Asia Time Corp - Amended Quarterly Report (10-Q/A)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

AMENDMENT NO. 2 TO

FORM 10-Q/A

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

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2007

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

SECURITIES EXCHANGE ACT OF 1934

Commission File Number

000-51981

ASIA TIME CORPORATION

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

Delaware (State or other jurisdiction of incorporation or organization)		20-4062619 (I.R.S. Employer Identification No.)

Room 1601-1604, 16/F., CRE Centre 889 Cheung Sha Wan Road, Kowloon, Hong Kong (Address of principal executive offices)		N/A (Zip Code)

(852)-23100101

(Registrant’s telephone number, including area code)

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

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

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

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

There were 23,156,629 shares outstanding of registrant’s common stock, par value $.0001 per share, as of May 1, 2007.

EXPLANATORY NOTE

This Amendment No. 2 (this “Amendment No. 2”) on Form 10-Q/A, which amends and restates items identified below with respect to the Form 10-Q, filed by Asia Time Corporation (“we” or the “Company”) with the Securities and Exchange Commission (the “SEC”) on November 19, 2007 (the “Original Filing”), as amended by Amendment No. 1 on Form 10-Q/A to the Original Filing filed with the SEC on September 26, 2007 (“Amendment No. 1”, and collectively with the Originally Filing, referred to as the “Original Filing as Amended”) is being filed to reflect revisions to Financial Statements, Management’s Discussion And Analysis Of Financial Condition And Results Of Operation, Risk Factors, and Controls and Procedures. The Company has revised its financial statements for the three months ended March 31, 2007 and 2006 to reflect various adjustments, primarily to account for all fees and costs related to the January 2007 reverse merger as a charge to operations, to adjust the accounting for inventories and cost of sales by accruing for vendor incentives, and to recognize stock-based compensation in 2007. As a result of these adjustments, various income tax calculations were also revised, which effected net income and also caused reclassifications to cash flows. The Company has also corrected average and actual shares outstanding retroactively (and related earnings per share calculations) to reflect the January 2007 reverse merger. These adjustments are more fully described at Note 19 of the Notes to the Financial Statements contained herein.

This Form 10-Q/A only amends information in Item 1 (Financial Statements), Item 1A (Risk Factors), Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operation), and Item 4 (Controls and Procedures), and the other Items as presented in the Original Filing are not being amended but are restated without change in this Amendment for ease of reference. As a result of this Amendment, the certifications pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002, filed as exhibits to our Original Filing as Amended have been revised, re-executed and re-filed as of the date of this Amendment No. 2. Except for the foregoing amended and restated information, this Amendment No. 2 continues to describe conditions as of the date of the Original Filing, and the disclosures contained herein have not been updated to reflect events, results or developments that have occurred after the Original Filing, or to modify or update those disclosures affected by subsequent events. Among other things, forward-looking statements made in the Original Filing have not been revised to reflect events, results or developments that have occurred or facts that have become known to us after the date of the Original Filing, and such forward-looking statements should be read in their historical context. This Amendment No. 2 should be read in conjunction with the Company’s filings made with the SEC subsequent to the Original Filing, including any amendments to those filings.

ASIA TIME CORPORATION.

FORM 10-Q QUARTERLY REPORT

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION		1

ITEM 1.	FINANCIAL STATEMENTS	1

	Condensed Consolidated Balance Sheet (Unaudited)	2

	Condensed Consolidated Income Statement (Unaudited)	4

	Condensed Consolidated Statement of Cash Flows (Unaudited)	5

	Notes to Condensed Consolidated Financial Statements (Unaudited)	7

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION	43

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	51

ITEM 4.	CONTROLS AND PROCEDURES	52

PART II - OTHER INFORMATION		53

ITEM 1.	LEGAL PROCEEDINGS	53

ITEM 1A.	RISK FACTORS	53

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	53

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	53

ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	53

ITEM 5.	OTHER INFORMATION	53

ITEM 6.	EXHIBITS	53

SIGNATURES		54

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

CONDENSED CONSOLIDATED BALANCE SHEETS

(Stated in US Dollars)

	*As of*
	*March 31,*		*December 31,*
	*2007*		*2006*
	*(Unaudited)*		*(Audited)*
	$		$
	(restated)		(restated)
ASSETS
Current Assets :
Cash and cash equivalents		170,340		316,621
Restricted cash		4,604,317		4,523,679
Accounts receivable		13,839,068		8,188,985
Prepaid expenses and other receivables - Note 8		5,680,051		2,101,133
Tax prepayment		-		767
Inventories, net - Note 9		878,367		6,246,185
Prepaid lease payments - Note 11		17,079		22,958

Total Current Assets		25,189,222		21,400,328
Deferred tax assets - Note 6		13,969		14,042
Plant and equipment, net - Note 10		820,489		890,258
Leasehold lands - Note 11		890,740		895,322
Held-to-maturity investments - Note 12		299,654		301,196
Intangible assets - Note 13		305,158		337,836
Restricted cash		299,654		257,301

TOTAL ASSETS		27,818,886		24,096,283

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES
Current Liabilities :
Accounts payable		805,344		770,360
Other payables accrued liabilities - Note 14		139,455		190,358
Income tax payable		1,669,177		1,387,571
Bank borrowings - Note 15		12,661,617		13,205,167

Total Current Liabilities		15,275,593		15,553,456
Deferred tax liabilities - Note 6		31,548		31,711

TOTAL LIABILITIES		15,307,141		15,585,167

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)

(Stated in US Dollars)

	*As of*
	*March 31,*			*December 31,*
	*2007*			*2006*
	*(Unaudited)*			*(Audited)*
	$			$
	(restated)			(restated)
STOCKHOLDERS’ EQUITY
Preferred stock - Note 16
Par value : 2007 - US$0.0001
Authorized: 2007 - 10,000,000 shares
Issued and outstanding: 2007 - 2,250,348 shares (2006 - none)		225			-

Common stock - Note 18
Par value : 2007 - US$0.0001
Authorized: 2007 - 100,000,000 shares
Issued and outstanding: 2007 - 23,156,629 shares (2006 - 19,454,420 shares)		2,316			1,946
Additional paid-in capital		4,898,949			654,298
Accumulated other comprehensive income		(44,607	)		7,470
Retained earnings		7,654,862			7,847,402

TOTAL STOCKHOLDERS’ EQUITY		12,511,745			8,511,116

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		27,818,886			24,096,283

See notes to condensed consolidated financial statements.

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Stated in US Dollars)

	*Three months ended March 31,*
	*2007*			*2006*
	*(Unaudited)*			*(Unaudited)*
	$			$
	(restated)			(restated)

Net sales		21,118,142			20,303,091
Cost of sales		(17,898,978	)		(18,142,289	)

Gross profit		3,219,164			2,160,802
Other income - Note 4		48,497			41,905
Depreciation		(65,431	)		(75,753	)
Administrative and other operating expenses, including stock-based compensation		(2,046,406	)		(301,810	)

Income from operations		1,155,824			1,825,144
Fees and costs related to reverse merger - Note 1		(736,197	)		-
Other income - Note 4		29,929			42,913
Interest expense - Note 5		(239,429	)		(200,556	)

Income before taxes		210,127			1,667,501
Income taxes - Note 6		(402,667	)		(294,945	)

Net income (loss)		(192,540	)		1,372,556

Earnings per common share
- Basic		(0.01	)		0.07
- Diluted		(0.01	)		0.07

Weighted average common shares
- Basic		23,156,629			19,454,420
- Diluted		23,156,629			19,454,420

See notes to condensed consolidated financial statements.

