Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
|
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT
OF 1934
|
|
For
the quarter ended March 31, 2009
|
-OR-
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT
OF 1934
|
|
For
the transition period from __________________
to __________________
|
Commission File Number 0-50164
INNOCOM
TECHNOLOGY HOLDINGS, INC.
(Exact
Name of small business issuer as specified in Its charter)
|
NEVADA
|
|
87-0618756
|
|
(State
or other jurisdiction of
|
|
(I.R.S.
Employer Identification No.)
|
|
incorporation
or organization)
|
|
|
|
Suite
1501, Bank of East Asia Harbour View Centre,
56
Gloucester Road, Wanchai, Hong Kong, PRC
(Address
of principal executive offices)
|
|
(Zip
code)
|
Issuer’s
telephone number, including area code: (852) 3102 1602
(Former
name, former address or former fiscal year, if changed since last
report)
Indicate
by check mark whether the registrant: (1) 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 þ No o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act.
Large
accelerated filer o Accelerated
filer o Non-accelerated
filer o Smaller
reporting company þ
Indicate
by check mark whether the registrant is a shell company (as defined in Rue
12b-2of the Exchange Act).
Yes o No þ
The
number of shares outstanding of each of the Registrant’s classes of common
stock, as of May 8, 2009 was 37,900,536 shares, all of one class of $0.001 par
value Common Stock.
INNOCOM
TECHNOLOGY HOLDINGS, INC.
FORM
10-Q
Quarter
Ended March 31, 2009
TABLE
OF CONTENTS
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PART
I— FINANCIAL INFORMATION
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Page
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Item
1
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Financial
Statements
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| |
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Condensed
Consolidated Balance Sheets as of March 31, 2009 (unaudited) and
December 31, 2008 (audited)
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F-2
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| |
|
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|
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|
Condensed
Consolidated Statements of Operations and Comprehensive (Loss) Income for
the Three Months Ended March 31, 2009 and 2008 (unaudited)
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F-3
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| |
|
|
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Condensed
Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 2009 and 2008 (unaudited)
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F-4
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| |
|
|
|
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|
Condensed
Consolidated Statement of Stockholders’ Deficit for the Three
Months Ended March 31, 2009 (unaudited)
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F-5
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| |
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F-6
– F-12
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Item
2
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Managements
Discussion and Analysis of Financial Condition and Results
of Operation
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13
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| |
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Item
3
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Quantitative
and Qualitative Disclosures About Market Risk
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16
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Item
4T
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Controls
and Procedures
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16
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PART
II—OTHER INFORMATION
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Item
1
|
Legal
Proceedings
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16
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Item
1A
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Risk
Factors
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16
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Item
2
|
Unregistered
Sales of Equity Securities and Use of Proceeds
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|
17
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Item
3
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Defaults
Upon Senior Securities
|
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17
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Item
4
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Submission
of Matters to a Vote of Security Holders
|
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17
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Item
5
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Other
Information
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|
17
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| |
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Item
6
|
Exhibits
|
|
17
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| |
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SIGNATURES
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17
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SPECIAL
NOTE ON FORWARD LOOKING STATEMENTS
This
Quarterly Report on Form 10-Q, including "Management's Discussion and Analysis
of Financial Condition and Results of Operations" in Item 2 of Part I of this
report include forward-looking statements. These statements involve known and
unknown risks, uncertainties and other factors that may cause our actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance, or
achievements expressed or implied by forward-looking statements.
In some
cases, you can identify forward-looking statements by terminology such as "may,"
"should," "expects," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential," "proposed," "intended," or "continue" or the negative
of these terms or other comparable terminology. You should read statements that
contain these words carefully, because they discuss our expectations about our
future operating results or our future financial condition or state other
"forward-looking" information. There may be events in the future that we are not
able to accurately predict or control. Before you invest in our securities, you
should be aware that the occurrence of any of the events described in this
Annual Report could substantially harm our business, results of operations and
financial condition, and that upon the occurrence of any of these events, the
trading price of our securities could decline and you could lose all or part of
your investment. Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
growth rates, levels of activity, performance or achievements. We are under no
duty to update any of the forward-looking statements after the date of this
Quarterly Report to conform these statements to actual results.
