Attached files
file | filename |
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EX-32.2 - CERTIFICATION - Sound Worldwide Holdings, Inc. | swh_10q-ex3202.htm |
EX-31.2 - CERTIFICATION - Sound Worldwide Holdings, Inc. | swh_10q-ex3102.htm |
EX-31.1 - CERTIFICATION - Sound Worldwide Holdings, Inc. | swh_10q-ex3101.htm |
EX-32.1 - CERTIFICATION - Sound Worldwide Holdings, Inc. | swh_10q-ex3201.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
FOR
THE QUARTERLY PERIOD ENDED DECEMBER 31, 2009
OR
Commission
file number: 000-52116
SOUND
WORLDWIDE HOLDINGS, INC.
(Exact
name of Registrant as specified in its charter)
Delaware
|
20-5153419
|
|||
(State
or jurisdiction of
Incorporation
or organization)
|
(IRS
Employer
ID
Number)
|
Unit
1, 14/F, Leader Industrial Centre
Nos.
57-59 Au Pui Wan Street, Shatin, N.T.
Hong
Kong, China
|
N/A
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant’s
telephone number, including area code: (852) 2414-1831
Securities
registered under Section 12(b) of the Exchange Act:
None
Securities
registered under Section 12(g) of the Exchange Act:
Common
Stock, $0.0001 par value per share
(Title
of Class)
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes x
|
No o
|
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes o No o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company.
Large
accelerated filer o
|
Accelerated
Filer o
|
Non-accelerated
filer o
|
Smaller
reporting company x
|
(Do
Not Check if a Smaller Reporting Company)
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes o
|
No x
|
As of December 31, 2009, the registrant had 14,696,250 shares of common stock, $0.0001 par value, issued and outstanding.
Transitional
Small Business Disclosure Format Yes o No x
Item
1. Interim Consolidated Financial Statements and
Notes to Interim Consolidated Financial Statements
General
The
accompanying reviewed interim consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q. Therefore,
they do not include all information and footnotes necessary for a complete
presentation of financial position, results of operations, cash flows, and
stockholders' equity in conformity with generally accepted accounting
principles. Except as disclosed herein, there has been no material
change in the information disclosed in the notes to the consolidated financial
statements included in the Company's annual report on Form 10-K for the year
ended March 31, 2009. In the opinion of management, all adjustments
considered necessary for a fair presentation of the results of operations and
financial position have been included and all such adjustments are of a normal
recurring nature. Operating results for the three months and nine
months ended December 31, 2009 are not necessarily indicative of the results
that can be expected for the year ending March 31, 2010.
.
1
SOUND
WORLDWIDE HOLDINGS, INC.
Unaudited
Condensed Consolidated Financial Statements
For
The Nine Months Ended
December
31, 2009 and 2008
(Stated
in US Dollars)
2
SOUND
WORLDWIDE HOLDINGS, INC.
UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE
NINE MONTHS ENDED DECEMBER 31, 2009 AND 2008
INDEX TO
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
PAGES
|
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEET
|
4
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
5
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’
|
6
|
EQUITY
AND COMPREHENSIVE INCOME
|
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
7
|
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
8-
19
|
3
SOUND
WORLDWIDE HOLDINGS, INC.
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEET
(Stated
in US Dollars)
As
of
|
||||||||||||
December
31,
|
March
31,
|
|||||||||||
2009
$
|
2009
$
|
|||||||||||
Notes
|
|
|||||||||||
ASSETS
|
||||||||||||
Current
assets:
|
||||||||||||
Cash
and cash equivalents
|
15,964 | 7,989 | ||||||||||
Accounts
receivable, net of allowance
|
3 | |||||||||||
for doubtful
accounts
|
1,481,299 | 1,538,779 | ||||||||||
Prepaid
expenses and other receivables
|
2,854 | 422 | ||||||||||
Inventories
|
4 | - | 137,260 | |||||||||
Total
current assets
|
1,500,117 | 1,684,450 | ||||||||||
Property
and equipment, net
|
5 | 1,687,284 | 1,891,844 | |||||||||
TOTAL
ASSETS
|
3,187,401 | 3,576,294 | ||||||||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||||||
LIABILITIES
|
||||||||||||
Current
liabilities:
|
||||||||||||
Accounts
payable
|
91,094 | 43,178 | ||||||||||
Bank
and other borrowings
|
- | 340,066 | ||||||||||
Accrued
expenses and other liabilities
|
149,285 | 204,506 | ||||||||||
Total
current liabilities
|
240,379 | 587,750 | ||||||||||
TOTAL
LIABILITIES
|
240,379 | 587,750 | ||||||||||
Commitments
and contingencies
|
||||||||||||
Stockholder’s
equity:
|
||||||||||||
Common
stock (US$0.0001 par value
|
||||||||||||
-
authorized 20,000,000 shares; issued
and outstanding 14,696,250 shares
in December 31, 2009 and 14,336,250
shares in March 31, 2009)
|
1,470 | 1,434 | ||||||||||
Additional
paid-in capital
|
766,532 | 645,726 | ||||||||||
Retained
earnings
|
2,158,451 | 2,321,202 | ||||||||||
Accumulated
other comprehensive income
|
20,569 | 20,182 | ||||||||||
Total
stockholders’ equity
|
2,947,022 | 2,988,544 | ||||||||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
3,187,401 | 3,576,294 |
See
accompanying notes to unaudited condensed consolidated financial
statements.
4
SOUND
WORLDWIDE HOLDINGS, INC.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Stated
in US Dollars)
Three
months ended
December
31
|
Nine
months ended
December
31
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
$
|
$
|
$
|
$
|
|||||||||||||
Net
sales
|
106,901 | 42,820 | 2,281,447 | 4,113,370 | ||||||||||||
Cost
of sales
|
(178,182 | ) | (80,491 | ) | (2,165,266 | ) | (3,755,472 | ) | ||||||||
Gross
profit
|
(71,281 | ) | (37,671 | ) | 116,181 | 357,898 | ||||||||||
Selling,
general and administrative expenses, including shared based
payment
|
(67,009 | ) | (70,717 | ) | (247,640 | ) | (297,991 | ) | ||||||||
Other
income
|
- | - | - | 48 | ||||||||||||
Income
/ (loss) from operations
|
(138,290 | ) | (108,388 | ) | (131,459 | ) | 59,955 | |||||||||
Loss
on disposal of a subsidiary
|
- | (280 | ) | - | (276,321 | ) | ||||||||||
Interest
expenses
|
(5 | ) | (3,705 | ) | (31,292 | ) | (15,744 | ) | ||||||||
Loss
before taxes
|
(138,295 | ) | (112,373 | ) | (162,751 | ) | (232,110 | ) | ||||||||
Income
taxes expenses
|
- | - | - | (1,793 | ) | |||||||||||
Net
loss
|
(138,295 | ) | (112,373 | ) | (162,751 | ) | (233,903 | ) | ||||||||
Loss
per common stock, basic and diluted
|
(0.94)
cents
|
(0.79)
cents
|
(1.12)
cents
|
(1.68)
cents
|
||||||||||||
Weighted
average number of common stocks outstanding, basic and
diluted
|
14,676,250 | 14,236,250 | 14,592,977 | 13,938,524 |
See
accompanying notes to unaudited condensed consolidated financial
statements.
5
SOUND
WORLDWIDE HOLDINGS, INC.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
AND
COMPREHENSIVE INCOME
(Stated
in US Dollars)
Accumulated
|
||||||||||||||||||||||||
Additional
|
other
|
|||||||||||||||||||||||
Common
stock
|
paid-in
|
Comprehensive
|
Retained
|
|||||||||||||||||||||
Shares
|
Amount
|
capital
|
income
|
earnings
|
Total
|
|||||||||||||||||||
$
|
$
|
$
|
$
|
$
|
||||||||||||||||||||
Balance,
April 1, 2009
|
14,336,250 | 1,434 | 645,726 | 20,182 | 2,321,202 | 2,988,544 | ||||||||||||||||||
Issue
of stocks
|
360,000 | 36 | 120,806 | - | - | 120,842 | ||||||||||||||||||
Net
loss
|
- | - | - | - | (162,751 | ) | (162,751 | ) | ||||||||||||||||
Foreign
currency translation adjustments
|
- | - | - | 387 | - | 387 | ||||||||||||||||||
Comprehensive
income
|
- | 36 | 120,806 | 387 | (162,751 | ) | (41,522 | ) | ||||||||||||||||
Balance,
December 31, 2009
|
14,696,250 | 1,470 | 766,532 | 20,569 | 2,158,451 | 2,947,022 |
See
accompanying notes to unaudited condensed consolidated financial
statements.
