**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**





**WASHINGTON,
      D.C. 20549**





**FORM
      10-K**





**x****ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF**
              **THE
                SECURITIES EXCHANGE ACT OF 1934****FOR
                THE FISCAL YEAR ENDED DECEMBER 31, 2007****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. 001-33956**




**ASIA
      TIME CORPORATION**


( *Exact
      Name Of Registrant As Specified In Its Charter* )





**Delaware**
            
            **20-4062619***(State
                or other jurisdiction of*
              *incorporation
                or organization)*
            
            *(I.R.S.
                Employer*
              *Identification
                No.)***Room
                1601-1604, 16/F., CRE Centre**
              **889
                Cheung Sha Wan Road, Kowloon, Hong Kong**
            
            **N/A***(Address
                of principal executive offices)*
            
            *(Zip
                Code)*





*Registrant’s
      telephone number, including area code* : **(852)-23100101**




SECURITIES
      REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:


Title
                  of Each Class
              
              Name
                  of Each Exchange on Which RegisteredCommon
                  Stock, $0.0001 par value
              
              American
                  Stock Exchange




SECURITIES
      REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:




None.





Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act. Yes o No x




Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Act. Yes oNo x




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 if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not
      be contained, to the best of registrant’s knowledge, in definitive proxy or
      information statements incorporated by reference in Part III of this Form 10-K
      or any amendment to this Form 10-K. 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
      the definitions of “large accelerated filer,” “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act. (Check one):





Large
      accelerated filer o     Accelerated
      filer o


Non-accelerated
      filer x     Smaller
      reporting company o




*(Do
      not check if a smaller reporting company)*




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Act).


Yes oNo x




The
      registrant’s common stock commenced trading on the American Stock Exchange on
      February 12, 2008. The aggregate market value of the registrant's issued and
      outstanding shares of common stock held by non-affiliates of the registrant
      as
      of March 3, 2008 (based on the price at which the registrant’s common stock was
      last sold on such date) was approximately $24,449,363.




There
      were 24,684,649 shares outstanding of the registrant’s common stock, par value
      $.0001 per share, as of March 15, 2008. The registrant’s common stock is listed
      on the American Stock Exchange under the ticker symbol “TYM.”





DOCUMENTS
      INCORPORATED BY REFERENCE: The information required by Part III of Form 10-K
      is
      incorporated by reference from the registrant's definitive proxy statement
      on
      Schedule 14A that will be filed no later than the end of the 120-day period
      following the registrant's fiscal year end, or, if the registrant's definitive
      proxy statement is not filed within that time, the information will be filed
      as
      part of an amendment to this Annual Report on Form 10-K/A, not later than the
      end of the 120-day period.







**ASIA
      TIME CORPORATION**





**TABLE
      OF CONTENTS TO ANNUAL REPORT ON FORM 10-K**


**For
      the Fiscal Year Ended December 31, 2007**





**ITEM**
            
            
            **Page****PART
                I**
            
            
            2Item
                1.
            
            Business
            2Item
                1A.
            
            Risk
                Factors
            6Item
                1B.
            
            Unresolved
                Staff Comments
            18Item
                2.
            
            Properties
            18Item
                3.
            
            Legal
                Proceedings
            19Item
                4.
            
            Submission
                of Matters to a Vote of Security Holders
            19**PART
                II**
            
            
            20Item
                5.
            
            Market
                for Registrant’s Common Equity, Related Stockholder Matters and Issuer
                Purchases of Equity Securities
            20Item
                6.
            
            Selected
                Financial Data
            22Item
                7.
            
            Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations
            23Item
                7A.
            
            Quantitative
                and Qualitative Disclosures about Market Risk
            36Item
                8.
            
            Financial
                Statements and Supplementary Data
            37Item
                9.
            
            Changes
                in and Disagreements With Accountants on Accounting and Financial
                Disclosure
            37Item
                9A.
            
            Controls
                and Procedures
            37Item
                9B.
            
            Other
                Information
            38**PART
                III**
            
            
            39Item
                10.
            
            Directors,
                Executive Officers and Corporate Governance
            39Item
                11.
            
            Executive
                Compensation
            39Item
                12.
            
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            39Item
                13.
            
            Certain
                Relationships and Related Transactions, and Director
                Independence
            39Item
                14.
            
            Principal
                Accounting Fees and Services
            39**PART
                IV**
            
            
            39Item
                15.
            
            Exhibits,
                Financial Statement Schedules
            39Signatures
            40









**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 and their
      management’s expectations, hopes, beliefs, intentions or strategies regarding
      the future, including our financial condition, and results of operations. 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:





·
            Dependence
                on a limited number of suppliers;




·
            Cyclicality
                of our business;




·
            Decline
                in the value of our inventory;




·
            Significant
                order cancellations, reductions or
                delays;




·
            Competitive
                nature of our industry;




·
            Vulnerability
                of our business to general economic
                downturn;




·
            Our
                ability to obtain all necessary government certifications 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;




·
            Costs
                and expenses related to the Bonds and Bond Warrants;
                and




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




These
      risks and uncertainties, along with others, are also described below under
      the
      heading “Risk Factors.” Should one or more of these risks or uncertainties
      materialize, or should any of the parties’ assumptions prove incorrect, actual
      results may vary in material respects from those projected in these
      forward-looking statements. We undertake no obligation to update or revise
      any
      forward-looking statements, whether as a result of new information, future
      events or otherwise, except as may be required under applicable securities
      laws.




1


**PART
      I**




**Item
      1. Business**





**Overview**





With
      respect to this discussion, the terms “we” and “our” refer to Asia Time
      Corporation, its 100%-owned subsidiary Times Manufacture & E-Commerce
      Corporation Limited, a British Virgin Islands corporation, (“Times Manufacture”)
      and its subsidiaries, Times Manufacturing & E-Commerce Corporation Ltd., TME
      Enterprise Ltd., Citibond Design Ltd. and Megamooch Online Ltd., each of which
      is a British Virgin Islands corporation, and the Hong Kong corporate
      subsidiaries Billion Win International Enterprise Ltd., Goldcome Industrial
      Ltd., Citibond Industrial Ltd., and Megamooch International Ltd. Times
      Manufacture was founded in March 2002 and is based in Hong Kong.





**Our
      Company**





We
      are a
      distributor of watch movements components used in the manufacture and assembly
      of watches to a wide variety of timepiece manufacturers. Our core customer
      base
      consists primarily of wholesalers, and medium-to-large sized watch manufacturers
      that produce watches primarily for consumer sale. To a lesser extent, we design
      watches for manufacturers and exporters of watches and manufacture and
      distribute complete watches primarily to internet marketers.





We
      have
      distribution centers and strategically located sales offices throughout Hong
      Kong and the People’s Republic of China (“China” or “PRC”). We distribute more
      than 350 products from over 30 vendors, including such market leaders as Citizen
      Group, Seiko Corporation and Ronda AG, to a base of over 300 customers primarily
      through our direct sales force. As a part and included in our sale of watch
      movements, we provide a variety of value-added services, including automated
      inventory management services, integration, design and development, management,
      and support services.





**Our
      Industry**





A
      typical
      watch manufacturing process begins with the watch being designed, either from
      scratch or based on a chosen watch movement according to the required features.
      For example, if a watch manufacturer wants to design a three-hand chronograph
      with split-second, three dials and date, they will source the watch movements
      that meet these requirements and design the watch according to the
      specifications of this movement. Next in the process is the sourcing, purchasing
      or manufacture of the required components, including the watch case, watch
      movement, strap and crown. The last steps in the process are the assembly of
      the
      watch components, followed by testing and quality control.





Except
      for the largest watch manufactures, such as Citizen, Seiko, and Swatch, which
      produce and use their own watch movements, most watch manufacturers source
      and
      purchase the movements in the market.





In
      the
      watch manufacturing process, we provide watch movements directly to the
      manufacturers or through movement wholesalers, assisting the manufacturers
      to
      source the movement by providing technical information, advise, and pricing.
      We
      also assist provide our customers with watch design and technical
      assistance.





There
      are
      two categories of watch movements, quartz and mechanical. The main parts of
      an
      analog quartz watch movement are the battery; the oscillator, a piece of quartz
      that vibrates in response to the electric current; the integrated circuit,
      which
      divides the oscillations into seconds; the stepping motor, which drives the
      gear
      train; and the gear train itself, which makes the watch’s hands move. A digital
      watch movement has the same timing components as an analog quartz movement
      but
      has no stepping motor or gear train.





The
      main
      parts of a mechanical watch movement are the winding mechanism; the mainspring,
      which is the source of the watch’s power; the gear train, which transmits power
      from the mainspring to the escapement and drives the watch’s minutes and seconds
      hands; the escapement, which distributes power to the oscillator (i.e., the
      balance) and controls how fast the mainspring unwinds; the balance itself,
      which
      measures out time by vibrating at a steady rate; and the motion works, which
      moves the watch’s hour hand.




2





Most
      mechanical and quartz analog watch movements are made by one of three companies:
      Japan’s Citizen and Seiko, or Switzerland’s ETA, which is owned by the Swatch
      Group watch conglomerate. There are several smaller watch movement companies:
      Ronda, ISA, and others. Digital watch movements are made by various companies,
      most of them in China. Most watch manufacturers buy the movements, case them
      and
      sell them under their own brand names.





Watch
      movement distributors relieve movement manufacturers of a portion of the costs
      and personnel needed to warehouse, sell and deliver their products. Distributors
      market movement manufacturers’ products to a broader range of customers than
      such manufacturers could economically serve with their direct sales forces.
      Today, movement distributors have become an integral part of a watch
      manufacturer’s purchasing and inventory processes. Generally, companies engaged
      in the distribution of watch movement components, including us, are required
      to
      maintain a relatively significant investment in inventories and accounts
      receivable to be responsive to the needs of customers. To meet these
      requirements, we, as well as other companies in our industry, typically depend
      on internally generated funds as well as external sources of
      financing.





**Products**





We
      currently offer over 350 items. Our products primarily consist of watch
      movements and, to a lesser extent, complete watches.





*Watch
      Movements*





We
      primarily distribute quartz watch movements that were produced primarily in
      Switzerland and Japan. All quartz watch movements distributed by our company
      are
      multi-function and have three hands. The watch movements have high adaptability
      so that a range of watches, from inexpensive to luxury, may be made from the
      same watch movement. To a lesser extent, we also offer mechanical movements
      manufactured by Citizen and Tsinlien Sea Gull Co. Ltd. For the year ended
      December 31, 2007, we acquired most of our watch movement products from the
      following two manufacturers: Citizen Miyota Co., Ltd., which is a member company
      in the Citizen Group, supplied 63% and Seiko Corporation supplied 27%. The
      next
      highest supplier was Hip Shun Industrial (HK) Ltd., which supplied us with
      less
      than 4% of our watch movements.





*Complete
      Watches*





To
      a
      lesser extent we also distribute complete analog-quartz and automatic watches
      with pricing between $20.00 to $50.00. Manufacturing for these watches is
      currently outsourced to third party factories in China. Our top three brand
      names include NxTime, SIDIO and Marcellus. The watches are primarily designed
      by
      U.S. designers and range from fashion watches to classic designs. Watches can
      either be made-to-order or design-to-order.





**Strategy**





Our
      goal
      is to be a leading watch movement and timepiece distributor in Hong Kong and
      China through the following strategies.





*Offer
      wide-ranging product spectrum to customers.* Management estimates that it can increase revenues by broadening our product
      spectrum and offering more brands of quartz movement to customers. Apart from
      quartz movement, we intend to offer mechanical movements. By broadening our
      product spectrum, we hope to increase our market share through sales to
      manufacturers of high-end watches utilizing sophisticated mechanical movements.
      We plan to source other brands of quartz and mechanical movement in order to
      broaden our product spectrum. The number of brands and products that we plan
      to
      introduce will depend on the terms and conditions offered by our
      suppliers.





*Manufacture
      branded proprietary watch movements.* To
      further diversify our product offering and reduce our reliance on third party
      watch movement manufacturers, we eventually hope to manufacture our own brands
      of quartz movements and high end mechanical movements in-house. We estimate
      that
      our company can replace a portion of our current third-party watch movement
      sales with our own brand movements, watch movements manufactured in-house would
      be higher margin offerings than distributed products of third-party suppliers.
      In addition, in-house manufacturing will allow product offerings at more
      competitive price points which we believe will enhance our competitive position.
      To manufacture our own brands of quartz and mechanical movements in-house,
      would
      need to acquire watch movement facilities in China and invest in new equipments
      and research and development. We expect that up to $5.5 million will be required
      to obtain the equipment and facilities to manufacture branded proprietary watch
      movements. Our plan to acquire manufacturing facilities and equipment to
      manufacture our own brand of quartz and mechanical movements in-house is still
      underway and we have identified certain targets for negotiations and will
      disclose in due course.




3





*Developing
      closer relationships with product brands owners and
      distributors.* We
      believe it is important for our company to develop closer relationships with
      product brand owners and its distributors, which we believe would lead to more
      competitive pricing and stable supply of products. We also have plans to develop
      closer relationships with our existing brands and distributors by expanding
      our
      sales force. We commenced expansion of our sales force in the fourth quarter
      of
      2007 and will continue in 2008.





*Expand
      the distribution of complete watches* .
      Currently, the distribution of complete watches represents less than 12% of
      our
      revenues. As part of our expansion plan, we intend to expand our sales and
      marketing efforts in China. We believe that a heightened focus in this area
      can
      lead to an increase in market share and enhance our earning capacity. It is
      expected that these watches will be marketed through a lower to middle pricing
      strategy, with sales price range from US$100-$200. We plan to appoint watch
      distributors in larger China cities in the next two years to expand the
      distribution of our complete watches.





**Value-Added
      Services**





As
      a part
      of and included in our sale of watch movements, we provide a number of
      value-added services which are intended to attract new customers and to maintain
      and increase sales to existing customers. These value-added services
      include:





—
            *Automated
                inventory management services.*We
                manage our customers’ inventory reordering, stocking and administration
                functions. We believe these services reduce paperwork, inventory,
                cycle
                time and the overall cost of doing business for our customers. The
                automated inventory management services are provided through our
                computer
                system through which we can manage our customer’s inventory reordering,
                stocking and administration functions. We believe this helps us to
                provide
                better service to our customers by understanding their stock level,
                purchase behavior and allows us to be more responsive to their demands
                and
                queries.





—
            *Integration.*Our sales specialists work directly with our customers to develop
                and
                deliver customized solutions and technical support to meet specific
                requirements for our customers’ applications. We are able to offer
                customers a one-stop source for their integration
                needs.





**Sales
      and Marketing**





*Watch
      Movements*





We
      believe we have developed valuable long-term customer relationships and an
      understanding of our customers’ requirements. Our sales personnel are trained to
      identify our customers’ requirements and to actively market our entire product
      line to satisfy those needs. We serve a broad range of wholesalers, medium
      to
      small watch manufacturers and volume users in China and Hong Kong. We have
      established inventory management programs to address the specific distribution
      requirements of our customers.





As
      a
      distributor for leading watch movement manufacturers, we are able to offer
      technical support as well as a variety of supply chain management programs.
      Technical support and supply chain management services enhance our ability
      to
      attract new customers. Many of our services revolve around our use of software
      automation, computer-to-computer transactions through Internet-based solutions,
      technically competent product managers and business development
      managers.





Sales
      are
      made throughout China and Hong Kong from the sales departments maintained at
      our
      distribution facilities located in Hong Kong and from strategically located
      sales offices. Sales are made primarily through personal visits by our employees
      and telephone sales personnel who answer inquiries and receive and process
      orders from customers. Sales are also made through general advertising,
      referrals and marketing support from component manufacturers.




4




*Complete
      Watches*





Currently,
      the main distribution channels of our watches are US direct marketers, online
      retailers and China department stores. As part of our expansion plan, we intend
      to increase our focus on China’s complete watch market along with exportation to
      overseas markets.





With
      our
      foothold in Southern China, we intend further develop Eastern China and Northern
      China regions so as to cover the entire China market in complete
      watches.





We
      intend
      continue to outsource the production of complete watches to third parties.
      As
      part of our integrated efforts, we intend to supply these manufacturers with
      watch movements.





We
      are
      also exploring opportunities to establish a retail network in China through
      teaming up with fashion, apparel or accessories chain stores to market our
      completed watches in China.





**Suppliers**





Manufacturers
      of watch movements are increasingly relying on the marketing, customer service,
      technical support and other resources of distributors who market and sell their
      product lines to customers not normally served by the manufacturer, and to
      supplement the manufacturer’s direct sales efforts for other accounts often by
      providing value-added services not offered by the manufacturer. Manufacturers
      seek distributors who have strong relationships with desirable customers, have
      the infrastructure to handle large volumes of products and can assist customers
      in the design and use of the manufacturers’ products. Currently, we have stable
      supplies from many manufacturers, including Miyota, Seiko, Ronda and
      Suissebaches. We continuously seek to identify potential new suppliers. During
      the year ended December 31, 2007, products purchased from our ten largest
      suppliers accounted for 92% of our total net purchases.





**Operations**





Inventory
      management is critical to a distributor’s business. We constantly focus on a
      high number of resales or “turns” of existing inventory to reduce our exposure
      to product obsolescence and changing customer demand.





Our
      central computer system facilitates the control of purchasing and inventory,
      accounts payable, shipping and receiving, and invoicing and collection
      information for our distribution business. Our distribution software system
      includes financial systems, customer order entry, purchase order entry to
      manufacturers, warehousing and inventory control. Each of our sales departments
      and offices is electronically linked to our central computer systems, which
      provide fully integrated on-line, real-time data with respect to our inventory
      levels. We track inventory turns by vendor and by product, and our inventory
      management system provides immediate information to assist in making purchasing
      decisions and decisions as to which inventory to exchange with suppliers under
      stock rotation programs. In some cases, customers use computers that interface
      directly with our computers to identify available inventory and to rapidly
      process orders. Our computer system also tracks inventory turns by customer.
      We
      also monitor supplier stock rotation programs, inventory price protection,
      rejected material and other factors related to inventory quality and quantity.
      This system enables us to more effectively manage our inventory and to respond
      quickly to customer requirements for timely and reliable delivery of components.





**Competition**





The
      watch
      movement distribution industry is highly competitive, primarily with respect
      to
      price, product availability, knowledge of product and quality of service. We
      believe that the breadth of our customer base, services and product lines,
      our
      level of technical expertise and the overall quality of our services are
      particularly important to our competitive position. We compete with large
      distributors such as National Electronics Holding Ltd., as well as mid-size
      distributors, such as PTS Resources Ltd., many of whom distribute the same
      or
      competitive products as we do.




5





Our
      major
      competitors in complete watches include designer brands from overseas, China
      and
      Hong Kong such as Guess, Calvin Klein and Dolce & Gabanna.





**Backlog**





As
      is
      typical of watch movement distributors, we have a backlog of customer orders.
      At
      December 31, 2007, we had a backlog of approximately $3.5 million as compared
      to
      a backlog of approximately $1.4 million at December 31, 2006. We believe that
      a
      substantial portion of our backlog represents orders due to be filled within
      the
      next 90 days. In recent years, the trend in our industry has been toward
      outsourcing, with more customers entering into just-in-time contracts with
      distributors, instead of placing orders with long lead times. As a result,
      the
      correlation between backlog and future sales is changing. In addition, we have
      increased our use of transactions where we purchase inventory based on
      electronically transmitted forecasts from our customers that may not become
      an
      order until the date of shipment and, therefore, may not be reflected in our
      backlog. Our backlog is subject to delivery rescheduling and cancellations
      by
      the customer, sometimes without penalty or notice. For the foregoing reasons
      our
      backlog is not necessarily indicative of our future sales for any particular
      period.





**Employees**





At
      December 31, 2007, we had a total of 35 full-time employees. There are no
      collective bargaining contracts covering any of our employees. We believe our
      relationship with our employees is satisfactory .





**Available
      Information**





Our
      principal executive offices are located at Room 1601-1604, 16/F., CRE Centre,
      889 Cheung Sha Wan Road, Kowloon, Hong Kong. Our telephone number is (852)
      23100101. Our Internet address is www.asiatimecorp.com .
      We make
      available free of charge on or through our Internet Website our annual reports
      on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K,
      and
      amendments to those reports filed or furnished pursuant to Section 13(a) or
      15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable
      after we electronically file such material with, or furnish it to, the
      Securities and Exchange Commission.





**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 currently listed for trading on the American Stock Exchange
      under the ticker symbol “TYM.” 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.




**RISKS
      RELATED TO OUR OPERATIONS**





**We
      are dependent on a limited number of suppliers. Loss of one or more of our
      key
      suppliers could harm our ability to manufacture and deliver our products to
      our
      customers, which would have a material adverse effect on our
      business.**





We
      rely
      on a limited number of suppliers for products that generate a significant
      portion of our sales. During the year ended December 31, 2007, products
      purchased from our 10 largest suppliers accounted for 92% of our total net
      purchases. Substantially all of our inventory has been and will be purchased
      from suppliers with which we have entered into non-exclusive distribution
      agreements. Moreover, most of our distribution agreements are cancelable upon
      short notice. As a result, in the event that one or more of those suppliers
      experience financial difficulties or are not willing to do business with us
      in
      the future on terms acceptable to management, our ability to manufacture and
      deliver our products to our customers would be harmed, which would result in
      a
      material adverse effect on our business, results of operations or financial
      condition. Additionally, our relationships with our customers could be
      materially adversely affected because our customers depend on our distribution
      of watch movements from the industry’s leading suppliers.




6





**Our
      industry is highly cyclical, and an industry downturn could limit our ability
      to
      generate revenues and have a material adverse effect on our
      business.**





The
      watch
      movement distribution industry and, in particular, the timepiece manufacturing
      industry has historically been affected by general economic downturns and
      fluctuations in product supply and demand, often associated with changes in
      technology and manufacturing capacity. These industry cycles and economic
      downturns have often had an adverse economic effect upon manufacturers,
      end-users of watch movements and watch movement distributors, including our
      company. We cannot predict the timing or the severity of the cycles within
      our
      industry, or how long and to what levels any industry downturn and/or general
      economic weakness will last or be exacerbated by terrorism or war or other
      factors on our industry. Our revenues closely follow the strength or weakness
      of
      the timepiece market, and future downturns in this industry, would have a
      material adverse effect on our business, results of operations and financial
      condition.





**Rapid
      technological change and new and enhanced products could cause declines in
      the
      value of our inventory or result in obsolescence of our
      inventory.**





The
      watch
      movements industry is subject to rapid technological change, new and enhanced
      products and evolving industry standards, which can contribute to a decline
      in
      value or obsolescence of inventory. During an industry and/or economic downturn,
      it is possible that prices will decline due to an oversupply of product and,
      therefore, there may be greater risk of declines in inventory value. We cannot
      assure you that unforeseen new product developments or declines in the value
      of
      our inventory will not materially adversely affect our business, results of
      operations or financial condition, or that we will successfully manage our
      existing and future inventories.





**We
      make commitments regarding the level of business we sill seek and accept,
      including production schedules and personnel levels, and significant order
      cancellations, reductions, or delays by our customers could materially adversely
      affect our commitments and business.**





Our
      sales
      are typically made pursuant to individual purchase orders, and we generally
      do
      not have long-term supply arrangements with our customers, but instead work
      with
      our customers to develop nonbinding forecasts of future requirements. Based
      on
      these forecasts, we make commitments regarding the level of business that we
      will seek and accept, the timing of production schedules and the levels and
      utilization of personnel and other resources. A variety of conditions, both
      specific to each customer and generally affecting each customer’s industry, may
      cause customers to cancel, reduce or delay orders that were either previously
      made or anticipated. Generally, customers may cancel, reduce or delay purchase
      orders and commitments without penalty, except for payment for services rendered
      or products competed and, in certain circumstances, payment for materials
      purchased and charges associated with such cancellation, reduction or delay.
      Significant or numerous order cancellations, reductions or delays by our
      customers could have a material adverse effect on our business, financial
      condition or results of operations.





**The
      market for our products is very competitive and, if we cannot effectively
      compete, our business will be harmed.**





The
      market for our products is very competitive and subject to rapid technological
      change. We compete with many other distributors of watch movements and complete
      watches many of which are larger and have significantly greater assets, name
      recognition and financial, personnel and other resources than we have. As a
      result, our competitors may be in a stronger position to respond quickly to
      potential acquisitions and other market opportunities, new or emerging
      technologies and changes in customer requirements. Occasionally, we compete
      for
      customers with many of our own suppliers and additional competition has emerged
      from, fulfillment companies, catalogue distributors and e-commerce companies,
      including on-line distributors and brokers, which have grown with the expanded
      use of the Internet. We cannot assure you that we will be able to maintain
      or
      increase our market share against the emergence of these or other sources of
      competition. Failure to maintain and enhance our competitive position could
      materially adversely affect our business and prospects.




7





Additionally,
      prices for our products tend to decrease over their life cycle. This reduces
      resale per component sold. There is also continuing pressure from customers
      to
      reduce their total cost for products. Our suppliers may also seek to reduce
      our
      margins on the sale of their products in order to increase their own
      profitability or to be competitive with other suppliers of comparable product.
      We incur substantial costs on our value-added services required to remain
      competitive, retain existing business and gain new customers, and we must
      evaluate the expense of those efforts against the impact of price and margin
      reductions.





**Substantial
      defaults by our customers on accounts receivable or the loss of significant
      customers could have a material adverse effect on our liquidity and results
      of
      operations.**





A
      substantial portion of our working capital consists of accounts receivable
      from
      customers. If customers responsible for a significant amount of accounts
      receivable were to become insolvent or otherwise unable to pay for products
      and
      services, 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 collection
      costs and defaults in excess of management’s expectations. A significant
      deterioration in our ability to collect on accounts receivable could also impact
      the cost or availability of financing available to us.





**We
      are dependent on Japanese manufacturers for our watch movements and subject
      to
      trade regulations which expose us to political and economic
      risk.**





Approximately
      90% of watch movements that we sell are manufactured by Japanese companies.
      As a
      result, our ability to sell certain products at competitive prices could be
      adversely affected by any of the following:





·
            increases
                in tariffs or duties on imports from
                Japan;




·
            changes
                in trade treaties between Japan and Hong
                Kong;




·
            strikes
                or delays in air or sea transportation between Japan and Hong
                Kong;




·
            future
                legislation with respect to pricing and/or import quotas on products
                imported from Japan; and




·
            turbulence
                in the Japanese economy or financial
                markets.




