NIVS IntelliMedia Technology Group, Inc. - FORM 10-Q/A

Attached files

file	filename
EX-32.1 - NIVS IntelliMedia Technology Group, Inc.	v174985_ex32-1.htm
EX-31.1 - NIVS IntelliMedia Technology Group, Inc.	v174985_ex31-1.htm
EX-31.2 - NIVS IntelliMedia Technology Group, Inc.	v174985_ex31-2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1 on

FORM 10-Q/A

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2009

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 000-52933

NIVS IntelliMedia Technology Group, Inc.

(Exact name of Registrant as specified in its charter)

Delaware		20-8057809
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

NIVS Industry Park, No. 29-31, Shuikou Road, Huizhou, Guangdong, China 516006

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

86-752-3125862

(COMPANY’S TELEPHONE NUMBER, INCLUDING AREA CODE)

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

Indicate by check mark whether the registrant 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. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” as defined in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o

Non-accelerated filer x	Smaller reporting company o

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

The number of shares outstanding of the registrant’s Common Stock, par value $0.0001 per share, was 40,675,347 as of November 11, 2009.

EXPLANATORY NOTE

This Amendment No. 1 (this “Amendment”) on Form 10-Q/A, which amends and restates items identified below with respect to the Form 10-Q, filed by NIVS IntelliMedia Technology Group, Inc. (“we” or the “Company”) with the Securities and Exchange Commission (the “SEC”) on November 12, 2009 (the “Original Filing”), is being filed to reflect revisions to Financial Statements, Management’s Discussion and Analysis of Financial Condition and Results of Operation, Controls and Procedures, and Exhibits.

The Company has revised its financial statements for the three and nine months ended September 30, 2009 and as of September 30, 2009 to reflect various adjustments to account for restatements made due to (i) an overstatement of selling expenses of approximately $618,000 for the three months ended September 30, 2009, and (ii) an addition of “Cost of goods sold”, “Selling expense” and “Other general and administrative” expense for the three and nine months ended September 30, 2009 in the amount of approximately $870,000 related to the Company’s non-payment of contributions to PRC housing provident funds for its employees as required under PRC regulations. In addition, we have reclassified restricted cash in the Company’s Consolidated Statements of Cash Flows for the nine months ended September 30, 2009 and 2008 from “Cash flows from operating activities” to “Cash flows from investing activities”.

This Form 10-Q/A only amends information in Item 1 (Financial Statements), Item 1A (Risk Factors), Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operation), Item 4 (Controls and Procedures), and Item 6 (Exhibits). Other Items presented in the Original Filing are not being amended but are restated without change in this Amendment for ease of reference.

As a result of this Amendment, the certifications pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002, filed as exhibits to our Original Filing have been revised, re-executed and re-filed as of the date of this Amendment. Except for the foregoing amended and restated information, this Amendment continues to describe conditions as of the date of the Original Filing, and the disclosures contained herein have not been updated to reflect events, results or developments that have occurred after the Original Filing, or to modify or update those disclosures affected by subsequent events unless otherwise indicated in this report. Among other things, forward-looking statements made in the Original Filing have not been revised to reflect events, results or developments that have occurred or facts that have become known to us after the date of the Original Filing, and such forward-looking statements should be read in their historical context. This Amendment should be read in conjunction with the Company’s filings made with the SEC subsequent to the Original Filing, including any amendments to those filings.

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC.

FORM 10-Q/A

For the Quarterly Period Ended September 30, 2009

INDEX

				Page
Part I	Financial Information

	Item 1.	Financial Statements

		a)	Consolidated Balance Sheets as of September 30, 2009 (Unaudited) (Restated) and December 31, 2008	1

		b)	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2009 (Restated) and 2008 (Unaudited)	2

		c)	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2009 (Restated) and 2008 (Unaudited)	3

		d)	Notes to Consolidated Financial Statements (Unaudited)	4

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		32

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		40

	Item 4.	Controls and Procedures		40

Part II	Other Information

	Item 1.	Legal Proceedings		42

	Item 1A.	Risk Factors		42

	Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds		45

	Item 3.	Default Upon Senior Securities		45

	Item 4.	Submission of Matters to a Vote of Security Holders		45

	Item 5.	Other Information		45

	Item 6.	Exhibits		46

Signatures				47

NIVS IntelliMedia Technology Group, Inc. and Subsidiaries

Consolidated Balance Sheets

(In US Dollars)

	September 30,		December 31,
	2009		2008
	(Unaudited) (Restated)

Assets
Current Assets
Cash and cash equivalents	$	2,286,326	$	461,504
Trade receivables, net (Note 4)		29,526,807		20,364,356
VAT refundable		228,845		1,094,090
Inventories, net (Note 6)		22,440,402		11,279,832
Restricted cash (Note 11)		5,579,619		11,681,595
Prepaid expenses and other receivables		24,682		81,690
Total current assets		60,086,681		44,963,067
Property and equipment, net (Note 7)		55,302,005		56,331,487
Advances to suppliers (Note 5)		14,558,721		15,286,028
Intangible assets, net (Note 8)		2,301,176		2,343,383
Total Assets	$	132,248,583	$	118,923,965

Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable—trade	$	4,434,623	$	2,020,363
Customer deposit (Note 9)		65,042		1,393,171
Accrued liabilities and other payable		1,819,937		1,441,922
Various taxes payable		1,959,416		470,860
Short-term loans (Note 10)		40,387,647		35,871,715
Wages payable		526,202		800,744
Bank notes payable (Note 11)		8,742,092		18,849,201
Corporate tax payable		4,932,266		2,744,518
Total current liabilities		62,867,225		63,592,494
Due to shareholder (Note 12)		-		7,842,780
Total liabilities		62,867,225		71,435,274

Commitments and contingencies (Note 16)		-		-

Equity
NIVS IntelliMedia Technology Group, Inc.'s shareholder equity
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, 0 shares outstanding at September 30, 2009 and December 31, 2008		-		-
Common stock, $0.0001 par value, 100,000,000 shares authorized, 40,675,347 and 36,855,714 shares issued and outstanding at September 30, 2009 and December 31, 2008, respectively (Note 2)		4,068		3,686
Additional paid-in capital		21,717,239		12,663,513
Accumulated other comprehensive income		3,932,687		3,960,012
Statutory surplus reserve fund (Note 14)		3,568,869		3,568,869
Retained earnings (unrestricted)		38,695,199		26,193,371
Total NIVS IntelliMedia Technology Group, Inc. Shareholders' Equity		67,918,062		46,389,451
Noncontrolling interest		1,463,296		1,099,240
Total Equity		69,381,358		47,488,691
Total Liabilities & Equity	$	132,248,583	$	118,923,965

The accompanying notes are an integral part of these consolidated financial statements.

NIVS IntelliMedia Technology Group, Inc. and Subsidiaries

Consolidated Statements of Operations

(In US Dollars)

(Unaudited)

	For The Three Months Ended						For The Nine Months Ended
	September 30,						September 30,
	2009			2008			2009			2008
	(Restated)						(Restated)

Revenue	$	52,384,695		$	49,411,468		$	122,501,145		$	101,048,363
Other Sales		70,741			164,939			223,190			320,992
Cost of Goods Sold		(40,956,192	)		(38,261,969	)		(95,226,516	)		(77,852,802	)
Gross Profit		11,499,244			11,314,438			27,497,819			23,516,553

Selling Expenses		2,327,577			1,286,796			5,595,689			2,649,900

General and administrative
Amortization		24,270			18,003			60,063			51,491
Depreciation		83,903			87,859			248,227			249,068
Bad debts		-			424,299			-			808,401
Merger cost		-			1,783,586			-			1,783,586
Stock-based compensation		-			765,000			-			765,000
Others general and administrative (Note 13)		1,154,369			857,584			3,119,359			1,891,291
Total general and administrative		1,262,542			3,936,331			3,427,649			5,548,837
Research and development		1,122,003			261,141			2,457,478			668,323
Total operating expenses		4,712,122			5,484,268			11,480,816			8,867,060

Income from operations		6,787,122			5,830,170			16,017,003			14,649,493

Other income (expenses)
Government grant		335,459			21,506			402,382			21,506
Interest income		1			250,664			6			393,946
Interest expense		(404,087	)		(517,857	)		(1,290,312	)		(1,563,094	)
Imputed interest		-			(147,620	)		-			(446,953	)
Sundry income (expense), net		-			(31,544	)		9,981			(22,370	)
Total other income (expenses)		(68,627	)		(424,851	)		(877,943	)		(1,616,965	)

Income before noncontrolling interest and income taxes		6,718,495			5,405,319			15,139,060			13,032,528
Income taxes (Note 15)		(1,033,814	)		(645,936	)		(2,309,683	)		(1,621,020	)
Net income		5,684,681			4,759,383			12,829,377			11,411,508
Net income attributable to the noncontrolling interest		(146,805	)		(196,195	)		(327,549	)		(363,328	)
Net income attributable to NIVS IntelliMedia Technology Group, Inc.	$	5,537,876		$	4,563,188		$	12,501,828		$	11,048,180

Basic earnings per share - net income attributable to NIVS's common shareholders	$	0.14		$	0.13		$	0.32		$	0.37

Weighted-average shares outstanding, Basic		40,675,347			34,147,201			39,595,543			29,746,845

Diluted earnings per share - net income attributable to NIVS's common shareholders	$	0.14		$	0.13		$	0.31		$	0.37

Weighted-average shares outstanding, Diluted		40,675,347			34,844,197			39,862,552			29,979,177

The accompanying notes are an integral part of these consolidated financial statements.

NIVS IntelliMedia Technology Group, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In US Dollars)

(Unaudited)

	For The Nine Months Ended
	September 30,
	2009			2008
	(Restated)
Cash Flows From Operating Activities
Net Income	$	12,829,377		$	11,411,508
Adjustments to reconcile net income to net cash provided by operating activities:
Imputed interest		-			446,953
Bad debts		-			808,401
Depreciation		4,380,877			3,575,811
Amortization		60,063			51,491
Stock-based compensation		-			765,000
Changes in operating assets and liabilities:
Account receivable-trade		(9,162,451	)		(17,268,951	)
Interest receivables		-			(393,919	)
Advance to suppliers for purchases		727,307			(9,583,376	)
Prepaid expenses and deposits		57,008			(2,569,116	)
Inventories, net		(11,160,570	)		10,499,518
VAT refundable		865,245			-
Accounts payable, accrued liabilities and customer deposits		1,464,146			(4,925,735	)
Various taxes payable		1,488,556			795,962
Wages payable		(274,542	)		(237,039	)
Corporate tax payable		2,187,748			604,280
Net cash provided by (used in) operating activities		3,462,764			(6,019,212	)

Cash Flows From Investing Activities
Purchases of property and equipment		(3,270,839	)		(8,176,812	)
Purchases of intangible assets		(55,161	)		(28,674	)
Due from related parties		-			(5,406,525	)
Changes in restricted cash		6,101,976			(2,334,918	)
Short-term investment, marketable securities		-			568,063
Net cash provided by (used in) investing activities		2,775,976			(15,378,866	)

Cash Flows From Financing Activities
Increase (decrease) in loans payable		4,515,932			3,020,190
Increase (decrease) in notes payable		(10,107,109	)		10,607,071
Capital lease payable		-			-
Net proceeds of share issuance		1,212,382			10,487,474
Due to shareholder		-			(1,875,133	)
Net cash provided by (used in) financing activities		(4,378,795	)		22,239,602

Effect of exchange rate changes on cash		(35,123	)		833,883

Net increase in cash and cash equivalents		1,824,822			1,675,407
Cash and cash equivalents, beginning of period		461,504			1,438,651
Cash and cash equivalents, end of period	$	2,286,326		$	3,114,058

Supplemental disclosure information:
Interest expense paid	$	1,290,312		$	1,045,237
Income taxes paid	$	2,442,340		$	975,084
Supplemental financial activities:
Exchange of Li debt for common stock	$	7,841,726		$	-
Issuance of shares for warrants exercise	$	946,640		$	-

The accompanying notes are an integral part of these consolidated financial statements.

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 1 - RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

On February 17, 2010, the Company discovered that its financial statements for the three months ended September 30, 2009 should not be relied upon due to an error in the accounting record of selling expenses, resulting in an overstatement of the Company’s selling expenses for the period. The Company also noted that its financial statements for the three and nine months ended September 30, 2009 should not be relied upon due to an error in the accounting treatment of unrecorded liabilities, resulting in an understatement of the Company’s liabilities and expenses for the periods.

Authorized officers of the Company’s Board of Directors concluded on February 17, 2010 that the Company should restate the financial statements described above and file an amendment to the Quarterly Report on Form 10Q filed with the Securities and Exchange Commission (the “SEC”) on November 12, 2010.

In addition, the Company reclassified the change in restricted cash on its Consolidated Statement of Cash Flows for the nine months ended September 30, 2009 and 2008 from “Cash flows from operating activities” to “Cash flows from investing activities”.

Effects of Restatements

To correct the above noted errors, the Company has restated the accompanying Consolidated Balance Sheets as of September 30, 2009, its Consolidated Statements of Operations for the three and nine months ended September 30, 2009, and the Consolidated Statements of Cash Flows for the nine months ended September 30, 2009, and the notes to the consolidated financial statements.

The following is a summary items affected by the corrections described above:

Consolidated Balance Sheets

	As of September 30, 2009
	As previously
	reported		Adjustments			As restated
Accrued liabilities and other payable	$	949,937	$	870,000		$	1,819,937
Corporate tax payable		5,064,923		(132,657	)		4,932,266
Total current liabilities		62,129,882		737,343			62,867,225
Total liabilities		62,129,882		737,343			62,867,225
Retained earnings (unrestricted)		39,414,109		(718,910	)		38,695,199
Total NIVS IntelliMedia Technology Group, Inc. Shareholder’s Equity		68,636,972		(718,910	)		67,918,062
Noncontrolling interest		1,481,729		(18,433	)		1,463,296
Total Equity	$	70,118,701	$	(737,343	)	$	69,381,358

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 1 - RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (CONTINUED)

Effects of Restatements (continued)

Consolidated Statements of Operations

	For the three months ended
	September 30, 2009
	As previously
	reported			Adjustments			As restated
Cost of goods sold	$	(40,334,025	)	$	(622,167	)	$	(40,956,192	)
Gross profit		12,121,411			(622,167	)		11,499,244
Selling expenses		2,884,365			(556,788	)		2,327,577
Other general and administrative		967,960			186,409			1,154,369
Total general and administrative		1,076,133			186,409			1,262,542
Total operating expenses		5,082,501			(370,379	)		4,712,122
Income from operations		7,038,910			(251,788	)		6,787,122
Income before noncontrolling interest and income taxes		6,970,283			(251,788	)		6,718,495
Income taxes		(1,166,471	)		132,657			(1,033,814	)
Net income		5,803,812			(119,131	)		5,684,681
Net income attributable to the noncontrolling interest		(165,238	)		18,433			(146,805	)
Net income attributable to NIVS IntelliMedia Technology Group, Inc.	$	5,638,574		$	(100,698	)	$	5,537,876

	For the nine months ended
	September 30, 2009
	As previously
	reported			Adjustments			As restated
Cost of goods sold	$	(94,604,349	)	$	(622,167	)	$	(95,226,516	)
Gross profit		28,119,986			(622,167	)		27,497,819
Selling expenses		5,534,265			61,424			5,595,689
Other general and administrative		2,932,950			186,409			3,119,359
Total general and administrative		3,241,240			186,409			3,427,649
Total operating expenses		11,232,983			247,833			11,480,816
Income from operations		16,887,003			(870,000	)		16,017,003
Income before noncontrolling interest and income taxes		16,009,060			(870,000	)		15,139,060
Income taxes		(2,442,340	)		132,657			(2,309,683	)
Net income		13,566,720			(737,343	)		12,829,377
Net income attributable to the noncontrolling interest		(345,982	)		18,433			(327,549	)
Net income attributable to NIVS IntelliMedia Technology Group, Inc.	$	13,220,738			(718,910	)		12,501,828
Basic earnings per share - net income attributable to NIVS's common shareholders	$	0.33			(0.01	)		0.32
Diluted earnings per share - net income attributable to NIVS's common shareholders	$	0.33		$	(0.02	)	$	0.31

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 1 - RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (CONTINUED)

Effects of Restatements (continued)

Consolidated Statements of Cash Flows

	For the nine months ended
	September 30, 2009
	As previously
	reported		Adjustments			As restated
Net income	$	13,566,720	$	(737,343	)	$	12,829,377
Accounts payable, accrued liabilities and customer deposits		594,146		870,000			1,464,146
Corporate tax payable	$	2,320,405	$	(132,657	)	$	2,187,748

Reclassification of Items on Statement of Cash Flows

The change of the restricted cash of $6,101,976 and $2,334,918 for the nine months ended September 30, 2009 and 2008, respectively, which were originally reflected in the movement of restricted cash under “Cash flows from operating activities”, was reclassified to reflect in the movement of restricted cash under “Cash flows from investing activities” on the Company’s Consolidated Statements of Cash Flows.

