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EX-10.15 - FORFEITURE AGREEMENT - PRIME GLOBAL CAPITAL GROUP Inchometouch_ex1015.htm
EX-23.1 - CONSENT - PRIME GLOBAL CAPITAL GROUP Inchometouch_ex2301.htm
EX-10.14 - TERMS OF ORAL AGREEMENT - PRIME GLOBAL CAPITAL GROUP Inchometouch_ex1014.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No.  4
FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Home Touch Holding Company 

(Name of small business issuer in our charter)

Nevada
  
3670
  
26-4309660
         
(State or other jurisdiction of
incorporation or organization)
 
(Primary Standard
Industrial Classification
Code Number)
 
IRS I.D.

703, Liven House, 61-63 King Yip Street,
Kwun Tong, Hong Kong.
 
N/A
   
(Address of principal executive offices)
(Zip Code)

Registrant’s telephone number:  +852 2111 0121.

SEC File No. 333-158713
CSC Services of Nevada, Inc.
502 East John Street
Carson City, NV 89706
(800) 315-9420

(Name, address and telephone number of agent for service)

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act Registration Statement number of the earlier effective Registration Statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act Registration Statement number of the earlier effective Registration Statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act Registration Statement number of the earlier effective Registration Statement for the same offering. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.

Large accelerated filer ¨                   Accelerated Filer ¨

Non-accelerated filer ¨                Smaller reporting company x

CALCULATION OF REGISTRATION FEE
Title of each class of 
securities to be registered
 
Amount to be 
registered
   
Proposed 
maximum 
offering 
price per unit
   
Proposed 
maximum 
aggregate 
offering price
   
Amount of 
registration 
fee [1] [2]
 
Common Stock offered by the Selling
Stockholders [3]
   
1,579,000
   
$
0.05
   
$
78,950
   
$
4.01
 
 
(1) Estimated in accordance with Rule 457(c) of the Securities Act of 1933 solely for the purpose of computing the amount of the registration fee based on recent prices of private transactions.
 
(2) Calculated under Section 6(b) of the Securities Act of 1933 as .00005580 of the aggregate offering price.
 
(3) Represents shares of the registrant’s common stock being registered for resale that have been issued to the selling shareholders named in this registration statement.
 
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay our effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a) may determine.

 

 

PROSPECTUS
HOME TOUCH HOLDING COMPANY

Selling shareholders are offering up to 1,579,000 shares of common stock.  The selling shareholders will offer their shares at $.05  per share until our shares are quoted on the OTC Bulletin Board and, assuming we secure this qualification, thereafter at prevailing market prices or privately negotiated prices.    We will not receive proceeds from the sale of shares from the selling shareholders.

There are no underwriting commissions involved in this offering.  We have agreed to pay all the costs of this offering. Selling shareholders will pay no offering expenses.

Prior to this offering, there has been no market for our securities. Our common stock is not now listed on any national securities exchange, the NASDAQ stock market, or the OTC Bulletin Board.  There is no guarantee that our securities will ever trade on the OTC Bulletin Board or other exchange.

This offering is highly speculative and these securities involve a high degree of risk and should be considered only by persons who can afford the loss of their entire investment.  See “Risk Factors” beginning on page 7.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is _________________ , 2009.
 

 
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TABLE OF CONTENTS


SUMMARY INFORMATION AND RISK FACTORS
4
RISK FACTORS
7
USE OF PROCEEDS
17
DETERMINATION OF OFFERING PRICE
17
DILUTION
17
SELLING SHAREHOLDERS
17
PLAN OF DISTRIBUTION
22
LEGAL PROCEEDINGS
23
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
24
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
25
DESCRIPTION OF SECURITIES
26
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES LIABILITIES
27
DESCRIPTION OF BUSINESS
27
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
36
DESCRIPTION OF PROPERTY
43
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
43
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
45
EXECUTIVE COMPENSATION
47
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
50
FINANCIAL STATEMENTS
F-1


 
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SUMMARY INFORMATION AND RISK FACTORS

You should carefully read all information in the prospectus, including the financial statements and their explanatory notes, under the Financial Statements prior to making an investment decision.  Please do not enter into a investment decision on our company without proper guidance from your financial advisor or a registered broker.

Organization

Home Touch Holding Company is a Nevada corporation formed on January 26, 2009.  As of January 26, 2009, we acquired Home Touch Limited, a Hong Kong China corporation formed as Lexing Group Limited in July 2004 which changed its name to Home Touch Limited in 2005.  Home Touch Limited is our wholly-owned subsidiary.  The transaction was structured as a share exchange in which we exchanged 40,000,000 shares of our common stock for 10,000 shares of Home Touch Limited.  The purpose of this transaction was solely to form a U.S. holding company for our business.

Our principal office is located at 703, Liven House, 61-63 King Yip Street, Kwun Tong, Hong Kong.  Telephone:  +852 2111 0121.

Business
 
Through Home Touch Limited, we design and sell and install various energy saving + smart home system products and solutions.  Our products and solutions can centrally control home systems in buildings and/or villas which are pre-wired as well as those that aren’t pre-wired by using utilize radio frequency, or European Installation Bus, wireless electronic networking technology to integrate the various devices and appliances found in most homes, hotels and offices.  We design, supply and install the whole building system.  We are a registered electrical contractor in Hong Kong.

Our main target is property developers in Hong Kong and China – about 85% of our business come from them. We also sell to single end users, generally owners of high-end residences, that in general are referred by interior designers. For outside Hong Kong, we have a distribution agreement Home Touch Solutions Sdn Bhd, a Malaysian company. Under our distribution agreement, the local distributor directly sells to developers.  We do not own Home Touch Solutions Sdn Bhd and they are not a partner or affiliate. Once they have purchased the products, they assume all expenses for installation and maintenance. We have sold $2,232 to this distributor as of June 30, 2009.

We design our own products such as Novel, Noble, Royal lighting switch, transceiver, remote controller, telephone controller, IP video door phone and WiFi video door phone, which are produced for us by third party manufactures. We also design our own solutions such as t.HOME, Building Management Software, E-boardcasting software and IP Smart. In addition, we distribute products with built in software from other brands.  All of the products we sell operate on the same RF wireless frequency /or EIB and easily communicate with each other.

Our products and solutions include, among others:
 
·
IP video door phone
·
WiFi video door phone
·
WiFi network for the whole building
 
 
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·
Energy Saving system for home and building
·
Smart home system, include, lighting control, home appliance control, curtain control
·
Security system, including all kinds of detector and alarm products
·
Intelligent Household Management System that allows text message, picture, video message, report, to all residences of a building. It also allows residents to book club house facilities, send messages, and panic alarm to building management office. With the same system, residents may remote site control their residence
·
Windows Vista Media Center Edition solution
·
transceiver - a wireless device used to transmit RF signal to infrared signal to control heating and air conditioning, all home appliances and audio-visual systems such as DVD, TV, Amplifier, Cable TV, and Stereo.
·
remote controller or internet tablet
·
t.HOME 1 - A USB white box that plugs into a computer USB port that allows the user to use Window Media Center to coordinate with the transceiver for control of home systems, appliances and audio-visual media.
·
Smart home system from Visiomatic – a German made product and solution which uses a panel to control all kinds of home devices.
·
IP Smart - A plug in to a Cisco IP phone to control lighting, curtain and all kinds of appliances. This solution is mainly for hotel, service apartment and office.

The Offering
 
As of the date of this prospectus, we had 40,000,000 shares of common stock outstanding.

Selling shareholders are offering up to 1,579,000 shares of common stock.  The selling shareholders will offer their shares at $.05 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices.   We will pay all expenses of registering the securities, estimated at approximately $50,000.  We will not receive any proceeds of the sale of these securities.

To be quoted on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market for our common stock.  The current absence of a public market for our common stock may make it more difficult for you to sell shares of our common stock that you own.

Financial Summary

Because this is only a financial summary, it does not contain all the financial information that may be important to you. Therefore, you should carefully read all the information in this prospectus, including the financial statements and their explanatory notes before making an investment decision. The following table summarizes our financial position as of June 30, 2009, March 31, 2009 and 2008, and the results of our operations for the periods ended June 30, 2009 and 2008 and the years ended March 31, 2009 and 2008, which were derived from our audited financial statements.

 
5

 
 
HOME TOUCH HOLDING COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2009, MARCH 31, 2009 AND 2008

   
June 30, 2009
   
March 31, 2009
   
March 31, 2008
 
   
(unaudited)
             
Total Assets
  $ 234,560     $ 214,419     $ 332,662  
                         
Total Liabilities
  $ 286,911     $ 145,244     $ 778,899  
                         
Total Stockholders' Equity (Deficit)
  $ (52,351 )   $ 69,175     $ (446,237 )
                         
Total Liabilities and Stockholders’ Equity (Deficit)
  $ 234,560     $ 214,419     $ 332,662  
 
 
HOME TOUCH HOLDING COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2009 AND 2008 AND FOR THE YEARS ENDED MARCH 31, 2009 AND 2008

   
Three Months
   
Three Months
             
   
Ended
   
Ended
   
Year ended
   
Year ended
 
   
June 30, 2009
   
June 30, 2008
   
March 31, 2009
   
March 31, 2008
 
   
(unaudited)
   
(unaudited)
             
Total revenues, net
  $ 21,539     $ 28,063     $ 882,685     $ 259,822  
                                 
Total cost of revenue
    11,644       6,769       509,356       145,578  
                                 
 Gross profit
    9,895       21,294       373,329       114,244  
                                 
 Total operating expenses
    129,751       90,920       391,237       338,972  
                                 
Loss from operations
    (119,856 )     (69,626 )     (17,908 )     (224,728 )
                                 
Total other (expense) income
    (1,670 )     (1,737 )     (6,074 )     2,115  
                                 
Loss before income taxes
    (121,526 )     (71,363 )     (23,982 )     (222,613 )
                                 
Income tax expense
    -       -       -       -  
                                 
Net loss
  $ (121,526 )   $ (71,363 )   $ (23,982 )   $ (222,613 )
                                 
Net loss per share – Basic and diluted
  $ -     $ -     $ -     $ -  
                                 
Weighted average shares outstanding
    40,000,000       40,000,000       40,000,000       40,000,000  
 
 
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RISK FACTORS

In addition to the other information provided in this prospectus, you should carefully consider the following risk factors in evaluating our business before purchasing any of our common stock.  All material risks are discussed in this section.

There is substantial doubt about our ability to continue as a going concern and if we are unable to generate significant revenue or secure additional financing we may be unable to implement our business plan and grow our business.

Our auditors have raised substantial doubt as to our ability to continue as a going concern because we have suffered from continuous losses with an accumulated deficit of $631,745 as of June 30, 2009. The continuation of our business as a going concern is dependent upon the continued financial support from our stockholders and credit facility from the revolving lines of credit. There is uncertainty regarding our ability to implement our business plan and grow our business without additional financing.  We have no agreements, commitments or understandings to secure additional financing. Our future growth and success is dependent upon our ability to continue selling our products, generate cash from operating activities and obtain additional financing. There is no assurance that we will be able to continue selling our products, generate sufficient cash from operations, sell additional shares of common stock or borrow additional funds. Our inability to obtain additional cash could have a material adverse affect on our ability to grow our business and implement our business plan.

Risks Related to our Business

Because of dependence on consumer preference for our smart home systems products, our revenues are susceptible to fluctuations and decreases.

We are susceptible to fluctuations in our business based upon consumer demand for our products. In addition, we cannot guarantee that increases in demand for our products associated with increases in the deployment of new technology will continue. We believe that our success depends on our ability to anticipate, gauge and respond to fluctuations in consumer preferences. However, it is impossible to predict with complete accuracy the occurrence and effect of fluctuations in consumer demand over a product’s life cycle. Moreover, we caution that any growth in revenues that we achieve may be transitory and should not be relied upon as an indication of future performance.

Increased demand for consumer service and support services could decrease our profitability.

Certain of our products and solutions have more features and are more complex than others and therefore require more end-user technical support. We provide 12 months defect liability period which is free of charge, afterward we charge clients for a minimum three years maintenance service. Therefore, as the mix of our products includes more of these complex product lines, support costs could increase, which could decrease our profitability.

Any failure to anticipate or respond adequately to technological developments and customer requirements, or any significant delays in product introduction, could reduce our revenues or profitability.