Trade
      regulations between Hong Kong and Japan have remained stable for the past five
      years. However, there is long-standing political tension between China and
      Japan, which could intensify, causing trade retaliation and changes in trade
      regulations. As a special administrative region of China, Hong Kong could be
      indirectly affected by changes in trade regulation between China and Japan,
      which would limit our ability to sell our products.





**Our
      industry is subject to supply shortages that could prevent us from manufacturing
      and delivering our products to our customers in a timely manner. Any delay
      or
      inability to deliver our products may have a material adverse effect on our
      results of operations.**





During
      prior periods, there have been shortages of components in the watch movements
      industry and the availability of certain movements have been limited by some
      of
      our suppliers. We cannot assure you that any future shortages or allocations
      would not have such an effect on us. A future shortage can be caused by and
      result from many situations and circumstances that are out of our control,
      and
      such shortage could limit the amount of supply available of certain required
      movements and increase prices affecting our profitability.





**We
      face risks related to our recent accounting restatements in December 2007 and
      February 2008.**





In
      December 2007 and February 2008, we determined that we had accounting
      inaccuracies in previously reported financial statements and decided to restate
      our financial statements for the years ended December 31, 2006, 2005, and 2004,
      the three months ended March 31, 2007, the three months and six months ended
      June 30, 2007, and the three months and nine months September 30, 2007. The
      restatements for the foregoing periods related to the correction of errors
      with
      respect to the accounting for inventory by adjusting watch movement costing
      for
      the effects of vendor incentives from an as received basis to an accrual basis,
      as we were able to estimate the value of the incentives as inventory is
      purchased, the accounting for fees and costs related to the January 2007 reverse
      merger as a charge to operations, and the recognition of stock-based
      compensation cost related to the Escrow Shares. As a result of these
      adjustments, various income tax calculations were also revised, which effected
      net income and also caused reclassifications to cash flows. We also corrected
      average and actual shares outstanding retroactively (and related earnings per
      share calculations) to reflect the January 2007 reverse merger. We also made
      various changes to footnote disclosures relating to these revisions. It is
      possible that such restatement of our financial statements could lead to
      litigation claims and/or regulatory proceedings against us. The defense of
      any
      such claims or proceedings may cause the diversion of management's attention
      and
      resources, and we may be required to pay damages if any such claims or
      proceedings are not resolved in our favor.




8





**The
      prices of our products are subject to volatility, which could have a negative
      impact on our sales and gross profit margins.**





A
      portion
      of the watch movements products we sell have historically experienced volatile
      pricing. If market pricing for these products decreases significantly, we may
      experience periods when our investment in inventory exceeds the market price
      of
      such products. In addition, at times there are price increases from our
      suppliers that we are unable to pass on to our customers. These market
      conditions could have a negative impact on our sales and gross profit margins
      unless and until our suppliers reduce the cost of these products to us.
      Furthermore, in the future, the need for aggressive pricing programs in response
      to market conditions, an increased number of low-margin, large volume
      transactions and/or increased availability of the supply of certain products,
      could further impact our gross profit margins.





**A
      reversal of the trend for distribution to play an increasing role in the watch
      movements industry could limit demand for our services and materially adversely
      affect our results of operations.**





In
      recent
      years, there has been a growing trend for large wholesalers and watch
      manufacturers to outsource their procurement, inventory and materials management
      processes to third parties, particularly watch movement distributors, including
      our company. A reversal of this trend for could limit demand for our services,
      materially adversely affecting our ability to generate revenues. If such a
      reversal occurs, we may be forced to change the focus of our operations if
      we
      are unable to generate sufficient revenues to support our operations as
      currently conducted.





**Our
      manufacturing capacity restraints and limited experience may cause unexpected
      costs, delays and make it more difficult to compete, which may have an adverse
      effect on our results of operations.**





As
      part
      of our expansion plan, we intend to substantially expand the design and
      manufacture of our own brands of complete watches and commence the manufacture
      of branded watch movements in-house. In order to produce our watches and watch
      movements in quantities sufficient to meet our anticipated market demand we
      will
      need to increase our manufacturing capacity by a significant factor over the
      current level. There are technical challenges to increasing manufacturing
      capacity, including equipment design and automation, material procurement,
      problems with production yields and quality control and assurance. Developing
      commercial scale manufacturing facilities will require the investment of
      substantial funds and the hiring and retaining of additional management and
      technical personnel who have the necessary manufacturing experience. We may
      encounter some difficulties, such as significant unexpected costs and delays,
      in
      scaling up the necessary manufacturing operations to produce required quantities
      of watch movements and watches. The failure to scale-up manufacturing operations
      in a timely and cost-effective way may adversely affect our income. Moreover,
      the lack of experience in watch movement and watch manufacture design may make
      it difficult to compete against companies that have more senior management
      and
      experience. If we are unable to satisfy demand for products, our ability to
      generate revenue could be impaired, market acceptance of our products could
      be
      adversely affected and customers may instead purchase our competitors’
products.





**If
      third-party carriers were unable to transport our products on a timely basis,
      we
      may be unable to timely deliver products to our customers and our operations
      could be materially adversely affected.**





All
      of
      our products are shipped through third party carriers. If a strike or other
      event prevented or disrupted these carriers from transporting our products,
      other carriers may be unavailable or may not have the capacity to deliver our
      products to our customers. If adequate third party sources to ship our products
      were unavailable at any time, our business would be materially adversely
      affected.




9





**Our
      products may be found to be defective and, as a result, warranty and/or product
      liability claims may be asserted against us which could have a material adverse
      effect on our business.**





Our
      products are sold at prices that are significantly lower than the cost of the
      watches in which they are incorporated. Since a defect or failure in a product
      could give rise to failures in the end products that incorporate them (and
      claims for consequential damages against us from our customers), we may face
      claims for damages that are disproportionate to the sales and profits we receive
      from our products involved. Our business could be materially adversely affected
      as a result of a significant quality or performance issue in the products sold
      by us depending on the extent to which we are required to pay for the damages
      that result. Although we currently have product liability insurance, such
      insurance is limited in coverage and amount.





**The
      failure to manage growth effectively could have an adverse effect on our
      business, financial condition, and results of operations.**





Any
      significant growth in the market for our products or entry into new markets
      by
      Asia Time may require us to expand our employee base for managerial,
      operational, financial, and other purposes. As of December 31, 2007, we had
      35
      full time employees. Continued future growth will impose significant added
      responsibilities upon the members of management to identify, recruit, maintain,
      integrate, and motivate new employees. Aside from increased difficulties in
      the
      management of human resources, we may also encounter working capital issues,
      as
      we will need increased liquidity to finance. For effective growth management,
      we
      will be required to continue improving our operations, management, and financial
      systems and control. Our failure to manage growth effectively may lead to
      operational and financial inefficiencies that will have a negative effect on
      our
      profitability.





**We
      are dependent on certain key personnel and loss of our sole executive officer,
      which would have a material adverse effect on our business and results of
      operations.**





Our
      success is, to a certain extent, attributable to our sole executive officer,
      Kwong Kai Shun. Kwong Kai Shun oversees the operation of our business. There
      can
      be no assurance that we will be able to retain Kwong Kai Shun or that he may
      not
      receive and/or accept competing offers of employment. The loss of Kwong Kai
      Shun
      could have a material adverse effect upon our business, financial condition,
      and
      results of operations.





**Our
      planned expansion into new international markets poses additional risks and
      could fail, which could cost us valuable resources and affect our results of
      operations.**





We
      plan
      to expand sales of products into new international markets including developing
      and developed countries, such as South America and Europe. These markets are
      untested for our products and we face risks in expanding the business overseas,
      which include differences in regulatory product testing requirements,
      intellectual property protection (including patents and trademarks), taxation
      policy, legal systems and rules, marketing costs, fluctuations in currency
      exchange rates and changes in political and economic conditions.





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





**All
      of our assets are located in Hong Kong and China and substantially all of our
      revenues are derived from our operations in Hong Kong and 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
      the results of operations and financial condition.**





Our
      business operations may be adversely affected by the current and future
      political environment in the PRC. The PRC has operated as a socialist state
      since the mid-1900s and is controlled by the Communist Party of China. The
      Chinese government exerts substantial influence and control over the manner
      in
      which we must conduct our business activities. The PRC has only permitted
      provincial and local economic autonomy and private economic activities since
      1988. The government of the PRC has exercised and continues to exercise
      substantial control over virtually every sector of the Chinese economy,
      particularly the pharmaceutical industry, through regulation and state
      ownership. 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 current 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.




10





**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, in which system
      decided legal cases have little value as precedents unlike the common law system
      prevalent in the United States. There are substantial uncertainties regarding
      the interpretation and application of PRC laws and regulations, including but
      not limited to the laws and regulations governing our business, or the
      enforcement and performance of our arrangements with customers in the event
      of
      the imposition of statutory liens, death, bankruptcy and criminal proceedings.
      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 such as foreign investment, corporate
      organization and governance, commerce, taxation and trade. 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. We are considered
      a foreign persons or foreign funded enterprises under PRC laws, and as a result,
      we are required to comply with PRC laws and regulations. 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:





·
            levying
                fines;




·
            revoking
                our business and other licenses;




·
            requiring
                that we restructure our ownership or operations;
                and




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




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




While
        the
        Chinese economy has experienced rapid growth in recent years, such growth
        has
        been uneven among various sectors of the economy and in different geographical
        areas of the country. Also, many observers believe that this rapid growth
        cannot
        continue at its current pace and that an economic correction may be imminent.
        Rapid economic growth can also lead to growth in the money supply and rising
        inflation. During the past two decades, the rate of inflation in China has
        been
        as high as approximately 20% and China has experienced deflation as low as
        minus
        2%. If prices for our products 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. 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. During 2007, the interest rate
        was
        increased from 5.67% to 7.83%. Repeated rises in interest rates by the central
        bank could slow economic activity in China which could, in turn, materially
        increase our costs and also reduce demand for our products.




**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.**





The
      PRC
      State Administration of Foreign Exchange, or SAFE, issued a public notice in
      January 2005 concerning foreign exchange regulations on mergers and acquisitions
      in China. The public notice states that if an offshore company controlled by
      PRC
      residents intends to acquire a PRC company, such acquisition will be subject
      to
      strict examination by the relevant foreign exchange authorities. The public
      notice also states that the approval of the relevant foreign exchange
      authorities is required for any sale or transfer by the PRC residents of a
      PRC
      company’s assets or equity interests to foreign entities for equity interests or
      assets of the foreign entities.




11





In
      April
      2005, SAFE issued another public notice further explaining the January notice.
      In accordance with the April notice, if an acquisition of a PRC company by
      an
      offshore company controlled by PRC residents has been confirmed by a Foreign
      Investment Enterprise Certificate prior to the promulgation of the January
      notice, the PRC residents must each submit a registration form to the local
      SAFE
      branch with respect to their respective 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 transaction or use of assets in
      China to guarantee offshore obligations. The April notice also provides that
      failure to comply with the registration procedures set forth therein may result
      in restrictions on our PRC resident shareholders and subsidiaries. Pending
      the
      promulgation of detailed implementation rules, the relevant government
      authorities are reluctant to commence processing any registration or application
      for approval required under the SAFE notices.





In
      addition, on August 8, 2006, the Ministry of Commerce (“MOFCOM”), joined by the
      State-Owned Assets Supervision and Administration Commission of the State
      Council, State Administration of Taxation, State Administration for Industry
      and
      Commerce, China Securities Regulatory Commission and SAFE, amended and released
      the Provisions for Foreign Investors to Merge and Acquire Domestic Enterprises,
      new foreign-investment rules which took effect September 8, 2006, superseding
      much, but not all, of the guidance in the prior SAFE circulars. These new rules
      significantly revise China’s regulatory framework governing onshore-offshore
      restructurings and how foreign investors can acquire 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.





These
      new
      rules may significantly affect the means by which offshore-onshore
      restructurings are undertaken in China in connection with offshore private
      equity and venture capital financings, mergers and acquisitions. It is expected
      that such transactional activity in China in the near future will require
      significant case-by-case guidance from MOFCOM and other government authorities
      as appropriate. 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 its
      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, which
      could divert the attention of our management and adversely affect our results
      of
      operations.





It
      is
      uncertain how our business operations or future strategy will be affected by
      the
      interpretations and implementation of the SAFE notices and new rules. Our
      business operations or future strategy could be adversely affected by the SAFE
      notices and the new rules. For example, we may be subject to a more stringent
      review and approval process with respect to our foreign exchange activities,
      which could limit our ability to acquire companies in the PRC, restricting
      our
      ability to expand our operations.





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





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. In addition, we are required to maintain records that accurately
      and
      fairly represent our transactions and have an adequate system of internal
      accounting controls. Foreign companies, including some that may compete with
      us,
      are not subject to these prohibitions, and therefore may have a competitive
      advantage over us. Corruption, extortion, bribery, pay-offs, theft and other
      fraudulent practices occur from time-to-time in the PRC, and our executive
      officers and employees have not been subject to the United States Foreign
      Corrupt Practices Act prior to the completion of the Share Exchange. We can
      make
      no assurance 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.




12





**Any
      recurrence of Severe Acute Respiratory Syndrome (SARS), Avian Flu, or another
      widespread public health problem, in the PRC could adversely affect our
      employees, customers, and our ability to continue our operations, including
      manufacturing and distribution.**





A
      renewed
      outbreak of Severe Acute Respiratory Syndrome, Avian Flu or another widespread
      public health problem in China, where all of our manufacturing facilities are
      located and where all of our sales occur, could have a negative effect on our
      operations. Our business is dependent upon our ability to continue to
      manufacture our 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.**





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.





**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 law.**





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. In addition, we may need to rely on a new and
      developing communication infrastructure to efficiently transfer our information
      from retail nodes to the headquarters. 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.





**You
      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 are conducted in Hong Kong and China. Moreover all of
      our
      directors and officers are nationals and residents of Hong Kong and China.
      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
      our
      officers and/or directors predicated upon the civil liability provisions of
      the
      securities law 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.




13





**RISKS
      RELATED TO OUR CAPITAL STRUCTURE**





**The
      price of our common stock may be volatile, and if an active trading market
      for
      our common stock does not develop, the price of our common stock may suffer
      and
      decline.**





Prior
      to
      our initial public offering and listing of our common stock on the American
      Stock Exchange on February 12, 2008, there has been no public market for our
      securities in the United States. Accordingly, we cannot assure you that an
      active trading market will develop or be sustained or that the market price
      of
      our common stock will not decline. The price at which our common stock will
      trade after our initial public offering is likely to be highly volatile and
      may
      fluctuate substantially due to many factors, some of which are outside of our
      control.





**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.**





As
      of
      March 15, 2008, we had 24,684,649 shares of common stock outstanding, and our
      certificate of incorporation permits the issuance of up to approximately
      75,315,351additional shares of common stock. Thus, we have the ability to issue
      substantial amounts of common stock in the future, which would dilute the
      percentage ownership held by the existing investors.





Pursuant
      to the terms of the Share Exchange, we registered the 2,250,348 shares of common
      stock underlying shares of our Series A Convertible Preferred Stock issued
      in an
      equity financing, in addition to 1,703,017 shares held by other shareholders.
      In
      addition, we agreed to file a registration statement no later than 90 days
      after
      our securities become listed for trading on the American Stock Exchange to
      register the Bonds, the 2,285,714 shares of our common stock, subject to
      adjustment, issuable upon the conversion of the Bonds, the Bond Warrants, and
      the 600,000 shares of our common stock, subject to adjustment, issuable upon
      the
      exercise of the Bond Warrants. We also intend to register the 200,000 shares
      of
      common stock issued in connection with our investor relations agreement that
      we
      entered into in February 2007. The preferred stockholders of the 2,250,348
      registered shares are subject to a lock up agreement pursuant to which they
      agreed not to sell their shares until our common stock began trading on the
      American Stock Exchange, which occurred on February 12, 2008, after which their
      shares will automatically be released from the lock up every 30 days on a pro
      rata over a nine month period beginning on the date that is 30 days after
      listing of the shares. All of the shares included in an effective registration
      statement as described above may be freely sold and transferred, except if
      subject to a lock up agreement.





In
      connection with the public offering that we conducted on February 15, 2008,
      in
      which we issued 963,700 shares of freely tradable common stock, we, each of
      our
      directors and senior officers, and each holder of 5% or more of our common
      stock
      agreed, with limited exceptions, that we and they will not, without the prior
      written consent of the offering’s underwriter, through February 12, 2008, among
      other things, directly or indirectly, offer to sell, sell or otherwise dispose
      of any of shares of our common stock or file a registration statement with
      the
      SEC. After the lock-up agreements, up to the shares that had been locked up
      will
      be eligible for future sale in the public market at prescribed times pursuant
      to
      Rule 144 under the Securities Act, or otherwise, sales of a significant number
      of these shares of common stock in the public market could reduce the market
      price of the common stock.





Further,
      effective February 15, 2008, the SEC revised Rule 144, which provides a safe
      harbor for the resale of restricted securities, shortening applicable holding
      periods and easing other restrictions and requirements for resales by our
      non-affiliates, thereby enabling an increased number of our outstanding
      restricted securities to be resold sooner in the public market. Sales of
      substantial amounts of our stock at any one time or from time to time by the
      investors to whom we have issued them, or even the availability of these shares
      for sale, could cause the market price of our common stock to
      decline.





**Our
      principal stockholder has significant influence over us.**




Our
      largest shareholder, Kwong Kai Shun, who is also our Chairman of the Board,
      Chief Executive Officer and Chief Financial Officer, beneficially owns or
      controls approximately 84.0% of our outstanding shares as of January 1, 2008.
      As
      a result of his holding, this shareholder has a controlling influence in
      determining the outcome of any corporate transaction or other matters submitted
      to our shareholders for approval, including mergers, consolidations and the
      sale
      of all or substantially all of our assets, election of directors, and other
      significant corporate actions. This shareholder also has the power to prevent
      or
      cause a change in control. In addition, without the consent of this shareholder,
      we could be prevented from entering into transactions that could be beneficial
      to us. The interests of this shareholder may differ from the interests of our
      shareholders.




14





**The
      ability of our operating subsidiaries to pay dividends may be restricted due
      to
      foreign exchange control regulations of China.**





The
      ability of our operating subsidiaries to pay dividends may be restricted due
      to
      the foreign exchange control policies and availability of cash balance of our
      operating subsidiaries. We expect in the future that a substantial portion
      of
      our revenue being earned and currency received may be denominated in Renminbi
      (RMB). RMB is subject to the exchange control regulation in China, and, as
      a
      result, we may unable to distribute any dividends outside of China due to PRC
      exchange control regulations that restrict our ability to convert RMB into
      US
      Dollars.





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




On
      December 15, 2006, we entered into the Exchange Agreement with the sole
      shareholder of Times Manufacture, pursuant to which we agreed to acquire 100%
      of
      the issued and outstanding securities of Times Manufacture in exchange for
      shares of our common stock. On January 23, 2007, the Share Exchange closed,
      Times Manufacture became our 100%-owned subsidiary and our sole business
      operations became that of Times Manufacture. Also, the management and directors
      of Times Manufacture became the management and directors of us and we changed
      our corporate name from SRKP 9, Inc. to Asia Time Corporation.





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





·
            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 in 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.





**In
      connection with Mr. Kwong’s agreement to release, under certain conditions, up
      to 2,326,000 shares of his common stock in our company to investors in our
      January 2007 Private Placement, we recorded a compensation charge of
      approximately $2.4 million for 2007.**





In
      connection with the Private Placement, Kwong Kai Shun, our Chairman of the
      Board, Chief Executive Officer and Chief Financial Officer, entered into an
      agreement (the “Escrow Agreement”) with the investors in the Private Placement
      pursuant to which Mr. Kwong agreed to place 2,326,000 shares of his common
      stock
      in escrow for possible distribution to the investors (the "Escrow Shares").
      Pursuant to the Escrow Agreement, if our net income for 2006 or 2007, subject
      to
      specified adjustments, is less than $6.3 million or $7.7 million, respectively,
      a portion, if not all, of the Escrow Shares will be transferred to the investors
      based upon our actual net income, if any, for such fiscal years. We have
      accounted for the Escrow Shares as the equivalent of a performance-based
      compensatory stock plan between Mr. Kwong and us. Accordingly, during the year
      ended December 31, 2007, we recorded a charge to operations of $2,433,650 to
      recognize the grant date fair value of stock-based compensation in conjunction
      with the Escrow Shares. The expense will have a negative effect on our results
      of operations for 2007 and cause our net income to be reduced by $2.4 million
      for the year. We may not realize a benefit from services provided under the
      agreement that is comparable to such negative effect. As a result, our
      operations may suffer and our stock price may decline.




15





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





Our
      internal control over financial reporting may have weaknesses and conditions
      that need to be addressed, the disclosure of which may have an adverse impact
      on
      the price of our common stock. 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. Our failure of these controls could also
      prevent us from maintaining accurate accounting records and discovering
      accounting errors and financial frauds. 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.





**Standards
      for compliance with Section 404 of the Sarbanes-Oxley Act Of 2002 are uncertain,
      and if we fail to comply in a timely manner, our business could be harmed and
      our stock price could decline.**




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 company’s 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
      2007
      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 2008 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.





**We
      recently completed a placement of convertible bonds that included a beneficial
      conversion feature and are mandatorily redeemable and 600,000 warrants
      exercisable at $0.0001 per share. The features of the bonds and the value of
      the
      warrants will have the effect of reducing our reported operating results during
      the term of the bonds.**





In
      November 2007, we issued $8,000,000 Variable Rate Convertible Bonds due in
      2012,
      or the Bonds. The terms of Bonds include conversion features allowing the
      holders to convert the Bonds into shares of our common stock. Certain of those
      conversion features that allow for the reduction in conversion price upon the
      occurrence of stated events constitute a “beneficial conversion feature” for
      accounting purposes. In addition, we may be required to repurchase the Bonds
      at
      the request of the holders if certain events occur or do not occur, as set
      forth
      in the Trust Deed. If our common stock ceases to be listed on AMEX or there
      is a
      change of control of the company as defined in the Trust Deed, each holder
      will
      have the right to require us to redeem all or part of that holder’s Bonds. If on
      or before November 13, 2008, the Bonds, Bond Warrants, and shares underlying
      the
      Bonds and Bond Warrants are not registered with the SEC, then holders of the
      Bonds can require us to redeem the Bonds at 106.09% of the principal amount
      of
      the Bonds. In addition, at any time after November 13, 2010, each holder can
      require us to redeem the Bonds at 126.51% of the principal amount of the Bonds
      and we are required to redeem any outstanding Bonds at 150.87% of its principal
      amount on November 13, 2012. If a triggering event occurs and we are requested
      by the holders to repurchase all or a portion of the Bonds, we will be required
      to pay cash to redeem all or a portion of the Bonds. Finally, in connection
      with
      the issuance of the Bonds, we issued the holder of the Bonds the Bond Warrants
      exercisable at a per share exercise price of $0.0001.




16





The
      accounting treatment related to the beneficial conversion and mandatory
      redemption features of the Bonds and the value of the Bond Warrants will have
      an
      adverse impact on our results of operations for the term of the Bonds. The
      application of Generally Accepted Accounting Principles will require us to
      allocate $6,107,299 to the beneficial conversion feature of the Bonds and
      $1,652,701 to the Bonds Warrants, which will be reflected in our financial
      statements as an interest discount. In addition, we have determined that the
      total redemption premium associated with the mandatory redemption feature of
      the
      Bonds is $4,069,600. All of the aforementioned amounts associated with the
      beneficial conversion and mandatory redemption feature of the Bonds and the
      value of the Bond Warrants will be amortized as additional interest expense
      over
      the term of the Bonds. This accounting will result in an increase in interest
      expense in all reporting periods during the term of the Bonds, and, as a result,
      reduce our net income accordingly.





**Mandatory
      redemption of the Bonds could have a material adverse effect on our liquidity
      and cash resources.**





If
      we are
      required to redeem all or any portion of the Bonds, this may have a material
      adverse effect on our liquidity and cash resources, and may impair our ability
      to continue to operate. If we are required to repurchase all or a portion of
      the
      Bonds and do not have sufficient cash to make the repurchase, we may be required
      to obtain third party financing to do so, and there can be no assurances that
      we
      will be able to secure financing in a timely manner and on favorable terms,
      which could have a material adverse effect on our financial performance, results
      of operations and stock price. Furthermore, additional equity financing may
      be
      dilutive to the holders of our common stock, and debt financing, if available,
      may involve restrictive covenants, and strategic relationships, if necessary
      to
      raise additional funds, and may require that we relinquish valuable rights.





**We
      will incur an expense charge of approximately $700,000 in the first quarter
      of
      2008 in connection with 200,000 shares of common stock issued for investor
      relation services.**




On
      January 16, 2008, we entered into an investor relations agreement with Public
      Equity Group Inc. pursuant to which we agreed to issue 200,000 shares of our
      common stock to Public Equity Group Inc. In connection with the issuance of
      200,000 shares of common stock, we expect to recognize a one-time charge to
      operations in the first quarter of 2008 in an amount equal to approximately
      $700,000, which is derived from valuing each share at $3.50, the per share
      offering price in our February 2008 public offering. The expense will have
      a
      negative effect on our results of operations for 2008 and we may not realize
      a
      benefit from services provided under the agreement that is comparable to such
      negative effect. As a result, our operations may suffer and our stock price
      may
      decline.





**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.




17





**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
      currently plan to declare or pay any cash dividends on our shares of common
      stock in the foreseeable future and we currently intend to retain any future
      earnings for funding growth. As a result, you should not rely on an investment
      in our securities if you require dividend income. Capital appreciation, if
      any,
      of our shares may be your sole source of gain for the foreseeable future.
      Moreover, you may not be able to resell your shares in our company at or above
      the price you paid for them. We paid cash dividends of $0, $2.4 million, and
      $642,848 during the years ended December 31, 2007, 2006, and 2005
      respectively.





**Item
      1B. Unresolved Staff Comments**





Not
      applicable.





