**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**AMENDMENT
      NO. 1 TO**


**FORM
      10-Q/A**




**x** **QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE**


**SECURITIES
      EXCHANGE ACT OF 1934**




**For
      the quarterly period ended June 30, 2007**





**OR**





**o** **TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE**


**SECURITIES
      EXCHANGE ACT OF 1934**





**Commission
      File Number**


**000-51981**







**ASIA
      TIME CORPORATION**


*(Exact
      name of small business issuer as specified in its charter)*





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





**(852)-23100101**


*(Registrant’s
      telephone number, including area code)*





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




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





Large
      accelerated filer o Accelerated
      filer o Non-accelerated
      filer x







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




There
      were 23,156,629 shares outstanding of registrant’s common stock, par value
      $.0001 per share, as of August 14, 2007.












**EXPLANATORY
      NOTE**





This
      Amendment No. 1 (this “Amendment”) on Form 10-Q/A, which amends and restates
      items identified below with respect to the Form 10-Q, filed by Asia Time
      Corporation (“we” or the “Company”) with the Securities and Exchange Commission
      (the “SEC”) on August 20, 2007 (the “Original Filing”) is being filed to reflect
      revisions to Financial Statements, Management’s Discussion And Analysis Of
      Financial Condition And Results Of Operation, Risk Factors, and Controls and
      Procedures. The Company has revised its financial statements for the three
      months and six months ended June 30, 2007 and 2006 to reflect various
      adjustments, primarily to account for all fees and costs related to the January
      2007 reverse merger as a charge to operations, to adjust the accounting for
      inventories and cost of sales by accruing for vendor incentives, and to
      recognize stock-based compensation in 2007. As a result of these adjustments,
      various income tax calculations were also revised, which effected net income
      and
      also caused reclassifications to cash flows. The Company has also corrected
      average and actual shares outstanding retroactively (and related earnings per
      share calculations) to reflect the January 2007 reverse merger. These
      adjustments are more fully described at Note 22 of the Notes to the Financial
      Statements contained herein.





This
      Form
      10-Q/A only amends information in Item 1 (Financial Statements), Item 1A (Risk
      Factors), Item 2 (Management’s Discussion and Analysis of Financial Condition
      and Results of Operation), and Item 4 (Controls and Procedures), and the other
      Items as presented in the Original Filing are not being amended but are restated
      without change in this Amendment for ease of reference. As a result of this
      Amendment, the certifications pursuant to Section 302 and Section 906 of the
      Sarbanes-Oxley Act of 2002, filed as exhibits to our Original Filing have been
      revised, re-executed and re-filed as of the date of this Amendment. Except
      for
      the foregoing amended and restated information, this Amendment continues to
      describe conditions as of the date of the Original Filing, and the disclosures
      contained herein have not been updated to reflect events, results or
      developments that have occurred after the Original Filing, or to modify or
      update those disclosures affected by subsequent events. Among other things,
      forward-looking statements made in the Original Filing have not been revised
      to
      reflect events, results or developments that have occurred or facts that have
      become known to us after the date of the Original Filing, and such
      forward-looking statements should be read in their historical context. This
      Amendment should be read in conjunction with the Company’s filings made with the
      SEC subsequent to the Original Filing, including any amendments to those
      filings.









**ASIA
      TIME CORPORATION.**


**FORM
      10-Q QUARTERLY REPORT**





**TABLE
      OF CONTENTS**




**Page**PART
                  I - FINANCIAL INFORMATION
              
              1ITEM
                  1.
              
              
              FINANCIAL
                  STATEMENTSCondensed
                  Consolidated Balance Sheet (Unaudited)
              
              2Condensed
                  Consolidated Income Statement (Unaudited)
              
              4Condensed
                  Consolidated Statement of Cash Flows (Unaudited)
              
              5Notes
                  to Condensed Consolidated Financial Statements (Unaudited)
              
              7ITEM
                  2.
              
              
              MANAGEMENT’S
                  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                  OPERATION
              
              48ITEM
                  3.
              
              
              QUANTITATIVE
                  AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
              
              56ITEM
                  4.
              
              
              CONTROLS
                  AND PROCEDURES
              
              57PART
                  II - OTHER INFORMATION
              
              57ITEM
                  1.
              
              
              LEGAL
                  PROCEEDINGS
              
              57ITEM
                  1A.
              
              
              RISK
                  FACTORS
              
              57ITEM
                  2.
              
              
              UNREGISTERED
                  SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
              
              59ITEM
                  3.
              
              
              DEFAULTS
                  UPON SENIOR SECURITIES
              
              59ITEM
                  4.
              
              
              SUBMISSION
                  OF MATTERS TO A VOTE OF SECURITY HOLDERS
              
              59ITEM
                  5.
              
              
              OTHER
                  INFORMATION
              
              59ITEM
                  6.
              
              
              EXHIBITS
              
              59SIGNATURES
              
              60









**PART
      I - FINANCIAL INFORMATION**





**ITEM
      1.**  **FINANCIAL
      STATEMENTS**





The
      accompanying unaudited financial statements have been prepared in accordance
      with accounting principles generally accepted in the United States of America
      for interim financial information and with the instructions to Form 10-Q.
      Accordingly, they do not include all of the information and footnotes required
      by generally accepted accounting principles for complete financial statements.
      The accompanying unaudited financial statements reflect all adjustments that,
      in
      the opinion of management, are considered necessary for a fair presentation
      of
      the financial position, results of operations, and cash flows for the periods
      presented. The results of operations for such periods are not necessarily
      indicative of the results expected for the full fiscal year or for any future
      period. The accompanying unaudited financial statements should be read in
      conjunction with the audited financial statements of Asia Time Corporation
      included in the Form 10-K/A for the fiscal year ended December 31, 2006 as
      filed
      with the Securities and Exchange Commission on February 8, 2008.




1




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





CONDENSED
      CONSOLIDATED BALANCE SHEET


AS
      OF
      JUNE 30, 2007 AND DECEMBER 31, 2006


(Stated
      in US Dollars)




***As
                of******June
                30,***
            
            ***December
                31,******2007***
            
            ***2006******(Unaudited)***
            
            ***(Audited)***$
            
            $(Restated)
            
            (Restated)**ASSETS**Current
                Assets :Cash
                and cash equivalents
            
            
            74,710
            
            
            316,621Restricted
                cash
            
            
            5,940,642
            
            
            4,523,679Accounts
                receivable
            
            
            14,463,214
            
            
            8,188,985Prepaid
                expenses and other receivables - Note 8
            
            
            6,044,193
            
            
            2,101,133Tax
                prepayment
            
            
            -
            
            
            767Inventories,
                net - Note 9
            
            
            3,980,993
            
            
            6,246,185Prepaid
                lease payments - Note 11
            
            
            22,840
            
            
            22,958Total
                Current Assets
            
            
            30,526,592
            
            
            21,400,328Deferred
                tax assets - Note 7
            
            
            13,920
            
            
            14,042Plant
                and equipment, net - Note 10
            
            
            754,958
            
            
            890,258Leasehold
                lands - Note 11
            
            
            879,219
            
            
            895,322Held-to-maturity
                investments - Note 12
            
            
            299,654
            
            
            301,196Intangible
                assets - Note 13
            
            
            274,210
            
            
            337,836Restricted
                cash
            
            
            255,984
            
            
            257,301**TOTAL
                ASSETS**
            
            
            33,004,537
            
            
            24,096,283**LIABILITIES
                AND STOCKHOLDERS’ EQUITY****LIABILITIES**Current
                Liabilities :Accounts
                payable
            
            
            1,514,350
            
            
            770,360Other
                payables and accrued liabilities - Note 14
            
            
            51,232
            
            
            190,358Advance
                from a related party - Note 15
            
            
            23,938
            
            
            -Income
                taxes payable
            
            
            1,984,221
            
            
            1,387,571Bank
                borrowings - Note 16
            
            
            15,608,181
            
            
            13,205,167Total
                Current Liabilities
            
            
            19,181,922
            
            
            15,553,456Deferred
                tax liabilities - Note 6
            
            
            31,498
            
            
            31,711**TOTAL
                LIABILITIES**
            
            
            19,213,420
            
            
            15,585,167






**COMMITMENTS
                AND CONTINGENCIES - Note
                19**




2




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





CONDENSED
      CONSOLIDATED BALANCE SHEET (Continued)


AS
      OF
      JUNE 30, 2007 AND DECEMBER 31, 2006


(Stated
      in US Dollars)




***As
                of******June
                30,***
            
            ***December
                31,******2007***
            
            ***2006******(Unaudited)***
            
            ***(Audited)***$
            
            $(Restated)
            
            (Restated)**STOCKHOLDERS’
                EQUITY**Preferred
                stock - Note 17Par
                value : US$0.0001Authorized:
                10,000,000 sharesIssued
                and outstanding: 2007 - 2,250,348 shares (2006 - none)
            
            
            225
            
            
            -Common
                stock - Note 17Par
                value : US$0.0001Authorized:
                2007 - 100,000,000 shares (2006 - 100,000,000shares)Issued
                and outstanding: 2007 - 23,156,629 shares (2006 -19,454,420
                shares)
            
            
            2,316
            
            
            1,946Additional
                paid-in capital
            
            
            4,939,591
            
            
            654,298Accumulated
                other comprehensive income
            
            
            (40,672
            )
            
            7,470Retained
                earnings
            
            
            8,889,657
            
            
            7,847,402**TOTAL
                STOCKHOLDERS’ EQUITY**
            
            
            13,791,117
            
            
            8,511,116**TOTAL
                LIABILITIES AND STOCKHOLDERS’ EQUITY**
            
            
            33,004,537
            
            
            24,006,283







See
      notes
      to condensed consolidated financial statements.




3




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS


FOR
      THE
      THREE AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006


(Stated
      in US Dollars)





***Three
                months ended***
              ***June
                30,***
            
            ***Six
                months ended***
              ***June
                30,******2007***
            
            ***2006***
            
            ***2007***
            
            ***2006******(Unaudited)***
            
            ***(Unaudited)***
            
            ***(Unaudited)***
            
            ***(Unaudited)***$
            
            $
            
            $
            
            $(Restated)
            
            (Restated)
            
            (Restated)
            
            (Restated)Net
                sales
            
            
            20,869,437
            
            
            22,924,095
            
            
            41,987,579
            
            
            43,227,186Cost
                of sales
            
            
            (18,519,891
            )
            
            (20,124,304
            )
            
            (36,418,869
            )
            
            (38,266,593
            )Gross
                profit
            
            
            2,349,546
            
            
            2,799,791
            
            
            5,568,710
            
            
            4,960,593Other
                income - Note 4
            
            
            48,281
            
            
            41,875
            
            
            96,778
            
            
            83,780Depreciation
            
            
            (63,433
            )
            
            (95,935
            )
            
            (128,864
            )
            
            (159,366
            )Administrative
                and other operating expenses, including stock-based
                compensation
            
            
            (558,857
            )
            
            (298,113
            )
            
            (2,605,263
            )
            
            (612,245
            )Income
                from operations
            
            
            1,775,537
            
            
            2,447,618
            
            
            2,931,361
            
            
            4,272,762Fees
                and costs related to reverse merger
            
            
            -
            
            
            -
            
            
            (736,197
            )
            
            -Other
                income - Note 4
            
            
            48,452
            
            
            67,383
            
            
            78,381
            
            
            110,296Interest
                expense - Note 5
            
            
            (274,990
            )
            
            (297,298
            )
            
            (514,419
            )
            
            (497,854
            )Income
                before taxes
            
            
            1,548,999
            
            
            2,217,703
            
            
            1,759,126
            
            
            3,885,204Income
                taxes - Note 6
            
            
            (314,204
            )
            
            (389,366
            )
            
            (716,871
            )
            
            (684,311
            )Net
                income
            
            
            1,234,795
            
            
            1,828,337
            
            
            1,042,255
            
            
            3,200,893Earnings
                per common share-
                Basic
            
            
            0.05
            
            
            0.09
            
            
            0.05
            
            
            0.16-
                Diluted
            
            
            0.05
            
            
            0.09
            
            
            0.04
            
            
            0.16Weighted
                average common shares-
                Basic
            
            
            23,156,629
            
            
            19,454,420
            
            
            22,686,183
            
            
            19,454,420-
                Diluted
            
            
            25,406,977
            
            
            19,454,420
            
            
            24,606,260
            
            
            19,454,420







See
      notes
      to condensed consolidated financial statements.