The reclassification has no impact on the Consolidated Statements of Operations for the nine months ended September 30, 2009 and 2008, and the Consolidated Balance Sheets as of September 30, 2009 and December 31, 2008.

The following is a summary of the changes described above:

	For the nine months ended September 30, 2009
	As previously reported		As revised
Net cash provided by operating activities	$	9,564,740	$	3,462,764
Net cash provided by (used in) investing activities	$	(3,326,000)	$	2,775,976

	For the nine months ended September 30, 2008
	As previously reported		As revised
Net cash used in operating activities	$	(8,354,130)	$	(6,019,212)
Net cash used in investing activities	$	(13,043,948)	$	(15,378,866)

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 2 - DESCRIPTION OF BUSINESS AND ORGANIZATION

NIVS IntelliMedia Technology Group, Inc. (“NIVS USA”) was incorporated in the State of Delaware on December 7, 2006. NIVS USA was originally organized as a “blank check” shell company to investigate and acquire a target company or business seeking the perceived advantages of being a publicly held corporation. On July 25, 2008, NIVS USA (i) closed a share exchange transaction pursuant to which it became the 100% parent of Niveous Holding Company Limited (“Niveous”) (ii) assumed the operations of Niveous and its subsidiaries, and (iii) changed its name from SRKP 19, Inc. to NIVS IntelliMedia Technology Group, Inc.

Because the shares issued by the NIVS USA to the shareholders of Niveous and their designees in the aforementioned transaction represented a controlling interest, the transaction has been accounted for as a recapitalization or reverse merger with Niveous being considered the acquirer. The accompanying consolidated financial statements have been restated on a retroactive basis to present the capital structure of Niveous as though it were the reporting entity.

Niveous was incorporated in British Virgin Islands (BVI) on October 31, 2003. As at September 30, 2009, Niveous had 50,000 capital shares authorized with $1.00 par value and 10,000 shares issued and outstanding.

In April, 2004, Niveous acquired 97.5% of ownership of NIVS (HZ) Audio & Video Tech Company Limited (“NIVS PRC”) from its original shareholders. NIVS PRC is the main operating company located in Huizhou, PRC. It engages in research, development, production, marketing and sales of audio & video electronic equipment for the domestic and international markets.

In April, 2005, Niveous acquired 100% of ownership of NIVS International (H.K.) Limited (“NIVS HK”) under an ownership transfer agreement. NIVS HK is a holding company incorporated in November 2004 in Hong Kong, PRC with the original sole shareholder Mr. Li Tianfu. Pursuant to the transfer agreement, Niveous agreed to pay Mr. Li Tianfu 1M HKD for the ownership transfer.

In February 2006, NIVS PRC established a branch company NIVS (HZ) Audio & Video Tech Company Limited Shenzhen Branch (“NIVS Shenzhen”) located in Shenzhen, PRC. NIVS Shenzhen is currently performing sales and marketing for the Company’s products.

In November 2007, Niveous entered an ownership transfer agreement to transfer its whole ownership of NIVS PRC to NIVS HK. After the restructuring, NIVS PRC became a subsidiary of NIVS HK.

In June 2008, NIVS HK entered an ownership transfer agreement to transfer its whole ownership of NIVS PRC to Niveous. Pursuant to the agreement, Niveous agreed to pay NIVS HK 50M HKD within three months. After the restructuring, NIVS PRC became a subsidiary of Niveous. As a result, Niveous and Mr. Li Tianfu hold 97.5% and 2.5% of total interests of NIVS PRC, respectively.

In June 2008, Niveous entered into a share exchange agreement with SRKP 19, Inc., a Delaware corporation, and all of the shareholders of Niveous. Pursuant to the exchange agreement, as it was amended (the “Exchange Agreement”), SRKP 19 agreed to issue an aggregate of 27,546,667 shares of its common stock in exchange for all of the issued and outstanding securities of Niveous (the “Share Exchange”).The Share Exchange closed in July 2008. Upon the closing of the Share Exchange on July 25, 2008, SRKP 19 issued an aggregate of 27,546,667shares of its common stock to the shareholders of Niveous and their designees in exchange for all of the issued and outstanding securities of Niveous. Immediately after the closing of the Share Exchange, SRKP 19 changed its corporate name from “SRKP 19, Inc.” to “NIVS IntelliMedia Technology Group, Inc.” For accounting purposes, the Share Exchange was treated as a reverse acquisition.

Prior to the closing of the Share Exchange, the NIVS USA’s shareholders canceled an aggregate of 4,756,390 shares held by them such that there were 2,340,000 shares of common stock outstanding immediately prior to the Share Exchange. The shareholders also canceled an aggregate of 6,149,723 warrants such that the shareholders held an aggregate of 946,667 warrants immediately after the Share Exchange.

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 2 - DESCRIPTION OF BUSINESS AND ORGANIZATION (CONTINUED)

Concurrently with the close of the Share Exchange, NIVS USA conducted an initial closing of a private placement transaction pursuant to which NIVS USA sold an aggregate of 5,239,460 shares of common stock at $1.80 per share, for gross proceeds of approximately $9.4 million. On August 12, 2008, NIVS USA conducted the second and final closing of the private placement pursuant to which NIVS USA sold an aggregate of 1,304,587 shares of common stock at $1.80 per share, for gross proceeds of approximately $2.3 million. Accordingly, NIVS USA sold a total of 6,544,047 shares of common stock in the private placement for aggregate gross proceeds of $11.8 million. WestPark Capital, Inc., the placement agent for the Private Placement, was paid a commission equal to 6.5% of the gross proceeds from the financing, in addition to a $130,000 success fee for the Share Exchange, for an aggregate fee of approximately $896,000. NIVS USA filed a registration statement covering the common stock sold in the Private Placement within 30 days of the closing of the Share that was declared effective by the Securities and Exchange Commission ("SEC") in March 2009.

On December 24, 2008, NIVS USA entered into an agreement with Mr. Li pursuant to which the outstanding debt that the Company owed to Mr. Li would be converted into shares of NIVS USA common stock. According to the agreement, the shares would be issued upon the closing of its public offering. The public offering closed on March 18, 2009 and NIVS USA issued 2,240,493 shares of common stock to Mr. Li, which is equal to the debt amount of approximately $7.8 million divided by the offering price of public offering, which was $3.50 per share. As a result of the conversion of the debt into equity, the debt is no longer outstanding, and NIVS USA and its subsidiaries do not have any outstanding debt owed to Mr. Li. As a result of the shares issued in the debt conversion, the number of shares that Mr. Li beneficially owns increased from 12,204,667 shares to 14,445,160 shares.

In March 2009, NIVS USA completed a public offering consisting of 550,000 shares of common stock. WestPark Capital, Inc. acted as underwriter in the public offering. Shares of common stock were sold to the public at a price of $3.50 per share, for gross proceeds of approximately $1.9 million. Compensation for WestPark Capital’s services included discounts and commissions of $192,500, a $57,750 non-accountable expense allowance, road show expenses of approximately of $10,000, and legal counsel fees (excluding blue sky fees) of $40,000. WestPark Capital also received a warrant to purchase 55,000 shares of common stock at an exercise price of $4.20 per share. The warrant, which has a term of five years, is not exercisable until at least one-year from the date of issuance. The warrant also carries registration rights.

In April 2009, the underwriter to the Company’s public offering that closed in March 2009 exercised its over-allotment option to purchase an additional of 82,500 shares of common stock. The shares were sold to the underwriter at a price of $3.50 per share for gross proceeds of $288,750. Compensation incurred in the public offering included discounts and commissions of $28,875, an $8,663 non-accountable expense allowance, other expenses of $4,821, and legal counsel fees of $42,500.

NIVS USA and its subsidiaries – Niveous, NIVS HK, NIVS PRC and NIVS Shenzhen shall be collectively referred throughout as the “Company”.

To summarize the paragraphs above, the organization and ownership structure of the Company is currently as follows:

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Basis of preparation

The consolidated financial statements have been prepared in accordance with US GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation SX. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2008 and notes thereto contained in the Report on Form 10-K of the Company as filed with the United States Securities and Exchange Commission (the “SEC”). Interim results are not necessarily indicative of the results for the full year.

In the opinion of the management, the consolidated financial statements reflect all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position of the Company as of September 30, 2009 and December 31, 2008, and the results of operations and cash flows for the nine months ended September 30, 2009 and 2008, respectively.

The Company has evaluated subsequent events through the date that the financial statements were issued, which was November 10, 2009 the date of the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2009.

b. Basis of consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries. Significant inter-company transactions have been eliminated in consolidation.

c. Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting year. Because of the use of estimates inherent in the financial reporting process, actual results could differ from those estimates.

d. Fair values of financial instruments

The Company adopted the standard for the Disclosures About Fair Value of Financial Instruments, which defines financial instruments and requires fair value disclosures of those financial instruments. On January 1, 2008, the Company adopted the standard for “Fair Value Measurements,” which defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosures requirements for fair value measures. Current assets and current liabilities qualified as financial instruments and management believes their carrying amounts are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and if applicable, their current interest rate is equivalent to interest rates currently available. The three levels are defined as follow:

Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value.

As of the balance sheet date, the estimated fair values of the financial instruments were not materially different from their carrying values as presented due to the short maturities of these instruments and that the interest rates on the borrowings approximate those that would have been available for loans of similar remaining maturity and risk profile at respective period-ends. Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates the hierarchy disclosures each quarter.

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

e. Advertising

The Company expenses advertising costs as incurred. Advertising is included in selling expenses for financial reporting. The Company spent $1,246,367, $25,218, $3,606,650 and $33,004 on advertising expenses for the three and nine months ended September 30, 2009 and 2008, respectively.

f. Cash and cash equivalents

Cash and cash equivalents include cash on hand, demand deposits with banks and liquid investments with an original maturity of three months or less.

g. Accounts receivable

Accounts receivable are recognized and carried at original invoiced amount less an allowance for uncollectible accounts, as needed.

The Company uses the aging method to estimate the valuation allowance for anticipated uncollectible receivable balances. Under the aging method, bad debts percentages determined by management based on historical experience as well as current economic climate are applied to customers’ balances categorized by the number of months the underlying invoices have remained outstanding. The valuation allowance balance is adjusted to the amount computed as a result of the aging method. When facts subsequently become available to indicate that the amount provided as the allowance was incorrect, an adjustment which classified as a change in estimate is made.

h. Inventories

Inventories are stated at the lower of cost, as determined on a weighted average basis, or market. Costs of inventories include purchase and related costs incurred in bringing the products to their present location and condition. Market value is determined by reference to selling prices after the balance sheet date or to management’s estimates based on prevailing market conditions. The management writes down the inventories to market value if it is below cost. The management also regularly evaluates the composition of its inventories to identify slow-moving and obsolete inventories to determine if valuation allowance is required.

i. Property and equipment

Property and equipment are initially recognized and recorded at cost. Gains or losses on disposals are reflected as gain or loss in the period of disposal. The cost of improvements that extend the life of plant and equipment are capitalized. These capitalized costs may include structural improvements, equipment and fixtures. All ordinary repairs and maintenance costs are expensed as incurred.

Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets:

Building		38 years
Molds		8 years
Machinery and Equipment		10 years
Electronic Equipment		5 years
Leasehold Improvements		5 years
Office and Other Equipment		5 years
Automobiles		5 years

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

j. Intangible assets

The Company’s intangible assets are stated at cost less accumulated amortization and are comprised of land-use rights and computer software use rights. Land-use rights are related to land the Company occupies in Guangdong Province, PRC and are being amortized on a straight-line basis over a period of 40 years. Computer software use rights are being amortized on a straight-line basis over a period of 10 years. All trademarks use rights are being amortized on a straight-line basis over a period of 10 years.

k. Impairment of long-lived assets

The Company accounts for impairment of plant and equipment and amortizable intangible assets in accordance with the standard of “Accounting for Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of”, which requires the Company to evaluate a long-lived asset for recoverability when there is event or circumstance that indicate the carrying value of the asset may not be recoverable. An impairment loss is recognized when the carrying amount of a long-lived asset or asset group is not recoverable (when carrying amount exceeds the gross, undiscounted cash flows from use and disposition) and is measured as the excess of the carrying amount over the asset’s (or asset group’s) fair value.

l. Comprehensive income

The Company has adopted the standard of “Reporting Comprehensive Income”, which establishes standards for reporting and displaying comprehensive income, its components, and accumulated balances in a full-set of general-purpose financial statements. Accumulated other comprehensive income represents the accumulated balance of foreign currency translation adjustments.

m. Revenue recognition

The Company generates revenues from the sales of audio and video electronic products and subcontracting activities. Sales are recognized when the following four revenue criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed or determinable, and collectability is reasonably assured. Sales are presented net of value added tax (VAT). No return allowance is made as products returns are insignificant based on historical experience.

n. Government grants

Grants from the PRC government are recognized at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions. Government grants are recognized as other income or gains in the period received and as assets, decreases of liabilities, or expenses depending on the form of the grants received.

o. Research and development costs

Research and development costs are expensed to operations as incurred. The Company spent $1,122,003, $261,141, $2,457,478 and $668,323, on direct research and development (“R&D”) efforts in the three and nine months ended September 30, 2009 and 2008, respectively.

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

p. Income taxes

The Company accounts for income taxes in accordance with the accounting standard which requires an asset and liability approach for financial accounting and reporting for income taxes and allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.

The Company adopted the accounting standard for uncertainty in income taxes which prescribes a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the Company has taken or expects to take on a tax return (including a decision whether to file or not to file a return in a particular jurisdiction).

q. Foreign currency translation

The functional currency of Niveous and NIVS HK is Hong Kong Dollar (“HKD”). The Company maintains its financial statements using 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 exchange 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 (loss) for the respective periods.

The functional currency of NIVS PRC and NIVS Shenzhen is the Renminbi (“RMB”), the PRC’s currency. These two companies maintain their financial statements using their own 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 exchange 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 (loss) for the respective periods.

For financial reporting purposes, the financial statements of Niveous and NIVS HK, which are prepared in HKD, are translated into the Company’s reporting currency, United States Dollars (“USD”); the financial statements of NIVS PRC and NIVS Shenzhen, which are prepared in RMB, are translated into the Company’s reporting currency, USD. 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 the average exchange rate prevailing during the reporting period. Adjustments resulting from the translation, if any, are included in accumulated other comprehensive income (loss) in stockholder’s equity.

The exchange rates used for foreign currency translation were as follows (USD$1 = RMB):

Period Covered	Balance Sheet Date Rates		Average Rates
Year ended December 31, 2008		6.81710		6.93722
Nine months ended September 30, 2009		6.81756		6.82175
Three months ended September 30, 2009		6.81756		6.84110
Nine months ended September 30, 2008		6.83530		6,97500
Three months ended September 30, 2008		6.83530		6.82082

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

q. Foreign currency translation (continued)

The exchange rates used for foreign currency translation were as follows (USD$1 = HKD):

Period Covered	Balance Sheet Date Rates		Average Rates
Nine months ended September 30, 2009		7,75194		7.75014
Three months ended September 30, 2009		7.79154		7.75102
Nine months ended September 30, 2008		7.79730		7.76880
Three months ended September 30, 2008		7.79730		7.80007

r. Customer deposit

The customer deposits are recorded as liability when the Company receives it and recognized as revenue after the total amount is paid off upon the delivery of the products.

s. Related parties

A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

t. Recently issued accounting pronouncements

In June 2009, the Financial Accounting Standards Board (FASB) issued a standard that established the FASB Accounting Standards Codification (ASC) and amended the hierarchy of generally accepted accounting principles (ASC) and amended the hierarchy of generally accepted accounting principles (GAAP) such that the ASC became the single source of authoritative nongovernmental U.S. GAAP. The ASC did not change current U.S. GAAP, but was intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place. All previously existing accounting standard documents were superseded and all other accounting literature not included in the ASC is considered non-authoritative. New accounting standards issued subsequent to June 30, 2009 are communicated by the FASB through Accounting Standards Updates (ASUs). The Company adopted the ASC on July 1, 2009. This standard did not have an impact on the Company’s consolidated results of operations or financial condition. However, throughout the notes to the consolidated financial statements references that were previously made to various former authoritative U.S. GAAP pronouncements have been changed to coincide with the appropriate section of the ASC.

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

t. Recently issued accounting pronouncements (continued)

In December 2007, the FASB issued a new standard which established the accounting for and reporting of noncontrolling interests (NCIs) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCIs (previously referred to as minority interests) be treated as a separate component of equity, not as a liability (as was previously the case); that increases and decreases in the parent’s ownership interest that leave control intact be treated as equity transactions, rather than as step acquisitions or dilution gains or losses; and that losses of a partially owned consolidated subsidiary be allocated to the NCI even when such allocation might result in a deficit balance. This standard also required changes to certain presentation and disclosure requirements. The Company adopted the standard beginning January 1, 2009. The provisions of the standard were applied to all NCIs prospectively, except for the presentation and disclosure requirements, which were applied retrospectively to all periods presented. As a result, upon adoption, the Company retroactively reclassified the “Minority interest in subsidiaries” balance previously included in the “Other liabilities” section of the consolidated balance sheet to a new component of equity with respect to NCIs in consolidated subsidiaries. The adoption also impacted certain captions previously used on the consolidated statement of income, largely identifying net income including NCI and net income attributable to the Company. The adoption of this standard did not have a material impact on the Company’s consolidated financial position or results of operations.