**Item
      2. Properties**





In
      addition to our executive offices located at Room 1601-1604, 16/F., CRE Centre
      889 Cheung Sha Wan Road, Kowloon, Hong Kong, we have offices at the following
      locations:





Unit
      B,
      17/F, Tower 2,


Maritime
      Bay,


No.
      18
      Pui Shing Road,


Tseung
      Kwan O, Sai Kung,


NT





Car
      Park
      No. 77 on the Basement,


Maritime
      Bay





Flat
      F,
      8/F Hoi Tsui Mansion,


Tower
      16
      Rivera Gardens,


Nos.
      2-12
      Yi Lok Street,


Tsuen
      Wan,


NT





Car
      Park
      No. 46, 2/F Podium of


Podium
      D
      of Riviera Gardens





Flat
      G,
      59/F,


Tower
      6
      Banyan Garden,


No.
      863
      Lai Chi Kok Road


Kowloon





Car
      Park
      No. 270


2/F
      of
      Banyan Garden





Each
      of
      the above properties is owned by our subsidiary Billion Win International
      Enterprise Ltd.




18





**Item
      3. Legal Proceedings**





We
      are
      not a party to any material legal proceedings.





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





No
      matters were submitted to the security holders to be voted on during the fourth
      quarter of 2007.




19


**PART
      II**





**Item
      5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities.**





Commencing
      on February 12, 2008, our shares of common stock have been listed for trading
      on
      AMEX under the ticker symbol “TYM.” As of March 15, 2008, we had 32 registered
      shareholders.





From
      February 12, 2008, which was our first day of trading, through March 15, 2008,
      the high and low sales price for our common stock on AMEX has been $8.70 and
      $3.91 per share, respectively. On March 25, 2008, the closing sales price for
      our common stock on AMEX was $4.90 per share.





The
      price
      of our common stock will likely fluctuate in the future. The stock market in
      general has experienced extreme stock price fluctuations in the past few years.
      In some cases, these fluctuations have been unrelated to the operating
      performance of the affected companies. Many companies have experienced dramatic
      volatility in the market prices of their common stock. We believe that a number
      of factors, both within and outside its control, could cause the price of our
      common stock to fluctuate, perhaps substantially. Factors such as the following
      could have a significant adverse impact on the market price of our common
      stock:





·
            Our
                ability to obtain additional financing and, if available, the terms
                and
                conditions of the financing;  ·
            Our financial position and results
              of
              operations;  ·
            Concern as to, or other evidence of,
              the
              reliability and efficiency of our products and services or our
              competitors’ products and services;  ·
            Announcements of innovations or new
              products
              or services by us or our competitors;  ·
            U.S. federal and state governmental
              regulatory
              actions and the impact of such requirements on our
              business;  ·
            The development of litigation against
              us;  ·
            Period-to-period fluctuations in our
              operating
              results;  ·
            Changes in estimates of our performance
              by any
              securities analysts;  ·
            The issuance of new equity securities
              pursuant
              to a future offering or acquisition;  ·
            Changes in interest
              rates;  ·
            Competitive developments, including
              announcements by competitors of new products or services or significant
              contracts, acquisitions, strategic partnerships, joint ventures or
              capital
              commitments;  ·
            Investor perceptions of us;
              and  ·
            General economic and other national
              conditions.




**Dividend
      Policy**




We
      do not
      expect to declare or pay any further cash dividends on our common stock in
      the
      foreseeable future, and we currently intend to retain future earnings, if any,
      to finance the expansion of our business. The decision whether to pay cash
      dividends on our common stock will be made by our board of directors, in their
      discretion, and will depend on our financial condition, operating results,
      capital requirements and other factors that the board of directors considers
      significant. We paid cash dividends of $0, $2.4 million, and $643,000 for the
      years ended December 31, 2007, 2006, and 2005, respectively.




20





The
      ability of our operating subsidiaries to pay dividends may be restricted due
      to
      the foreign exchange control policies and availability of cash balance of our
      operating subsidiaries. We expect in the future that a substantial portion
      of
      our revenue being earned and currency received may be denominated in Renminbi
      (RMB). RMB is subject to the exchange control regulation in China, and, as
      a
      result, we may unable to distribute any dividends outside of China due to PRC
      exchange control regulations that restrict our ability to convert RMB into
      US
      Dollars.





**Recent
      sales of unregistered securities**





On
      November 13, 2007, we completed a financing transaction with ABN AMRO Bank
      N.V.
      (the “Subscriber”) under Regulation S of the Securities Act of 1933, as amended
      (the “Securities Act”) and issued (i) $8,000,000 Variable Rate Convertible Bonds
      due in 2012 (the “Bonds”) and (ii) 600,000 warrants to purchase an aggregate of
      600,000 shares of our common stock, subject to adjustments for stock splits
      or
      reorganizations as set forth in the warrant, that expire in 2010 (the “Bond
      Warrants”). The Bonds and Bond Warrants were offered and sold to the Subscriber
      in reliance upon exemption from registration pursuant to Regulation S of the
      Securities Act. We complied with the conditions of Rule 903 as promulgated
      under
      the Securities Act including, but not limited to, the following: (i) Subscriber
      is a non-U.S. resident and has not offered or sold their shares in accordance
      with the provisions of Regulation S; (ii) an appropriate legend was affixed
      to
      the securities issued in accordance with Regulation S; (iii) Subscriber has
      represented that it was not acquiring the securities for the account or benefit
      of a U.S. person; and (iv) Subscriber agreed to resell the securities only
      in
      accordance with the provisions of Regulation S, pursuant to a registration
      statement under the Securities Act, or pursuant to an available exemption from
      registration. We will refuse to register any transfer of the shares not made
      in
      accordance with Regulation S, after registration, or under an exemption.





On
      January 23, 2007, pursuant to the terms of the Exchange Agreement entered into
      by and between us, Times Manufacture & E-Commerce Corporation Limited
      (“Times Manufacture”) and the sole shareholder of Times Manufacture, we issued
      19,454,420 shares of common stock to Kwong Kai Shun, the sole shareholder of
      Times Manufacture, in exchange for all of the issued and outstanding securities
      of Times Manufacture. The securities were offered and issued to the sole
      shareholder of Times Manufacture in reliance upon an exemption from registration
      pursuant to Section 4(2) under the Securities Act of 1933, as amended, and
      Rule
      506 promulgated thereunder. Kwong Kai Shun was the principal executive officer
      of Times Manufacture before the Share Exchange and became our principal
      executive officer after the Share Exchange. The sole shareholder of Times
      Manufacture qualified as an accredited investor (as defined by Rule 501 under
      the Securities Act of 1933, as amended).





On
      January 23, 2007, 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 1,749,028 shares of Series A Convertible Preferred
      Stock at $1.29 per share. On February 9, 2007, we conducted a second and final
      closing of the private placement pursuant to which we sold 501,320 shares of
      Series A Convertible Preferred Stock at $1.29 per share. Accordingly, a total
      of
      2,250,348 shares of Series A Convertible Preferred Stock were sold in the
      private placement for an aggregate of $2,902,946 (the “Private Placement”). Each
      share of the Series A Convertible Preferred Stock is convertible into shares
      of
      common stock at a conversion price equal to the purchase price of such shares.
      Upon liquidation, the holders of the Series A Convertible Preferred Stock shall
      receive $1.29 per share of Series A Convertible Preferred Stock then held prior
      to any other distribution or payment made to holders of the common stock. The
      securities were offered and sold to investors in reliance upon exemptions from
      registration pursuant to Section 4(2) under the Securities Act of 1933, as
      amended, and Rule 506 promulgated thereunder. Each of the persons and/or
      entities receiving our securities qualified as an accredited investor (as
      defined by Rule 501 under the Securities Act of 1933, as amended).




21


**Transfer
      Agent**





The
      transfer agent and registrar for our common stock is Corporate Stock Transfer.





**Equity
      Compensation Plan Information**





As
      of
      December 31, 2007, we did not have an equity compensation plan.





**Item
      6. Selected Financial Data**





The
      following selected consolidated statement of operations data for each of the
      years in the five-year period ended December 31, 2007 and the consolidated
      balance sheet data as of year-end for each of the years in the five-year period
      ended December 31, 2007 were derived from the audited consolidated financial
      statements. Such selected financial data should be read in conjunction with
      the
      consolidated financial statements and the notes to the consolidated financial
      statements starting on page F-1 and with Item 7. “Management’s Discussion and
      Analysis of Financial Condition and Results of Operations.”




**Consolidated
                Statement of Operations**
            
            **Years
                Ended December 31,****2007**
            
            **2006**
            
            **2005**
            
            **2004**
            
            **2003*****(in
                thousands, except share and per share
                amounts)***Net
                sales
            
            $
            96,963
            
            $
            81,134
            
            $
            63,078
            
            $
            36,553
            
            $
            33,215Cost
                of sales
            
            
            (83,120
            )
            
            (71,496
            )
            
            (57,026
            )
            
            (34,609
            )
            
            (31,953
            )Gross
                profit
            
            $
            13,843
            
            $
            9,637
            
            $
            6,052
            
            $
            1,944
            
            $
            1,262Otherincome
            
            
            618
            
            
            424
            
            
            939
            
            
            -
            
            
            -Depreciation
            
            
            (332
            )
            
            (326
            )
            
            (259
            )
            
            (126
            )
            
            (18
            )Administrative
                and other operatingexpenses,
                including stock based compensation
            
            
            (4,595
            )
            
            (1,285
            )
            
            (1,436
            )
            
            (1,345
            )
            
            (834
            )Income
                from operations
            
            $
            9,534
            
            $
            8,450
            
            $
            5,296
            
            $
            473
            
            $
            410Fee
                and costs related to reverse merger
            
            
            (741
            )
            
            -
            
            
            -
            
            
            -
            
            
            -Interest
                expense
            
            
            (1,478
            )
            
            (1,060
            )
            
            (515
            )
            
            (165
            )
            
            (115
            )Other
                income
            
            
            233
            
            
            238
            
            
            156
            
            
            28
            
            
            20Income
                before taxes
            
            $
            7,548
            
            $
            7,628
            
            $
            4,937
            
            $
            336
            
            $
            315Income
                taxes
            
            
            (1,978
            )
            
            (1,308
            )
            
            (912
            )
            
            (132
            )
            
            (55
            )Net
                income
            
            $
            5,571
            
            $
            6,320
            
            $
            4,025
            
            $
            204
            
            $
            260Earnings
                per common share:-
                Basic
            
            $
            0.24
            
            $
            0.32
            
            $
            0.21
            
            $
            0.01
            
            $
            0.01-
                Diluted
            
            $
            0.22
            
            $
            0.32
            
            $
            0.21
            
            $
            0.01
            
            $
            0.01Dividends
                declared per common share
            
            $
            -
            
            $
            0.11
            
            $
            0.03
            
            $
            -
            
            $
            -Weighted
                average common shares:-
                Basic
            
            
            22,923,339
            
            
            19,454,420
            
            
            19,454,420
            
            
            19,454,420
            
            
            19,454,420-
                Diluted
            
            
            25,388,026
            
            
            19,454,420
            
            
            19,454,420
            
            
            19,454,420
            
            
            19,454,420




**As
                  of December 31,****Consolidated
                  Balance Sheets**
              
              
              **2007**
              
              
              **2006**
              
              
              **2005**
              
              
              **2004**
              
              
              **2003*****(in
                  thousands)***Current
                  Assets
              
              $
              48,925
              
              $
              21,400
              
              $
              16,648
              
              $
              12,432
              
              $
              4,836Total
                  Assets
              
              
              51,451
              
              
              24,096
              
              
              18,533
              
              
              13,866
              
              
              4,876Current
                  Liabilities
              
              
              24,176
              
              
              15,553
              
              
              13,890
              
              
              12,620
              
              
              3,847Total
                  Liabilities
              
              
              24,578
              
              
              15,585
              
              
              13,890
              
              
              12,620
              
              
              3,847Total
                  Stockholders' Equity
              
              
              26,873
              
              
              8,511
              
              
              4,644
              
              
              1,246
              
              
              1,030


22




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





**Forward-Looking
      Statements**





*The
      following discussion should be read in conjunction with our consolidated
      financial statements and related notes included elsewhere in this report. 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 report are
      qualified by these cautionary statements and there can be no assurance of the
      actual results or developments.*





**Overview**





We
      are a
      distributor of watch movements components used in the manufacture and assembly
      of watches to a wide variety of timepiece manufacturers. There are two
      categories of watch movements, quartz and mechanical. The main parts of an
      analog quartz watch movement are the battery; the oscillator, a piece of quartz
      that vibrates in response to the electric current; the integrated circuit,
      which
      divides the oscillations into seconds; the stepping motor, which drives the
      gear
      train; and the gear train itself, which makes the watch’s hands move. A digital
      watch movement has the same timing components as an analog quartz movement
      but
      has no stepping motor or gear train. To a lesser extent we also distribute
      complete analog-quartz and automatic watches with pricing between $20.00 to
      $50.00. Manufacturing for these watches is currently outsourced to third party
      factories in China.





Our
      core
      customer base consists primarily of large wholesalers, online retailers and
      small and medium-sized watch manufacturers that produce watches primarily for
      sale to customers in Hong Kong and China. To a lesser extent, we design watches
      for manufacturers and exporters of watches and manufacture and distribute
      complete watches primarily to online retailers and internet
      marketers.





We
      are
      mainly engaged in watch movement distribution business in Hong Kong and China
      which accounted for approximately 89% of our revenue for the year ended December
      31, 2007. We have distribution centers and strategically located sales offices
      throughout Hong Kong and the People’s Republic of China (“China” or “PRC”). We
      distribute more than 350 products from over 30 vendors, including such market
      leaders as Citizen Group, Seiko Corporation and Ronda AG, to a base of over
      350
      customers primarily through our direct sales force. As a part and included
      in
      our sale of watch movements, we provide a variety of value-added services,
      including automated inventory management services, integration, design and
      development, management, and support services.





23




**Corporate
      Structure**





We
      were
      incorporated in the State of Delaware on January 3, 2006. We were 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 January 23, 2007, we closed a share exchange transaction (“Share
      Exchange”) pursuant to which we (i) issued 19,454,420 shares of our common stock
      to acquire 100% equity ownership of Times Manufacture & E-Commerce
      Corporation Limited, a British Virgin Islands corporation (“Times Manufacture”),
      which has eight wholly-owned subsidiaries, (ii) assumed the operations of Times
      Manufacture and its subsidiaries, and (iii) changed our name from SRKP 9, Inc.
      to Asia Time Corporation. Times Manufacture also paid an aggregate of $350,000
      to the stockholders of SRKP 9, Inc. Times Manufacture was founded in January
      2002 and is based in Hong Kong.





With
      respect to this discussion, the terms “we” and “our” refer to Asia Time
      Corporation, its 100%-owned subsidiary Times Manufacture Times Manufacture
      and
      its subsidiaries, Times Manufacturing & E-Commerce Corporation Ltd., TME
      Enterprise Ltd., Citibond Design Ltd. and Megamooch Online Ltd., each of which
      is a British Virgin Islands corporation, and the Hong Kong corporate
      subsidiaries Billion Win International Enterprise Ltd., Goldcome Industrial
      Ltd., Citibond Industrial Ltd., and Megamooch International Ltd. Times
      Manufacture was founded in March 2002 and is based in Hong Kong.





In
      2005,
      we re-aligned the structure and business functions of our subsidiaries to
      clearly define the scopes our business objectives in order to strengthen our
      ability to effectively conduct our business operations. Billion Win
      International Enterprise Limited, or Billion Win, is our central sourcing
      component. Billion Win, which is held indirectly through Times Manufacture,
      procures and imports watch movements and distributes them to suppliers, volume
      users in China, and two of our subsidiaries, Goldcome Industrial Limited, or
      Goldcome, and Citibond Industrial Limited, or Citibond. Goldcome mainly focuses
      it distributions to wholesalers and large manufacturers and Citibond focuses
      on
      distributions to small to medium size manufacturers. Megamooch International
      Limited is a complete watch distributor and exporter targeting overseas buyers.
      Another two subsidiaries, TME Enterprise Ltd. and Citibond Design Ltd., are
      responsible for complete watch design for manufacturers and exporters and
      handles large volume watch movement transactions between buyers and sellers
      solely on a commission basis. Megamooch Online Ltd. operations are focused
      on
      complete watch marketing and distribution, with manufacturing being outsourced,
      and its concentrates on overseas markets.





**Watch
      Movement Segment**





Presently,
      Hong Kong does not generally have watch movement manufacturing. Watch movements
      are largely imported from Japan and Switzerland. The revenue for the watch
      movement segment of our business for the year ended December 31, 2007 was $86.4
      million, with a gross profit $8.9 million, a 18.3% and 53.6% growth,
      respectively, compared to $73.0 million revenue and $5.8 million gross profit
      for the year ended December 31, 2006. The gross profit margin increased from
      8.0% for the year ended December 31, 2006 to 10.3% for the year ended December
      31, 2007, primarily due to more diversified products being promoted to customers
      and higher selling prices, which primarily resulted of extended credit terms
      to
      our customers. We provide a wide product spectrum of products carrying major
      brands as well as middle-low end China movements. We believe carrying a wide
      product spectrum enables us to provide a convenient one-stop provider for our
      customers, which may result in higher sales per customer. We began to target
      small to medium manufacturers in mid-2005 and our customer base has expanded
      to
      more than 350 watch manufacturers. In addition, we have extended our credit
      period from an average of 30 days to 60 days to major customers that have
      maintained a history of timely settlement of receivables. We believe that this
      extension lead to an increase of purchase orders from those customers. We review
      the credit status of each customer and periodically adjust the credit period
      to
      specific customers in an attempt to maximize business with each customer without
      suffering significant credit risk.





**Complete
      Watch Segment**





Revenue
      of our complete watch segment was $10.5 million for the year ended December
      31,
      2007, a 30.4% increase compared to the same period in 2006, in which revenue
      was
      $8.1 million. This segment contributed approximately 11% of our revenue in
      2007,
      as compared to 10% of revenue for the year ended December 31, 2006. We believe
      the increase was primarily contributed to our offering of value-added design
      services to our customers at no extra charge. Our main market positioning in
      China is on the middle-class adult, daily, sporty and classy
      design.





24




**Recent
      Events**





***February
      2008 Public Offering***





On
      February 15, 2008, we completed an initial public offering consisting of 963,700
      shares of our common stock. Our sale of common stock, which was sold indirectly
      by us to the public at a price of $3.50 per share, resulted in net proceeds
      of
      approximately $2.7 million. These proceeds were net of underwriting discounts
      and commissions, fees for legal and auditing services, and other offering costs.
      Upon the closing of the initial public offering, we sold to the underwriter
      warrants to purchase up to 83,800 shares of our common stock. The warrants
      are
      exercisable at a per share price of $4.20 and has a term of five
      years.





***January
      2008 Investor Relations Agreement***





In
      addition, on January 16, 2008, we entered into a consulting agreement with
      Public Equity Group Inc. Pursuant to the agreement, Public Equity Group will
      provide us with business consulting and investor relation services, oversee
      of
      all of our investor public relation and related service providers, and monitor
      our investor relation meetings with brokerage firms and brokers to develop
      support for our stock and research coverage, in addition to strategic advice
      and
      other customary investor relation services. The agreement has a term of one
      year, unless terminated earlier with 60-days prior written notice. As
      consideration for entering in the agreement and compensation for Public Equity
      Group’s services under the agreement, we agreed to issue 200,000 shares of our
      common stock to Public Equity Group Inc. In connection with the issuance of
      200,000 shares of common stock, we expect to recognize a one-time charge to
      operations in the first quarter of 2008 in an amount equal to approximately
      $700,000, which is derived from valuing each share at $3.50, which is the
      offering price for our February 2008 public offering.





***November
      2007 Issuance of Bonds and Bond Warrants***




On
      November 13, 2007, we closed a financing transaction under Regulation S with
      ABN
      AMRO Bank N.V. (the “Subscriber”) issuing (i) US $8,000,000 Variable Rate
      Convertible Bonds due 2012 (the “Bonds”) and (ii) warrants to purchase 600,000
      shares of our common stock expiring 2010 (the “Warrants”). The financing
      transaction was completed in accordance with a subscription agreement entered
      into by us and the Subscriber dated October 31, 2007.





US
      $8,000,000 Variable Rate Convertible Bonds





The
      Bonds
      were issued further to a trust deed between us and The Bank of New York, London
      Branch, dated November 13, 2007 (the “Trust Deed”) and are represented by the
      global certificate in the form as set forth in the Trust Deed. The Bonds are
      subject to a paying and conversion agency agreement between us, The Bank of
      New
      York, and The Bank of New York, London Branch. The Bonds were subscribed at
      a
      price equal to 97% of their principal amount, which is the issue price of 100%
      less a 3% commission to the Subscriber. The Terms and Conditions of the Bonds
      (the “Terms”) contained in the Trust Deed, set forth, among other things, the
      following terms:





·
            *Interest*.
                The Bonds bear cash interest from November 13, 2007 at the rate of
                6% per
                annum for the first year after November 13, 2007 and 3% per annum
                thereafter, of the principal amount of the Bonds.




·
            *Conversion*.
                Each Bond is convertible at the option of the holder at any time
                on and
                after 365 days after the date our shares of common stock commence
                trading
                on the American Stock Exchange, which occurred on February 12, 2008
                (the
                “Listing Date”), into shares of our common stock at an initial per share
                conversion price (“Conversion Price”) equal to the price per share at
                which shares are sold in our public offering on the American Stock
                Exchange (“AMEX”), which was $3.50 per share, subject to adjustment
                according to the Terms of the Bonds. No Bonds may be converted after
                the
                close of business on November 13, 2012, or if such Bond is called
                for
                redemption before the maturity date, then up to the close of business
                on a
                date no later than seven business days prior to the date fixed for
                redemption thereof.




25




·
            *Conversion
                Price Adjustments*.
                The number of shares of our common stock to be issued on conversion
                of the
                Bonds will be determined by dividing the principal amount of each
                Bond to
                be converted by the Conversion Price in effect at the conversion
                date. The
                Conversion Price is subject to adjustment in certain events, including
                our
                issuance of additional shares of common stock or rights to purchase
                common
                stock at a per share or per share exercise or conversion price,
                respectively, at less than the applicable Conversion Price of the
                Bonds.
                If for the period of 20 consecutive trading days immediately prior
                to
                November 13, 2009 or September 29, 2012, the Conversion Price for
                the
                Bonds is higher than the average closing price for our shares, then
                the
                Conversion Price will be reset to such average closing price; provided
                that, the Conversion Price will not be reset lower than 70% of the
                then
                existing Conversion Price. In addition, the Trust Deed provides that
                the
                Conversion Price of the Bonds cannot be adjusted to lower than $0.25
                per
                share of common stock (as adjusted for stock splits, stock dividends,
                spin-offs, rights offerings, recapitalizations and similar events).




·
            *Mandatory
                Redemptions*.
                If on or before November 13, 2008, the Bonds, Warrants, and shares
                underlying the Bonds and Warrants are not registered with the Securities
                and Exchange Commission (the “SEC”), the holder of the Bonds can require
                us to redeem the Bonds at 106.09% of their principal amount. Also,
                at any
                time after November 13, 2010, the holders of the Bonds can require
                us to
                redeem the Bonds at 126.51% of their principal amount. We are required
                to
                redeem any outstanding Bonds at 150.87% of its principal amount on
                November 13, 2012.




Warrants
      to Purchase 600,000 Shares of Common Stock





The
      Warrants, which are evidenced by a warrant instrument entered into by and
      between us and the Subscriber, dated November 13, 2007 (the “Warrant
      Instrument”), are subject to the terms of a warrant agency agreement by and
      among us, The Bank of New York and The Bank of New York, London Branch, dated
      November 13, 2007 (the “Warrant Agency Agreement”). Pursuant to the terms and
      conditions of the Warrant Instrument and Warrant Agency Agreement, the Warrants
      are exercisable at $0.0001 per share and terminate on November 13, 2010. We
      listed the shares underlying the Warrants on AMEX. In addition, we have agreed
      to register the shares of common stock underlying the Warrants with the SEC
      on
      or prior to November 13, 2008 and will keep the registration effective until
      30
      days after the Warrants terminate.





Registration
      Rights for Bonds, Warrants, and Underlying Shares





On
      November 13, 2007, we and the Subscriber also entered into a registration rights
      agreement pursuant to which we agreed to register the Bonds and Warrants, and
      the shares of common stock underlying the Bonds and Warrants (the “Registrable
      Securities”). We agreed to prepare and file with the SEC, no later than 90 days
      after the Listing Date, a Registration Statement on Form S-1 (the “Registration
      Statement”) to register the Registrable Securities and, as promptly as possible,
      and in any event no later than 365 days after the Listing Date, cause that
      Registration Statement, as amended, to become effective. In addition, we agreed
      to list all Registrable Securities covered by the Registration Statement on
      each
      securities exchange on which similar securities issued by us are then listed.
      The registration rights agreement does not provide for liquidated or specified
      damages in the event we do not timely register the Registrable
      Securities.





Accounting
      for the Bond and Warrant Transaction





The
      terms
      of Bonds include conversion features allowing the holders to convert the Bonds
      into shares of our common stock. Certain of those conversion features that
      allow
      for the reduction in conversion price upon the occurrence of stated events
      constitute a “beneficial conversion feature” for accounting purposes. In
      addition, we may be required to repurchase the Bonds at the request of the
      holders if certain events occur or do not occur, as set forth in the Bond trust
      deed. Upon the occurrence of any of the events that trigger a mandatory
      redemption, as described above, and we are requested by the holders to
      repurchase all or a portion of the Bonds, we will be required to pay cash to
      redeem all or a portion of the Bonds.





The
      accounting treatment related to the beneficial conversion and mandatory
      redemption features of the Bonds and the value of the Bond Warrants will have
      an
      adverse impact on our results of operations for the term of the Bonds. The
      application of Generally Accepted Accounting Principles will require us to
      allocate $6,107,299 to the beneficial conversion feature of the Bonds and
      $1,652,701 to the Bonds Warrants, which have been reflected in our financial
      statements as an interest discount. Also, we have determined that the total
      redemption premium associated with the mandatory redemption feature of the
      Bonds
      is $4,069,600. All of the aforementioned amounts associated with the beneficial
      conversion and mandatory redemption feature of the Bonds and the value of the
      Bond Warrants are being amortized as additional interest expense over the term
      of the Bonds. This accounting will result in an increase in interest expense
      in
      all reporting periods during the term of the Bonds, and, as a result, reduce
      our
      net income accordingly. For the year ended December 31, 2007, we recorded
      $345,461 in expenses related to the Bonds and Bond Warrants.