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Stated in US Dollars)

	*Three months ended March 31,*
	*2007*			*2006*
	*(Unaudited)*			*(Unaudited)*
	$			$
	(restated)			(restated)
Cash flows from operating activities
Net income (loss)		(192,540	)		1,372,556
Adjustments to reconcile net income (loss) to net cash
used in operating activities :
Stock-based compensation		1,611,563			-
Amortization of intangible assets		31,023			38,720
Amortization of leasehold lands		5,774			2,023
Depreciation		65,431			75,753
Gain on disposal of plant and equipment		-			(2,037	)
Income taxes		402,667			294,945

Changes in operating assets and liabilities :
(Increase) decrease in -
Accounts receivable		(5,705,639	)		(766,647	)
Prepaid expenses and other receivables		(3,573,152	)		(396,270	)
Inventories		5,347,553			(714,080	)
Increase (decrease) in -
Accounts payable		39,021			187,074
Other payables and accrued liabilities		(63,519	)		(18,395	)
Income taxes payable		(112,158	)		(33,989	)
Unearned revenue		-			(1,238,248	)

Net cash used in operating activities		(2,143,976	)		(1,198,595	)

Cash flows from investing activities
Acquisition of plant and equipment		(64	)		(381,125	)
Proceeds from disposal of plant and equipment		-			2,037

Net cash used in investing activities		(64	)		(379,088	)

Cash flows from financing activities
Proceeds from issuance of Series A convertible preferred stock		2,641,683			-
Advances from related parties		(19,655	)		(1,069,745	)
Proceeds from new short-term bank loans		112,157			33,988
Repayment of short-term bank loans		(434,006	)		(88,348	)
Net advances under other short-term bank borrowings		(86,461	)		3,945,193
Increase in restricted cash		(147,822	)		(1,808,096	)
Decrease in bank overdrafts		(68,773	)		(109,056	)

Net cash provided by financing activities		1,997,123			903,936

Net decrease in cash and cash equivalents		(146,917	)		(673,747	)
Effect of foreign currency translation on cash and cash equivalents		636			(266	)
Cash and cash equivalents - beginning of period		316,621			780,090

Cash and cash equivalents - end of period		170,340			106,077

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Stated in US Dollars)

	*Three months ended March 31,*
	*2007*		*2006*
	*(Unaudited)*		*(Unaudited)*
	$		$
	(restated)		(restated)
Supplemental disclosures of cash flow information :
Cash paid for :
Interest		239,429		200,556
Income taxes		112,158		33,989

See notes to condensed consolidated financial statements.

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

1.	Organization and Recapitalization

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

Recapitalization

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

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

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

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

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

1.	Organization and Recapitalization (continued)

The Company agreed to register the 1,999,192 shares of common stock that were held by certain of the Company’s shareholders immediately prior to the closing of the Exchange Agreement. If the Company fails to register 1,999,192 shares due to failure on the part of the Company, additional shares of its common stock shall be issued to the respective shareholders in the amount of 0.0333% of their respective shares for each calendar day until the registration becomes effective. There is no maximum potential consideration to be transferred in connection with the registration of these shares. The Company agreed to file a registration statement no later than the tenth day after the end of the six month period that immediately follows the filing date of the initial registration statement (the "Required Filing Date"). The Company agreed to use reasonable best efforts to cause such registration statement to become effective within 120 days after the Required Filing Date or the actual filing date, whichever is earlier, or 150 days after the Required Filing Date or the actual filing date, whichever is earlier, if the registration statement is subject to a full review by the Securities and Exchange Commission. In addition, the Company agreed to use its reasonable best efforts to maintain the registration statement effective for a period of 24 months at the Company's expense.

Restatement

The Company has revised its financial statements for the three months ended March 31, 2007 to reflect various adjustments, primarily to account for all fees and costs related to the January 2007 reverse merger as a charge to operations, to adjust the accounting for inventories and cost of sales by accruing for vendor incentives, and to recognize stock-based compensation in 2007. As a result of these adjustments, various income tax calculations were also revised, which effected net loss and also caused reclassifications to cash flows. The Company has also corrected average and actual shares outstanding retroactively (and related earnings per share calculations) to reflect the January 2007 reverse merger. These adjustments are more fully described at Note 19.

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

2.	Description of business

The Company and its subsidiaries are engaged in trading 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 holding
Times Manufacturing & E-Commerce Corporation Ltd. (“TMEHK”)	British Virgin Islands January 2, 2002	US$20,000 Ordinary	Investment holding
Billion Win International Enterprise Ltd. (“BW”)	Hong Kong March 5, 2001	HK$5,000,000 Ordinary	Trading of watch components
Goldcome Industrial Ltd. (“GI”)	Hong Kong March 2, 2001	HK$10,000 Ordinary	Trading of watch components
Citibond Industrial Ltd. (“CI”)	Hong Kong February 28, 2003	HK$1,000 Ordinary	Trading of watch components
Megamooch International Ltd. (“MI”)	Hong Kong April 2, 2001	HK$100 Ordinary	Trading of watches and watch components
TME Enterprise Ltd.	British Virgin Islands November 28, 2003	US$2 Ordinary	Investment holding
Citibond Design Ltd.	British Virgin Islands August 1, 2003	US$2 Ordinary	Inactive
Megamooch Online Ltd.	British Virgin Islands June 6, 2003	US$2 Ordinary	Trading of watches and watch components

3.	Summary of significant accounting policies

Consolidation

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

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

3.	Summary of significant accounting policies

Consolidation

Basis of presentation

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

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

Use of estimates

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

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

3.	Summary of significant accounting policies (continued)

Concentrations of credit risk

Financial instruments that potentially subject the Group to significant concentrations of credit risk consist principally of accounts receivable. The Group extends credit based on an evaluation of the customer’s financial condition, generally without requiring collateral or other security. In order to minimize the credit risk, the management of the Group has delegated a team responsibility for determination of credit limits, credit approvals, and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. Further, the Group reviews the recoverable amount of each individual trade debt at each balance sheet date to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the directors of the Group consider that the Group’s credit risk is significantly reduced. Other than set forth below, no customers represented 10% or more of the Group’s net sales and accounts receivable.

For the three months ended March 31, 2007 and 2006, customers representing 10% or more of the Group’s net sales and their related accounts receivable were as follows:

	*Three months ended* *March 31,*
	2007		2006
	$		$

Customer A		2,736,969		2,989,922
Customer B		2,136,233		2,881,040
Customer C		-		2,118,331

Net sales		4,873,202		7,989,293

Accounts receivable		1,239,793		709,970

Restricted cash

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

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

3.	Summary of significant accounting policies (continued)

Accounts receivable

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

During the three months ended March 31, 2007 and 2006, the Company had no uncollectible accounts receivable and, accordingly, did not record any allowance for doubtful accounts.

Inventories

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

Leasehold land

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

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

3.	Summary of significant accounting policies (continued)

Intangible assets

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

Amortization of intangible assets is provided using the straight-line method over their estimated useful lives at the following annual rates:

Trademarks			20	%
Websites			20	%

Held-to-maturity investments

The Company’s policies with respect to investments in debt and equity securities are as follows:

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

Plant and equipment

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

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

Buildings	over the unexpired lease term
Furniture and fixtures	20 - 25%
Office equipment	25 - 33%
Machinery and equipment	25 - 33%
Moulds	33%
Motor vehicles	25 - 33%

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

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

3.	Summary of significant accounting policies (continued)

Impairment of long-lived assets

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

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

Revenue recognition

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

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

Income taxes

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

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

3.	Summary of significant accounting policies (continued)

Earnings per share

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

The Company did not have any potentially dilutive common share equivalents during the three months ended March 31, 2006. As the Company had a net loss for the three months ended March 31, 2007, the calculation of diluted earnings per share for the period excluded the effect of the Series A Convertible Preferred Stock on an “as converted” basis, since the effect would have been anti-dilutive. Basic and diluted earnings per share were thus the same for the three months ended March 31, 2007.