Our ability to remain competitive in the smart home systems products market will depend considerably upon our ability to successfully identify new product opportunities, as well as secure the right to sell and introduce these products and enhancements on a timely and cost effective basis. There can be no assurance that we will be successful at securing the rights to sell and marketing new products or enhancing our existing products, or that these new or enhanced products will achieve consumer acceptance and, if achieved, will sustain that acceptance. In addition, there can be no assurance that products developed by others will not render our products non-competitive or obsolete or that we will be able to obtain or maintain the rights to use proprietary technologies developed by others which are incorporated in our products. Any failure to anticipate or respond adequately to technological developments and customer requirements, or any significant delays in product development or introduction, could reduce our revenues or profitability.

 
7

 
 
 
Our revenues are highly concentrated in several customers which accounts for more than 73% of our revenues, and our revenues could be reduced if these customers reduce their orders from us.

In our fiscal year ended March 31, 2009, the following customer accounted for the following amounts and percentages of our total revenues:
 
Name of Customer
 
Amount of Revenues
   
Percentage of
Total Revenues
 
Grand Tech Construction Limited
   
382,050
     
43%
 
Home Touch Services Limited (related party)
   
145,371
     
16%
 
Shenzhen Bochuang Hi-Tech Company Limited
   
127,193
     
14%
 
                 

We have no agreements with these customers, who purchases from us on purchase orders only.  If we cease to do business with these customers at current levels and are unable to generate additional sales with new and existing customers that purchase a similar amount of our products, our revenues and net income would decline considerably.

Because more than 10% of our revenues in our last fiscal quarter and last fiscal year were derived from related parties and our past financings have been obtained from related parties, a material portion of our business and financing is dependent upon related party transactions.

In our fiscal year ended March 31, 2009, the following customer accounted for the following amounts and percentages of our total revenues:
 
Name of Customer
 
Amount of Revenues
   
Percentage of
Total Revenues
 
Home Touch Services Limited (related party)
   
145,371
     
14%
 

Home Touch Services Limited is a related party because it is owned by our officers and directors.  In addition, as of March 31, 2008, a balance of $382,702 due to related parties represented temporary advances from a related company, which is controlled by Mr. David Gunawan Ng and Ms. Stella Wai Yau. The balance was unsecured, non-interest bearing and repayable on demand.  For the year ended March 31, 2009, we received the additional advances of $66,949 and the balance of $449,651 due to related parties was waived by the related company subsequently.  As a result, a material portion of our business and financing is dependent upon related party transactions.

Because a material amount of aggregate revenues from March 31, 2006 through June 30, 2009, of which $685,411 in revenues were generated from sales of products with the entities with whom we have marketing arrangements, if we were to lose these arrangements, our revenues could be reduced.

We market through and in cooperation with various partners.  We view these marketing arrangements as material to our future success in that we have generated a total revenues of $1,387,387 in aggregate revenues from March 31, 2006 through June 30, 2009, of which $685,411 in revenues were generated from sales of products with the entities with whom we have these marketing arrangements.  If we were to lose these arrangements, our revenues could be reduced.
 
Our purchases are concentrated in several product suppliers and third party manufacturers, which account for more than 37% of our orders, and our sales and thus our revenues could be reduced if these product suppliers stop supplying us.

For the year ended March 31, 2009, three product suppliers accounted for 10% or more of our purchases as follows:
 
   
Year ended March 31, 2009
 
   
Purchases
   
Percentage
of purchases
   
Accounts
payable
 
                   
Jardine One Solution
   
56,532
     
14%
     
-
 
MAG Living (Shenzhen) Co. Limited
   
51,481
     
12%
     
-
 
Shenzhen Bochuang Hi-Tech Company Limited
   
43,669
     
11%
         
                         
     
151,682
     
37%
     
-
 
 
 
 
8

 

Because of the rapid innovation of products and technologies that is characteristic of our industry, although we have obtained various patents on our products, the rights granted under any patent may not provide competitive advantages to us, may not be adequate to safeguard and maintain our proprietary rights or may infringe upon right of others, which could reduce our revenues.

The procedures by which we identify, document and file for patent, trademark, and copyright protection are based solely on engineering and management judgment, with no assurance that a specific filing will be issued, or if issued, will deliver any lasting value to us. Because of the rapid innovation of products and technologies that is characteristic of our industry, there is no assurance that rights granted under any patent will provide competitive advantages to us or will be adequate to safeguard and maintain our proprietary rights. Moreover, the laws of certain countries in which our products are or may be manufactured or sold may not offer protection on such products and associated intellectual property to the same extent that the U.S. legal system may offer.  Because of technological changes in the smart home systems products industry, current extensive patent coverage, and the rapid rate of issuance of new patents, it is possible certain components of our products and business methods may unknowingly infringe upon the patents of others.
 
We sell complex products that incorporate leading-edge technology, the presence of defects may harm customer satisfaction, reduce sales opportunities, or increase returns and reduce our revenues or profits.

We sell complex products that incorporate leading-edge technology, including hardware and software. Software may contain bugs that can unexpectedly interfere with operations. There can be no assurance that our or our suppliers testing programs will detect all defects in individual products or defects that could affect numerous shipments. The presence of defects may harm customer satisfaction, reduce sales opportunities, or increase returns. An inability to cure or repair a product defect could result in the failure of a product line, temporary or permanent withdrawal from a product or market, damage to our reputation, or increased inventory costs, any of which could reduce our revenues, margins and net income.

We face risks associated with product warranties.
 
We could incur substantial costs as a result of product failures for which we are responsible under warranty obligations.
 
Because we depend on a limited number of suppliers and third party manufacturers for the smart home system products we sell, any interruption in the availability of these products could reduce our revenues.

We rely on a limited number of suppliers and third party manufacturers for the smart home system products we sell. We do not have any long-term or exclusive purchase or manufacturing commitments with any of our suppliers and third party manufacturers except Shenzhen Bochuang Hi-Tech Company Limited which manufactures switches and a video door phone for us. Our failure to maintain existing relationships with our suppliers and third party manufacturers or to establish new relationships in the future could also negatively affect our ability to obtain smart home system products we sell in a timely manner. If we are unable to obtain ample supply of product from our existing suppliers and third party manufacturers or alternative sources of supply or manufacture, we may be unable to satisfy customers' demands for particular products, which could reduce our revenues.

 
9

 
 
If our business reputation is damaged due to the actions of external factors over which we may have little or no control, including the performance of persons acting as suppliers of our smart home system products, our revenues could be reduced.
 
Promoting our business depends largely on the success of our marketing efforts and our ability to provide a consistent, positive customer experience. Our ability to provide a positive customer experience is dependent on external factors over which we may have little or no control, including the nature and quality of the smart home system products we sell.  We will purchase the products we sell from third parties.  Our failure to provide our customers with positive customer experiences, including our or our suppliers failure to deliver high quality products on a timely basis, for any reason could substantially harm our reputation. The failure of these activities could adversely affect our ability to attract new customers and maintain customer relationships and, as a result, substantially harm our business and reduce our revenues.
 
If we cannot increase our sales volumes, reduce our costs or introduce higher margin products to offset anticipated reductions in the average unit price of our products, our operating results may suffer.
     
The average unit price of our products may decrease in the future in response to changes in product mix, competitive pricing pressures, new product introductions by our competitors or other factors. If we are unable to offset the anticipated decrease in our average selling prices by increasing our sales volumes or through new product introductions, our net revenues will decline. Our business could be seriously harmed, particularly if the average selling price of our products decreases significantly without a corresponding increase in sales.

Because our competitors in the smart home system products sales business have greater financial and marketing resources than we do, we may experience a reduction in market share and revenues.

The markets for our smart home system products are highly competitive and rapidly changing.  Some of our current and prospective competitors have significantly greater financial, technical, marketing resources than we do.  Our ability to compete in our markets depends on a number of factors, some within and others outside our control.  These factors include: the frequency and success of product introductions by us and by our competitors, the selling prices of our products and of our competitors’ products, the performance of our products and of our competitors’ products, product distribution by our competitors, our marketing ability and the marketing ability of our competitors, and the quality of customer support offered by us and by our competitors.

The real estate market is cyclical and is experiencing a downturn which could decrease the demand for our products and reduce our revenues.

Our products are primarily installed in new residential, hotel and commercial real estate projects. The market for real estate in Hong Kong, Macau, U.A.E., and mainland China tends to be cyclical, with periods in which real estate construction declines, such as is the current case.  A continued downturn or the lack of a recovery in the real estate market could decrease the demand for our products and reduce our revenues.
 
 
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Risks Related to Management and Personnel

We depend heavily on key personnel, and turnover of key senior management could harm our business.
 
Our future business and results of operations depend in significant part upon the continued contributions of our senior management personnel, including Mr. David Gunawan Ng, Chairman and Executive Director, Ms. Stella Wai Yau, Chief Operating Officer (“COO”) and Chief Financial Officer (“CFO”) and Mr. Remus Hung Yat Lam, Sales Director. If we were to lose Mr. David Gunawan Ng, Executive Director, Ms. Stella Wai Yau, COO and CFO, and Mr. Remus Hung Yat Lam, Sales Director, if Mr. David Gunawan Ng, Executive Director, Ms.  Stella Wai Yau, COO and CFO, and Mr. Remus Hung Yat Lam, Sales Director fails to perform in their respective current position, or if we are not able to attract and retain skilled employees as needed, our business could suffer. We have no key person insurance on these members of management.  We have no employment agreements with any management except Mr. Remus Hung Yat Lam, Sales Director.  Significant turnover in our senior management could significantly deplete our institutional knowledge held by our existing senior management team. We depend on the skills and abilities of these key employees in managing the product acquisition, marketing and sales aspects of our business, any part of which could be harmed by turnover in the future.

Our management has limited experience in managing the day to day operations of a public company and, as a result, we may incur additional expenses associated with the management of our company.

The management team, including Mr. David Gunawan Ng, Chairman and Executive Director and Ms. Stella Wai Yau, COO and CFO is responsible for the operations and reporting of the combined company. The requirements of operating as a small public company are new to the management team and the employees as a whole. This may require us to obtain outside assistance from legal, accounting, investor relations, or other professionals that could be more costly than planned. We may also be required to hire additional staff to comply with additional SEC reporting requirements and compliance under the Sarbanes-Oxley Act of 2002. Our failure to comply with reporting requirements and other provisions of securities laws could negatively affect our stock price and adversely affect our results of operations, cash flow and financial condition.  

Although we believe that we currently have adequate internal control over financial reporting, we are exposed to risks from recent legislation requiring companies to evaluate internal control over financial reporting.

Section 404 of the Sarbanes-Oxley Act of 2002 ("Section 404") requires our management to report on the operating effectiveness of the Company's Internal Controls over financial reporting for the year ended March 31, 2011. ZYCPA Company Limited, (formerly Zhong Yi (Hong Kong) C.P.A. Company Limited) Certified Public Accountants, our independent registered public accounting firm, will be required to attest to the effectiveness of our internal control over financial reporting beginning with the year ended March 31, 2011. We must establish an ongoing program to perform the system and process evaluation and testing necessary to comply with these requirements. We expect that the cost of this program will require us to incur expenses and to devote resources to Section 404 compliance on an ongoing basis.

 
11

 

It is difficult for us to predict how long it will take to complete management's assessment of the effectiveness of our internal control over financial reporting for each year and to remediate any deficiencies in our internal control over financial reporting. As a result, we may not be able to complete the assessment and process on a timely basis. In the event that our Chief Operating Officer, Chief Financial Officer or independent registered public accounting firm determine that our internal control over financial reporting is not effective as defined under Section 404, we cannot predict how regulators will react or how the market prices of our shares will be affected.

Because we do not have an audit or compensation committee, shareholders will have to rely on the entire board of directors, none of which are not independent, to perform these functions.

We do not have an audit or compensation committee comprised of independent directors.  Indeed, we do not have any audit or compensation committee.  These functions are performed by the board of directors as a whole.  No members of the board of directors are independent directors.  Thus, there is a potential conflict in that board members who are management will participate in discussions concerning management compensation and audit issues that may affect management decisions.

Certain of our stockholders hold a significant percentage of our outstanding voting securities which could reduce the ability of minority shareholders to effect certain corporate actions.

Our officers, directors and majority shareholders are the beneficial owners of approximately 69.2% of our outstanding voting securities. As a result, they possess significant influence and can elect a majority of our board of directors and authorize or prevent proposed significant corporate transactions. Their ownership and control may also have the effect of delaying or preventing a future change in control, impeding a merger, consolidation, takeover or other business combination or discourage a potential acquirer from making a tender offer.

Risks Related to our Operations in China

Because we all our customers and operations are located in China, the following risks could affect our business of our suppliers and thus harm our revenues.

General economic conditions in China could reduce our revenues.