6
SOUND
WORLDWIDE HOLDINGS, INC.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated
in US Dollars)
Nine
months ended December 31,
|
||||||||
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
loss
|
(162,751 | ) | (233,903 | ) | ||||
Adjustments
to reconcile net income to
|
||||||||
Net
cash provided by operating activities:
|
||||||||
Depreciation
expense
|
204,071 | 111,459 | ||||||
Share
based compensation
|
95,042 | - | ||||||
Changes
in current assets and liabilities
|
||||||||
Accounts
receivable
|
57,018 | 928,709 | ||||||
Prepaid
expenses and other receivables
|
(2,434 | ) | 100,552 | |||||
Inventories
|
137,298 | 922,101 | ||||||
Accounts
payable
|
63,651 | (606,473 | ) | |||||
Amount
due to related parties
|
11,527 | - | ||||||
Accrued
expenses and other liabilities
|
(56,654 | ) | (115,245 | ) | ||||
Tax
prepayment
|
- | 15,392 | ||||||
Net
cash provided by operating activities
|
346,768 | 1,122,592 | ||||||
Cash
flows from investing activity:
|
||||||||
Purchases
of property and equipment
|
- | (389,520 | ) | |||||
Net
cash used in investing activity
|
- | (389,520 | ) | |||||
Cash
flow from financing activities:
|
||||||||
New
bank borrowings
|
- | 674,383 | ||||||
Repayment
of bank borrowings
|
(340,158 | ) | (1,614,148 | ) | ||||
Net
cash used in financing activities
|
(340,158 | ) | (939,765 | ) | ||||
Effect
of exchange rate changes on cash and
cash equivalents
|
1,365 | 1,161 | ||||||
Net
(increase)/decrease in cash and cash equivalents
|
7,975 | (205,532 | ) | |||||
Cash
and cash equivalents at beginning of the period
|
7,989 | 288,356 | ||||||
Cash
and cash equivalents at end of the period
|
15,964 | 82,824 | ||||||
Supplementary
disclosures of cash flow information:
|
||||||||
Interest
paid
|
31,292 | 15,744 | ||||||
Income
taxes paid
|
- | 1,793 | ||||||
7
SOUND
WORLDWIDE HOLDINGS, INC.
NOTES TO
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated
in US Dollars)
1.
|
Organization
and nature of operations
|
Sound
Worldwide Holdings, Inc. (the “Company”) and its subsidiaries (together, the
“Group”) are principally engaged in manufacturing and trading of denim fabrics
and garments. The Group owns production plants in Hong Kong and the
People’s Republic of China (“PRC”) and its customers are mainly in the United
States, Europe and Japan.
On
October 25, 2007, Freedom 3, Inc. a Delaware corporation (“Freedom 3”), sold one
share of its common stock to Sound Worldwide Limited (“Sound Worldwide” or
“SWL”) for $1.00 and redeemed 100,000 shares of its common stock from its prior
sole stockholder constituting 100% of Freedom 3’s issued and outstanding shares
of its common stock prior to the sale, resulting in Sound Worldwide owning 100%
of Freedom 3. After the sale and redemption by Freedom 3, Sound Worldwide and
Freedom 3 entered into a Share Exchange Agreement, dated October 25, 2007, or
Exchange Agreement, pursuant to which each issued and outstanding share of Sound
Worldwide’s common stock and preferred stock was converted into 350 shares of
Freedom 3’s common stock and preferred stock, respectively, and all of the
issued and outstanding shares of Sound Worldwide’s common and preferred stock
were retired and cancelled, resulting in Freedom 3 owning 100% of Sound
Worldwide (the “Exchange”). This resulted in the stockholders of Sound Worldwide
to become stockholders of Freedom 3. The previous stockholder of Freedom was
then issued 300,000 shares of Freedom 3 as agreed previously. The one share of
Freedom’s common stock held by Sound Worldwide was then cancelled and Sound
Worldwide sold one share of its common stock to Freedom 3, which resulted in
Freedom 3 owning 100% of Sound Worldwide. Freedom 3 then changed its name to
Sound Worldwide Holdings, Inc.
For
accounting purposes, the Exchange has been treated as an acquisition of Freedom
3 by Sound Worldwide and as a recapitalization of Sound Worldwide (i.e. a
“reverse acquisition”), in which Sound Worldwide was deemed to be the accounting
acquirer. As a result of the Exchange, the historical consolidated financial
statements of the Company for periods prior to the date of the transaction are
those of Sound Worldwide, as the accounting acquirer, and all references to the
consolidated financial statements of the Company apply to the historical
financial statements of Sound Worldwide prior to the transaction and the
consolidated financial statements of the Company subsequent to the transaction.
The Company’s shares have been restated retroactively to reflect the share
exchange ratio as at the date of the transaction in a manner similar to a stock
split.
On May
27, 2008, the Company and SWL, entered into a Share Purchase and Exchange
Agreement (the “Exchange Agreement”) with Best Allied, a wholly-owned subsidiary
of SWL, and Ms. Ivy S.K. Lam, a director and officer of Best Allied and a
stockholder of an aggregate of 6,063,750 shares of the Company’s Common Stock.
Pursuant to the Exchange Agreement, at a closing held on May 30, 2008, Ms. Lam
purchased from the Company and SWL 10,000 shares of Common Stock of Best Allied
owned by SWL, which constituted 100% of the issued and outstanding shares of
Best Allied, in exchange for 6,063,750 shares of the Company’s Common Stock held
by Ms. Lam, which constituted 100% of the shares of the Company’s Common Stock
held by Ms. Lam (the “Exchange”). The effective date of the Exchange is April 1,
2008.
Pursuant
to the agreement, Ms. Lam had agreed to the return and cancellation of 6,063,750
shares of our common stock held by her.
8
SOUND
WORLDWIDE HOLDINGS, INC.
NOTES TO
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated
in US Dollars)
1.
|
Organization
and nature of operations
(Continued)
|
As of
December 31, 2009, the subsidiaries of the Company include the
following:
Place
and date
|
Attributable
equity
|
Principal
|
|
Name of
company
|
of
incorporation
|
interest
held
|
activities
|
Sound
Worldwide
|
BVI
|
100%
|
Investment
holding
|
Limited
(“SWL”)
|
July,
28th,
1999
|
||
Asian
Point
|
BVI
|
100%
|
Manufacturing
and
|
Investment
Limited
(“Asian
Point”)
|
March
26th,
1997
|
trading
of denim fabrics
|
2.
|
Summary
of principal accounting policies
|
Basis of presentation and
consolidation
The
accompanying consolidated financial statements have been prepared in accordance
with generally accepted accounting principles in the United States of
America.
The
consolidated financial statements include the accounts of Sound Worldwide
Holdings, Inc. and its subsidiaries. All significant inter-company balances and
transactions have been eliminated in consolidation.
The
results of subsidiaries acquired or disposed of during the years are included in
the consolidated income statement from the effective date of acquisition or up
to the effective date of disposal.
The
Company also evaluates consolidation of entities under Financial Accounting
Standards Board (FASB) Interpretation No.46, “Consolidation of Variable Interest
Entities” (FIN 46). FIN 46 requires management to evaluate whether an entity or
interest is a variable interest entity and whether the Company is the primary
beneficiary. Consolidation is required if both of these criteria are met. The
Company does not have any variable interest entities requiring
consolidation.
On
June 29, 2009, the Financial Accounting Standards Board (FASB) established
the FASB Accounting Standards Codification (Codification) as the single source
of authoritative U.S. generally accepted accounting principles (GAAP) for all
nongovernmental entities. Rules and interpretive releases of the Securities and
Exchange Commission (SEC) are also sources of authoritative U.S. GAAP for SEC
registrants. The Codification does not change U.S. GAAP but takes previously
issued FASB standards and other U.S. GAAP authoritative pronouncements, changes
the way the standards are referred to, and includes them in specific topic
areas. The Codification is effective for financial statements issued for interim
and annual periods ending after September 15, 2009. The adoption of the
Codification did not have any impact on the Company’s financial
statements.
9
SOUND
WORLDWIDE HOLDINGS, INC.
NOTES TO
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated
in US Dollars)
2.
|
Summary
of principal accounting policies (continued)
|
Use of
estimates
In
preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management makes estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the dates of the financial
statements, as well as the reported amounts of revenues and expenses during the
reporting year. These accounts and estimates include, but are not limited to,
the valuation of accounts receivable, deferred income taxes and the estimation
on useful lives of plant and equipment. Actual results could differ from those
estimates.
Cash and cash
equivalents
Cash and
cash equivalents include all cash, deposits in banks and other highly liquid
investments with original maturities of three months or less at the date of
acquisition. These investments are carried at cost, which
approximates market value.