In June 2009, the FASB issued a new standard regarding the accounting for transfers of financial assets amending the existing guidance on transfers of financial assets to, among other things, eliminate the qualifying special-purpose entity concept, include a new unit of account definition that must be met for transfers of portions of financial assets to be eligible for sale accounting, clarify and change the derecognition criteria for a transfer to be accounted for as a sale, and require significant additional disclosure. The standard is effective for new transfers of financial assets beginning January 1, 2010. The adoption of this standard is not expected to have a material impact on the Company’s consolidated results of operations or financial condition.

In June 2009, the FASB issued an accounting standard that revised the consolidation guidance for variable-interest entities. The modifications include the elimination of the exemption for qualifying special purpose entities, a new approach for determining who should consolidate a variable-interest entity, and changes to when it is necessary to reassess who should consolidate a variable-interest entity. The standard is effective January 1, 2010. The Company is currently evaluating the impact of this standard, but would not expect it to have a material impact on the Company’s consolidated results of operations or financial condition.

In August 2009, the FASB issued ASU No. 2009-05, Measuring Liabilities at Fair Value, which provides additional guidance on how companies should measure liabilities at fair value under ASC 820. The ASU clarifies that the quoted price for an identical liability should be used. However, if such information is not available, a entity may use, the quoted price of an identical liability when traded as an asset, quoted prices for similar liabilities or similar liabilities traded as assets, or another valuation technique (such as the market or income approach). The ASU also indicates that the fair value of a liability is not adjusted to reflect the impact of contractual restrictions that prevent its transfer and indicates circumstances in which quoted prices for an identical liability or quoted price for an identical liability traded as an asset may be considered level 1 fair value measurements. The ASU is effective October 1, 2009. The Company is currently evaluating the impact of this standard, but would not expect it to have a material impact on the Company’s consolidated results of operations or financial condition.

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

t. Recently issued accounting pronouncements (continued)

In September 2009, the FASB issued ASU No. 2009-12, Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), that amends ASC 820 to provide guidance on measuring the fair value of certain alternative investments such as hedge funds, private equity funds and venture capital funds. The ASU indicates that, under certain circumstance, the fair value of such investments may be determined using net asset value (NAV) as a practical expedient, unless it is probable the investment will be sold at something other than NAV. In those situations, the practical expedient cannot be used and disclosure of the remaining actions necessary to complete the sale is required. The ASU also requires additional disclosures of the attributes of all investments within the scope of the new guidance, regardless of whether an entity used the practical expedient to measure the fair value of any of its investments. This ASU is effective October 1, 2009. The Company is currently evaluating the impact of this standard, but would not expect it to have a material impact on the Company’s consolidated results of operations or financial condition.

In October 2009, the FASB issued ASU No. 2009-13, Multiple-Deliverable Revenue Arrangements—a consensus of the FASB Emerging Issues Task Force, that provides amendments to the criteria for separating consideration in multiple-deliverable arrangements. As a result of these amendments, multiple-deliverable revenue arrangements will be separated in more circumstances than under existing U.S. GAAP. The ASU does this by establishing a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable will be based on vendor-specific objective evidence if available, third-party evidence if vendor-specific objective evidence is not available, or estimated selling price if neither vendor-specific objective evidence nor third-party evidence is available. A vendor will be required to determine its best estimate of selling price in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis. This ASU also eliminates the residual method of allocation and will require that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method, which allocates any discount in the overall arrangement proportionally to each deliverable based on its relative selling price. Expanded disclosures of qualitative and quantitative information regarding application of the multiple-deliverable revenue arrangement guidance are also required under the ASU. The ASU does not apply to arrangements for which industry specific allocation and measurement guidance exists, such as long-term construction contracts and software transactions. The ASU is effective beginning January 1, 2011. The Company is currently evaluating the impact of this standard on the Company’s consolidated results of operations and financial condition.

In October 2009, the FASB issued ASU No. 2009-14, Certain Revenue Arrangements That Include Software Elements—a consensus of the FASB Emerging Issues Task Force, that reduces the types of transactions that fall within the current scope of software revenue recognition guidance. Existing software revenue recognition guidance requires that its provisions be applied to an entire arrangement when the sale of any products or services containing or utilizing software when the software is considered more than incidental to the product or service. As a result of the amendments included in ASU No. 2009-14, many tangible products and services that rely on software will be accounted for under the multiple-element arrangements revenue recognition guidance rather than under the software revenue recognition guidance. Under the ASU, the following components would be excluded from the scope of software revenue recognition guidance: the tangible element of the product, software products bundled with tangible products where the software components and non-software components function together to deliver the product’s essential functionality, and undelivered components that relate to software that is essential to the tangible product’s functionality. The ASU also provides guidance on how to allocate transaction consideration when an arrangement contains both deliverables within the scope of software revenue guidance (software deliverables) and deliverables not within the scope of that guidance (non-software deliverables). The ASU is effective beginning January 1, 2011. The Company is currently evaluating the impact of this standard on the Company’s consolidated results of operations and financial condition.

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 4 - TRADE RECEIVABLES, NET

Trade receivables consist of the following:

	September 30,			December 31,
	2009			2008
Trade receivables	$	32,904,589		$	23,742,432
Allowance for doubtful accounts		(3,377,782	)		(3,378,076	)
Trade receivables, net	$	29,526,807		$	20,364,356

The provision for bad debts increased by $0, $424,299, $0 and $808,401 for three and nine months ended September 30, 2009 and 2008, respectively, as follows:

	Three Months			Three Months			Nine Months			Nine Months
	Ended			Ended			Ended			Ended
	September 30,			September 30,			September 30,			September 30,
	2009			2008				2009		2008
Beginning balance	$	(3,373,367	)	$	(1,487,987	)	$	(3,378,076	)	$	(728,265	)
(Provision)/Reversal during the period		-			(424,299	)		-			(808,401	)
Exchange rate effect		(4,415	)		376,922			294			1,302
Ending balance	$	(3,377,782	)	$	(1,535,364	)	$	(3,377,782	)	$	(1,535,364	)

NOTE 5 - ADVANCES TO SUPPLIERS

In accordance with the contracts with the Company’s suppliers, cash is advanced for material and equipment purchase. The delivery term is usually 30 days. In the event of a breach of contract, the Company has the following rights and penalty protection:

The Company has the right to get back the deposit and charge double interest on the deposit according to the interest rate during the same period in which the contract was breached. The Company owns the raw material and equipment acquired from the suppliers under the agreements. The Company has the legal right to take possession of it. The Company did not have any contract breaches for the year ended December 31, 2008 and nine months ended September 30, 2009.

For the nine months ended September 30, 2009, two suppliers accounted for more than 10% of the advances to suppliers and each accounted approximately 24% and 10%, respectively. Total purchases of each supplier in 2009 accounted for approximately, 10% and 3%, respectively.

For the fiscal year ended December 31, 2008, four suppliers accounted for more than 10% of the advances to suppliers and each accounted approximately 24%, 24%, 19% and 12%, respectively. Total purchases of each supplier in 2008 accounted for approximately, 19%, 0%, 0% and 6%, respectively. Those two suppliers with zero purchases in 2008 were the main suppliers of raw materials related with the Company’s IPTV products. The Company made cash advances in November and December 2008 and raw materials were shipped in February 2009.

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 6 - INVENTORIES, NET

Inventories include raw material and finished goods. Finished goods contain direct material, direct labor and manufacturing overhead and do not contain general and administrative costs. Inventory consists of the following:

	September 30,			December 31,
	2009			2008
Raw material	$	11,980,248		$	10,692,030
Finished goods		10,701,035			828,700
Reserve for obsolete inventory		(240,881	)		(240,898	)
Inventory, net	$	22,440,402		$	11,279,832

Management uses the specific identification method to provide an allowance for obsolete or slow-moving inventory items, including finished goods and raw materials. There were no provisions made for the allowance for obsolescence for the three and nine months ended September 30, 2009 and 2008, respectively, as follows:

	Three Months			Three Months			Nine Months			Nine Months
	Ended			Ended			Ended			Ended
	September 30,			September 30,			September 30,			September 30,
	2009			2008			2009			2008
Beginning balance	$	(240,635	)	$	(106,200	)	$	(240,898	)	$	(105,391	)
(Provision)/Reversal during the period		-			-			-			-
Foreign exchange adjustment		(246	)		(254	)		17			(1,063	)
Ending balance	$	(240,881	)	$	(106,454	)	$	(240,881	)	$	(106,454	)

NOTE 7 - PROPERTY AND EQUIPMENT, NET

Property and equipment consist of the following:

	September 30,			December 31,
	2009			2008
Building	$	16,645,424		$	16,656,779
Molds		31,624,384			28,712,602
Machinery and Equipments		14,512,552			14,452,170
Electronic, office and other equipments		2,185,250			1,869,063
Automobiles		1,280,693			1,215,387
Construction in progress		1,518,349			1,506,717
Accumulated Depreciation		(12,464,647	)		(8,081,231	)
Property and equipments, net	$	55,302,005		$	56,331,487

The depreciation expense is $1,484,756, $1,228,344, $4,380,877 and $3,575,811 for three and nine months ended September 30, 2009 and 2008:

	Three Months		Three Months		Nine Months		Nine Months
	Ended		Ended		Ended		Ended
	September 30,		September 30,		September 30,		September 30,
	2009		2008		2009		2008
Cost of sales	$	1,333,744	$	1,118,260	$	3,933,395	$	3,293,779
Selling expenses		67,350		22,225		199,506		32,964
General and administrative expenses		83,652		87,859		247,976		249,068
Total	$	1,484,746	$	1,228,344	$	4,380,877	$	3,575,811

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 8 - INTANGIBLE ASSETS, NET

Intangible assets consist of the following:

	September 30,			December 31,
	2009			2008
Land use rights	$	2,755,889		$	2,757,769
Computer software use rights		4,821			4,824
Trade mark		48,199			29,339
Accumulated amortization		(507,733	)		(448,549	)
Intangible assets, net	$	2,301,176		$	2,343,383

The amortization expense is $24,270, $ 18,003, $60,063 and $51,491 in the three and nine months ended September 30, 2009 and 2008, respectively, and are comprised of the following:

	Three Months		Three Months		Nine Months		Nine Months
	Ended		Ended		Ended		Ended
	September 30,		September 30,		September 30,		September 30,
	2009		2008		2009		2008
General and administrative expense	$	24,270	$	18,003	$	60,063	$	51,491

NOTE 9 - CUSTOMER DEPOSIT

The Company requires its customers to pay 30% deposit of the total amount for each order. The customer deposits are recorded as liability when the Company receives it and are recognized as revenue after the total amount is paid off upon the delivery of the products. In its agreement, the Company specifies the delivery date (usually 30 days after the order is placed) and the liability for breach of the contract. If the Company cannot fulfill its supply to its customers according to the contract, the customers have the right to get back their deposit. If the products do not meet the quality standard or need to be reworked, the Company is responsible for the rework and certain expenses. The Company may compensate its customers for their loss if the customers rework or repack by themselves. If the customers do not pay the balance according to the contract, the Company will charge them 0.5% of the balance amount each day at the second week after the due date. But the total breach amount should not be over 20% of the total amount of the contract. For the nine months ended September 30, 2009 and year ended December 31, 2008, the Company has had no costs related to a contract breach or product quality issue.

For the nine months ended September 30, 2009, only one customer in the aging list of the customer deposit and accounted 100%. Total sales to this customer in 2009 accounted for approximately 0%,

For the year ended December 31, 2008, two customers accounted for more than 10% of the customer deposit and each accounted approximately 26% and 12%, respectively. Total sales to each customer in 2008 accounted for approximately 1% and 4% of total sales, respectively.

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 10 - SHORT TERM LOANS

Short term loans consist of the following:

	September 30,		December 31,
	2009		2008
Construction Bank	$	19,818,594	$	19,495,158
Defutai Bank		2,676,096		2,175,207
Nanyian Bank		5,576,405		6,683,487
Minsheng Bank		406,136		-
Shenzhen Development Bank		7,510,016		5,757,583
Pufa Bank		4,400,400		1,760,280
	$	40,387,647	$	35,871,715

The above outstanding short term loans are used primarily for general working capital purposes. Recurring bank loans carry annual interest rates of 3.54%~7.12% with maturity dates ranging from 30 days to one year. These loans are either non-secured or secured by the Company’s accounts receivable, building and land-use rights.

The annual interest rates are shown as follows:

	2009			2008
Construction Bank		3.54	%		6.84	%
Defutai Bank		4.50	%		4.92	%
Agricultural Bank		-			7.20	%
Nanyian Bank		7.12	%		6.84	%
Minsheng Bank		4.14	%		-
Shenzhen Development Bank		5.35	%		6.48	%
Pufa Bank		5.84	%		7.20	%

The Pufa bank loans are collateralized by two dormitory building and equipment.

The Minsheng bank loans are guaranteed by the Company’s accounts receivables.

NOTE 11 - RESTRICTED CASH AND BANK NOTES PAYABLE

Bank notes payable consist of the following:

	September 30,		December 31,
	2009		2008
Shanghai Pufa Bank	$	2,024,184	$	-
Shenzhen Development Bank		1,653,670		10,336,605
Construction Bank		5,064,238		8,512,596
	$	8,742,092	$	18,849,201

The bank notes have no interest bearing. Additionally, the banks charge a ½ of 1 percent fee on the amounts borrowed by the Company.

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 11 - RESTRICTED CASH AND BANK NOTES PAYABLE (CONTINUED)

The terms of the bank notes payable require the Company to maintain a deposit at the bank to secure the notes as follows:

	September 30,		December 31,
	2009		2008
Construction Bank,	$	964,786	$	1,753,433
Shenzhen Development Bank		1,932,362		9,923,397
Defutai Bank		501,037		-
Shenzhen Pingan Bank		-		4,765
Minsheng Bank		8,819		-
Nanyang Bank		148,431		-
Shanghai Pufa Bank		2,024,184		-
	$	5,579,619	$	11,681,595

NOTE 12 - DUE TO SHAREHOLDER

Due to shareholder consists of the following:

	September 30,		December 31,
	2009		2008
Due to Mr. Li Tianfu	$	-	$	7,842,780

The above amounts are due to Mr. Li Tianfu. These amounts are non-secured, no interest bearing, and are considered to be long-term with no fixed repayment date. The imputed interests are assessed as an expense to the business operation and an addition to the paid-in capital. The calculation is performed quarterly by annual rate in the range of 5.22 ~ 6.57% with the reference to the average three months loan rate. The imputed interests are as follows:

	Three Months		Three Months		Nine Months		Nine Months
	Ended		Ended		Ended		Ended
	September 30,		September 30,		September 30,		September 30,
	2009		2008		2009		2008
Imputed interests	$	-	$	147,620	$	-	$	446,953

On November 28, 2008, the Company and its subsidiaries entered into a Debt Repayment and Set-Off Agreement (the “Repayment Agreement”) with Mr. Li and each of NIVS Investment (SZ) Co., Ltd.; Zhongkena Technology Development; Xentsan Technology (SZ) Co., Ltd.; Korea Hyundai Light & Electric (Int'l) Holding; NIVS Information & Technology (HZ) Co., Ltd.; and Hyundai Light & Electric (HZ) Co., Ltd. (collectively, the “Related Companies”). Pursuant to the Agreement, as it was amended on December 22, 2008, each of the Related Companies agreed to completely and immediately repay all outstanding loan amounts that it owed to the Company and the Company agreed to repay $996,433 of the debt that it owed to Mr. Li.

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 12 - DUE TO SHAREHOLDER (CONTINUED)

Pursuant to the terms of the Repayment Agreement, the Company and its subsidiaries (collectively, the “NIVS Group”) had outstanding loan amounts of $8,838,159 owed to Mr. Li (the “Li Debt”), and Mr. Li, through the Related Companies, had an aggregate outstanding loan amount of $996,433 owed to the NIVS Group (the “Related Companies’ Debt”), with $996,433 owed by Korea Hyundai Light & Electric (Int'l) Holding. The loans were unsecured with no fixed repayment date. Pursuant to the Repayment Agreement, the Related Companies’ Debt of $996,433 was repaid in full by set-off against the Li Debt of $8,838,159 such that, as a result of the transactions contemplated by the Repayment Agreement, the Related Companies’ Debt was no longer outstanding and neither Mr. Li nor any of the Related Companies owed the NIVS Group any loan amount. Moreover, after the repayments under the Repayment Agreement, the Company’s remaining debt owed to Mr. Li was $7,842,780 as of December 31, 2008.