PART
I. FINANCIAL INFORMATION
ITEM
1. Financial Statements
INDEX
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
|
Page
|
|
Condensed Consolidated
Balance Sheets as of March 31,
2009 and December 31, 2008
|
|
|
F-2 |
|
|
|
|
|
|
|
Condensed Consolidated
Statements of Operations And
Comprehensive Income (Loss) for the three months ended March 31, 2009 and
2008 and for the period from January 19, 2007 (Inception) through March
31, 2009
|
|
|
F-3 |
|
|
|
|
|
|
|
Condensed Consolidated
Statements of Cash
Flows for the three months
ended March 31, 2009 and 2008 and for the period from January 19, 2007
(Inception) through March 31, 2009
|
|
|
F-4 |
|
|
|
|
|
|
|
Condensed Consolidated
Statement of Stockholders’ Equity
(Deficit) for the period from January 19, 2007 (Inception) through March
31, 2009
|
|
|
F-5 |
|
|
|
|
|
|
|
|
|
|
F-6
to F-12
|
|
INNOCOM
TECHNOLOGY HOLDINGS, INC.
(A
Development Stage Company)
CONDENSED
CONSOLIDATED BALANCE SHEETS
AS
OF MARCH 31, 2009 AND DECEMBER 31, 2008
(Currency
expressed in United States Dollars (“US$”), except for number of
shares)
|
|
|
March
31,
2009
|
|
|
December
31,
2008
|
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
8,703 |
|
|
$ |
11,553 |
|
|
Prepayments
and other receivables
|
|
|
72,828 |
|
|
|
72,869 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
81,531 |
|
|
|
84,422 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
assets:
|
|
|
|
|
|
|
|
|
|
Intangible
assets, net
|
|
|
- |
|
|
|
- |
|
|
Land
use right, net
|
|
|
- |
|
|
|
- |
|
|
Property,
plant and equipment, net
|
|
|
736,186 |
|
|
|
737,859 |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$ |
817,717 |
|
|
$ |
822,281 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
80,595 |
|
|
$ |
80,692 |
|
|
Amount
due to a related party
|
|
|
4,249,797 |
|
|
|
4,152,410 |
|
|
Other
payables and accrued liabilities
|
|
|
219,329 |
|
|
|
210,866 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
4,549,721 |
|
|
|
4,443,968 |
|
|
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
deficit:
|
|
|
|
|
|
|
|
|
|
Common
stock, $0.001 par value; 50,000,000 shares authorized; 37,898,251 shares
and 37,898,251 shares issued and outstanding as of March 31, 2009 and
December 31, 2008
|
|
|
37,898 |
|
|
|
37,898 |
|
|
Additional
paid-in capital
|
|
|
6,901,232 |
|
|
|
6,901,232 |
|
|
Accumulated
other comprehensive income
|
|
|
537,719 |
|
|
|
532,248 |
|
|
Retained
earnings
|
|
|
5,351,825 |
|
|
|
5,351,825 |
|
|
Deficit
accumulated during the development stage
|
|
|
(16,560,678 |
) |
|
|
(16,444,890 |
) |
|
|
|
|
|
|
|
|
|
|
|
Total
stockholders’ deficit
|
|
|
(3,732,004 |
) |
|
|
(3,621,687 |
) |
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
$ |
817,717 |
|
|
$ |
822,281 |
|
See
accompanying notes to condensed consolidated financial statements.
INNOCOM
TECHNOLOGY HOLDINGS, INC.