Trade accounts
receivable
Accounts
receivable are stated at original amount less allowance made for doubtful
receivables, if any, based on a review of all outstanding amounts at the year
end. An allowance is also made when there is objective evidence that
the Group will not be able to collect all amounts due according to original
terms of receivables. Bad debts are written off when
identified. The Group extends unsecured credit to customers in the
normal course of business and believes all accounts receivable in excess of the
allowances for doubtful receivables to be fully collectible. The
Group does not accrue interest on trade accounts receivable.
Inventory
Inventories,
which primarily consist of yarns, denim fabrics, garments and other textile
materials and products, are stated at the lower of cost or market. Cost is
determined by the first-in, first-out method. Write down of
potentially obsolete or slow-moving inventory is recorded based on management’s
assumptions about future demand and market conditions.
10
SOUND
WORLDWIDE HOLDINGS, INC.
NOTES TO
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated
in US Dollars)
2.
|
Summary
of principal accounting policies (Continued)
|
Property and
equipment
Property
and equipment are stated at cost less accumulated depreciation. Cost
represents the purchase price of the asset and other costs incurred to bring the
asset into its existing use. Maintenance, repairs and betterments,
including replacement of minor items, are charged to expense; major additions to
physical properties are capitalized.
Depreciation
of property and equipment is calculated on a straight-line method over the
estimated useful lives of the assets. The estimated useful lives are
as follows:-
Office
unit
|
5
years
|
Machinery
Furniture
and office equipment
Motor
vehicles
|
5-10
years
5
years
5
years
|
Upon sale
or disposition, the applicable amounts of asset cost and accumulated
depreciation are removed from the accounts and the net amount less proceeds from
disposal is charged or credited to income.
Impairment of long-lived
assets
In
accordance with FASB Accounting Standard Codification Topic 360 (ASC 360)
“Property, Plant and Equipment – Overall” (Formerly known as SFAS No. 144,
Accounting for Impairment or
Disposal of Long-Lived Assets ), long-lived assets, such as property and
equipment, are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to estimated undiscounted future
cash flows expected to be generated by the asset. If the carrying amount of an
asset exceeds its estimated future cash flows, an impairment charge is
recognized by the amount by which the carrying amount of the asset exceeds the
fair value of the asset. Assets to be disposed of are separately presented in
the balance sheet and reported at the lower of the carrying amount or fair value
less costs to sell, and are no longer depreciated. The assets and liabilities of
a disposal group classified as held for sale are presented separately in the
appropriate asset and liability sections of the balance sheet.
No
impairment of long-lived assets was recognized for the period
presented.
11
SOUND
WORLDWIDE HOLDINGS, INC.
NOTES TO
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated
in US Dollars)
2. Summary
of principal accounting policies (Continued)
Revenue
recognition
The
Company recognized revenue when the following fundamental criteria are met: (i)
persuasive evidence that an arrangement exists, (ii) delivery has occurred,
(iii) our price to the customer is fixed or determinable and (iv) collection of
the resulting accounts receivable is reasonably assured. These
criteria are usually met at the time of product shipment. The Company
does not recognize revenue until all customer acceptance requirements have been
met and no significant obligations remain, when applicable. Customer
purchase orders and/or contracts are generally used to determine the existence
of an arrangement. Shipping documents are used to verify product
delivery. The Company assesses whether a price is fixed or
determinable based upon the payment terms associated with the transaction and
whether the sales price is subject to refund or adjustment. The
Company assesses the collectability of the accounts receivable based primarily
upon the creditworthiness of the customer as determined by credit checks and
analysis, as well as the customer’s payment history.
Sales of
goods represent the invoiced values of goods, net of sales returns, trade
discounts and allowances. The Company records reductions to revenue
for estimated product returns and pricing adjustments in the same period that
the related revenue is recorded. The amount of these reductions is
based on historical sales returns, analysis of credit memo data, and other
factors known at the time. The amounts of reductions to revenue were
$Nil and $2,751 for the nine months ended December 31, 2009 and 2008,
respectively.
Shipping
and handling fees and costs
Costs incurred by the Group for shipping and handling, including costs paid to third-party transportation companies, to transport and deliver products to customers, are included in “Selling, general and administrative expenses”. Shipping and handling fees and costs amounted to $3,455 and $9,381 for the nine months ended December 31, 2009 and 2008, respectively.
12
SOUND
WORLDWIDE HOLDINGS, INC.
NOTES TO
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated
in US Dollars)
2.
|
Summary
of principal accounting policies (Continued)
|
Income
Taxes
Income
taxes are accounted for under the asset and liability method. Deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carry forwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment
date.
FASB
Accounting Standard Codification Topic 740 (ASC 740) “Income taxes”, (Formerly
known as FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes, an interpretation of Statement of Financial Accounting Standards No. 109
(“FIN 48”)). ASC 740 clarifies the accounting for uncertainty
in tax positions. This interpretation requires that an entity
recognizes in the consolidated financial statements the impact of a tax
position, if that position is more likely than not of being sustained upon
examination, based on the technical merits of the position. The
adoption of ASC 740 did not have any impact on the Group’s consolidated
financial statements.
Comprehensive
income
Other
comprehensive income refers to revenues, expenses, gains and losses that under
U.S. GAAP are included in comprehensive income but are excluded from net income
as these amounts are recorded as a component of stockholders’ equity. The
Company’s other comprehensive income represented foreign currency translation
adjustment.
13
SOUND
WORLDWIDE HOLDINGS, INC.
NOTES TO
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated
in US Dollars)
2.
|
Summary
of principal accounting policies (continued)
|
Foreign currency
translation
The
functional currency of the Group is Hong Kong dollars (“HK$”). The
Group maintains its financial statements in the functional
currency. Monetary assets and liabilities denominated in currencies
other than the functional currency are translated into the functional currency
at rates of exchange prevailing at the balance sheet
dates. Transactions denominated in currencies other than the
functional currency are translated into the functional currency at the exchanges
rates prevailing at the dates of the transaction. Exchange gains or
losses arising from foreign currency transactions are included in the
determination of net income for the respective periods.
In
translating the financial statements of the Company from its functional currency
into its reporting currency of United States dollars, balance sheet accounts are
translated using the closing exchange rate in effect at the balance sheet date
and income and expense accounts are translated using an average exchange rate
prevailing during the reporting period. Any translation adjustments resulting
are not included in determining net income but are included in cumulative other
comprehensive income (loss), a component of stockholders’ equity.
December
31,
|
December
31,
|
||
2009
|
2008
|
||
Quarter
end HK$ : US$ exchange rate
|
7.7555
|
7.7918
|
|
Average
quarterly HK$ : US$ exchange rate
|
7.7509
|
7.7980
|
Share-based
compensation
The
Company adopted FASB Accounting Standard Codification Topic 718 (ASC 718)
“Compensation – Stock Compensation” (Formerly known as SFAS No. 123R,
Share-Based Payment (“SFAS No. 123R”)). Under ASC 718, the Group measures the
cost of employee and consultant services received in exchange for an award of
equity instruments based on the grant-date fair value of the award and
recognizes the costs over the period the employee or consultant is required to
provide service in exchange for the award, which generally is the vesting
period.
Share-based
compensation expense included in selling, general and administrative expenses
for the nine month ended December 31, 2009 and 2008 was $95,042 and $nil,
respectively. Since share-based compensation is not tax deductible in Hong Kong,
the PRC and the United States, no related tax benefit has been
recognized.
Earnings per
share
Basic
earnings per share is computed by dividing net income attributable to ordinary
shareholders by the weighted average number of ordinary shares outstanding
during the year. Diluted earnings per share gives effect to all dilutive
potential common shares outstanding during the year. The weighted average number
of common shares outstanding is adjusted to include the number of additional
common shares that would have been outstanding if the dilutive potential common
shares had been issued.
14
SOUND
WORLDWIDE HOLDINGS, INC.
NOTES TO
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated
in US Dollars)
2.
|
Summary
of principal accounting policies (continued)
|
Commitments and
contingencies
Liabilities
for loss contingencies arising from claims, assessments, litigation, fines and
other sources are recorded when it is probable that a liability has been
incurred and the amount of the assessment can be reasonable
estimated.