4




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





CONDENSED
      CONSOLIDATED STATEMENT OF CASH FLOWS


(Stated
      in US Dollars)





***Six
                months ended June 30,******2007***
            
            ***2006******(Unaudited)***
            
            ***(Unaudited)***$
            
            $(Restated)
            
            (Restated)**Cash
                flows from operating activities**Net
                income
            
            
            1,042,255
            
            
            3,200,893Adjustments
                to reconcile net income to net cashused
                in operating activities :Stock-based
                compensation
            
            
            1,652,205
            
            
            -Amortization
                of intangible assets
            
            
            61,907
            
            
            77,413Amortization
                of leasehold lands
            
            
            11,522
            
            
            9,294Depreciation
            
            
            128,864
            
            
            159,366Loss
                on disposal of plant and equipment
            
            
            5,404
            
            
            7,735Income
                taxes
            
            
            716,871
            
            
            684,311Changes
                in operating assets and liabilities :(Increase)
                decrease in-Accounts
                receivable
            
            
            (6,317,232
            )
            
            (3,528,823
            )Prepaid
                expenses and other receivables
            
            
            (3,929,492
            )
            
            (963,218
            )Inventories
            
            
            2,231,701
            
            
            1,114,146Increase
                (decrease) in -Accounts
                payable
            
            
            748,048
            
            
            68,807Other
                payables and accrued liabilities
            
            
            (138,176
            )
            
            (20,293
            )Income
                taxes payable
            
            
            (111,908
            )
            
            (33,977
            )Unearned
                revenue
            
            
            -
            
            
            (1,597,305
            )Net
                cash used in operating activities
            
            
            (3,898,031
            )
            
            (821,651
            )**Cash
                flows from investing activities**Acquisition
                of plant and equipment
            
            
            (3,824
            )
            
            (1,164,127
            )Proceeds
                from disposal of plant and equipment
            
            
            320
            
            
            2,037Net
                cash used in investing activities
            
            
            (3,504
            )
            
            (1,162,090
            )**Cash
                flows from financing activities**Proceeds
                from issuance of Series A convertible preferred stock
            
            
            2,641,683
            
            
            -Proceeds
                from new short-term bank loans
            
            
            2,815,939
            
            
            33,977Repayment
                of short-term bank loans
            
            
            (2,247,211
            )
            
            (167,009
            )Net
                advances under other short-term bank borrowings
            
            
            1,969,237
            
            
            3,765,189Increase
                in restricted cash
            
            
            (1,440,370
            )
            
            (1,172,602
            )Advances
                (from) to related parties
            
            
            (9,057
            )
            
            541,978Decrease
                (increase) in bank overdrafts
            
            
            (66,923
            )
            
            167,638Dividends
                paid
            
            
            -
            
            
            (1,608,572
            )Net
                cash provided by financing activities
            
            
            3,663,298
            
            
            1,560,599Net
                decrease in cash and cash equivalents
            
            
            (238,237
            )
            
            (423,142
            )Effect
                of foreign currency translation on cash and cash
                equivalents
            
            
            (3,674
            )
            
            (3,449
            )Cash
                and cash equivalents - beginning of period
            
            
            316,621
            
            
            780,090Cash
                and cash equivalents - end of period
            
            
            74,710
            
            
            353,499




5




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





CONDENSED
      CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)


(Stated
      in US Dollars)




***Six
                months ended June 30,******2007***
            
            ***2006******(Unaudited)***
            
            ***(Unaudited)***$
            
            $(Restated)
            
            (Restated)Supplemental
                disclosures of cash flow information :Cash
                paid for :Interest
            
            
            514,419
            
            
            497,854Income
                taxes
            
            
            111,908
            
            
            33,977







See
      notes
      to condensed consolidated financial statements.




6




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**1.**
            **Organization
                and Recapitalization**





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. The stockholders’ equity section of SRKP 9,
      Inc. has been retroactively restated for all periods presented to reflect the
      accounting effect of the reverse merger transaction. All costs associated with
      the reverse merger transaction were expensed as incurred.




7




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**1.**
            **Organization
                and Recapitalization
                (Continued)**




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
      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. 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.








Restatement





The
      Company has revised its financial statements for the three months and six months
      ended June 30, 2007 and 2006 to reflect various adjustments, primarily to
      account for all fees and costs related to the January 2007 reverse merger as
      a
      charge to operations, to adjust the accounting for inventories and cost of
      sales
      by accruing for vendor incentives, and to recognize stock-based compensation
      in
      2007. As a result of these adjustments, various income tax calculations were
      also revised, which effected net income and also caused reclassifications to
      cash flows. The Company has also corrected average and actual shares outstanding
      retroactively (and related earnings per share calculations) to reflect the
      January 2007 reverse merger. These adjustments are more fully described at
      Note
      22.




8




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**2.**
              **Description
                    of business**
  The
        Company and its subsidiaries are engaged in sale to distributors of completed
        watches and watch components.





Name
                of company
            Place
                and date of incorporation
            Issued
                and fully
              paid
                capital
            Principal
                activitiesTimes
                Manufacture & E-Commerce Corporation Ltd.
            British
                Virgin Islands
              March
                21, 2002
            US$20,002
              Ordinary
            Investment
                holdingTimes
                Manufacturing & E-Commerce Corporation Ltd. (“TMEHK”)
            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
              September
                6, 2003
            US$2
              Ordinary
            Trading
                of watches and watch components




9




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006


**3.**
              **Summary
                    of significant accounting
                    policies**


Consolidation





The
      consolidated financial statements include the accounts of the Company and its
      majority owned subsidiaries. Intercompany accounts and transactions have been
      eliminated in consolidation.





Basis
      of presentation





The
      accompanying condensed consolidated financial statements of the Company and
      its
      subsidiaries have been prepared in accordance with generally accepted accounting
      principles in the United States of America for interim consolidated financial
      information. Accordingly, they do not include all the information and notes
      necessary for comprehensive set of consolidated financial
      statements.





In
      the
      opinion of the management of the Company, the accompanying financial statements
      include all adjustments, including those of a normal recurring nature, necessary
      for a fair presentation of the results of operations for the three months and
      six months ended June 30, 2007 and 2006. Results for the interim periods
      presented are not necessarily indicative of the results that might be expected
      for the full fiscal year. These condensed financial statements should be read
      in
      conjunction with the consolidated financial statements of Asia Time Corporation
      and the notes thereto for the years ended December 31, 2006, 2005 and 2004,
      as
      filed with Securities and Exchange Commission.





Use
      of
      estimates





In
      preparing financial statements in conformity with accounting principles
      generally accepted in the United States of America, management makes estimates
      and assumptions that affect the reported amounts of assets and liabilities
      and
      disclosures of contingent assets and liabilities at the dates of the financial
      statements, as well as the reported amounts of revenues and expenses during
      the
      reporting periods. These accounts and estimates include, but are not limited
      to,
      the valuation of accounts receivable, inventories, deferred income taxes and
      the
      estimation on useful lives of plant and equipment and intangible assets. Actual
      results could differ from those estimates.




10




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**3.**
                  **Summary
                        of significant accounting policies
                        (continued)**


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. Other than set forth
      below, no customers represented 10% or more of the Group’s net sales and
      accounts receivable.





For
      the
      six months ended June 30, 2007 and 2006, customers representing 10% or more
      of
      the Group’s net sales and their related accounts receivable were as
      follows:





***Six
                months ended June 30,*****2007**
            
            **2006**$
            
            $Customer
                A
            
            
            -
            
            
            5,408,938Customer
                B
            
            
            -
            
            
            5,349,973Customer
                C
            
            
            -
            
            
            4,609,452Net
                sales
            
            
            -
            
            
            15,368,363Accounts
                receivable
            
            
            -
            
            
            1,848,380





Restricted
      cash





Deposits
      in banks for securities of bank borrowings that are restricted in use are
      classified as restricted cash.




11




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**3.**
                      **Summary
                            of significant accounting policies
                            (continued)**


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.





During
      the six months ended June 30, 2007 and 2006, the Company had no uncollectible
      accounts receivable and, accordingly, did not record any allowance for doubtful
      accounts.





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 six months ended June 30, 2007 and 2006,
      the Company did not make any allowance for slow-moving or defective
      inventories.





Leasehold
      land





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




12




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)





(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006


**3.**
                      **Summary
                            of significant accounting policies
                            (continued)**


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 at the following annual rates:


Trademarks
            
            
            20
            %Websites
            
            
            20
            %





Held-to-maturity
      investments




The
      Company’s policies with respect to 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.




Plant
      and equipment





Plant
      and
      equipment are stated at cost less accumulated depreciation. Cost represents
      the
      purchase price of the asset and other costs incurred to bring the asset into
      its
      existing use. Maintenance, repairs and betterments, including replacement of
      minor items, are charged to expense; major additions to physical properties
      are
      capitalized.





Depreciation
      of plant and equipment is provided using the straight-line method over their
      estimated useful lives at the following annual rates:




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
              %


Upon
      sale
      or disposition, the applicable amounts of asset cost and accumulated
      depreciation are removed from the accounts and the net amount less proceeds
      from
      disposal is charged or credited to the statement of operations.




13




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**3.**
                        **Summary
                              of significant accounting policies
                              (continued)**


Impairment
      of long-lived assets





Long-lived
      assets are reviewed for impairment whenever events or changes in circumstances
      indicate that the carrying amount of the assets may not be recoverable. The
      Company recognizes impairment of long-lived assets in the event that the net
      book values of such assets exceed the future undiscounted cash flows
      attributable to such assets.





No
      impairment of long-lived assets was recognized for any of the periods
      presented.





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
      their 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.





Income
      taxes





The
      Group
      uses the asset and liability method of accounting for income taxes pursuant
      to
      Statement of Financial Accounting Standards (“SFAS”) No. 109 “Accounting for
      Income Taxes”. Under the asset and liability method, deferred tax assets and
      liabilities are recognized for the future tax consequences attributable to
      temporary differences between the financial statements carrying amounts of
      existing assets and liabilities and loss carry forwards and their respective
      tax
      bases. 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. Valuation allowances are
      established when necessary to reduce deferred tax assets to the amount expected
      to be realized.




14




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)


**3.**
                        **Summary
                              of significant accounting policies
                              (continued)**


Earnings
      per share





The
      Company computes earnings per share in accordance with SFAS No. 128, “Earnings
      per Share” (“SFAS 128”), and SEC Staff Accounting Bulletin No. 98 (“SAB 98”).
      SFAS 128 requires companies with complex capital structures to present basic
      and
      diluted earnings per share. Basic earnings per share is measured as net income
      divided by the weighted average common shares outstanding for the period.
      Diluted earnings per share is similar to basic earnings per share 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 issued at
      the
      beginning of the periods presented, or date of issuance, if later. Potential
      common shares that have an anti-dilutive effect (i.e., that increase income
      per
      share or decrease loss per share) are excluded from the calculation of diluted
      earnings per share.





The
      Company did not have any potentially dilutive common share equivalents during
      the three months and six months ended June 30, 2006. The calculation of diluted
      earnings per share for the three months and six months ended June 30, 2007
      includes the shares of Series A Convertible Preferred Stock on an “as converted”
basis.