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

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

3.	Summary of significant accounting policies (continued)

Earnings per share (continued)

	Three Months Ended March 31,
	2007								2006
				Weighted							Weighted
	Net			Average					Net		Average
	Loss			Shares		Per Share			Income		Shares		Per Share

Earnings per share - basic
Net income (loss)	$	(192,540	)		23,156,629	$	(0.01	)	$	1,372,556		19,454,420	$	0.07
Effect of dilutive securities
Convertible preferred stock		-			-					-		-
Earnings per share - diluted
Net income (loss)	$	(192,540	)		23,156,629	$	(0.01	)	$	1,372,556		19,454,420	$	0.07

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

3.	Summary of significant accounting policies (Continued)

Stock-Based Compensation

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

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

The Company did not recognize any stock-based compensation during the three months ended March 31, 2006. During the three months ended March 31, 2007, the Company recorded $1,611,563, 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.

Recent accounting pronouncements

In July 2006, the FASB issued FIN 48, “Accounting for Uncertainty in Income Taxes.” FIN 48 requires that the Company recognize in its financial statements the impact of a tax position if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 are effective as of the beginning of the Company’s 2007 fiscal year, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings, if any. The Company did not have any material unrecognized tax benefits as of January 1, 2007. The adoption of FIN 48 did not have any impact on the Company’s consolidated financial statements.

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

3.	Summary of significant accounting policies (continued)

Recent accounting pronouncements (continued)

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

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

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

4.	Other income

	*Three months ended March 31,*
	*2007*		*2006*
	*(Unaudited)*		*(Unaudited)*
	$		$

Operating income
License fee of intangible assets		32,716		41,905
Rental income		15,781		-

		48,497		41,905
Non-operating income
Bank interest income		29,002		36,343
Net exchange gains		927		109
Other interest income		-		6,461

		29,929		42,913

		78,426		84,818

5.	Interest expense

	*Three months ended March 31,*
	*2007*		*2006*
	*(Unaudited)*		*(Unaudited)*
	$		$

Interest on bank trust receipts		219,502		179,554
Interest on short-term bank loans		9,583		5,175
Interest on bank overdrafts		10,344		15,827

		239,429		200,556

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

6.	Income taxes

	*Three months ended* *March 31,*
	*2007*		*2006*
	*(Unaudited)*		*(Unaudited)*
	$		$
Hong Kong profits tax
Current period		402,667		294,945

The Company’s subsidiaries operating in Hong Kong are subject to a tax of 17.5% on the estimated assessable profits during the periods. During the three months ended March 31, 2007 and 2006, the effective tax rate was (191.6)% and 17.7%, respectively. The effective tax rate in 2007 would have been 15.7% if non-deductible stock-based compensation and reverse merger costs had been excluded from the calculation.

Deferred tax (assets) liabilities as of March 31, 2007 and 2006 are composed of the following:

	*As of*
	*March 31,*			*December 31,*
	*2007*			*2006*
	*(Unaudited)*			*(Audited)*
	$			$

Temporary difference on accelerated tax
depreciation on plant and equipment		17,579			17,669

Deferred tax liabilities, net		17,579			17,669

Recognized in the balance sheet:
Net deferred tax assets		(13,969	)		(14,042	)
Net deferred tax liabilities		31,548			31,711

		17,579			17,669

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

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

7.	Comprehensive income

	*Three months ended* *March 31,*
	*2007*			*2006*
	*(Unaudited)*			*(Unaudited)*
	$			$


Net income		(192,540	)		1,372,556
Foreign currency translation adjustment		(52,077	)		(4,067	)

Total comprehensive income		(244,617	)		1,368,489

8.	Prepaid expenses and other receivables

	*As of*
	*March 31,*		*December 31,*
	*2007*		*2006*
	*(Unaudited)*		*(Audited)*
	$		$

Rebate receivable		1,695,002		-
Interest receivable		-		20,218
Rental receivable		-		46,314
Other receivable		50,015		-
Purchase deposits paid		3,306,826		1,530,372
Sales proceeds of intangible assets receivable		299,501		301,042
Other deposits and prepayments		328,707		203,187

		5,680,051		2,101,133

9.	Inventories

	*As of*
	*March 31,*		*December 31,*
	*2007*		*2006*
	*(Unaudited)*		*(Audited)*
	$		$

Completed watches, at cost		762,191		1,745,648
Watch movements, cost		194,602		4,500,537

		878,367		6,246,185

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

10.

Plant and equipment

	*As of*
	*March 31,*		*December 31,*
	*2007*		*2006*
	*(Unaudited)*		*(Audited)*
	$		$
Cost
Buildings		241,109		242,350
Furniture and fixtures		490,406		492,866
Office equipment		145,164		145,911
Machinery and equipment		319,979		321,626
Moulds		382,696		384,665
Motor vehicles		45,693		45,928

		1,625,047		1,633,346

Accumulated depreciation
Buildings		9,868		8,441
Furniture and fixtures		260,501		237,508
Office equipment		107,653		100,612
Machinery and equipment		108,995		93,475
Moulds		289,716		276,936
Motor vehicles		27,825		26,116

		804,558		743,088

Net
Buildings		231,241		233,909
Furniture and fixtures		229,905		255,358
Office equipment		37,511		45,299
Machinery and equipment		210,984		228,151
Moulds		92,980		107,729
Motor vehicles		17,868		19,812

		820,489		890,258

Depreciation expenses included in administrative and other operating expenses for the three months ended March 31, 2007 and March 31, 2006 are $65,431 and $75,753, respectively.

As at March 31, 2007 and December 31, 2006, the carrying amount of buildings pledged as security for the Group’s banking facilities amounted to $231,241 and $233,909, respectively.

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

11.

Leasehold lands

	*As of*
	*March 31,*		*December 31,*
	*2007*		*2006*
	*(Unaudited)*		*(Audited)*
	$		$

Cost		944,653		949,514

Accumulated amortization		36,834		31,234

Net		907,819		918,280

Analyzed for reporting purposes as:
Current asset		17,079		22,958
Non-current asset		890,740		895,322

		907,819		918,280

Amortization expenses included in administrative and other operating expenses for the three months ended March 31, 2007 and March 31, 2006 are $5,774 and $2,023, respectively.

As at March 31, 2007 and December 31, 2006, the carrying amount of leasehold lands pledged as security for the Group’s banking facilities amounted to $907,819 and $918,280, respectively.

12.

Held-to-maturity investments

	*As of*
	*March 31,*		*December 31,*
	*2007*		*2006*
	*(Unaudited)*		*(Audited)*
	$		$

Hang Seng Capital Guarantee Investment Fund
- 30,000 units at $10 each, interest rate at 10.5% in 3.75 years
Cost		299,654		301,196

The carrying amount of the held-to-maturity investment approximates its fair value at March 31, 2007.

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

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

13.

Intangible assets

	*As of*
	*March 31,*		*December 31,*
	*2007*		*2006*
	*(Unaudited)*		*(Audited)*
	$		$
Cost
Trademarks		199,667		200,695
Websites		419,301		421,459

		618,968		622,154
Accumulated amortization
Trademarks		121,797		112,389
Websites		192,013		171,929

		313,810		284,318
Net
Trademarks		77,870		88,306
Websites		227,288		249,530

		305,158		337,836

Amortization expenses included in administrative and other operating expenses for the three months ended March 31, 2007 and March 31, 2006 are $ 31,023 and $38,720, respectively.

14.

Other payables and accrued liabilities

	*As of*
	*March 31,*		*December 31,*
	*2007*		*2006*
	*(Unaudited)*		*(Audited)*
	$		$

Accrued expenses		130,496		181,352
Sales deposits received		8,959		9,006

		139,455		190,358

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

15.