General economic conditions in China have an impact on our business and financial results. The global economy in general and in China specifically remains uncertain. As a result, individuals and companies may delay or reduce expenditures. Weak economic conditions and/or softness in the consumer or business channels for the use of smart home systems products could result in lower demand for our products, resulting in lower sales, earnings and cash flows.

Changes in China’s political or economic situation could harm us and our operating results.

Economic reforms adopted by the Chinese government have had a positive effect on the economic development of the country, but the government could change these economic reforms or any of the legal systems at any time. This could either benefit or damage our operations and profitability. Some of the things that could have this effect are:

 
12

 

 
·
Level of government involvement in the economy;

 
·
Control of foreign exchange;

 
·
Methods of allocating resources;

 
·
Balance of payments position;

 
·
International trade restrictions; and

 
·
International conflict.
 
The Chinese economy differs from the economies of most countries belonging to the Organization for Economic Cooperation and Development, or OECD, in many ways. For example, state-owned enterprises still constitute a large portion of the Chinese economy, and weak corporate governance traditions and a lack of flexible currency exchange policy continue to persist. As a result of these differences, the business of our suppliers could be adversely affected.
 
Our business is largely subject to the uncertain legal environment in China and your legal protection could be limited.

The Chinese legal system is a civil law system based on written statutes. Unlike common law systems, it is a system in which precedents set in earlier legal cases are not generally used. The overall effect of legislation enacted over the past 20 years has been to enhance the protections afforded to foreign invested enterprises in China. However, these laws, regulations and legal requirements are relatively recent and are evolving rapidly, and their interpretation and enforcement involve uncertainties. These uncertainties could limit the legal protections available to foreign investors, such as the right of foreign invested enterprises to hold licenses and permits such as requisite business licenses.

Because all of our executive officers and our directors are residents of China and not of the U.S., and all the assets of these persons are located outside the U.S. and all of our revenues are generated in China or other areas outside the United States, you may have difficulty in enforcing your legal rights against us or our executive officers and directors.

All of our executive officers and our directors are residents of China and not of the U.S., and all the assets of these persons are located outside the U.S. All of our revenues are generated in China or other areas outside the United States.  As a result, it could be difficult for investors to effect service of process on our officers or directors, to enforce a judgment under U.S. federal securities laws or other U.S. laws obtained in the U.S. against our Chinese operations and subsidiaries or our executive officers or directors.  Further, China’s treaties do not provide for reciprocal recognition and enforcement of judgments of U.S. courts.
 
The Chinese government exerts substantial influence over the manner in which we and our suppliers must conduct their business activities.

Only recently has China permitted provincial and local economic autonomy and private economic activities. The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, import and export tariffs, environmental regulations, land use rights, property and other matters. We believe that our operations in China are in material compliance with all applicable legal and regulatory requirements. However, the central or local governments of the jurisdictions in which we operate may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.

Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties or joint ventures.  Any divestiture could reduce our assets or revenues and thus reduce the value of our stock.

 
13

 

Future inflation in China may inhibit our suppliers’ to conduct business profitably in China, increasing their prices and potentially reducing our revenues.

In recent years, the Chinese economy has experienced periods of rapid expansion and highly fluctuating rates of inflation. During the past ten years, the rate of inflation in China has been as high as 20.7% and as low as -2.2%. These factors have led to the adoption by the Chinese government, from time to time, of various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation. High inflation may in the future cause the Chinese government to impose controls on credit and/or prices, or to take other action, which could inhibit economic activity in China, and thereby harm the market for our products.
 
The value of our securities will be affected by the foreign exchange rate between U.S. dollars and RMB.

The value of our common stock will be affected by the foreign exchange rate between U.S. dollars and RMB, and between those currencies and other currencies in which our sales may be denominated. Currently, RMB is stronger than U.S. Dollars. For example, to the extent that we need to convert U.S. dollars into RMB for our operational needs and should RMB appreciate against the U.S. dollar at that time, our financial position, the business of the Company, and the price of our common stock may be harmed. Conversely, if we decide to convert our RMB into U.S. dollars for the purpose of declaring dividends on our common stock or for other business purposes and the U.S. dollar appreciates against RMB, the U.S. dollar equivalent of our earnings from our subsidiaries in China would be reduced.
 
In the event that the U.S. dollars appreciate against RMB, our costs will increase. If we cannot pass the resulting cost increase on to our customers, our profitability and operating results will suffer. In addition, since our sales to international customers grew rapidly, we are subject to the risk of foreign currency depreciation.

Risks Related to the Market for our Stock
 
Investors may have difficulty in reselling their shares due to the lack of market or state Blue Sky laws. 

Our common stock is currently not quoted on any market. No market may ever develop for our common stock, or if developed, may not be sustained in the future.

 
14

 

The holders of our shares of common stock and persons who desire to purchase them in any trading market that might develop in the future should be aware that there may be significant state law restrictions upon the ability of investors to resell our shares. Accordingly, even if we are successful in having the Shares available for trading on the OTCBB, investors should consider any secondary market for the Company's securities to be a limited one. We intend to seek coverage and publication of information regarding the company in an accepted publication which permits a "manual exemption." This manual exemption permits a security to be distributed in a particular state without being registered if the company issuing the security has a listing for that security in a securities manual recognized by the state. However, it is not enough for the security to be listed in a recognized manual. The listing entry must contain (1) the names of issuers, officers, and directors, (2) an issuer's balance sheet, and (3) a profit and loss statement for either the fiscal year preceding the balance sheet or for the most recent fiscal year of operations.  We may not be able to secure a listing containing all of this information.  Furthermore, the manual exemption is a non issuer exemption restricted to secondary trading transactions, making it unavailable for issuers selling newly issued securities. Most of the accepted manuals are those published in Standard and Poor's, Moody's Investor Service, Fitch's Investment Service, and Best's Insurance Reports, and many states expressly recognize these manuals. A smaller number of states declare that they “recognize securities manuals” but do not specify the recognized manuals. The following states do not have any provisions and therefore do not expressly recognize the manual exemption: Alabama, Georgia, Illinois, Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont and Wisconsin.

Accordingly, our shares should be considered totally illiquid, which inhibits investors’ ability to resell their shares.
 
We will be subject to penny stock regulations and restrictions and you may have difficulty selling shares of our common stock.

The SEC has adopted regulations which generally define so-called “penny stocks” to be an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. We anticipate that our common stock will become a “penny stock”, and we will become subject to Rule 15g-9 under the Exchange Act, or the “Penny Stock Rule.” This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and “accredited investors” (generally, individuals with a net worth in excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together with their spouses). For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities in the secondary market.

For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.

We do not anticipate that our common stock will qualify for exemption from the Penny Stock Rule. In any event, even if our common stock were exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock, if the SEC finds that such a restriction would be in the public interest.
 
Sales of our common stock under Rule 144 could reduce the price of our stock.
 
There are 12,320,000 shares of our common stock held by non- affiliates and 27,680,000 shares held by affiliates Rule 144 of the Securities Act of 1933 defines as restricted securities. 1,579,000 shares of our common stock held by non-affiliates are currently eligible for resale or are being registered in this offering, however affiliates will still be subject to the resale restrictions of Rule 144.  In general, persons holding restricted securities, including affiliates, must hold their shares for a period of at least six months, may not sell more than one percent of the total issued and outstanding shares in any 90-day period, and must resell the shares in an unsolicited brokerage transaction at the market price.  The availability for sale of substantial amounts of common stock under Rule 144 could reduce prevailing market prices for our securities.
 
15

 
 
Although we will be a mandatory reporting company under Section 15(d) of the Securities Act of 1933 until and through fiscal year end March 31, 2010, if we do not file a Registration Statement on Form 8-A to become a mandatory reporting company under Section 12(g) of the Securities Exchange Act of 1934 thereafter, we will continue as a voluntary reporting company and will not be subject to the proxy statement or other information requirements of the 1934 Act, our securities can no longer be quoted on the OTC Bulletin Board, and our officers, directors and 10% stockholders will not be required to submit reports to the SEC on their stock ownership and stock trading activity, all of which could reduce the value of your investment and the amount of publicly available information about us.

As a result of this offering as required under Section 15(d) of the Securities Exchange Act of 1934, we will file periodic reports with the Securities and Exchange Commission through March 31, 2010, including a Form 10-K for the year ended March 31, 2010, assuming this registration statement is declared effective before that date.  At or prior to March 31, 2010, we intend voluntarily to file a registration statement on Form 8-A which will subject us to all of the reporting requirements of the 1934 Act. This will require us to file quarterly and annual reports with the SEC and will also subject us to the proxy rules of the SEC. In addition, our officers, directors and 10% stockholders will be required to submit reports to the SEC on their stock ownership and stock trading activity.  We are not required under Section 12(g) or otherwise to become a mandatory 1934 Act filer unless we have more than 500 shareholders and total assets of more than $10 million on March 31, 2010.  If we do not file a registration statement on Form 8-A at or prior to March 31, 2010, we will continue as a voluntary reporting company and will not be subject to the proxy rules, Section 16 ownership reporting and short swing profits provisions or other requirements of the 1934 Act, our securities can no longer be quoted on the OTC Bulletin Board, and our officers, directors and 10% stockholders will not be required to submit reports to the SEC on their stock ownership and stock trading activity and  our securities can no longer be quoted on the OTC Bulletin Board.
 

 

 
16

 

USE OF PROCEEDS

Not applicable.  We will not receive any proceeds from the sale of shares offered by the selling shareholders.

DETERMINATION OF OFFERING PRICE
 
The offering price has been arbitrarily determined and does not bear any relationship to our assets, results of operations, or book value, or to any other generally accepted criteria of valuation. Prior to this offering, there has been no market for our securities.  In order to assure that selling shareholders will offer their shares at $.05 per share until our shares are quoted on the OTC Bulletin Board, we will notified our shareholders and our Transfer Agent that no sales will be allowed prior to the date our shares are quoted on the OTC Bulletin Board without proof of the selling price.
 
DILUTION

Not applicable. We are not offering any shares in this registration statement. All shares are being registered on behalf of our selling shareholders.

SELLING SHAREHOLDERS

The selling shareholders named below are selling the securities.  The table assumes that all of the securities will be sold in this offering. However, any or all of the securities listed below may be retained by any of the selling shareholders, and therefore, no accurate forecast can be made as to the number of securities that will be held by the selling shareholders upon termination of this offering.  The nine selling shareholders who are U.S. citizens or residents acquired their shares by purchase exempt from registration under section 4(2) of the Securities Act of 1933 in the share exchange pursuant to which we acquired Home Touch Limited.  The remaining 33 selling shareholders who are not U.S. citizens or residents acquired their shares by purchase exempt from registration under section 4(2) of the Securities Act of 1933 or Regulation S under the Securities Act of 1933 in the share exchange pursuant to which we acquired Home Touch Limited.

We believed that Section 4(2) of the Securities Act of 1933 was available because:
 
 
·
None of these issuances involved underwriters, underwriting discounts or commissions.
 
·
Restrictive legends were and will be placed on all certificates issued as described above.
 
·
The distribution did not involve general solicitation or advertising.
 
·
The distributions were made only to investors who were sophisticated enough to evaluate the risks of the investment.

We believed that Regulation S was available because:
 
 
·
None of these issuances involved underwriters, underwriting discounts or commissions;
 
·
We placed Regulation S required restrictive legends on all certificates issued;
 
·
No offers or sales of stock under the Regulation S offering were made to persons in the United States;
 
·
No direct selling efforts of the Regulation S offering were made in the United States.

 
17

 

In connection with the above transactions, although some of the investors may have also been accredited, we provided the following to all investors:
 
 
·
Access to all our books and records.
 
·
Access to all material contracts and documents relating to our operations.
 
·
The opportunity to obtain any additional information, to the extent we possessed such information, necessary to verify the accuracy of the information to which the investors were given access.
 
Prospective investors were invited to review at our offices at any reasonable hour, after reasonable advance notice, any materials available to us concerning our business. Prospective Investors were also invited to visit our offices.

 
18

 

We believe that the selling shareholders listed in the table have sole voting and investment powers with respect to the securities indicated.  We will not receive any proceeds from the sale of the securities by the selling shareholders.  No selling shareholders are broker-dealers or affiliates of broker-dealers.
 
