**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**




**FORM
      10-Q**




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


**SECURITIES
      EXCHANGE ACT OF 1934**




**For
      the quarterly period ended September 30, 2008**




**OR**




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


**SECURITIES
      EXCHANGE ACT OF 1934**




**Commission
      File Number**


**001-33956**




**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  ̈




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





Large
                accelerated filer ̈
            Accelerated
                filer ̈
            Non-accelerated
                filerx
            Smaller
                reporting company ̈*(Do
                not check if a smaller**reporting
                company)*




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




There
      were 26,570,677 shares outstanding of registrant’s common stock, par value
      $0.0001 per share, as of November 14, 2008.












**ASIA
      TIME CORPORATION**


**FORM
      10-Q QUARTERLY REPORT**




**TABLE
      OF CONTENTS**




**Page**PART
                I - FINANCIAL INFORMATIONITEM
                1.
            FINANCIAL
                STATEMENTS
            1Condensed
                Consolidated Balance Sheets (Unaudited)
            2Condensed
                Consolidated Statements of Operations (Unaudited)
            4Condensed
                Consolidated Statements 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
            38ITEM
                3.
            QUANTITATIVE
                AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
            45ITEM
                4.
            CONTROLS
                AND PROCEDURES
            45PART
                II - OTHER INFORMATIONITEM
                1.
            LEGAL
                PROCEEDINGS
            46ITEM
                1A.
            RISK
                FACTORS
            46ITEM
                2.
            UNREGISTERED
                SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
            46ITEM
                3.
            DEFAULTS
                UPON SENIOR SECURITIES
            46ITEM
                4.
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS
            46ITEM
                5.
            OTHER
                INFORMATION
            47ITEM
                6.
            EXHIBITS
            47SIGNATURES
            
            48









**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
      as
      contained in its Annual Report on Form 10-K, as amended, as originally filed
      with the Securities and Exchange Commission on March 31, 2008.




1




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)




CONDENSED
      CONSOLIDATED BALANCE SHEETS


(Stated
      in US Dollars)




***As of******September 30,***
            
            ***December 31,******2008***
            
            ***2007****Notes*
            
            ***(Unaudited)***
            
            ***(Audited)******$***
            
            ***$*****ASSETS**Current
                Assets :Cash
                and cash equivalents
            
            
            
            
            
            2,973,029
            
            
            6,258,119Restricted
                cash
            
            
            
            
            
            7,979,513
            
            
            8,248,879Accounts
                receivable
            
            
            
            
            
            25,204,251
            
            
            14,341,989Prepaid
                expenses and other receivables
            
            
            *7*
            
            
            17,004,909
            
            
            7,704,999Inventories,
                net
            
            
            *8*
            
            
            10,904,300
            
            
            12,370,970Total
                Current Assets
            
            
            
            
            
            64,066,002
            
            
            48,924,956Deferred
                tax assets
            
            
            *6*
            
            
            29,964
            
            
            29,929Property
                and equipment, net
            
            
            *9*
            
            
            8,321,309
            
            
            1,891,709Leasehold
                lands
            
            
            *10*
            
            
            -
            
            
            -Held-to-maturity
                investments
            
            
            *11*
            
            
            300,578
            
            
            300,231Intangible
                assets
            
            
            *12*
            
            
            18,025
            
            
            48,012Restricted
                cash
            
            
            
            
            
            256,772
            
            
            256,476**TOTAL
                ASSETS**
            
            
            
            
            
            72,992,650
            
            
            51,451,313**LIABILITIES
                AND STOCKHOLDERS’ EQUITY****LIABILITIES**Current
                Liabilities :Accounts
                payable
            
            
            
            
            
            2,692,873
            
            
            1,310,809Other
                payables and accrued liabilities
            
            
            *13*
            
            
            627,358
            
            
            132,507Income
                taxes payable
            
            
            
            
            
            4,718,084
            
            
            2,293,887Bank
                borrowings
            
            
            *14*
            
            
            24,022,728
            
            
            20,438,479Total
                Current Liabilities
            
            
            
            
            
            32,061,043
            
            
            24,175,682Convertible
                bond payables
            
            
            *15*
            
            
            4,957,551
            
            
            345,461Deferred
                tax liabilities
            
            
            *6*
            
            
            57,019
            
            
            56,953**TOTAL
                LIABILITIES**
            
            
            
            
            
            37,075,613
            
            
            24,578,096**COMMITMENTS
                AND CONTINGENCIES**
            
            
            *18*




2




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)




CONDENSED
      CONSOLIDATED BALANCE SHEETS *(Continued)*


(Stated
      in US Dollars)




***As of****Notes*
            
            ***September 30,***
              ***2008***
              ***(Unaudited)***
            
            ***December 31,***
              ***2007***
              ***(Audited)******$***
            
            ***$*****STOCKHOLDERS’
                EQUITY**Preferred
                stock
            
            
            *16*Par
                value: 2008 – US$0.0001 (2007 – US$0.0001)Authorized:
                2008 – 10,000,000 shares
              (2007
                – 10,000,000 shares)Issued
                and outstanding: 2008 – Nil shares
              (2007
                – 2,250,348 shares)
            
            
            
            
            
            -
            
            
            225Common
                stock
            
            
            *16*Par
                value: 2008 US$0.0001 (2007 – US$0.0001)Authorized:
                100,000,000 sharesIssued
                and outstanding: 2008 – 26,570,677 shares
              (2007
                – 23,156,629 shares)
            
            
            
            
            
            2,657
            
            
            2,316Additional
                paid-in capital
            
            
            
            
            
            12,636,309
            
            
            13,481,036Accumulated
                other comprehensive income/(loss)
            
            
            
            
            
            19,119
            
            
            (28,404
            )Retained
                earnings
            
            
            
            
            
            23,258,952
            
            
            13,418,044**TOTAL
                STOCKHOLDERS’ EQUITY**
            
            
            
            
            
            35,917,037
            
            
            26,873,217**TOTAL
                LIABILITIES AND STOCKHOLDERS’ EQUITY**
            
            
            
            
            
            72,992,650
            
            
            51,451,313




See
      notes
      to condensed consolidated financial statements




3


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)




CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS


(Stated
      in US Dollars)




***Three months ended***
              ***September 30,***
            
            ***Nine months ended***
              ***September 30,******2008***
            
            ***2007***
            
            ***2008***
            
            ***2007******(Unaudited)***
            
            ***(Unaudited)***
            
            ***(Unaudited)***
            
            ***(Unaudited)******$***
            
            ***$***
            
            ***$***
            
            ***$***Net
                sales
            
            
            40,049,042
            
            
            22,972,645
            
            
            114,997,186
            
            
            64,960,224Cost
                of sales
            
            
            (33,533,669
            )
            
            (18,410,524
            )
            
            (97,534,658
            )
            
            (54,829,393
            )Gross
                profit
            
            
            6,515,373
            
            
            4,562,121
            
            
            17,462,528
            
            
            10,130,831Other
                operating income – Note 3
            
            
            25,848
            
            
            48,425
            
            
            77,405
            
            
            145,203Depreciation
            
            
            (371,581
            )
            
            (64,635
            )
            
            (986,492
            )
            
            (193,499
            )Administrative
                and other operating expenses, including stock-based
                compensation
            
            
            (619,553
            )
            
            (690,514
            )
            
            (2,929,940
            )
            
            (3,295,777
            )Income
                from operations
            
            
            5,550,087
            
            
            3,855,397
            
            
            13,623,501
            
            
            6,786,758Fees
                and costs related to reverse merger
            
            
            -
            
            
            -
            
            
            -
            
            
            (736,197
            )Non-operating
                income – Note 4
            
            
            25,369
            
            
            39,555
            
            
            136,117
            
            
            117,936Interest
                expenses – Note 5
            
            
            (460,730
            )
            
            (316,516
            )
            
            (1,485,568
            )
            
            (830,935
            )Income
                before taxes
            
            
            5,114,726
            
            
            3,578,436
            
            
            12,274,050
            
            
            5,337,562Income
                taxes – Note 6
            
            
            (952,833
            )
            
            (697,737
            )
            
            (2,433,142
            )
            
            (1,414,608
            )Net
                income
            
            
            4,161,893
            
            
            2,880,699
            
            
            9,840,908
            
            
            3,922,954Earnings
                per common share-
                Basic
            
            
            0.16
            
            
            0.12
            
            
            0.39
            
            
            0.17-
                Diluted
            
            
            0.15
            
            
            0.11
            
            
            0.36
            
            
            0.16Weighted
                average common shares-
                Basic
            
            
            26,570,394
            
            
            23,156,629
            
            
            25,386,013
            
            
            22,844,721-
                Diluted
            
            
            27,244,540
            
            
            25,406,977
            
            
            27,059,811
            
            
            24,874,262




See
      notes
      to consolidated financial statements.