The parties to the Repayment Agreement also acknowledged that there were no remaining debt obligations owed to the Company or its subsidiaries, either directly or indirectly, by Mr. Li, any other executive officer or director, or any related family member, of the Company, or any entity owned or controlled by such persons, including the Related Companies, and that no loans or similar arrangements will be made by the Company or its subsidiaries to such persons or entities in the future. Due to the loans that the Company made to the entities owned and controlled by its chief executive officer in violation of Section 402 of the Sarbanes-Oxley Act of 2002, the Company and/or its chief executive officer could become subject to criminal, civil or administrative sanctions, penalties, or investigations and may also face potential private securities litigation.

On December 24, 2008, the Company entered into an agreement with Mr. Li pursuant to which the outstanding debt of $7,842,780 that the Company owed to Mr. Li would be converted into shares of the Company’s common stock. According to the agreement, the shares would be issued upon the closing of its public offering, which closed in March 2009. The number of shares that the Company issued to Mr. Li was equal to the debt amount of approximately $7,841,726 (as adjusted for currency fluctuations) divided by the offering price of the public offering. Based on the offering price for the Company’s offering of $3.50 per share, the Company issued 2,240,493 shares of common stock to Mr. Li. After giving effect to the conversion, the debt owed to Mr. Li was no longer outstanding and the Company does not have any outstanding debt owed to Mr. Li. As a result of the conversion, the number of shares that Mr. Li beneficially owned increased from 12,204,667 shares to 14,445,160 shares. This represented a 3.3% increase of Mr. Li’s ownership of the Company’s outstanding shares of common stock from 33.1% to 36.4%.

NOTE 13 - OTHER GENERAL AND ADMINISTRATIVE

For the three and nine months ended September 30, 2009 and 2008, the amount of other general and administrative expenses mainly composed of the following events:

	Three Months		Three Months		Nine Months		Nine Months
	Ended		Ended		Ended		Ended
	September 30,		September 30,		September 30,		September 30,
	2009		2008		2009		2008
Audit and accounting	$	102,477	$	25,000	$	145,269	$	32,783
Legal fee		51,708		-		271,708		18,531
Office expenses		403,154		492,566		1,324,189		1,086,188
Salary and wages		130,695		203,413		522,071		479,146
Consulting		19,737		5,341		132,518		61,921
Utilities		13,343		137		39,796		81,202
Others		433,255		131,127		683,808		131,520
	$	1,154,369	$	857,584	$	3,119,359	$	1,891,291

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 14 - STATUTORY RESERVES

As stipulated by the relevant laws and regulations for enterprises operating in PRC, the subsidiaries of the Company are required to make annual appropriations to a statutory surplus reserve fund. Specifically, the subsidiaries of the Company are required to allocate 10% of their profits after taxes, as determined in accordance with the PRC accounting standards applicable to the subsidiaries of the Company, to a statutory surplus reserve until such reserve reaches 50% of the registered capital of the subsidiaries of the Company.

NOTE 15 - INCOME TAX

Niveous is registered in BVI and pays no taxes.

NIVS HK is a holding company registered in Hong Kong and has no operating profit for tax liabilities.

NIVS Shenzhen serves as a branch company of NIVS PRC. The assessment of its tax liabilities is combined with that of NIVS PRC. NIVS PRC is qualified as Hi-Tech Company in 2009.

Beginning January 1, 2008, the new Enterprise Income Tax (“EIT”) law has replaced the old laws for Domestic Enterprises (“DES”) and Foreign Invested Enterprises (“FIEs”). The new standard EIT rate of 25% replaces the 33% rate applicable to both DES and FIEs, except for High Tech companies that pay a reduced rate of 15%, subject to government verification for Hi-Tech company status in every three years. For companies established before March 16, 2007 continue to enjoy tax holiday treatment approved by local government for a grace period of either for the next 5 years or until the tax holiday term is completed, whichever is sooner.

The provision for taxes on earnings consisted of:

	Three Months		Three Months		Nine Months		Nine Months
	Ended		Ended		Ended		Ended
	September 30,		September 30,		September 30,		September 30,
	2009		2008		2009		2008
PRC Enterprises Income Taxes	$	1,033,814	$	645,936	$	2,309,683	$	1,621,020
United States Federal Income Taxes		-		-		-		-
Total	$	1,033,814	$	645,936	$	2,309,683	$	1,621,020

A reconciliation between the income tax computed at the U.S. statutory rate and the Group’s provision for income tax is as follows:

	Three Months			Three Months			Nine Months			Nine Months
	Ended			Ended			Ended			Ended
	September 30,			September 30,			September 30,			September 30,
	2009			2008			2009			2008
U.S. statutory rate		34	%		34	%		34	%		34	%
Foreign income not recognized in the U.S.		(34	)%		(34	)%		(34	)%		(34	)%
PRC preferential enterprise income tax rate		25	%		25	%		25	%		25	%
Tax holiday and relief granted to the Subsidiary		(10	)%		(12.5	)%		(10	)%		(12.5	)%
Provision for income tax		15	%		12.5	%		15	%		12.5	%

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 15 - INCOME TAX (CONTINUED)

The pro forma effect of the tax holiday granted is as follows:

	Three Months		Three Months		Nine Months		Nine Months
	Ended		Ended		Ended		Ended
	September 30,		September 30,		September 30,		September 30,
	2009		2008		2009		2008
Income tax expense as reported (includes tax holiday)	$	1,033,814	$	645,936	$	2,309,683	$	1,621,020
Income tax expense pro forma (without tax holiday)		1,723,023		1,291,872		3,849,472		3,242,040
Net benefit from tax holiday	$	689,209	$	645,936	$	1,539,789	$	1,621,020

Earnings per share as reported (includes tax holiday)	$	0.14	$	0.13	$	0.32	$	0.37
Earnings per share pro forma (without tax holiday)		0.12		0.11		0.28		0.32
Net benefit from tax holiday – Basic	$	0.02	$	0.02	$	0.04	$	0.05

Earnings per share as reported (includes tax holiday)	$	0.14	$	0.13	$	0.31	$	0.37
Earnings per share pro forma (without tax holiday)		0.12		0.11		0.27		0.31
Net benefit from tax holiday – Diluted	$	0.02	$	0.02	$	0.04	$	0.06

The tax authority of the PRC Government conducts periodic and ad hoc tax filing reviews on business enterprises operating in the PRC after those enterprises had completed their relevant tax filings, hence the Company’s tax filings may not be finalized. It is therefore uncertain as to whether the PRC tax authority may take different views about the Company’s tax filings which may lead to additional tax liabilities.

Accounting for Uncertainty in Income Taxes

The Company adopted the provisions of Accounting for Uncertainty in Income Taxes on January 1, 2007. The provisions clarify the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with the standard “Accounting for Income Taxes,” and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The provisions of Accounting for Uncertainty in Income Taxes also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Based on the Company’s evaluation, the Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements.

The Company may from time to time be assessed interest or penalties by major tax jurisdictions. In the event it receives an assessment for interest and/or penalties, it will be classified in the financial statements as tax expense.

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 16 - COMMITMENTS AND CONTINGENCIES

Lack of Insurance

The company does not carry any business interruption insurance, products liability insurance or any other insurance policy except for a limited property insurance policy. As a result, the Company may incur uninsured losses, increasing the possibility that the investors would lose their entire investment in the Company.

The Company could be exposed to liabilities or other claims for which the Company would have no insurance protection. The Company does not currently maintain any business interruption insurance, products liability insurance, or any other comprehensive insurance policy except for property insurance policies with limited coverage. As a result, the Company may incur uninsured liabilities and losses as a result of the conduct of its business. There can be no guarantee that the Company will be able to obtain additional insurance coverage in the future, and even if it can obtain additional coverage, the Company may not carry sufficient insurance coverage to satisfy potential claims. Should uninsured losses occur, any purchasers of the Company’s common stock could lose their entire investment.

Because the Company does not carry products liability insurance, a failure of any of the products marketed by the Company may subject the Company to the risk of product liability claims and litigation arising from injuries allegedly caused by the improper functioning or design of its products. The Company cannot assure that it will have enough funds to defend or pay for liabilities arising out of a products liability claim. To the extent the Company incurs any product liability or other litigation losses, its expenses could materially increase substantially. There can be no assurance that the Company will have sufficient funds to pay for such expenses, which could end its operations and the investors would lose their entire investment.

Fines and penalties by housing authority

If the Company receives any notice from the local housing authority or any claim from our current and former employees regarding the Company’s non-compliance with the regulations, the Company will be required respond to the notice and pay all amounts due to the government, including any administrative penalties imposed, which would require the Company to divert its financial resources and/or impact its cash reserves, if any, to make such payments. Additionally, any administrative costs in excess of the payments, if material, may impact the Company's operating results. As of September 30, 2009, the Company has not received any notice from the local housing authority or any claim from our current and former employees.

NOTE 17 - OPERATING RISK

Country risk

The Company has significant investments in the PRC. The operating results of the Company may be adversely affected by changes in the political and social conditions in the PRC and by changes in Chinese government policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things. The Company can give no assurance that those changes in political and other conditions will not result in have a material adverse effect upon the Company’s business and financial condition.

NOTE 18 - CONCENTRATION OF CREDIT RISK

A significant portion of the Company’s cash at September 30, 2009 and December 31, 2008 is maintained at various financial institutions in the PRC which do not provide insurance for amounts on deposit. The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk in this area.

The Company operates principally in the PRC and grants credit to its customers in this geographic region. Although the PRC is economically stable, it is always possible that unanticipated events in foreign countries could disrupt the Company’s operations.

For the nine months ended September 30, 2009, one customer had net sales exceeding 10% of the Company’s total net sales. For year ended December 31, 2008, three customers had net sales exceeding 10% of the Company’s total net sales of the quarter.

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 19 - SEGMENT INFORMATION AND GEOGRAPHIC INFORMATION

The segment information for revenue is as follows:

		Three Months		Three Months		Nine Months		Nine Months
		Ended		Ended		Ended		Ended
		September 30,		September 30,		September 30,		September 30,
		2009		2008		2009		2008
Standard audio and video equipment:	China	$	7,867,689	$	21,685,845	$	26,171,279	$	38,429,568
	Europe		3,070,058		728,995		10,199,873		3,050,970
	North America		22,441		1,069,931		1,075,390		3,390,087
	Other Asian Countries		6,461,698		7,256,163		17,473,587		16,486,181
	South America		234,484		2,600,629		1,376,833		5,211,502
	Other Countries		3,434,120		813,077		4,512,607		902,654
Intelligent audio and video equipment	China		10,260,067		732,498		20,444,678		3,048,225
	Europe		4,686,425		-		8,755,700		-
	North America		26,485		601,505		667,537		5,390,087
	Other Asian Countries		9,099,927		7,575,247		17,568,126		15,236,435
	South America		272,188		-		1,514,956		-
	Other Countries		4,278,606		-		5,624,938		-
Other audio and video equipment	China		1,301,614		6,347,578		4,618,934		9,902,654
	Europe		381,513		-		714,552		-
	Other Asian Countries		987,380		-		1,782,155		-
	South America		-		-		-		-
Total		$	52,384,695	$	49,411,468	$	122,501,145	$	101,048,363

NOTE 20 - JULY 2008 INVESTOR RELATIONS AGREEMENT

In July 2008, the Company entered into a two-year consulting agreement with Nascent Value LLC (“Nascent”). According to the agreement, as amended, Nascent will provide the Company with business consulting and investor relation services. Nascent is a third-party investor relations firm that does not have any other relationship or common ownership with the Company or any of the Company’s affiliates. As consideration for entering into the agreement and compensation for Nascent’s services under the agreement, the Company issued to Nascent 425,000 shares (“IR Shares”) of its common stock upon the closing of the Share Exchange. In connection with the IR Shares, the Company recognized a stock-based compensation charge during the three months ended September 30, 2008 in the amount of $765,000, which is derived from valuing each share at $1.80, the price at which shares of the Company’s common stock were sold in the Private Placement. The Company also agreed to pay Nascent $6,000 per month for its services. Nascent also entered into a lock-up agreement with WestPark Capital, Inc., the placement agent for the Private Placement, pursuant to which 20,000 IR Shares will be subject to lock-up restrictions until the Company’s securities are listed on a national securities exchange and the remaining 405,000 IR Shares will be subject to lock-up restrictions following the listing of the Company’s common stock on NYSE Amex, which occurred in March 2009. WestPark Capital, Inc. reserves the right to release all or a portion of the shares at its sole discretion.

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 21 - EARNINGS PER SHARE

Basic net income per share is computed by dividing net income attributable to common shareholders by the weighted-average number of shares outstanding during the period.

Diluted net income per share is computed by using the weighted-average number of shares of common stock outstanding and, when dilutive, potential shares from options and warrants to purchase common stock, using the treasury stock method.

The following table illustrates the computation of basic and dilutive net income per share and provides a reconciliation of the number of weighted-average basic and diluted shares outstanding:

	Three Months		Three Months		Nine Months		Nine Months
	Ended		Ended		Ended		Ended
	September 30,		September 30,		September 30,		September 30,
	2009		2008		2009		2008

Net income attributable to NIVS IntelliMedia Technology Group, Inc.	$	5,537,876	$	4,563,188	$	12,501,828	$	11,048,180
Denominator:
Basic weighted-average shares outstanding		40,675,347		34,147,201		39,595,543		29,746,845
Effect of dilutive warrants		-		696,996		267,009		232,332
Diluted weighted-average shares outstanding		40,675,347		34,844,197		39,862,552		29,979,177
Net income per share:
Basic	$	0.14	$	0.13	$	0.32	$	0.37
Diluted	$	0.14	$	0.13	$	0.31	$	0.37

The following were excluded from the computation of the diluted securities outstanding as it is anti-dilutive:

	Three Months		Three Months		Nine Months		Nine Months
	Ended		Ended		Ended		Ended
	September 30,		September 30,		September 30,		September 30,
	2009		2008		2009		2008

Stock warrants	$	55,000	$	-	$	55,000	$	-

NOTE 22 - COMMON STOCK WARRANTS

Since the inception of NIVS USA, the NIVS USA’s shareholders held an aggregate of 7,096,390 warrants. Immediately prior to the closing of the share exchange on July 25, 2008, the shareholders canceled an aggregate of 6,149,723 warrants such that the shareholders held an aggregate of 946,667 warrants immediately after the Share Exchange. On March 19, 2009, the shareholders exercised the aggregate warrants at $0.0001 per share in accordance with the cashless exercise provision in the underlying warrant agreements. The Company issued an aggregate of 946,640 shares of common stock for the cashless exercise of the 946,667 warrants at $4.12 per share.

In March 2009, NIVS USA completed a public offering of its commons stock and issued a warrant to purchase 55,000 shares at an exercise price of $4.20 per share. The warrant has 5 year term and is not exercisable until at least one year from the date of issuance.

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 22 - COMMON STOCK WARRANTS (CONTINUED)

The summary of the status of the Company’s outstanding warrant activity is as follows:

	Warrants			Average Exercise Price
Balance December 31, 2007		7,096,390		$	0.0001
Warrants issued to shareholders		-		$
Warrants exercised		-		$	-
Forfeited/canceled		(6,149,723	)	$	-
Balance December 31, 2008		946,667

Warrants issued to underwriter		55,000		$	4.20
Warrants exercised		(946,667	)	$	-
Forfeited/canceled		-		$	-
Balance September 30, 2009		55,000

NOTE 23 – OMNIBUS INCENTIVE PLAN

On June 23, 2009, the NIVS IntelliMedia Technology Group, Inc. 2009 Omnibus Incentive Plan (the “Plan”) was approved and adopted. As approved by the Board and shareholders, the Plan reserved a total of 4.0 million shares authorized for issuance under the Plan. A description of the material terms of the Plan and complete copy of the Plan are included in the Company's definitive proxy statement filed with the SEC on April 30, 2009 in connection with the Annual Meeting. The material features of the Plan are summarized as follows:

The Compensation Committee of the Company’s Board of Directors (or the Board of Directors if so desired) (the “Committee”) has the authority to determine, within the limits of the express provisions of the Plan, the individuals to whom awards will be granted, the nature, amount and terms of such awards and the objectives and conditions for earning such awards. The Committee may grant awards to any employee, director, consultant or other person providing services to the Company or its affiliates. The maximum awards that can be granted under the Plan to a single participant in any calendar year will be 1 million shares of common stock (whether through grants of Options or Stock Appreciation Rights or other awards of common stock or rights with respect thereto) or $1 million in the form of cash-based incentive awards.

Awards under the Plan may include incentive stock options, nonqualified stock options, stock appreciation rights (“SARs”), restricted shares of common stock, restricted stock units, performance share or unit awards, other stock-based awards and cash-based incentive awards.

As of September 30, 2009, no specific awards have been granted or are contemplated under the Plan. Also, the exact types and amounts of any future awards to be made to any eligible participants pursuant to the Plan are not presently determinable. Due to the discretionary nature of the Plan, it is impossible to state who the participants in the Plan will be in the future or the number of options or other awards to be received by a person or group.