26




In
      addition, if we are required to redeem all or any portion of the Bonds, this
      may
      have a material adverse effect on our liquidity and cash resources, and may
      impair our ability to continue to operate. If we are required to repurchase
      all
      or a portion of the Bonds and do not have sufficient cash to make the
      repurchase, we may be required to obtain third party financing to do so, and
      there can be no assurances that we will be able to secure financing in a timely
      manner and on favorable terms, which could have a material adverse effect on
      our
      financial performance, results of operations and stock price.





***January
      2007 Share Exchange and Private Placement***





On
      December 15, 2006, we entered into a share exchange agreement with the sole
      shareholder of Times Manufacture. Pursuant to the share exchange agreement
      (the
      "Exchange Agreement") we agreed to issue shares of our common stock in exchange
      for all of the issued and outstanding securities of Times Manufacture (the
      "Share Exchange"). The Share Exchange closed on January 23, 2007. Upon the
      closing of the Share Exchange and pursuant to the terms of the Exchange
      Agreement, we issued an aggregate of 19,454,420 shares of our common stock
      to
      the sole shareholder of Times Manufacture in exchange for all of the issued
      and
      outstanding securities of Times Manufacture. Times Manufacture also paid an
      aggregate of $350,000 to the stockholders of SRKP 9, Inc. In addition, prior
      to
      the closing of the Share Exchange and the Private Placement, as described below,
      we effectuated a 1.371188519-for-one stock dividend such that there were
      3,702,209 shares of common stock outstanding immediately prior to the Share
      Exchange and Private Placement. We issued no fractional shares in connection
      with the Share Exchange.





On
      January 23, 2007, 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 1,749,028 shares of Series A Convertible Preferred
      Stock at $1.29 per share. On February 9, 2007, we conducted a second and final
      closing of the private placement pursuant to which we sold 501,320 shares of
      Series A Convertible Preferred Stock at $1.29 per share. Accordingly, a total
      of
      2,250,348 shares of Series A Convertible Preferred Stock were sold in the
      private placement for an aggregate gross proceeds of $2,902,946 (the "Private
      Placement"). After commissions and expenses, we received net proceeds of
      approximately $2.3 million in the Private Placement.





We
      agreed
      to and did register the common stock underlying the Series A Convertible
      Preferred Stock sold in the Private Placement. The investors in the Private
      Placement also entered into a lock up agreement pursuant to which they agreed
      not to sell their shares until our common stock began trading on the American
      Stock Exchange, which occurred on February 12, 2008, after which their shares
      will automatically be released from the lock up every 30 days on a pro rata
      over
      a nine month period beginning on the date that is 30 days after listing of
      the
      shares.





In
      connection with the Private Placement, Kwong Kai Shun, our Chairman of the
      Board, Chief Executive Officer and Chief Financial Officer, entered into an
      agreement (the “Escrow Agreement”) with the investors pursuant to which Mr.
      Kwong agreed to place 2,326,000 shares of his common stock in escrow for
      possible distribution to the investors (the "Escrow Shares"). Pursuant to the
      Escrow Agreement, if our net income for 2006 or 2007, subject to specified
      adjustments, as set forth in our filings with the SEC is less than $6.3 million
      or $7.7 million, respectively, a portion, if not all, of the Escrow Shares
      will
      be transferred to the investors based upon our actual net income, if any, for
      such fiscal years. We met these targets. We have accounted for the Escrow Shares
      as the equivalent of a performance-based compensatory stock plan between Mr.
      Kwong and us. Accordingly, during the year ended December 31, 2007, we recorded
      $2,433,650 as a charge to operations to recognize the grant date fair value
      of
      stock-based compensation in conjunction with the Escrow Agreement, as described
      above.





27




**Critical
      Accounting Policies and Estimates**





Financial
      Reporting Release No. 60 recommends that all companies include a discussion
      of
      critical accounting policies used in the preparation of their financial
      statements. The Securities and Exchange Commission (“SEC”) defines critical
      accounting policies as those that are, in management's view, most important
      to
      the portrayal of our financial condition and results of operations and those
      that require significant judgments and estimates.





The
      preparation of these consolidated financial statements requires our management
      to make estimates and assumptions that affect the reported amounts of assets,
      liabilities, revenues and expenses, as well as the disclosure of contingent
      assets and liabilities at the date of our financial statements. We base our
      estimates on historical experience, actuarial valuations and various other
      factors that we believe to be reasonable under the circumstances, the results
      of
      which form the basis for making judgments about the carrying value of assets
      and
      liabilities that are not readily apparent from other sources. Some of those
      judgments can be subjective and complex and, consequently, actual results may
      differ from these estimates under different assumptions or conditions. While
      for
      any given estimate or assumption made by our management there may be other
      estimates or assumptions that are reasonable, we believe that, given the current
      facts and circumstances, it is unlikely that applying any such other reasonable
      estimate or assumption would materially impact the financial statements. The
      accounting principles we utilized in preparing our consolidated financial
      statements conform in all material respects to generally accepted accounting
      principles in the United States of America.





*Impairment
      of long-lived assets*





The
      long-lived assets held and used by us are reviewed for impairment whenever
      events or changes in circumstances indicate that the carrying amount of assets
      may not be recoverable. It is reasonably possible that these assets could become
      impaired as a result of technology or other industry changes. Determination
      of
      recoverability of assets to be held and used is by comparing the carrying amount
      of an asset to future net undiscounted cash flows to be generated by the
      assets.





If
      such
      assets are considered to be impaired, the impairment to be recognized is
      measured by the amount by which the carrying amount of the assets exceeds the
      fair value of the assets. Assets to be disposed of are reported at the lower
      of
      the carrying amount of fair value less costs to sell.





*Inventories*





Inventories
      are stated at the lower of cost or market. Cost is determined on a first-in,
      first-out basis and includes only purchase costs. There are no significant
      freight charges, inspection costs and warehousing costs incurred for any of
      the
      periods presented. In assessing the ultimate realization of inventories,
      management makes judgments as to future demand requirements compared to current
      or committed inventory levels. We have vendor arrangements on the purchase
      of
      watch movements providing for price reduction paid in the form of additional
      watch movements. The percentage of additional movements to be received by us
      from these vendors is estimated and inventory costs are reduced to reflect
      the
      effect of these additional movements on the actual cost of the items in
      inventory. During the years ended December 31, 2007, 2006, and 2005, we did
      not
      make any allowance for slow-moving or defective inventories.





We
      evaluate our inventories for excess, obsolescence or other factors rendering
      inventories as unsellable at normal gross profit margins. Write-downs are
      recorded so that inventories reflect the approximate market value and take
      into
      account our contractual provisions with our suppliers governing price
      protections and stock rotations. Due to the large number of transactions and
      complexity of managing the process around price protections and stock rotations,
      estimates are made regarding the valuation of inventory at market
      value.





In
      addition, assumptions about future demand, market conditions and decisions
      to
      discontinue certain product lines can impact the decision to write-down
      inventories. If assumptions about future demand change and/or actual market
      conditions are different than those projected by management, additional
      write-downs of inventories may be required. In any case, actual results may
      be
      different than those estimated.





28




*Trade
      receivables*





Trade
      and
      other receivables are recognized initially at fair value and subsequently
      measured at amortized cost using the effective interest method, less provision
      for impairment. A provision for impairment of trade and other receivables is
      established when there is objective evidence that we will not be able to collect
      all amounts due according to the original terms of receivables. The amount
      of
      the provision is the difference between the asset’s carrying amount and the
      present value of estimated future cash flows, discounted at the effective
      interest rate. The amount of the provision is recognized in the income
      statement.





*Foreign
      currency translation*





Our
      consolidated financial statements are presented in United States dollars. Our
      functional currency is the Hong Kong Dollar (HKD). Our consolidated financial
      statements are translated into United States dollars from HKD at period-end
      exchange rates as to assets and liabilities and average exchange rates as to
      revenues and expenses. Capital accounts are translated at their historical
      exchange rates when the capital transactions occurred.





*Revenue
      recognition*





Sales
      of
      goods represent the invoiced value of goods, net of sales returns, trade
      discounts and allowances. We recognize revenue when the goods are delivered
      and
      the customer takes ownership and assumes risk of loss, collection of the
      relevant receivable is probable, persuasive evidence of an arrangement exists,
      and the sales price is fixed or determinable. We provide pre- and post- sales
      service to our customers related to inventory management information in order
      to
      facilitate and manage sales to customers. Our integration, design and
      development and management services provide customers with watch design
      assistance, components outsourcing or other project support, and are generally
      completed prior to a sale and do not continue post-delivery. There is no
      requirement that these services be provided for a sale to take place, nor is
      there any objective or reliable evidence of a separate fair value, or if no
      longer offered or ceased to be offered would a right of return be created for
      the goods sold. We believe these services are part of the sales process and
      are
      not a customer deliverable, and are therefore charged to selling expense or
      cost
      of sales, as appropriate.





*Deferred
      income tax*





Deferred
      income tax is provided in full, using the liability method, on temporary
      differences arising between the tax bases of assets and liabilities and their
      carrying amounts in the consolidated financial statements. However, if the
      deferred income tax arises from initial recognition of an asset or liability
      in
      a transaction other than a business combination that at the time of the
      transaction affects neither accounting nor taxable profit or loss, it is not
      accounted for. Deferred income tax is determined using tax rates (and laws)
      that
      have been enacted or substantially enacted by the balance sheet date and are
      expected to apply when the related deferred income tax assets is realized or
      the
      deferred income tax liability is settled.





*Stock-based
      compensation*





Effective
      January 1, 2006, we adopted SFAS No. 123 (revised 2004), “Share-Based Payment”
(“SFAS 123R”), a revision to SFAS No. 123, “Accounting for Stock-Based
      Compensation”. SFAS 123R requires that we measure the cost of employee services
      received in exchange for equity awards based on the grant date fair value of
      the
      awards, with the cost to be recognized as compensation expense in our financial
      statements over the vesting period of the awards. Accordingly, we recognize
      compensation cost for equity-based compensation for all new or modified grants
      issued after December 31, 2005. We account for stock option and warrant grants
      issued and vesting to non-employees in accordance with EITF 96-18, “Accounting
      for Equity Instruments that are Issued to Other Than Employees for Acquiring,
      or
      in Conjunction with Selling, Goods or Services”, and EITF 00-18, “Accounting
      Recognition for Certain Transactions involving Equity Instruments Granted to
      Other Than Employees”, whereas the value of the stock compensation is based upon
      the measurement date as determined at either (a) the date at which a performance
      commitment is reached or (b) at the date at which the necessary performance
      to
      earn the equity instruments is complete.





29




We
      did
      not recognize any stock-based compensation during the years ended December
      31,
      2006, 2005 and 2004. During the year ended December 31, 2007, we recorded
      $2,433,650 as a charge to operations to recognize the grant date fair value
      of
      stock-based compensation in conjunction with the Escrow Agreement, as described
      above.





**Results
      of Operations**





The
      following table sets forth certain items in our statement of operations as
      a
      percentage of net sales for the periods shown:




**Year
                ended December 31,****2007**
            
            
            **2006**
            
            
            **2005**Net
                sales
            
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %Cost
                of sales
            
            
            85.7
            %
            
            88.1
            %
            
            90.4
            %Gross
                profit
            
            
            14.3
            %
            
            11.9
            %
            
            9.6
            %Other
                income
            
            
            0.6
            %
            
            0.5
            %
            
            1.5
            %Depreciation
            
            
            0.3
            %
            
            0.4
            %
            
            0.4
            %Administrative
                and other operatingexpenses,
                including stock-basedcompensation
            
            
            4.7
            %
            
            1.6
            %
            
            2.3
            %Income
                from operations
            
            
            9.9
            %
            
            10.4
            %
            
            8.4
            %Fees
                and costs related to reverse merger
            
            
            0.8
            %
            
            -
            
            
            -Other
                income
            
            
            0.2
            %
            
            0.3
            %
            
            0.2
            %Interest
                expenses
            
            
            1.5
            %
            
            1.3
            %
            
            0.8
            %Income
                before taxes
            
            
            7.8
            %
            
            9.4
            %
            
            7.8
            %Income
                taxes
            
            
            2.0
            %
            
            1.6
            %
            
            1.4
            %Net
                income
            
            
            5.8
            %
            
            7.8
            %
            
            6.4
            %





***Comparison
      of year ended December 31, 2007 (“Fiscal 2007”) with year ended
      December 31, 2006 (“Fiscal 2006”)***





Net
      sales
      for the year ended December 31, 2007 were $97.0 million compared to $81.1
      million for the comparable period in 2006, an increase of 19.5%. This increase
      was primarily due to the increased sales of watch movements and completed
      watches. Net sales of watch movements for the year ended December 31, 2007
      were
      $86.4 million compared to $73.0 million for the comparable period in 2006 an
      increase of 18.3%. The increase was primarily due to an increase of volume
      of
      sales from 97.8 million to 100.3 million pieces, an increase of 2.5%. The
      increase in the volume of movements was primarily due to an increase in sale
      of
      high-end items. Sales of completed watches for the year ended December 31,
      2007
      was $10.5 million compared to $8.1 million for the comparable period in 2005,
      an
      increase of 30.4%. The increase was primarily due to an increase in sales volume
      from 877,600 pieces for Fiscal 2006 compared to 1.2 million pieces for Fiscal
      2007, an increase of 38.2%.





Cost
      of
      sales consists of cost of purchases, net of discounts and returns. Cost of
      sales
      was $83.1 million for the year ended December 31, 2007 as compared to $71.5
      million for the comparable period in 2006. The increase in total dollars was
      attributable to higher costs associated with our products. Our increase in
      revenue was 19.5% and our increase in cost of sales was 16.3% for Fiscal 2007,
      as compared to Fiscal 2006. As a percentage of net sales, cost of sales
      decreased to 85.7% for the year ended December 31, 2007 compared to 88.1% for
      the comparable period in 2006. The decrease as a percentage of net sales was
      attributable to improved economy of scale and more trading volume of watch
      movements.





Gross
      profit for the year ended December 31, 2007 was $13.8 million, or 14.3% of
      net
      sales, compared to $9.6 million, or 11.9% of net sales for the comparable period
      in 2006. Management considers gross profit to be a key performance indicator
      in
      managing our business. Gross profit margins are usually a factor of product
      mix
      and demand for product. The increase of profit margin was primarily attributable
      to a lower cost for the sales resulting from an increase in economies of scale
      and (ii) higher mark-up prices that resulted from extended credit terms that
      we
      offered to our customers. Profit margin of movements as a percentage of net
      sales had increased to 10.3% for the year ended December 31, 2007 as compared
      to
      8.0% of net sales for same period in 2006. There was a slight decrease of profit
      margin for completed watches for the year ended December 31, 2007 to 46.5%
      of
      net sales as compared to 47.2% for the same period in 2006.





30




Other
      income from operations was $617,913or 0.6% of net sales for Fiscal 2007, as
      compared to $424,016, or 0.5% of net sales for Fiscal 2006. The increase in
      other income from operations was attributable to a one-time income of $424,102
      our sale of intangible assets and a rental income of $63,065 in Fiscal 2007,
      which was the rent received from our company-owned properties.





Administrative
      and other operating expenses were $4.6 million, or 4.7% of net sales for Fiscal
      2007, as compared to $1.3 million, or 1.6% of net sales, for Fiscal 2006. The
      increase in amount and as a percentage of net sales was primarily due to the
      recognition of $2,433,650 of stock-based compensation in 2007 related to the
      Escrow Shares provided by our CEO, Kwong Kai Shun, which were subject to the
      achievement of defined annual net income for 2007 pursuant to the Private
      Placement agreement entered into with our investors. The increase was also
      attributable to an increase in professional fees related to reporting
      requirements as a public company and additional employees and upgraded staff
      benefits in the comparable period in 2007. Management considers these expenses
      as a percentage of net sales to be a key performance indicator in managing
      our
      business.





Other
      income from non-operating activities was $233,379, or 0.2% of net sales for
      Fiscal 2007, which was consistent as compared to $237,571, or 0.3% of net sales
      for Fiscal 2006. This income was mainly come from bank deposit interests and
      had
      no significant change over the comparable periods.





Interest
      expense was $1.5 million for Fiscal 2007, as compared to $1.1 million for Fiscal
      2006. The increase was primarily due to the interest and amortization on bonds
      of $345,461 in Fiscal 2007.





Income
      taxes for Fiscal 2007 were $2.0 million, or 2.0% of net sales, as compared
      to
      $1.3 million for Fiscal 2006, or 1.6% of net sales. The increase of effective
      income tax rates from 17.1% for Fiscal 2006 to 19.3% for Fiscal 2007 was
      primarily due to increase in the income not subject to tax by $30,537 and
      increase in expense not deductible by $293,603.




Net
      income for Fiscal 2007 was $5.6 million, compared to net income of $6.3 million
      for Fiscal 2006, representing an 11.1% decrease.





***Comparison
      of year ended December 31, 2006 (“Fiscal 2006”) with year ended
      December 31, 2005 (“Fiscal 2005”)***





Net
      sales
      for the year ended December 31, 2006 were $81.1 million compared to $63.1
      million for the comparable period in 2005, an increase of 28.6%. This increase
      was largely due to the improved sales of watch movements and completed watches.
      Sales of watch movements for the year ended December 31, 2006 were $73.0 million
      compared to $58.8 million for the comparable period in 2005 an increase of
      24.1%. The increase was primary due to the increase of volume from 72.9 million
      to 97.8 million pieces, an increase of 34.2%. Sales of completed watches for
      the
      year ended December 31, 2006 was $8.1 million compared to $4.2 million for
      the
      comparable period in 2005, an increase of 90.9%.





Cost
      of
      sales consists of cost of purchases, net of discounts and returns. Cost of
      sales
      was $71.5 million for the year ended December 31, 2006 as compared to $57.0
      million for the comparable period in 2005. As a percentage of net sales, cost
      of
      sales decreased to 88.1% for the year ended December 31, 2006 compared to 90.4%
      for the comparable period in 2005. The increase in total dollars was
      attributable to higher costs associated with our products and the decrease
      as a
      percentage of net sales was attributable to improved economy of scale and more
      trading volume of watch movements. Our increase in revenue was 28.6% and our
      increase in cost of sales was 25.4% for Fiscal 2006 compared to Fiscal
      2005.





Gross
      profit for the year ended December 31, 2006 were $9.6 million, or 11.9% of
      net
      sales, compared to $6.1 million, or 9.6% of net sales for the comparable period
      in 2005. Management considers gross profit to be a key performance indicator
      in
      managing our business. Gross profit margins are usually a factor of product
      mix
      and demand for product. The increase of profit margin was primarily attributable
      to i) the economies of scale, where we can get a lower cost for the sales,
      and
      ii) the improved profit margin by higher mark-up prices as a result of extended
      credit terms to our customers. Together, the profit margin of movements as
      a
      percentage of net sales had increased to 8.0% for the year ended December 31,
      2006 as compared to 6.4% of net sales for same period in 2005. There was a
      slight decrease of profit margin for completed watches for the year ended
      December 31, 2006 to 47.2% of net sales as compared to 53.8% for the same period
      of 2005. This was primarily due to the increase of sales of basic units in
      2006
      which had a lower profit margin. However, this decrease was offset by the
      increase of profit margin in movement segment, which accounted for 90% of the
      total sales in 2006.





31




Other
      income from operation was $424,016 or 0.5% of net sales for Fiscal 2006, as
      compared to $938,573, or 1.5% of net sales for Fiscal 2005. The decrease in
      income from operation was attributable to the lack of commission income in
      Fiscal 2006 as compared to $771,432 in Fiscal 2005. This was the commission
      received for connecting buyers and sellers in China. The decrease in income
      from
      operation was partially offset by a one time income of $210,594 derived from
      the
      selling of intangible assets and a rental income of $46,284 in Fiscal 2006,
      which was the rent received from our company-owned properties.





Administrative
      and other operating expenses were $1.3 million or 1.6% of net sales for
      Fiscal 2006, as compared to $1.4 million, or 2.3% of net sales, for Fiscal
      2005. The decrease as a percentage of net sales was primarily attributable
      to
      economies of scale. Management considers these expenses as a percentage of
      net
      sales to be a key performance indicator in managing our business.





Other
      income from non-operation was $237,571 or 0.3% of net sales for Fiscal 2006,
      as
      compared to $156,199, or 0.3% of net sales for Fiscal 2005. The increase was
      primarily due to the increase in bank interest, which was $208,854 for Fiscal
      2006 and $76,358 for Fiscal 2005 partially offset by a decrease in other
      interest income of $18,635 and $49,440 for Fiscal 2006 and Fiscal 2005
      respectively.





Interest
      expense increased to $1.1 million for Fiscal 2006, compared to $514,637 for
      Fiscal 2005. This increase is primarily attributable to higher borrowing levels
      to maintain adequate inventory, and higher borrowing rates. Further increases
      in
      borrowing rates would further increase our interest expense, which would have
      a
      negative effect on our results of operations.





Income
      taxes for Fiscal 2006 were $1.3 million, or 1.6% of net sales, as compared
      to
      $911,687 for Fiscal 2005, or 1.4% of net sales. The decrease of effective income
      tax rates from 18.5% for Fiscal 2005 to 17.1% for Fiscal 2006 is primarily
      due
      to increase in income not subject to tax by $30,000 and decrease in unused
      tax
      losses not recognized by $50,000 for Fiscal 2006. Unused tax losses not
      recognized represents valuation allowances established to reduce deferred tax
      assets to the amount expected to be realized.





Net
      income for Fiscal 2006 was $6.3 million, compared to net income of $4.0 million
      for Fiscal 2005.





**Liquidity
      and Capital Resources**





To
      provide liquidity and flexibility in funding our operations, we borrow amounts
      under bank facilities and other external sources of financing. As of December
      31, 2007, we had general banking facilities amounted to $22.2 million for
      overdraft, letter of credit, trust receipt, invoice financing and export loans
      granted by ten banks. Interest on the facilities ranged from minus 2.0 to 0.75%
      over the Bank’s Best Lending Rate of Hong Kong (Prime Rate) or Hong Kong Inter
      Bank Offered Rate (HIBOR). These banking facilities were secured by the
      leasehold properties, time deposits and held-to maturity investments of the
      group and personal guarantees executed by our Chairman of the
      Board.





On
      February 15, 2008, we completed an initial public offering consisting of 963,700
      shares of our common stock. Our sale of common stock, which was sold indirectly
      by us to the public at a price of $3.50 per share, resulted in net proceeds
      of
      approximately $2.7 million. These proceeds were net of underwriting discounts
      and commissions, fees for legal and auditing services, and other offering costs.
      Upon the closing of the initial public offering, we sold to the underwriter
      warrants to purchase up to 83,800 shares of our common stock. The warrants
      are
      exercisable at a per share price of $4.20 and will expire if unexercised after
      five years from the date of issuance.





On
      November 13, 2007, we completed a financing transaction pursuant to which we
      issued $8,000,000 Variable Rate Convertible Bonds that will be due in 2012.
      The
      Bonds were subscribed at a price equal to 97% of their principal amount, which
      is the issue price of 100% less a 3% commission to the Subscriber of the Bonds.
      The Bonds bear cash interest at the rate of 6% per annum for the first year
      after November 13, 2007 and 3% per annum thereafter, of the principal amount
      of
      the Bonds. Each Bond is convertible at the option of the holder at any time
      on
      and after a date that is 365 days after February 12, 2008, which is the date
      that our shares of common stock commence trading on the AMEX, at an initial
      conversion price of $3.50. The conversion price is subject to adjustment in
      certain events, including our issuance of additional shares of common stock
      or
      rights to purchase common stock at a per share or per share exercise or
      conversion price, respectively, at less than the applicable per share conversion
      price of the Bonds. If for the period of 20 consecutive trading days immediately
      prior to November 13, 2009 or September 29, 2012, the conversion price for
      the
      Bonds is higher than the average closing price for the shares, then the
      conversion price will be reset to such average closing price; provided that,
      the
      conversion price will not be reset lower than 70% of the then existing
      conversion price. In connection with the issuance of the Bonds, we also issued
      to the Subscriber warrants to purchase 600,000 shares of our common stock.
      The
      warrants were subscribed at a price of $0.0001 per warrant, are exercisable
      at
      $0.0001 per share, and terminate on November 13, 2010.





32




On
      January 23, 2007, 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 1,749,028 shares of Series A Convertible Preferred
      Stock at $1.29 per share. On February 9, 2007, we conducted a second and final
      closing of the private placement pursuant to which we sold 501,320 shares of
      Series A Convertible Preferred Stock at $1.29 per share. Accordingly, a total
      of
      2,250,348 shares of Series A Convertible Preferred Stock were sold in the
      private placement for an aggregate gross proceeds of $2,902,946 (the “Private
      Placement”). After commissions and expenses, we received net proceeds of
      approximately $2.3 million in the Private Placement.




For
      the
      year ended December 31, 2007, net cash used by operating activities was $8.1
      million, as compared to net cash provided in operating activities of $190,906
      in
      Fiscal 2006 and net cash used in operating activities of $445,644 in Fiscal
      2005. The increase in net cash used by operating activities in Fiscal 2007
      was
      attributable to an increase in (i) cash used for accounts receivable of $6.2
      million for Fiscal 2007 as compared to $3.4 million for Fiscal 2006, (ii)
      prepaid expenses and other receivables of $5.6 million for Fiscal 2007 as
      compared to $1.7 million for Fiscal 2006, (iii) inventories of $6.1 million
      for
      Fiscal 2007 as compared to $50,990 for Fiscal 2006 and (iv) income taxes payable
      of $1.1 million for Fiscal 2007 as compared to $701,921 for Fiscal 2006;
      partially offset by an increase in net income of 5.6 million for Fiscal 2007
      as
      compared to $6.3 million for Fiscal 2006 and an adjustment of $2.4 million
      to
      reconcile the net income for the stock-based compensation related to the Escrow
      Shares. The increase in cash used for accounts receivable was primarily
      attributable to the extended aging and an increase in net sales of 19.5% for
      Fiscal 2007 as compared to Fiscal 2006. The increase in cash used for prepaid
      expenses and other receivables was primarily attributable to an increase in
      deposit paid from $1.5 million for Fiscal 2006 to $5.8 million for Fiscal 2007,
      and the deposit for a potential acquisition of plant facilities, but no
      acquisition has been completed as of the date of this report. The increase
      in
      inventories was due to an expected increase in demand of watch movements in
      the
      first quarter of 2008, in addition to an anticipated increase in sales of
      mechanical movements, which require a higher inventory level than quartz
      movements. The increase in income tax was due to the increase in net income,
      and
      the increase in net income was due to the improved profit margin of movements
      segment as a result of improved economies of scale and increased selling
      price.