 
               
Amount
   
Percentage
   
               
owned
   
owned
   
   
Shares to
         
after the
   
after the
   
   
be offered
   
Percentage
   
offering,
   
offering,
   
   
by the
   
owned
   
assuming
   
assuming
   
   
Selling
   
before
   
all shares
   
all shares
 
Relationship
Selling Shareholder
 
Stockholders
   
Offering
   
sold [1]
   
sold [1]
 
to us
Liu Jia Min
   
10,000
     
*
     
0
     
0
   
                                   
Li Mi
   
15,000
     
*
     
0
     
0
   
                                   
Xu Chen Yuan
   
20,000
     
*
     
0
     
0
   
                                   
Liu Fang Jun
   
15,000
     
*
     
0
     
0
   
                                   
Yang Zhong Jie
   
20,000
     
*
     
0
     
0
   
                                   
Zhang Xiao Ming
   
15,000
     
*
     
0
     
0
   
                                   
Li Jian Hui
   
15,000
     
*
     
0
     
0
   
                                   
Zhang Bai Fang
   
30,000
     
*
     
0
     
0
   
                                   
Chen Min
   
20,000
     
*
     
0
     
0
   
                                   
Shen Jin Rong
   
15,000
     
*
     
0
     
0
   
                                   
Zhou Yao Yu
   
15,000
     
*
     
0
     
0
   
                                   
Xu Ren Hui
   
15,000
     
*
     
0
     
0
   
                                   
Shi Guo Neng
   
10,000
     
*
     
0
     
0
   
                                   
Cheng Bang Hui
   
10,000
     
*
     
0
     
0
   
                                   
Qian Kang Mei
   
20,000
     
*
     
0
     
0
   
                                   
Chen Sheng Hua
   
30,000
     
*
     
0
     
0
   

 
19

 

Cao Ming
   
14,000
     
*
     
0
     
0
   
                                   
Yan Yan
   
10,000
     
*
     
0
     
0
   
                                   
Zhou Tao
   
20,000
     
*
     
0
     
0
   
                                   
Wang Min Jun
   
20,000
     
*
     
0
     
0
   
                                   
Gu Xin Lun
   
20,000
     
*
     
0
     
0
   
                                   
Hu Jing
   
15,000
     
*
     
0
     
0
   
                                   
Zhou Bo
   
20,000
     
*
     
0
     
0
   
                                   
Yu Qiang
   
20,000
     
*
     
0
     
0
   
                                   
Ye Li Hong
   
20,000
     
*
     
0
     
0
   
                                   
Li Yan Ting
   
20,000
     
*
     
0
     
0
   
                                   
Xu Guang Rong
   
15,000
     
*
     
0
     
0
   
                                   
Hu Liang Na
   
15,000
     
*
     
0
     
0
   
                                   
Zhao Shan Bao
   
20,000
     
*
     
0
     
0
   
                                   
Li Zhi Hui
   
15,000
     
*
     
0
     
0
   
                                   
Yi Fei Chen
   
80,000
     
1.95
     
700,000
     
1.75
   
                                   
Shiu Pao Chen
   
80,000
     
1.07
     
350,000
     
0.87
   
                                   
Au Yeung Po Leung
   
100,000
     
4.55
     
1,712,000
     
4.3
   
                                   
Pau Chin Hung
   
100,000
     
3.56
     
1,324,000
     
3.31
   
                                   
Robert Forstedt
   
70,000
     
1.36
     
476,000
     
1.19
   
                                   
Nancy Hundt
   
80,000
     
2.29
     
836,000
     
2.09
   

 
20

 

Intrepid Capital, LLC [1]
   
100,000
     
4.84
     
1,836,000
     
4.59
   
                                   
Gulf Asset Management[2]  
   
100,000
     
3.37
     
1,248,000
     
3.12
   
                                   
Pegasus Asset Management,
[3]
   
100,000
     
4.72
     
1,789,000
     
4.47
   
                                   
Michael Williams
   
100,000
     
1.42
     
470,000
     
1.17
 
Attorney
                                   
Brandon Williams
   
100,000
     
*
     
0
     
0
 
Affiliate of Attorney
                                   
Maggie Ensley
   
50,000
     
*
     
0
     
0
 
Affiliate of Attorney
                                   
Total
   
1,579,000
                           

[1]  Jeff Toghraie is the beneficial owner of Intrepid Capital, LLC.

[2]   Parvin M. Riazi is the beneficial owner of Gulf Asset Management.

[3]  Sam Toghraie is the beneficial owner of Pegasus Asset Management.

*    Represents ownership of less than one percent

Blue Sky

The holders of our shares of common stock and persons who desire to purchase them in any trading market that might develop in the future should be aware that there may be significant state law restrictions upon the ability of investors to resell our shares. Accordingly, even if we are successful in having the Shares available for trading on the OTCBB, investors should consider any secondary market for the Company's securities to be a limited one. We intend to seek coverage and publication of information regarding the company in an accepted publication which permits a "manual exemption." This manual exemption permits a security to be distributed in a particular state without being registered if the company issuing the security has a listing for that security in a securities manual recognized by the state. However, it is not enough for the security to be listed in a recognized manual. The listing entry must contain (1) the names of issuers, officers, and directors, (2) an issuer's balance sheet, and (3) a profit and loss statement for either the fiscal year preceding the balance sheet or for the most recent fiscal year of operations.  We may not be able to secure a listing containing all of this information.  Furthermore, the manual exemption is a non issuer exemption restricted to secondary trading transactions, making it unavailable for issuers selling newly issued securities. Most of the accepted manuals are those published in Standard and Poor's, Moody's Investor Service, Fitch's Investment Service, and Best's Insurance Reports, and many states expressly recognize these manuals. A smaller number of states declare that they “recognize securities manuals” but do not specify the recognized manuals. The following states do not have any provisions and therefore do not expressly recognize the manual exemption: Alabama, Georgia, Illinois, Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont and Wisconsin.
 
21

 
 
PLAN OF DISTRIBUTION

Our common stock is currently not quoted on any market.  No market may ever develop for our common stock, or if developed, may not be sustained in the future.  Accordingly, our shares should be considered totally illiquid, which inhibits investors’ ability to resell their shares.

Selling shareholders are offering up to 1,579,000 shares of common stock.  The selling shareholders will offer their shares at $.05 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices.  We will not receive any proceeds of the sale of these securities.  We will pay all expenses of registering the securities.
 
The securities offered by this prospectus will be sold by the selling shareholders without underwriters and without commissions.  The distribution of the securities by the selling shareholders may be effected in one or more transactions that may take place in the over-the-counter market or privately negotiated transactions.

The selling shareholders may pledge all or a portion of the securities owned as collateral for margin accounts or in loan transactions, and the securities may be resold pursuant to the terms of such pledges, margin accounts or loan transactions. Upon default by such selling shareholders, the pledge in such loan transaction would have the same rights of sale as the selling shareholders under this prospectus. The selling shareholders may also enter into exchange traded listed option transactions, which require the delivery of the securities listed under this prospectus. After our securities are qualified for quotation on the OTC Bulletin Board, the selling shareholders may also transfer securities owned in other ways not involving market makers or established trading markets, including directly by gift, distribution, or other transfer without consideration, and upon any such transfer the transferee would have the same rights of sale as such selling shareholders under this prospectus.

In addition to the above, each of the selling shareholders will be affected by the applicable provisions of the Securities Exchange Act of 1934, including, without limitation, Regulation M, which may limit the timing of purchases and sales of any of the securities by the selling shareholders or any such other person.  We have instructed our selling shareholders that they many not purchase any of our securities while they are selling shares under this registration statement.

Upon this registration statement being declared effective, the selling shareholders may offer and sell their shares from time to time until all of the shares registered are sold; however, this offering may not extend beyond two years from the initial effective date of this registration statement.

There can be no assurances that the selling shareholders will sell any or all of the securities.  In various states, the securities may not be sold unless these securities have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.

All of the foregoing may affect the marketability of our securities. Pursuant to oral promises we made to the selling shareholders, we will pay all the fees and expenses incident to the registration of the securities.

 
22

 

Should any substantial change occur regarding the status or other matters concerning the selling shareholders or us, we will file a post-effective amendment disclosing such matters.

OTC Bulletin Board Considerations

To be quoted on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market for our common stock.  We have engaged in preliminary discussions with a FINRA Market Maker to file our application on Form 211 with FINRA, but as of the date of this prospectus, no filing has been made.  Based upon our counsel’s prior experience, we anticipate that after this registration statement is declared effective, it will take approximately 2 – 8 weeks for FINRA to issue a trading symbol.
 
The OTC Bulletin Board is separate and distinct from the NASDAQ stock market.  NASDAQ has no business relationship with issuers of securities quoted on the OTC Bulletin Board.  The SEC’s order handling rules, which apply to NASDAQ-listed securities, do not apply to securities quoted on the OTC Bulletin Board.

Although the NASDAQ stock market has rigorous listing standards to ensure the high quality of our issuers, and can delist issuers for not meeting those standards, the OTC Bulletin Board has no listing standards.  Rather, it is the market maker who chooses to quote a security on the system, files the application, and is obligated to comply with keeping information about the issuer in our files.  FINRA cannot deny an application by a market maker to quote the stock of a company.  The only requirement for inclusion in the bulletin board is that the issuer be current in our reporting requirements with the SEC.

Although we anticipate listing on the OTC Bulletin board will increase liquidity for our stock, investors may have greater difficulty in getting orders filled because it is anticipated that if our stock trades on a public market, it initially will trade on the OTC Bulletin Board rather than on NASDAQ.  Investors’ orders may be filled at a price much different than expected when an order is placed.  Trading activity in general is not conducted as efficiently and effectively as with NASDAQ-listed securities.

Investors must contact a broker-dealer to trade OTC Bulletin Board securities.  Investors do not have direct access to the bulletin board service.  For bulletin board securities, there only has to be one market maker.

Bulletin board transactions are conducted almost entirely manually.  Because there are no automated systems for negotiating trades on the bulletin board, they are conducted via telephone.  In times of heavy market volume, the limitations of this process may result in a significant increase in the time it takes to execute investor orders.  Therefore, when investors place market orders - an order to buy or sell a specific number of shares at the current market price - it is possible for the price of a stock to go up or down significantly during the lapse of time between placing a market order and getting execution.

Because bulletin board stocks are usually not followed by analysts, there may be lower trading volume than for NASDAQ-listed securities.

LEGAL PROCEEDINGS

There are no pending or threatened lawsuits against us.

 
23

 
 
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS

The board of directors elects our executive officers annually.  A majority vote of the directors who are in office is required to fill vacancies.  Each director shall be elected for the term of one year, and until his or her successor is elected and qualified, or until his earlier resignation or removal. Our directors and executive officers are as follows:

Name
 
Age
 
Position
Mr. David Gunawan Ng
 
39
 
Chairman and Executive Director
         
Ms. Stella Wai Yau
 
38
 
COO, CFO, Secretary and Director
         
Mr. Remus Hung Yat Lam
 
29
 
Sales Director

Mr. David Gunawan Ng has held his current position since he joined us in July 2004.  Since May 1997 he has been a director of Sky Well Group Limited, an electronic products company.  He has a Diploma of Hotel Institute Montreux (Switzerland, 1991) and a Diploma of American Hotel and Motel Association (Switzerland, 1991) (Specialization in Marketing and Sales).

Ms. Stella Wai Yau has held her current position as COO, CFO, Secretary and Director since she joined us in October 2005. Since July 2002, she has been Operation Manager & Director of Sky Well Group Limited, an electronic products company.  She has a Diploma of Hotel Institute Montreux (Switzerland, 1991).

Mr. Remus Hung Yat Lam has held his current position as Sales Director since he joined us in December 2006. From December 2005 to November 2006, he was Project Manager of School Touch (Hong Kong) Limited, a system design & engineering firm.  From January 2005 to November 2005, he was Sales Engineer of Sky Well Group Limited, an  electronic products company.  From January 2004 to January 2005, he was Electronic Engineer of Asia Contact Probes Company, an electronic products company.  He was graduated from Royal Melbourne Institute of Technology in the year of 2003 with a Bachelor of Communication Engineering.

Family Relationships

Mr. David Gunawan Ng and Ms. Stella Wai Yau are married.

Legal Proceedings

No officer, director, promoter or significant employee has been involved in the last five years in any of the following:

 
·
Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

 
·
Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

 
·
Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and

 
·
Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
 
 
 
24

 
 
 
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following tables set forth the ownership, as of the date of this prospectus, of our common stock by each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, our directors, and our executive officers and directors as a group.  To the best of our knowledge, the persons named have sole voting and investment power with respect to such shares, except as otherwise noted.  There are not any pending or anticipated arrangements that may cause a change in control.

The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a "beneficial owner" of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable community property laws, we believe that the beneficial owners of our common stock listed below have sole voting and investment power with respect to the shares shown.  The business address of the shareholders is 703, Liven House, 61-63 King Yip Street, Kwun Tong, Hong Kong.