Recently Issued Accounting
Pronouncements
ASC 805,
Business Combinations
(“ASC 805”) (formerly included under Statement of Financial Accounting
Standards No. 141 (revised 2007), Business Combinations)
contains guidance that was issued by the FASB in December 2007. It requires the
acquiring entity in a business combination to recognize all assets acquired and
liabilities assumed in a transaction at the acquisition-date fair value, with
certain exceptions. Additionally, the guidance requires changes to the
accounting treatment of acquisition related items, including, among other items,
transaction costs, contingent consideration, restructuring costs,
indemnification assets and tax benefits. ASC 805 also provides for a substantial
number of new disclosure requirements. ASC 805 also contains guidance that was
formerly issued as FSP FAS 141(R), Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination That Arise from
Contingencies which was intended to provide additional guidance
clarifying application issues regarding initial recognition and measurement,
subsequent measurement and accounting, and disclosure of assets and liabilities
arising from contingencies in a business combination. ASC 805 was effective for
business combinations initiated on or after the first annual reporting period
beginning after December 15, 2008. The Company implemented this guidance
effective January 1, 2009. Implementing this guidance did not have an
effect on the Company’s financial position or results of operations; however it
will likely have an impact on the Company’s accounting for future business
combinations, but the effect is dependent upon acquisitions, if any, that are
made in the future.
ASC 855,
Subsequent Events (“ASC
855”) (formerly Statement of Financial Accounting Standards No. 165, Subsequent Events) includes
guidance that was issued by the FASB in May 2009, and is consistent with current
auditing standards in defining a subsequent event. Additionally, the guidance
provides for disclosure regarding the existence and timing of a company’s
evaluation of its subsequent events. ASC 855 defines two types of subsequent
events, “recognized” and “non-recognized”. Recognized subsequent events provide
additional evidence about conditions that existed at the date of the balance
sheet and are required to be reflected in the financial statements.
Non-recognized subsequent events provide evidence about conditions that did not
exist at the date of the balance sheet but arose after that date and, therefore;
are not required to be reflected in the financial statements. However, certain
non-recognized subsequent events may require disclosure to prevent the financial
statements from being misleading. This guidance was effective prospectively for
interim or annual financial periods ending after June 15, 2009. The Company
implemented the guidance included in ASC 855 as of April 1, 2009. The
effect of implementing this guidance was not material to the Company’s financial
position or results of operations.
15
SOUND
WORLDWIDE HOLDINGS, INC.
NOTES TO
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated
in US Dollars)
3.
|
Accounts
receivable, net
|
Accounts
receivable consist of the following:
As
of
|
||||||||
December
31,
|
March
31,
|
|||||||
2009
|
2009
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
$
|
$
|
|||||||
Accounts
receivable
|
1,481,299 | 1,538,779 | ||||||
Less:
allowance for doubtful accounts
|
- | - | ||||||
1,481,299 | 1,538,779 |
The Group
has a credit policy in place and the exposure to credit risk is monitored on an
ongoing basis. Credit evaluations are performed on all customers
requiring credit over a certain amount.
4.
|
Inventories
|
Inventories
by major categories are summarized as follows:
As
of
|
||||||||
December
31,
|
March
31,
|
|||||||
2009
|
2009
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
$
|
$
|
|||||||
Raw
materials
|
- | 53,100 | ||||||
Work-in-progress
|
- | - | ||||||
Finished
goods
|
- | 84,160 | ||||||
- | 137,260 |
|
No
inventories were written off for the nine months ended December 31, 2009
and for the year ended March 31,
2009.
|
16
SOUND
WORLDWIDE HOLDINGS, INC.
NOTES TO
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated
in US Dollars)
5.
|
Property
and equipment, net
|
Property
and equipment consists of the following:
As
of
|
||||||||
December
31,
|
March
31,
|
|||||||
2009
|
2009
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
$
|
$
|
|||||||
Machinery
|
2,090,912 | 2,091,586 | ||||||
Furniture
and office equipment
|
593 | 593 | ||||||
Leasehold
improvement
|
- | - | ||||||
Motor
vehicles
|
46,145 | 46,161 | ||||||
Total
|
2,137,650 | 2,138,340 | ||||||
Less:
accumulated depreciation
|
(450,366 | ) | (246,496 | ) | ||||
Property
and equipment, net
|
1,687,284 | 1,891,844 | ||||||
Depreciation
expenses for the nine months ended December 31, 2009 and 2008 were $204,071 and
$111,459, of which $204,071 and $111,459 was included in cost of sales, and $Nil
and $Nil was included in selling, general and administrative expenses for the
nine months ended December 31, 2009 and 2008, respectively.
6.
|
Bank
borrowings and banking facilities
|
At
December 31, 2009, the group did not incur any bank borrowing and was not
granted any banking or credit facilities.
17
SOUND
WORLDWIDE HOLDINGS, INC.
NOTES TO
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated
in US Dollars)
7.
|
Share
based compensation
|
On March
9, 2009, the Board of Directors adopted the 2009 Equity Incentive Plan (the
“2009 Incentive Plan”) pursuant to which 6,000,000 shares of the Company’s
common stock are reserved for issuance upon exercise of stock options, and for
the issuance of stock appreciation rights, restricted stock awards and
performance shares. The purpose of the 2009 Incentive Plan is to provide
additional incentive to employees, directors, advisors and consultants. The 2009
Incentive Plan provides for a term of 10 years from the date of its adoption by
the Board of Directors, after which no awards may be made, unless the 2009
Incentive Plan is early terminated by the Board.
A summary
of non-vested equity share units issued under the 2009 Incentive Plan is as
follows:
Shares
|
Weighted
average grant date fair value
|
|||||
$
|
||||||
Balance
as of April 1, 2009
|
220,000
|
0.51
|
||||
Granted
on April 2, 2009
|
20,000
|
0.51
|
||||
Granted
on July 10, 2009
|
220,000
|
0.51
|
||||
Balance
as of December 31, 2009
|
460,000
|
0.51
|
The stock
awards vest equally over a period of one year from the date of
grant.
8.
|
(Loss)/income
per share
|
Basic
(loss)/income per share of common stock was calculated by dividing the net
(loss)/income by the weighted average number of shares of common stock
outstanding for the period.
There is
no dilution effect to the basic (loss)/income per share of common stock for the
periods presented.
18
SOUND
WORLDWIDE HOLDINGS, INC.
NOTES TO
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated
in US Dollars)
9.
|
Comprehensive
(loss)/income
|
Other
comprehensive (loss)/income refers to revenues, expenses, gains and losses that
under U.S. GAAP are included in comprehensive (loss)/income but are excluded
from net (loss)/income as these amounts are recorded as a component of
stockholders’ equity. The Company’s other comprehensive (loss)/income
represented foreign currency translation adjustment.
10.
|
Fair
value measurement
|
A
significant number of the Company’s financial instruments are carried at fair
value with changes in fair value recognized in earnings each period. The Company
adopted the provisions of FASB Accounting Standard Codification Topic 820 (ASC
820), “Fair Value Measurements and Disclosures” (Formerly known as SFAS No. 157
“Fair Value Measurement”). Under this standard, fair value is defined as the
price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date (an
exit price). In determining fair value, the Company uses various valuation
techniques. ASC 820, Fair Value Measurements and Disclosures establishes a
hierarchy for inputs used in measuring fair value that maximizes the use of
observable inputs and minimizes the use of unobservable inputs by requiring that
the most observable inputs be used when available.
11.
|
Subsequent
events
|
We have
evaluated significant events and transactions that occurred from January 1, 2010
through the date of this report and have determined that there were no events or
transactions other than those disclosed in this report, if any, that would
require recognition or disclosure in our Condensed Consolidated Financial
Statements for the quarterly period ended December 31,
2009.
19
Item 2. Management’s Discussion and
Analysis of Financial Condition and Results
of Operations.
CAUTIONARY
STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
Management’s
Discussion and Analysis contains various “forward looking statements” within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended,
regarding future events or the future financial performance of the Company that
involve risks and uncertainties. Certain statements included in this Form 10-Q,
including, without limitation, statements related to anticipated cash flow
sources and uses, and words including but not limited to “anticipates”,
“believes”, “plans”, “expects”, “future” and similar statements or expressions,
identify forward looking statements. Any forward-looking statements herein are
subject to certain risks and uncertainties in the Company’s business and any
changes in current accounting rules, all of which may be beyond the control of
the Company. The Company adopted at management’s discretion, the most
conservative recognition of revenue based on the most astringent guidelines of
the SEC. Management will elect additional changes to revenue recognition to
comply with the most conservative SEC recognition on a forward going accrual
basis as the model is replicated with other similar markets (i.e. SBDC). The
Company’s actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those set
forth therein.
Forward-looking
statements involve risks, uncertainties and other factors, which may cause our
actual results, performance or achievements to be materially different from
those expressed or implied by such forward-looking statements. Factors and risks
that could affect our results and achievements and cause them to materially
differ from those contained in the forward-looking statements include those
identified in the section titled “Risk Factors” in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2008, as well as other factors that
we are currently unable to identify or quantify, but that may exist in the
future.