An aggregate of 4,000,000 shares of the Company’s common stock is reserved for issuance and available for awards under the Plan, including incentive stock options granted under the Plan. With respect to awards made under the Plan, shares of common stock underlying awards that are forfeited or canceled (as a result, for example, of the lapse of an option or a forfeiture of restricted stock), as well as any shares surrendered to or withheld by the Company in payment or satisfaction of the exercise price of a stock option or tax withholding obligations with respect to an award, will be available for additional grants under the Plan. On the exercise of a SAR, only the number of shares actually issued will be counted against the number of shares reserved for grant under the Plan. Shares to be issued or purchased under the Plan will be authorized but unissued shares of common stock. Shares issued with respect to awards assumed by the Company in connection with acquisitions do not count against the total number of shares available for new awards under the Plan.

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 24 - SUBSEQUENT EVENTS

On October 26, 2009, the Company started the construction on Phase II of its factory in Huizhou (“Phase II”), which will include a new manufacturing facility and dormitory. Phase II's manufacturing facility, adjacent to Phase I, will span approximately 36,000 square meters and will be dedicated to designing and making super thin LEDTVs, HD LCDTVs and 3G cell phones under the NIVS brand name and intended for distribution in China's domestic market. The expected production capacity will be 2 million TV sets and 1.5 million phones per year. The estimate completion date is April 30, 2010 for the manufacturing facility and June 30, 2010 for the dormitory. The total budget of the construction is RMB 53,500,000 (approximately $7,847,380).

On October 27, 2009, the Company has signed a letter of intent to manufacture mobile phones for China Telecom Corp. Ltd. ("China Telecom") to be used with China Telecom’s 3G networks, e-Surfing. The Company will be manufacturing two CDMA 3G mobile phone models, the NE16 and NE20. Both of these phones are dual-mode phones using the EVDO and GSM standards, making them compatible with both 2G and 3G networks. China Telecom will initially purchase five million mobile phones for their e-Surfing network from among approximately twenty approved mobile phone vendors. The specific amount NE16 and NE20 phones to be ordered in the initial phase will be determined at a later date.

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 25 - CONDENSED PARENT COMPANY FINANCIAL INFORMATION

Basis of Presentation

The condensed parent company financial statements have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X, as the restricted net assets of the subsidiaries of NIVS IntelliMedia Technology Group exceed 25% of the consolidated net assets of NIVS IntelliMedia Technology Group. The ability of the Company’s Chinese operating subsidiaries to pay dividends may be restricted due to the foreign exchange control policies and availability of cash balances of the Chinese operating subsidiaries. Because substantially all of the Company’s operations are conducted in China and a substantial majority of its revenues are generated in China, a majority of the Company’s revenue being earned and currency received are denominated in Renminbi (RMB). RMB is subject to the exchange control regulation in China, and, as a result, the Company may be unable to distribute any dividends outside of China due to PRC exchange control regulations that restrict its ability to convert RMB into US Dollars.

The condensed parent company financial statements have been prepared using the same accounting principles and policies described in the notes to the consolidated financial statements, with the only exception being that the parent company accounts for its subsidiaries using the equity method. Refer to the consolidated financial statements and notes presented above for additional information and disclosures with respect to these financial statements.

NIVS IntelliMedia Technology Group, Inc.

(Formerly SRKP 19, Inc.)

CONDENSED PARENT COMPANY BALANCE SHEETS

(Dollars in Thousands)

	September 30,		December 31,
	2009		2008
	(Unaudited)
ASSETS

Cash	$	-	$	-
Other receivables		8
Investment in subsidiaries, at equity in net assets		67,910		46,521
Total Assets		67,918		46,521

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

CURRENT LIABILITIES
Due to subsidiaries		-		132
Due to Stockholders		-		-
Total Current Liabilities		-		132

COMMITMENTS AND CONTINGENCIES		-		-

STOCKHOLDERS’ EQUITY:
Preferred stock, $.0001 par value, 10,000,000 shares authorized, none issued
Common stock, $.0001 par value, 100,000,000 shares authorized, 40,675,347 and 36,855,714 shares issued and outstanding at September 30, 2009 and December 31, 2008, respectively		4		4
Additional Paid in Capital		21,717		12,663
Accumulated other comprehensive income		3,933		3,960
Statutory surplus reserve fund		3,569		3,569
Retained earnings (unrestricted)		38,695		26,193
Total Stockholders’ Equity		67,918		46,389
Total Liabilities & Shareholders' Equity	$	67,918	$	46,521

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 25 - CONDENSED PARENT COMPANY FINANCIAL INFORMATION (CONTINUED)

NIVS IntelliMedia Technology Group, Inc.

(Formerly SRKP 19, Inc.)

CONDENSED PARENT COMPANY STATEMENTS OF OPERATIONS

(Dollars in Thousands)

	For the Three		For the Three		For the Nine		For the Nine
	Months Ended		Months Ended		Months Ended		Months Ended
	September 30,		September 30,		September 30,		September 30,
	2009		2008		2009		2008
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Revenue	$	-	$	-	$	-	$	-

Merger cost		-		944		-		944
Other general and administrative		184		21		671		34
Total Expenses		184		965		671		978

Equity in undistributed income of subsidiaries		5,722		12,026		13,173		12,026
Income before income taxes		5,538		11,061		12,502		11,048

Provision for income tax		-		-		-		-

Net income	$	5,538	$	11,061	$	12,502	$	11,048

NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements and disclosures

Amounts and Disclosures for the Three and Nine Months Ended September 30, 2009 and 2008 are Unaudited

NOTE 25 - CONDENSED PARENT COMPANY FINANCIAL INFORMATION (CONTINUED)

NIVS IntelliMedia Technology Group, Inc.

(Formerly SRKP 19, Inc.)

CONSDENSED PARENT COMPANY STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

	For the Nine			For the Nine
	Months Ended			Months Ended
	September 30,			September 30,
	2009			2008
	(Unaudited)			(Unaudited)
Cash Flows from Operating Activities:
Net income	$	12,502		$	11,048
Other receivables		(8	)
Equity in undistributed income of subsidiaries		(13,173	)		(12,026	)
Increase in due to subsidiaries		-			-
Net Cash (Used) by Operating Activities		(679	)		(978	)

Cash Flows from Investing Activities:
Capital contribution to subsidiaries		(533	)		(9,478	)
Net Cash (Used) by Investing Activities		(533	)		(9,478	)

Cash Flows from Financing Activities:
Advances from stockholders
Repayment to stockholders		-			(33	)
Repayment to subsidiaries		-			-
Proceeds from issuance of shares		-			-
Proceeds from issuance of warrants		-			-
Net proceeds of share issuance		1,212			10,488
Net Cash Provided by Financing Activities		1,212			10,455

Net increase/(decrease) in cash and cash equivalents		-			(1	)
Cash and cash equivalents, beginning of period		-			1
Cash and cash equivalents, end of period	$	-		$	-

ITEM 2.

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

The following discussion relates to the financial condition and results of operations of NIVS IntelliMedia Technology Group, Inc. (the “Company”) and its subsidiaries, including its wholly-owned subsidiary, NIVS Holding Company Limited, a British Virgin Islands corporation (“NIVS BVI”), and NIVS (Huizhou) Audio & Video Tech. Co., Ltd., a company organized under the laws of the PRC (“NIVS PRC”), which is 97.5% owned by NIVS BVI and 2.5% owned by Tianfu Li, our Chief Executive Officer and Chairman of the Board. See the notes to the financial statements of this report for more information on our organization and ownership structure.

Forward-Looking Statements

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the related notes, and the other financial information included in this Quarterly Report.

This Quarterly Report contains forward-looking statements that involve substantial risks and uncertainties. All statements other than historical facts contained in this report, including statements regarding our future financial position, capital expenditures, cash flows, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “anticipated,” “believe,” “expect, “plan,” “intend,” “seek,” “estimate,” “project,” “could,” “may,” and similar expressions are intended to identify forward-looking statements. Such statements reflect our management’s current views with respect to future events and financial performance and involve risks and uncertainties, including, without limitation, Our reliance on our major customers for a large portion of our net sales; our ability to develop and market new products; our ability to continue to borrow and raise additional capital to fund our operations; our ability to collect aging trade receivables and the effect of a growing doubtful account allowance; our ability to accurately forecast amounts of supplies needed to meet customer demand; exposure to market risk through sales in international markets; the market acceptance of our products; exposure to product liability and defect claims; and fluctuations in the availability of raw materials and components needed for our products; and various other matters, many of which are beyond our control. Actual results may vary materially and adversely from those anticipated, believed, estimated or otherwise indicated should one or more of these risks or uncertainties occur or if any of the risks or uncertainties described elsewhere in this report occur. Consequently, all of the forward-looking statements made in this filing are qualified by these cautionary statements and there can be no assurance of the actual results or developments.

Overview

Through NIVS PRC, we engage in the development, production and sales of audio and video equipment, and set-top box products. In recent years, we have spent substantial resources on research and development to establish intelligent video and audio products (meaning products incorporating Chinese speech interactive technology), which we believe should help us diversify our revenue streams in addition to adding a higher margin product line. We combine our Chinese speech interactive technology with traditional video and audio products to form an intelligent audio-visual system consisting of the audio system, TV set and DVB. Our audio products have a solid reputation and established brand name in the PRC, while abroad our products have been named among the most popular brands on consumer websites for several years.

We sell our products to wholesalers and distributors of electronic products. For export sales and OEM production, we produce based on customer demand and orders. For products with our own brand names, customers generally do not provide us with any long-term commitments. As a result it is necessary for us to estimate, based in part on non-binding estimates by our customers and potential customers, the requirements for our products. In addition, in some instances, we develop products based on anticipated customer demand with no assurance that we will receive the anticipated orders. To the extent that we do not receive the anticipated orders or that our customers require products in greater quantities than anticipated, our revenue and margins will be affected.

A small number of customers account for a very significant percentage of our revenue. For the nine months ended September 30, 2008, we had three customers that each accounted for at least 5% of the revenues that we generated. These three customers accounted for a total of approximately 28.3 % of our revenue for that period. During the nine months ended September 30, 2008, we had one customer that accounted for more than 10% of our sales. The customer accounted for 13.1 % of our sales. The loss of any of these customers could have a material adverse effect upon our revenue and net income.

We have longstanding business relationships with certain suppliers with stable supply sources, and we believe this practice helps us reduce our risk on shortage of raw material supply. We also enter into one-year agreements with some of our suppliers that provide our forecast of the quantity that we believe that we will need for the upcoming year. These agreements typically result in obtaining a discount on our purchases from our suppliers during the year as we submit purchase orders further to the agreements. Notwithstanding our practices to reduce the cost of our materials, price fluctuations of materials will still affect our production cost and gross margin.

Various factors may impact our company’s performance in different ways. Our ability to compete effectively in light of the short life cycle of many of our products is related to the amount of resources we invest in research and development and how quickly we are able to produce new product models to replace products with older functionality. By upgrading our products, adding functionality, and improving technological specifications, we can increase the value of such products and the resulting product price, which can help compensate for losses associated with the short life cycle of many of our products and can help increase our revenue. For example, the average selling price for certain of our existing speaker and CRT TV has been declining. By adding functionality and developing new design to our speaker to form new intelligent audio and video equipment and shift CRT TV to LCDTV production, we believe we increased the value of such products and the resulting product price.

In addition, we have shifted our focus from one product to another product that we believe would increase our profitability. For example, in the first nine months of 2009, our sales revenue for LCDTV increased approximately 38.8%, respectively, compared to our sales revenue for the first nine months of 2008.

During the first nine months of 2009, our sales revenue for intelligent audio and video equipment increased to $41.3 million, an increase of 101% compared to $20.5 million for the same period in 2008. The increase in revenue for new intelligent audio and video equipment resulted from an increase in sales volume. Our sales volume for intelligent audio and video equipment increased by 114% to 1.5 million pieces as compared to 0.7 million pieces for the same period in 2008.We believe the increase in sales revenue and volume are a result of our investment of resources into the research and development of new products and design, our focus on the promotion of our brand, and expansion of our sales channels.

In the past, we have relied more heavily on sales to original equipment manufacturers (OEMs) for a significant portion of our revenues; however, we have increased our focus on and investment of resources in sales of our own brand, which we believe will permit us to decrease our reliance on OEM sales. OEM sales accounted for approximately 56.1% of our revenues for the nine months ended September 30, 2009, as compared to 64.8% for the nine months ended September 30, 2008, and sales of products with our own brand accounted for approximately 43.9 % of our revenues for the same period, as compared to 35.2 % for the same period in 2008.

Results of Operations

The following table sets forth information from our statements of operations for the three months ended September 30, 2009 and 2008 (unaudited) in dollars and as a percentage of revenue:

	For Three Months Ended												For Nine months Ended
	September 30,												September 30,
	2009						2008						2009					2008
	(in dollars)			(as percent of revenue)			(in dollars)			(as percent of revenue)			(in dollars)			(as percent of revenue)		(in dollars)			(as percent of revenue)
	(all amounts are in thousands except percentages, share and per share amounts)

Revenue	$	52,384			99.9	%		49,411			99.7	%		122,501		99.8	%		101,048			99.7	%
Other Sales		71			0.1	%		165			0.3	%		223		0.2	%		320			0.3	%
Cost of Goods Sold		(40, 956	)		-78.1	%		(38,262	)		-77.2	%		(95,226	)	-77.6	%		(77,853	)		-76.8	%
Gross Profit		11,499			21.9	%		11,314			22.8	%		27,498		22.4	%		23,517			23.2	%

Selling Expenses		2,328			4.4	%		1,287			2.6	%		5,596		4.6	%		2,650			2.6	%

General and administrative
Amortization		24			0.0	%		18			0.0	%		60		0.0	%		51			0.1	%
Depreciation		84			0.2	%		88			0.2	%		248		0.2	%		249			0.2	%
Bad debts		-			-			424			0.9	%		-			-		808			0.8	%
Merger cost		-			-			1,783			3.6	%		-			-		1,784			1.8	%
Stock-based compensation		-			-			765			1.5	%		-			-		765			0.8	%
Others General and administrative		1,154			2.2	%		858			1.7	%		3,120		2.6	%		1,891			1.8	%
Total General and administrative		1,262			2.4	%		3,936			7.9	%		3,428		2.8	%		5,548			5.5	%
Research and development		1,122			2.1	%		261			0.5	%		2,457		2.0	%		668			0.7	%
Total operating expenses		4,712			8.9	%		5,484			11	%		11,481		9.4	%		8,867			8.8	%
Income from operations		6,787			13	%		5,830			11.8	%		16,017		13	%		14,650			14.4	%

Other income (expenses)
Government grant		335			0.6	%		22			0.0	%		402		0.3	%		22			0.0	%
Interest income		-						251			0.5	%		-		-			394			0.4	%
Interest expense		(404	)		-0.8	%		(518	)		-1.0	%		(1,290	)	-1.1	%		(1,563	)		-1.5	%
Imputed interest		-						(148	)		-0.3	%		-		-			(447	)		-0.4	%
Sundry income (expense), net		-						(32	)		-0.1	%		10		0.0	%		(22	)		0.0	%
Total other income (expenses)		(69	)		-0.1	%		(425	)		-0.9	%		(878	)	-0.8	%		(1,616	)		-1.5	%

Income before Non-controlling interest and income taxes		6,718			12.8	%		5,405			10.9	%		15,139		12.2	%		13,034			12.9	%
Income taxes		(1,033	)		-2	%		(646	)		-1.3	%		(2,310	)	-1.9	%		(1,621	)		-1.6	%
Net Income	$	5,685			10.8	%	$	4,759			9.6	%	$	12,829		10.3	%	$	11,413			11.3	%
Net income attributable to the non-controlling interest		(147)			-0.3	%		(196)			-0.4	%		(328)		-0.3	%		(363)			-0.4
Net income attributable to NIVS IntelliMedia Technology Group, Inc.	$	5,538			10.5	%	$	4,563			9.2	%	$	12,501		10	%	$	11,050			10.9
Basic Earnings Per Share	$	0.14			0.0	%	$	0.13					$	0.32				$	0.37	.
Basic Weighted-Average Shares Outstanding		40,675,347			-			34,147,201						39,595,543					29,746,845
Diluted Earnings Per Share	$	0.14					$	0.13					$	0.31				$	0.37
Diluted Weighted-Average Shares Outstanding		40,675,347						34,844,197						39,862,552					29,979,177

Three months ended September 30, 2009 and 2008

Revenues, which consist of sales of our products, were $52.4 million for the three months ended September 30, 2009, an increase of $3.0 million, or 6.0%, compared to $49.4 million for the same period in 2008. The increase in revenue was attributed mainly to the increased demand for our products, which we believe is a result of our market expansion efforts. The increase of revenue was also due to the new sales of digital equipment and LCD products. For the three months ended September 30, 2009, our sales revenue for standard audio equipment decreased to $18.7 million, a decrease of 35.3% compared to $28.9 million for the same period in 2008. Sales revenue for televisions decreased to $5.8 million, a decrease of 14.7% compared to $6.8 million for the same period in 2008. Sales revenue for our intelligent audio and video equipment increased to $25.3 million, an increase of 201.0% compared to $8.4 million for the same period in 2008. For the three months ended September 30, 2009, our sales volume for standard audio equipment decreased by 33% to 1.0 million pieces as compared to 1.5 million pieces for the same period in 2008. The decrease was due to product upgrades to the intelligent products from standard products. For the three months ended September 30, 2009, our sales volume for televisions decreased by 34.3% to 42,000 pieces as compared to 64,000 pieces for the same period in 2008. Our sales volume for intelligent audio and video equipment increased by 181.3% to 0.9 million pieces as compared to 320,000 pieces for the same period in 2008. We believe the increase in intelligent equipment sales revenue and volume are a result of our investment of resources into the research and development of new products and design to meet the requirements of the market, our focus on the promotion of our brand, and expansion of our sales channels.