Bank borrowings

	*As of*
	*March 31,*		*December 31,*
	*2007*		*2006*
	*(Unaudited)*		*(Audited)*
	$		$
Secured:
Bank overdrafts repayable on demand		480,280		551,714
Repayable within one year
Non-recurring bank loans		1,141,262		1,469,866
Other bank borrowings		11,040,075		11,183,587

		12,661,617		13,205,167

As of March 31, 2007, the above banking borrowings were secured by the following:

(a)

first fixed legal charge over leasehold land and buildings with carrying amounts of $1,139,060 (note 10 and 11);

(b)

charge over bank deposits of $4,903,971;

(c)

charge over held-to-maturity investments of $299,654 (note 12)

(d)

personal guarantee executed by a director of the Company; and

(e)

other financial covenant :- The bank borrowings require one of the Company’s subsidiaries to maintain a minimum net worth of $1,283,038. The Company’s subsidiary was in compliance with this requirement at March 31, 2007.

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

16.

Common stock and convertible preferred stock

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

		Series A Convertible Preferred Stock				Common Stock				Additional
		($0.0001 Par Value)				($0.0001 Par Value)				Paid-In
		Shares		Amount		Shares		Amount		Capital

Balances, December 31, 2006			0	$	0		19,454,420	$	1,946	$	654,298
Jan. 23, 2007	Shares issued to SRKP 9 founders:
	Originally issued on Jan. 3, 2006; deemed issued on Jan. 23, 2007 for reverse merger purposes		-		-		2,700,000		270		(270	)
	Issued in connection with 1.371188519- for-1 retroactive stock split						1,002,209		100		(100	)
Jan. 23, 2007	Adjustment to SRKP 9 accounts to reflect reverse merger		-		-		-		-		(7,999	)
Jan. 23, 2007	Gross proceeds from shares sold in offering - initial closing		1,749,028		175		-		-		2,256,071
Jan. 23, 2007	Offering costs - initial closing (9% of gross)		-		-		-		-		(203,062	)
Jan.23, 2007	Stock-based compensation		-		-		-		-		1,611,563
Feb. 9, 2007	Gross proceeds from shares sold in offering - final closing		501,320		50		-		-		646,651
Feb. 9, 2007	Offering costs - initial closing (9% of gross)		-		-		-		-		(58,203	)
Balances, March 31, 2007			2,250,348	$	225		23,156,629	$	2,316	$	4,898,949

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

16.

Common stock and convertible preferred stock (continued)

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

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

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

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

The Company agreed to file a registration statement covering the common stock underlying the Series A Convertible Preferred Stock sold in the Private Placement within 30 days of the closing of the Share Exchange pursuant to the Subscription Agreement with each investor.

The Company agreed to a penalty provision with respect to its obligation to register the Series A Convertible Preferred Stock. If the Company fails to register the Series A Convertible Preferred Stock due to failure on the part of the Company, the Company will pay to the holders of Series A Convertible Preferred Stock a cash payment equal to 0.0333% of the purchase price of their respective shares for each business day of the failure. There is no maximum potential consideration to be transferred. The Company is required to file the registration statement no later than thirty days after the consummation of the Private Placement and agreed to use reasonable best efforts to cause such Registration Statement to become effective within one hundred and fifty 150 days after the closing of the Private Placement, or one hundred eighty 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 twenty-four 24 months at the Company’s expense.

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

16.

Common stock and convertible preferred stock (continued)

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

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

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

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 has allocated the $2,433,650 based on the quarterly weighted average of the implicit probabilities of achieving each net income target. The cumulative probability factor at March 31, 2007 was 66.22%. Accordingly, 66.22% of $2,433,650, or $1,611,563, was charged to operations for the three months ended March 31, 2007.

Approximately 66% of the aggregate fair value of $2,433,650 was charged to operations during the three months ended March 31, 2007 because at March 31, 2007 it appeared probable (but not certain) that the Company would meet or exceed the required net income for 2006, and net income for the three months ended March 31, 2007 was within expectations.

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

16.

Common stock and convertible preferred stock (continued)

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

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

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

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

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

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

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

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 Company with respect to MPF Scheme is to make the required contributions under the plan.

The assets of the schemes are controlled by trustees and held separately from those of the Group. Total pension cost was $4,900 and $4,718 for the three months ended March 31, 2007 and 2006, respectively.

18.

Segment Information

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



Three months ended March 31, 2007	Watch Movements			Completed Watches			Total
	$			$			$
Sales		19,224,066			1,894,076			21,118,142

Cost of sales		(16,922,125	)		(976,853	)		(17,898,978	)

Segment result		2,301,941			917,223			3,219,164


Three months ended March 31, 2006		Watch Movements			Completed Watched			Total
	$			$			$
Sales		18,184,751			2,118,340			20,303,091

Cost of sales		(17,027,271	)		(1,115,018	)		(18,142,289	)

Segment result		1,157,480			1,003,322			2,160,802

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

18.

Segment Information (continued)

The Company’s operations are conducted primarily in Hong Kong and China and the Company’s sales, gross profit and total assets attributable to other geographical areas are less than 10% of the Company’s corresponding consolidated totals for the three months and three months ended March 31, 2007 and 2006. Consequently, no segment information by geographical areas is presented.

19.

Restatement

The Company has restated its financial statements for the three months ended March 31, 2007 and 2006 to correct various accounting errors and/or disclosure omissions.

The restated financial statements include adjustments to account for all fees and costs related to the January 2007 reverse merger (see Note 1) as a charge to operations, to account for inventories by adjusting watch movement costing for the effects of vendor incentives from an as received basis to an accrual basis, as the Company was able to estimate the value of the incentives as inventory is purchased, and to recognize stock-based compensation cost related to the Escrow Agreement (see Note 16). As a result of these adjustments, various income tax calculations were also revised, which effected net income and also caused reclassifications to cash flows. The Company has also corrected average and actual shares outstanding retroactively (and related earnings per share calculations) to reflect the January 2007 reverse merger (see Note 1). The Company also made various changes to footnote disclosures relating to these revisions.

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

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

19.

Restatement (continued)

Statement of Operations

Three months ended March 31, 2007 (Unaudited)

	2007			2007			2007
	(As originally reported)			(As restated)			(Effect of adjustment)
	$			$			$
Net sales		21,118,142			21,118,142			-
Cost of sales		(18,255,983	)		(17,898,978	)		357,005

Gross profit		2,862,159			3,219,164			357,005
Other income					48,497			48,497
Depreciation		(65,431	)		(65,431	)		-
Administrative and other operating expenses, including stock-based compensation		(434,843	)		(2,046,406	)		(1,611,563	)

Income from operations		2,361,885			1,155,824			(1,206,061	)
Fees and costs related to reverse merger		-			(736,197	)		(736,197	)
Other income		78,426			29,929			(48,497	)
Interest expense		(239,429	)		(239,429	)		-

Income before taxes		2,200,882			210,127			(1,990,755	)
Income taxes		(405,672	)		(402,667	)		3,005

Net income (loss)		1,795,210			(192,540	)		(1,987,750	)

Earnings per common share
- Basic		0.08			(0.01	)		(0.09	)
- Diluted		0.07			(0.01	)		(0.08	)

Weighted average common shares
- Basic		23,156,629			23,156,629			-
- Diluted		23,156,629			23,791,074			(634,445	)

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

19.

Restatement (continued)

Statement of Operations

Three months ended March 31, 2006 (Unaudited)

	2006			2006			2006
	(As originally reported)			(As restated)			(Effect of adjustment)
	$			$			$
Net sales		20,303,091			20,303,091			-
Cost of sales		(18,080,818	)		(18,142,289	)		61,471

Gross profit		2,222,273			2,160,802			61,471
Other income					41,905			-
Depreciation		(75,753	)		(75,753	)		-
Administrative and other operating expenses, including stock-based compensation		(314,342	)		(301,810	)		-

Income from operations		1,832,178			1,825,144			61,471
Other income		84,818			42,913			-
Interest expense		(200,556	)		(200,556	)		-

Income before taxes		1,716,440			1,667,501			61,471
Income taxes		(297,150	)		(294,945	)		(2,205	)

Net income		1,419,290			1,372,556			59,266

Earnings per common share
- Basic		0.06			0.07			0.01
- Diluted		0.06			0.07			0.01

Weighted average common shares
- Basic		23,156,629			19,454,420			(3,702,209	)
- Diluted		25,406,977			19,454,420			(5,952,557	)

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

19.