 
Name
 
Number of Shares of Common Stock
   
Percentage
Mr. David Gunawan Ng[1]
   
27,680,000
     
69.2%
Ms. Stella Wai Yau [1]
   
27,680,000
     
69.2%
All officers and directors as a group [2 persons]
   
27,680,000
     
69.2%

[1]  Owned 21,000,000 shares by Mr. David Gunawan Ng and 6,680,000 by Ms. Stella Wai Yau.  Mr. David Gunawan Ng and Ms. Stella Wai Yau are husband and wife.

This table is based upon information derived from our stock records. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, each of the shareholders named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned. Except as set forth above, applicable percentages are based upon 40,000,000 shares of common stock outstanding as of April 15, 2009.
 
25

 

DESCRIPTION OF SECURITIES

The following description as a summary of the material terms of the provisions of our Articles of Incorporation and Bylaws is qualified in our entirety.  The Articles of Incorporation and Bylaws have been filed as exhibits to the registration statement of which this prospectus is a part.

Common Stock

We are authorized to issue 100,000,000 shares of common stock with $0.001 par value per share. As of the date of this registration statement, there were 40,000,000 shares of common stock issued and outstanding held by 44 shareholders of the record.

Each share of common stock entitles the holder to one vote, either in person or by proxy, at meetings of shareholders. The holders are not permitted to vote their shares cumulatively. Accordingly, the shareholders of our common stock who hold, in the aggregate, more than fifty percent of the total voting rights can elect all of our directors and, in such event, the holders of the remaining minority shares will not be able to elect any of such directors. The vote of the holders of a majority of the issued and outstanding shares of common stock entitled to vote thereon is sufficient to authorize, affirm, ratify or consent to such act or action, except as otherwise provided by law.

Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors out of funds legally available. We have not paid any dividends since our inception, and we presently anticipate that all earnings, if any, will be retained for development of our business. Any future disposition of dividends will be at the discretion of our Board of Directors and will depend upon, among other things, our future earnings, operating and financial condition, capital requirements, and other factors.

Holders of our common stock have no preemptive rights or other subscription rights, conversion rights, redemption or sinking fund provisions. Upon our liquidation, dissolution or winding up, the holders of our common stock will be entitled to share ratably in the net assets legally available for distribution to shareholders after the payment of all of our debts and other liabilities. There are not any provisions in our Articles of Incorporation or our Bylaws that would prevent or delay change in our control.

Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock in series as fixed by the Directors with $0.001 par value per share. As of the date of this Prospectus, there are no preferred shares outstanding.

Preferred stock may be issued in series with preferences and designations as the Board of Directors may from time to time determine. The board may, without shareholders approval, issue preferred stock with voting, dividend, liquidation and conversion rights that could dilute the voting strength of our common shareholders and may assist management in impeding an unfriendly takeover or attempted changes in control. There are no restrictions on our ability to repurchase or reclaim our preferred shares while there is any arrearage in the payment of dividends on our preferred stock.

 
26

 
 
INTEREST OF NAMED EXPERTS

Our Financial Statements as of March 31, 2009 and 2008, and the results of operations and cash flows for the years ended March 31, 2009 and 2008 were audited by ZYCPA Company Limited, (formerly Zhong Yi (Hong Kong) C.P.A Company Limited) Certified Public Accountants, as experts in accounting and auditing, to the extent and for the periods set forth in our report and are incorporated herein in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.

The legality of the shares offered under this registration statement is being passed upon by Williams Law Group, P.A., Tampa, Florida.  Michael T. Williams, principal of Williams Law Group, P.A., owns 570,000 shares of our common stock, of which 100,000 shares are being registered in this offering.  Two affiliates of Williams Law Group, P.A. own an aggregate of 150,000 additional shares being registered in this offering.

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES LIABILITIES

Our Bylaws, subject to the provisions of Nevada, contain provisions which allow the corporation to indemnify any person against liabilities and other expenses incurred as the result of defending or administering any pending or anticipated legal issue in connection with service to us if it is determined that person acted in good faith and in a manner which he reasonably believed was in the best interest of the corporation.  Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.

DESCRIPTION OF BUSINESS

Organization

Home Touch Holding Company is a Nevada corporation formed on January 26, 2009.  As of January 26, 2009, we acquired Home Touch Limited, a Hong Kong Special Administrative Region of China corporation formed as Lexing Group Limited in July 2004 which changed its name to Home Touch Limited in 2005.  Home Touch Limited is our wholly-owned subsidiary.  The transaction was structured as a share exchange in which we exchanged 40,000,000 shares of our common stock for 10,000 shares of Home Touch Limited.  The purpose of this transaction was solely to form a U.S. holding company for our business.

Business

Through Home Touch Limited, we design and sell and install various energy saving + smart home system products and solutions.  Our products and solutions can centrally control home systems in buildings and/or villas which are pre-wired as well as those that aren’t pre-wired by using utilize radio frequency, or European Installation Bus, wireless electronic networking technology to integrate the various devices and appliances found in most homes, hotels and offices.  We design, supply and install the whole building system.  We are a registered electrical contractor in Hong Kong.

 
27

 
 
Our main target is property developers in Hong Kong and China – about 85% of our business come from them. We also sell to single end users, generally owners of high-end residences, that in general are referred by interior designers. For outside Hong Kong, we have a distribution agreement Home Touch Solutions Sdn Bhd, a Malaysian company. Under our distribution agreement, our distributor sells to developers directly.  We do not own Home Touch Solutions Sdn Bhd and they are not a partner or affiliate.. Once they have purchased the products, they assume all expenses for installation and maintenance. We have sold $2,232 to this distributor as of June 30, 2009.

We design ourselves some of the products we sell such as Novel, Noble, Royal lighting switch, transceiver, remote controller, telephone controller, IP video door phone and WiFi video door phone. We also design our own solutions such as t.HOME, Building Management Software, E-boardcasting software and IP Smart. In addition, we distribute products with built in software from other brands.  All of the products we sell operate on the same RF wireless frequency /or EIB and easily communicate with each other.  This hardware and software is all our design except the European Installation Bus. Because we do not own any production facilities, we use manufacturers in China to produce some of our products for us.

We also act as a distributor of product manufactured by others, as described below.

Our products and solutions include, among others:
 
 
·
IP video door phone
 
·
WiFi video door phone
 
·
WiFi network for the whole building
 
·
Energy Saving system for home and building
 
·
Smart home system, include, lighting control, home appliance control, curtain control
 
·
Security system, including all kinds of detector and alarm products
 
·
Intelligent Household Management System that allows text message, picture, video message, report, to all residences of a building. It also allows residents to book club house facilities, send messages, and panic alarm to building management office. With the same system, residents may remote site control their residence
 
·
Windows Vista Media Center Edition solution
 
·
transceiver - a wireless device used to transmit RF signal to infrared signal to control heating and air conditioning, all home appliances and audio-visual systems such as DVD, TV, Amplifier, Cable TV, and Stereo.
 
·
remote controller or internet tablet
 
·
t.HOME 1 - A USB white box that plugs into a computer USB port that allows the user to use Window Media Center to coordinate with the transceiver for control of home systems, appliances and audio-visual media.
 
·
Smart home system from Visiomatic – a German made product and solution which uses a panel to control all kinds of home devices.
 
·
IP Smart - A plug in to a Cisco IP phone to control lighting, curtain and all kinds of appliances. This solution is mainly for hotel, service apartment and office.
 
Since inception, we have sold our systems to developers in 15 projects at prices ranging from $5,000 to $10,000.

We also offer a one stop solution to a home owner or their interior designer including:

 
·
Smart home system from Visiomatic – a German made product and solution which uses a panel to control all kinds of home devices.
 
 
28

 
 
 
·
Lighting Switch from Basalte – a Belgium made modern designed touch switch.
 
·
Video door phone from Elcom
 
·
Infrastructure from ABB – a European type control system for home and building use. We use this system as backbone and add our own control interface hardware which gives us more flexibility and custom-made to property developers. ABB iBUS system is running on EIB KNX (European Industry Bus) , it is a one wire bus system, low voltage.  A bus system is a wire or collection of wires through which data is transmitted from one part of a computer to another.

We have designed a system to work with the Windows Vista Media Center software found on desktop computers with the appropriate version of the Windows Vista program installed.  Components of this wireless system include:
 
 
·
Novel, Noble and or Royal lighting switches
 
·
curtain controller
 
·
transceiver - a wireless device used to transmit RF signal to infrared signal to control heating and air conditioning, all home appliances and audio-visual systems such as DVD, TV, Amplifier, Cable TV, and Stereo.
 
·
remote controller or internet tablet
 
 
o
The main different between remote control and web tablet is that there is a preset button and icon on remote controller even you don’t have such kind of devices or you have more than one set, web tablet provides the graphic interface to client and allow to add/delete devices even the devices located at different bedrooms. The scene control is provided to client custom-made the sequence control of the lighting, curtain and home appliances.
 
·
t.HOME 1 - A USB white box that plugs into a computer USB port that allows the user to use Window Media Center to coordinate with the transceiver for control of home systems, appliances and audio-visual media.
 
·
tHOME software on Media Center Edition platform.
 
Since inception, we have sold these type of systems to homeowners at prices ranging from $5000 to $10,000.

We also sell Visiomatic, a high level/luxury home control system.  The monitoring and control of home automation, security technology, entertainment electronics, communication technology, building technology and infotainment are provided on a single user interface which utilizes clear design and simple terms and symbols to make management of all of the technologies unambiguous.

The base is an intelligent software with a large number of interfaces.  The general system comprises a powerful industrial controller which has been designed for around-the-clock operation 365 days a year.  Functions include:
 
 
·
control and visualization of security systems,
 
·
retrieval of information such as stock exchange news, weather forecasts, world news,
 
·
regulation of heating and air conditioning,
 
·
activation of the answer phone,
 
·
Internet access
 
 
29

 

 
·
curtain and window shade control
 
·
telephone,
 
·
DVD player
 
·
video intercom
 
·
e-mail
 
·
home cinema
 
·
traffic reports, world time and many other options.
 
·
Remote control operation via a call centre
 
Since inception, we have sold these types of systems to homeowners at prices ranging from $50,000 to $300,000.

Our systems can also be adapted for the elderly and disabled. This field uses much of the same technology and equipment as home automation for security, entertainment, and energy conservation but tailors it towards the elderly and disabled through emergency assistance systems and tools, reminder systems, and medication dispensing.  For example, we offer a product called softphone, which allows disabled individuals to use their head to control the above features plus use the telephone and surf the internet.

Since inception, we have sold these type of systems to homeowners at prices ranging from $5,000 to $10,000.

Our smart home products also have commercial applications such as:

 
·
Hotel:  Finger tip display that allows user and hotel staff to switch on mailbox, close roller shutters, lighting on, and favorite music is played in every room with a director’s personal welcome on the display.
 
·
Office:  For presentations and conferences, coordinates technologies such as:
 
DVD
Digital video
Power Point presentations
Beamer/ projector
Plasma monitor
Multi room and surround systems
Videoconference system
 
Since inception, we have sold these type of commercial systems at prices ranging from $5000 to $10000.

For example, we developed and sell a product that can plug in to a Cisco IP phone to control lighting, curtain and all kinds of appliances. This solution is mainly for hotel, service apartment and office.  Prices for this product range from $5000 to $10000.

 
30

 
 
In our fiscal year ended March 31, 2009, the following customer accounted for the following amounts and percentages of our total revenues:
 
Name of Customer
 
Amount of Revenues
   
Percentage of
Total Revenues
 
Grand Tech Construction Limited
   
382,050
     
43%
 
Home Touch Services Limited (related party)
   
145,371
     
16%
 
Shenzhen Bochuang Hi-Tech Company Limited
   
127,193
     
14%
 

We have no agreements with these customers, who purchase from us on purchase orders only. 

Suppliers

For the year ended March 31, 2009, three product suppliers accounted for 10% or more of our purchases as follows:
 
   
Year ended March 31, 2009
 
   
Purchases
   
Percentage
of purchases
   
Accounts
payable
 
                   
Jardine One Solution
   
56,532
     
14%
     
-
 
MAG Living (Shenzhen) Co. Limited
   
51,481
     
12%
     
-
 
Shenzhen Bochuang Hi-Tech Company Limited
   
43,669
     
11%
         
                         
     
151,682
     
37%
     
-
 

We have distribution agreements with:
 
 
·
ABB for their i-busE IB/KNX system in Hong Kong, Basalt BVBE for their Tacto, Mona and Sentido KNX products in Hong Kong, Macau and Mainland China.
 
·
Elcom for their door phone products in China.
 
·
Visiomatic for their Visomatic System in the greater China area.
 