4


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)




CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS


(Stated
      in US Dollars)




***Nine months ended***
              ***September 30,******2008***
            
            ***2007******(Unaudited)***
            
            ***(Unaudited)******$***
            
            ***$*****Cash
                flows from operating activities**Net
                income
            
            
            9,840,908
            
            
            3,922,954Adjustments
                to reconcile net income to net cashused
                in operating activities :Amortization
                of bond discount and bond interest
            
            
            397,491
            
            
            -Stock-based
                compensation
            
            
            700,000
            
            
            1,852,494Amortization
                of intangible assets
            
            
            30,008
            
            
            92,884Amortization
                of leasehold lands
            
            
            -
            
            
            17,287Depreciation
            
            
            986,492
            
            
            193,499Loss
                on disposal of plant and equipment
            
            
            -
            
            
            5,406Income
                taxes
            
            
            2,433,142
            
            
            1,414,608Changes
                in operating assets and liabilities :(Increase)
                decrease in -Accounts
                receivable
            
            
            (10,833,327
            )
            
            (7,281,110
            )Prepaid
                expenses and other receivables
            
            
            (9,280,457
            )
            
            (4,260,214
            )Inventories
            
            
            1,479,276
            
            
            275,517Increase
                (decrease) in -Accounts
                payable
            
            
            1,378,980
            
            
            306,241Other
                payables and accrued liabilities
            
            
            494,444
            
            
            (138,142
            )Income
                taxes payable
            
            
            (14,363
            )
            
            (112,601
            )Net
                cash used in operating activities
            
            
            (2,387,406
            )
            
            (3,711,177
            )**Cash
                flows from investing activities**Acquisition
                of plant and equipment
            
            
            (7,406,579
            )
            
            (30,257
            )Proceeds
                from disposal of plant and equipment
            
            
            -
            
            
            320Net
                cash used in investing activities
            
            
            (7,406,579
            )
            
            (29,937
            )**Cash
                flows from financing activities**Proceeds
                from issuance of common stock
            
            
            2,669,987
            
            
            -Proceeds
                from issuance of Series A convertible preferred stock
            
            
            -
            
            
            2,6471,683Proceeds
                from new short-term bank loans
            
            
            -
            
            
            2,816,620Repayment
                of short-term bank loans
            
            
            (1,849,929
            )
            
            (4,029,839
            )Net
                advances under other short-term bank borrowings
            
            
            5,243,083
            
            
            3,175,698Increase
                in restricted cash
            
            
            (4,181
            )
            
            (1,031,003
            )Advances
                (from) to related parties
            
            
            278,578
            
            
            (20,773
            )Increase
                in bank overdrafts
            
            
            167,601
            
            
            40,840Net
                cash provided by financing activities
            
            
            6,505,139
            
            
            3,593,226Net
                decrease in cash and cash equivalents
            
            
            (3,288,846
            )
            
            (147,888
            )Effect
                of foreign currency translation on cash and cash
                equivalents
            
            
            3,756
            
            
            (2,517
            )Cash
                and cash equivalents - beginning of period
            
            
            6,258,119
            
            
            316,621Cash
                and cash equivalents - end of period
            
            
            2,973,029
            
            
            166,216




5




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)




CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS *(Continued)*


(Stated
      in US Dollars)




***Nine months ended***
              ***September 30,******2008***
            
            ***2007******(Unaudited)***
              ***$***
            
            ***(Unaudited)***
              ***$***Supplemental
                disclosures of cash flow information :Cash
                paid for :Interest
            
            
            1,485,568
            
            
            830,935Income
                taxes
            
            
            2,433,142
            
            
            1,414,608




See
      notes
      to consolidated financial statements.




6


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)





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





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





Recapitalization





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





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





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





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





The
      Company agreed to register the 1,999,192 shares of common stock that were held
      by certain of the Company’s shareholders immediately prior to the closing of the
      Exchange Agreement. If the Company fails to register 1,999,192 shares due to
      failure on the part of the Company, additional shares of its common stock shall
      be issued to the respective shareholders in the amount of 0.0333% of their
      respective shares for each calendar day until the registration becomes
      effective. There is no maximum potential consideration to be transferred in
      connection with the registration of these shares. The Company agreed to file
      a
      registration statement no later than the tenth day after the end of the nine
      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 (“SEC”). In
      addition, the Company agreed to use its reasonable best efforts to maintain
      the
      registration statement effective for a period of 24 months at the Company's
      expense.


7


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)





**1.**
            **Organization
                and nature of operations*********(Continued)***




Restructuring





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





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





Corporate
      Structure – Before Restructuring








8


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)





**1.**
            **Organization
                and nature of operations*********(Continued)***





Corporate
      Structure – After Restructuring











Description
      of business





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





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


9


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)





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





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





Principle
      of Consolidation





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





Use
      of
      estimates





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





Concentrations
      of credit risk





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





Restricted
      cash





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


10


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)





**2.**
            **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.





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





During
      the reporting period, the Group did not experience any bad debts and,
      accordingly, did not make any allowance for doubtful debts.





Inventories





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





Leasehold
      lands





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


11


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)





**2.**
            **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 as follows:





Trademarks
            
            
            20
            %Websites
            
            
            20
            %




Held-to-maturity
      investments





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





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





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





Property
      and equipment





Property
      and equipment are stated at cost less accumulated depreciation.





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





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




12


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)





**2.**
            **Summary
                of significant accounting policies*****(Continued)***





Property
      and equipment *(Continued)*





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





Revenue
      recognition




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




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





Advertising
      and promotion expenses





Advertising
      and promotion expenses are charged to expense as incurred.





Advertising
      and promotion expenses amounted to $Nil during each of the three and nine month
      periods ended September 30, 2008 and 2007.




13


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)




**2.**
            **Summary
                of significant accounting policies*****(Continued)***





Income
      taxes





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





Comprehensive
      income





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





Foreign
      currency translation





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


14


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)




**2.**
            **Summary
                of significant accounting policies*****(Continued)***





Foreign
      currency translation





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





***Nine months ended***
              ***September 30,******2008***
            
            ***2007***Nine
                months end HK$ : US$ exchange rate
            
            
            7.7890
            
            
            7.7840Average
                quarterly HK$ : US$ exchange rate
            
            
            7.7979
            
            
            7.8098





Fair
      value of financial instruments





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





Basic
      and diluted earnings per share





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


15


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)





**2.**
            **Summary
                of significant accounting policies*****(Continued)***





Basic
      and diluted earnings per share *(Continued)*





The
      calculation of diluted weighted average common shares outstanding for the three
      and nine months ended September 30, 2008 and 2007 is based on the estimate
      fair
      value of the Company’s common stock during such periods applied to warrants and
      options using the treasury stock method to determine if they are dilutive.
      The
      Convertible Bond is included on an “as converted “basis when these shares are
      dilutive.





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





***Three months ended***
              ***September 30,***
            
            ***Nine months ended***
              ***September 30,******2008***
            
            ***2007***
            
            ***2008***
            
            ***2007******(Unaudited)***
            
            ***(Unaudited)***
            
            ***(Unaudited)***
            
            ***(Unaudited)******$***
            
            
            ***$***
            
            
            
            
            
            ***$***Numerator
                for basic and diluted earnings per share:Net
                income
            
            
            4,161,893
            
            
            2,880,699
            
            
            9,840,908
            
            
            3,922,954Denominator:Basic
                weighted average shares
            
            
            26,570,394
            
            
            23,156,629
            
            
            25,386,013
            
            
            22,844,721Effect
                of dilutive securities
            
            
            674,146
            
            
            2,250,348
            
            
            1,673,798
            
            
            2,029,541Diluted
                weighted average shares
            
            
            27,244,540
            
            
            25,406,977
            
            
            27,059,811
            
            
            24,874,262Basic
                earnings per share:
            
            
            0.16
            
            
            0.12
            
            
            0.39
            
            
            0.17Diluted
                earnings per share
            
            
            0.15
            
            
            0.11
            
            
            0.36
            
            
            0.16


16


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)





**2.**
            **Summary
                of significant accounting policies*****(Continued)***





Interest
      rate risk





The
      Group
      is exposed to interest rate risk arising from short-term variable rate
      borrowings from time to time. The Group’s future interest expense will fluctuate
      in line with any change in borrowing rates. The Group does not have any
      derivative financial instruments for the nine months ended September 30, 2008
      and 2007 and believes its exposure to interest rate risk is not
      material.





Stock-Based
      Compensation





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





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





During
      the nine months ended September 30, 2008 and 2007, the Company recorded $700,000
      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 16.


17


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)





**2.**
            **Summary
                of significant accounting policies*****(Continued)***





*Recently
      Issued Accounting Pronouncements*





In
      February 2008, FASB issued FASB Staff Position (“FSP”) FAS 157-1 *“Application
      of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting
      Pronouncements. That address Fair Value Measurement for Purposes of Lease
      Classification or Measurement under Statement 13,” and FSP FAS 157-2, “Effective
      Date of FASB Statement No. 157.”* FSP FAS
      157-1 amends the scope of SFAS No. 157 and other accounting standards that
      address fair value measurements for purpose of lease classification or
      measurement under Statement 13. The FSP is effective on initial adoption of
      Statement 157, FSP FAS 157-2 defers the effective date of SFAS No. 157 to fiscal
      years beginning after November 15, 2008 for all nonfinancial assets and
      nonfinancial liabilities, exception those that are recognized or disclosed
      at
      fair value in the financial statements on a recurring basis. The Company does
      not expect the adoption of FSP FAS 157-1 and FSP FAS 157-2 will have a material
      impact on its consolidated financial statements.





In
      December 2007, the FASB issued SFAS No. 141(R), *“Business
      Combinations”* and SFAS
      No. 160, “Noncontrolling Interests in Consolidated Financial Statements – *an
      amendment to ARB No. 51”* .
      SFAS
      No. 141(R) and SFAS No. 160 require most identifiable assets, liabilities,
      noncontrolling interests and goodwill acquired in business combination to be
      recorded at “full fair value” and require noncontrolling interests (previously
      referred to as minority interests) to be reported as a component of equity,
      which changes the accounting for transactions with noncontrolling interest
      holders. Both statements are effective for periods beginning on or after
      December 15, 2008, and earlier adoption is prohibited. SFAS No. 141(R) will
      be
      applied to business combinations occurring after the effective date. SFAS No.
      160 will be applied prospectively to all noncontrolling interests, including
      any
      that arose before the effective date. We are currently evaluating the impact
      of
      adopting SFAS No. 160 on our consolidated financial statements.





In
      March
      2008, the FASB issued SFAS No. 161, *“Disclosures
      about Derivative Instruments and Hedging Activities,”* which
      requires enhanced disclosures about an entity’s derivative and hedging
      activities. This Statement is effective for financial statements issued for
      fiscal years and interim periods beginning after November 15, 2008. The Company
      does not expect the adoption of SFAS 161 will have a material impact on its
      results of operations and financial position.