Costs of sales, which include raw material, labor and manufacturing overhead, were $41 million for the three months ended September 30, 2009, an increase of $2.7 million, or 7 %, compared to $38.3 million for the same period in 2008. The increase was primarily a result of the increase in sales and was relatively consistent with the increase in our net revenue. As a percentage of net revenue, cost of sales for the three months ended September 30, 2009 and 2008 was 78.1 % and 77.2%, respectively.

Gross profit for the three months ended September 30, 2009 was $11.5 million, or 21.9% of revenues, compared to $11.3 million, or 22.8% of revenues, for the comparable period in 2008. Gross profit margins are a factor of cost of sales, product mix and product demand. In the third quarter of 2009, gross margin remains consistent with the same period in 2008.

Selling expenses, which mainly include marketing, shipping, insurance, wage and other expenses, were $2.3 million for the three months ended September 30, 2009, an increase of $1.0 million, or 76.9%, compared to $1.3 million for the same period in 2008. The increase was primarily due to an increase in television advertising (on CCTV) and marketing activities.

Research and development expenses were approximately $1.1 million for the three months ended September 30, 2009, an increase of approximately $0.8 million, or 267 %, compared to $0.3 million for the same period in 2008. We believe that our focus on research and development contributed to the increase in our total sales. In the future, we expect to continue to increase our research and development efforts and to enable us to manufacture wider lines of products.

General and administrative expenses, which include wage, benefit, bad debts, utility, consulting, professional fee, various taxes and levies and other expenses, were $1.3 million for the three months ended September 30, 2009, a decrease of $2.7 million, or 67.5%, compared to $4.0 million for the same period in 2008. The decrease was primarily a result of a decrease in the expense related to reverse merger in 2008, partially offset by an increase of $186,409 in accrued liabilities related to housing contribution requirements under PRC laws. We expect our general and administrative expenses to increase as a result of professional fees incurred as a result of being a publicly reporting company in the United States.

Interest expenses were $0.4 million and $0.5 million for the three months ended September 30, 2009 and 2008, respectively. The decrease was due to the decrease in the interest rate during the three months ended September 30, 2009.

Income tax provisions for the three months ended September 30, 2009 were approximately $1.0 million, as compared to approximately $0.6 million for the three months ended September 30, 2008. The increase was primarily due to an increase in the taxable income for the three months ended September 30, 2009. NIVS PRC is registered in PRC and has had tax advantages granted by local government for corporate income taxes and sales taxes commencing April 6, 2004. NIVS PRC has been entitled to have a full tax exemption for the first two profitable years, followed by a 50% reduction on a normal tax rate of 24% for the following three consecutive years. On March 16, 2007, the National People’s Congress of China enacted a new PRC Enterprise Income Tax Law, under which foreign invested enterprises and domestic companies will be subject to enterprise income tax at a uniform rate of 25%. The new law became effective on January 1, 2008. During the transition period for enterprises established before March 16, the tax rate will be gradually increased starting in 2008 and be equal to the new tax rate in 2012. Our effective income tax rates for the three months ended September 30, 2009 and September 30, 2008 were 15% and 12.5%, respectively. We believe that our profitability will be negatively affected in the near future as a result of the new EIT Law.

Net income was $5.7 million for the three months ended September 30, 2009, an increase of $0.9 million, or 18.8%, compared to $4.8 million for the same period in 2008.

Nine months ended September 30, 2009 and 2008

Revenues were $122.5 million for the nine months ended September 30, 2009, an increase of $21.5 million, or 21.2%, compared to $101.0 million for the same period in 2008. The increase in revenue was attributed mainly to the increased demand for our products, which we believe is a result of our market expansion efforts. The increase of revenue was also due to the new sales of digital equipment and LCD products. For the nine months ended September 30, 2009, our sales revenue for standard audio equipment decreased to $56.4 million, a decrease of 4% compared to $58.9 million for the same period in 2008. Sales revenue for televisions increased to $17.6 million, an increase of 34% compared to $13.1 million for the same period in 2008. Sales revenue for our intelligent audio and video equipment increased to $41.3 million, an increase of 101% compared to $20.5 million for the same period in 2008. For the nine months ended September 30, 2009, our sales volume for standard audio equipment decreased by 3% to 3.0 million pieces as compared to 3.1 million pieces for the same period in 2008. The decrease was due to product upgrades to the intelligent products from standard products. For the nine months ended September 30, 2009, our sales volume for televisions increased by 25.3% to 124,000 pieces as compared to 99,000 pieces for the same period in 2008. Our sales volume for intelligent audio and video equipment increased by 114% to 1.5 million pieces as compared to 0.7 million pieces for the same period in 2008. We believe the increase in sales revenue and volume of intelligent equipment are a result of our investment of resources into the research and development of new products and design to meet the requirements of the market, our focus on the promotion of our brand, and expansion of our sales channels.

Costs of sales were $95.2 million for the nine months ended September 30, 2009, an increase of $17.3 million, or 22.3 %, compared to $77.8 million for the same period in 2008. The increase was primarily a result of the increase in sales and was relatively consistent with the increase in our net revenue. As a percentage of net revenue, cost of sales for the nine months ended September 30, 2009 and 2008 was 77.6 % and 76.8%, respectively.

Gross profit for the nine months ended September 30, 2009 was $27.5 million, or 22.4 % of revenues, compared to $23.5 million, or 23.2% of revenues, for the comparable period in 2008. Gross profit margins are a factor of cost of sales, product mix and product demand. In the nine months of 2009, the price of standard audio equipments which are large percentage of our sales decreased and some of the costs involved in production increased; however, its effect is partially offset by increase in the new intelligent products. These factors caused the small decrease in gross margin

Selling expenses, which mainly include marketing, shipping, insurance, wage and other expenses, were $5.6 million for the nine months ended September 30, 2009, an increase of $2.9 million, or 107 %, compared to $2.7 million for the same period in 2008. The increase was primarily due to an increase in television advertising (on CCTV), internet advertising, and marketing activities.

Research and development expenses were approximately $2.5 million for the nine months ended September 30, 2009, an increase of approximately $1.8 million, or 257 %, compared to $0.7 million for the same period in 2008. We believe that our focus on research and development contributed to the increase in our total sales. In the future, we expect to continue to increase our research and development efforts and to enable us to manufacture wider lines of products.

General and administrative expenses were $3.4 million for the nine months ended September 30, 2009, a decrease of $2.1 million, or 38%, compared to $5.5 million for the same period in 2008. The decrease was primarily a result of a decrease in the expense related to reverse merger in 2008, partially offset by an increase of $186,409 in accrued liabilities related to housing contribution requirements under PRC laws. We expect our general and administrative expenses to increase as a result of professional fees incurred as a result of being a publicly reporting company in the United States.

Interest expenses were $1.3 million and $1.6 million for the nine months ended September 30, 2009 and 2008, respectively. The decrease was due to the decrease in the interest rate during the nine months ended September 30, 2009.

Income tax provisions for the nine months ended September 30, 2009 were approximately $2.3 million, as compared to approximately $1.6 million for the nine months ended September 30, 2008. The decrease was primarily due to a decrease in the taxable income for the nine months ended September 30, 2009. NIVS PRC is registered in PRC and has had tax advantages granted by local government for corporate income taxes and sales taxes commencing April 6, 2004. NIVS PRC has been entitled to have a full tax exemption for the first two profitable years, followed by a 50% reduction on a normal tax rate of 24% for the following three consecutive years. On March 16, 2007, the National People’s Congress of China enacted a new PRC Enterprise Income Tax Law, under which foreign invested enterprises and domestic companies will be subject to enterprise income tax at a uniform rate of 25%. The new law became effective on January 1, 2008. During the transition period for enterprises established before March 16, the tax rate will be gradually increased starting in 2008 and be equal to the new tax rate in 2012. Our effective income tax rates for the nine months ended September 30, 2009 and September 30, 2008 were 15 % and 12.5%, respectively. We believe that our profitability will be negatively affected in the near future as a result of the new EIT Law.

Net income was $12.8 million for the nine months ended September 30, 2009, an increase of $1.4 million, or 12.3%, compared to $11.4 million for the same period in 2008.

Liquidity and Capital Resources

We had an unrestricted cash balance of approximately $2.3 million as of September 30, 2009, as compared to $0.5 million as of December 31, 2008. In addition, we also had approximately $5.6 million in restricted cash as of September 30, 2009, as compared to $11.7 million as of December 31, 2008. Our restricted cash is held as a security deposit for our recurring, short-term bank notes. Our funds are kept in financial institutions located in China, and banks and other financial institutions in the PRC do not provide insurance for funds held on deposit, and in the event of a bank failure, we may not have access to our funds on deposit. In addition, we are subject to the regulations of the PRC, which restrict the transfer of cash from China, except under certain specific circumstances. Accordingly, such funds may not be readily available to us to satisfy obligations that have been incurred outside the PRC.

We had negative working capital of approximately $2.8 million, and $18.6 million as at September 30, 2009 and as of December 31, 2008, respectively. The decrease of negative working capital was largely caused by public offering fund raising and management attention to the aging of accounts payable.

Our accounts receivable has been an increasingly significant portion of our current assets, representing $29.5 million, $20.4 million, or 49.1%, and 45.3% of current assets, as at September 30, 2009 and as of December 31, 2008, respectively. If customers responsible for a significant amount of accounts receivable were to become insolvent or otherwise unable to pay for our products, or to make payments in a timely manner, our liquidity and results of operations could be materially adversely affected. An economic or industry downturn could materially adversely affect the servicing of these accounts receivable, which could result in longer payment cycles, increased collections costs and defaults in excess of management’s expectations. A significant deterioration in our ability to collect on accounts receivable could affect our cash flow and working capital position and could also impact the cost or availability of financing available to us.

We provide our major customers with payment terms ranging from 30 to 90 days. Additionally, our production lead time is approximately three weeks, from the inspection of incoming materials, to production, testing and packaging. We need to keep a large supply of raw materials and work in process and finished goods inventory on hand to ensure timely delivery of our products to our customers. We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Allowance for doubtful accounts is based on our assessment of the aging of accounts receivable, the collectability of specific customer accounts, our history of bad debts, and the general condition of the industry. Our aging of accounts receivables could result in our inability to collect receivables requiring us to increase our doubtful accounts reserve, which would decrease our net income and working capital. We experienced no bad debt expense in the nine months ended as of September 30, 2009 compared to $0.8 million for the same period in 2008. We believed it was appropriate to maintain the reserve balance for doubtful accounts primarily due to a decrease in the aging of our accounts receivable with a growth in our outstanding receivables as of September 30, 2009, and the general decline in the domestic and global economy. Due to the difficulty in assessing future trends, we could be required to further increase our provisions for doubtful accounts. As our accounts receivable age and become uncollectible our cash flow and results of operations are negatively impacted.

As of September 30, 2009, inventories amounted to $22.4 million, compared to $11.3 million as of December 31, 2008. We have experienced increased sales volume annually and, also, we launched promotion campaign in domestic market in the first quarter of 2009; as a result, we need to maintain certain amounts of finished goods to meet the customers’ demand when launching nationwide promotion campaign. We expect to experience increase in our inventory levels going forward, including both of raw material and finished goods. We maintain certain reserve amounts of raw materials in our inventories and engage in long-term arrangements with suppliers in an attempt to protect against any rising prices and shortages of raw materials used to manufacture our products.

NIVS PRC has entered into various revolving bank loans and bank notes to finance our operation. Most of the loans are one year renewable. NIVS PRC had bank loans of approximately $40.4 million, and $35.9 million as at September 30, 2009 and as of December 31, 2008, respectively. These loans carry annual interest rates of approximately 3.54% to 7.12% with maturity dates ranging from 30 days to one year. These loans are either unsecured or secured by the Company’s buildings, receivables and land use rights.

From June 2005 to November 2008, our subsidiaries entered into hundreds of loan transactions with NIVS PRC’s founder and our principal shareholder and current Chief Executive Officer and Chairman of the Board, Tianfu Li. In these loan transactions, we would borrow funds from Mr. Li. As of September 30, 2008, our subsidiaries had an aggregate outstanding loan balance due to Mr. Li of $9.1 million and $568,063 owed to NIVS Investment (SZ) Co., Ltd. In addition, our subsidiaries, primarily through NIVS PRC and NIVS International (H.K.) Limited (“NIVS HK”), would lend funds to the entities that were owned and controlled by Mr. Li. These entities controlled by Mr. Li are NIVS Investment (SZ) Co., Ltd.; Zhongkena Technology Development; Xentsan Technology (SZ) Co., Ltd.; Korea Hyundai Light & Electric (Int'l) Holding; NIVS Information & Technology (HZ) Co., Ltd.; and Hyundai Light & Electric (HZ) Co., Ltd. (collectively, the “Related Companies”). Our loans to related parties also include a loan to a supplier of Hyundai Light and Electric (HZ) Co. Ltd. in the amount of 38,474,900 RMB, which is equal to approximately U.S. $5.5 million. The note carried an interest rate of 1.5% per month and was guaranteed by Hyundai Light and Electric (HZ) Co Ltd.

The amount of the loans made by our subsidiaries to the Related Companies ranged in amount. The aggregate amount loaned from our subsidiaries to the Related Companies was approximately $13 million and $10 million during the years ended December 31, 2008 and 2007, respectively. The loan amounts owed to our subsidiaries by the Related Companies as of December 31, 2008 and 2007 were $0 and $2.2 million, respectively. As of December 31, 2008, our subsidiaries had an aggregate outstanding loan balance due to Mr. Li of $7.8 million, which was converted into equity upon the closing of our public offering in March 2009. All of the loans to and from our subsidiaries were unsecured with no fixed repayment date. The loans were borrowed and repaid frequently. Normally, it was agreed that the loan amounts were to be paid back to our subsidiaries within three to six months from the date of the loan transaction. The loans to the Related Companies were for temporary funding of each of the Related Companies’ business.

As presented in our statements of cash flows in our financial statements, the cash payments directly to and from our largest shareholder, Mr. Li, are reflected as “Due to Shareholder” and are classified as financing activities pursuant to the standards within Accounting Standard Codification 230-10-45, which provides that “financing activities include obtaining resources from owners and providing them with a return on, and a return of, their investment; borrowing money and repaying amounts borrowed.” The loan transactions with the related parties are classified as investing activity in accordance with the standards within Accounting Standard Codification 230-10-45 as the related parties are not “owners” of our company as described in the standards within Accounting Standard Codification 230-10-45 since the entities do not own equity in our company. In addition, Mr. Li, from July 2008, has not owned any part of Hyundai Light & Electric (Int’l) Holding Limited, and Mr. Li has never had any ownership interest of the supplier of Hyundai Light & Electric (Int’l) Holding Limited that was the holder of the note. The loans to the related parties were not a borrowing of funds by us, nor a repayment of funds borrowed by an owner.

Upon the closing of the Share Exchange, we, a publicly reporting company under U.S. securities laws, gained ownership of the subsidiaries. As a result, our subsidiaries became subject to the Sarbanes-Oxley Act of 2002, including Section 402’s prohibition against personal loans to directors and executive officers, either directly or indirectly. Because the loans did not have a purpose directly related to the business operations of our company or our subsidiaries, we believe that the loans made and outstanding after the closing of the Share Exchange may violate Section 402 of Sarbanes-Oxley, which would subject us and our chief executive officer to possible criminal, civil or administrative sanctions, penalties, or investigations, in addition to potential private securities litigation. It was intended that all loans from our subsidiaries to our officers and directors, whether directly or indirectly, be repaid in full prior to the closing of the Share Exchange, and no further loans were to be made to such related parties after the closing of the Share Exchange, which occurred on July 25, 2008. In November 2008, it was discovered that the loans to the entities owned by Mr. Li continued after the closing of the Share Exchange, as more fully described in the notes to the financial statements contained in this report. We made a total of 47 loans, with a total loan amount of $3,221,915, to the Related Companies after the closing of the Share Exchange.