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





15




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**3.**
                        **Summary
                              of significant accounting policies
                              (continued)**


Earnings
      per share (continued)





**Three Months Ended June
                30,****2007**
            
            **2006****Weighted**
            
            
            
            
            
            **Weighted****Net**
            
            **Average**
            
            
            
            **Net**
            
            **Average****Income**
            
            **Shares**
            
            **Per
                Share**
            
            **Income**
            
            **Shares**
            
            **Per
                Share**Earnings
                per share - basicNet
                income
            
            $
            1,234,795
            
            
            23,156,629
            
            $
            0.05
            
            $
            1,828,337
            
            
            19,454,420
            
            $
            0.09Effect
                of dilutive securitiesConvertible
                preferred stock
            
            
            -
            
            
            2,250,348
            
            
            
            
            
            -
            
            
            -Earnings
                per share - dilutedNet
                income
            
            $
            1,234,795
            
            
            25,406,977
            
            $
            0.05
            
            $
            1,828,337
            
            
            19,454,420
            
            $
            0.09







**Six********Months Ended June
                30,****2007**
            
            **2006****Weighted**
            
            
            
            
            
            **Weighted****Net**
            
            **Average**
            
            
            
            **Net**
            
            **Average****Income**
            
            **Shares**
            
            **Per
                Share**
            
            **Income**
            
            **Shares**
            
            **Per
                Share**Earnings
                per share - basicNet
                income
            
            $
            1,042,255
            
            
            22,686,183
            
            $
            0.05
            
            $
            3,200,893
            
            
            19,454,420
            
            $
            0.16Effect
                of dilutive securitiesConvertible
                preferred stock
            
            
            -
            
            
            1,920,077
            
            
            
            
            
            -
            
            
            -Earnings
                per share - dilutedNet
                income
            
            $
            1,042,255
            
            
            24,606,260
            
            $
            0.04
            
            $
            3,200,893
            
            
            19,454,420
            
            $
            0.16




16




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006


**3.**
                          **Summary
                                of significant accounting policies
                                (continued)**


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 three months
      or six months ended June 30, 2006. During the three months and six months ended
      June 30, 2007, the Company recorded $40,642 and $1,652,205, respectively, 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.








Recent
      adopted accounting pronouncements





In
      July
      2006, the FASB issued FIN 48, “Accounting for Uncertainty in Income Taxes.” FIN
      48 requires that the Company recognize in its financial statements the impact
      of
      a tax position if that position is more likely than not of being sustained
      on
      audit, based on the technical merits of the position. The provisions of FIN
      48
      are effective as of the beginning of the Company’s 2007 fiscal year, with the
      cumulative effect of the change in accounting principle recorded as an
      adjustment to opening retained earnings, if any. The Company did not have any
      material unrecognized tax benefits as of January 1, 2007. The adoption of
      FIN 48 had no impact on the Company’s consolidated financial
      statements.




17




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**3.**
                          **Summary
                                of significant accounting policies
                                (continued)**


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. Although the
      Company will continue to evaluate the provisions of SFAS 157, the Company
      currently does not believe the adoption of SFAS 157 will have a material
      impact on the Company’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. The Company has not chosen to early adopt this
      statement. Although
      the Company will continue to evaluate the provisions of SFAS 159, management
      currently does not believe the adoption of SFAS 159 will have a
      material impact on the Company’s consolidated financial statements.




18





ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**4.**
              **Other
                    income**


***Three
                months ended***
            
            ***Six
                months ended******June
                30,***
            
            ***June
                30,***
            
            ***June
                30,***
            
            ***June
                30,******2007***
            
            ***2006***
            
            ***2007***
            
            ***2006******(Unaudited)***
            
            ***(Unaudited)***
            
            ***(Unaudited)***
            
            ***(Unaudited)***$
            
            $
            
            $
            
            $*Operating
                income*License
                fee of intangible assets
            
            
            ***32,571***
            
            
            ***41,875***
            
            
            ***65,287***
            
            
            ***83,780***Rental
                income
            
            
            ***15,710***
            
            
            ***-***
            
            
            ***31,491***
            
            
            ***-******48,281***
            
            
            ***41,875***
            
            
            ***96,778***
            
            
            ***83,780****Non-operating
                income*Bank
                interest income
            
            
            ***47,904***
            
            
            ***57,661***
            
            
            ***76,906***
            
            
            ***94,004***Net
                exchange gains
            
            
            ***548***
            
            
            ***189***
            
            
            ***1,475***
            
            
            ***298***Other
                interest income
            
            
            ***-***
            
            
            ***9,506***
            
            
            ***-***
            
            
            ***15,967***Sundry
            
            
            ***-***
            
            
            ***27***
            
            
            ***-***
            
            
            ***27******48,452***
            
            
            ***67,383***
            
            
            ***78,381***
            
            
            ***110,296******96,733***
            
            
            ***109,258***
            
            
            ***175,159***
            
            
            ***194,076***






**5.**
              **Interest
                    expense**


***Three
                months ended***
            
            ***Six
                months ended******June
                30,***
            
            ***June
                30,***
            
            ***June
                30,***
            
            ***June
                30,******2007***
            
            ***2006***
            
            ***2007***
            
            ***2006******(Unaudited)***
            
            ***(Unaudited)***
            
            ***(Unaudited)***
            
            ***(Unaudited)***$
            
            $
            
            $
            
            $Interest
                on bank trust receipts
            
            
            ***248,538***
            
            
            ***277,748***
            
            
            ***468,040***
            
            
            ***457,302***Interest
                on short-term bank loans
            
            
            ***7,181***
            
            
            ***3,199***
            
            
            ***16,764***
            
            
            ***8,374***Interest
                on bank overdrafts
            
            
            ***10,847***
            
            
            ***16,351***
            
            
            ***21,191***
            
            
            ***32,178***Interest
                on other loans
            
            
            ***8,424***
            
            
            ***-***
            
            
            ***8,424***
            
            
            ***-******274,990***
            
            
            ***297,298***
            
            
            ***514,419***
            
            
            ***497,854***




19




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (as
      restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006


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


***Three
                months ended***
            
            ***Six
                months ended******June
                30,***
            
            ***June
                30,***
            
            ***June
                30,***
            
            ***June
                30,******2007***
            
            ***2006***
            
            ***2007***
            
            ***2006******(Unaudited)***
            
            ***(Unaudited)***
            
            ***(Unaudited)***
            
            ***(Unaudited)***$
            
            $
            
            $
            
            $Hong
                Kong profits taxCurrent
                period
            
            
            ***314,204***
            
            
            ***389,366***
            
            
            ***716,871***
            
            
            ***684,311***







The
      Company’s subsidiaries operating in Hong Kong are subject to a tax of 17.5% on
      the estimated assessable profits during the periods. During the three months
      ended June 30, 2007 and 2006, the effective tax rates were 20.3% and 17.6%,
      respectively. During the six months ended June 30, 2007 and 2006, the effective
      tax rates were 40.8% and 17.6%, respectively. The effective tax rates for the
      three months and six months ended June 30, 2007 would have been 19.8% and 17.3%
      if non-deductible stock-based compensation and reverse merger costs had been
      excluded from the calculation.




20




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006


**6.**
              **Interest
                    taxes (continued)**
  Deferred
        tax (assets) liabilities as of June 30, 2007 and December 31, 2006 are composed
        of the following:





***As
                of******June
                30,***
            
            ***December
                31,******2007***
            
            ***2006******(Unaudited)***
            
            ***(Audited)***$
            
            $Temporary
                difference on accelerated taxdepreciation
                on plant and equipment
            
            
            17,578
            
            
            17,669Deferred
                tax liabilities, net
            
            
            17,578
            
            
            17,669Recognized
                in the balance sheet:Net
                deferred tax assets
            
            
            (13,920
            )
            
            (14,042
            )Net
                deferred tax liabilities
            
            
            31,498
            
            
            31,71117,578
            
            
            17,669





Deferred
      tax assets of the Company relating to the tax effect of the change in valuation
      allowance of the Company have not been accounted for in the financial statements
      for the six months ended June 30, 2007 and 2006, 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 June 30, 2007 or June 30, 2006.






**7.**
              **Comprehensive
                    income**


***Three
                months ended***
            
            ***Six
                months ended******June
                30,***
            
            ***June
                30,***
            
            ***June
                30,***
            
            ***June
                30,******2007***
            
            ***2006***
            
            ***2007***
            
            ***2006******(Unaudited)***
            
            ***(Unaudited)***
            
            ***(Unaudited)***
            
            ***(Unaudited)***$
            
            $
            
            $
            
            $Net
                income
            
            
            ***1,234,795***
            
            
            ***1,828,337***
            
            
            ***1,042,255***
            
            
            ***3,200,893***Foreign
                currency translation adjustment
            
            
            ***3,935***
            
            
            ***6,206***
            
            
            ***(48,142***
            ***)***
            
            ***(10,273***
            ***)*****Total
                comprehensive income**
            
            
            ***1,238,730***
            
            
            ***1,834,543***
            
            
            ***994,113***
            
            
            ***3,190,620***




21




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006


**8.**
              **Prepaid
                  expenses and other
                  receivables**


***As
                of******June
                30,***
            
            ***December
                31,******2007***
            
            ***2006******(Unaudited)***
            
            ***(Audited)***$
            
            $Rebate
                receivable
            
            
            1,365,746
            
            
            -Interest
                receivable
            
            
            -
            
            
            20,218Rental
                receivable
            
            
            -
            
            
            46,314Other
                receivable
            
            
            14,932
            
            
            -Purchase
                deposits paid
            
            
            2,543,961
            
            
            1,530,372Sales
                proceeds of intangible assets receivable
            
            
            299,501
            
            
            301,042Other
                deposits and prepayments
            
            
            1,820,053
            
            
            203,1876,044,193
            
            
            2,101,133








**9.**
            **Inventories**


***As
                  of******June
                  30,***
              
              ***December
                  31,******2007***
              
              ***2006******(Unaudited)***
              
              ***(Audited)***$
              
              $Merchandises,
                  at cost - completed watches
              
              
              311,051
              
              
              1,745,648Merchandises,
                  at cost - watch movements
              
              
              3,669,942
              
              
              4,500,5373,980,993
              
              
              6,246,185




22




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**10.**
              **Plant
                    and equipment**


***As
                of******June
                30,***
            
            ***December
                31,******2007***
            
            ***2006******(Unaudited)***
            
            ***(Audited)***$
            
            $*Cost*Buildings
            
            
            241,109
            
            
            242,350Furniture
                and fixtures
            
            
            487,642
            
            
            492,866Office
                equipment
            
            
            145,047
            
            
            145,911Machinery
                and equipment
            
            
            319,980
            
            
            321,626Moulds
            
            
            382,696
            
            
            384,665Motor
                vehicles
            
            
            44,092
            
            
            45,9281,620,566
            
            
            1,633,346*Accumulated
                depreciation*Buildings
            
            
            11,339
            
            
            8,441Furniture
                and fixtures
            
            
            283,042
            
            
            237,508Office
                equipment
            
            
            114,810
            
            
            100,612Machinery
                and equipment
            
            
            124,994
            
            
            93,475Moulds
            
            
            302,387
            
            
            276,936Motor
                vehicles
            
            
            29,036
            
            
            26,116865,608
            
            
            743,088*Net*Buildings
            
            
            229,770
            
            
            233,909Furniture
                and fixtures
            
            
            204,600
            
            
            255,358Office
                equipment
            
            
            30,237
            
            
            45,299Machinery
                and equipment
            
            
            194,986
            
            
            228,151Moulds
            
            
            80,309
            
            
            107,729Motor
                vehicles
            
            
            15,056
            
            
            19,812754,958
            
            
            890,258




Depreciation
      expenses included in administrative and other operating expenses for the six
      months ended June 30, 2007 and June 30, 2006 are $128,864 and $159,366,
      respectively.





As
      at
      June 30, 2007 and December 31, 2006, the carrying amount of buildings pledged
      as
      security for the Group’s banking facilities amounted to $229,770 and $233,909,
      respectively.