In
      May
      2008, the FASB issued SFAS No. 162, *“The
      Hierarchy of Generally Accepted Accounting Principles”* (“SFAS
      162”). This statement identifies the sources of accounting principles and the
      framework for selecting the principles used in the preparation of financial
      statements of nongovernmental entities that are presented in accordance with
      generally accepted accounting principles (“GAAP”). With the issuance of this
      statement, the FASB concluded that the GAAP hierarchy should be directed toward
      the entity and not its auditor, and reside in the accounting literature
      established by the FASB as opposed to the American Institute of Certified Public
      Accountants (“AICPA”) Statement on Auditing Standards No. 69, *“The
      Meaning of Present Fairly in Conformity With Generally Accepted Accounting
      Principles.”* This
      statement is effective 60 days following the Securities and Exchange
      Commission’s approval of the Public Company Accounting Oversight Board
      amendments to AU Section 411, *“The
      Meaning of Present Fairly in Conformity With Generally Accepted Accounting
      Principles.”* The
      Company does not expect the adoption of SFAS 162 will have a material impact
      on
      its results of operations and financial position.


18


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)





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





***Three months ended***
            
            ***Nine months ended******September 30,***
            
            ***September 30,******2008***
            
            ***2007***
            
            ***2008***
            
            ***2007******(Unaudited)***
            
            ***(Unaudited)***
            
            ***(Unaudited)***
            
            ***(Unaudited)******$***
            ******
            ***$***
            ******
            ***$***
            ******
            ***$***License
                fee of intangible assets
            
            
            10,001
            
            
            32,668
            
            
            30,008
            
            
            97,955Rental
                income
            
            
            15,847
            
            
            15,757
            
            
            47,397
            
            
            47,24825,848
            
            
            48,425
            
            
            77,405
            
            
            145,203








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





***Three months ended***
            
            ***Nine months ended******September 30,***
            
            ***September 30,******2008***
            
            ***2007***
            
            ***2008***
            
            ***2007******(Unaudited)***
            
            ***(Unaudited)***
            
            ***(Unaudited)***
            
            ***(Unaudited)******$***
            
            ***$***
            
            ***$***
            
            ***$***Bank
                interest income
            
            
            25,315
            
            
            35,114
            
            
            136,063
            
            
            112,020Net
                exchange gains
            
            
            -
            
            
            600
            
            
            -
            
            
            2,075Sundry
            
            
            54
            
            
            3,841
            
            
            54
            
            
            3,84125,369
            
            
            39,555
            
            
            136,117
            
            
            117,936








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





***Three months ended***
            
            ***Nine months ended******September 30,***
            
            ***September 30,******2008***
            
            ***2007***
            
            ***2008***
            
            ***2007******(Unaudited)***
            
            ***(Unaudited)***
            
            ***(Unaudited)***
            
            ***(Unaudited)******$***
            ******
            ***$***
            ******
            ***$***
            ******
            ***$***
            ******Interest
                on trade related bank loan
            
            
            274,193
            
            
            291,499
            
            
            822,704
            
            
            759,539Interest
                and amortization on bonds
            
            
            177,727
            
            
            -
            
            
            637,491
            
            
            -Interest
                on short-term bank loans
            
            
            -
            
            
            10,844
            
            
            -
            
            
            27,608Interest
                on bank overdrafts
            
            
            8,479
            
            
            11,859
            
            
            24,380
            
            
            33,050Interest
                on other loans
            
            
            331
            
            
            2,314
            
            
            993
            
            
            10,738460,730
            
            
            316,516
            
            
            1,485,568
            
            
            830,935


19


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)




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





***Three months ended***
            
            ***Nine months ended******September 30,***
            
            ***September 30,******2008***
            
            ***2007***
            
            ***2008***
            
            ***2007******(Unaudited)***
            
            ***(Unaudited)***
            
            ***(Unaudited)***
            
            ***(Unaudited)******$***
            ******
            ***$***
            ******
            ***$***
            ******
            ***$***Hong
                Kong profits tax******Current
                period
            
            
            952,833
            
            
            697,737
            
            
            2,433,142
            
            
            1,414,608





The
      Company’s subsidiaries operating in Hong Kong are subject to profits tax of
      16.5% (2007:17.5%) on the estimated assessable profits during the
      periods.





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





The
      major
      components of deferred tax recognized in the condensed consolidated balance
      sheets for the nine months ended September 30, 2008 and the year ended December
      31, 2007 respectively are as follows:





***As of******September 30,***
              ***2008***
            
            ***December 31,***
              ***2007******(Unaudited)***
            
            ***(Audited)******$***
            
            ***$***Temporary
                difference on accelerated taxdepreciation
                on plant and equipment
            
            
            27,055
            
            
            27,024Deferred
                tax liabilities, net
            
            
            27,055
            
            
            27,024Recognized
                in the balance sheet:Net
                deferred tax assets
            
            
            (29,964
            )
            
            (29,929
            )Net
                deferred tax liabilities
            
            
            57,019
            
            
            56,95327,055
            
            
            27,024





Deferred
      tax assets of the Company relating to the tax effect of the change in valuation
      allowance of the Company has not been accounted for in the financial statements
      for the nine months ended September 30, 2008 and the year ended December 31,
      2007 as management determined that it was more likely than not that these tax
      losses would not be utilized in the foreseeable future. There was no other
      significant unprovided deferred taxation of the Company at the balance sheet
      dates.


20




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)




NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)




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




***As of******September 30,***
              ***2008***
            
            ***December 31,***
              ***2007******(Unaudited)***
            
            ***(Audited)******$***
            
            ***$***Rebate
                receivable
            
            
            4,841,648
            
            
            -Interest
                receivable
            
            
            -
            
            
            24,696Purchase
                deposits paid
            
            
            4,570,171
            
            
            7,553,332Deposit
                for acquisition
            
            
            7,459,237
            
            
            -Other
                deposits and prepayments
            
            
            133,853
            
            
            126,97117,004,909
            
            
            7,704,999




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




**8.**
            **Inventories**




***As of******September 30,***
              ***2008***
            
            ***December 31,***
              ***2007******(Unaudited)***
            
            ***(Audited)******$***
            
            ***$***Merchandises,
                at cost – completed watches
            
            
            -
            
            
            2,148,638Merchandises,
                at cost – watch movements
            
            
            10,904,300
            
            
            10,222,33210,904,300
            
            
            12,370,970




No
      inventories were written off during the nine months ended September 30, 2008
      and
      for the year ended December 31, 2007, respectively.


21


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)




NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)




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




***As of******September 30,***
            
            ***December 31,******2008***
            
            ***2007******(Unaudited)***
            
            ***(Audited)******$***
            
            ***$****Cost*Land
                and buildings
            
            
            1,189,416
            
            
            1,188,043Furniture
                and fixtures
            
            
            510,156
            
            
            488,901Office
                equipment
            
            
            229,029
            
            
            146,752Machinery
                and equipment
            
            
            1,197,715
            
            
            320,595Moulds
            
            
            7,210,939
            
            
            774,558Motor
                vehicles
            
            
            74,561
            
            
            74,47510,411,816
            
            
            2,993,324*Accumulated
                depreciation*Land
                and buildings
            
            
            90,362
            
            
            68,525Furniture
                and fixtures
            
            
            405,271
            
            
            331,751Office
                equipment
            
            
            139,964
            
            
            128,165Machinery
                and equipment
            
            
            318,016
            
            
            157,294Moulds
            
            
            1,088,510
            
            
            379,548Motor
                vehicles
            
            
            48,384
            
            
            36,3322,090,507
            
            
            1,101,615*Net*Land
                and buildings
            
            
            1,099,054
            
            
            1,119,518Furniture
                and fixtures
            
            
            104,885
            
            
            157,150Office
                equipment
            
            
            89,065
            
            
            18,587Machinery
                and equipment
            
            
            879,699
            
            
            163,301Moulds
            
            
            6,122,429
            
            
            395,010Motor
                vehicles
            
            
            26,177
            
            
            38,1438,321,309
            
            
            1,891,709




Depreciation
      expenses included in administrative and other operating expenses for the nine
      months ended September 30, 2008 and 2007 were $986,492 and $193,499,
      respectively.




As
      at
      September 30, 2008 and December 31, 2007, the carrying amount of land and
      buildings pledged as security for the Group’s banking facilities amounted to
      $1,099,054 and $1,119,518, respectively.


22


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)




NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)




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




***As of******September 30,***
              ***2008***
            
            ***December 31,***
              ***2007******(Unaudited)***
            
            ***(Audited)******$***
            
            ***$****Cost*
            
            
            -
            
            
            949,514*Accumulated
                amortization*
            
            
            -
            
            
            -Transfer
                to property and equipment
            
            
            -
            
            
            (949,514
            )*Net*
            
            
            -
            
            
            -Analyzed
                for reporting purposes as:Current
                asset
            
            
            -
            
            
            -Non-current
                asset
            
            
            -
            
            
            --
            
            
            -




Amortization
      expenses included in administrative and other operating expenses for the nine
      months ended September 30, 2008 and for the year ended December 31, 2007 were
      $Nil and $Nil respectively.




As
      at
      September 30, 2008 and December 31, 2007, the carrying amount of leasehold
      lands
      pledged as security for the Group’s banking facilities amounted to $Nil and
      $Nil, respectively.




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




***As of******September 30,***
              ***2008***
            
            ***December 31,***
              ***2007******(Unaudited)***
            
            ***(Audited)******$***
            
            ***$***Hang
                Seng Capital Guarantee Investment Fund–
                30,000 units at $10 each, interest rate at 10.5% in 3.75
                years*Cost*
            
            
            300,578
            
            
            300,231




As
      at
      September 30, 2008 and December 31, 2007, the carrying amount of
      held-to-maturity investments pledged as security for the Group’s banking
      facilities amounted to $300,578 and $300,231, respectively.