(A
Development Stage Company)
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
AND
COMPREHENSIVE INCOME (LOSS)
FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008 AND
FOR
THE PERIOD FROM JANUARY 19, 2007 (INCEPTION) THROUGH MARCH 31, 2009
(Currency
expressed in United States Dollars (“US$”), except for number of
shares)
(Unaudited)
|
|
|
Three
months ended
March
31,
|
|
|
Period
from
January
19, 2007 (Inception)
through
March 31,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues,
net
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
Cost
of revenue
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment
loss on long-lived assets
|
|
|
- |
|
|
|
- |
|
|
|
14,481,991 |
|
|
General
and administrative
|
|
|
115,788 |
|
|
|
137,066 |
|
|
|
1,857,248 |
|
|
Total
operating expenses
|
|
|
115,788 |
|
|
|
137,066 |
|
|
|
16,339,239 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS
FROM OPERATIONS
|
|
|
(115,788 |
) |
|
|
(137,066 |
) |
|
|
(16,339,239 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
- |
|
|
|
- |
|
|
|
(240,497 |
) |
|
Interest
income
|
|
|
- |
|
|
|
- |
|
|
|
20,727 |
|
|
Loss
on disposal of plant and equipment
|
|
|
- |
|
|
|
- |
|
|
|
(1,669 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS
BEFORE INCOME TAXES
|
|
|
(115,788 |
) |
|
|
(137,066 |
) |
|
|
(16,560,678 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax expense
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS
FROM CONTINUING OPERATIONS, NET OF TAX
|
|
|
(115,788 |
) |
|
|
(137,066 |
) |
|
|
(16,560,678 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
operations, net of tax
|
|
|
- |
|
|
|
122,028 |
|
|
|
401,190 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS
|
|
$ |
(115,788 |
) |
|
$ |
(15,038 |
) |
|
$ |
(16,159,488 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation gain
|
|
|
5,471 |
|
|
|
34,458 |
|
|
|
357,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
(LOSS) INCOME
|
|
$ |
(110,317 |
) |
|
$ |
19,420 |
|
|
$ |
(15,802,188 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from continuing operations per share - Basic and diluted
|
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.44 |
) |
|
Income
from discontinued operations per share - Basic and diluted
|
|
$ |
- |
|
|
$ |
0.00 |
|
|
$ |
0.01 |
|
|
Net
loss per share – Basic and diluted
|
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.43 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding – basic and diluted
|
|
|
37,898,251 |
|
|
|
37,898,251 |
|
|
|
37,898,251 |
|
See
accompanying notes to condensed consolidated financial statements.
INNOCOM
TECHNOLOGY HOLDINGS, INC.
(A
Development Stage Company)
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008 AND
FOR
THE PERIOD FROM JANUARY 19, 2007 (INCEPTION) THROUGH MARCH 31, 2009
(Currency
expressed in United States Dollars (“US$”))
(Unaudited)
|
|
|
Three
months ended
March
31,
|
|
|
Period
from
January
19,
2007
Inception)
through
|
|
|
|
|
2009
|
|
|
2008
|
|
|
March
31, 2009
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
Loss
from continuing operations
|
|
$ |
(115,788 |
) |
|
$ |
(137,066 |
) |
|
$ |
(16,560,678 |
) |
|
Adjustments
to reconcile loss from continuing operations to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
788 |
|
|
|
417 |
|
|
|
4,350 |
|
|
Amortization
of intangible assets
|
|
|
- |
|
|
|
148,671 |
|
|
|
598,562 |
|
|
Impairment
of long-lived assets
|
|
|
- |
|
|
|
- |
|
|
|
14,481,991 |
|
|
Write-off
of obsolete inventories
|
|
|
- |
|
|
|
- |
|
|
|
87,299 |
|
|
Loss
on disposal of plant and equipment
|
|
|
- |
|
|
|
- |
|
|
|
1,669 |
|
|
Change
in operating assets and liabilities:
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Inventories
|
|
|
- |
|
|
|
- |
|
|
|
(87,299 |
) |
|
Prepayments
and other receivables
|
|
|
- |
|
|
|
(93,739 |
) |
|
|
(46,233 |
) |
|
Accounts
payable, trade
|
|
|
- |
|
|
|
- |
|
|
|
80,692 |
|
|
Other
payables and accrued liabilities
|
|
|
8,463 |
|
|
|
(400,780 |
) |
|
|
21,632 |
|
|
Net
cash used in operating activities
|
|
|
(106,537 |
) |
|
|
(482,497 |
) |
|
|
(1,418,015 |
) |
|
Net
cash provided by discontinued operations
|
|
|
- |
|
|
|
400,780 |
|
|
|
401,190 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
of intangible assets
|
|
|
- |
|
|
|
- |
|
|
|
(5,960,775 |
) |
|
Payment
for property, plant and equipment
|
|
|
- |
|
|
|
- |
|
|
|
(8,896,299 |
) |
|
Net
cash used in investing activities
|
|
|
- |
|
|
|
- |
|
|
|
(14,857,074 |
) |
|
Net
cash provided by discontinued operations
|
|
|
- |
|
|
|
- |
|
|
|
(2,382 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advances
from a related party
|
|
|
97,387 |
|
|
|
87,156 |
|
|
|
15,346,129 |
|
|
Repayment
of shot term borrowing
|
|
|
- |
|
|
|
- |
|
|
|
(6,080,032 |
) |
|
Proceeds
from short-term loan
|
|
|
- |
|
|
|
- |
|
|
|
6,080,032 |
|
|
Net
cash provided by financing activities
|
|
|
97,387 |
|
|
|
87,156 |
|
|
|
15,346,129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect
of exchange rate changes on cash and cash equivalents
|
|
|
6,300 |
|
|
|
19 |
|
|
|
538,855 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
change in cash and cash equivalents
|
|
|
(2,850 |
) |
|
|
5,458 |
|
|
|
8,703 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BEGINNING
OF PERIOD
|
|
|
11,553 |
|
|
|
3,597 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
END
OF PERIOD
|
|
$ |
8,703 |
|
|
$ |
9,055 |
|
|
$ |
8,703 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
Cash
paid for income taxes
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
Cash
paid for interest
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
240,497 |
|
See
accompanying notes to condensed consolidated financial statements.