23




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006


**11.**
              **Leasehold
                    lands**
  ***As
                    of******June
                    30,***
                
                ***December
                    31,******2007***
                
                ***2006******(Unaudited)***
                
                ***(Audited)***$
                
                $*Cost*
                
                
                944,653
                
                
                949,514*Accumulated
                    amortization*
                
                
                42,594
                
                
                31,234*Net*
                
                
                902,059
                
                
                918,280Analyzed
                    for reporting purposes as:Current
                    asset
                
                
                22,840
                
                
                22,958Non-current
                    asset
                
                
                879,219
                
                
                895,322902,059
                
                
                918,280


Amortization
      expenses included in administrative and other operating expenses for the six
      months ended June 30, 2007 and June 30, 2006 were $11,522 and $9,294,
      respectively.





As
      at
      June 30, 2007 and December 31, 2006, the carrying amount of leasehold lands
      pledged as security for the Group’s banking facilities amounted to $902,059 and
      $919,280, respectively.






**12.**
              **Held-to-maturity
                  investments**




***As
                of******June
                30,***
            
            ***December
                31,******2007***
            
            ***2006******(Unaudited)***
            
            ***(Audited)***$
            
            $Hang
                Seng Capital Guarantee Investment Fund-
                30,000 units at $10 each, interest rate at 10.5% in 3.75
                years*Cost*
            
            
            299,654
            
            
            301,196





As
      at
      June 30, 2007 and December 31, 2006, the carrying amount of the held-to-maturity
      investments pledged as security for the Group’s banking facilities amounted to
      $299,654 and $301,196, respectively.




24




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**13.**
              **Intangible
                  assets**




***As
                of******June
                30,***
            
            ***December
                31,******2007***
            
            ***2006******(Unaudited)***
            
            ***(Audited)***$
            
            $*Cost*Trademarks
            
            
            199,667
            
            
            200,695Websites
            
            
            419,301
            
            
            421,459618,968
            
            
            622,154*Accumulated
                Amortization*Trademarks
            
            
            131,780
            
            
            112,389Websites
            
            
            212,978
            
            
            171,929344,758
            
            
            284,318*Net*Trademarks
            
            
            67,887
            
            
            88,306Websites
            
            
            206,323
            
            
            249,530274,210
            
            
            337,836





Amortization
      expenses included in administrative and other operating expenses for the six
      months ended June 30, 2007 and June 30, 2006 were $61,907  and
      $77,413, respectively.








**14.**
              **Other
                  payables and accrued
                  liabilities**




***As
                of******June
                30,***
            
            ***December
                31,******2007***
            
            ***2006******(Unaudited)***
            
            ***(Audited)***$
            
            $Accrued
                expenses
            
            
            42,273
            
            
            181,352Sales
                deposits received
            
            
            8,959
            
            
            9,00651,232
            
            
            190,358


25


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**15.**
              **Advance
                  from a related****party**




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





***As
                of******June
                30,***
            
            ***December
                31,******2007***
            
            ***2006******(Unaudited)***
            
            ***(Audited)***$
            
            $Advance
                from a director
            
            
            23,938
            
            
            -





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








**16.**
                **Bank
                    borrowings**




***As
                  of******June
                  30,***
              
              ***December
                  31,******2007***
              
              ***2006******(Unaudited)***
              
              ***(Audited)***$
              
              $Secured:Bank
                  overdrafts repayable on demand
              
              
              481,978
              
              
              551,714Repayable
                  within one yearNon-recurring
                  bank loans
              
              
              2,030,973
              
              
              1,469,866Other
                  bank borrowings
              
              
              13,095,230
              
              
              11,183,58715,608,181
              
              
              13,205,167




As
      of
      June 30, 2007, the above banking borrowings were secured by the
      following:





(a)
            first
                fixed legal charge over leasehold land and buildings with carrying
                amounts
                of $1,131,829 (note 10 and 11);


(b)
              charge
                  over bank deposits of $6,196,626;
 (c)
                charge
                    over held-to-maturity investments of $299,654 (note
                    12);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 maintain a minimum net
      worth of $3,839,754. The Company was in compliance with this requirement at
      June
      30, 2007.





26




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




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





A
      reconciliation of certain of the equity accounts of SRKP 9, Inc. and Times
      Manufacture as a result of the January 2007 reverse merger is as
      follows:


**Series
                  A Convertible Preferred Stock**
              
              **Common
                  Stock**
              
              **Additional****($0.0001
                  Par Value)**
              
              **($0.0001
                  Par Value)**
              
              **Paid-In****Shares**
              
              **Amount**
              
              **Shares**
              
              **Amount**
              
              **Capital****Balances,
                  December 31, 2006**
              
              **0**
              
              **$**
              **0**
              
              
              **19,454,420**
              
              **$**
              **1,946**
              
              **$**
              **654,298**Jan.
                  23, 2007
              
              
              Shares
                  issued to SRKP 9 founders:Originally
                  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
              )Jan.
                  23, 2007
              
              
              Adjustment
                  to SRKP 9 accounts to
                reflect
                  reverse merger
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (7,999
              )Jan.
                  23, 2007
              
              
              Gross
                  proceeds from shares sold in offering -
                initial
                  closing
              
              
              1,749,028
              
              
              175
              
              
              -
              
              
              -
              
              
              2,256,071Jan.
                  23, 2007
              
              
              Offering
                  costs - initial closing (9% of gross)
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (203,062
              )Jan.23,2007
              
              
              Stock-based
                  compensation
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,652,205Feb.
                  9,2007
              
              
              Gross
                  proceeds from shares sold in offering -
                final
                  closing
              
              
              501,320
              
              
              50
              
              
              -
              
              
              -
              
              
              646,651Feb.
                  9,2007
              
              
              Offering
                  costs - initial closing (9% of gross)
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (58,203
              )**Balances,
                  June 30, 2007**
              
              **2,250,348**
              
              **$**
              **225**
              
              
              **23,156,629**
              
              **$**
              **2,316**
              
              **$**
              **4,939,591**







27


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**17.**
            **Common
                stock and convertible preferred stock
                (continued)**




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.




28




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)





(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006





**17.**
            **Common
                stock and convertible preferred stock
                (continued)**




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 six 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.





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.





29




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)





(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**17.**
              **Common
                  stock and convertible preferred stock
                  (continued)**


The
      Company has allocated the $2,433,650 based on the quarterly weighted average
      of
      the implicit probabilities of achieving each net income target as
      follows:





Three
                Months Ended
            
            Cumulative
                Probability Factor at Quarter-End
            
            Amount
                Charged to OperationsMarch
                31, 2007
            
            
            66.22
            %
            $
            1,611,563June
                30, 2007
            
            
            67.89
            %
            
            40,642Total
                through June 30, 2007
            
            
            
            
            $
            1,652,205








Approximately
      66% of the aggregate fair value of $2,433,650 was charged to operations during
      the three months ended March 31, 2007 because at March 31, 2007 it appeared
      probable (but not certain) that the Company would meet or exceed the required
      net income for 2006, and net income for the three months ended March 31, 2007
      was within expectations. For the three months ended June 30, 2007, net income
      was below the expected growth rate and annualized quarterly net income was
      below
      the amount required to reach the 2007 required net income, as a result of which
      the probability factor at June 30, 2007 increased only slightly.





The
      Company met the 2006 net income requirement of $6,300,000.




30




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**17.**
              **Common
                  stock and convertible preferred stock
                  (continued)**




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 our 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.




31




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006


**18.**
              **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 $7,623 and $4,274 for the three months
      ended June 30, 2007 and 2006, respectively.








**19.**
              **Commitments
                  and contingencies**




Operating
      leases commitments





The
      Company leases office premises under various non-cancelable operating lease
      agreements that expire at various dates through years 2007 to 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 June 30, 2007 are as follows:





Period
                ending June 30,
            
            ***$***2007
                - 2008
            
            
            82,4122008
                - 2009
            
            
            31,778114,190





Rental
      expenses for the six months ended June 30, 2007 and 2006 were $50,302 and
      $38,403, respectively.




32


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006





**20.**
              **Segment
                  Information**




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





Six
                months ended
            
            Watch
            
            CompletedJune
                30, 2007
            
            Movements
            
            Watches
            
            Total*$*
            
            *$*
            
            *$*Sales
            
            
            38,234,543
            
            
            3,753,036
            
            
            41,987,579Cost
                of sales
            
            
            (34,409,027
            )
            
            (2,009,842
            )
            
            (36,418,869
            )Segment
                result
            
            
            3,825,516
            
            
            1,743,194
            
            
            5,568,710




Six
                months ended
            
            Watch
            
            CompletedJune
                30, 2006
            
            Movements
            
            Watches
            
            Total*$*
            
            *$*
            
            *$*Sales
            
            
            37,877,213
            
            
            5,349,973
            
            
            43,227,186Cost
                of sales
            
            
            (35,483,333
            )
            
            (2,783,260
            )
            
            (38,266,593
            )Segment
                result
            
            
            2,393,880
            
            
            2,566,713
            
            
            4,960,593




Three
                  months ended
              
              Watch
              
              CompletedJune
                  30, 2007
              
              Movements
              
              Watches
              
              Total*$*
              
              *$*
              
              *$*Sales
              
              
              19,010,476
              
              
              1,858,961
              
              
              20,869,437Cost
                  of sales
              
              
              (17,486,902
              )
              
              (1,032,989
              )
              
              (18,519,891
              )Segment
                  result
              
              
              1,523,574
              
              
              825,972
              
              
              2,349,546


Three
                months ended
            
            Watch
            
            CompletedJune
                30, 2006
            
            Movements
            
            Watches
            
            Total*$*
            **
            *$*
            **
            *$*Sales
            
            
            19,692,462
            
            
            3,231,633
            
            
            22,924,095Cost
                of sales
            
            
            (18,456,062
            )
            
            (1,668,242
            )
            
            (20,124,304
            )Segment
                result
            
            
            1,236,400
            
            
            1,563,391
            
            
            2,799,791




33




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**21.**
              **Segment
                  Information
                  (continued)**




The
      Company’s operations are conducted primarily in Hong Kong and China and the
      Company’s sales, gross profit and total assets attributable to other
      geographical areas are less than **** 10%
      of
      the Company’s corresponding consolidated totals for the three months and six
      months ended June 30, 2007 and 2006. Consequently, no segment information by
      geographical areas is presented.






**22.**
            **Restatement******




The
      Company has restated its financial statements for the three months and six
      months ended June 30, 2007 and 2006 to correct various accounting errors and/or
      disclosure omissions.





The
      restated financial statements include adjustments to account for all fees and
      costs related to the January 2007 reverse merger (see Note 1) as a charge to
      operations, to account for inventories by adjusting watch movement costing
      for
      the effects of vendor incentives from an as received basis to an accrual basis,
      as the Company was able to estimate the value of the incentives as inventory
      is
      purchased, and to recognize stock-based compensation cost related to the Escrow
      Agreement (see Note 17). As a result of these adjustments, various income tax
      calculations were also revised, which effected net income and also caused
      reclassifications to cash flows. The Company has also corrected average and
      actual shares outstanding retroactively (and related earnings per share
      calculations) to reflect the January 2007 reverse merger (see Note 1). The
      Company also made various changes to footnote disclosures relating to these
      revisions.





Below
      are
      summaries of the financial statement line items that were affected by the
      restatements described above.