Net
      cash
      provided in investing activities was $163,398 for the year ended December 31,
      2007, as compared to net cash used in investing activities of $859,823 for
      Fiscal 2006. The net cash provided in investing activities in Fiscal 2007 was
      due to the proceeds from disposal of intangible assets of $589,893, partially
      offset by the cash used in acquisition of manufacturing facilities for the
      completed watches segment. The net cash used in investing activities in Fiscal
      2006 reflected the acquisition of two properties for an aggregate of $618,025,
      which were pledged for banking facilities and the acquisition of manufacturing
      facilities for the completed watches segment, partially offset by the disposal
      of an intangible asset of $300,849 and disposal of equipment of $2,031. The
      net
      cash used in investing activities in Fiscal 2005 was due to the acquisition
      of a
      property of $330,884 and a held-to-maturity investment fund that were pledged
      for banking facilities, and the acquisition of plant and equipment of $243,504
      and acquisition of furniture and fixtures.





33




Net
      cash
      provided by financing activities was $13.9 million for the year ended December
      31, 2007 as compared to $204,116 and $1.2 million for the comparable period
      in
      2006 and 2005, respectively. The increase in net cash provided by financing
      activities in Fiscal 2007 was due to (i) the proceeds from issuance of Series
      A
      Convertible Preferred Stock of $2.6 million, (ii) the issuance of convertible
      bonds of $7.8 million, (iii) proceeds from new short-term bank loans of $5.4
      million , and (iv) net advancement of other bank borrowings of 6.6 million,
      partially offset by repayment of short-term bank loans $4.6 million and an
      increase in restricted cash of $3.7 million as deposit to facilitate the bank
      loans. The decrease in net cash provided by financing activities in Fiscal
      2006
      was attributable to dividends paid of $2.45 million as compared to $642,848
      in
      Fiscal 2005. The bank borrowing for Fiscal 2005 was increased to $10 million
      as
      compared to $7.4 million for Fiscal 2004.





For
      Fiscal year 2007, 2006 and 2005, our inventory turnover was 8.9, 10.8 and 10.8
      times, respectively. In 2005 and 2006 the turnover ratio is almost the same
      at
      10.8 times. The turnover ratio decrease in Fiscal 2007 as the order delivery
      cycle time of our supplies has shortened, possibly allowing us to keep a lower
      stock level with a decreased risk of stock shortages. The average days
      outstanding of our accounts receivable at December 31, 2007 were 42 days, as
      compared to 29 days and 24 days at December 31, 2006 and 2005. The increase
      in
      accounts receivable was due to the change in credit policy since 2005 where
      credit terms of up to 60 days were given to customers who had good credit
      history in order to improve our profit margin and competitiveness.





In
      an
      attempt to reduce our reliance on third-party watch movement manufacturers,
      we
      have plans to manufacture our own brands of quartz movements and mechanical
      movements in-house. To manufacture our own brands of quartz and mechanical
      movements in-house, we would need to acquire watch movement facilities in China
      and invest in new equipment and research and development. We expect that up
      to
      $5.5 million will be required to obtain the equipment and facilities to
      manufacture branded proprietary watch movements. Our plan to acquire
      manufacturing facilities and equipment to manufacture our own brand of quartz
      and mechanical movements in-house is still underway and we have identified
      certain targets for negotiations and will disclose in due course. We also have
      plans to expand our operation and sales force in China in 2008. Currently,
      we
      are looking for opportunities to establish our retail network in China through
      teaming up with fashion, apparel or accessories chain stores in China to market
      our completed watches in China. We may be required to raise the appropriate
      amount of capital needed for our future operations from future equity sales
      or
      through debt financings. Failure to obtain funding when needed may force us
      to
      delay, reduce, or eliminate our plans to manufacture our own watch movement
      parts. We may not be able to obtain additional financial resources when
      necessary or on terms favorable to us, if at all, and any available additional
      financing may not be adequate. Moreover, new equity securities issued in
      financings, including any shares of Series A Convertible Preferred Stock or
      any
      new series of preferred stock authorized by our Board of Directors, may have
      greater rights, preferences or privileges than our existing common stock. To
      the
      extent stock is issued or options and warrants are exercised, holders of our
      common stock will experience further dilution.





Based
      on
      our current plans, we believe that cash on hand, cash flow from operations
      and
      funds available under our bank facilities will be sufficient to fund our capital
      needs for the next 12 months. However, 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




**Off-Balance
      Sheet Arrangements**





Other
      than the Escrow Agreement and Escrow Shares, as described above, we do not
      have
      any off-balance sheet debt, nor do we have any transactions, arrangements or
      relationships with any special purpose entities.





**Contractual
      Obligations**





Other
      than those commitments and obligations being entered into in the normal course
      of business, we do not have any additional, material capital commitments and
      obligations due to other parties.





**Inflation
      and Seasonality**





Inflation
      and seasonality have not had a significant impact on our operations during
      the
      last two fiscal years.





**New
      Accounting Pronouncements**




In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurement” (“SFAS
      157”). SFAS 157 defines fair value, establishes a framework for measuring fair
      value, and expands disclosures about fair value measurements. SFAS 157 is
      effective for financial statements issued for fiscal years beginning after
      November 15, 2007, and interim periods within those fiscal years. Earlier
      application is encouraged, provided that the reporting entity has not yet issued
      financial statements for that fiscal year, including any financial statements
      for an interim period within that fiscal year. The provisions of this statement
      should be applied prospectively as of the beginning of the fiscal year in which
      this statement is initially applied, except in some circumstances where the
      statement shall be applied retrospectively. We are currently evaluating the
      effect, if any, of SFAS 157 on our financial statements. Management currently
      does not believe the adoption of SFAS 157 will have a material impact on our
      consolidated financial statements.




35




On
      February 15, 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities — Including an Amendment of SFAS No.
      115” (“SFAS 159”). The fair value option established by SFAS 159 permits all
      entities to choose to measure eligible items at fair value at specified election
      dates. A business entity will report unrealized gains and losses on items for
      which the fair value option has been elected in earnings (or another performance
      indicator if the business entity does not report earnings) at each subsequent
      reporting date. The fair value option: (a) may be applied instrument by
      instrument, with a few exceptions, such as investments otherwise accounted
      for
      by the equity method; (b) is irrevocable (unless a new election date occurs);
      and (c) is applied only to entire instruments and not to portions of
      instruments. SFAS 159 is effective as of the beginning of an entity’s first
      fiscal year that begins after November 15, 2007. Early adoption is permitted
      as
      of the beginning of the previous fiscal year provided that the entity makes
      that
      choice in the first 120 days of that fiscal year and also elects to apply the
      provisions of SFAS 157. We have not chosen to early adopt this statement.
      Management currently does not believe the adoption of SFAS 159 will have a
      material impact on our consolidated financial statements.





In
      December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (“SFAS
      141(R)”), which requires an acquirer to measure the identifiable assets
      acquired, the liabilities assumed, and any noncontrolling interest in the
      acquiree at their fair values on the acquisition date, with goodwill being
      the
      excess value over the net identifiable assets acquired. SFAS 141(R) is effective
      for financial statements issued for fiscal years beginning after December 15,
      2008. Early adoption is prohibited. We do not anticipate that the adoption
      of
      the above standards will have a material impact on our current or future
      consolidated financial statements.





In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements” (“SFAS 160”), which clarifies that a
      noncontrolling interest in a subsidiary should be reported as equity in the
      consolidated financial statements. The calculation of earnings per share will
      continue to be based on income amounts attributable to the parent. SFAS 160
      is
      effective for financial statements issued for fiscal years beginning after
      December 15, 2008. Early adoption is prohibited. The Company does not anticipate
      that the adoption of the above standards will have a material impact on it
      current or future consolidated financial statements.





**Item
      7A. Quantitative and Qualitative Disclosures about Market
      Risk**





*Credit
      Risk.* **** We
      are
      exposed to credit risk from our cash at bank, fixed deposits and contract
      receivables. The credit risk on cash at bank and fixed deposits is limited
      because the counterparts are recognized financial institutions. Contract
      receivables are subject to credit evaluations. As we are getting more new
      customers and offering credit terms, financial efficiency, we believe that
      cash
      flow and controlling bad debt and late payment become more and more important.
      We carry out thorough research through public filing records available on our
      new customers, coupled with the employment of business intelligence information
      provider, before extending any credit to new customers. Different levels of
      credit periods and credit limits are granted to different customers according
      to
      their size, financial position, business position and payment history, among
      other factors, in order to offer the right credit terms to our customers to
      enhance competitiveness yet manage the risk. We have not recorded bad debt
      since
      inception.





*Foreign
      Currency Risk.* **** The
      functional currency of our company is the Hong Kong Dollar (HKD). In the future,
      we expect Renminbi (RMB) also to be a functional currency. Substantially all
      of
      our operations are conducted in the PRC. Our sales and purchases are conducted
      within the PRC in HKD and in the future will include RMB. 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 its
      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 its operations in the PRC. In addition, the RMB is not freely convertible
      into foreign currency and all foreign exchange transactions must take place
      through authorized institutions.




36




*Country
      Risk.* **** The
      substantial portion of our business, assets and operations are located and
      conducted in Hong Kong and China. While these economies have 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
      Hong Kong and 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
      8.  Financial Statements and Supplementary Data**





The
      information required by this Item 8 is incorporated by reference to the
      Financial Statements of Asia Time Corporation beginning at page F-1 of this
      Form
      10-K.





**Item
      9. Changes in and Disagreements With Accountants on Accounting and Financial
      Disclosure**





Not
      applicable.





**Item
      9A. Controls and Procedures**





*Evaluation
      of disclosure controls and procedures*





As
      of
      December 31, 2007, our sole executive officer, who is our Chief Executive
      Officer (CEO) and our Chief Financial Officer (CFO), performed an evaluation
      of
      the effectiveness of and the operation of our disclosure controls and procedures
      as defined in Rule
      13a-15 (e)
      or Rule
      15d-15 (e)
      under
      the Exchange Act. Based on that evaluation, our CEO/CFO concluded that our
      disclosure controls and procedure as of December 31, 2007 had significant
      deficiencies that caused our controls and procedures to be ineffective. These
      deficiencies consisted of inadequate staffing and supervision that could lead
      to
      the untimely identification and resolution of accounting and disclosure matters
      and failure to perform timely and effective reviews. In addition, there are
      deficiencies in the recording and classification of accounting transactions
      and
      a lack of personnel with expertise in US generally accepted accounting
      principles and US Securities and Exchange Commission rules and
      regulations.





We
      are in
      the process of improving our controls and procedures in an effort to remediate
      these deficiencies through improving supervision, education, and training of
      our
      accounting staff. We have hired two third-party financial consultants to review
      and analyze our financial statements and assist us improve our reporting of
      financial information. Our management and Board of Directors, with assistance
      from outside financial consultants, conducted a review and analysis of our
      accounting treatment for (i) our inventory by adjusting watch movement costing
      for the effects of vendor incentives from an as received basis to an accrual
      basis, (ii) the share exchange transaction that we conducted in January 2007,
      (iii) stock-based compensation related to an escrow agreement that our CEO/CFO
      entered into with investors in our January 2007 private placement. Based on
      the
      review, we concluded that we misapplied accounting principles generally accepted
      in the United States of America and we restated our financial statements for
      the
      periods over the past two years.





Management
      intends to seek additional qualified in house accounting personnel, such as
      a
      chief financial officer, or third-party accounting personnel to ensure that
      management will have adequate resources in order to attain complete reporting
      of
      financial information disclosures in a timely matter. We believe that the
      remedial steps that we take will address the conditions identified by our
      CEO/CFO as significant deficiencies in our disclosure controls and procedures.
      Additional effort is needed to fully remedy these deficiencies and we are
      continuing our efforts to improve and strengthen our control processes and
      procedures. We
      also intend to engage outside consultants to assist us in assessing and
      improving our internal controls and procedures. We
      believe that the remedial steps that we take will address the conditions
      identified by our CEO/CFO as significant deficiencies in our disclosure controls
      and procedures. We will continue to monitor the effectiveness of these new
      internal policies. Our CEO/CFO believes that there are no material inaccuracies,
      or omissions of material facts necessary to make the statements not misleading
      in light of the circumstances in which they were made, in this Form
      10-K.





37




*Management’s
      Annual Report on Internal Control over Financial Reporting* .





Our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting (as defined in Rule 13a-15(f) under the
      Exchange Act). Our internal control over financial reporting is a process
      designed to provide reasonable assurance regarding the reliability of financial
      reporting and the preparation of financial statements for external purposes
      of
      accounting principles generally accepted in the United States.





Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements. Therefore, even those systems determined to
      be
      effective can provide only reasonable assurance of achieving their control
      objectives.





Our
      management, with the participation of our CEO/CFO, evaluated the effectiveness
      of our internal control over financial reporting as of December 31, 2007. In
      making this assessment, our management used the criteria set forth by the
      Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
      Internal Control — Integrated Framework. Based on this evaluation, our
      management, with the participation of CEO/CFO, concluded that, as of December
      31, 2007, our internal control over financial reporting was
      effective.





This
      annual report does not include an attestation report of the Company’s registered
      public accounting firm regarding internal control over financial reporting.
      Management’s report was not subject to attestation by the company’s registered
      public accounting firm pursuant to temporary rules of the Securities and
      Exchange Commission that permit the company to provide only management’s report
      in this annual report.




*Changes
      in internal control over financial reporting*




There
      have been no changes in our internal control over financial reporting identified
      in connection with the evaluation required by Rule 13a-15(d) or Rule 15d-15(d)
      under the Exchange Act that occurred during the quarter ended December 31,
      2007
      that have materially affected, or are reasonably likely to materially affect,
      our internal control over financial reporting.





**Item
      9B. Other Information**





None.




38


**PART
      III**





**Item
      10. Directors, Executive Officers and Corporate Governance**





The
      information required by this Item 10 is incorporated by reference from our
      definitive proxy statement on Schedule 14A which will be filed before the end
      of
      the 120-day period immediately following the end of our 2007 fiscal year, or,
      if
      our definitive proxy statement is not filed within that time, the information
      will be filed as part of an amendment to this Annual Report on Form 10-K/A,
      not
      later than the end of the 120-day period.





**Item
      11. Executive Compensation**





The
      information required by this Item 11 is incorporated by reference from our
      definitive proxy statement on Schedule 14A which will be filed before the end
      of
      the 120-day period immediately following the end of our 2007 fiscal year, or,
      if
      our definitive proxy statement is not filed within that time, the information
      will be filed as part of an amendment to this Annual Report on Form 10-K/A,
      not
      later than the end of the 120-day period.





**Item
      12. Security Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters**





The
      information required by this Item 12 is incorporated by reference from our
      definitive proxy statement on Schedule 14A which will be filed before the end
      of
      the 120-day period immediately following the end of our 2007 fiscal year, or,
      if
      our definitive proxy statement is not filed within that time, the information
      will be filed as part of an amendment to this Annual Report on Form 10-K/A,
      not
      later than the end of the 120-day period.





**Item
      13. Certain Relationships and Related Transactions, and Director
      Independence**





The
      information required by this Item 13 is incorporated by reference from our
      definitive proxy statement on Schedule 14A which will be filed before the end
      of
      the 120-day period immediately following the end of our 2007 fiscal year, or,
      if
      our definitive proxy statement is not filed within that time, the information
      will be filed as part of an amendment to this Annual Report on Form 10-K/A,
      not
      later than the end of the 120-day period.





**Item
      14. Principal Accounting Fees and Services**





The
      information required by this Item 14 is incorporated by reference from our
      definitive proxy statement on Schedule 14A which will be filed before the end
      of
      the 120-day period immediately following the end of our 2007 fiscal year, or,
      if
      our definitive proxy statement is not filed within that time, the information
      will be filed as part of an amendment to this Annual Report on Form 10-K/A,
      not
      later than the end of the 120-day period.





**PART
      IV**


**Item
      15. Exhibits, Financial Statement Schedules**





1.
      Financial Statements: See “Index to Consolidated Financial Statements” in Part
      II, Item 8 of this Annual Report on Form 10-K.





2.
      Financial Statement Schedule: Not applicable.





3.
      Exhibits: The exhibits listed in the accompanying “Exhibit Index” are filed or
      incorporated by reference as part of this Form 10-K.




39


**SIGNATURES**




Pursuant
      to the requirements of Section 13 or 15(d) 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, in the city of Kowloon, Hong Kong,
      on March 31, 2008.




**Asia
              Time
              Corporation**/s/
              Kwong Kai
              ShunKwong Kai Shun
              Chief Executive Officer, Chief Financial Officer
                and
              Chairman of the
                Board




Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons on behalf of the registrant and in the
      capacities and on the dates indicated.





SIGNATURE
            
            TITLE
            
            DATE/s/
                Kwong Kai Shun
            
            Chief
                Executive Officer, Chief Financial Officer and Chairman of the Board
            
            March
                31, 2008Kwong
                Kai Shun
            
            (Principal
              Executive
              Officer; Principal Financial and Accounting Officer)/s/
                Michael Mak
            
            Director
                and Corporate Secretary
            
            March
                31, 2008Michael
                Mak/s/
                Lee Siu Po
            
            Director
            
            March
                31, 2008Lee
                Siu Po/s/
                  Dr. Leung Ching Wah
            
            Director
            
            March
                31, 2008Dr.
                Leung Ching WahDirectorWu
                Hok Lun


40


**EXHIBIT
      INDEX**








**Exhibit
                No.**
            ****
            **Exhibit
                Description**2.1
            
            Share
                Exchange Agreement, dated as of December 15, 2006, by and among the
                Registrant, Kwong Kai Shun and Times Manufacture & E-Commerce
                Corporation, Limited (incorporated by reference from Exhibit 2.1
                to
                Current Report on Form 8-K filed with the Securities and Exchange
                Commission on January 29, 2007).3.1
            
            Certificate
                of Incorporation (incorporated by reference from Exhibit 3.1 to the
                Registration Statement on Form 10-SB (File No. 000-51981) filed with
                the
                Securities and Exchange Commission on May 5, 2006).3.2
            
            Bylaws
                (incorporated by reference from Exhibit 3.2 to the Registration Statement
                on Form 10-SB (File No. 000-51981) filed with the Securities and
                Exchange
                Commission on May 5, 2006).3.3
            
            Articles
                of Merger Effecting Name Change (incorporated by reference from Exhibit
                3.3 to Current Report on Form 8-K filed with the Securities and Exchange
                Commission on January 29, 2007).3.4
            
            Certificate
                Of Designations, Preferences And Rights Of Series A Convertible Preferred
                Stock (incorporated by reference from Exhibit 3.4 to Current Report
                on
                Form 8-K filed with the Securities and Exchange Commission on January
                29,
                2007).4.1
            
            Specimen
                Certificate of Common Stock (incorporated by reference to Exhibit
                4.1 of
                the Registrant's Registration Statement on Form SB-2 filed August
                20,
                2004).4.2
            
            Trust
                Deed, dated November 13, 2007, by and between the Registrant and
                The Bank
                of New York, London Branch (incorporated by reference to Exhibit
                4.1 to
                the Current Report on Form 8-K filed with the Securities and Exchange
                Commission on November 16, 2007).4.3
            
            Paying
                and Conversion Agency Agreement, dated November 13, 2007, by and
                among the
                Registrant, The Bank of New York, and The Bank of New York, London
                Branch
                (incorporated by reference to Exhibit 4.2 to the Current Report on
                Form
                8-K filed with the Securities and Exchange Commission on November
                16,
                2007).4.4
            
            Warrant
                Instrument, dated November 13, 2007, by and between the Registrant
                and ABN
                AMRO Bank N.V. (incorporated by reference to Exhibit 4.3 to the Current
                Report on Form 8-K filed with the Securities and Exchange Commission
                on
                November 16, 2007).4.5
            
            Warrant
                Agency Agreement, dated November 13, 2007 among the Registrant, The
                Bank
                of New York and The Bank of New York, London Branch (incorporated
                by
                reference to Exhibit 4.4 to the Current Report on Form 8-K filed
                with the
                Securities and Exchange Commission on November 16,
                2007).4.6
            
            Registration
                Rights Agreement, dated November 13, 2007, by and between the Registrant
                and ABN AMRO Bank N.V. (incorporated by reference to Exhibit 4.5
                to the
                Current Report on Form 8-K filed with the Securities and Exchange
                Commission on November 16, 2007).10.1
            
            Form
                of Subscription Agreement dated as of January 23, 2007 and February
                9,
                2007 (incorporated by reference from Exhibit 10.1 to Current Report
                on
                Form 8-K filed with the Securities and Exchange Commission on February
                13,
                2007).10.1(a)
            
            Form
                of Amendment No. 1 dated as of July 20, 2007 to Subscription Agreement
                (incorporated by reference from Exhibit 10.1(a) to Registration Statement
                on Form S-1 filed with the Securities and Exchange Commission on
                December
                18, 2007).10.1(b)
            
            Form
                of Amendment No. 2 dated as of December 16, 2007 to Subscription
                Agreement
                (incorporated by reference from Exhibit 10.1(b) to Registration Statement
                on Form S-1 filed with the Securities and Exchange Commission on
                December
                18, 2007, 2008).10.2
            
            Form
                of Agreement between Kwong Kai Shun and Investors of Series A Convertible
                Preferred Stock (incorporated by reference from Exhibit 10.2 to
                Registration Statement on Form S-1 filed with the Securities and
                Exchange
                Commission on September 26, 2007).10.2(a)
            
            Amendment
                No. 1 to Agreement between Kwong Kai Shun and Investors of Series
                A
                Convertible Preferred Stock, dated June 30, 2007 (incorporated by
                reference to Exhibit 10.2(a) of the Registration Statement on Form
                S-1
                filed with the Securities and Exchange Commission on September 26,
                2007).




41




10.2(b)
            
            Form
                of Amendment No. 2 to Agreement between Kwong Kai Shun and Investors
                of
                Series A Convertible Preferred Stock (incorporated by reference to
                Exhibit
                10.2(b) of the Registration Statement on Form S-1 filed with the
                Securities and Exchange Commission on December 18,
                2007).10.3
            
            Subscription
                Agreement, dated October 31, 2007, by and between the Registrant
                and ABN
                AMRO Bank N.V. (incorporated by reference to Exhibit 10.3 to the
                Current
                Report on Form 8-K filed with the Securities and Exchange Commission
                on
                November 16, 2007).10.4
            
            Registration
                Rights Agreement dated January 23, 2007 entered into by and between
                the
                Registrant and Affiliates of WestPark Capital, Inc. (incorporated
                by
                reference to Exhibit 10.4 of the Registration Statement on Form S-1
                filed
                with the Securities and Exchange Commission on December 18,
                2007).21.1
            
            List
                of Subsidiaries (incorporated by reference from Exhibit 21.1 to Current
                Report on Form 8-K filed with the Securities and Exchange Commission
                on
                January 29, 2007).31.1
            
            Certification
                of Chief Executive Officer and 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*
            
            Certifications
                of Chief Executive 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.




42




**ASIA
      TIME CORPORATION**


**(FORMERLY
      SRKP 9, INC.)**





**CONSOLIDATED
      FINANCIAL STATEMENTS**





**INDEX
      TO CONSOLIDATED FINANCIAL STATEMENTS**


PAGEReport
                  of Independent Registered Public Accounting Firm
              
              
              F-2Consolidated
                  Balance Sheets
              
              
              F-3Consolidated
                  Statements of Operations
              
              
              F-5Consolidated
                  Statements of Stockholders’ Equity
              
              
              F-6Consolidated
                  Statements of Cash Flows
              
              
              F-7Notes
                  to Consolidated Financial Statements
              
              
              F-9





F-1




**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**





To
      the
      Board of Directors and Stockholders of


Asia
      Time
      Corporation


(Formerly
      SRKP 9, Inc.)





We
      have
      audited the accompanying consolidated balance sheets of Asia Time Corporation
      (the “Company”) and its subsidiaries (collectively referred to as the “Group”)
      as of December 31, 2007 and 2006, and the related consolidated statements of
      operations, stockholders’ equity and cash flows for the years ended December 31,
      2007, 2006 and 2005. These consolidated financial statements are the
      responsibility of the Company’s management. Our responsibility is to express an
      opinion on these consolidated financial statements based on our
      audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audits provide a
      reasonable basis for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the consolidated financial position of the Company
      and
      its subsidiaries as of December 31, 2007 and 2006, and the consolidated results
      of their operations and their cash flows for the years ended December 31, 2007,
      2006 and 2005, in conformity with accounting principles generally accepted
      in
      the United States of America.