INNOCOM
TECHNOLOGY HOLDINGS, INC.
(A
Development Stage Company)
CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR
THE PERIOD FROM JANUARY 19, 2007 (INCEPTION) THROUGH MARCH 31, 2009
(Currency
expressed in United States Dollars (“US$”), except for number of
shares)
(Unaudited)
| |
|
Common
stock
|
|
|
Additional
paid-in
|
|
|
Accumulated
other
|
|
|
Retained
|
|
|
accumulated
|
|
|
Total
stockholders’
equity
|
|
| |
|
No.
of shares
|
|
|
Amount
|
|
|
capital
|
|
|
(loss)
income
|
|
|
earnings
|
|
|
stage
|
|
|
(deficit)
|
|
|
Balance
as of January 19, 2007 (Inception)
|
|
|
37,898,251 |
|
|
$ |
37,898 |
|
|
$ |
6,901,232 |
|
|
$ |
180,418 |
|
|
$ |
8,585,184 |
|
|
$ |
- |
|
|
$ |
15,704,732 |
|
|
Net
loss for the year
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(3,634,549 |
) |
|
|
- |
|
|
|
(3,634,549 |
) |
|
Foreign
currency translation adjustment
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(8,766 |
) |
|
|
|
|
|
|
- |
|
|
|
(8,766 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of December 31, 2007
|
|
|
37,898,251 |
|
|
|
37,898 |
|
|
|
6,901,232 |
|
|
|
171,652 |
|
|
|
4,950,635 |
|
|
|
- |
|
|
|
12,061,417 |
|
|
Net
income (loss) for the year
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
401,190 |
|
|
|
(16,444,890 |
) |
|
|
(16,043,700 |
) |
|
Foreign
currency translation adjustment
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
360,596 |
|
|
|
- |
|
|
|
- |
|
|
|
360,596 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of December 31, 2008
|
|
|
37,898,251 |
|
|
|
37,898 |
|
|
|
6,901,232 |
|
|
|
532,248 |
|
|
|
5,351,825 |
|
|
|
(16,444,890 |
) |
|
|
(3,621,687 |
) |
|
Net
loss for the period
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(115,788 |
) |
|
|
(115,788 |
) |
|
Foreign
currency translation adjustment
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,471 |
|
|
|
- |
|
|
|
- |
|
|
|
5,471 |
|
|
Balance
as of March 31, 2009
|
|
|
37,898,251 |
|
|
$ |
37,898 |
|
|
$ |
6,901,232 |
|
|
$ |
537,719 |
|
|
$ |
5,351,825 |
|
|
$ |
(16,560,678 |
) |
|
$ |
(3,732,004 |
) |
See
accompanying notes to condensed consolidated financial statements.
INNOCOM
TECHNOLOGY HOLDINGS, INC.
(A
Development Stage Company)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008 AND FOR THE PERIOD FROM JANUARY
19, 2007 (INCEPTION) THROUGH MARCH 31, 2009
(Currency
expressed in United States Dollars (“US$”))
(Unaudited)
NOTE－1 BASIS
OF PRESENTATION
The
accompanying unaudited condensed consolidated financial statements have been
prepared by management in accordance with both accounting principles generally
accepted in the United States (“GAAP”), and the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Certain information and note disclosures normally
included in audited financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to those
rules and regulations, although the Company believes that the disclosures made
are adequate to make the information not misleading.
In the
opinion of management, the consolidated balance sheet as of December 31, 2008
which has been derived from audited financial statements and these unaudited
condensed consolidated financial statements reflect all normal and recurring
adjustments considered necessary to state fairly the results for the periods
presented. The results for the period ended March 31, 2009 are not necessarily
indicative of the results to be expected for the entire fiscal year ending
December 31, 2009 or for any future period.