Restatement (continued)

Consolidated Balance Sheet

Three months ended March 31, 2007 (unaudited)

	2007		2007		2007
	(As originally reported)		(As restated)		(Effect of adjustment)
	$		$		$
ASSETS
Current Assets :
Cash and cash equivalents		170,340		170,340		-
Restricted cash		4,604,317		4,604,317		-
Accounts receivable		13,839,068		13,839,068		-
Prepaid expenses and other receivables		5,675,551		5,680,051		4,500
Inventories, net		895,538		878,367		(17,171	)
Prepaid lease payments		17,079		17,079		-

Total Current Assets		25,201,893		25,189,222		(12,671	)
Deferred tax assets		13,969		13,969		-
Plant and equipment, net		820,489		820,489		-
Leasehold lands		890,740		890,740		-
Held-to-maturity investments		299,654		299,654		-
Intangible assets		305,158		305,158		-
Restricted cash		299,654		299,654		-

TOTAL ASSETS		27,831,557		27,818,886		(12,671	)

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES
Current Liabilities :
Accounts payable		805,344		805,344		-
Other payables and accrued liabilities		139,455		139,455		-
Income tax payable		1,737,662		1,669,177		(68,485	)
Bank borrowings		12,661,617		12,661,617		-

Total Current Liabilities		15,344,078		15,275,593		(68,485	)
Deferred tax liabilities		31,548		31,548		-

TOTAL LIABILITIES		15,375,626		15,307,141		(68,485	)

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

19.

Restatement (continued)

Consolidated of Balance Sheet (continued)

Three months ended March 31, 2007 (unaudited)

	2007			2007			2007
	(As originally reported)			(As restated)			(Effect of adjustment)
	$			$			$
STOCKHOLDERS’ EQUITY
Preferred stock
Par value : 2007 - US$0.0001
Authorized: 2007 - 10,000,000 shares
Issued and outstanding: 2007 - 2,250,348 shares		225			225			-

Common stock
Par value : 2007 - US$0.0001
Authorized: 2007 - 100,000,000 shares
Issued and outstanding: 2007 - 23,156,629 shares		2,316			2,316			-
Additional paid-in capital		2,553,663			4,898,949			2,345,286
Accumulated other comprehensive income		(44,607	)		(44,607	)		-
Retained earnings		9,944,334			7,654,862			(2,289,472	)

TOTAL STOCKHOLDERS’ EQUITY		12,455,931			12,511,745			55,814

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		27,831,557			27,818,886			(12,671	)

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

19.

Restatement (continued)

Statement of Cash Flows

Three months ended March 31, 2007 (unaudited)

	2007			2007			2007
	(As originally reported)			(As restated)			(Effect of adjustment)
	$			$			$
Cash flows from operating activities
Net income (loss)		1,795,210			(192,540	)		(1,987,750	)
Adjustments to reconcile net income (loss) to net cash used in operating activities :
Stock-based compensation		-			1,611,563			1,611,563
Amortization of intangible assets		31,023			31,023			-
Amortization of leasehold lands		5,774			5,774			-
Depreciation		65,431			65,431			-
Income taxes		405,672			402,667			(3,005	)
Changes in operating assets and liabilities :
(Increase) decrease in -
Accounts receivable		(5,705,639	)		(5,705,639	)		-
Prepaid expenses and other receivables		(3,568,652	)		(3,573,152	)		(4,500	)
Inventories		5,704,558			5,347,553			(357,005	)
Increase (decrease) in -
Accounts payable		39,021			39,021			-
Other payables and accrued liabilities		(63,519	)		(63,519	)		-
Advances from related parties		(19,655	)		-			19,655
Income taxes payable		(112,158	)		(112,158	)		-

Net cash used in operating activities		(1,422,934	)		(2,143,976	)		(721,042	)

Cash flows from investing activities
Acquisition of plant and equipment		(64	)		(64	)		-

Net cash used in investing activities		(64	)		(64	)		-

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

19.

Restatement (continued)

Statement of Cash Flows (Continued)

Three months ended March 31, 2007 (unaudited)

	2007			2007			2007
	(As originally reported)			(As restated)			(Effect of adjustment)
	$			$			$
Cash flows from financing activities
Proceeds from issuance of common stock		1,897,793			-			(1,897,793	)
Proceeds from issuance of Series A convertible preferred stock		-			2,641,683			2,641,683
Advances from related parties		-			(19,655	)		(19,655	)
Proceeds from new short-term bank loans		-			112,157			112,157
Repayment of short-term bank loans		(321,849	)		(434,006	)		(112,157	)
Net advances under other short-term bank borrowings		(86,461	)		(86,461	)		-
Increase in restricted cash		(147,822	)		(147,822	)		-
Decrease in bank overdrafts		(68,773	)		(68,773	)		-

Net cash provided by financing activities		1,272,888			1,997,123			724,235

Net decrease in cash and cash equivalents		(150,110	)		(146,917	)		3,193
Effect of foreign currency translation on cash and cash equivalents		636			636			-
Cash and cash equivalents - beginning of period		319,814			316,621			(3,193	)

Cash and cash equivalents - end of period		170,340			170,340			-

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

19.

Restatement (continued)

Statement of Cash Flows

Three months ended March 31, 2006 (unaudited)

	2006			2006			2006
	(As originally reported)			(As restated)			(Effect of adjustment)
	$			$			$
Cash flows from operating activities
Net income		1,419,290			1,372,556			46,734
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of intangible assets		38,720			38,720			-
Amortization of leasehold lands		2,023			2,023			-
Depreciation		75,753			75,753			-
Gain on disposal of plant and equipment		(2,037	)		(2,037	)		-
Income taxes		297,150			294,945			2,205
Changes in operating assets and liabilities:
(Increase) decrease in -
Accounts receivable		(766,647	)		(766,647	)		-
Prepaid expenses and other receivables		(1,404,441	)		(396,270	)		(1,008,171	)
Inventories		232,620			(714,080	)		946,700
Increase (decrease) in -
Accounts payable		187,074			187,074			-
Other payables and accrued liabilities		(395	)		(18,395	)		(18,000	)
Advances from related parties		(1,069,745	)		-			1,069,745
Income taxes payable		(33,989	)		(33,989	)		-
Unearned income		(1,238,248	)		(1,238,248	)		-

Net cash used in operating activities		(2,262,872	)		(1,198,595	)		1,064,277

Cash flows from investing activities
Acquisition of plant and equipment		(381,125	)		(381,125	)		-
Proceeds from disposal of plant and equipment		2,037			2,037			-

Net cash used in investing activities		(379,088	)		(379,088	)		-

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

19.

Restatement (continued)

Statement of Cash Flows (continued)

Three months ended March 31, 2006 (unaudited)

	2006			2006			2006
	(As originally reported)			(As restated)			(Effect of adjustment)
	$			$			$
Cash flows from financing activities
Proceeds from issuance of common stock		2,167			-			(2,167	)
Advances from related parties		-			(1,069,745	)		(1,069,745	)
Proceeds from new short-term bank loans		-			33,988			33,988
Repayment of short-term bank loans		(54,359	)		(88,348	)		(33,989	)
Net advances under short-term bank borrowings		3,945,192			3,945,193			-
Increase in restricted cash		(1,808,096	)		(1,808,096	)		-
Decrease in bank overdrafts		(109,056	)		(109,056	)		-

Net cash provided by financing activities		1,975,848			903,936			(1,071,912	)

Net decrease in cash and cash equivalents		(666,112	)		(673,747	)		(7,635	)
Effect of foreign currency translation on cash and cash equivalents		(266	)		(266	)		-
Cash and cash equivalents - beginning of period		780,090			780,090			-

Cash and cash equivalents - end of period		113,712			106,077			(7,635	)

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

20.