In
addition, the foregoing factors may affect generally our business, results of
operations and financial position. Forward-looking statements speak only as of
the date the statement was made. We do not undertake and specifically decline
any obligation to update any forward-looking
statements.
The
following discussion of our financial condition and results of operations should
be read in conjunction with our unaudited financial statements and related notes
appearing elsewhere in this report.
Organizational History and
Operations
Sound
Worldwide Holdings, Inc. (the “Company”) and its subsidiaries (together, the
“Group”) are principally engaged in manufacturing and trading of denim fabrics
and garments. The Group owns production plants in Hong Kong and the People’s
Republic of China and its customers are mainly in the United States, Europe and
Japan.
On
October 25, 2007, Freedom 3, Inc. a Delaware corporation (“Freedom 3”), sold one
share of its common stock to Sound Worldwide Limited (“Sound Worldwide” or
“SWL”) for $1.00 and redeemed 100,000 shares of its common stock from its prior
sole stockholder constituting 100% of Freedom 3’s issued and outstanding shares
of its common stock prior to the sale, resulting in Sound Worldwide owning 100%
of Freedom 3. After the sale and redemption by Freedom 3, Sound Worldwide and
Freedom 3 entered into a Share Exchange Agreement, dated October 25, 2007, or
Exchange Agreement, pursuant to which each issued and outstanding share of Sound
Worldwide’s common stock and preferred stock was converted into 350 shares of
Freedom 3’s common stock and preferred stock, respectively, and all of the
issued and outstanding shares of Sound Worldwide’s common and preferred stock
were retired and cancelled, resulting in Freedom 3 owning 100% of Sound
Worldwide (the “Exchange”). This resulted in the stockholders of Sound Worldwide
to become stockholders of Freedom 3. The previous stockholder of Freedom was
then issued 300,000 shares of Freedom 3 as agreed previously. The one share of
Freedom’s common stock held by Sound Worldwide was then cancelled and Sound
Worldwide sold one share of its common stock to Freedom 3, which resulted in
Freedom 3 owning 100% of Sound Worldwide. Freedom 3 then changed its name to
Sound Worldwide Holdings, Inc.
20
For
accounting purposes, the Exchange has been treated as an acquisition of Freedom
3 by Sound Worldwide and as a recapitalization of Sound Worldwide (i.e. a
"reverse acquisition"), in which Sound Worldwide was deemed to be the accounting
acquirer. As a result of the Exchange, the historical consolidated financial
statements of the Company for periods prior to the date of the transaction are
those of Sound Worldwide, as the accounting acquirer, and all references to the
consolidated financial statements of the Company apply to the historical
financial statements of Sound Worldwide prior to the transaction and the
consolidated financial statements of the Company subsequent to the transaction.
The Company’s shares have been restated retroactively to reflect the share
exchange ratio as at the date of the transaction in a manner similar to a stock
split.
On May
27, 2008, the Company and SWL, entered into a Share Purchase and Exchange
Agreement (the “Exchange Agreement”) with Best Allied, a wholly-owned subsidiary
of SWL, and Ms. Ivy S.K. Lam, a director and officer of Best Allied and a
stockholder of an aggregate of 6,063,750 shares of the Company’s Common Stock.
Pursuant to the Exchange Agreement, at a closing held on May 30, 2008, Ms. Lam
purchased from the Company and SWL 10,000 shares of Common Stock of Best Allied
owned by SWL, which constituted 100% of the issued and outstanding shares of
Best Allied, in exchange for 6,063,750 shares of the Company’s Common Stock held
by Ms. Lam, which constituted 100% of the shares of the Company’s Common Stock
held by Ms. Lam (the “Exchange”). The effective date of the Exchange is April 1,
2008.
Pursuant
to the agreement, Ms. Lam had agreed to the return and cancellation of 6,063,750
shares of our common stock held by her.
As of
September 30, 2008, the subsidiaries of the Company include the
following:
þ Sound Worldwide Limited
(“SWL”), incorporated in the British Virgin Islands on July 28, 1999, 100% of
which is owned by the Company. SWL’s primary business is as an investment
holding company;
þ Asian Point Investment
Limited (“Asian Point”) , incorporated in the British Virgin Islands on March
26, 1997, 100% of which is owned by the Company. Asian Point’s primary business
is manufacturing and trading denim fabrics.
SIGNIFICANT ACCOUNTING
POLICIES
Basis
of presentation
The
accompanying consolidated financial statements have been prepared in accordance
with generally accepted accounting principles in the United States of America,
which require management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities, at the date of the financial statements and reported amount of
revenues and expenses during the reporting period.
Consolidation
The
consolidated financial statements include the accounts of Sound Worldwide
Holdings, Inc. and its subsidiaries. All significant inter-company balances and
transactions have been eliminated in consolidation.
The
results of subsidiaries acquired or disposed of during the period are included
in the consolidated income statement from the effective date of acquisition or
up to the effective date of disposal.
21
Revenue
Recognition
The
Company recognized revenue when the following fundamental criteria are met: (i)
persuasive evidence that an arrangement exists, (ii) delivery has occurred,
(iii) our price to the customer is fixed or determinable and (iv) collection of
the resulting accounts receivable is reasonably assured. These criteria are
usually met at the time of product shipment. The Company does not recognize
revenue until all customer acceptance requirements have been met and no
significant obligations remain, when applicable. Customer purchase orders and/or
contracts are generally used to determine the existence of an arrangement.
Shipping documents are used to verify product delivery. The Company assesses
whether a price is fixed or determinable based upon the payment terms associated
with the transaction and whether the sales price is subject to refund or
adjustment. The Company assesses the collectability of the accounts receivable
based primarily upon the creditworthiness of the customer as determined by
credit checks and analysis, as well as the customer’s payment
history.
Sales of
Goods represent the invoiced values of goods, net of sales returns, trade
discounts and allowances. The Company records reductions to revenue for
estimated product returns and pricing adjustments in the same period that the
related revenue is recorded. The amount of these reductions is based on
historical sales returns, analysis of credit memo data, and other factors known
at the time. The amounts of reductions to revenue were $2,571 and $27,005 for
the nine months ended December 31, 2008 and 2007, respectively.
Trade
Accounts Receivable
Accounts
receivable are stated at original amount less allowance made for doubtful
receivables, if any, based on a review of all outstanding amounts at the year
end. An allowance is also made when there is objective evidence that the Group
will not be able to collect all amounts due according to original terms of
receivables. Bad debts are written off when identified. The Group extends
unsecured credit to customers in the normal course of business and believes all
accounts receivable in excess of the allowances for doubtful receivables to be
fully collectible. The Group does not accrue interest on trade accounts
receivable.
Inventory
Inventories,
which primarily consist of yarns, denim fabrics, garments and other textile
materials and products, are stated at the lower of cost or market. Cost is
determined by the first-in, first-out method. Write down of potentially obsolete
or slow-moving inventory is recorded based on management’s assumptions about
future demand and market conditions.
Income
Taxes
Income
taxes are accounted for under the asset and liability method. Deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carry forwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment
date.
Share-based
Compensation
Effective
January 1, 2006, the Group adopted Statements of Financial Accounting
Standards (“SFAS”) No. 123R, Share-Based Payment (“SFAS
No. 123R”). Under SFAS No. 123R, the Group measures the cost of
employee and consultant services received in exchange for an award of equity
instruments based on the grant-date fair value of the award and recognizes the
costs over the period the employee or consultant is required to provide service
in exchange for the award, which generally is the vesting period.
22
COMPARISON OF RESULTS OF
OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 2009 AND
2008
Revenues
Our
revenues increased by $64,081, or 149.7%, from $42,820 in the three months ended
December 31, 2008 to $106,901 in the three months ended December 31, 2009. The
increase was mainly attributable to the increasing selling price of the products
as a result of a decrease in competition. In overall, there is an
increase in both sales volume and amount.
Cost of
Revenues
For the
three months ended December 31, 2009, our total cost of revenues increased by
$97,691, or 121.4%, to $178,182 from $80,491 for the three months ended December
31, 2008. This increase was primarily due to the increase in sales volume, which
resulted from the decrease in competition.
Gross
Loss
Our gross
loss amount increased by $33,610, or 89.2%, from $37,671 for the three months
ended December 31, 2008 to $71,281 for the three months ended December 31, 2009.
Gross loss percentage recorded 66.7% and 88% for the quarter ended December 31,
2009 and 2008, respectively. The decreased gross loss amount and percentage was
mainly due to the increased in selling price.
Operating
Expenses
Our total
operating expenses (selling, general & administrative expenses (SG&A))
for the three months ended December 31, 2009, decreased by $3,708 or 5.2%, to
$67,009 from $70,717 for the three months ended December 31, 2008. The decrease
was in line with the control expenses..