These
unaudited condensed consolidated financial statements and notes thereto should
be read in conjunction with the Management’s Discussion and the audited
financial statements and notes thereto included in the Annual Report on Form
10-K for the year ended December 31, 2008.
NOTE－2 ORGANIZATION
AND BUSINESS BACKGROUND
Innocom
Technology Holdings, Inc. (the “Company” or “INCM”) was incorporated in the
State of Nevada on June 26, 1998. On June 20, 2006, the Company changed its name
from “Dolphin Productions, Inc.” to “Innocom Technology Holdings,
Inc.”
The
Company, through its subsidiaries, is principally engaged in trading and
manufacture of mobile phone handsets and components in Hong Kong and the
People’s Republic of China (“the PRC”).
In
February, the Company has temporarily ceased its planned principal operation in
the manufacturing facility in Changzhou City, Zhejiang Province, the PRC.
Starting from the fourth quarter 2008, global economic conditions have
deteriorated significantly across the countries and the demand for communication
products and components was adversely slowed down. During such challenging
economic times, the Company temporarily discontinued operation in the
manufacture of mobile communication products and components in the PRC. The
Company intends to continue to operate the manufacturing facility depending upon
the market recovery condition and demands from the customers.
INCM and
its subsidiaries are hereinafter referred to as (the “Company”).
NOTE－3 GOING
CONCERN UNCERTAINTIES
These
condensed consolidated financial statements have been prepared assuming that
Company will continue as a going concern, which contemplates the realization of
assets and the discharge of liabilities in the normal course of business for the
foreseeable future. The accompanying condensed consolidated financial statements
do not reflect any adjustments that might result if the Company is unable to
continue as a going concern. The Company does not generate significant revenue,
and has negative cash flows from operations, which raise substantial doubt about
the Company’s ability to continue as a going concern.
INNOCOM
TECHNOLOGY HOLDINGS, INC.
(A
Development Stage Company)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008 AND FOR THE PERIOD FROM JANUARY
19, 2007 (INCEPTION) THROUGH MARCH 31, 2009
(Currency
expressed in United States Dollars (“US$”))
(Unaudited)
The
continuation of the Company is dependent upon the continuing financial support
from its shareholders throughout March 31, 2009. Management believes this
funding will continue, and is also actively seeking new investors. Management
believes the existing shareholders will provide the additional cash to meet the
Company’s obligations as they become due, and will allow its planned principal
business to commence and assembly the production lines of mobile handsets and
components in the PRC.
NOTE－4 SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
In
preparing these condensed consolidated financial statements, management makes
estimates and assumptions that affect the reported amounts of assets and
liabilities in the balance sheets and revenues and expenses during the periods
reported. Actual results may differ from these estimates.
The
condensed consolidated financial statements include the financial statements of
INCM and its subsidiaries.
All
significant inter-company balances and transactions within the Company have been
eliminated upon consolidation.
|
|
Development
stage company
|
The
Company has no substantive operations as of March 31, 2009 and the historical
operations of the Company relating to its planned manufacturing facility in the
PRC are presented for the period from January 19, 2007 (date of inception). The
Company is considered as a development stage company in accordance with the
provisions of Statement of Financial Accounting Standards (“SFAS”) No. 7, “Accounting and Reporting by
Development Stage Enterprises”.
The
Company will recognize its revenue in accordance with the Staff Accounting
Bulletin No. 104, "Revenue
Recognition in Financial Statements" ("SAB 104"). Revenue will be
recognized upon shipment, provided that evidence of an arrangement exists, title
and risk of loss have passed to the customer, fees are fixed or determinable and
collection of the related receivable is reasonably assured. Revenue will be
recorded net of taxes and estimated product returns, which is based upon the
Company's return policy, sales agreements, management estimates of potential
future product returns related to current period revenue, current economic
trends, changes in customer composition and historical experience. To date, the
Company has had no revenues and is in the development stage.
|
|
Cash
and cash equivalents
|
Cash and
cash equivalents are carried at cost and represent cash on hand, demand deposits
placed with banks or other financial institutions and all highly liquid
investments with an original maturity of three months or less as of the purchase
date of such investments.
Intangible
assets include trademarks of mobile phone handsets purchased from a third party.
In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 142,
“Goodwill and Other Intangible
Assets” (“SFAS No. 142”), intangible assets with finite useful lives
related to developed technology, customer lists, trade names and other
intangibles are being amortized on a straight-line basis over the estimated
useful life of the related asset.