23




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)




NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)




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




***As of******September 30,***
              ***2008***
            
            ***December 31,***
              ***2007******(Unaudited)***
            
            ***(Audited)******$***
            
            ***$****Cost*Trademarks
            
            
            200,282
            
            
            200,051Websites
            
            
            -
            
            
            -200,282
            
            
            200,051*Accumulated
                amortization*Trademarks
            
            
            182,257
            
            
            152,039Websites
            
            
            -
            
            
            -182,257
            
            
            152,039*Net*Trademarks
            
            
            18,025
            
            
            48,012Websites
            
            
            -
            
            
            -18,025
            
            
            48,012




Amortization
      expenses included in administrative and other operating expenses for the nine
      months ended September 30, 2008 and 2007 were $30,008 and $91,907,
      respectively.




Estimated
      aggregate future amortization expenses for the succeeding three years as of
      September 30, 2008 were as follows:




***$***2008
            
            
            18,025


24




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)




NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)




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




***As of******September 30,***
              ***2008***
            
            ***December 31,***
              ***2007******(Unaudited)***
            
            ***(Audited)******$***
            
            ***$***Accrued
                expenses
            
            
            352,814
            
            
            92,249Deposit
                received
            
            
            233,468
            
            
            -Sales
                deposits received
            
            
            41,076
            
            
            40,258627,358
            
            
            132,507




**14.**
            **Bank
                borrowings**




***As of******September 30,***
              ***2008***
            
            ***December 31,***
              ***2007******(Unaudited)***
            
            ***(Audited)******$***
            
            ***$***Secured:Bank
                overdrafts repayable on demand
            
            
            696,854
            
            
            528,451Repayable
                within one yearShort
                term bank loans
            
            
            369,633
            
            
            2,223,290Other
                trade related bank loans
            
            
            22,956,241
            
            
            17,686,73824,022,728
            
            
            20,438,479




As
      of
      September 30, 2008, the Company’s banking facilities are composed of the
      following:





**Amount****Facilities granted**
            
            **Granted**
            
            **Utilized**
            
            **Unused*****$***
            
            ***$***
            
            ***$***Bank
                overdrafts
            
            
            953,238
            
            
            696,854
            
            
            256,384Other
                short terms bank loans
            
            
            369,633
            
            
            369,633
            
            
            -Other
                trade related facilities
            
            
            23,504,330
            
            
            22,956,241
            
            
            548,08924,827,201
            
            
            24,022,728
            
            
            804,473


25




ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)




NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)




**14.**
            **Bank
                borrowings*****(Continued)***




As
      of
      September 30, 2008, the above short-term banking borrowings were secured by
      the
      following:




(a)
            first
                fixed legal charge over leasehold land and buildings with carrying
                amounts
                of $1,099,054 (note 9 and 10);




(b)
            charge
                over restricted cash of totally $7,979,513;




(c)
            charge
                over held-to-maturity investments of $300,578 (note 11);
                and




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




(e)
            Other
                financial covenant:-




The
      bank
      borrowings require one of the Company’s subsidiaries to be secured by an
      Insurance Policy of $2,567,724 and a director as the insured party.




The
      bank
      borrowings require one of the Company’s subsidiaries to maintain a minimum net
      worth of $6,419,309.




The
      Company was in compliance with this requirement at September 30,
      2008.




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




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




**15.**
            **Convertible
                Bonds and Bond Warrants**




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




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


26


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)




NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)




**15.**
            **Convertible
                Bonds and Bond Warrants*****(Continued)***




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




*-
      Conversion.* Each
      Bond is convertible at the option of the holder at any time on a date that
      is
      365 days after the date that the Company’s securities are traded on NYSE
      Alternext US (formerly known as the American Stock Exchange) (“Alternext”)
      through March 28, 2012, into shares of the Company’s common stock at an initial
      conversion price equal to the price per share at which shares are sold in the
      Company’s proposed initial public offering of common stock on the Alternext with
      minimum gross proceeds of $2,000,000. If no initial public offering occurs
      prior
      to conversion, the conversion price per share will be $2.00, subject to
      adjustment in accordance with the terms and conditions of the Bonds. The
      conversion price was adjusted to $3.50 based on the Company’s initial public
      offering completed in February 2008. 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
      per share conversion price of the Bonds. If for the period of 20 consecutive
      trading days immediately prior to April 12, 2009 or February 18, 2012, the
      conversion price for the Bonds is higher than the average closing price for
      the
      shares, then the conversion price will be reset to such average closing price;
      provided that, the conversion price will not be reset lower than 70% of the
      then
      existing conversion price. In addition, the Trust Deed provides that the
      conversion price of the Bonds cannot be adjusted to lower than $0.25 per share
      of common stock (as adjusted for stock splits, stock dividends, spin-offs,
      rights offerings, recapitalizations and similar events).




*-
      Mandatory Redemptions.* If
      either (i) the Company’s common stock (including the shares of common stock
      issuable upon conversion of the Bonds and exercise of the Warrants) are not
      listed on Alternext on or before August 13, 2008 or (ii) the Company breaches
      certain of its obligations to timely register the Bonds, Warrants and underlying
      shares pursuant to the registration rights agreement dated November 13, 2007
      entered into by and between the Subscriber and the Company, then holders of
      the
      Bonds can require the Company to redeem the Bonds at 104.53% of the principal
      amount of the Bonds at any time after November 13, 2008. In addition, at any
      time after November 13, 2010, holders of the Bonds can require the Company
      to
      redeem the Bonds at 126.51% of the principal amount. The Company is required
      to
      redeem any outstanding Bonds at 150.87% of its principal amount on November
      13,
      2012.




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


27


ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)




NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)




**15.**
            **Convertible
                Bonds and Bond Warrants*****(Continued)***




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




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




As
      addressed in an earlier paragraph under Mandatory Redemptions, the Company
      will
      redeem each bond at 150.87% of its principal amount on November 13, 2012 (the
      maturity date). On the basis of this commitment, the Company has determined
      the
      total redemption premium to be $4,069,600, which is an addition to the original
      face value of the Bonds of $8,000,000. This redemption premium is to be
      amortized to interest expense over the term of the Bonds by the interest method.
      Interest expense on the accretion of redemption premium for the period from
      November 13, 2007 to June 30, 2008 amounted to $219,765 as disclosed in the
      following schedule of Convertible Bonds Payable.


28







ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)




**15.**
            **Convertible
                Bonds and Bond Warrants*****(Continued)***





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





(1)
            
            Convertible
                Bonds
            
            $
            8,000,000(2)
            
            Bond
                Discount
            
            $
            240,000(3)
            
            Warrants
            
            $
            1,652,701(4)
            
            Beneficial
                Conversion Feature
            
            $
            1,892,701





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





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





For
                the nine months ended September 30, 2008
            
            
            ***$***Convertible
                Bonds Payable
            
            
            8,000,000Less:
                Interest discount - Warrants
            
            
            (1,652,701
            )Less:
                Interest discount - Beneficial conversion feature
            
            
            (1,892,701
            )Less:
                Bond discount
            
            
            (240,000
            )Accretion
                of interest discount - Warrant
            
            
            247,226Accretion
                of interest discount - Beneficial conversion feature
            
            
            382,430Amortization
                of bond discount to interest expense
            
            
            5,6556%
                Interest Payable
            
            
            105,462Accretion
                of redemption premium
            
            
            2,180Net
            
            
            4,957,551





**16.**
            **Common
                stock and****convertible****preferred
                stock**





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





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





The
      shares of the Company’s Series A Preferred Stock were 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 was initially
      convertible into one share of common stock. All of the Series A Preferred Stock
      were converted into common stock during the nine months ended September 30,
      2008.




29


ASIA
        TIME
        CORPORATION
 (Formerly
        SRKP 9, Inc.)
 
 NOTES
        TO
        CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Stated
        in US Dollars)
 
 **16.**
              **Common
                  stock and****convertible****preferred
                  stock*****(Continued)***
 
 If
        the
        Company at any time prior to the first trading day on which the common stock
        was
        quoted on the Alternext, the Nasdaq Capital Market, the Nasdaq Global Market
        or
        the New York Stock Exchange (each a “Trading Market”) sold or issued 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
        were at least $1,000,000, then the aforementioned conversion price was to
        be
        reduced to such effective price. Each share of Series A Convertible
        Preferred Stock would 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, 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. The Company agreed to a
        penalty provision with respect to its obligation to register the Series A
        Convertible Preferred Stock. If the Company failed to register the Series
        A
        Convertible Preferred Stock due to failure on the part of the Company, the
        Company would 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 was no maximum potential consideration
        to be transferred. The Company was 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.
 
 The
        investors in the Private Placement also entered into a lock-up agreement
        pursuant to which they agreed not to sell their shares until the Company’s
        common stock begins to be listed or quoted on the New York Stock Exchange,
        Alternext, NASDAQ Global Market, NASDAQ Capital Market or the OTC Bulletin
        Board, after which their shares will automatically be released from the lock
        up
        every 30 days on a pro rata over a nine month period beginning on the date
        that
        is 30 days after listing or quotation of the shares. The Company’s common stock
        began trading on Alternext in February 2008.
  30
  ASIA
        TIME
        CORPORATION
 (Formerly
        SRKP 9, Inc.)
 
 NOTES
        TO
        CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Stated
        in US Dollars)
 
 **16.**
              **Common
                  stock and****convertible****preferred
                  stock*****(Continued)***
  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 had 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 fafailed to be listed or quoted for trading
        on the Alternext ,
        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 would distribute to shareholders
        would
        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 would be 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 would
        Mr.
        Kwong be required to distribute in excess of 2,326,000 shares. If the event
        Mr.
        Kwong would have been required to transfer shares to investors, it was
        anticipated that the transfer would have been 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.
 
 The
        Company met the 2006 and 2007 net income requirement of $6,300,000 and
        $7,700,000, respectively, and the Escrow Shares had fully returned to Mr.
        Kwong
        on April 1, 2008.
  31
  ASIA
        TIME
        CORPORATION
 (Formerly
        SRKP 9, Inc.)
 