Subsequent Events

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

US $8,000,000 Variable Rate Convertible Bonds

The Bonds were issued further to a trust deed between the Company and The Bank of New York, London Branch, dated November 13, 2007 (the “Trust Deed”), and are represented by the global certificate in the form as set forth in the Trust Deed. The bonds are subject to a paying and conversion agency agreement between the Company, The Bank of New York, and The Bank of New York, London Branch,

The Bonds are subscribed at a price equal to 97% of their principal amount, which is the issue price of 100% less a 3% commission to the Subscriber. The Terms and Conditions of the Bonds (the “Terms”) contained in the Trust Deed, set forth, among other things, the following terms:

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

- Each Bond is convertible at the option of the holder at any time on and after 365 days after the date the Company’s shares of common stock commence trading on the American Stock Exchange or any alternative stock exchange (the “Listing Date”) into shares of common stock of the Company at an initial per share conversion price (“Conversion Price”) equal to the price per share at which shares are sold in the Company’s proposed initial public offering on the American Stock Exchange (“AMEX”) with minimum gross proceeds of US$2,000,000. If no initial public offering has occurred prior to conversion, the Conversion Price will be US$2.00, subject to adjustment according to the Terms of the Bonds. No Bonds may be converted after the close of business on November 13, 2012, or if such Bond is called for redemption before the maturity date, then up to the close of business on a date no later than seven business days prior to the date fixed for redemption thereof.

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

20.

Subsequent Events (continued)

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

- If on or before November 13, 2008, (i) the Company common stock is not listed on AMEX or the New York Stock Exchange or NASDAQ or (ii) the Bonds, Warrants, and shares underlying the Bonds and Warrants are not registered with the Securities and Exchange Commission (the “SEC”), the holder of the Bonds can require the Company to redeem the Bonds at 106.09% of their principal amount. Also, at any time after November 13, 2010, the holders of the Bonds can require the Company to redeem the Bonds at 126.51% of their principal amount. The Company is required to redeem any outstanding Bonds at 150.87% of its principal amount on November 13, 2012.

Warrants to Purchase 600,000 Shares of Common Stock

The Warrants, which are evidenced by a warrant instrument entered into by and between the Company and the Subscriber, dated November 13, 2007 (the “Warrant Instrument”), are subject to the terms of a warrant agency agreement by and among the Company, The Bank of New York and The Bank of New York, London Branch, dated November 13, 2007 (the “Warrant Agency Agreement”).

Pursuant to the terms and conditions of the Warrant Instrument and Warrant Agency Agreement, the Warrants are exercisable at $0.0001 per share and terminate on November 13, 2010. The Company has agreed to list the shares underlying the Warrants on AMEX, or any alternative stock exchange by November 13, 2008. In addition, the Company has agreed to register the shares of common stock underlying the Warrants with the SEC on or prior to November 13, 2008 and will keep the registration effective until 30 days after the Warrants terminate.

ASIA TIME CORPORATION

(Formerly SRKP 9, Inc.)

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

(Stated in US Dollars)

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

21.

Subsequent Events (continued)

Registration Rights

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

Accounting for Bonds and Warrants

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

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

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

Forward-Looking Statements

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

Overview

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

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

We are mainly engaged in watch movement distribution business in Hong Kong and China which accounted for approximately 91% of our revenue for the three months ended March 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 ETA SA Manufacture Horlogere Suisse, to a base of over 300 customers primarily through our direct sales force. As a part and included in our sale of watch movements, we provide a variety of value-added services, including automated inventory management services, integration, design and development, management, and support services.

Recent Events

January 2007 Private Placement

On January 23, 2007, concurrently with the close of the Share Exchange, we conducted an initial closing of a private placement transaction pursuant to which we sold an aggregate of 1,749,028 shares of Series A Convertible Preferred Stock at $1.29 per share. On February 9, 2007, we conducted a second and final closing of the private placement pursuant to which we sold 501,320 shares of Series A Convertible Preferred Stock at $1.29 per share. Accordingly, a total of 2,250,348 shares of Series A Convertible Preferred Stock were sold in the private placement for an aggregate gross proceeds of $2,902,946 (the “Private Placement”). WestPark Capital, Inc. (“WestPark”) acted as the placement agent for the Private Placement. For its services as placement agent, WestPark received an aggregate fee of approximately $261,265, which consisted of a commission equal to 9.0% of the gross proceeds from the financing. After commissions and expenses, we received net proceeds of approximately $2.3 million in the Private Placement.

In connection with the Private Placement, Kwong Kai Shun, our Chairman of the Board, Chief Executive Officer and Chief Financial Officer, entered into an agreement (the “Escrow Agreement”) with the investors pursuant to which he agreed to purchase all of the shares of Series A Preferred Stock then held by such investors at a per share purchase price of $1.29 if our common stock fails to be listed or quoted for trading on the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market or the New York Stock Exchange on or before June 30, 2007, which has been subsequently extended to March 31, 2008. In addition, Mr. Kwong agreed to place 2,326,000 shares of his common stock in escrow for possible distribution to the investors (the "Escrow Shares"). Pursuant to the Escrow Agreement, if our net income for 2006 or 2007, subject to specified adjustments, as set forth in our filings with the SEC is less than $6.3 million or $7.7 million, respectively, a portion, if not all, of the Escrow Shares will be transferred to the investors based upon our actual net income, if any, for such fiscal years. We have accounted for the Escrow Shares as the equivalent of a performance-based compensatory stock plan between Mr. Kwong and us. Accordingly, during the three months ended March 31, 2007, we recorded a charge to operations of $1,611,563 to recognize the grant date fair value of stock-based compensation in conjunction with the Escrow Shares.

Corporate Structure

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

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

Watch Movement Segment

Presently, Hong Kong does not generally have watch movement manufacturing. Watch movements are largely imported from Japan and Switzerland. The revenue for the watch movement segment of our business for the three months ended March 31, 2007 was $19.2 million, with a gross profit $2.3 million, a 5.7% and 87.9% increase, respectively, as compared to $18.2 million in revenue and $1.2 million in gross profit for the three months ended March 31, 2006. The gross profit margin increased to 12.0% for the three months ended March 31, 2007 from 6.4% for the same period in 2006, primarily due to more diversified products being promoted to customers and higher selling prices as a result of extended credit terms to our customers. We provide a wide product spectrum of products carrying major brands as well as middle-low end China movements. We believe carrying a wide product spectrum enables us to provide a convenient one-stop provider for our customers, which may result in higher sales per customer. We began to target small to medium manufacturers in mid-2005 and our customer base has expanded to more than 300 watch manufacturers. In addition, we have extended our credit period from an average to 30 days to 60 days to major customers that have maintained a history of timely settlement of receivables. We believe that this extension lead to an increase of purchase orders from those customers. We review the credit status of each customer and periodically adjust the credit period to specific customers in an attempt to maximize business with each customer without suffering significant credit risk.

Complete Watch Segment

Revenue of our complete watch segment was $1.9 million for the three months ended March 31, 2007, a 10.6% decrease compared to the same period in 2006 in which revenue was $2.1 million. This segment contributed approximately 9.0% of our revenue for the three months ended March 31, 2007, as compared to 10.4% of revenue for the period ended March 31, 2006. Our main market positioning in China is on the middle-class adult, daily, sporty and classy design.