INNOCOM
TECHNOLOGY HOLDINGS, INC.
(A
Development Stage Company)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008 AND FOR THE PERIOD FROM JANUARY
19, 2007 (INCEPTION) THROUGH MARCH 31, 2009
(Currency
expressed in United States Dollars (“US$”))
(Unaudited)
Trademarks
are carried at cost less accumulated amortization and impairment loss, are
amortized on a straight-line basis over their estimated useful lives of 10 years
beginning at the time the related trademarks are granted. They will be used in
the planned assembly line for mobile phone communication products and components
in the PRC and subject to amortization when they are in operational
use.
No
provision for amortization is made until such time as trademarks are put into
operational use.
All lands
in the People’s Republic of China (the “PRC”) are owned by the PRC government.
The government in the PRC, according to the relevant PRC law, may sell the right
to use the land for a specified period of time. Thus, all of the Company’s land
purchases in the PRC are considered to be leasehold land and are stated at cost
less accumulated amortization and any recognized impairment loss. Amortization
is provided over the term of the land use right agreements on a straight-line
basis, which is 45 years and they will expire in 2054.
No
provision for amortization is made until such time as the relevant assets are
put into operational use.
|
·
|
Plant
and equipment, net
|
Plant and
equipment are stated at cost less accumulated depreciation and accumulated
impairment losses, if any. Depreciation is calculated on the straight-line basis
(after taking into account their respective estimated residual values) over the
following expected useful lives from the date on which they become fully
operational:
|
|
|
Depreciable
life
|
|
Residual
value
|
|
Plant
and machinery
|
|
5-10
years
|
|
5%
|
|
Furniture,
fixtures and office equipment
|
|
5
years
|
|
5%
|
Expenditure
for repairs and maintenance is expensed as incurred. When assets have retired or
sold, the cost and related accumulated depreciation are removed from the
accounts and any resulting gain or loss is recognized in the results of
operations.
|
·
|
Valuation
of long-lived assets
|
Long-lived
assets primarily include plant and equipment, land use right and intangible
assets. In accordance with SFAS No. 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets”, the Company periodically reviews
long-lived assets for impairment whenever events or changes in business
circumstances indicate that the carrying amount of the assets may not be fully
recoverable or that the useful lives are no longer appropriate. Each impairment
test is based on a comparison of the undiscounted cash flows to the recorded
value of the asset. If an impairment is indicated, the asset is written down to
its estimated fair value based on a discounted cash flow analysis. Determining
the fair value of long-lived assets includes significant judgment by management,
and different judgments could yield different results. There has been no
impairment as of March 31, 2009.
|
·
|
Comprehensive
(loss) income
|
SFAS No.
130, “Reporting Comprehensive
Income”, establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive income as defined
includes all changes in equity during a period from non-owner sources.
Accumulated comprehensive income, as presented in the accompanying consolidated
statements of stockholders’ equity consists of changes in unrealized gains and
losses on foreign currency translation. This comprehensive income is not
included in the computation of income tax expense or benefit.
INNOCOM
TECHNOLOGY HOLDINGS, INC.
(A
Development Stage Company)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008 AND FOR THE PERIOD FROM JANUARY
19, 2007 (INCEPTION) THROUGH MARCH 31, 2009
(Currency
expressed in United States Dollars (“US$”))
(Unaudited)
The
Company accounts for income tax using SFAS No. 109 “Accounting for Income
Taxes”, which requires the asset and liability approach for financial
accounting and reporting for income taxes. Under this approach, deferred income
taxes are provided for the estimated future tax effects attributable to
temporary differences between financial statement carrying amounts of assets and
liabilities and their respective tax bases, and for the expected future tax
benefits from loss carry-forwards and provisions, if any. Deferred tax assets
and liabilities are measured using the enacted tax rates expected in the years
of recovery or reversal and the effect from a change in tax rates is recognized
in the consolidated statement of operations and comprehensive income in the
period of enactment. A valuation allowance is provided to reduce the amount of
deferred tax assets if it is considered more likely than not that some portion
of, or all of the deferred tax assets will not be realized.
The
Company adopts Financial Accounting Standards Board ("FASB") Interpretation No.
(FIN) 48, "Accounting for
Uncertainty in Income Taxes" and FSP FIN 48-1, which amended certain
provisions of FIN 48. FIN 48 clarifies the accounting for uncertainty in income
taxes recognized in financial statements in accordance with SFAS No. 109, "Accounting for Income Taxes."