 NOTES
        TO
        CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Stated
        in US Dollars)
 
 **16.**
              **Common
                  stock and****convertible****preferred
                  stock*****(Continued)***
 
 If
        the
        Company had paid 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 would have been adjusted as follows: the conversion
        price would have been multiplied by a fraction, of which (i) the numerator
        would
        have be the number of shares of common stock outstanding immediately before
        one
        of the events described above and (ii) the denominator would have been the
        number of shares of common stock outstanding immediately after such
        event.
 
 Holder
        of
        the Series A Convertible Preferred Stock had 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 had the right to vote with respect to any matters brought to
        a
        vote before the Company’s holders of common stock.
 
 In
        the
        event of any liquidation, dissolution, or winding up of the Company, the
        holders
        of the Series A Convertible Preferred Stock were 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 were insufficient to pay
        the above amounts in full, then all of the Company’s assets would have been
        ratably distributed among the holders of the Series A Convertible Preferred
        Stock in accordance with the respective amounts that would have been payable
        on
        such shares if all amounts payable were paid in full.
 
 There
        were no additional specific dividend rights or redemption rights of holders
        of
        the Series A Convertible Preferred Stock.
 
 If
        the
        Company redeemed or acquired any shares of the Series A Convertible Preferred
        Stock are converted, those shares would have resumed the status of authorized
        but unissued shares of preferred stock and would have been no longer designated
        as Series A Convertible Preferred Stock.
 
 As
        long
        as any shares of Series A Convertible Preferred Stock were outstanding, the
        Company could not 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.
 
 On
        January 16, 2008, the Company entered into a consulting agreement with Public
        Equity Group Inc. Pursuant to the agreement, Public Equity Group will provide
        the Company with business consulting and investor relation services and other
        related services. The agreement has a term of one year, unless terminated
        earlier with 60-days prior written notice. As consideration for entering
        in the
        agreement and compensation for Public Equity Group’s services under the
        agreement, the Company issued 200,000 shares of its common stock to Public
        Equity Group Inc.
 
 On
        February, 12, 2008, the Company’s common stock commenced trading on the
        Alternext.




32





ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)





**16.**
            **Common
                stock and****convertible****preferred
                stock*****(Continued)***





On
      February 15, 2008, the Company issued 963,700 shares of common stock upon the
      closing of an initial public offering. The Company’s sale of common stock, which
      was sold indirectly by the Company to the public at a price of $3.50 per share,
      resulted in net proceeds of $2,669,987. These proceeds were net of underwriting
      discounts and commissions, fees for legal and auditing services, and other
      offering costs.





**17.**
            **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 during the nine months ended September 30,
      2008
      and 2007 were $15,230 and $7,623, respectively.





**18.**
            **Commitments
                and contingencies**





Operating
      leases commitments





The
      Group
      leases office premises under various non-cancelable operating lease agreements
      that expire at various dates through years 2008, with an option to renew the
      lease. All leases are on a fixed repayment basis. None of the leases includes
      contingent rentals. Minimum future commitments under these agreements payable
      as
      of September 30, 2008 are as follows:





***$***2008
            
            
            12,751





Rental
      expenses for the nine months ended September 30, 2008 and 2007 were $66,621
      and
      $50,302, respectively.





33





ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)





**19.**
            **Segment
                Information**





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





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





For
      the
      nine months ended September 30, 2008





Watch
              movements
            
            Completed
              watches
            
            Unallocated
            
            Total$
            
            $
            
            $
            
            $Sales
            
            
            100,475,092
            
            
            14,522,094
            
            
            -
            
            
            114,997,186Cost
                of sales
            
            
            (87,390,652
            )
            
            (10,144,006
            )
            
            -
            
            
            (97,534,658
            )Gross
                profit
            
            
            13,084,440
            
            
            4,378,088
            
            
            -
            
            
            17,462,528Operations
                expenses
            
            
            (1,462,127
            )
            
            (888,881
            )
            
            (1,565,425
            )
            
            (3,916,433
            )Other
                operating income
            
            
            47,397
            
            
            30,008
            
            
            -
            
            
            77,405Income
                from operations
            
            
            11,669,710
            
            
            3,519,215
            
            
            (1,565,425
            )
            
            13,623,500Non-operating
                income
            
            
            136,117
            
            
            -
            
            
            -
            
            
            136,117Interest
                expenses
            
            
            (848,077
            )
            
            -
            
            
            (637,491
            )
            
            (1,485,568
            )Income
                before income taxes
            
            
            10,957,750
            
            
            3,519,215
            
            
            (2,202,916
            )
            
            12,274,049




34





ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)





**19.**
            **Segment
                Information*****(Continued)***





For
      the
      three months ended September 30, 2008





Watch
              movements
            
            Completed
              watches
            
            Unallocated
            
            Total$
            
            $
            
            $
            
            $Sales
            
            
            36,619,414
            
            
            3,429,628
            
            
            -
            
            
            40,049,042Cost
                of sales
            
            
            (30,943,960
            )
            
            (2,589,709
            )
            
            -
            
            
            (33,533,669
            )Gross
                profit
            
            
            5,675,454
            
            
            839,919
            
            
            -
            
            
            6,515,373Operations
                expenses
            
            
            (447,269
            )
            
            (324,493
            )
            
            (219,373
            )
            
            (991,135
            )Other
                operating income
            
            
            15,847
            
            
            10,001
            
            
            -
            
            
            25,848Income
                from operations
            
            
            5,244,032
            
            
            525,427
            
            
            (219,373
            )
            
            5,550,086Non-operating
                income
            
            
            25,369
            
            
            -
            
            
            -
            
            
            25,369Interest
                expenses
            
            
            (283,003
            )
            
            -
            
            
            (177,727
            )
            
            (460,730
            )Income
                before income taxes
            
            
            4,986,398
            
            
            525,427
            
            
            (397,100
            )
            
            5,114,725





35





ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)





**19.**
            **Segment
                Information*****(Continued)***





For
      the
      nine months ended September 30, 2007





Watch
              movements
            
            Completed
              watches
            
            Unallocated
            
            Total$
            
            $
            
            $
            
            $Sales
            
            
            56,600,993
            
            
            8,359,231
            
            
            -
            
            
            64,960,224Cost
                of sales
            
            
            (50,356,664
            )
            
            (4,472,729
            )
            
            -
            
            
            (54,829,393
            )Gross
                profit
            
            
            6,244,329
            
            
            3,886,502
            
            
            -
            
            
            10,130,831Operations
                expenses
            
            
            (898,394
            )
            
            (386,441
            )
            
            (2,204,441
            )
            
            (3,489,276
            )Other
                operation income
            
            
            47,248
            
            
            97,955
            
            
            -
            
            
            145,203Income
                from operations
            
            
            5,393,183
            
            
            3,598,016
            
            
            (2,204,441
            )
            
            6,786,758Fees
                and costs related to reverse merger
            
            
            -
            
            
            -
            
            
            (736,197
            )
            
            (736,197
            )Non-operating
                income
            
            
            117,936
            
            
            -
            
            
            -
            
            
            117,936Interest
                expenses
            
            
            (830,935
            )
            
            -
            
            
            -
            
            
            (830,935
            )Income
                before income taxes
            
            
            4,680,184
            
            
            3,598,016
            
            
            (2,940,638
            )
            
            5,337,562








36





ASIA
      TIME
      CORPORATION


(Formerly
      SRKP 9, Inc.)





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Stated
      in US Dollars)





**19.**
            **Segment
                Information*****(Continued)***





For
      the
      three months ended September 30, 2007





Watch
              movements
            
            Completed
              watches
            
            Unallocated
            
            Total$
            
            $
            
            $
            
            $Sales
            
            
            18,366,451
            
            
            4,606,194
            
            
            -
            
            
            22,972,645Cost
                of sales
            
            
            (15,947,638
            )
            
            (2,462,886
            )
            
            -
            
            
            (18,410,524
            )Gross
                profit
            
            
            2,418,813
            
            
            2,143,308
            
            
            -
            
            
            4,562,121Operations
                expenses
            
            
            (356,752
            )
            
            (110,886
            )
            
            (287,511
            )
            
            (755,149
            )Other
                operation income
            
            
            15,757
            
            
            32,668
            
            
            -
            
            
            48,425Income
                   from operations
            
            
            2,077,818
            
            
            2,065,090
            
            
            (287,511
            )
            
            3,855,397Fees
                and costs related to reverse merger
            
            
            -
            
            
            -
            
            
            -
            
            
            -Non-operating
                income
            
            
            39,555
            
            
            -
            
            
            -
            
            
            39,555Interest
                expenses
            
            
            (316,516
            )
            
            -
            
            
            -
            
            
            (316,516
            )Income
                before income taxes
            
            
            1,800,857
            
            
            2,065,090
            
            
            (287,511
            )
            
            3,578,436





Total
      assets




Watch
              movements
            
            Completed
              watches
            
            Unallocated
            
            Total$
            
            $
            
            $
            
            $At
                September 30, 2008
            
            
            55,985,941
            
            
            16,939,327
            
            
            38,418
            
            
            72,962,686At
                December 31, 2007
            
            
            45,349,351
            
            
            6,101,962
            
            
            -
            
            
            51,451,313





The
      Group’s operations are primarily in Hong Kong and China and the Group’s sales,
      gross profit and total assets attributable to other geographical areas are
      less
      than **** 10%
      of
      the Group’s corresponding consolidated totals for the nine months ended
      September 30, 2008 and 2007 consequently, no segment information by geographical
      areas is presented.





37




**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
      $70.00. 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
      completed watches primarily to online retailers and internet
      marketers.