On November 28, 2008, we and our subsidiaries entered into a Debt Repayment and Set-Off Agreement (the “Agreement”) with Mr. Li and the Related Companies. Pursuant to the Agreement, as it was amended on December 22, 2008, each of the Related Companies agreed to completely and immediately repay all outstanding loan amounts that it owed to us and our subsidiaries and we and our subsidiaries agreed to repay approximately $1.0 million of the debt that we and our subsidiaries owed to Mr. Li. As inducement for the Related Companies for entering into the Agreement, we and our subsidiaries agreed to, among other things, permit the amounts owed to us by the Related Companies to be off-set by amounts that we owed to Mr. Li and acknowledge that the Related Companies no longer owed any loan amounts to us or our subsidiaries.

Immediately prior to the repayments under the Agreement, our subsidiaries had an aggregate outstanding loan amount of approximately $8.8 million owed to Mr. Li (the “Li Debt”). On the same date, Mr. Li, through the Related Companies, had an aggregate outstanding loan amount of approximately $1.0 million owed to our subsidiaries (the “Related Companies’ Debt”), which consisted of approximately $1.0 million owed by Korea Hyundai Light & Electric (Int'l) Holding. Pursuant to the Agreement, the Related Companies’ Debt of approximately $1.0 million was repaid by set off against the Li Debt of approximately $8.8 million. As a result of the transactions contemplated by the Agreement, the Related Companies’ Debt is no longer outstanding and neither Mr. Li nor any of the Related Companies owed us or our subsidiaries any loan amount. Moreover, after the repayments under the Agreement, our subsidiaries’ remaining debt owed to Mr. Li was approximately $7.8 million. The parties to the Repayment Agreement also acknowledged that there were no remaining debt obligations owed to the us or our subsidiaries, either directly or indirectly, by Mr. Li, any other executive officer or director, or any related family member, of our company or subsidiaries, or any entity owned or controlled by such persons, including the Related Companies, and that no loans or similar arrangements will be made by us or our subsidiaries to such persons or entities in the future.

On December 24, 2008, we and three of our subsidiaries (NIVS BVI, NIVS HK, and NIVS PRC) entered into an agreement with Mr. Li pursuant to which the outstanding debt of $7.8 million that we owed to Mr. Li would be converted into shares of our common stock based on the closing price of our public offering that we conducted in March 2009. According to the agreement, we issued 2,240,493 shares of our common stock to Mr. Li in March 2009 upon the closing of our public offering. As a result of the conversion, the debt amount of $7.8 million was converted into shares of common stock at $3.50 per share, and the debt is no longer outstanding.

In March 2009, we completed a public offering consisting of 550,000 shares of our common stock. WestPark Capital, Inc. acted as underwriter in the public offering. Our shares of common stock were sold to the public at a price of $3.50 per share, for gross proceeds of approximately $1.9 million. Compensation for WestPark Capital’s services included discounts and commissions of $192,500, a $57,750 non-accountable expense allowance, roadshow expenses of approximately of $10,000, and legal counsel fees (excluding blue sky fees) of $40,000. WestPark Capital also received a warrant to purchase 55,000 shares of our common stock at an exercise price of $4.20 per share. The warrant, which has a term of five years, is not exercisable until at least one-year from the date of issuance. The warrant also carries registration rights. In April 2009, the underwriters exercised their over-allotment option in full for the offer and sale of 82,500 additional shares of common stock at $3.50 per share, for gross proceeds of $288,750.

In April 2009, WestPark Capital exercised its over-allotment option to purchase an additional of 82,500 shares of common stock. The shares were sold a price of $3.50 per share for a gross proceed of $288,750. Compensation incurred in the public offering included discounts and commissions of $28,875, an $8,663 non-accountable expense allowance, other expenses of $4,821, and legal counsel fees of $42,500.

On July 25, 2008, concurrently with the close of the Share Exchange, we conducted an initial closing of a private placement transaction pursuant to which we sold an aggregate of 5,239,460 shares of common stock at $1.80 per share, for gross proceeds of approximately $9.4 million. On August 12, 2009, we conducted a second and final closing of the private placement pursuant to which we sold an additional 1,304,587 shares of common stock at $1.80 per share for gross proceeds of approximately $2.3 million. Accordingly, we sold a total of 6,544,047 shares of common stock in the private placement for aggregate gross proceeds of approximately $11.8 million (the “Private Placement”). WestPark Capital, Inc., the placement agent for the Private Placement, was paid a commission equal to 6.5% of the gross proceeds from the financing, in addition to a $130,000 success fee for the Share Exchange, for an aggregate fee of approximately $896,000. We agreed to file a registration statement covering the common stock sold in the Private Placement and to pay for all costs related to the registration of the shares. The registration statement covering such shares was declared effective by the Securities and Exchange Commission in March 2009. We have used the proceeds from the Private Placement to provide working capital for speech-controlled TV and product promotion, speech-controlled audio acoustics, DVD, and DVB production capacity expansion, technology and product research and development, basic research and application product development, brand building and publicity and strengthening channel building and brand promotion in China and to increase reserve funds as well as new production lines for LCD TV for the expansion of business.

We are required to contribute a portion of our employees’ total salaries to the Chinese government’s social insurance funds, including pension insurance, medical insurance, unemployment insurance, and job injuries insurance, and maternity insurance, in accordance with relevant regulations. Total contributions to the funds are approximately $120,000 and $160,000 for the nine months ended September 30, 2009 and 2008, respectively. We expect that the amount of our contribution to the government’s social insurance funds will increase in the future as we expand our workforce.

According to the relevant PRC regulations on housing provident funds, PRC enterprises are required to contribute housing provident funds for their employees. The monthly contributions for Huizhou City must be at least 5% of each employee’s average monthly income in the previous year. The Company has not paid such funds for its employees since its establishment and the accumulated unpaid amount is approximately $870,000. Under local regulations on collection of housing provident funds in Huizhou City where the Company’s subsidiary, NIVS PRC, is located, the local housing authority may require the Company to rectify its non-compliance by setting up bank accounts and making payment and relevant filings for the unpaid housing funds for its employees within a specified time period. If the Company fails to do so within the specified time period, the local housing authority may impose a monetary fine on it and may also apply to the local people’s court for enforcement. The Company’s employees may also be entitled to claim payment of such funds individually. If the Company receives any notice from the local housing authority or any claim from our current and former employees regarding the Company’s non-compliance with the regulations, the Company will be required respond to the notice and pay all amounts due to the government, including any administrative penalties imposed, which would require the Company to divert its financial resources and/or impact its cash reserves, if any, to make such payments. Additionally, any administrative costs in excess of the payments, if material, may impact the Company's operating results. As of September 30, 2009, the Company has not received any notice from the local housing authority or any claim from our current and former employees

Net cash provided by operating activities was $3.5 million for the nine months ended September 30, 2009, compared to net cash used in operating activities of $6.0 million for the nine months ended September 30, 2008. The increase in net cash provided in operating activities was primarily due to a decrease in advances to suppliers and a decrease in accounts receivable. Our increase in net cash provided in operating activities for the nine months ended September 30, 2009 was partially offset by an increase in cash used in inventories in response to increasing material prices and demand of our products.

Investing activity during the nine months ended September 30, 2009 and 2008 included the purchasing of property and equipment and intangible assets, which resulted in net cash provided by investing activities of $2.8 million for the nine months ended September 30, 2009, compared to net cash used in investing activities of $15.4 million for the nine months ended September 30, 2008. The decrease in net cash used in investing activities was primarily due to the decrease in the restricted cash and the completion of our new plant renovation in 2008. In June 2008, we entered into an agreement for the purchase of production equipment and a new plant renovation at a contracted price of RMB 36,117,340 (USD $5,283,997). As of June 30, 2009, we had paid $3.3 million for the purchase of production equipment and plant renovation. The plant renovation and the equipment installation were completed in the end of 2008. The remainder balance of RMB 24,210 (USD$3,542) was paid in January, 2009.

Net cash used in financing activities amounted to $4.4 million for the nine months ended September 30, 2009, compared to net cash provided by financing activities of 22.2 million for the nine months ended September 30, 2008. The change in cash used in/provided by financing activities was primarily a decrease in various notes payable financing, partially offset by an increase in cash flow provided by bank loans and our IPO closing in March 2009.

In October 2009, we commenced construction on Phase II of our factory in Huizhou (Phase II), which will include a new manufacturing facility and dormitory. Phase II's manufacturing facility, adjacent to Phase I, will span approximately 36,000 square meters and will be dedicated to designing and making super thin LEDTVs, HD LCDTVs and 3G cell phones under the NIVS brand name and intended for distribution in China's domestic market. The expected production capacity will be 2 million TV sets and 1.5 million phones per year. Construction is scheduled to be completed during the second quarter of 2010, and the manufacturing facility is expected to be operational later that same quarter. The estimate completion date is April 30, 2010 for the manufacturing facility and June 30, 2010 for the dormitory. Total budget of the construction is RMB 53,500,000 ($7,847,380).

Based upon our present plans, we believe that cash on hand, cash flow from operations and funds available to us through financing will be sufficient to fund our current capital needs. We expect that our primary sources of funding for our operations for this year will result from our continued use of bank loans and bank notes and cash flow from operations to fund our operations during this year. However, our ability to maintain sufficient liquidity depends partially on our ability to achieve anticipated levels of revenue, while continuing to control costs. If we did not have sufficient available cash, we would have to seek additional debt or equity financing through other external sources, which may not be available on acceptable terms, or at all. Failure to maintain financing arrangements on acceptable terms would have a material adverse effect on our business, results of operations and financial condition.

Seasonality

The first quarter is traditionally our low season due to the long Chinese New Year Holiday, with sales gradually increasing in the second quarter. Sales are usually highest in the fourth quarter as most of the factories in China will ship out their stock to prepare the Chinese New Year Holiday.

Off-Balance Sheet Arrangements

We have no material off-balance sheet transactions.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of results of operations and financial condition are based upon our consolidated financial statements. These statements have been prepared in accordance with accounting principles generally accepted in the United States of America. These principles require management to make certain estimates and assumptions that affect amounts reported and disclosed in the financial statements and related notes. The most significant estimates and assumptions include valuation of inventories, provisions for income taxes, allowance for doubtful accounts, and purchase price allocation relating to the business acquired. Actual results could differ from these estimates. Periodically, we review all significant estimates and assumptions affecting the financial statements and record the effect of any necessary adjustments.

We describe our significant accounting policies in Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K as of and for the year ended December 31, 2008. We discuss our critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K as of and for the year ended December 31, 2008. Other than as indicated in this quarterly report, there have been no material revisions to the critical accounting policies as filed in our Annual Report on Form 10-K as of and for the year ended December 31, 2008 with the SEC on March 31, 2009.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in market risk from the information provided in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008, other than those discussed below.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

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

As of the end of the period covered by this Quarterly Report, we conducted an evaluation, under the supervision and the participation of our Chief Executive Officer and Chief Financial Officer, of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are not effective as of September 30, 2009 due to the deficiencies described below.

These deficiencies consisted of inadequate staffing and supervision that could lead to the untimely identification and resolution of accounting and disclosure matters and failure to perform timely and effective reviews. In addition, there are deficiencies in the recording and classification of accounting transactions and a lack of personnel with expertise in US generally accepted accounting principles and US Securities and Exchange Commission rules and regulations. Deficiencies in our controls and procedures have led to restatements of our financial statements, as follows:

In February 2010, the Company discovered that our financial statements for the three months ended September 30, 2009 should not be relied upon due to an error in the accounting record of selling expenses, resulting in an overstatement of our selling expenses for the period. The Company also noted that our financial statements for the three and nine months ended September 30, 2009, should not be relied upon due to an error in the accounting treatment of unrecorded liabilities, resulting in an understatement of our liabilities and cost and expenses for the periods in the amount of approximately $870,000 related to our non-payment of contributions to PRC housing provident funds for our employees as required under PRC regulations.

In December 2008, we noted that our financial statements for the years ended 2007, 2006, and 2005, the six months ended June 30, 2008 and 2007, and the nine months ended September 30, 2008 and 2007, contained an error in the accounting treatment for “Due from related parties,” whereby a misclassification of “Due from related parties” resulted in an overstatement of our assets and shareholders’ equity for those periods. We misclassified “Due from related parties” by recording related party receivables as an asset instead of as a deduction from stockholders’ equity for the periods referenced above. We reviewed the accounting for “Due from related parties” and, based on the review, we concluded that we misapplied accounting principles generally accepted in the United States of America and we restated our financial statements for the periods indicated above. We concluded that “Due from related parties” should have been accounted for by recording related party receivables as a deduction from stockholders’ equity. We accounted for “Due from related parties” by recording related party receivables as a deduction from stockholders’ equity.

In October 2008, we noted that our financial statements for the years ended 2007, 2006, and 2005 and the quarter ended June 30, 2008 and 2007 contained an error in the accounting treatment of imputed interest on due to shareholders loan, resulting in an understatement of our expenses for those periods. We did not account for the addition of imputed interest in our financial statements at the time of issuance. We reviewed the accounting for the imputed interest and, based on the review, we concluded that we misapplied accounting principles generally accepted in the United States of America and we restated our financial statements for the periods indicated above. We concluded that the imputed interest on loans due to our principal shareholders should have been accounted for as an expense to business operation and an addition to paid-in capital. We accounted for the imputed interest as an expense to business operations and an addition to paid-in capital.

Furthermore, in November 2008, our management identified a material weakness in our controls and procedures regarding our failure to timely disclose and prevent loan transactions made to entities owned and controlled by our CEO in violation of Section 402 of the Sarbanes-Oxley Act of 2002 (“Section 402”). The facts of the loan transactions and remediation are as follows:

On July 25, 2008, we consummated a share exchange transaction (the “Share Exchange”) pursuant to a share exchange agreement (the “Exchange Agreement”) dated as of June 27, 2008, and amended as of July 25, 2008, with NIVS Holding Company Limited, a British Virgin Islands corporation (“NIVS BVI”) and the shareholders of NIVS BVI (the “Shareholders”), whereby we (i) became the 100% parent of NIVS BVI and its subsidiaries, including its 97.5%-owned subsidiary NIVS (Huizhou) Audio & Video Tech. Co., Ltd., a company organized under the laws of the PRC (“NIVS PRC”); (ii) assumed the operations of NIVS BVI and its subsidiaries and (iii) changed our name from SRKP 19, Inc. to NIVS IntelliMedia Technology Group, Inc. Upon the closing of the Share Exchange, the sole business conducted by our company became the business conducted by NIVS BVI, and we appointed new officers and directors, which were officers and directors of NIVS BVI. Prior to the Share Exchange, NIVS PRC entered into loan transactions with its founder and our principal shareholder and current Chief Executive Officer and Chairman of the Board, Tianfu Li. In these transactions, NIVS PRC would borrow funds from Mr. Li and NIVS PRC would also lend funds to entities that were owned and controlled by Mr. Li. These entities are NIVS Investment (SZ) Co., Ltd.; Zhongkena Technology Development; Xentsan Technology (SZ) Co., Ltd.; Korea Hyundai Light & Electric (Int'l) Holding; NIVS Information & Technology (HZ) Co., Ltd.; and Hyundai Light & Electric (HZ) Co., Ltd. The loans were unsecured with no fixed repayment date.

It was intended that all loans from the Company to officers and directors, whether directly or indirectly, be repaid prior to the closing of the Share Exchange, and no further loans would be made to such related parties after the closing of the Share Exchange. In November 2008, it was discovered that the loans to entities owned by our CEO and other related parties continued after the closing of the Share Exchange. Upon the discovery of the continued loans to entities owned by our CEO and other related parties, we took remedial steps to address the violation of Section 402 by requiring immediate and full repayment of all outstanding loan balances, including all accrued interest, and we have received full repayment of the amounts owed to us by the entities owned and controlled by our CEO. We entered into a repayment agreement with the entities owned by our CEO and other related parties pursuant to which all amounts owed by such entities to us was repaid in full.

We have taken steps to improve the process designed to prevent such loans to our directors, officers or related entities by engaging (i) Protiviti, a third party consulting firm with experience in implementing Section 402 preventative measures and controls and procedures, (ii) two consultants in U.S. to help us meet the public reporting requirements, and (iii) a financial consultant with experience in public company reporting and advising China-based companies listed in the United States. Under the direction of Protiviti, our company has set up quarterly training seminars to department heads to ensure that they fully understand our internal controls and procedures and to follow these procedures at work. In 2010, we renewed our contract with Protiviti to help us further improve our internal controls and procedures to comply with SEC regulations. Furthermore, in January 2009, we appointed a new independent director and Chairman of our Audit, Compensation, and Nominating Committees, Charles Mo. In January 2009, we also hired a new Interim Chief Financial Officer and Corporate Secretary, Simon Zhang, who has experience with financial reporting under U.S. GAAP. Mr. Zhang subsequently became our permanent CFO. In addition, we have amended our Audit Committee charter and Code of Business Conduct and Ethics to specifically provide that our Audit Committee must discuss and review with management, our outside legal counsel, our independent auditor and other appropriate parties, as applicable, before approving any proposed loan, advance of funds, transfer of funds, creation of debt or other liability, or similar transaction that involves a related party, including any entity in which a director or executive officer of the Company has a direct or indirect interest. No transaction is permitted to occur until such review and analysis is complete and the Audit Committee provides prior written approval and authorization.