FIN 48 prescribes a recognition threshold and measurement attribute for
the financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. FIN 48 requires that the Company determine
whether the benefits of the Company's tax positions are more likely than not of
being sustained upon audit based on the technical merits of the tax position.
The provisions of FIN 48 also provide guidance on de-recognition,
classification, interest and penalties, accounting in interim periods and
disclosure.
In
connection with the adoption of FIN 48, the Company also adopted the policy of
recognizing interest and penalties, if any, related to unrecognized tax
positions as income tax expense. The Company did not have any unrecognized tax
positions or benefits and there was no effect on the financial condition or
results of operations for the period ended March 31, 2009. The Company’s tax
returns remain open subject to examination by major tax
jurisdictions.
|
·
|
Net
(loss) income per share
|
The
Company calculates net (loss) income per share in accordance with SFAS No.
128, “Earnings per
Share”. Basic (loss) income per share is computed by dividing the net
(loss) income by the weighted-average number of common shares outstanding during
the period. Diluted (loss) income per share is computed similar to basic (loss)
income per share except that the denominator is increased to include the number
of additional common shares that would have been outstanding if the potential
common stock equivalents had been issued and if the additional common shares
were dilutive.
|
·
|
Foreign
currencies translation
|
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. Monetary assets and liabilities denominated in currencies other
than the functional currency are translated into the functional currency using
the applicable exchange rates at the balance sheet dates. The resulting exchange
differences are recorded in the statement of operations.
INNOCOM
TECHNOLOGY HOLDINGS, INC.
(A
Development Stage Company)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008 AND FOR THE PERIOD FROM JANUARY
19, 2007 (INCEPTION) THROUGH MARCH 31, 2009
(Currency
expressed in United States Dollars (“US$”))
(Unaudited)
The
reporting currency of the Company is the United States dollar ("US$"). The
Company’s subsidiaries operating in Hong Kong maintained their books and records
in its local currency, Hong Kong Dollars ("HK$"), which are functional
currencies as being the primary currency of the economic environment in which
these entities operate.
In
general, assets and liabilities are translated into US$, in accordance with SFAS
No. 52, “Foreign Currency
Translation”, using the exchange rate on the balance sheet date. Revenues
and expenses are translated at average rates prevailing during the period. The
gains and losses resulting from translation of financial statements of foreign
subsidiaries are recorded as a separate component of accumulated other
comprehensive income within the statement of stockholders’ equity.
Translation
of amounts from HK$ into US$ has been made at the following exchange rates for
the respective period:
|
|
|
Three
months ended
March
31,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Period
end RMB:US$ exchange rate
|
|
|
6.8293 |
|
|
|
7.0222 |
|
|
Average
monthly RMB:US$ exchange rate
|
|
|
6.8252 |
|
|
|
7.1800 |
|
|
Period
end HK$:US$ exchange rate
|
|
|
7.7505 |
|
|
|
7.7827 |
|
|
Average
monthly HK$:US$ exchange rate
|
|
|
7.7547 |
|
|
|
7.7954 |
|
Parties,
which can be a corporation or individual, are considered to be related if the
Company has the ability, directly or indirectly, to control the other party or
exercise significant influence over the other party in making financial and
operating decisions. Companies are also considered to be related if they are
subject to common control or common significant influence.
|
·
|
Fair
value of financial instruments
|
The
Company values its financial instruments as required by SFAS No. 107, “Disclosures about Fair Value of
Financial Instruments”. The estimated fair value amounts have been
determined by the Company, using available market information and appropriate
valuation methodologies. The estimates presented herein are not necessarily
indicative of amounts that the Company could realize in a current market
exchange.
The
Company’s financial instruments primarily consist of cash and cash equivalents,
prepaid expenses and other receivable, amount due to a related party, other
payables and accrued liabilities.
As of the
balance sheet dates, the estimated fair values of the financial instruments were
not materially different from their carrying values as presented due to the
short term 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.
|
|
Recent
accounting pronouncements
|
The
Company has reviewed all recently issued, but not yet effective, accounting
pronouncements and does not believe the future adoption of any such
pronouncements may be expected to cause a material impact on its financial
condition or the results of its operations.
In
December 2007, the FASB issued a revision to SFAS No. 141, “Business Combinations” (“SFAS No.