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





**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.





38





**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 nine months ended September 30, 2008
      was $100.5 million, with a gross profit of $13.1 million, a 77.5% and 109.5%
      increase, respectively, as compared to $56.6 million in revenue and $6.2 million
      in gross profit for the nine months ended September 30, 2007. The gross profit
      margin increased to 13.0% for the nine months ended September 30, 2008 from
      11.0% for the same period in 2007, primarily due to more diversified products
      being promoted to customers and higher selling prices as a result of extended
      credit terms to our customers, plus the introduction of mechanical movements
      to
      the market which generally have higher profit margins. We provide a wide product
      spectrum of products ranging from mechanical movements to carrying major brands
      as well as middle-low end China quartz movements. We believe carrying a wide
      product spectrum enables us to provide a convenient one-stop provider for our
      customers, which may result in higher sales per customer. We began to target
      small to medium manufacturers in mid-2005 and our customer base has expanded
      to
      more than 350 watch manufacturers. In addition, we have extended our credit
      period from an average of 30 days to 50 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 $14.5 million for the nine months ended
      September 30, 2008, a 73.7% increase compared to the same period in 2007 in
      which revenue was $8.4 million. This segment contributed approximately 12.6%
      of
      our revenue for the nine months ended September 30, 2008, as compared to 12.9%
      of revenue for the same period in 2007. Our main market positioning in China
      is
      on the middle-class adult, daily, sporty and classy design.





**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**
              
              **Nine
                  months ended****September 30,**
                **2008**
              
              **September 30,**
                **2007**
              
              **September 30,**
                **2008**
              
              **September 30,**
                **2007**Net
                  sales
              
              
              100.0
              %
              
              100.0
              %
              
              100.0
              %
              
              100.0
              %Cost
                  of sales
              
              
              83.7
              %
              
              80.1
              %
              
              84.8
              %
              
              84.4
              %Gross
                  profit
              
              
              16.3
              %
              
              19.9
              %
              
              15.2
              %
              
              15.6
              %Other
                  operating income
              
              
              0.1
              %
              
              0.2
              %
              
              0.1
              %
              
              0.2
              %Depreciation
              
              
              0.9
              %
              
              0.3
              %
              
              0.9
              %
              
              0.3
              %Administrative
                  and other operating expenses, including stock-based
                  compensation
              
              
              1.5
              %
              
              3.0
              %
              
              2.5
              %
              
              5.1
              %Income
                  from operations
              
              
              14.0
              %
              
              16.8
              %
              
              11.9
              %
              
              10.4
              %Fees
                  and costs related to reverse merger
              
              
              -
              %
              
              -
              %
              
              -
              %
              
              1.1
              %Other
                  income
              
              
              0.1
              %
              
              0.2
              %
              
              0.1
              %
              
              0.2
              %Interest
                  expenses
              
              
              1.2
              %
              
              1.4
              %
              
              1.3
              %
              
              1.3
              %Income
                  before tax
              
              
              12.9
              %
              
              15.6
              %
              
              10.7
              %
              
              8.2
              %Income
                  taxation
              
              
              2.4
              %
              
              3.0
              %
              
              2.1
              %
              
              2.2
              %Net
                  income
              
              
              10.5
              %
              
              12.6
              %
              
              8.6
              %
              
              6.0
              %




***Comparison
      of the three months ended September 30, 2008 with the three months ended
      September 30, 2007***





Net
      sales
      for the three months ended September 30, 2008 was $40.0 million as compared
      to
      $23.0 million for the comparable period in 2007, an increase of $17.1 million,
      or 74.3%. This increase was primarily due to an increase in the sales of watch
      movements. Net sales of movements was $36.6 million for the three months ended
      September 30, 2008, accounting for approximately 91.4% of our total sales for
      the period, an increase of 99.4% as compared to $18.4 million for the comparable
      period in 2007. The increase was primarily attributable to an increase in volume
      of movements from 26.2 million pieces to 33.6 million pieces in the comparable
      three-month period in 2007 and 2008, respectively, and an increase in sales
      of
      middle to high-end movements. Sales of completed watches for the three months
      ended September 30, 2008, was $3.4 million as compared to $4.6 million for
      the
      comparable period in 2007, a decrease of 25.5%. The total volume decreased
      from
      0.54 million pieces to 60,000 pieces, or 88.9%. The decrease was due to our
      strategic shift to focus on high-end mechanical watches which have a longer
      production lead time. The profit margin of mechanical and quartz watches was
      approximately 40% and 20%, respectively, for the three months ended September
      30, 2008.





39




Cost
      of
      sales for the three months ended September 30, 2008 was $33.5 million, or 83.7%
      of net sales, as compared to $18.4 million, or 80.1% of net sales, for the
      same
      period in 2007. The increase in cost of sales as a percentage of net sales
      was
      largely attributable to the increase in sales of watch movements as a percentage
      of total revenue. These watch movements generally have higher costs of sales
      as
      compared to completed watches.




Gross
      profit for the three months ended September 30, 2008 was $6.5 million, or 16.3%
      of net sales, compared to $4.6 million, or 19.9% of net sales for the same
      period in 2007. The decrease in gross profit as a percentage of net sales was
      largely attributable to the increase in sales of watch movements as a percentage
      of total revenue. These watch movements generally have lower gross profit margin
      as compared to completed watches. Gross profit margins are usually a factor
      of
      product mix and demand for product. The gross profit margin of watch movements
      increased from 13.2% for the three months ended September 30, 2007 to 15.5%
      for
      the same period in 2008. The gross profit margin for completed watches for
      the
      three months ended September 30, 2008 was 24.5% as compared to 46.5% for the
      comparable period in 2007. The decrease in gross profit margin for completed
      watches was a result of management’s strategy to offer price discounts to
      shorten our inventory cycle and in exchange for a decreased warranty period
      on
      the products, as opposed to 2007 in which we offered a long-term warranty.
      Management believes that this new pricing strategy on completed watches in
      2008
      will reduce our exposure to the risk of return goods.





Other
      income from operations was approximately $26,000 or 0.1% of net sales, for
      the
      three months ended September 30, 2008, as compared to approximately $48,000,
      or
      0.2% of net sales, for the three months ended September 30, 2007. The decrease
      was due to a decrease in income received from the license fees of intangible
      assets as we had disposed of some websites in 2007.





Administrative
      and other operating expenses were approximately $620,000, or 1.5% of net sales,
      for the three months ended September 30, 2008, as compared to approximately
      $690,000, or 3.0% of net sales, for the comparable period in 2007. The decrease
      was primarily due to a stock based compensation expense of approximately
      $200,000 in the three months ended September 30, 2007, and we did not have
      such
      expense in the same period of 2008, offset by an increase in professional and
      legal expense of $129,000 in the three months ended September 30,
      2008.





Other
      income from non-operating activities was approximately $25,000, or 0.1% of
      net
      sales, for the three months ended September 30, 2008, as compared to
      approximately $40,000, or 0.2% of net sales, for the three months ended
      September 30, 2007. The decrease was primarily due to a decrease in bank
      interest income, which was approximately $25,000 for the three months ended
      September 30, 2008, as compared to approximately $35,000 for the same period
      in
      2007.





Interest
      expenses for the three months ended September 30, 2008 was approximately
      $461,000, or 1.2% of net sales, as compared to approximately $317,000, or 1.4%
      of net sales, in 2007. The increase was primarily due to the interest and
      amortization on bonds of approximately $177,000 in three months ended September
      30, 2008.





Income
      taxes for the three months ended September 30, 2008 were approximately $953,000,
      or 2.4% of net sales, as compared to approximately $698,000, or 3.0% of net
      sales for the three months ended September 30, 2007. The increase in income
      taxes was primarily due to an increase in the operating profit. The taxation
      rate decreased from 17.5% for the period ended September 30, 2007 to 16.5%
      for
      the same period in 2008.





Net
      income for the three months ended September 30, 2008 was $4.2 million, or 10.4%
      of net sales, an increase of 44.5% over the comparable period in 2007 of $2.9
      million, or 12.5% of net sales.




***Comparison
      of the nine months ended September 30, 2008 with the nine months ended September
      30, 2007***





Net
      sales
      for the nine months ended September 30, 2008 was $115.0 million as compared
      to
      $65.0 million for the comparable period in 2007, an increase of $50.0 million,
      or 77.0%. This increase was primarily due to an increase in the sales of both
      completed watches and watch movements. Net sales of movements was $100.5 million
      for the nine months ended September 30, 2008, accounting for approximately
      87.4%
      of our total sales for the period, an increase of 77.5% as compared to $56.6
      million for the comparable period in 2007. The increase was primarily
      attributable to an increase in volume of movements from 72.7 million pieces
      to
      88.2 million pieces in the comparable nine-month period in 2007 and 2008,
      respectively, and an increase in sales of middle to high-end movements. Sales
      of
      completed watches for the nine months ended September 30, 2008, was $14.5
      million as compared to $8.4 million for the comparable period in 2007, an
      increase of 73.7%. The increase was due to a significant increase in sales
      of
      high-end mechanical watches partially offset by a decrease in low-end items.
      The
      total volume decreased from 0.97 million pieces to 0.24 million pieces, or
      75.2%, in the comparable periods in 2007 and 2008, respectively. The decrease
      was due to our strategic shift to focus on high-end mechanical watches which
      have a longer production lead time.





40




The
      increase in sales of high-end mechanical watches and decrease in low-end items
      was a result of our strategic focus of our business on the high-end items which
      have a higher growth potential. Management believes the profit margin of
      mechanical watches is on the rise while the profit margin of quartz watches
      will
      further decline in 2008 and 2009. The profit margin of mechanical and quartz
      watches was approximately 40% and 20%, respectively, for the nine months ended
      September 30, 2008.





Cost
      of
      sales for the nine months ended September 30, 2008 was $97.5 million, or 84.8%
      of net sales, as compared to $54.8 million, or 84.4% of net sales, for the
      same
      period in 2007. There were no significant changes on the cost of sales as a
      percentage of net sales for the nine months ended September 30, 2008 and same
      period in 2007.