Dominic
      K.F. Chan & Co


Certified
      Public Accountants


Hong
      Kong


March
      20,
      2008




F-2


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





CONSOLIDATED
      BALANCE SHEETS


(Stated
      in US Dollars)





***At
                December 31,***Notes
            
            ***2007***
            
            ***2006******$***
            
            ***$*****ASSETS**Current
                Assets :Cash
                and cash equivalents
            
            
            
            
            
            6,258,119
            
            
            316,621Restricted
                cash
            
            
            
            
            
            8,248,879
            
            
            4,523,679Accounts
                receivable
            
            
            
            
            
            14,341,989
            
            
            8,188,985Prepaid
                expenses and other receivables
            
            
            *7*
            
            
            7,704,999
            
            
            2,101,133Tax
                prepayment
            
            
            
            
            
            -
            
            
            767Inventories,
                net
            
            
            *8*
            
            
            12,370,970
            
            
            6,246,185Prepaid
                lease payments
            
            
            
            
            
            -
            
            
            22,958Total
                Current Assets
            
            
            
            
            
            48,924,956
            
            
            21,400,328Deferred
                tax assets
            
            
            *6*
            
            
            29,929
            
            
            14,042Property
                and equipment, net
            
            
            *9*
            
            
            1,891,709
            
            
            890,258Leasehold
                lands
            
            
            *10*
            
            
            -
            
            
            895,322Held-to-maturity
                investments
            
            
            *11*
            
            
            300,231
            
            
            301,196Intangible
                assets
            
            
            *12*
            
            
            48,012
            
            
            337,836Restricted
                cash
            
            
            
            
            
            256,476
            
            
            257,301**TOTAL
                ASSETS**
            
            
            
            
            
            51,451,313
            
            
            24,096,283**LIABILITIES
                AND STOCKHOLDERS’ EQUITY****LIABILITIES**Current
                Liabilities :Accounts
                payable
            
            
            
            
            
            1,310,809
            
            
            770,360Other
                payables and accrued liabilities
            
            
            *13*
            
            
            132,507
            
            
            190,358Income
                taxes payable
            
            
            
            
            
            2,293,887
            
            
            1,387,571Bank
                borrowings
            
            
            *15*
            
            
            20,438,479
            
            
            13,205,167Total
                Current Liabilities
            
            
            
            
            
            24,175,682
            
            
            15,553,456Convertible
                bond payables
            
            
            *16*
            
            
            345,461
            
            
            -Deferred
                tax liabilities
            
            
            *6*
            
            
            56,953
            
            
            31,711**TOTAL
                LIABILITIES**
            
            
            
            
            
            24,578,096
            
            
            15,585,167**COMMITMENTS
                AND CONTINGENCIES**
            
            
            *20*





F-3


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





CONSOLIDATED
      BALANCE SHEETS *(Cont’d)*


(Stated
      in US Dollars)




***At
                December 31,***Notes
            
            ***2007***
            
            ***2006******$***
            
            ***$*****STOCKHOLDERS’
                EQUITY**Preferred
                stock
            
            
            *17*Par
                value: US$0.0001Authorized:
                2007 - 10,000,000 sharesIssued
                and outstanding: 2007 - 2,250,348 issued(2006
                - none)
            
            
            
            
            
            225
            
            
            -Common
                stock
            
            
            *17*Par
                value: US$0.0001Authorized:
                100,000,000 sharesIssued
                and outstanding: 2007 - 23,156,629 shares(2006
                - 19,454,420 shares)
            
            
            
            
            
            2,316
            
            
            1,946Additional
                paid-in capital
            
            
            
            
            
            13,481,036
            
            
            654,298Accumulated
                other comprehensive income
            
            
            
            
            
            (28,404
            )
            
            7,470Retained
                earnings
            
            
            
            
            
            13,418,044
            
            
            7,847,402**TOTAL
                STOCKHOLDERS’ EQUITY**
            
            
            
            
            
            26,873,217
            
            
            8,511,116**TOTAL
                LIABILITIES AND STOCKHOLDERS’ EQUITY**
            
            
            
            
            
            51,451,313
            
            
            24,096,283




See
      notes
      to consolidated financial statements




F-4


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





CONSOLIDATED
      STATEMENT OF OPERATIONS


(Stated
      in US Dollars)





***Year
                ended December 31,****Notes*
            
            ***2007***
            
            ***2006***
            
            ***2005******$***
            
            ***$***
            
            ***$***Net
                sales
            
            
            
            
            
            96,962,693
            
            
            81,134,275
            
            
            63,078,409Cost
                of sales
            
            
            *21*
            
            
            (83,119,825
            )
            
            (71,496,801
            )
            
            (57,026,036
            )Gross
                profit
            
            
            
            
            
            13,842,868
            
            
            9,637,474
            
            
            6,052,373Other
                operating income
            
            
            *3*
            
            
            617,913
            
            
            424,016
            
            
            938,573Depreciation
            
            
            
            
            
            (332,153
            )
            
            (325,995
            )
            
            (259,127
            )Administrative
                and other operating expenses
            
            
            
            
            
            (4,595,126
            )
            
            (1,284,863
            )
            
            (1,436,069
            )Income
                from operations
            
            
            
            
            
            9,533,502
            
            
            8,450,632
            
            
            5,295,750Fees
                and costs related to reverse merger
            
            
            
            
            
            (741,197
            )
            
            -
            
            
            -Non-operating
                income
            
            
            *4*
            
            
            233,379
            
            
            237,571
            
            
            156,199Interest
                expenses
            
            
            *5*
            
            
            (1,477,514
            )
            
            (1,060,536
            )
            
            (514,637
            )Income
                before taxes
            
            
            
            
            
            7,548,170
            
            
            7,627,667
            
            
            4,937,312Income
                taxes
            
            
            *6*
            
            
            (1,977,528
            )
            
            (1,307,728
            )
            
            (911,687
            )Net
                income
            
            
            
            
            
            5,570,642
            
            
            6,319,939
            
            
            4,025,625Earnings
                per share of common stock-
                Basic
            
            
            
            
            
            0.24
            
            
            0.32
            
            
            0.21-
                Diluted
            
            
            
            
            
            0.22
            
            
            0.32
            
            
            0.21Weighted
                average shares of common stock-
                Basic
            
            
            
            
            
            22,923,339
            
            
            19,454,420
            
            
            19,454,420-
                Diluted
            
            
            
            
            
            25,388,026
            
            
            19,454,420
            
            
            19,454,420




See
      notes
      to consolidated financial statements.




F-5


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





CONSOLIDATED
      STATEMENT OF STOCKHOLDERS’ EQUITY


(Stated
      in US Dollars)




***Accumulated******Additional***
              
              ***other******Preferred
                  stock***
              
              ***Common
                  stock***
              
              ***paid-in***
              
              ***comprehensive***
              
              ***Retained******Shares***
              
              ***Amount***
              
              ***Shares***
              
              ***Amount***
              
              ***capital***
              
              ***income***
              
              ***earnings***
              
              ***Total******$***
              
              
              
              ***$***
              
              ***$***
              
              ***$***
              
              ***$***
              
              ***$***Balance,
                  January 1, 2005
              
              
              -
              
              
              -
              
              
              19,454,420
              
              
              1,946
              
              
              652,488
              
              
              412
              
              
              591,059
              
              
              1,245,905Issuance
                  of shares*(Note
                  1)*
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              30,000
              
              
              -
              
              
              -
              
              
              30,000Restructuring*(Note
                  1)*
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (28,190
              )
              
              -
              
              
              -
              
              
              (28,190
              )Comprehensive
                  incomeNet
                  income
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              4,025,625
              
              
              4,025,625Foreign
                  currency translationadjustments
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              13,137
              
              
              -
              
              
              13,137Total
                  comprehensive income
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              13,137
              
              
              4,025,625
              
              
              4,038,762Dividends
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (642,848
              )
              
              (642,848
              )Balance,
                  December 31, 2005
              
              
              -
              
              
              -
              
              
              19,454,420
              
              
              1,946
              
              
              654,298
              
              
              13,549
              
              
              3,973,836
              
              
              4,643,629Comprehensive
                  incomeNet
                  income
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              6,319,939
              
              
              6,319,939Foreign
                  currency translationadjustments
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (6,079
              )
              
              -
              
              
              (6,079
              )Total
                  comprehensive income
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (6,079
              )
              
              6,319,939
              
              
              6,313,860Dividends
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (2,446,373
              )
              
              (2,446,373
              )Balance,
                  December 31, 2006
              
              
              -
              
              
              -
              
              
              19,454,420
              
              
              1,946
              
              
              654,298
              
              
              7,470
              
              
              7,847,402
              
              
              8,511,116Originally
                  issued on Jan. 3, 2006; deemed issued on Jan. 23, 2007 for reverse
                  merger
                  purposes
              
              
              -
              
              
              -
              
              
              2,700,000
              
              
              270
              
              
              (270
              )
              
              -
              
              
              -
              
              
              -Issued
                  in connection with 1.371188519 - for-1 retroactive stock
                  split
              
              
              -
              
              
              -
              
              
              1,002,209
              
              
              100
              
              
              (100
              )
              
              -
              
              
              -
              
              
              -Adjustment
                  to SRKP 9 accountsto
                  reflect reverse merger
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (7,999
              )
              
              -
              
              
              -
              
              
              (7,999
              )Gross
                  proceeds from shares sold in offering - initial closing
              
              
              1,749,028
              
              
              175
              
              
              -
              
              
              -
              
              
              2,053,009
              
              
              -
              
              
              -
              
              
              2,053,184Gross
                  proceeds from shares sold in offering - final closing
              
              
              501,320
              
              
              50
              
              
              -
              
              
              -
              
              
              588,448
              
              
              -
              
              
              -
              
              
              588,498Stock
                  based compensation
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              2,433,650
              
              
              -
              
              
              -
              
              
              2,433,650Stock
                  warrants & conversion feature(Note
                  16)
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              7,760,000
              
              
              -
              
              
              -
              
              
              7,760,000Comprehensive
                  incomeNet
                  income
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              5,570,642
              
              
              5,570,642Foreign
                      currency translationadjustments
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (35,874
              )
              
              -
              
              
              (35,874
              )Total
                  comprehensive income
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (35,874
              )
              
              5,570,642
              
              
              5,542,238Balance,
                  December 31, 2007
              
              
              2,250,348
              
              
              225
              
              
              23,156,629
              
              
              2,316
              
              
              13,481,036
              
              
              (28,404
              )
              
              13,418,044
              
              
              26,873,217





See
      notes
      to consolidated financial statements.




F-6




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





CONSOLIDATED
      STATEMENTS OF CASH FLOWS


(Stated
      in US Dollars)


***Year
                  ended December 31,******2007***
              
              ***2006***
              
              ***2005******$***
              
              ***$***
              
              ***$*****Cash
                  flows from operating activities**Net
                  income
              
              
              5,570,642
              
              
              6,319,939
              
              
              4,025,625Adjustments
                  to reconcile net income to net cash(used
                  in) provided by operating activities :Stock
                  based compensation
              
              
              2,433,650
              
              
              -
              
              
              -Amortization
                  of bond discount and bond interest
              
              
              345,461
              
              
              -
              
              
              -Amortization
                  of intangible assets
              
              
              123,977
              
              
              154,436
              
              
              154,438Amortization
                  of leasehold lands
              
              
              -
              
              
              23,247
              
              
              7,968Depreciation
              
              
              332,153
              
              
              325,995
              
              
              259,127Loss
                  on disposal of plant and equipment
              
              
              5,411
              
              
              7,715
              
              
              -Gain
                  on disposal of intangible assets
              
              
              (425,256
              )
              
              (210,594
              )
              
              -Income
                  taxes
              
              
              1,977,528
              
              
              1,307,728
              
              
              911,687Changes
                  in operating assets and liabilities :Accounts
                  receivable
              
              
              (6,176,551
              )
              
              (3,369,347
              )
              
              (1,445,937
              )Prepaid
                  expenses and other receivables
              
              
              (5,583,145
              )
              
              (1,706,789
              )
              
              334,759Inventories
              
              
              (6,142,119
              )
              
              50,990
              
              
              (2,421,140
              )Accounts
                  payable
              
              
              542,798
              
              
              (462,658
              )
              
              (573,017
              )Other
                  payables and accrued liabilities
              
              
              (57,206
              )
              
              45,445
              
              
              103,007Income
                  taxes payable
              
              
              (1,056,985
              )
              
              (701,921
              )
              
              (199,079
              )Unearned
                  revenue
              
              
              —
              
              
              (1,593,280
              )
              
              (1,603,082
              )Net
                  cash flows (used in) provided by operating activities
              
              
              (8,109,642
              )
              
              190,906
              
              
              (445,644
              )**Cash
                  flows from investing activities**Acquisition
                  of leasehold lands
              
              
              -
              
              
              (618,025
              )
              
              (330,884
              )Acquisition
                  of held-to-maturity investments
              
              
              -
              
              
              -
              
              
              (301,007
              )Acquisition
                  of property and equipment
              
              
              (426,815
              )
              
              (544,678
              )
              
              (243,504
              )Proceeds
                  from disposal of property and equipment
              
              
              320
              
              
              2,031
              
              
              -Proceeds
                  from disposal of intangible assets
              
              
              589,893
              
              
              300,849
              
              
              -Net
                  cash flows provided by (used in) investing activities
              
              
              163,398
              
              
              (859,823
              )
              
              (875,395
              )**Cash
                  flows from financing activities**Proceeds
                  from insurance of series A convertible preferred stock
              
              
              2,641,682
              
              
              -
              
              
              -Issuance
                  of convertible bonds
              
              
              7,760,000
              
              
              -
              
              
              -Proceeds
                  from new short-term bank loans
              
              
              5,368,934
              
              
              1,700,622
              
              
              346,622Repayment
                  of short-term bank loans
              
              
              (4,636,670
              )
              
              (525,535
              )
              
              (408,211
              )Net
                  advancement of other bank borrowings
              
              
              6,561,682
              
              
              1,789,269
              
              
              2,946,182Increase
                  in restricted cash
              
              
              (3,738,065
              )
              
              (484,997
              )
              
              (755,170
              )(Decrease)
                  increase in bank overdrafts
              
              
              (21,484
              )
              
              199,893
              
              
              (250,997
              )Advance
                  from a related party
              
              
              (33,000
              )
              
              (28,763
              )
              
              (60,511
              )Dividends
                  paid
              
              
              -
              
              
              (2,446,373
              )
              
              (642,848
              )Net
                  cash flows provided by financing activities
              
              
              13,903,079
              
              
              204,116
              
              
              1,175,067


F-7


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





CONSOLIDATED
      STATEMENTS OF CASH FLOWS *(Cont’d)*





(Stated
      in US Dollars)





***Year
                ended December 31,******2007***
            
            ***2006***
            
            ***2005******$***
            
            ***$***
            
            ***$***Net
                increase (decrease) in cash and cash equivalents
            
            
            5,956,835
            
            
            (464,801
            )
            
            (145,972
            )Effect
                of foreign currency translation on cash and cash
                equivalents
            
            
            (15,337
            )
            
            1,332
            
            
            14,575Cash
                and cash equivalents - beginning of year
            
            
            316,621
            
            
            780,090
            
            
            911,487Cash
                and cash equivalents - end of year
            
            
            6,258,119
            
            
            316,621
            
            
            780,090Supplemental
                disclosures for cash flow information :Cash
                paid for :Interest
            
            
            1,197,386
            
            
            1,060,536
            
            
            514,637Income
                taxes
            
            
            1,056,985
            
            
            701,921
            
            
            199,079





See
      notes
      to consolidated financial statements.




F-8


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)





**1.**
            **Organization
                and nature of operations**





Asia
      Time
      Corporation (the “Company”), formerly SRKP 9, Inc., was incorporated in the
      State of Delaware on January 3, 2006. Effective January 23, 2007, the Company
      changed its name from SRKP 9, Inc. to Asia Time Corporation.




Recapitalization





The
      Company entered into an Exchange Agreement dated December 15, 2006 (the
“Exchange Agreement”) with Times Manufacture & E-Commerce Corporation
      Limited, a British Virgin Islands corporation (“Times Manufacture”), and Kwong
      Kai Shun, the sole shareholder of Times Manufacture (“Original Shareholder”).
      The closing of the Exchange Agreement occurred on January 23, 2007.





The
      Company effected a 1.371188519-for-one stock reverse split in the course of
      the
      share exchange process such that there were 3,702,209 shares of common stock
      outstanding immediately prior to the closing of the Exchange Agreement. These
      financial statements give retroactive effect to this share split.





At
      the
      closing of the Exchange Agreement, the Company acquired all of the capital
      shares of Times Manufacture from the Original Shareholder, in exchange for
      which
      the Company issued 19,454,420 shares of its Common Stock to the Original
      Shareholder. The 19,454,420 shares of common stock issued to the Original
      Shareholder in conjunction with this transaction have been presented as
      outstanding for all periods presented.





The
      Original Shareholder of Times Manufacture acquired 84% of the Company’s issued
      and outstanding common stock in conjunction with the completion of the Exchange
      Agreement. Therefore, although Times Manufacture became the Company’s
      wholly-owned subsidiary, the transaction was accounted for as a recapitalization
      in the form of a reverse merger of Times Manufacture, whereby Times Manufacture
      was deemed to be the accounting acquirer and was deemed to have retroactively
      adopted the capital structure of SRKP 9, Inc. Since the transaction was
      accounted for as a reverse merger, the accompanying consolidated financial
      statements reflect the historical consolidated financial statements of Times
      Manufacture for all periods presented, and do not include the historical
      financial statements of SRKP 9, Inc. All costs associated with the reverse
      merger transaction were expensed as incurred.





The
      Company agreed to register the 1,999,192 shares of common stock that were held
      by certain of the Company’s shareholders immediately prior to the closing of the
      Exchange Agreement. If the Company fails to register 1,999,192 shares due to
      failure on the part of the Company, additional shares of its common stock shall
      be issued to the respective shareholders in the amount of 0.0333% of their
      respective shares for each calendar day until the registration becomes
      effective. There is no maximum potential consideration to be transferred in
      connection with the registration of these shares. The Company agreed to file
      a
      registration statement no later than the tenth day after the end of the six
      month period that immediately follows the filing date of the initial
      registration statement (the "Required Filing Date"). The Company agreed to
      use





F-9




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)





**1.**
            **Organization
                and nature of operations*****(Cont’d)***





reasonable
      best efforts to cause such registration statement to become effective within
      120
      days after the Required Filing Date or the actual filing date, whichever is
      earlier, or 150 days after the Required Filing Date or the actual filing date,
      whichever is earlier, if the registration statement is subject to a full review
      by the Securities and Exchange Commission (“SEC”). In addition, the Company
      agreed to use its reasonable best efforts to maintain the registration statement
      effective for a period of 24 months at the Company's expense.





Restructuring





For
      the
      purpose of the reverse takeover transaction (“RTO”), the companies comprising
      the group underwent a restructuring in December 2005 (the “Restructuring”), and
      the Company acquired all of the outstanding and issued shares of common stock
      of
      its subsidiaries (including Times Manufacturing & E-Commerce Corporation
      Limited (“TMEHK”), Billion Win International Enterprise Limited (“BW”), Citibond
      Industrial Limited (“CI”), Goldcome Industrial Limited (“GI”) and Megamooch
      International Limited (“MI”)) from their then existing stockholders in
      consideration for the issuance of 20,000 shares with a designated value of
      $1.00
      of the company’s voting common stock, representing 99.99% of the voting power in
      the company.





Before
      acquisition of TME HK group, TME HK acquired all of the outstanding and issued
      shares of common stock of its subsidiaries (including BW, CI, GI and MI) from
      their then existing stockholders in consideration for the issuance of 10,000
      shares with a designated value of $1.00 of TME HK’s voting common
      stock.




Corporate
      Structure - Before Restructuring





pagef9




F-10


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)





**1.**
            **Organization
                and nature of operations*****(Cont’d)***





Corporate
      Structure - After Restructuring




pagef10




Description
      of business





The
      Company and its subsidiaries (together, the “Group”) are engaged in sales to
      distributors of completed watches and watch components.





**Name
                of company**
            
            **Place
                and date of incorporation**
            
            **Issued
                and fully paid capital**
            
            **Principal
                activities**Times
                Manufacture & E-Commerce Corporation Ltd
            
            British
                Virgin Islands
              March
                21, 2002
            
            US$20,002
              Ordinary
            
            Investment
                holdingTimes
                Manufacturing & E-Commerce Corporation Ltd
              (“TME
                HK”)
            
            British
                Virgin Islands
              January
                2, 2002
            
            US$20,000
              Ordinary
            
            Investment
                holdingBillion
                Win International Enterprise Ltd (“BW”)
            
            Hong
                Kong
              March
                5, 2001
            
            HK$5,000,000
              Ordinary
            
            Trading
                of watch componentsGoldcome
                Industrial Ltd (“GI”)
            
            Hong
                Kong
              March
                2, 2001
            
            HK$10,000
              Ordinary
            
            Trading
                of watch componentsCitibond
                Industrial Ltd (“CI”)
            
            Hong
                Kong
              February
                28, 2003
            
            HK$1,000
              Ordinary
            
            Trading
                of watch componentsMegamooch
                International Ltd (“MI”)
            
            Hong
                Kong
              April
                2, 2001
            
            HK$100
              Ordinary
            
            Trading
                of watches and watch componentsTME
                Enterprise Ltd
            
            British
                Virgin Islands
              November
                28, 2003
            
            US$2
              Ordinary
            
            Investment
                holdingCitibond
                Design Ltd
            
            British
                Virgin Islands
              August
                1, 2003
            
            US$2
              Ordinary
            
            InactiveMegamooch
                Online Ltd
            
            British
                Virgin Islands
              June
                6, 2003
            
            US$2
              Ordinary
            
            Trading
                of watches and watch components




F-11




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)


**2.**
              **Summary
                  of significant accounting
                  policies**





The
      accompanying consolidated financial statements have been prepared in accordance
      with U.S. generally accepted accounting principles (“U.S. GAAP”).





Principle
      of Consolidation





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





Use
      of
      estimates





The
      preparation of the consolidated financial statements in conformity with U.S.
      generally accepted accounting principles requires management of the Group to
      make a number of estimates and assumptions relating to the reported amounts
      of
      assets and liabilities and the disclosure of contingent assets and liabilities
      at the date of the consolidated financial statements and the reported amounts
      of
      revenues and expenses during the period. Significant items subject to such
      estimates and assumptions include the recoverability of the carrying amount
      of
      property and equipment, intangible assets; the collectibility of accounts
      receivable; the realizability of deferred tax assets; the realizability of
      inventories; and amounts recorded for contingencies. These estimates are often
      based on complex judgments and assumptions that management believes to be
      reasonable but are inherently uncertain and unpredictable. Actual results may
      differ from those estimates.





Concentrations
      of credit risk





Financial
      instruments that potentially subject the Group to significant concentrations
      of
      credit risk consist principally of accounts receivable. The Group extends credit
      based on an evaluation of the customer’s financial condition, generally without
      requiring collateral or other security. In order to minimize the credit risk,
      the management of the Group has delegated a team responsibility for
      determination of credit limits, credit approvals and other monitoring procedures
      to ensure that follow-up action is taken to recover overdue debts. Further,
      the
      Group reviews the recoverable amount of each individual trade debt at each
      balance sheet date to ensure that adequate impairment losses are made for
      irrecoverable amounts. In this regard, the directors of the Group consider
      that
      the Group’s credit risk is significantly reduced.





Restricted
      cash





Certain
      cash balances are held as security for short-term bank borrowings and are
      classified as restricted cash in the Company’s balance sheets.





F-12


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)




**2.**
            **Summary
                of significant accounting policies*****(Cont’d)***





Accounts
      receivable





Accounts
      receivable are stated at original amount less an allowance made for doubtful
      receivables, if any, based on a review of all outstanding amounts at the year
      end. An allowance is also made when there is objective evidence that the Group
      will not be able to collect all amounts due according to the original terms
      of
      the receivables. Bad debts are written off when identified. The Group extends
      unsecured credit to customers in the normal course of business and believes
      all
      accounts receivable in excess of the allowances for doubtful receivables to
      be
      fully collectible. The Group does not accrue interest on trade accounts
      receivable.





The
      Group
      has a credit policy in place and the exposure to credit risk is monitored on
      an
      ongoing basis credit evaluations are preferred on all customers requiring credit
      over a certain amount.





During
      the years ended December 31, 2007, 2006 and 2005, the Group did not experience
      any bad debts and, accordingly, did not make any allowance for doubtful
      debts.





Inventories





Inventories
      are stated at the lower of cost or market. Cost is determined on a first-in,
      first-out basis and includes only purchase costs. There are no significant
      freight charges, inspection costs and warehousing costs incurred for any of
      the
      periods presented. In assessing the ultimate realization of inventories,
      management makes judgments as to future demand requirements compared to current
      or committed inventory levels. The Company has vendor arrangements on the
      purchase of watch movements providing for price reduction paid in the form
      of
      additional watch movements. The percentage of additional movements to be
      received by the Company from these vendors is estimated and inventory costs
      are
      reduced to reflect the effect of these additional movements on the actual cost
      of the items in inventory. During the years ended December 31, 2007, 2006 and
      2005, the Company did not make any allowance for slow-moving or defective
      inventories.





Leasehold
      lands





Leasehold
      lands, representing upfront payment for land use rights, are capitalized at
      their acquisition cost and amortized using the straight-line method over the
      lease terms.





F-13





ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)




**2.**
            **Summary
                of significant accounting policies*****(Cont’d)***





Intangible
      assets





Intangible
      assets with limited useful lives are stated at cost less accumulated
      amortization and accumulated impairment losses.





Amortization
      of intangible assets is provided using the straight-line method over their
      estimated useful lives as follows:





Trademarks
            
            
            20
            %Websites
            
            
            20
            %





Held-to-maturity
      investments





The
      Company’s policies for investments in debt and equity securities are as
      follows:





Non-derivative
      financial assets with fixed or determinable payments and fixed maturities that
      the company has the positive ability and intention to hold to maturity are
      classified as held-to-maturity securities. Held-to-maturity securities are
      initially recognized in the balance sheet at fair value plus transaction costs.
      Subsequently, they are stated in the balance sheet at amortized cost using
      the
      effective interest method less any identified impairment losses.




Investments
      are recognized/derecognized on the date the Company commits to  purchase/sell
      the investments or they expire.





Property
      and equipment





Property
      and equipment are stated at cost less accumulated depreciation.





Depreciation
      of property and equipment is provided using the straight-line method over their
      estimated useful lives as follows:-





Land
                and buildings
            
            
            over
                the unexpired lease termFurniture
                and fixtures
            
            
            20
                - 25
            %Office
                equipment
            
            
            25
                - 33
            %Machinery
                and equipment
            
            
            25
                - 33
            %Moulds
            
            
            33
            %Motor
                vehicles
            
            
            25
                - 33
            %





F-14


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)





**2.**
            **Summary
                of significant accounting policies*****(Cont’d)***





Property
      and equipment *(Cont’d)*





Property
      and equipment, and intangible assets subject to amortization are reviewed for
      impairment whenever events or changes in circumstances indicate that the
      carrying amount of an asset may not be recoverable. Recoverability of assets
      to
      be held and used is measured by a comparison of the carrying amount of an asset
      to estimated undiscounted future cash flows expected to be generated by the
      asset. If the carrying amount of an asset exceeds its estimated future cash
      flows, an impairment charge is recognized by the amount by which the carrying
      amount of the asset exceeds the fair value of the asset. Assets to be disposed
      of are separately presented in the balance sheet and reported at the lower
      of
      the carrying amount or fair value less costs to sell, and are no longer
      depreciated.





Revenue
      recognition




Sales
      of
      goods represent the invoiced value of goods, net of sales returns, trade
      discounts and allowances.