We do not anticipate any difficulty in locating back up suppliers, such as MAG Living for Shenzhen Bochuang.

Third Party Manufacturers
 
We design the outlook, print circuit board, software platform, and software interface and we give the designs to various factories in China to manufacture for us.  We have no agreements with our third party manufacturers except Shenzhen Bochuang Hi-Tech Company Limited which manufactures Noble series, Royal series, Novel series, Transeceiver, Telephone Controller, Remote Controller, Video Door Phone , Curtain Controller and Intelligent Socket for us and do not anticipate any difficulty in locating back up third party manufacturers.  Our Agreement with Shenzhen Bochuang Hi-Tech Company Limited is for a term of two years, commencing August 9, 2006, automatically renewable unless notice is given 60 days in the advance of the expiration date.  The Agreement is currently in force.
 
 
31

 

Markets and Marketing

We currently sell our products in Hong Kong, Mainland China, Macau, Taiwan ROC, U.A.E., Malaysia and Singapore.

We market through and in cooperation with various partners.

Microsoft Hong Kong Limited

We have cooperated with Microsoft in the Windows Vista launch. Before Window Vista launch in US, we started to develop a smart home function for Vista. And become the first launch smart home program in Vista. The smart home feature is a new direction for PC, and it is suitable to integrate with Vista main feature - Windows Media Center.  Accordingly, we believe we are the only Independent Software Vendor partner that was invited to be their digital home solution provider throughout over the world. We and Microsoft agreed to promote new concept of “ehome.”  We do not have a written agreement with Microsoft we have a join case study leaflet.  Microsoft wants to promote their Vista development platform to the industry.  Because have successful used this platform in our products, they picked us to highlight the advantage and benefits of Windows Vista platform.  We believe this will support additional sales of our products.

ABB (Hong Kong) Limited

We have a written distribution cooperation agreement with ABB. ABB’s distribution channel gives us access to various new hotel projects. We intend move into China market in cooperation with ABB. There are 3 tenders we have bid together.  We believe this will support additional sales of our products.

Nokia Hong Kong Limited

We do not have agreement with Nokia but are working with them on a joint leaflet for a joint promotion.  Nokia wanted to expand their business to other categories when they developed a new product line called web tebnet (N800, N810). We got the device and integrated it with our system. Nokia agreed to put their logo in the leaflet and promote this feature. And they will support the future development, such as mobile phone and smartphone integrated with smart home features.  We believe this will support additional sales of our products.  However, we have not yet sold any of these products.

China Light Group:

We have agreed to cooperate with China Light Group in marketing the concept of “All Electric Home + Intelligent Home” in Hong Kong. We have successfully won 4 projects totaling 68 houses.  We do not have a written agreement with CLP Group but we have a joint case study leaflet.  CLP Group wanted to promote the new concept - All Electric Home - to the Village user and felt our smart home product features add value to their promotion. We believe this will support additional sales of our products.
 

 
32

 

Megastrength Security Service Co. Ltd.

As a subsidiary of Henderson Land Group, one of the big four property developers in Hong Kong, they are the supply arm of the group. Home Touch has signed an exclusive cooperation agreement with them to promote Home Touch products and solution into Henderson Land Group.  We believe this will support additional sales of our products.

Cisco Systems (HK) Limited

We have successfully integrated Home Touch t.HOME 1’s platform into Cisco’s internet protocol phone infrastructure. We have successfully co-operate to launch a new generation of IP phone + intelligent home system into the office/hotel market together – IP Smart.  We do not have a written agreement with Cisco but we have a joint case study leaflet.  CISCO want to bring the IP phone to the home and office and. Our smart control feature is a new function to them, so they invited us to their Hong Kong promotion exhibition. We became the only smart control solution for Cisco IP phone. We believe this will support additional sales of our products.

EBS

We have a license with EBS in Malaysia to use Home Touch’s name to secure business in the region. We will utilize a joint promotion and approach acting as developers together.  We believe this will support additional sales of our products.   However, we have not yet sold any of products as a result of this relationship.

T&J

We have license T&J in Singapore to use Home Touch’s name to secure business in the region. We will utilize a joint promotion and approach acting as developers together.  We believe this will support additional sales of our products.  However, we have not yet sold any of products as a result of this relationship.

eHome

We have license ehome in UAE to use Home Touch’s name to secure business in the region. We will utilize a joint promotion and approach acting as developers together.  We believe this will support additional sales of our products.  However, we have not yet sold any of products as a result of this relationship.

We view these marketing arrangements as material to our future success in that we have generated a total revenues of $1,387,387 in aggregate revenues from March 31, 2006 through June 30, 2009, of which $685,411 in revenues were generated from sales of products with the entities with whom we have these marketing arrangements.  We have generated the following revenues through these marketing efforts:
 
 
·
Microsoft/Cisco -  $293,447 [1]
 
·
ABB -   $227,104
 
·
China Light -  $61,523
 
·
Megastrength Security Service Co. Ltd. - $103,337
 
[1]  Consists of Cisco related products of $181,311 and Microsoft related products of $112,136, aggregated because they were sold in the same project.

Our products are primarily sold through the efforts of our officers, directors and employees.

Warranties

We include 12-months warranty coverage on the products we design and distribute. With respect to products we acquire from third party suppliers, these suppliers reimburse us for the cost of warranty service.

Insurance

We have no products liability or other insurance.

 
33

 
 
Intellectual Property

We have the following patents:

NAME
 
GRANTED BY
 
DATE
 
NUMBER
USB Wireless Controller
 
Hong Kong
 
December 29, 2006
 
HK1090804
             
Intelligent House-Hold Management System
 
Hong Kong
 
March 16, 2007
 
HK1093867
             
A Visible Doorbell Device
 
Hong Kong
 
August 1, 2008
 
HK1111306
             
Advance computer usage/Audio-Visual/Gaming - Entertainment Automation
 
Hong Kong
 
July 7, 2008
 
HK1116992
             
A Visible Doorbell System
 
Hong Kong
 
August 1, 2008
 
HK1111307

The duration of all of the above patents is 7 years.

Our company name/logo were trademarked in Hong Kong on December 6, 2005, No. 300432422

Environmental Issues

We have not incurred and do not expect to incur any costs relating to environmental matters.

Competition and Market Position

The smart home systems products industry is characterized by intense competition based primarily on product availability, price, speed of delivery, ability to tailor specific solutions to customer needs, quality, and depth of product lines. Our competition is fragmented across our products, and, accordingly, we do not compete with any one company across all product and solutions lines. We compete with a variety of entities, some of which have greater financial resources. Our ability to remain competitive in this industry depends in part on our ability to successfully identify new product opportunities, develop and introduce new products and enhancements on a timely and cost effective basis, as well as our ability to successfully identify and enter into strategic alliances with entities doing business within the industries we serve. There can be no assurance that our product offerings will be, and/or remain, competitive or that strategic alliances, if any, will achieve the type, extent, and amount of success or business that we expect them to achieve. The sales of our products and technology may not occur or grow in the manner we expect, and thus we may not generate as much revenue as anticipated from such products.

 
34

 

Competition within the smart home system products industry varies by region and by specific product offerings. We compete with large scale, well capitalized public companies and smaller scale private companies that sell home health products and home medical equipment. We are a small competitor in the industry.  Many of our competitors have substantially greater financial, marketing, personnel and other resources than we do.
 
The major competitors in China are:
 
 
·
Guangzhou Anjubao Sci-tech Co. Ltd
 
·
Shanghai Super Smart Electronics Co. Ltd
 
·
TianJin Ruilang Smarthome Co. Ltd
 
·
GKB Group
 
·
Bright Technologies Co. Ltd
 
 
·
RainRead (China) Intelligence Co., Ltd
 
·
BoChuang Corporation Group
 
·
Xiamen Genway Security Technology Development Co., Ltd.
 
·
Aurine Group Co. Ltd
 
·
Haier Home Group
 
Haier and Aurine are the strongest in this industry and significantly larger and have significantly more resources than us. Haier is owned by Haier Group which a publically listed company in China, and they have a very strong back up from their parent company. Aurine is very strong in south east China. They own their own factory with more than 1000+ people. They are the pioneer in this industry which have the most job references all over China.  We believe we are of comparable size to most of the remainder these competitors.

In Hong Kong there are fewer competitors. Most of the competitors are system integrators meaning they do not have their own brand’s products, they just try to put everything together and offer to end customers. In addition, they do not have their own patent technology, solution and so do development team.
 
 
·
Intexact - Intexact is a small company specializes in personalized solutions for Intelligent Homes. It mainly focuses in high end intelligent home solution. Many of their job references are from single apartment.
 
·
Cypress Asia Group – Cypress focuses on larger projects. It has its own architecture, consultant and design company.
 
·
Nixon Technology – A traditional security systems provider. With many years security alarm installation experience, it claims to provide total solutions of intelligent building systems. It is the official distributor of Samsung home automation system.
 
Cypress and Interact are middle-size companies that are significantly larger than us.

We compete with other smart home system products companies based upon:
 
 
·
Design
 
 
o
We are an experienced design team of 5 people. All our patented solutions and products design is done in house.
 
 
·
Brand awareness

 
 
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o
We are the only smart home system solution provider which spending our effort on brand building. For instance, one of our project Soho 38, we build our brand in the same platform with Microsoft, Cisco and Hewlett Packard.
 
 
·
Cost advantage + flexibility
 
 
o
We have both our own development solution and distribution of well known brands like Visiomatic, Elcom, Basalte and ABB. In this case, we believe we offer a cost advantage by providing the tailor-made and flexibility solution and products to customers.

Research and Development

We have not incurred research and development expenses during the last two fiscal years.

Employees

We have the following full time employees:
 
 
·
Clerical – One
 
·
Operations – One
 
·
Administrative – One
 
·
Management – One
 
·
Sales – Three
 
·
Technical – Three
 
·
Automation System – Three
 
·
Marketing - One

We have no part time employees.  We have no collective bargaining agreement with our employees.  We consider our relationship with our employees to be excellent.


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes, and other financial information included in this Form S-1.

Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking (within the meaning of section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934).  The Private Securities Litigation Reform Act of 1995 is not available to us as a non-reporting issuer.  Further, Section 27A(b)(2)(D) of the Securities Act and Section 21E(b)(2)(D) of the Securities Exchange Act expressly state that the safe harbor for forward looking statements does not apply to statements made in connection with an initial public offering.

 
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Forward-looking statements are, by their very nature, uncertain and risky.  These risks and uncertainties include international, national, and local general economic and market conditions; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; change in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; the risk of foreign currency exchange rate; and other risks that might be detailed from time to time in our filing with the Securities and Exchange Commission.

Although the forward-looking statements in this Registration Statement reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them.  Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements.  You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

Overview

Generally, we operate in the “home integration” market, also called “smart home” or “intelligent home,” although our products, solutions and services apply to commercial, hotels and industrial buildings as well.  This market is also sometimes referred to as “home automation.”

As a registered electrical contractor in Hong Kong, we are principally engaged in the provision of a variety of smart home system products and solutions, which enable to centrally control home systems with wireless or non-wireless features by means of radio frequency (RF) or European Installation Bus (EIB), wireless electronic networking technology to integrate the various devices and appliances commonly found in buildings, homes, hotels and offices.

We sell various smart home system products and solutions that can centrally control various systems and functions in a multitude of residential and commercial buildings that are either pre-wired as well as those that are not.  By using current technology available in the marketplace today, both our own and through third parties, we are equipped to design, supply, install and fully integrate an entire building system.

We have designed our own proprietary products such as Novel, Noble, and Royal Lighting Switch, which are produced for us by third party manufactures. We also design our own solutions such as t.HOME Building Management Software, E-broadcasting software and IP Smart.  In addition, we distribute products and software from other brands.  All of the products we sell operate on the same RF wireless frequency /or EIB and easily communicate with each other.
 
Through Home Touch Limited, we design and sell and install various energy saving + smart home system products and solutions.  Our products and solutions can centrally control home systems in buildings and/or villas which are pre-wired as well as those that aren’t pre-wired by using utilize radio frequency, or European Installation Bus, wireless electronic networking technology to integrate the various devices and appliances found in most homes, hotels and offices.  We design, supply and install the whole building system.  We are a registered electrical contractor in Hong Kong.

 
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Our main target is property developers in Hong Kong and China – about 85% of our business come from them. We also sell to single end users, generally owners of high-end residences, that in general are referred by interior designers. For outside Hong Kong, we have a distribution agreement Home Touch Solutions Sdn Bhd, a Malaysian company.  Under our distribution agreement, the local distributor directly sells to developers.  We do not own Home Touch Solutions Sdn Bhd and they are not a partner or affiliate. Once they have purchased the products, they assume all expenses for installation and maintenance.