Other
Income
Our other
income, mainly consisting of commission and handling income, for the three
months ended December 31, 2009 and 2008 were $nil and $nil,
respectively.
(Loss)/income from
Operations
Our
(loss)/income from operations for the three months ended December 31, 2009 and
2008 were $(138,290) and $(108,388), respectively. The increase was primarily
due to the increase in cost of revenues.
Depreciation
Depreciation
expense for office units, machinery, furniture equipment and motor vehicles,
increased for the three months ended December 31, 2009 to $68,024 from $37,153
for the same period in 2008. The increase in depreciation expense was mainly due
to the full period effect of the depreciation charge for three months ended
December 31, 2009 as a result of the purchases of machinery made in the prior
fiscal year.
Interest
Expense
Interest
expense, net, decreased for the three months ended December 31, 2009 to $5 from
$3,705 for the three months ended December 31, 2008. This decrease was due to
the decrease in average bank borrowing balances.
Net
(Loss)/Income
We had
net loss of $138,295 for the three months ended December 31, 2009 as compared to
net loss of $112,373 for the three months ended December 31, 2008. The increased
net result was due to an increase in cost of revenues.
23
COMPARISON OF RESULTS OF
OPERATIONS FOR THE NINE MONTHS ENDED DECEMBER 31, 2009 AND
2008
Revenues
Our
revenues decreased by $1,831,923, or 44.5%, from $4,113,370 in the nine months
ended December 31, 2008 to $2,281,447 in the nine months ended December 31,
2009. The decrease was mainly attributable to the reduction in selling price of
the products as a result of an increase in competition. In overall,
there is a decrease in both sales volume and amount.
Cost of
Revenues
For the
nine months ended December 31, 2009, our total cost of revenues decreased by
$1,590,206, or 42.3%, to $2,165,266 from $3,755,472 for the nine months ended
December 31, 2008. This decrease was primarily due to the decrease in sales
volume, which resulted from the increase in competition.
Gross
Profit
Our gross
profit amount decreased by $241,717, or 67.5%, from $357,898 for the nine months
ended December 31, 2008 to $116,181 for the nine months ended December 31, 2009.
Gross profit percentage recorded 5.1% and 8.7% for the nine months ended
December 31, 2009 and 2008, respectively. The decreased gross profit amount and
percentage was mainly due to the reduction in selling price.
Operating
Expenses
Our total
operating expenses (selling, general & administrative expenses (SG&A))
for the nine months ended December 31, 2009, decreased by $50,351 or 16.9%, to
$247,640 from $297,991 for the nine months ended December 31, 2008. The decrease
was resulted from the decrease in revenue.
Other
Income
Our other
income, mainly consisting of commission and handling income, for the nine months
ended December 31, 2009 and 2008 were $nil and $48, respectively. This decrease
was primarily due to the decrease in provision of handling
services.
Income from
Operations
Our
income from operations for the nine months ended December 31, 2009 and 2008 were
$(131,459) and $59,955, respectively. The decrease was primarily due to the
decrease in revenue.
Loss on Disposal of Best
Allied
Our loss
on our disposal of Best Allied for the nine months ended December 31, 2008 of
$276,041 was in relation to the disposal of Best Allied on April 1,
2008.
Depreciation
Depreciation
expense for office units, machinery, furniture equipment and motor vehicles,
increased for the nine months ended December 31, 2009 to $204,071, from $111,459
for the same period in 2008. The increase in depreciation expense was mainly due
to the full period effect of the depreciation charge for nine months ended
December 31, 2009 as a result of the purchases of machinery made in the prior
fiscal year.
Interest
Expense
Interest
expense, net, increased for the nine months ended December 31, 2009 to $31,292
from $15,744 for the nine months ended December 31, 2008. This increase was due
to the increase in average bank borrowing balances.
Net Loss
We had
net loss of $162,751 for the nine months ended December 31, 2009 as compared to
net loss of $232,110 for the nine months ended December 31, 2008. The decreased
net loss was due to the loss on disposal of Best Allied.
24
Accounts
Receivable
Accounts
receivable, decreased from $1,538,779 as of March 31, 2009 to $1,481,299 as of
December 31, 2009. This decrease was primarily due to the decrease in revenue.
The Group has a credit policy in place and the exposure to credit risk is
monitored on an ongoing basis. Credit evaluations are performed on all customers
requiring credit over a certain amount.
Inventories
At
December 31, 2009, we did not have any inventory on hand, compared to $137,260
at March 31, 2009. Our inventories consist of raw materials, products which are
work-in-progress, and finished goods. Our raw materials decreased from $53,100
at March 31, 2009 to $nil at December 31, 2009 primarily due to the decrease in
purchases during the quarter ended December 31, 2009, as compared to the last
quarter ended March 31, 2009. Our Work-in-Progress inventory recorded $0 both at
March 31 and December 31, 2009. Our Finished Goods decreased from $84,160 to nil
primarily due to more goods delivered to the customers near quarter ended
December 31, 2009, as compared to the year ended March 31, 2009. No inventories
were written off for the nine months ended December 31, 2009.
Current
Liabilities
Total
current liabilities, consisting of accounts payable, bank and other borrowings
and accrued expenses and other liabilities, decreased from $587,750 as of March
31, 2009 to $240,379 as of December 31, 2009. This decrease was primarily
contributed by the decrease in bank borrowings.
Accounts
Payable
Accounts
payable, which typically operates on a monthly cycle, increased from $43,178 as
of March 31, 2009 to $91,094 as of December 31, 2009. The increase was mainly
due to the longer credit terms granted by the material suppliers.
Bank and Other
Borrowings
Bank and
other borrowings, which consist of bank overdrafts and other borrowings,
decreased from $340,066 as of March 31, 2009 to $nil as of December 31, 2009.
This decrease was primarily due to repayment of all bank borrowings during the
nine months ended December 31, 2009.
Banking
Facilities:
At
December 31, 2009, the group did not incur any bank borrowing and was not
granted any banking or credit facilities.
Accrued Expenses and Other
Liabilities
Accrued
expenses decreased from $204,506 as of March 31, 2009 to $149,285 as of December
31, 2009. Accrued expenses consist of legal and professional fees, accrued staff
related costs and other accruals and liabilities. Other accruals and liabilities
consist of payables on general administrative and selling expenses. The decrease
in accrued expenses and other liabilities was primarily due to fewer invoices
received and unpaid near quarter ended December 31, 2009.
25
LIQUIDITY AND CAPITAL
RESOURCES
Operating
Activities
Net cash
provided by operating activities totaled $346,768 for the nine months ended
December 31, 2009, which was a decrease from the net cash provided by operating
activities, which totaled $1,122,592 for the same period of 2008. This net cash
provided by operating activities was primarily attributable to an increase in
accounts payable and a decrease in inventory level, but offset in part by an
increase in accounts receivable and other receivables.
Investing
Activities
Net cash
used in investing activities totaled $nil for the nine months ended December 31,
2009, as compared to the net cash used in investing activities of $389,520 for
nine months ended December 31, 2008. The use of cash from investing activities
represented purchases of property and equipment.
Financing
Activities
Net cash
used in financing activities totaled $340,158 for nine months ended December 31,
2009, as compared to $939,765 used in financing activities for the nine months
ended December 31, 2008. The net cash used in financing activities was due to a
net repayment of bank borrowings of $340,158 for the nine months ended December
31, 2009 as compared to a net repayment of bank borrowings of $939,765 for the
nine months ended December 31, 2008.
The
summary of our cash flow statement was as follows:
For
the Nine Months Ended
|
||||||||
December
31,
2009
|
December
31,
2008
|
|||||||
Net
cash provided by operating activities
|
$
|
346,768
|
$
|
1,122,592
|
||||
Net
cash used in investing activities
|
$
|
-
|
$
|
(389,520)
|
)
|
|||
Net
cash used in financing activities
|
$
|
(340,185)
|
)
|
$
|
(939,765)
|
)
|
||
Effect
of exchange rate on cash
|
$
|
1,365
|
$
|
1,161
|
||||
Net
increase/(decrease) in cash
|
$
|
7,975
|
$
|
(205,532)
|
)
|
|||
Cash
at beginning of period
|
$
|
7,989
|
$
|
288,356
|
||||
Cash
at end of period
|
$
|
15,964
|
$
|
82,824
|
Impact of Inflation and
Changing Prices
We were
not impacted by inflation during the past two fiscal years in any material
respect. Interest rate hikes have increased the rental cost of our vault cash.
As the interest rates increase and vault cash costs increase, this will have a
less favorable impact on our income.