The
      Company recognizes revenue when the goods are delivered and the customer takes
      ownership and assumes risk of loss, collection of the relevant receivable is
      probable, persuasive evidence of an arrangement exists, and the sales price
      is
      fixed or determinable. The Company provides pre and post sales service to its
      customers related to inventory management information in order to facilitate
      and
      manage sales to customers. By providing such services to keep track of
      customers’ inventory levels, the Company can manage and replenish inventory
      levels on a timely basis. The Company’s integration, design and development and
      management services provide customers with watch design assistance, components
      outsourcing or other project support, and are generally completed prior to
      a
      sale and do not continue post-delivery. There is no requirement that these
      services be provided for a sale to take place, nor is there any objective or
      reliable evidence of a separate fair value, or if no longer offered or ceased
      to
      be offered would a right of return be created for the goods sold. The Company
      believes these services are part of the sales process and are not a customer
      deliverable, and are therefore charged to selling expense or cost of sales,
      as
      appropriate.





Advertising
      and promotion expenses





Advertising
      and promotion expenses are charged to expense as incurred.





For
      the
      year ended December 31, 2007, no advertising and promotion expenses were
      incurred.





Advertising
      and promotion expenses amounted to $2,502 and $19,718 during 2006 and 2005,
      respectively, and are included in administrative and other operating expenses.





F-15




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)





**2.**
            **Summary
                of significant accounting policies*****(Cont’d)***





Income
      taxes





Income
      taxes are accounted for under the asset and liability method. Deferred tax
      assets and liabilities are recognized for the future tax consequences
      attributable to differences between the financial statement carrying amounts
      of
      existing assets and liabilities and their respective tax bases and operating
      loss and tax credit carry forwards. Deferred tax assets and liabilities are
      measured using enacted tax rates expected to apply to taxable income in the
      years in which those temporary differences are expected to be recovered or
      settled. The effect on deferred tax assets and liabilities of a change in tax
      rates is recognized in income in the period that includes the enactment date.





In
      June
      2006, the FASB issued FASB Interpretation No. 48, *Accounting
      for Uncertainty in Income Taxes, an interpretation of Statement of Financial
      Accounting Standards No. 109* (“FIN
      48”). FIN 48 clarifies the accounting for uncertainty in tax positions. This
      interpretation requires that an entity recognizes in the consolidated financial
      statements the impact of a tax position, if that position is more likely than
      not of being sustained upon examination, based on the technical merits of the
      position. The adoption of FIN 48 did not have any impact on the Group’s results
      of operations or financial condition for the year ended December 31, 2007.
      As of
      the date of the adoption of FIN 48, the Group has no material unrecognized
      tax
      benefit which would favorably affect the effective income tax rate in future
      periods. The Group has elected to classify interest and penalties related to
      unrecognized tax benefits, if and when required, as part of income tax expense
      in the consolidated statements of operations.





Comprehensive
      income





Other
      comprehensive income refers to revenues, expenses, gains and losses that under
      U.S. GAAP are included in comprehensive income but are excluded from net income
      as these amounts are recorded as a component of stockholders’ equity. The
      Company’s other comprehensive income represented foreign currency translation
      adjustments.





Foreign
      currency translation





The
      functional currency of the Group is Hong Kong dollars (“HK$”). The Group
      maintains its financial statements in 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 exchanges
      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 for the respective periods.





F-16


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)





**2.**
            **Summary
                of significant accounting policies*****(Cont’d)***





Foreign
      currency translation





For
      financial reporting purposes, the financial statements of the Group which are
      prepared using the functional currency have been translated into United States
      dollars. Assets and liabilities are translated at the exchange rates at the
      balance sheet dates and revenue and expenses are translated at the average
      exchange rates and stockholders’ equity is translated at historical exchange
      rates. Any translation adjustments resulting are not included in determining
      net
      income but are included in foreign exchange adjustment to other comprehensive
      income, a component of stockholders’ equity.





2007
            
            2006
            
            2005Year
                end HK$ : US$ exchange rate
            
            
            7.7980
            
            
            7.7730
            
            
            7.7535Average
                yearly HK$ : US$ exchange rate
            
            
            7.8014
            
            
            7.7783
            
            
            7.7778




Fair
      value of financial instruments





The
      carrying values of the Group’s financial instruments, including cash and cash
      equivalents, restricted cash, trade and other receivables, deposits, trade
      and
      other payables approximate their fair values due to the short-term maturity
      of
      such instruments. The carrying amounts of borrowings approximate their fair
      values because the applicable interest rates approximate current market
      rates.




F-17


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)





**2.**
            **Summary
                of significant accounting policies*****(Cont’d)***





Basic
      and diluted earnings per share





The
      Company computes earnings per share (“EPS’) in accordance with Statement of
      Financial Accounting Standards No. 128, “Earnings per Share” (“SFAS No. 128”),
      and SEC Staff Accounting Bulletin No. 98 (“SAB 98”). SFAS No. 128
      requires companies with complex capital structures to present basic and diluted
      EPS. Basic EPS is measured as the income or loss available to common
      shareholders divided by the weighted average common shares outstanding for
      the
      period. Diluted EPS is similar to basic EPS but presents the dilutive effect
      on
      a per share basis of potential common shares (e.g., convertible securities,
      options, and warrants) as if they had been converted at the beginning of the
      periods presented, or issuance date, if later. Potential common shares that
      have
      an anti-dilutive effect (i.e., those that increase income per share or decrease
      loss per share) are excluded from the calculation of diluted EPS.





The
      calculation of diluted weighted average common shares outstanding for the year
      ended December 31, 2007 is based on the estimate fair value of the Company’s
      common stock during such periods applied to warrants and options using the
      treasury stock method to determine if they are dilutive. The Convertible Bond
      is
      included on an “as converted “basis when these shares are dilutive.





The
      following tables are a reconciliation of the weighted average shares used in
      the
      computation of basic and diluted earnings per share for the periods
      presented:





**2007**
            
            **2006**
            
            **2005*****$***
            
            ***$***
            
            ***$***Numerator
                for basic and diluted earnings per share:Net
                income
            
            
            5,570,642
            
            
            6,319,939
            
            
            4,025,625Denominator:Basic
                weighted average shares
            
            
            22,923,339
            
            
            19,454,420
            
            
            19,454420Effect
                of dilutive securities
            
            
            2,464,687
            
            
            -
            
            
            -Diluted
                weighted average shares
            
            
            25,388,026
            
            
            19,454,420
            
            
            19,454,420Basic
                earnings per share:
            
            
            0.24
            
            
            0.32
            
            
            0.21Diluted
                earnings per share:
            
            
            0.22
            
            
            0.32
            
            
            0.21




F-18


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)





**2.**
            **Summary
                of significant accounting policies*****(Cont’d)***





Comparative
      amounts





Certain
      amounts included in the prior years consolidated financial statements have
      been
      reclassified to conform to the current year’s presentation. These
      reclassifications had no effect on reported total assets, liabilities,
      shareholders’ equity, or net income.





Interest
      rate risk





The
      Group
      is exposed to interest rate risk arising from short-term variable rate
      borrowings from time to time. The Group’s future interest expense will fluctuate
      in line with any change in borrowing rates. The Group does not have any
      derivative financial instruments as of December 31, 2007 and 2006 and
      believes its exposure to interest rate risk is not material.





Stock-Based
      Compensation




Effective
      January 1, 2006, the Company adopted SFAS No. 123 (revised 2004), “Share-Based
      Payment” (“SFAS 123R”), a revision to SFAS No. 123, “Accounting for Stock-Based
      Compensation”. SFAS 123R requires that the Company measure the cost of employee
      services received in exchange for equity awards based on the grant date fair
      value of the awards, with the cost to be recognized as compensation expense
      in
      the Company’s financial statements over the vesting period of the awards.
      Accordingly, the Company recognizes compensation cost for equity-based
      compensation for all new or modified grants issued after December 31, 2005.
      The
      Company did not have equity awards outstanding at December 31,
      2005.





The
      Company accounts for stock option and warrant grants issued and vesting to
      non-employees in accordance with EITF 96-18, “Accounting for Equity Instruments
      that are Issued to Other Than Employees for Acquiring, or in Conjunction with
      Selling, Goods or Services”, and EITF 00-18, “Accounting Recognition for Certain
      Transactions involving Equity Instruments Granted to Other Than Employees”,
      whereas the value of the stock compensation is based upon the measurement date
      as determined at either (a) the date at which a performance commitment is
      reached or (b) at the date at which the necessary performance to earn the equity
      instruments is complete.





The
      Company did not recognize any stock-based compensation during the years ended
      December 31, 2006 and 2005. During the year ended December 31, 2007, the Company
      recorded $2,433,650 as a charge to operations to recognize the grant date fair
      value of stock-based compensation in conjunction with the Escrow Agreement
      described at Note 17.




F-19


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)


(Stated
      in US Dollars)





**2.**
            **Summary
                of significant accounting policies*****(Cont’d)***





Recent
      accounting pronouncements





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





On
      February 15, 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities — Including an Amendment of
      SFAS No. 115” (“SFAS 159”). The fair value option established by SFAS 159
      permits all entities to choose to measure eligible items at fair value at
      specified election dates. A business entity will report unrealized gains and
      losses on items for which the fair value option has been elected in earnings
      (or
      another performance indicator if the business entity does not report earnings)
      at each subsequent reporting date. The fair value option: (a) may be applied
      instrument by instrument, with a few exceptions, such as investments otherwise
      accounted for by the equity method; (b) is irrevocable (unless a new election
      date occurs); and (c) is applied only to entire instruments and not to portions
      of instruments. SFAS 159 is effective as of the beginning of an entity’s first
      fiscal year that begins after November 15, 2007. Early adoption is permitted
      as
      of the beginning of the previous fiscal year provided that the entity makes
      that
      choice in the first 120 days of that fiscal year and also elects to apply the
      provisions of SFAS 157. Management currently does not believe the adoption
      of
      SFAS 159 will have a material impact on the Group’s consolidated financial
      statements.





In
      December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”
(“SFAS 141(R)”), which requires an acquirer to measure the identifiable
      assets acquired, the liabilities assumed, and any noncontrolling interest in
      the
      acquiree at their fair values on the acquisition date, with goodwill being
      the
      excess value over the net identifiable assets acquired. SFAS 141(R) is
      effective for financial statements issued for fiscal years beginning after
      December 15, 2008. Early adoption is prohibited. The Company does not
      anticipate that the adoption of the above standards will have a material impact
      on it current or future consolidated financial statements





In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements” (“SFAS 160”), which clarifies that a
      noncontrolling interest in a subsidiary should be reported as equity in the
      consolidated financial statements. The calculation of earnings per share will
      continue to be based on income amounts attributable to the parent. SFAS 160
      is
      effective for financial statements issued for fiscal years beginning after
      December 15, 2008. Early adoption is prohibited. The Company does not
      anticipate that the adoption of the above standards will have a material impact
      on it current or future consolidated financial statements




F-20




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)





**3.**
            **Other
                operating income**




***Year
                ended December 31,******2007***
            
            ***2006***
            
            ***2005******$***
            
            ***$***
            
            ***$***Commission
                income
            
            
            -
            
            
            -
            
            
            771,432Gain
                on disposal of intangible assets
            
            
            424,103
            
            
            210,594
            
            
            -License
                fee of intangible assets
            
            
            130,745
            
            
            167,138
            
            
            167,141Rental
                income
            
            
            63,065
            
            
            46,284
            
            
            -617,913
            
            
            424,016
            
            
            938,573





**4.**
            **Non-operating
                income**




***Year
                ended December 31,******2007***
            
            
            ***2006***
            
            
            ***2005******$***
            
            
            ***$***
            
            
            ***$***Bank
                interest income
            
            
            214,217
            
            
            208,854
            
            
            76,358Dividend
                income
            
            
            11,957
            
            
            8,977
            
            
            4,481Insurance
                compensation
            
            
            -
            
            
            -
            
            
            8,325Net
                exchange gains
            
            
            3,335
            
            
            1,078
            
            
            1,302Other
                interest income
            
            
            25
            
            
            18,635
            
            
            49,440Sundry
                income
            
            
            3,845
            
            
            27
            
            
            16,293233,379
            
            
            237,571
            
            
            156,199





**5.**
            **Interest
                expenses**




***Year
                ended December 31,******2007***
            
            ***2006***
            
            ***2005******$***
            
            ***$***
            
            ***$***Interest
                on trade related bank loans
            
            
            1,066,581
            
            
            981,184
            
            
            457,983Interest
                and amortization on bonds
            
            
            345,461
            
            
            -
            
            
            -Interest
                on short-term bank loans
            
            
            22,267
            
            
            25,322
            
            
            6,254Interest
                on bank overdrafts
            
            
            42,654
            
            
            54,030
            
            
            45,302Interest
                on other loans
            
            
            551
            
            
            -
            
            
            5,0981,477,514
            
            
            1,060,536
            
            
            514,637





F-21


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)





**6.**
            **Income
                taxes**


***Year
                  ended December 31,******2007***
              
              ***2006***
              
              ***2005***Hong
                  Kong profits tax
              
              ***$***
              
              ***$***
              
              ***$***Current
                  year
              
              
              1,968,120
              
              
              1,311,479
              
              
              948,933Over
                  provision in prior year
              
              
              -
              
              
              (21,408
              )
              
              (37,246
              )1,968,120
              
              
              1,290,071
              
              
              911,687Deferred
                  taxes
              
              
              9,408
              
              
              17,657
              
              
              -1,977,528
              
              
              1,307,728
              
              
              911,687





The
      Company’s subsidiaries operating in Hong Kong are subject to profits tax of
      17.5% on the estimated assessable profits during the years.





The
      Company’s subsidiaries that are incorporation in the British Virgin Islands are
      not subject to income taxes under that jurisdiction.





A
      reconciliation of income tax expense to the amount computed by applying the
      Hong
      Kong statutory tax rate to the income before taxes in the consolidated income
      statement is as follows:




***Year
                ended December 31,******2007***
            
            ***2006***
            
            ***2005******$***
            
            ***$***
            
            ***$***Income
                before taxes
            
            
            7,548,170
            
            
            7,627,667
            
            
            4,937,312Provision
                for income taxes at Hong Kongincome
                tax rate
            
            
            1,320,929
            
            
            1,334,842
            
            
            864,030Change
                in valuation allowance
            
            
            4,150
            
            
            486
            
            
            50,918Non-taxable
                items
            
            
            (74,407
            )
            
            (43,870
            )
            
            (14,147
            )Non-deductible
                items
            
            
            726,856
            
            
            7,363
            
            
            27Others
            
            
            -
            
            
            8,907
            
            
            45,9271,977,528
            
            
            1,307,728
            
            
            911,687





F-22




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)




The
        major
        components of deferred tax recognized in the consolidated balance sheets
        as of
        December 31, 2007, 2006 and 2005 are as follows:


**6.**
            **Income
                taxes*****(Cont’d)***




***At
                December 31******2007***
            
            ***2006***
            
            ***2005******$***
            
            ***$***
            
            ***$***Temporary
                difference on accelerated taxdepreciation
                on plant and equipment
            
            
            27,024
            
            
            17,669
            
            
            -Deferred
                tax liabilities, net
            
            
            27,024
            
            
            17,669
            
            
            -Recognized
                in the balance sheet:Net
                deferred tax assets
            
            
            (29,929
            )
            
            (14,042
            )
            
            -Net
                deferred tax liabilities
            
            
            56,953
            
            
            31,711
            
            
            -27,024
            
            
            17,669
            
            
            -





Deferred
      tax assets of the Company relating to the tax effect of the change in valuation
      allowance of the Company has not been accounted for in the financial statements
      for the years ended December 31, 2007, 2006 and 2005 as management determined
      that it was more likely than not that these tax losses would not be utilized
      in
      the foreseeable future. There was no other significant unprovided deferred
      taxation of the Company at the balance sheet dates.





**7.**
            **Prepaid
                expenses and other
                receivables**




***At
                December 31,******2007***
            
            ***2006***
            
            ***2005******$***
            
            ***$***
            
            ***$***Rental
                receivable
            
            
            -
            
            
            46,314
            
            
            -Interest
                receivable
            
            
            24,696
            
            
            20,218
            
            
            -Purchase
                deposits
            
            
            7,553,332
            
            
            1,530,372
            
            
            361,221Sales
                proceeds of intangible assets receivable
            
            
            -
            
            
            301,042
            
            
            -Other
                deposits and prepayments
            
            
            126,971
            
            
            203,187
            
            
            33,0157,704,999
            
            
            2,101,133
            
            
            394,236





The
      purchase deposits represented advanced payments to suppliers for merchandises
      of
      inventories.







**8.**
            **Inventories**




***At
                December 31******2007***
            
            ***2006***
            
            ***2005******$***
            
            ***$***
            
            ***$***Merchandises,
                at cost - completed watches
            
            
            2,148,638
            
            
            1,745,648
            
            
            3,630,754Merchandises,
                at cost - watch movements
            
            
            10,222,332
            
            
            4,500,537
            
            
            2,682,86812,370,970
            
            
            6,246,185
            
            
            6,313,622





No
      inventories were written off during the years ended December 31, 2007, 2006
      and
      2005.




F-23





ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)




**9.**
            **Property
                and equipment**




***At
                December 31,******2007***
            
            
            ***2006***
            
            
            ***2005******$***
            
            
            ***$***
            
            
            ***$****Cost*Land
                and buildings
            
            
            1,188,043
            
            
            242,350
            
            
            104,008Furniture
                and fixtures
            
            
            488,901
            
            
            492,866
            
            
            478,811Office
                equipment
            
            
            146,752
            
            
            145,911
            
            
            137,410Machinery
                and equipment
            
            
            320,595
            
            
            321,626
            
            
            128,974Moulds
            
            
            774,558
            
            
            384,665
            
            
            230,863Motor
                vehicles
            
            
            74,475
            
            
            45,928
            
            
            26,3752,993,324
            
            
            1,633,346
            
            
            1,106,441*Accumulated
                depreciation*Land
                and buildings
            
            
            68,525
            
            
            8,441
            
            
            2,542Furniture
                and fixtures
            
            
            331,751
            
            
            237,508
            
            
            140,271Office
                equipment
            
            
            128,165
            
            
            100,612
            
            
            68,766Machinery
                and equipment
            
            
            157,294
            
            
            93,475
            
            
            32,447Moulds
            
            
            379,548
            
            
            276,936
            
            
            153,139Motor
                vehicles
            
            
            36,332
            
            
            26,116
            
            
            26,3751,101,615
            
            
            743,088
            
            
            423,540*Net*Land
                and buildings
            
            
            1,119,518
            
            
            233,909
            
            
            101,466Furniture
                and fixtures
            
            
            157,150
            
            
            255,358
            
            
            338,540Office
                equipment
            
            
            18,587
            
            
            45,299
            
            
            68,644Machinery
                and equipment
            
            
            163,301
            
            
            228,151
            
            
            96,527Moulds
            
            
            395,010
            
            
            107,729
            
            
            77,724Motor
                vehicles
            
            
            38,143
            
            
            19,812
            
            
            -1,891,709
            
            
            890,258
            
            
            682,901




Depreciation
      expenses included in administrative and other operating expenses for the years
      ended 2007, 2006 and 2005 are $332,153, $325,995, $259,127
      respectively.





As
      at
      December, 2006, 2005 and 2004, the carrying amount of land and buildings pledged
      as security for the Group’s banking facilities amounted to $1,121,531, $233,909
      and $101,466 respectively.





F-24


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)




**10.**
            **Leasehold
                lands**




***At
                December 31******2007***
            
            ***2006***
            
            ***2005******$***
            
            ***$***
            
            ***$****Cost*
            
            
            949,514
            
            
            949,514
            
            
            331,924*Accumulated
                amortization*
            
            
            -
            
            
            (31,234
            )
            
            (7,992
            )Transfer
                to property and equipment
            
            
            (949,514
            )
            
            -
            
            
            -*Net*
            
            
            -
            
            
            918,280
            
            
            323,932Analyzed
                for reporting purposes as:Current
                asset
            
            
            -
            
            
            22,958
            
            
            7,993Non-current
                asset
            
            
            -
            
            
            895,322
            
            
            315,939-
            
            
            918,280
            
            
            323,932





Amortization
      expenses included in administrative and other operating expenses for the years
      ended 2007, 2006 and 2005 are $Nil, $23,247 and $7,968
      respectively.





As
      at
      December, 2007, 2006 and 2005, the carrying amount of leasehold lands pledged
      as
      security for the Group’s banking facilities amounted to $Nil, $918,280, $323,932
      respectively.





**11.**
                **Held-to-maturity
                    investments**




***At
                December 31,******2007***
            
            ***2006***
            
            ***2005******$***
            
            ***$***
            
            ***$***Hang
                Seng Capital Guarantee Investment Fund-
                30,000 units at $10 each, interest rate at 10.5% in 3.75
                years*Cost*
            
            
            300,231
            
            
            301,196
            
            
            301,954





As
      at
      December, 2007, 2006 and 2005, the carrying amount of held-to-maturity
      investments pledged as security for the Group’s banking facilities amounted to
      $300,231, $301,196 and $301,954 respectively.




F-25


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)





**12.**
            **Intangible
                assets**




***At
                December 31,******2007***
            
            ***2006***
            
            ***2005******$***
            
            ***$***
            
            ***$****Cost*Trademarks
            
            
            200,051
            
            
            200,695
            
            
            201,199Websites
            
            
            -
            
            
            421,459
            
            
            573,418200,051
            
            
            622,154
            
            
            774,617*Accumulated
                amortization*Trademarks
            
            
            152,039
            
            
            112,389
            
            
            72,431Websites
            
            
            -
            
            
            171,929
            
            
            118,037152,039
            
            
            284,318
            
            
            190,468*Net*Trademarks
            
            
            48,012
            
            
            88,306
            
            
            128,768Websites
            
            
            -
            
            
            249,530
            
            
            455,38148,012
            
            
            337,836
            
            
            584,149





Amortization
      expenses included in administrative and other operating expenses for the years
      ended 2007, 2006 and 2005 are $ 92,884, $154,436 and $154,438
      respectively.





Estimated
      aggregate future amortization expenses for the succeeding three years as of
      December 31, 2007 were as follows:





***$***2008
            
            
            48,012




**13.**
            **Other
                payables and accrued
                liabilities**




***At
                December 31,******2007***
            
            
            ***2006***
            
            
            ***2005******$***
            
            
            ***$***
            
            
            ***$***Accrued
                expenses
            
            
            92,249
            
            
            181,352
            
            
            145,249Sales
                deposits received
            
            
            40,258
            
            
            9,006
            
            
            -132,507
            
            
            190,358
            
            
            145,249




F-26


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)





**14.**
            **Advance
                from a related****party**





Advance
      from a related party for working capital is as follows:




***At
                December 31,******2007***
            
            ***2006***
            
            ***2005******$***
            
            ***$***
            
            ***$***Advance
                from a director
            
            
            -
            
            
            -
            
            
            28,854





The
      above
      advance is interest-free, unsecured and has no fixed repayment
      terms.





**15.**
            **Bank
                borrowings**




***At
                December 31******2007***
            
            ***2006***
            
            ***2005******$***
            
            ***$***
            
            ***$***Secured:Bank
                overdrafts repayable on demand
            
            
            528,451
            
            
            551,714
            
            
            352,577Repayable
                within one yearShort
                term bank loans
            
            
            2,223,290
            
            
            1,469,866
            
            
            294,764Other
                trade related bank loans
            
            
            17,686,738
            
            
            11,183,587
            
            
            9,416,78820,438,479
            
            
            13,205,167
            
            
            10,064,129





As
      of
      December 31, 2007, the Company’s banking facilities are composed of the
      following:




**Facilities
                granted**
            
            
            **Granted**
            
            
            **Amount****Utilized**
            
            
            **Unused*****$***
            
            
            ***$***Bank
                overdrafts
            
            
            695,662
            
            
            528,451
            
            
            167,211Other
                short terms bank loans
            
            
            2,223,290
            
            
            2,223,290
            
            
            -Other
                trade related facilities
            
            
            22,151,579
            
            
            17,686,738
            
            
            4,464,84125,070,531
            
            
            20,438,479
            
            
            4,632,052





F-27


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)





**15.**
            **Bank
                borrowings*****(Cont’d)***





As
      of
      December 31, 2007, the above short-term banking borrowings were secured by
      the
      following:





(a)
            first
                fixed legal charge over leasehold land and buildings with carrying
                amounts
                of $1,152,189 (note 10 and 11);





(b)
            charge
                over restricted cash of totally $8,505,354;





(c)
            charge
                over held-to-maturity investments of $300,231 (note 11);
                and





(d)
            personal
                guarantee executed by a director of the
                Company;





(e)
            Other
                financial covenant:-





The
      bank
      borrowings require one of the Company’s subsidiaries to be secured by an
      Insurance Policy of $256,476 and a director as the insured party.





The
      bank
      borrowings require one of the Company’s subsidiaries to maintain a minimum net
      worth of $5,257,758.





The
      Company was in compliance with this requirement at December 31,
      2007.





The
      interest rates of short-terms bank loans were at 6.25% to 8.00% per annum with
      various maturity rates.





The
      interest rates of other trade related bank loans were at Hong Kong Prime Rate
      minus 0.75% to 2% per annum.





**16.**
            **Convertible
                Bonds and Bond Warrants**





On
      November 13, 2007, the Company completed a financing transaction with ABN AMRO
      Bank N.V. (the “Subscriber ”) issuing (i) $8,000,000 Variable Rate Convertible
      Bonds due in 2012 (the “Bonds”) and (ii) warrants to purchase an aggregate of
      600,000 shares of our common stock, subject to adjustments for stock splits
      or
      reorganizations as net forth in the warrant, that expire in 2010 (the “Warrants
“).





The
      Bonds
      were subscribed at a price equal to 97% of their principal amount, which is
      the
      issue price of 100% less a 3% commission to the Subscriber. The Bonds were
      issued pursuant to, and are subject to the terms and conditions of, a trust
      deed
      dated November 13, 2007, as amended, between us and The Bank of New York, London
      Branch (the “Trust Deed “). The Bonds are also subject to a paying and
      conversion agency agreement dated November 13, 2007 between us, The Bank of
      New
      York, and The Bank of New York, London Branch. The terms and conditions of
      the
      Bonds, as set forth in the Trust Deed include, among other thing, the following
      terms:





*Interest
      Rate.* The Bonds bear cash interest from November 13, 2007 at the rate of 6%
      per annum for the first year after November 13, 2007 and 3% per annum
      thereafter, of the principal amount of the Bonds.