34




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**22.**
              **Restatement****(continued)**




**Statement
      of Operations**


**Six
      months ended June 30, 2007 (unaudited)**





***June
                30***
            
            ***June
                30***
            
            ***June
                30******2007***
            
            ***2007***
            
            ***2007******(As
                originally***
            
            ***(As
                restated)***
            
            ***(Effect
                of******Reported)***
            
            
            
            ***Change)***$
            
            $
            
            $Net
                sales
            
            
            41,987,579
            
            
            41,987,579
            
            
            -Cost
                of sales
            
            
            (36,544,870
            )
            
            (36,418,869
            )
            
            126,001Gross
                profit
            
            
            5,442,709
            
            
            5,568,710
            
            
            126,001Other
                income
            
            
            96,778
            
            
            96,778
            
            
            -Depreciation
            
            
            (128,864
            )
            
            (128,864
            )
            
            -Administrative
                and other operating expenses
            
            
            (953,058
            )
            
            (2,605,263
            )
            
            (1,652,205
            )Income
                from operations
            
            
            4,457,565
            
            
            2,931,361
            
            
            (1,526,204
            )Fees
                and costs related to reverse merger
            
            
            (419,197
            )
            
            (736,197
            )
            
            (317,000
            )Other
                income
            
            
            78,381
            
            
            78,381
            
            
            -Interest
                expense
            
            
            (514,419
            )
            
            (514,419
            )
            
            -Income
                before taxes
            
            
            3,602,330
            
            
            1,759,126
            
            
            (1,843,204
            )Income
                taxes
            
            
            (760,302
            )
            
            (716,871
            )
            
            43,431Net
                income
            
            
            2,842,028
            
            
            1,042,255
            
            
            (1,799,773
            )Earnings
                per common share-
                Basis
            
            
            0.12
            
            
            0.05
            
            
            (0.07
            )-
                Diluted
            
            
            0.11
            
            
            0.04
            
            
            (0.07
            )Weighted
                average common shares-
                Basis
            
            
            23,156,629
            
            
            22,686,183
            
            
            (470,446
            )-
                Diluted
            
            
            25,086,369
            
            
            24,606,260
            
            
            (480,109
            )




35




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**22.**
            **Restatement****(continued)**




**Statement
      of Operations**


**Six
      months ended June 30, 2006 (unaudited)**





***June
                30***
            
            ***June
                30***
            
            ***June
                30******2006***
            
            ***2006***
            
            ***2006******(As
                originally***
            
            ***(As
                restated)***
            
            ***(Effect
                of******Reported)***
            
            
            
            ***Change)***$
            
            $
            
            $Net
                sales
            
            
            43,227,186
            
            
            43,227,186
            
            
            -Cost
                of sales
            
            
            (39,780,894
            )
            
            (38,266,593
            )
            
            1,514,301Gross
                profit
            
            
            3,446,292
            
            
            5,568,710
            
            
            1,514,301Other
                income
            
            
            83,780
            
            
            83,780
            
            
            -Depreciation
            
            
            (159,366
            )
            
            (159,366
            )
            
            -Administrative
                and other operating expenses
            
            
            (612,245
            )
            
            (612,245
            )
            
            -Income
                from operations
            
            
            2,758,461
            
            
            4,272,762
            
            
            1,514,301Other
                income
            
            
            110,296
            
            
            110,296
            
            
            -Interest
                expense
            
            
            (497,854
            )
            
            (497,854
            )
            
            -Income
                before taxes
            
            
            2,370,903
            
            
            3,885,204
            
            
            1,514,301Income
                taxes
            
            
            (419,309
            )
            
            (684,311
            )
            
            (322,930
            )Net
                income
            
            
            1,951,594
            
            
            3,200,893
            
            
            1,191,371Earnings
                per common share-
                Basis
            
            
            0.08
            
            
            0.16
            
            
            0.08-
                Diluted
            
            
            0.08
            
            
            0.16
            
            
            0.08Weighted
                average common shares-
                Basis
            
            
            23,156,629
            
            
            19,454,420
            
            
            (3,702,209
            )-
                Diluted
            
            
            23,156,629
            
            
            19,454,420
            
            
            (3,702,209
            )




36




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)




**22.**
              **Restatement****(continued)**


**Statement
      of Operations**


**Three
      months ended June 30, 2007 (unaudited)**





***June
                30***
            
            ***June
                30***
            
            ***June
                30******2007***
            
            ***2007***
            
            ***2007******(As
                originally***
            
            ***(As
                restated)***
            
            ***(Effect
                of******Reported)***
            
            
            
            ***Change)***$
            
            $
            
            $Net
                sales
            
            
            20,869,437
            
            
            20,869,437
            
            
            -Cost
                of sales
            
            
            (18,288,887
            )
            
            (18,519,891
            )
            
            (231,004
            )Gross
                profit
            
            
            2,580,550
            
            
            2,349,546
            
            
            (231,004
            )Other
                income
            
            
            48,281
            
            
            48,281
            
            
            -Depreciation
            
            
            (63,433
            )
            
            (63,433
            )
            
            -Administrative
                and other operating expenses
            
            
            (518,215
            )
            
            (558,857
            )
            
            (40,642
            )Income
                from operations
            
            
            2,047,183
            
            
            1,775,537
            
            
            (271,646
            )Other
                income
            
            
            48,452
            
            
            48,452
            
            
            -Interest
                expense
            
            
            (274,990
            )
            
            (274,990
            )
            
            -Income
                before taxes
            
            
            1,820,645
            
            
            1,548,999
            
            
            (271,646
            )Income
                taxes
            
            
            (354,630
            )
            
            (314,204
            )
            
            40,426Net
                income
            
            
            1,466,015
            
            
            1,234,795
            
            
            (231,220
            )Earnings
                per common share-
                Basis
            
            
            0.06
            
            
            0.05
            
            
            (0.01
            )-
                Diluted
            
            
            0.06
            
            
            0.05
            
            
            (0.01
            )Weighted
                average common shares-
                Basis
            
            
            23,156,629
            
            
            23,156,629
            
            
            --
                Diluted
            
            
            25,406,977
            
            
            25,406,977
            
            
            -




37




ASIA
        TIME
        CORPORATION
 (Formerly
        SRKP 9, Inc.)
 
 NOTES
        TO
        CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)
 (Stated
        in US Dollars)
 
 THREE
        MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006
  **22.**
              **Restatement****(continued)**
 
 **Statement
        of Operations**
 **Three
        months ended June 30, 2006 (unaudited)**
 
 ***June
                  30***
              
              ***June
                  30***
              
              ***June
                  30******2006***
              
              ***2006***
              
              ***2006******(As
                  originally***
              
              ***(As
                  restated)***
              
              ***(Effect
                  of******Reported)***
              
              
              
              ***Adjustments)***$
              
              $
              
              $Net
                  sales
              
              
              22,924,095
              
              
              22,924,095
              
              
              -Cost
                  of sales
              
              
              (21,700,076
              )
              
              (20,124,304
              )
              
              1,575,772Gross
                  profit
              
              
              1,224,019
              
              
              2,799,791
              
              
              1,575,772Other
                  income
              
              
              41,875
              
              
              41,875
              
              
              -Depreciation
              
              
              (95,935
              )
              
              (95,935
              )
              
              -Administrative
                  and other operating expenses
              
              
              (298,113
              )
              
              (298,113
              )
              
              -Income
                  from operations
              
              
              871,846
              
              
              2,447,618
              
              
              1,575,772Other
                  income
              
              
              67,383
              
              
              67,383
              
              
              -Interest
                  expense
              
              
              (297,298
              )
              
              (297,298
              )
              
              -Income
                  before taxes
              
              
              641,931
              
              
              2,217,703
              
              
              1,575,772Income
                  taxes
              
              
              (122,159
              )
              
              (389,366
              )
              
              (267,207
              )Net
                  income
              
              
              519,772
              
              
              1,828,337
              
              
              1,308,565Earnings
                  per common share-
                  Basis
              
              
              0.02
              
              
              0.09
              
              
              0.07-
                  Diluted
              
              
              0.02
              
              
              0.09
              
              
              0.07Weighted
                  average common shares-
                  Basis
              
              
              23,156,629
              
              
              19,454,420
              
              
              (3,702,209
              )-
                  Diluted
              
              
              23,156,629
              
              
              19,454,420
              
              
              (3,702,209
              )
  38




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**22.**
                **Restatement****(continued)**


**Consolidated
        Balance Sheet**
 **June
        30, 2007 (unaudited)**




***2007***
              
              ***2007***
              
              ***2007******(As
                  originally***
              
              ***(As
                  restated)***
              
              ***(Effect
                  of******Reported)***
              
              
              
              ***Adjustments)******$***
              
              ***$***
              
              ***$*****ASSETS**Current
                  Assets :Cash
                  and cash equivalents
              
              
              74,710
              
              
              74,710
              
              
              -Restricted
                  cash
              
              
              5,940,642
              
              
              5,940,642
              
              
              -Accounts
                  receivable
              
              
              14,463,214
              
              
              14,463,214
              
              
              -Prepaid
                  expenses and other receivables
              
              
              6,044,193
              
              
              6,044,193
              
              
              -Inventories,
                  net
              
              
              4,229,168
              
              
              3,980,993
              
              
              (248,175
              )Prepaid
                  lease payments
              
              
              22,840
              
              
              22,840
              
              
              -Total
                  Current Assets
              
              
              30,774,767
              
              
              30,526,592
              
              
              (248,175
              )Deferred
                  tax assets
              
              
              13,920
              
              
              13,920
              
              
              -Plant
                  and equipment, net
              
              
              754,958
              
              
              754,958
              
              
              -Leasehold
                  lands
              
              
              879,219
              
              
              879,219
              
              
              -Held-to-maturity
                  investments
              
              
              299,654
              
              
              299,654
              
              
              -Intangible
                  assets
              
              
              274,210
              
              
              274,210
              
              
              -Restricted
                  cash
              
              
              255,984
              
              
              255,984
              
              
              -**TOTAL
                  ASSETS**
              
              
              33,252,712
              
              
              33,004,537
              
              
              (248,175
              )**LIABILITIES
                  AND STOCKHOLDERS’ EQUITY****LIABILITIES**Current
                  Liabilities :Accounts
                  payable
              
              
              1,514,350
              
              
              1,514,350
              
              
              -Other
                  payables and accrued liabilities
              
              
              51,232
              
              
              51,232
              
              
              -Advances
                  from a related party
              
              
              23,938
              
              
              23,938
              
              
              -Income
                  taxes payable
              
              
              2,093,132
              
              
              1,984,221
              
              
              (108,911
              )Bank
                  borrowings
              
              
              15,608,181
              
              
              15,608,181
              
              
              -Total
                  Current Liabilities
              
              
              19,290,833
              
              
              19,181,922
              
              
              (108,911
              )Deferred
                  tax liabilities
              
              
              31,498
              
              
              31,498
              
              
              -**TOTAL
                  LIABILITIES**
              
              
              19,322,331
              
              
              19,213,420
              
              
              (108,911
              )**COMMITMENTS
                  AND CONTINGENCIES**


39


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**22.**
                  **Restatement****(continued)**


**Consolidated
      Balance Sheet (continued)**


**June
      30, 2007 (Unaudited)**





***2007***
            
            ***2007***
            
            ***2007******(As
                originally***
            
            ***(As
                restated)***
            
            ***(Effect
                of******Reported)***
            
            
            
            ***Adjustments)******$***
            
            ***$***
            
            ***$*****STOCKHOLDERS’
                EQUITY**Preferred
                stockPar
                value : 2007 - US$0.0001Authorized:
                2007 - 10,000,000 sharesIssued
                and outstanding: 2007 - 2,250,348 shares
            
            
            225
            
            
            225
            
            
            -Common
                stockPar
                value : 2007 - US$0.0001Authorized:
                2007 - 100,000,000 sharesIssued
                and outstanding: 2007 - 23,156,629 shares
            
            
            2,316
            
            
            2316
            
            
            -Additional
                paid-in capital
            
            
            2,970,386
            
            
            4,939,591
            
            
            1,969,205Accumulated
                other comprehensive income
            
            
            (40,672
            )
            
            (40,672
            )
            
            -Retained
                earnings
            
            
            10,998,126
            
            
            8,889,657
            
            
            (2,108,469
            )**TOTAL
                STOCKHOLDERS’ EQUITY**
            
            
            13,930,381
            
            
            13,791,117
            
            
            (139,264
            )**TOTAL
                LIABILITIES AND STOCKHOLDERS’ EQUITY**
            
            
            33,252,712
            
            
            33,004,537
            
            
            (248,175
            )




40





ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**22.**
                    **Restatement****(continued)**




**Statement
      of Cash Flows**


**Six
      months ended June 30, 2007 (Unaudited)**


***2007***
            
            ***2007***
            
            ***2007******(As
                originally***
            
            ***(As
                restated)***
            
            ***(Effect
                of******Reported)***
            
            
            