We design our own products such as Novel, Noble, Royal lighting switch, transceiver, remote controller, telephone controller, IP video door phone and WiFi video door phone, which are produced for us by third party manufactures. We also design our own solutions such as t.HOME, Building Management Software, E-boardcasting software and IP Smart. In addition, we distribute products and software from other brands.  All of the products we sell operate on the same RF wireless frequency /or EIB and easily communicate with each other.

Summary of Critical Accounting Estimates

In accordance with the SEC’s Staff Accounting Bulletin No. 104, “Revenue Recognition”, the Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collectibility is reasonably assured.

(a)         Sale of products

The Company generally sells its products on a no-return basis, including lighting and curtain switch, lighting components, video door phone, remote controller and computer accessories, etc. The Company recognizes product revenue when persuasive evidence of an arrangement exists, the product has been delivered upon shipment, the sales price is fixed or determinable and collectibility is reasonably assured.

(b)         Projects revenue

Under the intelligent home system solutions arrangement, the Company is obligated to deliver to its customers multiple products and/or services (“multiple elements”), which include two elements: (1) hardware and software; and (2) provision of design, customized implementation system and technical supports, under the customers’ requirement on significant modification of hardware and customization of software.

The Company offers multiple solutions to their customers' needs. Those solutions may involve the delivery or performance of multiple products and services and performance may occur at different points in time or over different periods of time. In general, its sale arrangements include initial installation of hardware, technical support or implementation services and involve consideration in the form of a fixed fee with no general rights of return.

Fee is negotiated in a fixed amount and concluded upon the signing the contract, which provides for a customer deposit upon contract execution, milestone billings. The Company classifies hardware and its related implementation fees together as project revenue in the statement of operation and considers multiple element arrangements. Revenue from the sales of the Company’s hardware are recognized upon shipment or delivery of the hardware provided that persuasive evidence of an arrangement exists, collection is probable, payment terms are fixed and determinable and no significant obligations remain. Revenues from providing implementation services or technical supports are recognized when services are rendered and accepted by the customers.

 
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The Company adopted the Emerging Issues Task Force Issue No. 00-21, “Revenue Arrangements with Multiple Deliverables” (“EITF 00-21”) to allocates revenue for these transactions that include multiple elements to each unit of accounting based on its relative fair value and recognizes revenue for each unit of accounting when revenue recognition criteria have been met. The price charged when the element is sold separately generally determines fair value. When the Company has objective evidence of the fair values of undelivered elements but not delivered elements, the Company allocates revenue first to the fair value of the undelivered elements, and the residual revenue is then allocated to the delivered elements. If the fair value of any undelivered element included in a multiple element arrangement cannot be objectively determined, revenue is deferred until all elements are delivered or services have been performed, or until fair value can objectively be determined for any remaining undelivered elements.

For fixed fee long-term contracts, the Company recognizes project revenues using the percentage-of-completion method of accounting upon completion of each contract milestone, under the provisions of SOP No. 81-1, “Accounting for Performance of Construction Type and Certain Production Type Contracts” , (“SOP 81-1”).

(c)         Technical service

Technical service is primarily derived from the provision of technical development and application on home system solutions to a single customer for a certain period of time, which is considered as a long term contract. The Company recognizes technical service income using the percentage-of-completion method of accounting upon completion of each milestone, under the provisions of SOP No. 81-1, “Accounting for Performance of Construction Type and Certain Production Type Contracts” , (“SOP 81-1”). This service is generally billed on a time-cost plus basis in accordance with each milestone under the contract.

(d)         Interest income

Interest income is recognized on a time apportionment basis, taking into account the principal amounts outstanding and the interest rates applicable.

Allowance for Doubtful Accounts

An allowance for doubtful accounts is established and determined based on managements’ assessment of known requirements, aging of receivables, payment history, the customer’s current credit worthiness and the economic environment.  If actual results differ from the estimate, revisions to the allowance are recorded.

Inventories

Inventories are recorded at the lower of cost or net realizable value, with expense estimates made for obsolescence or unsaleable inventory equal to the difference between the recorded cost of inventories and their estimated market value based upon assumptions about future demand and market conditions. On an on-going basis, we monitor these estimates and records adjustments for differences between estimates and actual experience. Historically, actual results have not significantly deviated from those determined using these estimates.

 
39

 

Impairment of Long-Lived Assets

Long-lived assets primarily include plant and equipment. In accordance with the Statement of Financial Accounting Standard ("SFAS") No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, we review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable.  If the total of the expected undiscounted future net cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount of the asset.

Income taxes

We have considered potential sources of future taxable income in determining the amount of a valuation allowance against its deferred tax assets at March 31, 2009.  Changes in the future taxable income estimate, could affect the deferred tax asset in the future and an adjustment to the valuation allowance would be recorded in the period such determination is made.
 
We also adopted Financial Accounting Standards Board ("FASB") Interpretation No. (FIN) 48, "Accounting for Uncertainty in Income Taxes" and FSP FIN 48-1, which amended certain provisions of FIN 48. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in the financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes.” FIN 48 provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized upon the adoption of FIN 48 and in subsequent periods. This interpretation also provides guidance on measurement, de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

In connection with the adoption of FIN 48, we analyzed the filing positions in all of the federal, state and foreign jurisdictions where we and our subsidiaries are required to file income tax returns, as well as all open tax years in these jurisdictions. We adopted the policy of recognizing interest and penalties, if any, related to unrecognized tax positions as income tax expense. We did not have any unrecognized tax positions or benefits and there was no effect on the financial condition or results of operations for the years ended March 31, 2009 and 2008.

Product warranty and post service support

We generally offer product warranty and post-contract customer support (“PCS”) to its customers for a period of twelve months, free of charge. We periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

Results of Operations

Comparison of the three months ended June 30, 2009 to the three month ended June 30, 2008

Revenues for the three months ended June 30, 2009 amounted to $21,539 compared to $28,063 for the three months ended June 30, 2008 representing a decrease of 6,524.  The decrease is due to the downturn of the economy in Hong Kong, Macau and China which caused us to delay many of our projects during this period.  During the three months ended June 30, 2009, we had related party, project revenue of $18,919 and did not have any related party, project revenue for the three months ended June 30, 2008.  We are now focusing our efforts on project revenue instead of product revenue and we used a related party to bid on the projects.  We will continue to increase our project revenue; however, we will not be using the related party to bid on the projects.

Gross profit for the three months ended June 30, 2009 was $9,895, a decrease of $11,399, as compared to $21,294 for the three months ended June 30, 2008. The gross profit rate was 45.9% for the three months ended June 30, 2009 compared to 75.9% for the three months ended June 30, 2008.  Management feels that the gross profit percentage for the three months ended June 30, 2009 is consistent with the gross profit percentage of 42.3% for the year ended March 31, 2009 and 44.0% for the year ended March 31, 2008 and will continue to be within this range.  Cost of revenue consists primarily of material costs, direct labor and sub-contracting fees.  The lower profit margin for the three months ended June 30, 2009 compared to 2008 is due to the change in customer base.  During 2008, we focused more on the end customer which provided a higher profit margin, but now we are focusing more on developer projects which have a lower profit margin.  Although the developer projects have lower profit margins, we will be able to achieve higher revenues by selling directly to developers instead of the end user.

Our operating expenses increased $38,831 to $129,751 for the three months ended June 30, 2009, as compared to operating expenses of $90,920 for the three months ended June 30, 2008.  The increase of 42.7% is due to the overall expansion of our business.  We do not expect to see a significant increase in our operating expenses during the fiscal year ended March 31, 2010.

Comparison of the year ended March 31, 2009 to the year ended March 31, 2008

Revenues for the year ended March 31, 2009 amounted to $882,685 representing an increase of $622,863 as compared to sales of $259,822 for 2008.  In the fiscal year ended March 31, 2009, project revenue increased by $394,100 or 220%.  The increase is due to work being completed on existing contracts, and the addition and deliver of new contracts obtained during the year ended March 31, 2009.  We also had technical service revenue of $127,193 for the year ended March 31, 2009 compared to $0 in 2008.  The increase is due to our focused effort on selling more service contracts during fiscal year 2009.

 
40

 

Gross profit for the year ended March 31, 2009 was $373,329, an increase of $259,085, as compared to $114,244 in 2008. The gross profit rate was 42.3% for the year ended March 31, 2009 compared to 44.0% in 2008.  Management feels this difference is immaterial.  Cost of revenue consists primarily of material costs, direct labor and sub-contracting fees.  Management feels that at these levels of revenue, our cost of sales will continue to be in this range.

Our operating expenses increased $52,265 to $391,237 for the year ended March 31, 2009, as compared to operating expenses of $338,972 for 2008.  The increase of 14.1% is due to the overall expansion of our business.  We do not expect to see a significant increase in our operating expenses during the fiscal year ended March 31, 2010.

Net loss for the year ended March 31, 2009 was ($23,982), or ($0.00) per share as compared to ($222,613), or ($0.00) per share for 2008. Our net loss decreased by 198,631, due primarily to the increase in revenue.

Liquidity and Capital Resources

At June 30, 2009, our cash and cash equivalents totaled $16,213, compared to $17,391 as of March 31, 2009.  Historically our cash has been provided by collection of sales revenues, bank loans, short and long-term notes as well as capital from related parties, primarily certain shareholders.  During the three months ended June 30, 2009 and 2008, cash used in operations was $144,672 and $226,471, respectively.  For the three months ended June 30, 2009, the cash used in operations comprised primarily of our net loss of $121,526 , payments for inventories of $12,531, payments for deposits and other assets of 33,981, offset by collections of accounts receivable of $16,941.  For the three months ended June 30, 2008, the cash used in operations comprised primarily of our net loss of $71,363, payments for inventories of $155,196, payments for accrued liabilities and other payables of $44,956 , offset by an increase in accounts payable of 38,784.

We did not expend funds for investing activities during the three months ended June 30, 2009 and 2008.

During the three months ended June 30, 2009, we received proceeds from bank loans of $153,846 and made payments of $10,352 on long-term bank loans compared to proceeds of $185,897 from the issuance of promissory notes and payments of $9,283 on long-term bank loans.

As we expand, we may need to make sizeable cash commitments to secure inventory, and the impact of this potential trend on our business is uncertain. We plan to continue to fund our operations from our stockholders and the anticipated addition of new banking facilities, such as Government Guarantee Loans and/or Hong Kong Government SME funding.  In addition, we plan to increase the initial deposit percentage from our clients upon the undertaking of new projects.  However, we currently do not have any agreements with shareholders or lenders and we can offer no assurances that we will be able to obtain additional funds on acceptable terms, if at all.

We also anticipate that our continued growth will require a substantial increase in capital needs. Except as set forth above, we do not have and we have not identified any source for additional financing.  There can be no assurance that we will be able to secure financing for this growth.  The ability and speed that will be able to grow of our operations will directly related to the amount of financing that we can obtain.

 
41

 
 
Long-term bank loans consist of the following:
 

   
June 30, 2009
   
March 31, 2009
 
Bank loans, payable to financial institutions in Hong Kong:
           
             
Equivalent to HK$300,000 with interest rate at 6.84% per annum payable monthly, repayable by April 24, 2009, guaranteed by one director of our company
 
$
1,603
   
$
1,603
 
                 
Equivalent to HK$300,000 with interest rate at 7.8% per annum payable monthly, repayable by October 4, 2009, guaranteed by the directors of our company
   
7,810
     
12,618
 
                 
Equivalent to HK$1,200,000 with annual interest rate at
0.5% over Hong Kong prime rate payable monthly, repayable by May 3, 2012, guaranteed by the local government of Hong Kong Special Administrative Region and the directors of the Company
   
149,905
         
                 
Total
   
157,715
     
14,221
 
                 
Less: current portion of bank loans
   
(56,527
)
   
(14,221
)
                 
Bank loans, net of current portion
 
$
101,188
   
$
-
 

The minimum future payments of the aggregate bank loans are $56,527 in the next 12 months.

From its inception, we have suffered from continuous losses with an accumulated deficit of $631,745 as of June 30, 2009. The continuation as a going concern through March 31, 2010 is dependent upon the continued financial support from its stockholders and credit facility from the revolving lines of credit. We have executed a growing strategy by setting up a showroom to attract and promote their products and solutions and plans to institute the cost-saving strategy to reduce all non-essential costs. Also, we are currently pursuing the additional financing for our operations. However, there is no assurance that we will be successful in securing sufficient funds to sustain the operations.