Gross
      profit for the nine months ended September 30, 2008 was $17.5 million, or 15.2%
      of net sales, compared to $10.1 million, or 15.6% of net sales for the same
      period in 2007. There were no significant changes on the gross profit for the
      nine months ended September 30, 2008 and same period in 2007. 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 11.0%
      for the period ended September 30, 2007 to 13.0% of net sales for the same
      period in 2008. The increase in gross profit margin was primarily due to an
      increase in sales of higher-margin items. There was a decrease of gross profit
      margin for completed watches for the nine months ended September 30, 2008,
      which
      was 30.1% of net sales as compared to 46.5% of net sales for the comparable
      period in 2007. The decrease in profit margin was due to the decrease in profit
      margin of low-end items as we were making clearance sales to move away from
      our
      low-end watches to focus our sales efforts on high-end items in accordance
      to
      our long-term strategy. Another reason of the decrease was the change in
      management’s strategy to offer price discounts to shorten our inventory cycle
      and in exchange for a decreased warranty period on the products, as opposed
      to
      2007 in which we offered a long-term warranty. Management believes that this
      new
      pricing strategy on completed watches in 2008 will reduce our exposure to the
      risk of return goods.





Other
      income from operations was approximately $77,000 or 0.1% of net sales for the
      nine months ended September 30, 2008, as compared to approximately $145,000
      or
      0.2% of net sales for the nine months ended September 30, 2007. The decrease
      was
      due to a decrease in income received from the license fees of intangible assets
      as we had disposed of some websites in 2007.





Administrative
      and other operating expenses were $2.9 million, or 2.5% of net sales for the
      nine months ended September 30, 2008, as compared to $3.3 million, or 5.1%
      of
      net sales for the comparable period in 2007. The decrease in administrative
      and
      other operating expenses in amount and as a percentage of net sales was
      primarily due to a one-time recognition of approximately $1.9 million of
      stock-based compensation during the nine months ended September 30, 2007 related
      to the Escrow Shares provided by our CEO, Kwong Kai Shun, pursuant to the
      Private Placement agreement entered into with our investors, and there is no
      such expense in the same period in 2008, partially offset by (i) a recognition
      of stock-based business consulting fee during the nine month ended 2008 of
      approximately $700,000 valued at $3.50, the offering price in our public
      offering, and (ii) an increase in professional fees related to reporting
      requirements as a public company in 2008. 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 approximately $136,000, or 0.1% of
      net
      sales, for the nine months ended September 30, 2008, as compared to
      approximately $118,000, or 0.2% of net sales, for the nine months ended
      September 30, 2007. The increase was primarily due to an increase in bank
      interest income, which was approximately $130,000 for the nine months ended
      September 30, 2008, as compared to approximately $112,000 for the same period
      in
      2007.




Interest
      expense for the nine months ended September 30, 2008 was $1.5 million, or 1.3%
      of net sales, as compared to approximately $831,000, or 1.3% of net sales in
      the
      same period in 2007. The increase was primarily due to the interest and
      amortization on bonds of $637,000 in nine months ended September 30,
      2008.





Income
      taxes for the nine months ended September 30, 2008 were $2.4 million, or 2.1%
      of
      net sales, as compared to approximately $1.4 million, or 2.2% of net sales
      for
      the nine months ended September 30, 2007. The increase in income taxes was
      primarily due to an increase in the operating profit. The taxation rate
      decreased from 17.5% for the period ended September 30, 2007 to 16.5% for the
      same period in 2008.





Net
      income for the nine months ended September 30, 2008 was $9.8 million, 8.6%
      of
      net sales, as compared to 3.9 million, or 6.0% of net sales for the comparable
      period in 2007.





**Off-Balance
      Sheet Arrangements**





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





41




**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.





**Critical
      Accounting Policies and Estimates**





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





We
      describe our significant accounting policies in Note 1 of the Notes to
      Consolidated Financial Statements included in our Annual Report on Form 10-K
      as
      of and for the year ended December 31, 2007. We discuss our critical accounting
      policies and estimates in Management’s Discussion and Analysis of Financial
      Condition and Results of Operations in our Annual Report on Form 10-K as of
      and
      for the year ended December 31, 2007. Other than as indicated in this quarterly
      report, there have been no material revisions to the critical accounting
      policies as filed in our Annual Report on Form 10-K as of and for the year
      ended
      December 31, 2007 with the SEC on March 31, 2008.





*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.





During
      the nine months ended September 30, 2007, we recorded approximately $1,652,205
      as a charge to operations to recognize the grant date fair value of stock-based
      compensation in conjunction with the Escrow Agreement. During the nine months
      ended September 30, 2008, we did not record any charge to operations to
      recognize the grant date fair value of stock-based compensation in conjunction
      with the Escrow Agreement.





*New
      Accounting Pronouncements*





In
      February 2008, FASB issued FASB Staff Position (“FSP”) FAS 157-1 *“Application
      of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting
      Pronouncements. That address Fair Value Measurement for Purposes of Lease
      Classification or Measurement under Statement 13,” and FSP FAS 157-2, “Effective
      Date of FASB Statement No. 157.”* FSP FAS
      157-1 amends the scope of SFAS No. 157 and other accounting standards that
      address fair value measurements for purpose of lease classification or
      measurement under Statement 13. The FSP is effective on initial adoption of
      Statement 157, FSP FAS 157-2 defers the effective date of SFAS No. 157 to fiscal
      years beginning after November 15, 2008 for all nonfinancial assets and
      nonfinancial liabilities, exception those that are recognized or disclosed
      at
      fair value in the financial statements on a recurring basis. The Company does
      not expect the adoption of FSP FAS 157-1 and FSP FAS 157-2 will have a material
      impact on its consolidated financial statements.





In
      December 2007, the FASB issued SFAS No. 141(R), *“Business
      Combinations”* and SFAS
      No. 160, “Noncontrolling Interests in Consolidated Financial Statements - *an
      amendment to ARB No. 51”* .
      SFAS
      No. 141(R) and SFAS No. 160 require most identifiable assets, liabilities,
      noncontrolling interests and goodwill acquired in business combination to be
      recorded at “full fair value” and require noncontrolling interests (previously
      referred to as minority interests) to be reported as a component of equity,
      which changes the accounting for transactions with noncontrolling interest
      holders. Both statements are effective for periods beginning on or after
      December 15, 2008, and earlier adoption is prohibited. SFAS No. 141(R) will
      be
      applied to business combinations occurring after the effective date. SFAS No.
      160 will be applied prospectively to all noncontrolling interests, including
      any
      that arose before the effective date. The Company is currently evaluating the
      impact of adopting SFAS No. 160 on its consolidated financial
      statements.





42




In
      March
      2008, the FASB issued SFAS No. 161, *“Disclosures
      about Derivative Instruments and Hedging Activities,”* which
      requires enhanced disclosures about an entity’s derivative and hedging
      activities. This Statement is effective for financial statements issued for
      fiscal years and interim periods beginning after November 15, 2008. The Company
      does not expect the adoption of SFAS 161 will have a material impact on its
      results of operations and financial position.





In
      May
      2008, the FASB issued SFAS No. 162, *“The
      Hierarchy of Generally Accepted Accounting Principles”* (“SFAS
      162”). This statement identifies the sources of accounting principles and the
      framework for selecting the principles used in the preparation of financial
      statements of nongovernmental entities that are presented in accordance with
      generally accepted accounting principles (“GAAP”). With the issuance of this
      statement, the FASB concluded that the GAAP hierarchy should be directed toward
      the entity and not its auditor, and reside in the accounting literature
      established by the FASB as opposed to the American Institute of Certified Public
      Accountants (“AICPA”) Statement on Auditing Standards No. 69, *“The
      Meaning of Present Fairly in Conformity With Generally Accepted Accounting
      Principles.”* This
      statement is effective 60 days following the Securities and Exchange
      Commission’s approval of the Public Company Accounting Oversight Board
      amendments to AU Section 411, *“The
      Meaning of Present Fairly in Conformity With Generally Accepted Accounting
      Principles.”* The
      Company does not expect the adoption of SFAS 162 will have a material impact
      on
      its results of operations and financial position.





**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 September
      30, 2008 we had general banking facilities amounted to approximately $24.8
      million for overdraft, letter of credit, trust receipt, invoice financing and
      export loans granted by seven banks. The amount increased by $9.6 million
      compared to $15.2 million as at September 30, 2007. Interest on the facilities
      ranged from minus 2.00% to 0.75% over the Bank’s Best Lending Rate of Hong Kong
      (Prime Rate) or Hong Kong Inter Bank Offered Rate (HIBOR). These banking
      facilities were secured by the leasehold properties, time deposits and held-to
      maturity investments of the group and personal guarantees executed by our
      Chairman of the Board.





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




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





On
      January 23, 2007, concurrently with the close of the Share Exchange, we
      conducted an initial closing of a private placement transaction pursuant to
      which we sold an aggregate of 1,749,028 shares of Series A Convertible Preferred
      Stock at $1.29 per share. On February 9, 2007, we conducted a second and final
      closing of the private placement pursuant to which we sold 501,320 shares of
      Series A Convertible Preferred Stock at $1.29 per share. Accordingly, a total
      of
      2,250,348 shares of Series A Convertible Preferred Stock were sold in the
      private placement for an aggregate gross proceeds of $2,902,946 (the “Private
      Placement”). After commissions and expenses, we received net proceeds of
      approximately $2.3 million in the Private Placement. All of the Series A
      Preferred Stock was converted to shares of common stock during the nine months
      ended September 30, 2008.





43





For
      the
      nine months ended September 30, 2008, net cash used in operating activities
      was
      approximately $2.4 million, as compared to net cash used in operating activities
      of $3.7 million for the comparable period in 2007. The decrease in net cash
      used
      in operating activities was primarily attributable to an increase in net income
      of $5.9 million for the nine months ended September 30, 2008 as compared to
      $3.9
      million in the same period in 2007, an increase in non-cash adjustment of income
      taxes of $1.0 million for the nine months ended September 30, 2008 as compared
      to $1.4 million in the same period in 2007, a decrease in inventories of $1.2
      million for the nine months ended September 30, 2008 as compared to
      approximately $275,000 in the same period in 2007, an increase in accounts
      payable of $1.1 million for the nine months ended September 30, 2008 as compared
      to approximately $306,000 in the same period in 2007, offset by an increase
      in
      prepaid expenses and other receivables of $5.0 million for the nine months
      ended
      September 30, 2008 as compared to $4.3 million in the same period in 2007,
      and
      an increase in accounts receivable of $3.6 million for the nine months ended
      September 30, 2008 as compared to $7.3 million in the same period in 2007.
      The
      increase in prepaid expenses and other receivables was attributable to an
      increase in rebate receivables and the deposit paid in relation to two potential
      acquisitions. The deposit of acquisitions is fully refundable if the
      transactions do not close. The increase in accounts receivable is attributable
      to the increase in sales.