            ***Adjustments)******$***
            
            ***$***
            
            ***$*****Cash
                flows from operating activities**Net
                income
            
            
            2,842,028
            
            
            1,042,255
            
            
            (1,799,773
            )Adjustments
                to reconcile net income to net cashused
                in operating activities :Stock-based
                compensation
            
            
            -
            
            
            1,652,205
            
            
            1,652,205Amortization
                of intangible assets
            
            
            61,907
            
            
            61,907
            
            
            -Amortization
                of leasehold lands
            
            
            11,522
            
            
            11,522
            
            
            -Depreciation
            
            
            128,864
            
            
            128,864
            
            
            -Loss
                on disposal of plant and equipment
            
            
            5,404
            
            
            5,404
            
            
            -Income
                taxes
            
            
            760,302
            
            
            716,871
            
            
            (43,431
            )Fees
                and costs related to reverse merger
            
            
            419,197
            
            
            -
            
            
            (419,197
            )Changes
                in operating assets and liabilities :(Increase)
                decrease in -Accounts
                receivable
            
            
            (6,317,232
            )
            
            (6,317,232
            )
            
            -Prepaid
                expenses and other receivables
            
            
            (3,929,492
            )
            
            (3,929,492
            )
            
            -Inventories
            
            
            2,357,702
            
            
            2,231,701
            
            
            (126,001
            )Increase
                (decrease) in -Accounts
                payable
            
            
            748,048
            
            
            748,048
            
            
            -Other
                payables and accrued liabilities
            
            
            (138,176
            )
            
            (138,176
            )
            
            -Income
                taxes payable
            
            
            (111,908
            )
            
            (111,908
            )
            
            -Net
                cash used in operating activities
            
            
            (3,161,834
            )
            
            (3,898,031
            )
            
            (736,197
            )**Cash
                flows from investing activities**Cash
                acquired in connection with reverse acquisition
            
            
            3,193
            
            
            -
            
            
            (3,193
            )Acquisition
                of plant and equipment
            
            
            (3,824
            )
            
            (3,824
            )
            
            -Proceeds
                from disposal of plant and equipment
            
            
            320
            
            
            320
            
            
            -Net
                cash used in investing activities
            
            
            (311
            )
            
            (3,504
            )
            
            (3,193
            )**Cash
                flows from financing activities**Proceeds
                from issuance of Series A convertible preferred stock
            
            
            2,641,683
            
            
            2,641,683
            
            
            -Proceeds
                from new short-term bank borrowings
            
            
            -
            
            
            2,815,939
            
            
            2,815,939Repayment
                of short-term bank borrowings
            
            
            (28,187,384
            )
            
            (2,247,211
            )
            
            25,940,173Net
                advances under other short-term bank borrowings
            
            
            30,725,349
            
            
            1,969,237
            
            
            (28,756,112
            )Increase
                in restricted cash
            
            
            (1,440,370
            )
            
            (1,440,370
            )
            
            -Advances
                to related parties
            
            
            (9,057
            )
            
            (9,057
            )
            
            -Decrease
                in bank overdrafts
            
            
            (66,923
            )
            
            (66,923
            )
            
            -Fees
                and costs related to reverse merger
            
            
            (739,390
            )
            
            -
            
            
            739,390Net
                cash provided by financing activities
            
            
            2,923,908
            
            
            3,663,298
            
            
            739,390





41




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**22.**
                      **Restatement****(continued)**


**Statement
      of Cash Flows**


**Six
      months ended June 30, 2006 (Unaudited)**





***2007***
            
            ***2007***
            
            ***2007******(As
                originally***
            
            ***(As
                restated)***
            
            ***(Effect
                of******Reported)***
            
            
            
            ***Adjustments)******$***
            
            ***$***
            
            ***$***Net
                decrease in cash and cash equivalents
            
            
            (238,237
            )
            
            (238,237
            )
            
            -Effect
                of foreign currency translation on cash and cash
                equivalents
            
            
            (3,674
            )
            
            (3,674
            )
            
            -Cash
                and cash equivalents - beginning of period
            
            
            316,621
            
            
            316,621
            
            
            -Cash
                and cash equivalents - end of period
            
            
            74,710
            
            
            74,710
            
            
            -




42




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**22.**
                        **Restatement****(continued)**


**Statement
      of Cash Flows**


**Six
      months ended June 30, 2006 (Unaudited)**





***2006***
            
            ***2006***
            
            ***2006******(As
                originally***
            
            ***(As
                restated)***
            
            ***(Effect
                of******Reported)***
            
            
            
            ***Adjustments)******$***
            
            ***$***
            
            ***$*****Cash
                flows from operating activities**Net
                income
            
            
            1,951,594
            
            
            3,200,893
            
            
            1,249,299Adjustments
                to reconcile net income to net cash usedin
                operating activities :Amortization
                of intangible assets
            
            
            77,413
            
            
            77,413
            
            
            -Amortization
                of leasehold lands
            
            
            9,294
            
            
            9,294
            
            
            -Depreciation
            
            
            159,366
            
            
            159,366
            
            
            -Loss
                on disposal of plant and equipment
            
            
            7,735
            
            
            7,735
            
            
            -Income
                taxes
            
            
            419,309
            
            
            684,311
            
            
            265,002Changes
                in operating assets and liabilities :(Increase)
                decrease in -Accounts
                receivable
            
            
            (3,528,823
            )
            
            (3,528,823
            )
            
            -Prepaid
                expenses and other receivables
            
            
            (963,219
            )
            
            (963,218
            )
            
            1Inventories
            
            
            2,628,448
            
            
            1,114,146
            
            
            (1,514,302
            )Increase
                (decrease) in -Accounts
                payable
            
            
            68,807
            
            
            68,807
            
            
            -Other
                payables and accrued liabilities
            
            
            (20,293
            )
            
            (20,293
            )
            
            -Income
                taxes payable
            
            
            (33,977
            )
            
            (33,977
            )
            
            -Unearned
                income
            
            
            (1,597,305
            )
            
            (1,597,305
            )
            
            -Net
                cash used in operating activities
            
            
            (821,651
            )
            
            (821,651
            )
            
            -**Cash
                flows from investing activities**Acquisition
                of plant and equipment
            
            
            (1,164,127
            )
            
            (1,164,127
            )
            
            -Proceeds
                from disposal of plant and equipment
            
            
            2,037
            
            
            2,037
            
            
            -Net
                cash used in investing activities
            
            
            (1,162,090
            )
            
            (1,162,090
            )
            
            -




43




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**22.**
              **Restatement**(continued)****


**Statement
      of Cash Flows**


**Six
      months ended June 30, 2006 (Unaudited)**








***2006***
            
            ***2006***
            
            ***2006******(As
                originally***
            
            ***(As
                restated)***
            
            ***(Effect
                of******Reported)***
            
            
            
            ***Adjustments)***$
            
            $
            
            $**Cash
                flows from financing activities**Proceeds
                from new short-term bank borrowings
            
            
            -
            
            
            33,977
            
            
            33,977Repayment
                of short-term bank loans
            
            
            (27,682,224
            )
            
            (167,009
            )
            
            27,515,215Net
                advances under short-term bank borrowings
            
            
            -
            
            
            3,765,189
            
            
            3,765,189Net
                advances under other short-term bank borrowings
            
            
            31,314,380
            
            
            -
            
            
            (31,314,380
            )Increase
                in restricted cash
            
            
            (1,172,601
            )
            
            (1,172,602
            )
            
            (1
            )Advance
                from related parties
            
            
            541,978
            
            
            541,978
            
            
            -Increase
                in bank overdrafts
            
            
            167,638
            
            
            167,638
            
            
            -Dividends
                paid
            
            
            (1,608,572
            )
            
            (1,608,572
            )
            
            -Net
                cash flows provided by financing activities
            
            
            1,560,599
            
            
            1,560,599
            
            
            -Net
                decrease in cash and cash equivalents
            
            
            (423,142
            )
            
            (423,142
            )
            
            -Effect
                of foreign currency translation on cash and cash
                equivalents
            
            
            (3,449
            )
            
            (3,449
            )
            
            -Cash
                and cash equivalents - beginning of period
            
            
            780,090
            
            
            780,090
            
            
            -Cash
                and cash equivalents - end of period
            
            
            353,499
            
            
            353,499
            
            
            -




44




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**23.**
            **Subsequent
                Events**




On
      November 13, 2007, the Company 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 common stock of the Company expiring 2010 (the “Warrants”).
      The financing transaction was completed in accordance with a subscription
      agreement entered into by the Company 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 the Company 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
      the Company, The Bank of New York, and The Bank of New York, London Branch,




The
      Bonds
      are 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:




-
      The
      Bonds bear 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.





-
      Each
      Bond is convertible at the option of the holder at any time on and after 365
      days after the date the Company’s shares of common stock commence trading on the
      American Stock Exchange or any alternative stock exchange (the “Listing Date”)
      into shares of common stock of the Company at an initial per share conversion
      price (“Conversion Price”) equal to the price per share at which shares are sold
      in the Company’s proposed initial public offering on the American Stock Exchange
      (“AMEX”) with minimum gross proceeds of US$2,000,000. If no initial public
      offering has occurred prior to conversion, the Conversion Price will be US$2.00,
      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.





45




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006





**23.**
            **Subsequent
                Events (continued)**




-
      The
      number of shares of the Company’s 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 the
      Company’s 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 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).





-
      If on or before November 13, 2008, (i) the Company common stock is not listed
      on
      AMEX or the New York Stock Exchange or NASDAQ or (ii) 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 the
      Company 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 the Company
      to redeem the Bonds at 126.51% of their principal amount. The Company is
      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 the Company and the Subscriber, dated November 13, 2007 (the “Warrant
      Instrument”), are subject to the terms of a warrant agency agreement by and
      among the Company, 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. The Company has agreed to list the shares underlying the
      Warrants on AMEX, or any alternative stock exchange by November 13, 2008. In
      addition, the Company has 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.




46




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (restated)


(Stated
      in US Dollars)





THREE
      MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006




**23.**
            **Subsequent
                Events (continued)**




Registration
      Rights





On
      November 13, 2007, the Company and the Subscriber also entered into a
      registration rights agreement pursuant to which the Company agreed to register
      the Bonds and Warrants, and the shares of common stock underlying the Bonds
      and
      Warrants (the “Registrable Securities”). The Company 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, the Company agreed to list all Registrable Securities
      covered by the Registration Statement on each securities exchange on which
      similar securities issued by the Company are then listed. The registration
      rights agreement does not provide for liquidated or specified damages in the
      event the Company does not timely register the Registrable Securities.








Accounting
      for Bonds and Warrants





At
      November 13, 2007, the date of issuance, the Company determined the fair value
      of the Bonds to be zero, net of discounts for the fair value of the Warrants
      and
      the beneficial conversion feature aggregating $7,760,000, which were determined
      using the relative fair value method in accordance with APB 14 and EITF 98-5.
      The Warrants and the beneficial conversion feature were valued at $1,652,701
      and
      $6,107,299, respectively, with the fair value of the Warrants calculated using
      the Black-Scholes valuation model with a stock price fair value of $3.50 per
      share (the mid-point of the pending initial public offering) and the fair value
      of the beneficial conversion feature calculated using a conversion price of
      $2.00 per share (which is the Bond conversion price called for if the Company
      does not complete an initial public offering) and a fair value of $3.50 per
      share. The total amount allocated to the beneficial conversion feature is
      limited to the face value of the Bond, net of the Warrant fair value. The Bond
      discounts related to the Warrants and the beneficial conversion feature will
      be
      included in additional paid-in capital. The discounts will be recorded as
      interest expense over the five-year term of the Bonds using the interest method.
      The value of the Warrants and beneficial conversion feature are subject to
      adjustment based on the actual public offering price when the Company completes
      such an offering. There will be very significant adjustments to the
      aforementioned discounts if the actual initial public offering price is $3.50
      per share, as the actual number of shares issuable upon conversion of the Bonds
      will decrease from 4,000,000 shares to 2,285,714 shares, and the beneficial
      conversion feature will decrease accordingly. The Company will recalculate
      these
      amounts after its initial public offering based on the public offering price
      and
      will make any appropriate adjustments.