The
following table sets forth the Company Contractual Payment
Obligations:
Contractual
Obligation
|
Payment
by Period
|
|||||||||||||||||||
Total
|
Less
than
1
year
|
1-3
years
|
3-5
years
|
More
than
5
years
|
||||||||||||||||
Long-Term
Obligations
|
$
|
104,615
|
$
|
104,615
|
—
|
—
|
—
|
|||||||||||||
Capital
Obligations
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Operating
Lease Obligations
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Other
Long—Term Liabilities
Reflected
on the Registrant’s Balance Sheet under GAAP
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Total
|
$
|
104,615
|
$
|
104,615
|
—
|
—
|
—
|
26
Off-Balance Sheet
Arrangements
We did
not have any off-balance sheet arrangements that have or are reasonably likely
to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to
investors.
Recent Accounting
Pronouncements
Recent
accounting pronouncements that the Company has adopted or that will be required
to adopt in the future are summarized below.
On
September 30, 2009, the Company adopted updates issued by the Financial
Accounting Standards Board (FASB) to the authoritative hierarchy of GAAP. These
changes establish the FASB Accounting Standards CodificationTM (ASC) as the
source of authoritative accounting principles recognized by the FASB to be
applied by nongovernmental entities in the preparation of financial statements
in conformity with GAAP. Rules and interpretive releases of the Securities and
Exchange Commission (“SEC”) under authority of federal securities laws are also
sources of authoritative GAAP for SEC registrants. The FASB will no longer issue
new standards in the form of Statements, FASB Staff Positions, or Emerging
Issues Task Force Abstracts; instead the FASB will issue Accounting Standards
Updates. Accounting Standards Updates will not be authoritative in their own
right as they will only serve to update the Codification. These changes and the
Codification itself do not change GAAP. Other than the manner in which new
accounting guidance is referenced, the adoption of these changes had no impact
on the Condensed Consolidated Financial Statements.
In June
2009, the FASB issued guidance now codified as ASC Topic 105, “Generally Accepted Accounting
Principles” (“ASC 105”), which establishes the FASB Accounting Standards
Codification as the source of GAAP to be applied to nongovernmental agencies.
ASC 105 explicitly recognizes rules and interpretive releases of the SEC under
authority of federal securities laws as authoritative GAAP for SEC registrants.
ASC 105 became effective for interim or annual periods ending after
September 15, 2009. ASC 105 does not have a material impact on the
Company’s consolidated financial statements presented hereby.
In May
2009, the FASB issued guidance now codified as ASC Topic 855, “Subsequent Events” (“ASC
855”). The pronouncement modifies the definition of what qualifies as a
subsequent event—those events or transactions that occur following the balance
sheet date, but before the financial statements are issued, or are available to
be issued—and requires companies to disclose the date through which it has
evaluated subsequent events and the basis for determining that date. The Company
adopted the provisions of ASC 855 in the second quarter of 2009, in accordance
with the effective date.
WHERE YOU CAN FIND MORE
INFORMATION
You are
advised to read this Form 10-Q in conjunction with other reports and documents
that we file from time to time with the SEC. In particular, please read our
Quarterly Reports on Form 10-Q, Annual report on Form 10-K, and Current Reports
on Form 8-K that we file from time to time. You may obtain copies of these
reports directly from us or from the SEC at the SEC’s Public Reference Room at
100 F. Street, N.E. Washington, D.C. 20549, and you may obtain information about
obtaining access to the Reference Room by calling the SEC at 1-800-SEC-0330. In
addition, the SEC maintains information for electronic filers at its website
http://www.sec.gov.
27
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
We do not
hold any derivative instruments and do not engage in any hedging
activities.
Item
4. Controls and Procedures
a) Evaluation of Disclosure
Controls and Procedures
Our
management team, including our principal executive officer and our principal
financial officer, evaluated the effectiveness of the design and operation of
our disclosure controls and procedures as such term is defined under
Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as
amended (Exchange Act), as of the last day of the fiscal period covered by this
report, September 30, 2009. The term disclosure controls and procedures
means our controls and other procedures that are designed to ensure that
information required to be disclosed by us in the reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported, within
the time periods specified in the SEC’s rules and forms. Disclosure
controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is accumulated and
communicated to management, including our principal executive and principal
financial officer, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure. Based on this evaluation,
our principal executive officer and our principal financial officer concluded
that our disclosure controls and procedures were effective as of December 31,
2009.
Our
principal executive officer and our principal financial officer, are responsible
for establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Exchange Act Rules 13a-15(f).
Our principal executive officer and our principal financial officer are
required to base their assessment of the effectiveness of our internal control
over financial reporting on a suitable, recognized control framework, such as
the framework developed by the Committee of Sponsoring Organizations
(COSO). The COSO framework, published in Internal Control-Integrated
Framework, is known as the COSO Report. Our principal executive
officer and our principal financial officer, have chosen the COSO framework on
which to base their assessment. Based on this evaluation, our principal
executive officer and our principal financial officer concluded that our
internal control over financial reporting was effective as of December 31,
2009.
Because of its inherent limitations,
internal control over financial reporting may not prevent or detect
misstatements. Therefore, even those systems determined to be effective can
provide only reasonable assurance of achieving their control objectives.
Furthermore, smaller reporting companies face additional limitations. Smaller
reporting companies employ fewer individuals and find it difficult to properly
segregate duties. Often, one or two individuals control every aspect of the
Company's operation and are in a position to override any system of internal
control. Additionally, smaller reporting companies tend to utilize general
accounting software packages that lack a rigorous set of software
controls.
28
It should
be noted that any system of controls, however well designed and operated, can
provide only reasonable and not absolute assurance that the objectives of the
system are met. In addition, the design of any control system is based in part
upon certain assumptions about the likelihood of certain events. Because of
these and other inherent limitations of control systems, there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions, regardless of how remote.
b)
Changes in Internal Control over Financial Reporting.
During
the Quarter ended December 31, 2009, there was no change in our internal control
over financial reporting (as such term is defined in Rule 13a-15(f) under the
Exchange Act) that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
29
PART
II – OTHER INFORMATION
Item 1. Legal
Proceedings.
None.
There
have been no material changes to the risk factors previously discussed in Item
1A of the Company’s Form 10-K for the year ended March 31, 2009, including
but not limited, to the following:
Our
Common Stock Is Subject To Penny Stock Regulation
Our
shares are subject to the provisions of Section 15(g) and Rule 15g-9 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), commonly
referred to as the "penny stock" rule. Section 15(g) sets forth certain
requirements for transactions in penny stocks and Rule 15g-9(d)(1) incorporates
the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act.
The Commission generally defines penny stock to be any equity security that has
a market price less than $5.00 per share, subject to certain exceptions. Rule
3a51-1 provides that any equity security is considered to be penny stock unless
that security is: registered and traded on a national securities exchange
meeting specified criteria set by the Commission; authorized for quotation on
the NASDAQ Stock Market; issued by a registered investment company; excluded
from the definition on the basis of price (at least $5.00 per share) or the
registrant's net tangible assets; or exempted from the definition by the
Commission. Since our shares are deemed to be "penny stock", trading in the
shares will be subject to additional sales practice requirements on
broker/dealers who sell penny stock to persons other than established customers
and accredited investors.
FINRA
Sales Practice Requirements May Also Limit A Stockholder's Ability To Buy And
Sell Our Stock.
In
addition to the “penny stock” rules described above, the Financial Industry
Regulatory Authority (FINRA) has adopted rules that require that in recommending
an investment to a customer, a broker-dealer must have reasonable grounds for
believing that the investment is suitable for that customer. Prior to
recommending speculative low priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information
about the customer's financial status, tax status, investment objectives and
other information. Under interpretations of these rules, FINRA believes that
there is a high probability that speculative low priced securities will not be
suitable for at least some customers. FINRA requirements make it more difficult
for broker-dealers to recommend that their customers buy our common stock, which
may limit your ability to buy and sell our stock and have an adverse effect on
the market for our shares.
We
May Not Have Access To Sufficient Capital To Pursue Our Business And Therefore
Would Be Unable To Achieve Our Planned Future Growth.
We intend
to pursue a growth strategy that includes development of the Company business
and technology. Currently we have limited capital which is
insufficient to pursue our plans for development and growth. Our
ability to implement our growth plans will depend primarily on our ability to
obtain additional private or public equity or debt financing. We are
currently seeking additional capital. Such financing may not be
available at all, or we may be unable to locate and secure additional capital on
terms and conditions that are acceptable to us. Our failure to obtain
additional capital will have a material adverse effect on our
business.