Critical Accounting Policies and Estimates

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

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

Impairment of long-lived assets

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

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

Inventories

Inventories are stated at the lower of cost or market. Cost is determined on a first-in, first-out basis and includes only purchase costs. There are no significant freight charges, inspection costs and warehousing costs incurred for any of the periods presented. In assessing the ultimate realization of inventories, management makes judgments as to future demand requirements compared to current or committed inventory levels. We have vendor arrangements on the purchase of watch movements providing for price reduction paid in the form of additional watch movements. The percentage of additional movements to be received by us from these vendors is estimated and inventory costs are reduced to reflect the effect of these additional movements on the actual cost of the items in inventory. During the nine months ended September 30, 2007 and 2006, we did not make any allowance for slow-moving or defective inventories.

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

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

Trade receivables

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

Foreign currency translation

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

Revenue recognition

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

Deferred income tax

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

Stock-based compensation

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

We did not recognize any stock-based compensation during the three months or six months ended March 31, 2006. During the three months ended March 31, 2007, we recorded $1,611,563 as a charge to operations to recognize the grant date fair value of stock-based compensation in conjunction with the Escrow Agreement, as described above.

Results of Operations

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

	Three Months Ended March 31,
	2007			2006
Net Sales		100.0	%		100.0	%
Cost of Sales		84.8	%		89.4	%
Gross Profit		15.2	%		10.6	%
Other Income		0.2	%		0.2	%
Depreciation		0.3	%		0.4	%
Administrative and other operating expenses, including stock-based compensation		9.7	%		1.5	%
Income from Operations		5.4	%		8.9	%
Fees and Costs related to Reverse Merger		3.5	%		-
Other Income		0.1	%		0.2	%
Interest Expense		1.1	%		1.0	%
Income before Taxes		0.9	%		8.1	%
Income Taxes		1.9	%		1.5	%
Net Income		-1.0	%		6.6	%

Comparison of the three months ended March 31, 2007 with the three months ended March 31, 2006

Net sales for the three months end March 31, 2007 was $21.1 million as compared to $20.3 million for the comparable period in 2006, an increase of $0.8 million, or 4.0%. This increase was primarily due to an increase in sales of watch movements. Net sales of movements was $19.2 million for the three months end March 31, 2007, accounting for approximately 91.0% of our total sales for the period, an increase of 5.7% as compared to $18.2 million for the comparable period in 2006. The increase was primarily attributed to the increase in sales in middle to high-end movements, which had a higher price and profit margin, partially offset by a decrease in sales volume from 25.9 million pieces to 21.3 million pieces in the comparable three month periods in 2006 and 2007, respectively. The decrease in the sales volume of movements is primarily due to the decrease in low-end items. Sales of completed watches for the three months end March 31, 2007 was $1.9 million as compared to $2.1 million for the comparable period in 2006, a decrease of 10.6%. The decrease was due to a decrease in sales volume, largely in low-end items, from 0.28 million pieces to 0.21 million pieces in the comparable periods in 2007 and 2006 respectively.

Cost of sales for the three months ended March 31, 2007 was $17.9 million, or 84.8% of net sales, as compared to $18.1 million for the same period in 2006, or 89.4% of net sales. The decrease in cost of sales as a percentage of net sales was largely attributable to the improved economies of scale.

Gross profit for the three months ended March 31, 2007 was $3.2 million, or 15.2% of net sales, compared to $2.2 million, or 10.6% of net sales for the same period in 2006. The increase in our gross profit margin was primarily attributed to the increase in sales of higher-margin products as a result of diversification of products and economies of scale. Gross profit margins are usually a factor of product mix and demand for product. The gross profit of watch movements as a percentage of net sales had increased from 6.4% for the period ended March 31, 2006 as compared to 12.0% of net sales for the same period in 2007. The increase in gross profit margin was primarily due to an increase in sales of higher-margin items. There was only a slight increase of gross profit for completed watch for the three months ended March 31, 2007, which was 48.4% of net sales as compared to 47.4% of net sales for the comparable period in 2006 as the product mix had no significant change.

Other income from operations was $48,497, or 0.2% of net sales for the three months ended March 31, 2007, as compared to $41,905, or 0.2% of net sales for the three months ended March 31, 2006. The slight increase was primarily due to an increase in rental income, which was $15,781 for the three months ended March 31, 2007, partially offset by a decrease in income received from the license fees of intangible assets, which was $32,716 for the three months ended March 31, 2007, as compared to $41,905 for the same period in 2006.

Administrative and other operating expenses were $2,046,406, or 9.7% of net sales for the three months ended March 31, 2007, as compared to $301,810, or 1.5% of net sales for comparable period in 2006. The increase in amount and as a percentage of net sales was primarily due to the recognition of $1,611,563 of performance based stock- compensation in 2007 related to the Escrow Shares provided by our CEO, Kwong Kai Shun to certain investors, which are subject to the achievement of defined annual net income for 2006 and 2007 pursuant to the Private Placement agreement entered into with those investors. This stock compensation is measured each quarter based the probabilities that income for the year 2007 will reach a certain level so charges most likely will be recorded in the remaining quarters of 2007. The cost increases were also attributable to the increase in professional fees related to reporting requirements as a public company and additional employees and upgraded staff benefits in the comparable period in 2007. Management considers these expenses as a percentage of net sales to be a key performance indicator in managing our business.

Fees and costs related to the reverse merger for the three months ended March 31, 2007 were $736,197, which included the cost of obtaining the shell entity $317,000 paid to the shareholders of SRKP 9, Inc. There were no such expenses in the same period in 2006.

Other income from non-operating activities was $29,929, or 0.1% of net sales, for the three months ended March 31, 2007, as compared to $42,913, or 0.2% of net sales, for the three months ended March 31, 2006. The decrease was primarily due to a decrease in bank interest income, which was $29,002 for the three months ended March 31, 2007 as compared to $36,343 for the same period in 2006 and a lack of other interest income in the comparable period in 2007.

Interest expense for the three months ended March 31, 2007 was $239,429, or 1.1% of net sales, as compared to $200,556 for the same period in 2006, or 1.0% of net sales. This increase was primarily attributable to the increase in bank interest rates in the three months ended March 31, 2006 and the comparable period in 2007. Further increases in borrowing rates would further increase our interest expense, which would have a negative effect on our results of operations.

Income taxes for the three months ended March 31, 2007 were $402,667, or 1.9% of net sales, as compared to $294,945, or 1.5% of net sales for the same period in 2006.

Net loss for the three months ended March 31, 2007 was $192,540, or 1.0% of net sales, as compared to a net income of $1.4 million, or 6.6% of the net sales for the comparable period in 2006. The net loss was primarily due to the recognition of $1,611,563 of performance based stock compensation in 2007 related to certain Escrow Shares. provided by our CEO, in order for the Company to complete a financing transaction. (See footnote 16 for further information.

Off-Balance Sheet Arrangements

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

Contractual Obligations

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

Inflation and Seasonality

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

New Accounting Pronouncements

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

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

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

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

The FASB released SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans: an amendment of FASB Statements No. 87, 88, 106, and 132(R),” which requires an employer to recognize the over funded or under funded status of defined benefit and other postretirement plans as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through an adjustment to comprehensive income. This statement also requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. We are required to initially recognize the funded status of our defined benefit and other postretirement plans as of December 31, 2006, and to provide the required disclosures in our 2006 annual report on Form 10-KSB. The adoption of SFAS No. 158 has no material effect on our financial statements.

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

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 March 31, 2007 we had general banking facilities amounted to $12.7 million for overdraft, letter of credit, trust receipt, invoice financing and export loans granted by nine banks. The amount decreased by $1.1 million compared to $13.8 million as at March 31, 2006. Interest on the facilities ranged from minus 2.0 to 0.75% over the Bank’s Best Lending Rate of Hong Kong (Prime Rate) or Hong Kong Inter Bank Offered Rate (HIBOR). These banking facilities were secured by the leasehold properties, time deposits and held-to maturity investments of the group and personal guarantees executed by our Chairman of the Board.