As
      indicated above, the Company will redeem each unconverted Bond at 150.87% of
      its
      principal amount on November 13, 2012 (the maturity date). Based on this
      commitment, the Company has determined the total redemption premium to be
      $4,069,600, which is in addition to the original face value of the Bonds of
      $8,000,000. This redemption premium will be amortized to interest expense over
      the term of the Bonds by the interest method.




47




**ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATION**





*The
      following discussion should be read in conjunction with our consolidated
      financial statements and related notes included elsewhere in this quarterly
      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 quarterly 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 90% of our revenue for the six months ended
      June 30, 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 ETA SA Manufacture
      Horlogere Suisse, 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.





**Recent
      Events**





***January
      2007 Private Placement***





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”). WestPark Capital, Inc. (“WestPark”) acted as the placement agent
      for the Private Placement. For its services as placement agent, WestPark
      received an aggregate fee of approximately $261,265, which consisted of a
      commission equal to 9.0% of the gross proceeds from the financing. After
      commissions and expenses, we received net proceeds of approximately $2.3 million
      in the Private Placement.





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 he
      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 our 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.
      In
      addition, 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 have accounted for the Escrow Shares as the
      equivalent of a performance-based compensatory stock plan between Mr. Kwong
      and
      us. Accordingly, during the three months and six months ended June 30, 2007,
      we
      recorded a charge to operations of $40,642 and $1,652,205, respectively, to
      recognize the grant date fair value of stock-based compensation in conjunction
      with the Escrow Shares.




48




**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.





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 it 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 six months ended June 30, 2007 was
      $38.2 million, with a gross profit $3.8 million, a 0.9% and 59.8% increase,
      respectively, as compared to $37.9 million in revenue and $2.4 million in gross
      profit for the six months ended June 30, 2006. The gross profit margin increased
      to 10.0% for the six months ended June 30, 2007 from 6.3% for the same period
      in
      2006, primarily due to more diversified products being promoted to customers
      and
      higher selling prices as a result 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 300
      watch manufacturers. In addition, we have extended our credit period from an
      average to 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 $3.8 million for the six months ended June
      30,
      2007, a 29.8% decrease compared to the same period in 2006 in which revenue
      was
      $5.3 million. This segment contributed approximately 8.9% of our revenue for
      the
      six months ended June 30, 2007, as compared to 12.4% of revenue for the period
      ended June 30, 2006. Our main market positioning in China is on the middle-class
      adult, daily, sporty and classy design.





***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.




49




*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 six months ended June 30, 2007 and 2006, 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.





*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.




50




*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.





We
      did
      not recognize any stock-based compensation during the three months or six months
      ended June 30, 2006. During the three months and six months ended June 30,
      2007,
      we recorded $40,642 and $1,652,205, respectively, 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:





**Three
                months ended June 30,**
            
            **Six
                months ended June 30,****2007**
            
            **2006**
            
            **2007**
            
            **2006**Net
                Sales
            
            
            100.00
            %
            
            100.00
            %
            
            100.00
            %
            
            100.00
            %Cost
                of Sales
            
            
            88.7
            %
            
            87.8
            %
            
            86.7
            %
            
            88.5
            %Gross
                Profit
            
            
            11.3
            %
            
            12.2
            %
            
            13.3
            %
            
            11.5
            %Other
                Income form Operation
            
            
            0.2
            %
            
            0.2
            %
            
            0.2
            %
            
            0.2
            %Depreciation
            
            
            0.3
            %
            
            0.4
            %
            
            0.3
            %
            
            0.4
            %Administrative
                and other operating expenses, including stock-based
                compensation
            
            
            2.7
            %
            
            1.3
            %
            
            6.2
            %
            
            1.4
            %Income
                from Operations
            
            
            8.5
            %
            
            10.7
            %
            
            10.7
            %
            
            9.9
            %Fees
                and Costs related to Reverse Merger
            
            
            -
            
            
            -
            
            
            1.8
            %
            
            -Other
                Income
            
            
            0.2
            %
            
            0.3
            %
            
            0.2
            %
            
            0.3
            %Interest
                Expenses
            
            
            1.3
            %
            
            1.3
            %
            
            1.2
            %
            
            1.2
            %Profit
                before Tax
            
            
            7.4
            %
            
            9.7
            %
            
            4.2
            %
            
            9.0
            %Taxation
            
            
            1.5
            %
            
            1.7
            %
            
            1.7
            %
            
            1.6
            %Net
                Income
            
            
            5.9
            %
            
            8.0
            %
            
            2.5
            %
            
            7.4
            %





***Comparison
      of the three months ended June 30, 2007 with the three months ended June 30,
      2006***





Net
      sales
      for the three months ended June 30, 2007 was $20.9 million as compared to $22.9
      million for the same period in 2006, a decrease of $2.1 million, or 9.0%. This
      decrease was primarily due to the decrease in sales of completed watches, which
      went down from $3.2 million to $1.9 million for the comparable period. The
      watch
      movement segment remained almost the same from $19.7 million for the three
      months ended June 30, 2006 to $19.0 million for the three months ended June
      30,
      2007. The decrease in sales of completed watches was due to the delay in new
      product launches, which affected new order placements during the period.




51




Cost
      of
      sales for the three months ended June 30, 2007 was $18.5 million, or 88.7%
      of
      net sales, as compared to $20.1 million, or 87.8% of net sales, for the same
      period in 2006. The slight increase as a percentage of sales in 2007 is due
      to
      changes between the periods in our sales mix.





Gross
      profit for the three months ended June 30, 2007 was $2.3 million, or 11.3%
      of
      net sales, compared to $2.8 million, or 12.2% of net sales for the same period
      in 2006. The change in our gross profit margin was primarily attributable to
      the
      changes in cost as a the sales mix changed in three months ended June 30, 2007
      from the same period in 2006. Gross profit margins are usually a factor of
      product mix and demand for product. The gross profit of watch movements as
      a
      percentage of net sales had increased from 6.3% for the period ended June 30,
      2006 to 8.0% of net sales as compared to same period in 2007. There was only
      a
      slight decrease of gross profit for completed watches for the period ended
      June
      30, 2007, which was 44.4% of net sales as compared to 48.4% of net sales for
      the
      same period in 2006 as the product mix had no significant change.





Other
      income from operations was $48,281, or 0.2% of net sales for the three months
      ended June 30, 2007, as compared to $41,875, or 0.2% of net sales for the three
      months ended June 30, 2006. The slight increase was primarily due to an increase
      in rental income, which was $15,710 for the three months ended June 30, 2007,
      partially offset by a decrease in income received from the license fees of
      intangible assets, which was $32,571 for the three months ended June 30, 2007,
      as compared to $41,875 for the same period in 2006.





Administrative
      and other operating expenses were $558,875, or 2.7% of net sales for the three
      months ended June 30, 2007, as compared to $298,113, or 1.3% of net sales for
      comparable period in 2006. The increase in amount and as a percentage of net
      sales was primarily due to the recognition of $40,642 of stock-based
      compensation during the three months ended June 30, 2007 related to the Escrow
      Shares provided by our CEO, Kwong Kai Shun, which are subject to the achievement
      of defined annual net income for 2006 and 2007 pursuant to the Private Placement
      agreement entered into with our investors. The increase was also attributable
      to
      the 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 $48,452, or 0.2% of net sales, for
      the
      three months ended June 30, 2007, as compared to $67,383, or 0.3% of net sales,
      for the three months ended June 30, 2006. The decrease was primarily due to
      a
      decrease in bank interest income, which was $47,904 for the three months ended
      June 30, 2007, as compared to $57,661 for the same period in 2006 and a lack
      of
      other interest income in the comparable period in 2007.





Interest
      expense for the three months ended June 30, 2007 was $274,990, or 1.3% of net
      sales, which was consistent as compared to $297,298, or 1.3% of net sales,
      in
      2006.





Income
      taxes for the three months ended June 30, 2007 were $314,204, or 1.5% of net
      sales, as compared to $389,366 for the three months ended June 30, 2006, or
      1.7%
      of net sales. The decrease in income taxes were primarily due to a decrease
      in
      the operating profit from $2.2 million for the three months ended June 30,
      2006
      to $1.6 million for the same period in 2007.





Net
      income for the three months ended June 30, 2007 was $1.2 million, or 5.9% of
      net
      sales, as compared to $1.8 million, or 8.0% of the net sales for the comparable
      period in 2006. Net income for the three months ended June 30, 2007 included
      a
      stock-based compensation charge of $40,642 related to the Escrow Shares provided
      by our CEO, Kwong Kai Shun, as discussed above.





***Comparison
      of the six months ended June 30, 2007 with the six months ended June 30,
      2006***





Net
      sales
      for the six months ended June 30, 2007 was $42.0 million as compared to $43.2
      million for the comparable period in 2006, a decrease of $1.2 million, or 2.9%.
      This decrease was primarily due to the decrease in sales of completed watches,
      which went down from $5.3 million for the six months ended June 30, 2007 to
      $3.8
      million for the comparable period, partially offset by the increase in sales
      of
      watch movements from $37.9 million for the six months ended June 30, 2007 to
      $38.2 million for the comparable period. The decrease in sales of completed
      watches was due to the delay in new product launches, which affected new order
      placements in the period.





Cost
      of
      sales for the six months ended June 30, 2007 was $36.4 million, or 86.7% of
      net
      sales, as compared to $38.3 million, or 88.5% of net sales, for the same period
      in 2006. The decrease in cost of sales as a percentage of net sales was largely
      attributable to the improved economies of scale and the increased level of
      price
      reduction received in the form of additional watch movements from the
      manufacturers.




52




Gross
      profit for the six months ended June 30, 2007 was $5.6 million, or 13.3% of
      net
      sales, compared to $5.0 million, or 11.5% of net sales for the same period
      in
      2006. The increase in our gross profit margin was primarily attributable to
      the
      increase in sales of higher-margin products as a result of diversification
      of
      products, a decrease in costs in the six months ended June 30, 2007 due to
      improved economies of scale. Gross profit margins are usually a factor of
      product mix and demand for product. The gross profit of watch movements as
      a
      percentage of net sales had increased from 6.3% for the period ended June 30,
      2006 to 10.0% of net sales for the same period in 2007. The increase in gross
      profit margin was primarily due to an increase in sales of higher-margin items.
      There was only a slight increase of gross profit for completed watch for the
      six
      months ended June 30, 2007, which was 46.4% of net sales as compared to 48.0%
      of
      net sales for the comparable period in 2006 as the product mix had no
      significant change.





Other
      income from operations was $96,778, or 0.2% of net sales for the six months
      ended June 30, 2007, as compared to $83,780, or 0.2% of net sales for the six
      months ended June 30, 2006. The slight increase was primarily due to an increase
      in rental income, which was $31,491 for the six months ended June 30, 2007,
      partially offset by a decrease in income received from the license fees of
      intangible assets, which was $65,287 for the six months ended June 30, 2007,
      as
      compared to $83,780 for the same period in 2006.





Administrative
      and other operating expenses were $2,605,263, or 6.2% of net sales for the
      six
      months ended June 30, 2007, as compared to $612,245, or 1.4% of net sales for
      comparable period in 2006. The increase in amount and as a percentage of net
      sales was primarily due to the recognition of $1,652,205 of stock-based
      compensation for the six months ended June 30, 2007 related to the Escrow Shares
      provided by our CEO, Kwong Kai Shun, which are subject to the achievement of
      defined annual net income for 2006 and 2007 pursuant to the Private Placement
      agreement entered into with our investors. The increase was also attributable
      to
      the 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.





Fees
      and
      costs related to the reverse merger for the six months ended June 30, 2007
      were
      $736,197, which included the shell cost $317,000 paid to the shareholders of
      SRKP 9, Inc., the shell company. There were no such expenses in the same period
      in 2006.