In January 2009, in an effort to take additional measures to improve our internal controls and procedures regarding related party transactions and to adopt a policy for the identification, approval, processing, recording and disclosure of related party transactions, we adopted the NIVS IntelliMedia Technology Group, Inc. Policy and Procedures With Respect To Related Person Transactions. Additionally, in January 2009, in an effort to take additional measures to improve our internal controls and procedures to ensure that information required to be disclosed by our company in the reports that we file or submit under U.S. securities laws and the SEC’s rules and regulations is accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding required disclosure, we adopted the NIVS IntelliMedia Technology Group, Inc. Disclosure Controls and Procedures.

In addition to the foregoing, we are seeking to improve our controls and procedures in an effort to remediate these deficiencies through improving supervision, education, and training of our accounting staff. As stated above, since engaging Protiviti, our company has set up quarterly internal training seminars on internal controls and procedures to department heads. Additionally, we have engaged third-party financial consultants to review and analyze our financial statements and assist us in improving our reporting of financial information, including advising us on whether we need additional accounting personnel to ensure timely reporting of financial information. We believe that the remedial steps that we have taken and plan to take will address the conditions identified by our CEO and CFO in our disclosure controls and procedures. We will continue to monitor the effectiveness of these improvements. We also plan to work with the outside consultants we have engaged in assessing and improving our internal controls and procedures when necessary.

Changes in Internal Control over Financial Reporting

Due to the implementation of the remedial measures described above, there were changes in our internal controls over financial reporting during the third quarter of fiscal 2009 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Not applicable.

ITEM 1A. RISK FACTORS

Any investment in our common stock involves a high degree of risk. Investors should carefully consider the risks described below and all of the information contained in our public filings, such as our annual report on Form 10-K as filed with the SEC on March 31, 2009, before deciding whether to purchase our common stock.

We may be exposed to monetary fines by the local housing authority and claims from our employees in connection with NIVS PRC Light’s non-compliance with regulations with respect to contribution of housing provident funds for employees.

According to the relevant PRC regulations on housing provident funds, PRC enterprises are required to contribute housing provident funds for their employees. The monthly contributions must beat least 5% of each employee’s average monthly income in the previous year. NIVS PRC has not paid such funds for its employees since its establishment and the accumulated unpaid amount is approximately $870,000. Under local regulations on collection of housing provident funds in Huizhou City where NIVS PRC is located, the local housing authority may require NIVS PRC to rectify its non-compliance by setting up bank accounts and making payment and relevant filings for the unpaid housing funds for its employees within a specified time period. If NIVS PRC fails to do so within the specified time period, the local housing authority may impose a monetary fine on it and may also apply to the local people’s court for enforcement. NIVS PRC employees may also be entitled to claim payment of such funds individually. If we receive any notice from the local housing authority or any claim from our current and former employees regarding our non-compliance with the regulations, we will be required respond to the notice and pay all amounts due to the government, including any administrative penalties imposed, which would require us to divert our financial resources and/or impact our cash reserves, if any, to make such payments. Additionally, any administrative costs in excess of the payments, if material, may impact our operating results.

We depend on a small number of customers for the vast majority of our sales. A reduction in business from any of these customers could cause a significant decline in our sales and profitability.

The vast majority of our sales are generated from a small number of customers. For the nine months ended September 30, 2009, we had three customers that each accounted for at least 5% of the revenues that we generated. These three customers accounted for a total of approximately 28.3% of our revenue for that period. During the year ended December 31, 2008 and 2007, we had seven and five customers that generated revenues of at least 5% of our revenues, with one customer accounting for 12% and 13% of our revenue, respectively. These customers accounted for a total of approximately 44% and 38% of our revenue for the years ended December 31, 2008 and 2007, respectively. The loss of any of these customers could have a material adverse effect upon our revenue and net income.

In addition, we believe that one customer will represent substantially all of our mobile phone product sales in the foreseeable. We entered into a purchase agreement with Kuanda (Xiamen) Communications Co., Ltd and China PTAC Communications Services, on behalf of China Telecom, for the purchase by China Telecom of our two 3G mobile phone products. PRC law currently permits only three wireless carriers in the China telecommunications market, China Mobile, China Telecom and China Unicom. The purchase agreement that we have with China Telecom is contingent on delivery of the 3G mobile phones representing the aggregate order by March 31, 2010. The value of the order is approximately $28.8 million; the dollar value of any additional orders further to this relationship depends on the final number of delivered products. If we fail to meet the requirements of the order or otherwise lose China PTAC as a customer could result in a material adverse effect upon our revenue and net income.

Our acquisition of Dongri in January 2010 may not result in the benefits and revenue growth we expect.

In January 2010, our wholly-owned subsidiary, NIVS Holding Company Limited, acquired 100% of the equity interest in Huizhou Dongri Digital Co., Ltd., a company organized under the laws of the People’s Republic of China (“Dongri”) for a purchase price of up $23 million. Our acquisition of Dongri and its manufacturing facility could expose us to potential liabilities, some of which may not be disclosed by the seller, and there are no assurances that our acquisition of Dongri will enhance our future financial condition. We may continue to acquire additional businesses in the future. This acquisition and future acquisitions involve substantial risks, including:

integration and management of the operations;

retention of key personnel;

integration of information systems, internal procedures, accounts receivable and management, financial and operational controls;

diversion of management’s attention from other ongoing business concerns; and exposure to unanticipated liabilities of acquired companies;

uncertainty as to whether PRC governmental authorities will question the structure of the acquisition and require approval of PRC authorities that would have the ability to seek to void the transaction;

unforeseen tax liability in connection with our possession and operation of the Dongri; and

failure to realize anticipated financial results or benefits.

These and other factors could harm our ability to achieve anticipated levels of profitability or realize other anticipated benefits of an acquisition and could adversely affect our business and operating results.

Our expansion into the mobile phone industry will depend on the continued growth of the mobile communications industry, and if the mobile communications industry does not grow as we expect, our sales and profitability may be adversely affected.

We have recently made significant investments to enter into the mobile phone industry, and sales of our mobile phone products depend on continued growth in mobile communications in terms of the number of existing mobile subscribers who upgrade or simply replace their existing mobile devices, the number of new subscribers and increased usage. As well, our sales and profitability are affected by the extent to which there is increasing demand for, and development of, value-added services, leading to opportunities for us to successfully market mobile devices that feature these services. These developments are outside of our control. For example, we are dependent on operators in highly penetrated markets to successfully introduce services that cause a substantial increase in usage of voice and data. If operators are not successful in their attempts to increase subscriber numbers, stimulate increased usage or drive replacement sales, our business and results of operations could be materially adversely affected.

Allegations of health risks from the electromagnetic fields generated by mobile devices, and the lawsuits and publicity relating to them, regardless of merit, could affect our operations negatively by leading consumers to reduce their use of mobile devices or by causing us to allocate monetary and personnel resources to these issues.

There has been public speculation about possible health risks to individuals from exposure to electromagnetic fields from the use of mobile devices such as mobile phones, which we manufacture and sell. While a substantial amount of scientific research conducted to date by various independent research bodies has indicated that these radio signals, at levels within the limits prescribed by public health authority safety standards and recommendations, present no adverse effect to human health, we cannot be certain that future studies, irrespective of their scientific basis, will not suggest a link between electromagnetic fields and adverse health effects that would adversely affect our sales and share price. Research into these issues is ongoing by government agencies, international health organizations and other scientific bodies in order to develop a better scientific and public understanding of these issues.

Although our products and solutions are designed to meet all relevant safety standards and recommendations globally, no more than a perceived risk of adverse health effects of mobile communications devices could adversely affect us through a reduction in sales of mobile devices or increased difficulty in obtaining sites for base stations, and could have a negative effect on our reputation and brand value as well as harm our share price.

We will not be able to complete an acquisition of prospective acquisition targets in the PRC unless their financial statements can be reconciled to U.S. generally accepted accounting principles in a timely manner.

Companies based in the PRC may not have properly kept financial books and records that may be reconciled with U.S. generally accepted accounting principles. If we attempt to acquire a significant PRC target company and/or its assets, we would be required to obtain or prepare financial statements of the target that are prepared in accordance with and reconciled to U.S. generally accepted accounting principles. Federal securities laws require that a business combination meeting certain financial significance tests require the public acquirer to prepare and file historical and/or pro forma financial statement disclosure with the SEC. These financial statements must be prepared in accordance with, or be reconciled to U.S. generally accepted accounting principles and the historical financial statements must be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. If a proposed acquisition target does not have financial statements that have been prepared in accordance with, or that can be reconciled to, U.S. generally accepted accounting principles and audited in accordance with the standards of the PCAOB, we will not be able to acquire that proposed acquisition target. These financial statement requirements may limit the pool of potential acquisition targets with which we may acquire and hinder our ability to expand our retail operations. Furthermore, if we consummate an acquisition and are unable to timely file audited financial statements and/or pro forma financial information required by the Exchange Act, such as Item 9.01 of Form 8-K, we will be ineligible to use the SEC’s short-form registration statement on Form S-3 to raise capital, if we are otherwise eligible to use a Form S-3. If we are ineligible to use a Form S-3, the process of raising capital may be more expensive and time consuming and the terms of any offering transaction may not be as favorable as they would have been if we were eligible to use Form S-3.

We face uncertainty from China’s Circular on Strengthening the Administration of Enterprise Income Tax on Non-Resident Enterprises' Share Transfer (“Circular 698”) that was released in December 2009 with retroactive effect from January 1, 2008.

The Chinese State Administration of Taxation (SAT) released a circular (Guoshuihan No. 698 – Circular 698) on December 15, 2009 that addresses the transfer of shares by nonresident companies. Circular 698, which is effective retroactively to January 1, 2008, may have a significant impact on many companies that use offshore holding companies to invest in China. Circular 698, which provides parties with a short period of time to comply its requirements, indirectly taxes foreign companies on gains derived from the indirect sale of a Chinese company. Where a foreign investor indirectly transfers equity interests in a Chinese resident enterprise by selling the shares in an offshore holding company, and the latter is located in a country or jurisdiction where the effective tax burden is less than 12.5% or where the offshore income of his, her, or its residents is not taxable, the foreign investor is required to provide the tax authority in charge of that Chinese resident enterprise with the relevant information within 30 days of the transfers. Moreover, where a foreign investor indirectly transfers equity interests in a Chinese resident enterprise through an abuse of form of organization and there are no reasonable commercial purposes such that the corporate income tax liability is avoided, the PRC tax authority will have the power to re-assess the nature of the equity transfer in accordance with PRC’s “substance-over-form” principle and deny the existence of the offshore holding company that is used for tax planning purposes.

There is uncertainty as to the application of Circular 698. For example, while the term "indirectly transfer" is not defined, it is understood that the relevant PRC tax authorities have jurisdiction regarding requests for information over a wide range of foreign entities having no direct contact with China. Moreover, the relevant authority has not yet promulgated any formal provisions or formally declared or stated how to calculate the effective tax in the country or jurisdiction and to what extent and the process of the disclosure to the tax authority in charge of that Chinese resident enterprise. In addition, there are not any formal declarations with regard to how to decide “abuse of form of organization” and “reasonable commercial purpose,” which can be utilized by us to balance if our company complies with the Circular 698. As a result, we may become at risk of being taxed under Circular 698 and we may be required to expend valuable resources to comply with Circular 698 or to establish that we should not be taxed under Circular 698, which could have a material adverse effect on our financial condition and results of operations.

Under the New EIT Law, we and NIVS BVI may be classified as “resident enterprises” of China for tax purpose, which may subject us and NIVS BVI to PRC income tax on taxable global income.

Under the new PRC Enterprise Income Tax Law (the “New EIT Law”) and its implementing rules, both of which became effective on January 1, 2008. Under the New EIT Law, enterprises are classified as resident enterprises and non-resident enterprises. An enterprise established outside of China with its “de facto management bodies” located within China is considered a “resident enterprise,” meaning that it can be treated in a manner similar to a Chinese domestic enterprise for enterprise income tax purposes. The implementing rules of the New EIT Law define de facto management body as a managing body that in practice exercises “substantial and overall management and control over the production and operations, personnel, accounting, and properties” of the enterprise. Due to the short history of the New EIT law and lack of applicable legal precedents, it remains unclear how the PRC tax authorities will determine the PRC tax resident treatment of a foreign company such as us and NIVS BVI. Both us and NIVS BVI have all members of management team located in China. If the PRC tax authorities determine that we or NIVS BVI is a “resident enterprise” for PRC enterprise income tax purposes, a number of PRC tax consequences could follow. First, we may be subject to the enterprise income tax at a rate of 25% on our worldwide taxable income, including interest income on the proceeds from this offering, as well as PRC enterprise income tax reporting obligations. Second, the New EIT Law provides that dividend paid between “qualified resident enterprises” is exempted from enterprise income tax. A recent circular issued by the State Administration of Taxation regarding the standards used to classify certain Chinese-invested enterprises controlled by Chinese enterprises or Chinese group enterprises and established outside of China as “resident enterprises” clarified that dividends and other income paid by such “resident enterprises” will be considered to be PRC source income, subject to PRC withholding tax, currently at a rate of 10%, when recognized by non-PRC shareholders. It is unclear whether the dividends that we or NIVS BVI receives from NIVS PRC will constitute dividends between “qualified resident enterprises” and would therefore qualify for tax exemption, because the definition of qualified resident enterprises is unclear and the relevant PRC government authorities have not yet issued guidance with respect to the processing of outbound remittances to entities that are treated as resident enterprises for PRC enterprise income tax purposes. We are actively monitoring the possibility of “resident enterprise” treatment for the applicable tax years and are evaluating appropriate organizational changes to avoid this treatment, to the extent possible. As a result of the New EIT Law, our historical operating results will not be indicative of our operating results for future periods and the value of our common stock may be adversely affected.

Dividends payable by us to our foreign investors and any gain on the sale of our shares may be subject to taxes under PRC tax laws.

If dividends payable to our shareholders are treated as income derived from sources within China, then the dividends that shareholders receive from us, and any gain on the sale or transfer of our shares, may be subject to taxes under PRC tax laws.

Under the New EIT Law and its implementing rules, PRC enterprise income tax at the rate of 10% is applicable to dividends payable by us to our investors that are non-resident enterprises so long as such non-resident enterprise investors do not have an establishment or place of business in China or, despite the existence of such establishment of place of business in China, the relevant income is not effectively connected with such establishment or place of business in China, to the extent that such dividends have their sources within the PRC. Similarly, any gain realized on the transfer of our shares by such investors is also subject to a 10% PRC income tax if such gain is regarded as income derived from sources within China and we are considered as a resident enterprise which is domiciled in China for tax purpose. Additionally, there is a possibility that the relevant PRC tax authorities may take the view that the purpose of us and NIVS BVI is holding NIVS PRC, and the capital gain derived by our overseas shareholders or investors from the share transfer is deemed China-sourced income, in which case such capital gain may be subject to a PRC withholding tax at the rate of up to 10%. If we are required under the New EIT Law to withhold PRC income tax on our dividends payable to our foreign shareholders or investors who are non-resident enterprises, or if you are required to pay PRC income tax on the transfer or our shares under the circumstances mentioned above, the value of your investment in our shares may be materially and adversely affected.

In January, 2009, the State Administration of Taxation promulgated the Provisional Measures for the Administration of Withholding of Enterprise Income Tax for Non-resident Enterprises (“Measures”), pursuant to which, the entities which have the direct obligation to make the following payment to a non-resident enterprise shall be the relevant tax withholders for such non-resident enterprise, and such payment includes: incomes from equity investment (including dividends and other return on investment), interests, rents, royalties, and incomes from assignment of property as well as other incomes subject to enterprise income tax received by non-resident enterprises in China. Further, the Measures provides that in case of equity transfer between two non-resident enterprises which occurs outside China, the non-resident enterprise which receives the equity transfer payment shall, by itself or engage an agent to, file tax declaration with the PRC tax authority located at place of the PRC company whose equity has been transferred, and the PRC company whose equity has been transferred shall assist the tax authorities to collect taxes from the relevant non-resident enterprise. However, it is unclear whether the Measures refer to the equity transfer by a non-resident enterprise which is a direct or an indirect shareholder of the said PRC company. Given these Measures, there is a possibility that we may have an obligation to withhold income tax in respect of the dividends paid to non-resident enterprise investors.

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

Not applicable.

ITEM 3. DEFAULT UPON SENIOR SECURITIES

Not applicable.

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

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS

(a) Exhibits

Exhibit Number		Description of Document
31.1		Certification of Chief Executive Officer Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Chief Financial Officer Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	NIVS IntelliMedia Technology Group, Inc.

Dated: February 23, 2010	/s/	Tianfu Li
	By:	Tianfu Li
	Its:	Chairman of the Board and Chief Executive Officer

NIVS IntelliMedia Technology Group, Inc. - FORM 10-Q/A - February 23, 2010

Attached files

NIVS IntelliMedia Technology Group, Inc. Reports