On January 23, 2007, concurrently with the close of the Share Exchange, we conducted an initial closing of a private placement transaction pursuant to which we sold an aggregate of 1,749,028 shares of Series A Convertible Preferred Stock at $1.29 per share. On February 9, 2007, we conducted a second and final closing of the private placement pursuant to which we sold 501,320 shares of Series A Convertible Preferred Stock at $1.29 per share. Accordingly, a total of 2,250,348 shares of Series A Convertible Preferred Stock were sold in the private placement for an aggregate gross proceeds of $2,902,946 (the “Private Placement”). Of the gross proceeds, $50,000 is represented by a subscription receivable from one investor. WestPark Capital, Inc. (“WestPark”) acted as the placement agent for the Private Placement. For its services as placement agent, WestPark received an aggregate fee of approximately $261,265, which consisted of a commission equal to 9.0% of the gross proceeds from the financing. After commissions and expenses, we received net proceeds of approximately $2.3 million in the Private Placement.

Pursuant to Subscription Agreements entered into with the investors in the Private Placement, each share of the Series A Convertible Preferred Stock is convertible into shares of common stock at a conversion price equal to the per share purchase price. However, if we, at any time prior to the first trading day on which our common stock is quoted on the American Stock Exchange, Nasdaq Capital Market, Nasdaq Global Market or New York Stock Exchange (each a “Trading Market”) sell or issue any shares of common stock in one or a series of transactions at an effective price less than such conversion price where the aggregate gross proceeds to us are at least $1.0 million, then the aforementioned conversion price shall be reduced to such effective price. Each share of the Series A Convertible Preferred Stock shall automatically convert into shares of common stock if (i) the closing price of our common stock on the Trading Market for any 10 consecutive trading day period exceeds $3.00 per share, (ii) the shares of common stock underlying the Series A Convertible Preferred Stock are subject to an effective registration statement, and (iii) the daily trading volume of the common stock on a Trading Market exceeds 25,000 shares per day for 10 out of 20 prior trading days. Upon liquidation, the holders of the Series A Convertible Preferred Stock shall receive $1.29 per share of the Series A Convertible Preferred Stock then held prior to any other distribution or payment made to holders of the common stock.

We agreed to file, and did file, a registration statement covering the common stock underlying the Series A Convertible Preferred Stock sold in the Private Placement within 30 days of the closing of the Share Exchange pursuant to the subscription agreement with each investor.

For the three months ended March 31, 2007, net cash used by operating activities was approximately $2.1million, as compared to net cash used in operating activities of $1.2 million for the comparable period in 2006. The increase in net cash used by operating activities was primarily attributable to a net loss of $192,540 for the three months ended March 31, 2007 as compared to a net income of $1.4 million in the comparable period, and an increase in fees and costs related to restructuring and to the Share Exchange, partially offset by an adjustment related to stock-based compensation to our CEO, Kwong Kai Shun of $1.6 million. The net cash used by operating activities in the three months ended March 31, 2007 was also attributable to an increase in purchase deposits paid by $3.6 million comparable to the year ended December 31, 2006. The purpose of purchase deposits was to keep costs of goods sold at lower market prices to avoid buying price increases in hot seasons.

Net cash used in investing activities was $64 for the three months ended March 31, 2007, compared to $379,088 in the comparable period in 2006. The decrease in net cash used was primarily due to the decrease in expenditures for acquiring plant and equipment and no significant investment was made during the three months ended March 31, 2007.

Net cash provided by financing activities was $2.0 million for the three months ended March 31, 2007 and $0.9 million for the comparable period in 2006. The increase in net cash provided by financing activities was attributable to an issuance of equity securities of $2.6 million and a decrease of approximately $1.0 million in advances to related parties in the three months ended March 31, 2007 as compared to the same period in 2006.

For the three months ended March 31, 2007 and the same period in 2006, our average inventory turnover were approximately 18 days and 34 days, respectively. The average days outstanding of our accounts receivable for the three months ended March 31, 2007 was 56 days, as compared to 32 days for the same period in 2006. The increase in the average days outstanding of our accounts receivable was due to the change in our credit policy. Since January 2007, we have extended our credit terms from 30 days to 60 day to customers who have a good credit history in order to improve our profit margin and competitiveness. Inventory turnover and average days outstanding are key operating measures that management relies on to monitor our business.

For fiscal year 2006, 2005 and 2004, our inventory turnover was 10.8, 10.8 and 13.2 times, respectively. During 2004, our stock level was kept at a relatively low level to improve cash flow however, we also risked stock shortage. In 2005 and 2006 we increased our stock level and, thus, the turnover ratio to a more optimal level of 10.8. We expect the turnover ratio will further decrease in 2007 as the order delivery cycle time of our supplies has shortened, possibly allowing us to keep a lower stock level with a decreased risk of stock shortages. The average days outstanding of our accounts receivable at December 31, 2006 were 29 days, as compared to 24 days and 10.8 days at December 31, 2005 and 2004. The increase in accounts receivable was due to the change in credit policy since 2005 where credit terms of up to 30 days were given to customers who had good credit history in order to improve our profit margin and competitiveness.

In an attempt to reduce our reliance on third-party watch movement manufacturers, we have plans to manufacture our own brands of quartz movements and mechanical movements in-house. To manufacture our own brands of quartz and mechanical movements in-house, we would need to acquire watch movement facilities in China and invest in new equipment and research and development. We expect that up to $5.5 million will be required to obtain the equipment and facilities to manufacture branded proprietary watch movements. Our plan to acquire manufacturing facilities and equipment to manufacture our own brand of quartz and mechanical movements in-house will not take place until after the completion of our initial public offering, the proceeds of which will give us a portion of the required capital. We will be required to raise the appropriate amount of capital needed for our future operations from future equity sales or through debt financings. Failure to obtain funding when needed may force us to delay, reduce, or eliminate our plans to manufacture our own watch movement parts. We may not be able to obtain additional financial resources when necessary or on terms favorable to us, if at all, and any available additional financing may not be adequate. Moreover, new equity securities issued in financings, including any shares of Series A Convertible Preferred Stock or any new series of preferred stock authorized by our Board of Directors, may have greater rights, preferences or privileges than our existing common stock. To the extent stock is issued or options and warrants are exercised, holders of our common stock will experience further dilution.

Based on our current plans, we believe that cash on hand, cash flow from operations and funds available under our bank facilities will be sufficient to fund our capital needs for the next 12 months. However, our ability to maintain sufficient liquidity depends partially on our ability to achieve anticipated levels of revenue, while continuing to control costs. If we did not have sufficient available cash, we would have to seek additional debt or equity financing through other external sources, which may not be available on acceptable terms, or at all. Failure to maintain financing arrangements on acceptable terms would have a material adverse effect on our business, results of operations and financial condition.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

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

Foreign Currency Risk. The functional currency of our company is the Hong Kong Dollar (HKD). In the future, we expect Renminbi (RMB) also to be a functional currency. Substantially all of our operations are conducted in the PRC. Our sales and purchases are conducted within the PRC in HKD and in the future will include RMB. Conversion of RMB into foreign currencies is regulated by the People’s Bank of China through a unified floating exchange rate system. Although the PRC government has stated its intention to support the value of the RMB, there can be no assurance that such exchange rate will not again become volatile or that the RMB will not devalue significantly against the U.S. Dollar. Exchange rate fluctuations may adversely affect the value, in U.S. Dollar terms, of our net assets and income derived from its operations in the PRC. In addition, the RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions.

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

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures

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

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

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

(b) Changes in internal control over financial reporting

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

PART II-OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

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

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

(a) Exhibits

31.1	Certification of Principal Executive Officer and Principal Financial and Accounting Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.

32.1	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.

SIGNATURES

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


	ASIA TIME CORPORATION (Registrant)

February 8, 2008	By:	/s/ Kwong Kai Shun
		Kwong Kai Shun
		Chief Executive Officer, Chief Financial Officer and Chairman of the Board

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