F-28




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)





**16.**
            **Convertible
                Bonds and Bond Warrants*****(Cont’d)***





*Conversion*.
      Each
      Bond is convertible at the option of the holder at any time on a date that
      is
      365 days after the date that our securities are traded on the American Stock
      Exchange (“AMEX”) through March 28, 2012, into shares of our common stock at an
      initial conversion price equal to the price per share at which shares are sold
      in our proposed initial public offering of common stock on the American Stock
      Exchange (“AMEX”) with minimum gross proceeds of $2,000,000. If no initial
      public offering occurs prior to conversion, the conversion price per share
      will
      be $2.00, subject to adjustment in accordance with the terms and conditions
      of
      the Bonds. The conversion price was adjusted to $3.5 based on the Company’s
      initial public offering completed in February 2008. The conversion price is
      subject to adjustment in certain events, including our issuance of additional
      shares of common stock or rights to purchase common stock at a per share or
      per
      share exercise or conversion price, respectively, at less than the applicable
      per share conversion price of the Bonds. If for the period of 20 consecutive
      trading days immediately prior to April 12, 2009 or February 18, 2012, the
      conversion price for the Bonds is higher than the average closing price for
      the
      shares, then the conversion price will be reset to such average closing price;
      provided that, the conversion price will not be reset lower than 70% of the
      then
      existing conversion price. In addition, the Trust Deed provides that the
      conversion price of the Bonds cannot be adjusted to lower than $0.25 per share
      of common stock (as adjusted for stock splits, stock dividends, spin-offs,
      rights offerings, recapitalizations and similar events).




*Mandatory
      Redemptions*. If on or before November 13, 2008, either (i) our common stock
      (including the shares of common stock issuable upon conversion of the Bonds
      and
      exercise of the Warrants) are not listed on AMEX OR (ii) the Bonds, Warrants,
      and shares underlying the Bonds and Warrants are not registered with the
      Securities and Exchange Commission (the “SEC”), then holders of the Bonds can
      require us to redeem the Bonds at 106.09% of the principal amount. In addition,
      at any time after November 13, 2010, holders of the Bonds can require us to
      redeem the Bonds at 126.51% of the principal amount. The Company is required
      to
      redeem any outstanding Bonds at 150.87% of its principal amount on November
      13,
      2012.





On
      November 13, 2007, the Company entered into a warrant instrument with the
      Subscriber pursuant to which the Subscriber purchased the Warrants from us
      (the
“Warrants Instrument”). The Warrants, which are represented by a global
      certificate, are also subject to a warrant agency agreement by and among us,
      The
      Bank of New York and The Bank of New York, London Branch dated November 13,
      2007
      (the “Warrant Agency Agreement”). Pursuant to the terms and conditions of the
      Warrant Instrument and the Warrant Agency Agreement, the Warrants vested on
      November 13, 2007 and will terminate on November 13, 2010. The Bond Warrants
      are
      exercisable at a per share exercise price of $0.01. The Company has agreed
      to
      list the Warrant on AMEX, or any alternative stock exchange by November 13,
      2008.





On
      November 13, 2007 the Company also entered into a registration rights agreement
      with the Subscriber pursuant to which the Company agreed to include the Bonds,
      the Warrants, and the shares of common stock underlying the Bonds and Warrants
      in a pre-effective amendment to registration statement that the Company have
      on
      file with the SEC. Subsequently, the Company verbally agreed with the Subscriber
      not to include the Subscriber’s securities in this registration statement and to
      register them in a separate registration statement to be filed promptly after
      the effective date of this registration statement.




F-29


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)





**16.**
            **Convertible
                Bonds and Bond Warrants*****(Cont’d)***





At
      November 13, 2007, the date of issuance, the Company determined the fair value
      of the Bonds to be $7,760,000. The warrants and the beneficial conversion
      feature were $1,652,701 and $6,107,299 respectively, which were determined
      under
      the Black-Scholes valuation method. They are included under stockholders’ equity
      as additional paid in capital-stock warrants and additional paid in
      capital-beneficial conversion feature respectively in accordance with guidance
      of APB 14 and EITF No. 98-5.Accordingly, the interest discount on the warrants
      and beneficial conversion feature were recorded, and are being amortized by
      the
      interest method of 5 years. The Beneficial Conversion Feature was calculated
      using a $2 conversion price. The conversion rate effective with the Company’s
      initial public offering in February 2008 increased to $3.5. This change in
      the
      conversion rate will result in a reduction of the Beneficial Conversion Feature
      by approximately $4 million dollars and will result in a reduction in additional
      paid in capital and increase the bonds payable. The overall result in a
      reduction in bond discounts.





As
      addressed in an earlier paragraph under Mandatory Redemptions, the Company
      will
      redeem each bond at 150.87% of its principal amount on November 13, 2012 (the
      maturity date). On the basis of this commitment, the Company has determined
      the
      total redemption premium to be $4,069,600, which is an addition to the original
      face value of the Bonds of $8,000,000. This redemption premium is to be
      amortized to interest expense over the term of the Bonds by the interest method.
      Interest expense on the accretion of redemption premium for the period from
      November 13, 2007 to December 31, 2007 amounted to $65,333 as disclosed in
      the
      following schedule of Convertible Bonds Payable.





Because
      of the fact that the $8,000,000 Variable Rate Convertible Bonds contain three
      separate securities and yet merged into one package, the bond security must
      identify its constituents and establish the individual value as determined
      by
      the Issuer as follows:





(1)
            
            
            Convertible
                Bonds
            
            $
            8,000,000(2)
            
            
            Bond
                Discount
            
            $
            240,000(3)
            
            
            Warrants
            
            $
            1,652,701(4)
            
            
            Beneficial
                Conversion Feature
            
            $
            6,107,299





The
      above
      items (2), (3), and (4) are to be amortized to interest expense over the term
      of
      the Bonds by the effective interest method as disclosed in the table below.





The
      Convertible Bonds Payable, net consists of the following:-





Year
                ending December 31, 2007
            
            ***$***Convertible
                Bonds Payable
            
            
            8,000,000Less:
                Interest discount - Warrants
            
            
            (1,652,701
            )Less:
                Interest discount - Beneficial conversion feature
            
            
            (6,107,299
            )Less:
                Bond discount
            
            
            (240,000
            )Accretion
                of interest discount - Warrant
            
            
            44,374Accretion
                of interest discount - Beneficial conversion feature
            
            
            163,977Amortization
                of bond discount to interest expense
            
            
            6,4446%
                Interest Payable
            
            
            65,333Accretion
                of redemption premium
            
            
            65,333Net
            
            
            345,461




F-30




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)




**17.**
            **Common
                stock and****convertible****preferred
                stock**





The
      Company conducted a private placement (“Private Placement”) pursuant to
      subscription agreements (the “Subscription Agreement”) entered into by the
      Company and certain investors. Pursuant to the Private Placement, the Company
      sold an aggregate of 2,250,348 shares of Series A Convertible Preferred Stock
      (“Series A Preferred Stock”) at $1.29 per share for aggregate gross proceeds of
      $2,902,947.





At
      the
      initial closing of the Private Placement on January 23, 2007, the Company sold
      an aggregate of 1,749,028 shares of Series A Preferred Stock. At the second
      and
      final closing of the Private Placement on February 9, 2007, the Company sold
      an
      aggregate of 501,320 shares of Series A Preferred Stock.





The
      shares of the Company’s Series A Preferred Stock are convertible into shares of
      common stock at a conversion price equal to the share purchase price, subject
      to
      adjustments. Accordingly, each share of Series A Preferred Stock is initially
      convertible into one share of common stock.





If
      the
      Company at any time prior to the first trading day on which the common stock
      is
      quoted on the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq
      Global Market or the New York Stock Exchange (each a “Trading Market”) sells or
      issues any shares of common stock in one or a series of transactions at an
      effective price less than such conversion price where the aggregate gross
      proceeds to the Company are at least $1,000,000, then the aforementioned
      conversion price shall be reduced to such effective price. Each share of
      Series A Convertible Preferred Stock shall automatically convert into
      shares of common stock if (i) the closing price of the common stock on the
      Trading Market for any 10 consecutive trading day period exceeds $3.00 per
      share, (ii) the shares of common stock underlying the Series A
      Convertible Preferred Stock are subject to an effective registration statement,
      and (iii) the daily trading volume of the common stock on a Trading Market
      exceeds 25,000 shares per day for 10 out of 20 prior trading days.





The
      Company agreed to file a registration statement covering the common stock
      underlying the Series A Convertible Preferred Stock sold in the Private
      Placement within 30 days of the closing of the Share Exchange pursuant to the
      Subscription Agreement with each investor. The Company agreed to a penalty
      provision with respect to its obligation to register the Series A Convertible
      Preferred Stock. If the Company fails to register the Series A Convertible
      Preferred Stock due to failure on the part of the Company, the Company will
      pay
      to the holders of Series A Convertible Preferred Stock a cash payment equal
      to
      0.0333% of the purchase price of their respective shares for each business
      day
      of the failure. There is no maximum potential consideration to be transferred.
      The Company is required to file the registration statement no later than 30
      days
      after the consummation of the Private Placement and agreed to use reasonable
      best efforts to cause such Registration Statement to become effective within
      150
      days after the closing of the Private Placement, or 180 days if the Registration
      Statement is subject to a full review by the SEC. The Company is also required
      to use its reasonable best effort to maintain the Registration Statement
      effective for a period of 24 months at the Company's expense.




F-31




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)





**17.**
            **Common
                stock and****convertible****preferred
                stock*****(Cont’d)***





The
      investors in the Private Placement also entered into a lock-up agreement
      pursuant to which they agreed not to sell their shares until our common stock
      begins to be listed or quoted on the New York Stock Exchange, American Stock
      Exchange, NASDAQ Global Market, NASDAQ Capital Market or the OTC Bulletin Board,
      after which their shares will automatically be released from the lock up every
      30 days on a pro rata over a nine month period beginning on the date that is
      30
      days after listing or quotation of the shares.





In
      connection with the Private Placement, in January and February 2007, Kwong
      Kai
      Shun, the Company's Chairman of the Board, Chief Executive Officer and Chief
      Financial Officer, entered into an agreement (the “Escrow Agreement”) with the
      investors in the Private Placement pursuant to which Mr. Kwong agreed to place
      2,326,000 shares of his common stock in escrow for possible distribution to
      the
      investors (the "Escrow Shares"). Pursuant to the Escrow Agreement, if the
      Company's net income for 2006 or 2007 (subject to specified adjustments) as
      set
      forth in its filings with
      the
      SEC is less than $6,300,000 or $7,700,000, respectively, a portion, if not
      all,
      of the Escrow Shares will be transferred to the investors based upon the
      Company's actual net income, if any, for such fiscal years. In addition, Mr.
      Kwong has agreed to purchase all of the shares of Series A Preferred Stock
      then
      held by such investors at a per share purchase price of $1.29 if the Company's
      common stock fails to be listed or quoted for trading on the American Stock
      Exchange, the Nasdaq Capital Market, the Nasdaq Global Market or the New York
      Stock Exchange on or before June 30, 2007, which has been subsequently extended
      to March 31, 2008. The number of shares that Mr. Kwong will distribute to
      shareholders will be determined by the number of shares of common stock that
      have not been sold by the investors, multiplied by the shortfall in a valuation
      agreed upon by the parties. The agreed upon shortfall in valuation is calculated
      using the $1.29 purchase price per share of the common stock, the actual amount
      of net income for either 2006 or 2007 (subject to specified adjustments) and
      a
      price earnings ratio set at 5 for 2006 and 4 for 2007. In no circumstances
      will
      Mr. Kwong be required to distribute in excess of 2,326,000 shares. In the event
      that Mr. Kwong transfers any shares to investors, it is anticipated that the
      transfer will be effected under an exemption from registration pursuant to
      the
      Securities Act of 1933, as amended.





The
      Company has accounted for the Escrow Shares as the equivalent of a
      performance-based compensatory stock plan between the Company and Mr. Kwong.
      Accordingly, the Company determined the fair value of the stock-based
      compensation related to the Escrow Shares by employing a binomial tree model,
      which is commonly used to value performance-based equity compensation packages.
      The valuation model used a volatility factor of 57%, a risk-free interest rate
      of 5.7%, and weekly steps to incorporate various possible scenarios for net
      income and common stock price. The probability at each quarter-end represents
      the probability of achieving the annual 2006 and 2007 net income targets
      specified in the Escrow Agreement. This quarterly probability is a time-weighted
      average of the implicit probabilities of achieving each net income target.
      The
      probabilities are calculated using multi-period scenario analyses through a
      backward induction tree, which generated an aggregate fair value for the Escrow
      Shares of $2,433,650. The inputs to the valuation mode were based on actual
      quarterly net income and estimates made by the Company that the required annual
      net income would be equaled or exceeded.




F-32


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)





**17.**
            **Common
                stock and****convertible****preferred
                stock*****(Cont’d)***





As
      the
      performance conditions under this compensatory stock plan relate to the
      attainment of specific defined net income milestones for both 2006 and 2007,
      the
      Company has determined that the appropriate period over which to recognize
      the
      charge to operations for the aggregate fair value of this compensatory stock
      plan of $2,433,650 is the 11-month period from February 2007 through December
      2007, which is the period of vesting (which is equivalent to the period of
      benefit), since this is the period in which the Escrow Shares are subject to
      the
      Escrow Agreement.





The
      Company met the 2006 and 2007 net income requirement of $6,300,000 and
      $7,700,000 respectively, and the Escrow Shares would be fully returned to Mr.
      Kwong on April 1, 2008.





If
      the
      Company pays a stock dividend on the shares of common stock, subdivide
      outstanding shares of common stock into a larger number of shares, combine,
      through a reverse stock split, outstanding shares of the common stock into
      a
      smaller number of shares or issues, in the event of a reclassification of shares
      of the common stock, any shares of capital stock, then the conversion price
      of
      the Series A Preferred Stock will be adjusted as follows: the conversion price
      will be multiplied by a fraction, of which (i) the numerator will be the number
      of shares of common stock outstanding immediately before one of the events
      described above and (ii) the denominator will be the number of shares of common
      stock outstanding immediately after such event.





Holder
      of
      the Series A Convertible Preferred Stock have the right to one vote per share
      of
      common stock issuable upon conversion of the shares underlying any shares of
      Preferred Stock outstanding as of the record date for purposes of determining
      which holders have the right to vote with respect to any matters brought to
      a
      vote before the Company’s holders of common stock.





In
      the
      event of any liquidation, dissolution, or winding up of the Company, the holders
      of the Series A Convertible Preferred Stock are entitled to receive in
      preference to the holders of common stock an amount per share of $1.29 plus
      any
      accrued but unpaid dividends. If the Company’s assets are insufficient to pay
      the above amounts in full, then all of the Company’s assets will be ratably
      distributed among the holders of the Series A Convertible Preferred Stock in
      accordance with the respective amounts that would be payable on such shares
      if
      all amounts payable were paid in full.





There
      are
      no additional specific dividend rights or redemption rights of holders of the
      Series A Convertible Preferred Stock.





If
      the
      Company redeems or acquired any shares of the Series A Convertible Preferred
      Stock are converted, those shares will resume the status of authorized but
      unissued shares of preferred stock and will no longer be designated as Series
      A
      Convertible Preferred Stock.





As
      long
      as any shares of Series A Convertible Preferred Stock are outstanding, the
      Company cannot alter or adversely change the powers, preference or rights given
      to the Series A Convertible Preferred Stock holders, without the affirmative
      vote of those holders.




F-33


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)




**18.**
            **Concentration
                of credit**




A
      substantial percentage of the Group's sales are made to the following customers.
      Details of the customers accounting for 10% or more of total net revenue are
      as
      follows:




**2007**
            
            **2006**
            
            **2005**Company
                A
            
            
            11
            %
            
            12
            %
            
            24
            %Company
                B
            
            
            -
            
            
            11
            %
            
            11
            %









Details
      of the accounts receivable from the one customer with the largest receivable
      balances at December 31, 2007 and 2006 are as follows:





**Percentage
                of accounts receivable****2007**
            
            **2006**Company
                A
            
            
            22
            %
            
            18
            %




**19.**
            **Pension
                plans**





The
      Group
      participates in a defined contribution pension scheme under the Mandatory
      Provident Fund Schemes Ordinance “MPF Scheme” for all its eligible employees in
      Hong Kong.





The
      MPF
      Scheme is available to all employees aged 18 to 64 with at least 60 days of
      service in the employment in Hong Kong. Contributions are made by the Group’s
      subsidiary operating in Hong Kong at 5% of the participants’ relevant income
      with a ceiling of HK$20,000. The participants are entitled to 100% of the
      Group’s contributions together with accrued returns irrespective of their length
      of service with the Group, but the benefits are required by law to be preserved
      until the retirement age of 65. The only obligation of the Group with respect
      to
      MPF Scheme is to make the required contributions under the plan.





The
      assets of the schemes are controlled by trustees and held separately from those
      of the Group. Total pension cost was $20,265, $18,749 and $18,802 during 2007,
      2006 and 2005, respectively.




F-34




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)




**20.**
            **Commitments
                and contingencies**





Operating
      leases commitments





The
      Group
      leases office premises under various non-cancelable operating lease agreements
      that expire at various dates through years 2008, with an option to renew the
      lease. All leases are on a fixed repayment basis. None of the leases includes
      contingent rentals. Minimum future commitments under these agreements payable
      as
      of December 31, 2007 are as follows:





Year
                ending December 31
            
            ***$***2008
            
            
            70,047





Rental
      expenses for the years ended 2007, 2006 and 2005 were $90,295, $103,624 and
      $138,262 respectively.





**21.**
            **Segment
                Information**




SFAS
      No. 131, *Disclosures
      about Segments of an Enterprise and Related Information* ,
      establishes standards for reporting information about operating segments in
      financial statements. Operating segments are defined as components of an
      enterprise about which separate financial information is available that is
      evaluated regularly by the chief operating decision maker, or decision making
      group, in deciding how to allocate resources and in assessing
      performance.





For
      management purposes, the Group is currently organized into two major principal
      activities - trading of watch movements (components) and trading of completed
      watches. These principal activities are the basis on which the Group reports
      its
      primary segment information.




F-35


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)




**21.**
            **Segment
                Information*****(Cont’d)***





For
      the
      year ended December 31, 2007





Watch
              movements
            
            Completed
              watches
            
            Unallocated
            
            **Total****$**
            
            **$**
            
            **$**
            
            **$**Sales
            
            
            86,414,118
            
            
            10,548,575
            
            
            -
            
            
            96,962,693Cost
                of sales
            
            
            (77,473,063
            )
            
            (5,646,762
            )
            
            -
            
            
            (83,119,825
            )Gross
                profit
            
            
            8,941,055
            
            
            4,901,813
            
            
            -
            
            
            13,842,868Operations
                expenses
            
            
            (1,072,410
            )
            
            (913,394
            )
            
            (2,941,475
            )
            
            (4,927,279
            )Other
                operating income
            
            
            63,064
            
            
            554,849
            
            
            -
            
            
            617,913Income
                from operations
            
            
            7,931,709
            
            
            4,543,268
            
            
            (2,941,475
            )
            
            9,533,502Fees
                and costs related to reverse merger
            
            
            -
            
            
            -
            
            
            (741,197
            )
            
            (741,197
            )Non-operating
                income
            
            
            233,379
            
            
            -
            
            
            -
            
            
            233,379Interest
                expenses
            
            
            (1,132,053
            )
            
            -
            
            
            (345,461
            )
            
            (1,477,514
            )Income
                before income taxes
            
            
            7,033,035
            
            
            4,543,268
            
            
            (4,028,133
            )
            
            7,548,170Significant
                non-cash items:-
                Gain on disposal of intangible assets
            
            
            -
            
            
            (425,256
            )
            
            -
            
            
            (425,256
            )-
                Depreciation
            
            
            180,034
            
            
            152,119
            
            
            -
            
            
            332,153-
                Amortization of intangible assets
            
            
            -
            
            
            123,977
            
            
            -
            
            
            123,977Segment
                assets
            
            
            45,349,351
            
            
            6,101,962
            
            
            -
            
            
            **51,451,313**Total
                expenditures for additions to long-lived assets-
                Property and equipment
            
            
            426,815
            
            
            -
            
            
            -
            
            
            **426,815**





F-36




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)





**21.**
            **Segment
                Information*****(Cont’d)***





For
      the
      year ended December 31, 2006





Watch
              movements
            
            Completed
              watches
            
            Unallocated
            
            **Total****$**
            
            **$**
            
            **$**
            
            **$**Sales
            
            
            73,047,632
            
            
            8,086,643
            
            
            -
            
            
            81,134,275Cost
                of sales
            
            
            (67,228,452
            )
            
            (4,268,349
            )
            
            -
            
            
            (71,496,801
            )Gross
                profit
            
            
            5,819,180
            
            
            3,818,294
            
            
            -
            
            
            9,637,474Operations
                expenses
            
            
            (1,396,289
            )
            
            (214,569
            )
            
            -
            
            
            (1,610,858
            )Other
                operation income
            
            
            46,264
            
            
            377,752
            
            
            -
            
            
            424,016Income
                from operations
            
            
            4,469,155
            
            
            3,981,477
            
            
            -
            
            
            8,450,632Fees
                and costs related to reverse merger
            
            
            -
            
            
            -
            
            
            -
            
            
            -Non-operating
                income
            
            
            237,571
            
            
            -
            
            
            -
            
            
            237,571Interest
                expenses
            
            
            (1,060,536
            )
            
            -
            
            
            -
            
            
            (1,060,536
            )Income
                before income taxes
            
            
            3,646,190
            
            
            3,981,477
            
            
            -
            
            
            7,627,667Significant
                non-cash items:-
                Gain on disposal of fixed asset
            
            
            (210,594
            )
            
            -
            
            
            -
            
            
            (210,594
            )-
                Depreciation
            
            
            159,003
            
            
            166,992
            
            
            -
            
            
            325,995-
                Amortization of intangible assets
            
            
            -
            
            
            154,436
            
            
            -
            
            
            154,436-
                Amortization of leasehold lands
            
            
            23,247
            
            
            -
            
            
            -
            
            
            23,247Segment
                assets
            
            
            19,766,313
            
            
            4,329,970
            
            
            -
            
            
            **24,096,283**Total
                expenditures for additions to long-lived assets-
                Property and equipment
            
            
            776,252
            
            
            386,451
            
            
            -
            
            
            **1,162,703**-
                Acquisition of held-to-maturity investments
            
            
            301,007
            
            
            -
            
            
            -
            
            
            **301,007**





F-37




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)





**21.**
            **Segment
                Information*****(Cont’d)***





For
      the
      year ended December 31, 2005





Watch
              movements
            
            Completed
              watches
            
            Unallocated
            
            **Total****$**
            
            **$**
            
            **$**
            
            **$**Sales
            
            
            58,843,209
            
            
            4,235,200
            
            
            -
            
            
            63,078,409Cost
                of sales
            
            
            (55,069,673
            )
            
            (1,956,363
            )
            
            -
            
            
            (57,026,036
            )Gross
                profit
            
            
            3,773,536
            
            
            2,278,837
            
            
            -
            
            
            6,052,373Operations
                expenses
            
            
            (1,270,239
            )
            
            (424,957
            )
            
            -
            
            
            (1,695,196
            )Other
                operating income
            
            
            771,431
            
            
            167,142
            
            
            -
            
            
            938,573Income
                from operations
            
            
            3,274,728
            
            
            2,021,022
            
            
            
            
            
            5,295,750Fees
                and costs related to reverse merger
            
            
            -
            
            
            -
            
            
            -
            
            
            -Non-operating
                income
            
            
            156,199
            
            
            -
            
            
            -
            
            
            156,199Interest
                expenses
            
            
            (514,637
            )
            
            -
            
            
            -
            
            
            (514,637
            )Income
                before income taxes
            
            
            2,916,290
            
            
            2,021,022
            
            
            
            
            
            4,937,312Significant
                non-cash items:-
                Depreciation
            
            
            183,180
            
            
            75,947
            
            
            -
            
            
            259,127-
                Amortization of intangible assets
            
            
            -
            
            
            154,438
            
            
            -
            
            
            154,438-
                Amortization of leasehold lands
            
            
            7,968
            
            
            -
            
            
            -
            
            
            7,968Segment
                assets
            
            
            13,678,951
            
            
            5,078,308
            
            
            -
            
            
            **18,757,259**Total
                expenditures for additions to long-lived assets-
                Property and equipment
            
            
            574,388
            
            
            -
            
            
            -
            
            
            **574,388**




The
      Group’s operations are primarily in Hong Kong and China and the Group’s sales,
      gross profit and total assets attributable to other geographical areas are
      less
      than **** 10%
      of
      the Group’s corresponding consolidated totals for the years ended December,
      2007, 2006 and 2005 consequently, no segment information by geographical areas
      is presented.




F-38




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS *(Cont’d)*


(Stated
      in US Dollars)





**22.**
            **Subsequent
                Events**





On
      January 16, 2008, the Company entered into a consulting agreement with Public
      Equity Group Inc. Pursuant to the agreement, Public Equity Group will provide
      the Company with business consulting and investor relation services and other
      related services. The agreement has a term of one year, unless terminated
      earlier with 60-days prior written notice. As consideration for entering in
      the
      agreement and compensation for Public Equity Group’s services under the
      agreement, the Company will issue 200,000 shares of its common stock to Public
      Equity Group Inc. In connection with the issuance of 200,000 shares of common
      stock, we expect to recognize a one-time charge to operations in the first
      quarter of 2008 in an amount equal to approximately $700,000, which is derived
      from valuing each share at $3.50, the offering price in our public
      offering.




On
      February, 12, 2008, the company’s common stock commenced trading on the American
      Stock Exchange.





On
      February 15, 2008, the Company issued 963,700 shares of common stock upon the
      closing of an initial public offering. The Company’s sale of common stock, which
      was sold indirectly by the Company to the public at a price of $3.50 per share,
      resulted in net proceeds of approximately $2.7 million. These proceeds were
      net
      of underwriting discounts and commissions, fees for legal and auditing services,
      and other offering costs. Upon the closing of the initial public offering,
      the
      Company sold to the underwriter warrants to purchase up to 83,800 shares of
      its
      common stock. The warrants are exercisable at a per share price of $4.20 and
      has
      a term of five years.





F-39