Other
      income from non-operating activities was $78,381, or 0.2% of net sales, for
      the
      six months ended June 30, 2007, as compared to $110,296, or 0.3% of net sales,
      for the six months ended June 30, 2006. The decrease was primarily due to a
      decrease in bank interest income, which was $76,906 for the six months ended
      June 30, 2007, as compared to $94,004 for the same period in 2006 and a lack
      of
      other interest income in the comparable period in 2007.





Interest
      expense for the six months ended June 30, 2007 was $514,419, or 1.2% of net
      sales, which was consistent as compared to $497,854, or 1.2% of net sales,
      in
      2006.





Income
      taxes for the six months ended June 30, 2007 were $716,871, or 1.7% of net
      sales, as compared to $684,311 for the six months ended June 30, 2006, or 1.6%
      of net sales. The decrease in income taxes was primarily due to a decrease
      in
      the operating profit due to stock compensation expense that will not give rise
      to a future tax deduction. In addition operating profits wee also less than
      the
      2006 period.





Net
      income for the six months ended June 30, 2007 was $1.0 million, or 2.5% of
      net
      sales, as compared to $3.2 million, or 7.4% of the net sales for the comparable
      period in 2006. Net income for the six months ended June 30, 2007 included
      a
      stock-based compensation charge of $1,652,205 related to the Escrow Shares
      provided by our CEO, Kwong Kai Shun, as discussed above.





**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.




53




**New
      Accounting Pronouncements**





In
      February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid
      Financial Instruments, which amends SFAS No. 133, Accounting for Derivative
      Instruments and Hedging Activities (“SFAS No. 155”), and SFAS No. 140,
      Accounting for Transfers and Servicing of Financial Assets and Extinguishments
      of Liabilities. SFAS No. 155 simplifies the accounting for certain derivatives
      embedded in other financial instruments by allowing them to be accounted for
      as
      a whole if the holder elects to account for the whole instrument on a fair
      value
      basis. SFAS No. 155 also clarifies and amends certain other provisions of SFAS
      No. 133 and SFAS No. 140. SFAS No. 155 is effective for all financial
      instruments acquired, issued or subject to a remeasurement event occurring
      in
      fiscal years beginning after September 15, 2006. Earlier adoption is permitted,
      provided we have not yet issued financial statements, including for interim
      periods, for that fiscal year. We do not believe the adoption of SFAS No. 155
      will have a material impact on our consolidated financial position or results
      of
      operations.




The
      FASB
      released SFAS No. 156, “Accounting for Servicing of Financial Assets,” to
      simplify accounting for separately recognized servicing assets and servicing
      liabilities. SFAS No. 156 amends SFAS No. 140, “Accounting for Transfers and
      Servicing of Financial Assets and Extinguishments of Liabilities.” SFAS No. 156
      permits an entity to choose either the amortization method or the fair value
      measurement method for measuring each class of separately recognized servicing
      assets and servicing liabilities after they have been initially measured at
      fair
      value. SFAS No. 156 applies to all separately recognized servicing assets and
      liabilities acquired or issued after the beginning of an entity’s fiscal year
      that begins after September 15, 2006. SFAS No. 156 will be effective for us
      as
      of December 31, 2006, the beginning of our 2007 fiscal year. We do not believe
      the adoption of SFAS No. 156 will have a material impact on our consolidated
      financial position or results of operations.





In
      July
      2006, the FASB issued FIN 48 “Accounting for Uncertainty in Income Taxes.” This
      interpretation requires that we recognize in our financial statements, the
      impact of a tax position, if that position is more likely than not of being
      sustained on audit, based on the technical merits of the position. The
      provisions of FIN 48 are effective as of the beginning of our 2007 fiscal year,
      with the cumulative effect of the change in accounting principle recorded as
      an
      adjustment to opening retained earnings. We are currently evaluating the effect
      of FIN 48 on our financial statements and do not believe the adoption of FIN
      No.
      48 will have a material impact on our consolidated financial position or results
      of operations.





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. This Statement
      shall be 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. Although we will
      continue to evaluate the provisions of SFAS No. 157, management currently
      does not believe the adoption of SFAS No. 157 will have a material
      impact on our consolidated financial statements.





The
      FASB
      released SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and
      Other Postretirement Plans: an amendment of FASB Statements No. 87, 88, 106,
      and
      132(R),” which requires an employer to recognize the over funded or under funded
      status of defined benefit and other postretirement plans as an asset or
      liability in its statement of financial position and to recognize changes in
      that funded status in the year in which the changes occur through an adjustment
      to comprehensive income. This statement also requires an employer to measure
      the
      funded status of a plan as of the date of its year-end statement of financial
      position, with limited exceptions. We are required to initially recognize the
      funded status of our defined benefit and other postretirement plans as of
      December 31, 2006, and to provide the required disclosures in our 2006 annual
      report on Form 10-KSB. The adoption of SFAS No. 158 has no material effect
      on
      our 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.” The fair value option established by SFAS No. 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
      No.
      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. No.157. We have chosen not to adopt this statement early. Although we
      will
      continue to evaluate the provisions of SFAS No. 159, management currently
      does not believe the adoption of SFAS No. 159 will have a material
      impact on our consolidated financial statements.




54




**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 June 30,
      2007 we had general banking facilities amounted to $15.61 million for overdraft,
      letter of credit, trust receipt, invoice financing and export loans granted
      by
      nine banks. The amount increased by $2.40 million compared to $13.20 million
      as
      at June 30, 2006. 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
      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”). Of the gross proceeds, $50,000 is represented by a subscription
      receivable from one investor. WestPark Capital, Inc. (“WestPark”) acted as the
      placement agent for the Private Placement. For its services as placement agent,
      WestPark received an aggregate fee of approximately $261,265, which consisted
      of
      a commission equal to 9.0% of the gross proceeds from the financing. After
      commissions and expenses, we received net proceeds of approximately $2.3 million
      in the Private Placement.





Pursuant
      to Subscription Agreements entered into with the investors in 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 per share
      purchase price. However, if we, at any time prior to the first trading day
      on
      which our common stock is quoted on the American Stock Exchange, Nasdaq Capital
      Market, Nasdaq Global Market or New York Stock Exchange (each a “Trading
      Market”) sell or issue 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 us are at least $1.0 million, then the
      aforementioned conversion price shall be reduced to such effective price. Each
      share of the Series A Convertible Preferred Stock shall automatically convert
      into shares of common stock if (i) the closing price of our 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. Upon liquidation, the
      holders of the Series A Convertible Preferred Stock shall receive $1.29 per
      share of the Series A Convertible Preferred Stock then held prior to any other
      distribution or payment made to holders of the common stock.





We
      agreed
      to file, and did 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.





For
      the
      six months ended June 30, 2007, net cash used by operating activities was
      approximately $3.9 million, as compared to net cash used in operating activities
      of $821,651 for the comparable period in 2006. The increase in net cash used
      by
      operating activities was primarily attributable to a decrease in net income
      of
      $1.0 million for the six months ended June30, 2007 as compared to $3.2 million
      in the comparable period, an increase in accounts receivable of $6.3 million
      for
      the six months ended June 30, 2007 as comparable to $3.5 million in the same
      period in 2006, and an increase in prepaid expenses and other receivables of
      $3.9 million for the six months ended June 30, 2007 as comparable to $963,218
      in
      the same period in 2006, partially offset by a decrease in inventories of $2.2
      million for the six months ended June 30, 2007 as comparable to $1.1 million
      in
      the same period in 2006, an adjustment related to stock-based compensation
      to
      our CEO, Kwong Kai Shun of $1.7 million and the lack of unearned revenue. The
      increase in accounts receivable was due to an increase in sales and extended
      aging in the completed watches segment. The increase in prepaid expenses and
      other receivables was attributable to the deposit of potential acquisition
      of
      plant facilities to our intermediate. However, no solid acquisition plan was
      carried out as of the time of this quarterly report.





Net
      cash
      used in investing activities was $3,504 for the six months ended June 30, 2007,
      compared to $1.2 million in the comparable period in 2006. The decrease in
      net
      cash used was primarily due to the decrease in expenditures for acquiring plant
      and equipment from $1.2 million for the six months ended June 30, 2006 to
      $$3,824 in the comparable period in 2007, and no significant investment was
      made
      during this period.





Net
      cash
      provided by financing activities was $3.7 million for the six months ended
      June
      30, 2007 and $1.6 million for the comparable period in 2006. The increase in
      net
      cash provided by financing activities for the six months ended June 30, 2007
      was
      primarily attributable to an increase in our issuance of equity securities
      in a
      private placement in the amount of $2.6 million and the lack of dividends paid,
      partially offset by a an increase in recapitalization costs.





For
      the
      six months ended June 30, 2007 and the same period in 2006, our average
      inventory turnover were 26 days and 27 days, respectively. The average days
      outstanding of our accounts receivable for the six months ended June 30, 2007
      was 49 days, as compared to 28 days for the same period in 2006. The increase
      in
      accounts receivable was due to the change in our credit policy. Since January
      2007, we have extended our credit terms from 30 days to 60 day to customers
      who
      have a good credit history in order to improve our profit margin and
      competitiveness. Inventory turnover and average days outstanding are key
      operating measures that management relies on to monitor our business.




55




For
      fiscal year 2006, 2005 and 2004, our inventory turnover was 10.8, 10.8 and
      13.2
      times, respectively. During 2004, our stock level was kept at a relatively
      low
      level to improve cash flow however, we also risked stock shortage. In 2005
      and
      2006 we increased our stock level and, thus, the turnover ratio to a more
      optimal level of 10.8. We expect the turnover ratio will further decrease in
      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, 2006 were 29 days, as compared to 24 days and 10.8 days at December 31,
      2005
      and 2004. The increase in accounts receivable was due to the change in credit
      policy since 2005 where credit terms of up to 30 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 will not take place until after the completion
      of our initial public offering, the proceeds of which will give us a portion
      of
      the required capital. We will 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.





**ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURE 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.




*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.




56




**ITEM
      4.  CONTROLS AND PROCEDURES**





*(a)
      Evaluation of disclosure controls and procedures*





As
      of
      June 30, 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 June 30, 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-Q.




*(b)
      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 June 30, 2007
      that
      have materially affected, or are reasonably likely to materially affect, our
      internal control over financial reporting.








**PART
      II-OTHER INFORMATION**





**ITEM
      1.**  **LEGAL
      PROCEEDINGS**





We
      are
      not currently a party to any material legal proceedings.





**ITEM
      1A. RISK FACTORS**





Other
      than the following, there have been no material changes from the risk factors
      disclosed in the “Risk Factors” section of our annual report on Form 10-K/A for
      the year ended December 31, 2006.





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




57




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.





**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 will record 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 nine
      months ended September 30, 2007, we will record a charge to operations of
      $1,852,494 to recognize the grant date fair value of stock-based compensation
      in
      conjunction with the Escrow Shares, and during the three months ended December
      31, 2007, we will recognize a final charge to operations of $581,156 with
      respect to 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.





**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.





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.




58




**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 that we intend to issue
      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. if and when our registration statement,
      of which this prospectus is a part, is declared effective by the Securities
      and
      Exchange Commission. Upon 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 mid-range offering price of this 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.








**ITEM
      2.**  **UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**




None.





**ITEM
      3.**  **DEFAULTS
      UPON SENIOR SECURITIES**





None.





**ITEM
      4.**  **SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS**





None.





**ITEM
      5.**  **OTHER
      INFORMATION**





None.





**ITEM
      6.**  **EXHIBITS**




(a)
      Exhibits





31.1
            Certification
                of Principal Executive Officer and Principal Financial and Accounting
                Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of
                200232.1
            Certification
                of Principal Executive Officer and Principal Financial and Accounting
                Officer 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.




59




**SIGNATURES**





In
      accordance with the requirements of the Exchange Act, the registrant has duly
      caused this report to be signed on its behalf by the undersigned, thereunto
      duly
      authorized.




**ASIA
                TIME CORPORATION**
              (Registrant)February
                8, 2008
            By:
            /s/ Kwong
              Kai
              ShunKwong
                Kai ShunChief
                Executive Officer, Chief Financial Officer and Chairman of the
                Board






60