Commitments and Contingencies

Operating lease commitments

We were committed under non-cancelable operating leases with fixed monthly rentals, due through October 26, 2011. Total rent expenses for the three months ended June 30, 2009 and 2008 was $1,923 and $4,994, respectively.  Total rent expense for the years ended March 31, 2009 and 2008 was $16,165 and $19,975, respectively.

Future minimum rental payments due under non-cancelable operating leases are as follows:

Years ending June 30,
     
2010
 
$
53,846
 
2011
   
53,846
 
2012
   
17,949
 
         
Total:
 
$
125,641
 

Reserve for product warranties

We have not experienced any material returns where it was under obligation to honor this standard warranty provision. As such, no reserve for product warranties has been provided in the statement of operations for three months ended June 30, 2009 and 2008.

 
42

 
 
Revolving lines of credit

We have outstanding revolving bank line of credit of $19,230 (equivalent to HK$150,000). Advances under the lines of credit are unsecured and bear interest at a rate of 3% per annum over Hong Kong Best Lending Rate, payable monthly. The revolving bank line of credit is reviewed on a regular basis, subject to cancellation at the discretion of the bank and requires a minimum monthly fee of $13 (equivalent to HK$100). There were no borrowings under the revolving bank line of credit as of June 30, 2009.

Recently issued accounting pronouncements:

We have reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.


DESCRIPTION OF PROPERTY

We currently rent the following property:
 
 
·
Address:  Rooms 703, 705 and 706, Liven House, 61-63 King Yip Street, Kwun Tong, Hong Kong
 
·
Number of Square Feet:  4,450
 
·
Name of Landlord:  Smartway Investment Development Limited
 
·
Term of Lease: October 27, 2008 to October 26, 2011
 
·
Monthly Rental: $4,487
 
·
Adequate for current needs:  Yes
 
We are committed under non-cancelable operating leases with fixed monthly rentals, due through October 26, 2011. Total rent expenses for the years ended March 31, 2009 and 2008 was $16,165 and $19,975, respectively.

As of December 31, 2008, future minimum rental payments due under non-cancelable operating leases are as follows:

Year ending December 31,
     
2009
 
$
53,846
 
2010
   
53,846
 
2011
   
31,410
 
         
Total:
 
$
139,102
 
 
We do not intend to renovate, improve, or develop properties.  We are not subject to competitive conditions for property and currently have no property to insure.  We have no policy with respect to investments in real estate or interests in real estate and no policy with respect to investments in real estate mortgages.  Further, we have no policy with respect to investments in securities of or interests in persons primarily engaged in real estate activities.
 
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
For the year ended March 31, 2009, the Company sold its products at its current market value totaling $13,682 to a related company, Home Touch Services Limited, which is controlled by Mr. David Gunawan Ng and Ms. Stella Wai Yau, the directors of the Company in a normal course of business.

For the year ended March 31, 2009, the Company provided intelligent home system solutions at its current market value totaling $131,689 to a related company, Home Touch Services Limited, which is controlled by Mr. David Gunawan Ng and Ms. Stella Wai Yau, the directors of the Company in a normal course of business, with $6,108 of accounts receivable at year-end.

 
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For the year ended March 31, 2009, the Company purchased certain products at its current market value totaling $17,397 from a related company, Penflow Technology (Asia) Limited, which is controlled by Mr. David Gunawan Ng and Ms. Stella Wai Yau, the directors of the Company in a normal course of business. 

During the year ended March 31, 2009, the Company received the customer deposits of $52,956 from the related company, Home Touch Services Limited, which is controlled by Mr. David Gunawan Ng and Ms. Stella Wai Yau, the directors of the Company, relating to the service agreement of intelligent home system solutions with the contract value of $158,059 at its current market value in a normal course of business.  As of March 31, 2009, the Company has included the $52,956 in accrued liabilities and other payables.

As of March 31, 2008, a balance of $382,702 due to related parties represented temporary advances pursuant to an oral agreement from a related company, Technics Group Limited, which is controlled by Mr. David Gunawan Ng and Ms. Stella Wai Yau. The balance was unsecured, non-interest bearing and repayable on demand. During the year ended March 31, 2009, the Company received additional advances of $66,949 and the balance of $449,651 due to related parties was waived by the related party.

The following is a table summarized the transactions:

   
Amounts Due to
 
   
Related Parties
 
Balance, March 31, 2008
  $ 382,702  
Proceeds
    66,949  
Amount waived
    (449,651 )
Balance, March 31, 2009
  $ -  

For the year ended March 31, 2008, the Company obtained a note payable up to the available amount of $384,615 (approximately HK$3,000,000) from a related party, which was controlled by Mr. Ng Tze Lung David Gunawan and Ms. Yau Wai Stella, the directors of the Company. The note payable was unsecured and carried with an interest charge at a fixed sum of $12,820 payable upon its maturity due January 31, 2010, for working capital purposes to certain projects.

During the fiscal year of 2008, the Company received the proceeds of $230,769 from note payable and made repayments of $25,641.

During the fiscal year of 2009, the Company drew an additional $153,846 on the note payable and made repayments of $269,231.  The remaining $89,743 from the note payable was waived by the related party.  The following table summarizes the transactions:
 
   
Note Payable
 
   
Related Party
 
Balance, March 31, 2007
  $ -  
Proceeds
    230,769  
Payments
    (25,641 )
Balance, March 31, 2008
    205,128  
Proceeds
    153,846  
Payments
    (269,231 )
Amount waived
    (89,743 )
Balance, March 31, 2009
  $ -  

Because the Company was not in a position to meet repayment obligation to these related companies, Technics Group Limited and Penflow Technology (Asia) Limited, the forfeiture was granted by the related companies that were controlled by Mr. David Gunawan Ng and Ms. Stella Wai Yau, the directors of the Company, in exchange for the additional paid-in capital to the Company.  The loans were forfeited by these entities controlled by the principal shareholders of the company in order to improve the Company’s financial position.  However, Mr. David Gunawan Ng and Ms. Stella Wai Yau, our directors, did not receive any additional stock or other equity interest from us in exchange for the forfeiture of these loans.  The forfeiture was pursuant to an oral agreement. 

For the period ended June 30, 2009, the Company provided intelligent home system solutions at its current market value totaling $18,919 to a related company, Home Touch Services Limited, which is controlled by Mr. David Gunawan Ng and Ms. Stella Wai Yau, the directors of the Company in a normal course of business, with zero accounts receivable at year-end.

For the period ended June 30, 2009, the Company leased out some portion of the office premises to and reimbursed rental charge of $11,538 from a related company, Technices Group Limited, which is controlled by Mr. David Gunawan Ng and Ms. Stella Wai Yau, the directors of the Company, at the market price in accordance with the lease agreement in a normal course of business.

As of June 30, 2009, the Company had amounts due of $52,956 from the related company, Home Touch Services Limited, which is controlled by Mr. David Gunawan Ng and Ms. Stella Wai Yau, the directors of the Company, relating to the service agreement of intelligent home system solutions with the contract value of $158,059 at its current market value in a normal course of business.  The amount of $52,956 is included in accrued liabilities and other payables.
We believe that all related party transactions were on terms at least as favorable as we would have secured in arm’s-length transactions with third parties.  Except as set forth above, we have not entered into any material transactions with any director, executive officer, and promoter, beneficial owner of five percent or more of our common stock, or family members of such persons.

 
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MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

There is no established public trading market for our securities and a regular trading market may not develop, or if developed, may not be sustained.  A shareholder in all likelihood, therefore, will not be able to resell his or her securities should he or she desire to do so when eligible for public resales.  Furthermore, it is unlikely that a lending institution will accept our securities as pledged collateral for loans unless a regular trading market develops.  We have no plans, proposals, arrangements, or understandings with any person with regard to the development of a trading market in any of our securities.

Options, Warrants, Convertible Securities

There are no options, warrants or convertible securities outstanding.

Penny Stock Considerations

Our shares will be "penny stocks" as that term is generally defined in the Securities Exchange Act of 1934 to mean equity securities with a price of less than $5.00.  Our shares thus will be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock.

Under the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer must make a special suitability determination regarding the purchaser and must receive the purchaser's written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt.  Generally, an individual with a net worth in excess of $1,000,000, or annual income exceeding $100,000 individually or $300,000 together with his or her spouse, is considered an accredited investor.  In addition, under the penny stock regulations the broker-dealer is required to:

·      Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Securities and Exchange Commissions relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt;
·      Disclose commissions payable to the broker-dealer and our registered representatives and current bid and offer quotations for the securities;
·      Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer's account, the account's value and information regarding the limited market in penny stocks; and
·      Make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction, prior to conducting any penny stock transaction in the customer's account.

Because of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling shareholders or other holders to sell their shares in the secondary market and have the effect of reducing the level of trading activity in the secondary market.  These additional sales practice and disclosure requirements could impede the sale of our securities, if our securities become publicly traded.  In addition, the liquidity for our securities may be decreased, with a corresponding decrease in the price of our securities.  Our shares in all probability will be subject to such penny stock rules and our shareholders will, in all likelihood, find it difficult to sell their securities.

 
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OTC Bulletin Board Qualification for Quotation

To have our shares of common stock on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market for our common stock.  We have engaged in preliminary discussions with a FINRA Market Maker to file our application on Form 211 with FINRA, but as of the date of this prospectus, no filing has been made.  Based upon our counsel’s prior experience, we anticipate that after this registration statement is declared effective, it will take approximately 2 – 8 weeks for FINRA to issue a trading symbol.

Sales of our common stock under Rule 144.

There are 12,320,000 shares of our common stock held by non- affiliates and 27,680,000 shares held by affiliates Rule 144 of the Securities Act of 1933 defines as restricted securities. 1,579,000 shares of our Common stock are held by non-affiliates are currently eligible for resale or are being registered in this offering, however affiliates will still be subject to the resale restrictions of Rule 144.  In general, persons holding restricted securities, including affiliates, must hold their shares for a period of at least six months, may not sell more than one percent of the total issued and outstanding shares in any 90-day period, and must resell the shares in an unsolicited brokerage transaction at the market price.  The availability for sale of substantial amounts of common stock under Rule 144 could reduce prevailing market prices for our securities.

Holders

As of the date of this registration statement, we had 44 shareholders of record of our common stock.

Dividends

We have not declared any cash dividends on our common stock since our inception and do not anticipate paying such dividends in the foreseeable future.  We plan to retain any future earnings for use in our business.  Any decisions as to future payments of dividends will depend on our earnings and financial position and such other facts, as the Board of Directors deems relevant.

Reports to Shareholders

As a result of this offering, we will become subject to the information and reporting requirements of the Securities Exchange Act of 1934 and will file periodic reports, proxy statements, and other information with the Securities and Exchange Commission through March 31, 2010, assuming this registration statement is declared effective before that date. Thereafter, we will continue as a voluntary reporting company and will not be subject to the proxy statement or other information requirements of the 1934 Act. We are not required under Section 12(g) or otherwise to become a mandatory 1934 Act filer unless we have more than 500 shareholders and total assets of more than $10 million on March 31, 2010. However, at or prior to March 31, 2010, we intend voluntarily to file a registration statement on Form 8-A. This will require us to file quarterly and annual reports with the SEC and will also subject us to the proxy rules of the SEC. In addition, our officers, directors and 10% stockholders will be required to submit reports to the SEC on their stock ownership and stock trading activity. If we do not file a registration statement on Form 8-A at or prior to March 31, 2010, our securities can no longer be quoted on the OTC Bulletin Board. We currently intend to voluntarily send an annual report to shareholders containing audited financial statements.

 
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Where You Can Find Additional Information

We have filed with the Securities and Exchange Commission a registration statement on Form S-1.  For further information about us and the shares of common stock to be sold in the offering, please refer to the registration statement and the exhibits and schedules thereto. The registration statement and exhibits may be inspected, without charge, and copies may be obtained at prescribed rates, at the SEC's Public Reference Room at 100 F St., N.E., Washington, D.C. 20549.  The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.  The registration statement and other information filed with the SEC are also available at the web site maintained by the SEC at http://www.sec.gov.
 
EXECUTIVE COMPENSATION

Summary Compensation Table

The table below summarizes all compensation awarded to, earned by, or paid to our Principal Executive Officer, our two most highly compensated executive officers other than our CEO who occupied such position at the end of our latest fiscal year and up to two additional executive officers who would have been included in the table below except for the fact that they were not executive officers at the end of our latest fiscal year, by us, or by any third party where the purpose of a transaction was to furnish compensation, for all services rendered in all capacities to us or our subsidiary for the latest fiscal years ended March 31, 2009 and 2008.
 
Name
 
Title
 
Year
 
Salary
   
Bonus
   
Stock
awards
   
Option