Net
      cash
      used in investing activities was $7.4 million for the nine months ended
      September 30, 2008, compared to approximately $30,000 in the comparable period
      in 2007. Net cash used was primarily due to an increase in expenditures for
      acquiring moldings and equipments.





Net
      cash
      provided by financing activities was $6.5 million for the nine months ended
      September 30, 2008 and $3.6 million for the comparable period in 2007. The
      net
      cash provided by financing activities for the nine months ended September 30,
      2008 was primarily attributable to the proceeds of approximately $2.7 million
      from our issuance of common stocks in the public offering in February 2008,
      and
      net proceeds from bank loans of $3.4 million.





For
      the
      nine months ended September 30, 2008 and the same period in 2007, our average
      inventory turnover were 33 days and 30 days, respectively. The increase in
      inventory turnover period in 2008 was due to a higher level of stock associated
      with higher sales. The average days outstanding of our accounts receivable
      for
      the nine months ended September 30, 2008 was 47 days, as compared to 50 days
      for
      the same period in 2007. The decrease in the average days outstanding of our
      accounts receivable was due to quicker payments from our customers as a result
      of our tightened credit policy.




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. During the second quarter
      of
      2008, we identified two potential acquisition targets. One of the targets is
      a
      full-range manufacturer of plastic and metal watch parts and the other is a
      supplier of analog watches. If we are to acquire the former, we believe it
      will
      contribute to our strategy of producing low-end quartz movements in-house.
      If we
      are to acquire the latter, we believe it will result in an increased production
      of mechanical watches. There is currently no definitive agreement in place
      for
      either potential target and there is no assurance that we will be able to
      complete such acquisitions.




Adverse
      capital and credit market conditions may significantly affect our ability to
      meet liquidity needs, access to capital and cost of capital. We may need to
      raise further capital for our future growth and operations from future equity
      sales or through debt financings. The capital and credit markets have been
      experiencing extreme volatility and disruption for more than a year.
      Disruptions, uncertainty or volatility in the capital and credit markets may
      limit our access to capital required to operate our business. Failure to obtain
      funding when needed may force us to delay, reduce, or eliminate our plans to
      manufacture our own watch movement parts. Our results of operations, financial
      condition, cash flows and capital position could be materially adversely
      affected by disruptions in the financial markets.





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.





**Backlog**





As
      is
      typical of watch movement distributors, we have a backlog of customer orders.
      At
      September 30, 2008 we had a backlog of approximately $3.55 million as compared
      to a backlog of approximately $1.97 million at September 30, 2007. Our backlog
      is subject to delivery rescheduling and cancellations by the customer, sometimes
      without penalty or notice. Our backlog is not necessarily indicative of our
      future sales for any particular period.





44





**ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
      RISK**




*Credit
      Risk.* **** We
      are
      exposed to credit risk from our cash at banks, fixed deposits and contract
      receivables. The credit risk on cash at banks 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.





**ITEM
      4.  CONTROLS AND PROCEDURES**





**Evaluation
      of Disclosure Controls and Procedures**





Disclosure
      controls and procedures are controls and other procedures that are designed
      to
      ensure that information required to be disclosed by us in the reports that
      we
      file or submit under the Exchange Act is recorded, processed, summarized and
      reported, within the time periods specified in the Securities and Exchange
      Commission's rules and forms. Disclosure controls and procedures include,
      without limitation, controls and procedures designed to ensure that information
      required to be disclosed by us in the reports that we file under the Exchange
      Act is accumulated and communicated to our management, including our principal
      executive and financial officers, as appropriate to allow timely decisions
      regarding required disclosure.





As
      of the
      end of the period covered by this report, we conducted an evaluation, under
      the
      supervision and with the participation of our Chief Executive Officer (CEO)
      and
      our Chief Financial Officer (CFO), of our disclosure controls and procedures
      as
      defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act. Based upon
      this evaluation, our CEO and CFO concluded that the Company’s disclosure
      controls and procedures were effective.





We
      had
      identified deficiencies that consisted of inadequate staffing and supervision,
      in addition to 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. In April 2008, we hired our CFO, David Lin, who has more than
      17
      years of financial expertise, including experience with companies listed on
      the
      U.S. and Hong Kong stock exchanges, to assume the job responsibilities of a
      CFO
      from our CEO, who had previously assumed this duty. Our CEO and CFO believe
      the
      improved controls and procedures during this reporting period are effective
      which include hiring additional qualified in house accounting personnel and
      third-party accounting personnel to ensure that management will have adequate
      resources in reporting of financial information disclosures in a timely matter.
      We will continue to monitor the effectiveness of these improvements. We will
      also engage outside consultants to assist us in assessing and improving our
      internal controls and procedures when necessary.





**Changes
      in Internal Control over Financial Reporting**




Based
      on
      the evaluation of our management as required by paragraph (d) of Rule 13a-15
      or
      15d-15 of the Exchange Act, and other than as stated above, there were no
      changes in our internal control over financial reporting that occurred during
      the third quarter of 2008 that have materially affected, or are reasonably
      likely to materially affect, our internal control over financial
      reporting.





45





**PART
      II-OTHER INFORMATION**





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





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





**ITEM
      1A. RISK FACTORS**





The
      ownership of our common shares involves a number of risks and uncertainties.
      When evaluating the Company and our business before making an investment
      decision regarding our securities, potential investors should carefully consider
      the risk factors and uncertainties described in Part 1, “Item 1A. Risk Factors”
of our annual report on Form 10-K for the fiscal year ended December 31, 2007
      as
      well as the risk factors listed below, which supplement the risk factors
      contained in our Form 10-K. If any of the events or circumstances described
      in
      our 10-K or listed below actually occur, our business, financial condition
      or
      results of operations could be materially adversely affected. The risks
      contained in our Form 10-K and those listed below are not the only risks that
      we
      face. Additional risks that we do not yet know of or that we currently think
      are
      not significant may also impact our business operation.





**Adverse
      Capital and Credit Market Conditions May Significantly Affect Our Ability to
      Meet Liquidity Needs, Access to Capital and Cost of
      Capital**





The
      capital and credit markets have been experiencing extreme volatility and
      disruption for more than a year. Recently, the volatility and disruption have
      reached unprecedented levels. In some cases, the markets have exerted downward
      pressure on availability of liquidity and credit capacity for certain issuers.
      We need liquidity to pay our operating expenses, interest on our debt, and
      interest on our outstanding variable rate convertible bonds. Without sufficient
      liquidity, we will be forced to curtail our operations, and our business will
      suffer. Our internal sources of liquidity may prove to be insufficient, and
      in
      such case, we may not be able to successfully obtain additional financing on
      favorable terms, or at all. Disruptions, uncertainty or volatility in the
      capital and credit markets may also limit our access to capital required to
      operate our business. Such market conditions may limit our ability to replace,
      in a timely manner, maturing liabilities and access the capital necessary to
      grow our business. As such, we may be forced to delay raising capital or bear
      an
      unattractive cost of capital which could decrease our profitability and
      significantly reduce our financial flexibility. Our
      results of operations, financial condition, cash flows and capital position
      could be materially adversely affected by disruptions in the financial
      markets.





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





Not
      applicable.





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





Not
      applicable.





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





On
      September 27, 2008, we held our annual meeting of stockholders. Of the
      26,751,552 shares eligible to vote, 21,144,005, or 79.0%, votes were returned,
      formulating a quorum. At the annual stockholders meeting, the following matters
      were submitted to stockholders for vote: Proposal I—Election of directors;
      Proposal II—Ratification of the appointment of Dominic K.F. Chan & Co. as
      our independent auditors for the year ending December 31, 2008; and Proposal
      III
—Approval of the Asia Time Corporation 2008 Equity Incentive Plan.





**Proposal
      I—Election of Directors**





The
      results of voting on these proposals are as follows:




**Director**
            
            **For**
            
            **Against**
            
            **Withheld**
            
            **Elected**Kwong
                Kai Shun
            
            
            21,142,393
            
            
            0
            
            
            1,611
            
            
            YesMichael
                Mak
            
            
            21,142,393
            
            
            0
            
            
            1,611
            
            
            YesSiu
                Po Lee
            
            
            21,142,408
            
            
            0
            
            
            1,596
            
            
            YesDr.
                Ching Wah Leung
            
            
            21,142,408
            
            
            0
            
            
            1,596
            
            
            YesWu
                Hok Lun
            
            
            21,142,408
            
            
            0
            
            
            1,596
            
            
            Yes




All
      directors are elected at our annual stockholders meeting.





46





**Proposal
      II—Ratification of the appointment of Dominic K.F. Chan & Co. as our
      independent auditors for the year ending December 31, 2008.**





Proposal
      II was approved with 20,717,696 shares voted for, 425,909 voted against and
      400
      abstained from voting, thereby, ratifying the appointment of Dominic K.F. Chan
      & Co. as our independent auditors for the year ending December 31,
      2008.





**Proposal
      III—Approval of the Asia Time Corporation 2008 Equity Incentive
      Plan.**





Proposal
      III was approved with 21,135,508 shares voted for, 7,490 voted against and
      1,006
      abstained from voting, thereby, approving the Asia Time Corporation 2008 Equity
      Incentive Plan.





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





Not
      applicable.





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





31.1
            Certification
                of Principal Executive Officer pursuant to Section 302(a) of the
                Sarbanes-Oxley Act of 200231.2
            Certification
                of 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.





47





**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)November
                18, 2008
            By:
            /s/ Kwong
                Kai ShunKwong
                Kai ShunChief
                Executive Officer and Chairman of the
                Board




48