30
Failure
To Achieve And Maintain Effective Internal Controls In Accordance
With Section 404 Of The Sarbanes-Oxley Act Could Have A Material
Adverse Effect On Our Business And Operating Results.
It may be
time consuming, difficult and costly for us to develop and implement the
additional internal controls, processes and reporting procedures required by the
Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal
auditing and other finance staff in order to develop and implement appropriate
additional internal controls, processes and reporting procedures. If we are
unable to comply with these requirements of the Sarbanes-Oxley Act, we may not
be able to obtain the independent accountant certifications that the
Sarbanes-Oxley Act requires of publicly traded companies.
If we
fail to comply in a timely manner with the requirements of Section 404 of
the Sarbanes-Oxley Act regarding internal control over financial reporting or to
remedy any material weaknesses in our internal controls that we may identify,
such failure could result in material misstatements in our financial statements,
cause investors to lose confidence in our reported financial information and
have a negative effect on the trading price of our common stock.
Pursuant
to Section 404 of the Sarbanes-Oxley Act and current SEC regulations,
beginning with our annual report on Form 10-K for our fiscal period ending
December 31, 2009, we will be required to prepare assessments regarding internal
controls over financial reporting and beginning with our annual report on Form
10-K for our fiscal period ending December 31, 2009, furnish a report by our
management on our internal control over financial reporting. We have begun the
process of documenting and testing our internal control procedures in order to
satisfy these requirements, which is likely to result in increased general and
administrative expenses and may shift management time and attention from
revenue-generating activities to compliance activities. While our management is
expending significant resources in an effort to complete this important project,
there can be no assurance that we will be able to achieve our objective on a
timely basis. There also can be no assurance that our auditors will be able to
issue an unqualified opinion on management’s assessment of the effectiveness of
our internal control over financial reporting. Failure to achieve and maintain
an effective internal control environment or complete our Section 404
certifications could have a material adverse effect on our stock
price.
In
addition, in connection with our on-going assessment of the effectiveness of our
internal control over financial reporting, we may discover “material weaknesses”
in our internal controls as defined in standards established by the Public
Company Accounting Oversight Board, or the PCAOB. A material weakness is a
significant deficiency, or combination of significant deficiencies, that results
in more than a remote likelihood that a material misstatement of the annual or
interim financial statements will not be prevented or detected. The PCAOB
defines “significant deficiency” as a deficiency that results in more
than a remote likelihood that a misstatement of the financial statements
that is more than inconsequential will not be prevented or
detected.
In the
event that a material weakness is identified, we will employ qualified personnel
and adopt and implement policies and procedures to address any material
weaknesses that we identify. However, the process of designing and implementing
effective internal controls is a continuous effort that requires us to
anticipate and react to changes in our business and the economic and regulatory
environments and to expend significant resources to maintain a system of
internal controls that is adequate to satisfy our reporting obligations as a
public company. We cannot assure you that the measures we will take will
remediate any material weaknesses that we may identify or that we will implement
and maintain adequate controls over our financial process and reporting in the
future.
31
Any
failure to complete our assessment of our internal control over financial
reporting, to remediate any material weaknesses that we may identify or to
implement new or improved controls, or difficulties encountered in their
implementation, could harm our operating results, cause us to fail to meet our
reporting obligations or result in material misstatements in our financial
statements. Any such failure could also adversely affect the results of the
periodic management evaluations of our internal controls and, in the case of a
failure to remediate any material weaknesses that we may identify, would
adversely affect the annual auditor attestation reports regarding the
effectiveness of our internal control over financial reporting that are required
under Section 404 of the Sarbanes-Oxley Act. Inadequate internal controls
could also cause investors to lose confidence in our reported financial
information, which could have a negative effect on the trading price of our
common stock.
Risks Related to the Peoples
Republic of China (“PRC”)
Certain
political and economic considerations relating to PRC could adversely affect our
company.
The PRC
is passing from a planned economy to a market economy. The Chinese government
has confirmed that economic development will follow a model of market economy
under socialism. While the PRC government has pursued economic reforms since its
adoption of the open-door policy in 1978, a large portion of the PRC economy is
still operating under five-year plans and annual state plans adopted by the
government that set down national economic development goals. Through these
plans and other economic measures, such as control on foreign exchange, taxation
and restrictions on foreign participation in the domestic market of various
industries, the PRC government exerts considerable direct and indirect influence
on the economy. Many of the economic reforms are unprecedented or experimental
for the PRC government, and are expected to be refined and improved. Other
political, economic and social factors can also lead to further readjustment of
such reforms. This refining and readjustment process may not necessarily have a
positive effect on our operations or future business development. Our operating
results may be adversely affected by changes in the PRC’s economic and social
conditions as well as by changes in the policies of the PRC government, which we
may not be able to foresee, such as changes in laws and regulations (or the
official interpretation thereof), measures which may be introduced to control
inflation, changes in the rate or method of taxation, and imposition of
additional restrictions on currency conversion.
The
recent nature and uncertain application of many PRC laws applicable to us create
an uncertain environment for business operations and they could have a negative
effect on us.
The PRC
legal system is a civil law system. Unlike the common law system, such as the
legal system used in the United States, the civil law system is based on written
statutes in which decided legal cases have little value as precedents. In 1979,
the PRC began to promulgate a comprehensive system of laws and has since
introduced many laws and regulations to provide general guidance on economic and
business practices in the PRC and to regulate foreign investment. Progress has
been made in the promulgation of laws and regulations dealing with economic
matters such as corporate organization and governance, foreign investment,
commerce, taxation and trade. The promulgation of new laws, changes of existing
laws and the abrogation of local regulations by national laws could have a
negative impact on our business and business prospects. In addition, as these
laws, regulations and legal requirements are relatively recent, their
interpretation and enforcement involve significant uncertainty.
If
relations between the United States and China worsen, our stock price may
decrease and we may have difficulty accessing the U.S. capital
markets.
At
various times during recent years, the United States and China have had
disagreements over political and economic issues. Controversies may arise in the
future between these two countries. Any political or trade controversies between
the United States and China could adversely affect the market price of our
common stock and our ability to access U.S. capital markets.
Governmental
control of currency conversion may affect the value of your
investment.
The PRC
government imposes controls on the convertibility of Renminbi into foreign
currencies and, in certain cases, the remittance of currency out of the PRC.
Currently, the Renminbi is not a freely convertible currency. Shortages in the
availability of foreign currency may restrict our ability to remit sufficient
foreign currency to pay dividends, or otherwise satisfy foreign currency
denominated obligations. Under existing PRC foreign exchange regulations,
payments of current account items, including profit distributions, interest
payments and expenditures from the transaction, can be made in foreign
currencies without prior approval from the PRC State Administration of Foreign
Exchange by complying with certain procedural requirements. However, approval
from appropriate governmental authorities is required where Renminbi is to be
converted into foreign currency and remitted out of China to pay capital
expenses such as the repayment of loans and corporate debt obligations
denominated in foreign currencies.
32
The PRC
government may also at its discretion restrict access in the future to foreign
currencies for current account transactions. If the foreign exchange control
system prevents us from obtaining sufficient foreign currency to satisfy our
currency demands, we may not be able to pay certain of our expenses as they come
due.
It
may be difficult to effect service of process and enforcement of legal judgments
upon our company and our officers and directors because some of them reside
outside the United States.
As our
operations are presently based in China and some of our key directors and
officers reside outside the United States, service of process on our key
directors and officers may be difficult to effect within the United States.
Also, substantially all of our assets are located outside the United States and
any judgment obtained in the United States against us may not be enforceable
outside the United States. We have appointed Norbert Sporns, our Chief Executive
Officer and President, as our agent to receive service of process in any action
against our company in the United States.
Item 2. Unregistered
Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults
Upon Senior Securities.
None.
Item
4. Submission of Matters to a Vote of Security
Holders.
None.
Item 5. Other
Information.
There is
no information with respect to which information is not otherwise called for by
this form.
Item
6. Exhibits.
Exhibit
Number
|
||||
Certification
of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.1 | |||
Certification
of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2 | |||
Certification
of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.1 | |||
Certification
of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2 |
33
SIGNATURES
Pursuant to the requirements of the
Securities and Exchange Act of 1934, the Registrant has duly caused this Report
to be signed on its behalf by the undersigned thereunto duly
authorized.
Sound Worldwide Holdings, Inc.
(Registrant)
/s/
Roger
Kwok Wing Fan
|
|
Roger
Kwok Wing Fan
|
Date:
February 12,
2010
|
Chief
Executive Officer
|
|
and
Director
|
|
/s/
Tony Ka
Kin Chui
|
|
Tony
Ka Kin Chui
|
Date:
February 12,
2010
|
Chief
Financial Officer
|
|
and
Director
|
34