141(R)”). SFAS No. 141(R) revises the accounting for business combinations.
Under SFAS No. 141(R), an acquiring entity will be required to recognize the
assets acquired and liabilities assumed in a transaction at the acquisition-date
fair value with limited exceptions. Specifically, SFAS No. 141(R) will change
the accounting for acquisition costs, noncontrolling interests, acquired
contingent liabilities, restructuring costs associated with a combination and
certain tax-related items, as well as require additional disclosures. SFAS No.
141(R) applies prospectively to business combinations for which the acquisition
date is on or after the beginning of the first annual reporting period beginning
on or after December 15, 2008. The Company is required to apply SFAS No. 141(R)
to any acquisitions in 2009 or thereafter.
INNOCOM
TECHNOLOGY HOLDINGS, INC.
(A
Development Stage Company)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008 AND FOR THE PERIOD FROM JANUARY
19, 2007 (INCEPTION) THROUGH MARCH 31, 2009
(Currency
expressed in United States Dollars (“US$”))
(Unaudited)
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements—an amendment of ARB No. 51”
(“SFAS No. 160”). SFAS No. 160 establishes accounting and reporting standards
for noncontrolling interests in subsidiaries. This statement requires the
reporting of all noncontrolling interests as a separate component of
stockholders’ equity, the reporting of consolidated net income (loss) as the
amount attributable to both the parent and the noncontrolling interests and the
separate disclosure of net income (loss) attributable to the parent and to the
noncontrolling interests. In addition, this statement provides accounting and
reporting guidance related to changes in noncontrolling ownership interests.
Other than the reporting requirements described above which require
retrospective application, the provisions of SFAS No. 160 are to be applied
prospectively in the first annual reporting period beginning on or after
December 15, 2008. The Company’s adoption of SFAS No. 160 on January 1, 2009 did
not have an impact on its consolidated results of operations or financial
position.
In
December 2008, the FASB issues Staff Position (“FSP”) No. 140-4 and FIN 46(R)-8,
“Disclosures by Public
Entities about Transfers of Financial Assets and Interests in Variable Interest
Entities”. The
purpose of this FSP is to promptly increase disclosures by public entities and
enterprises until the pending amendments to SFAS No. 140, “Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities”, (“SFAS No. 140”) and FASB
Interpretation No. 46 (revised December 2003), “Consolidation of Variable Interest
Entities”, (“FIN 46(R)”) are finalized and approved by the FASB. The FSP
is effective for reporting periods (interim and annual) ending after December
15, 2008. This adoption did not have any impact on the consolidated financial
statements.
On
January 12, 2009, the FASB issued FSP EITF 99-20-01, “Amendment to the Impairment Guidance
of EITF Issue No. 99-20”. This FSP amends the impairment guidance in EITF
Issue No. 99-20, “Recognition of Interest Income and
Impairment on Purchased Beneficial Interests and Beneficial Interests That
Continue to be Held by
a Transferor in Securitized Financial Assets,” to achieve more consistent
determination of whether an other-than-temporary impairment has occurred. The
FSP also retains and emphasizes the objective of an other-than-temporary
impairment assessment and the related disclosure requirements in SFAS No. 115,
“Accounting for Certain Investments
in Debt and Equity Securities”, and other related guidance. The FSP is
shall be effective for interim and annual reporting periods ending after
December 15, 2008, and shall be applied prospectively.
Retrospective application to a prior interim or annual reporting
period is not permitted. The Company does not believe this pronouncement will
impact its financial statements.
NOTE－5 DISCONTINUED
OPERATIONS
Starting
from the fourth quarter of 2008, global economic conditions have deteriorated
significantly across the countries and the demand for communication products and
components was adversely slowed down. The Company has also discontinued its
trading business in the mobile communication products and components in Hong
Kong since the customers no longer demanded for sales orders during the first
quarter of 2009.
INNOCOM
TECHNOLOGY HOLDINGS, INC.
(A
Development Stage Company)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008 AND FOR THE PERIOD FROM JANUARY
19, 2007 (INCEPTION) THROUGH MARCH 31, 2009
(Currency
expressed in United States Dollars (“US$”))
(Unaudited)
NOTE－6 AMOUNT
DUE TO A RELATED PARTY
As of
March 31, 2009, a balance of $4,249,797 due to a director and a major
shareholder of the Company, Mr. William Hui, represented temporary advance to
the Company which was unsecured, interest-free and has no fixed repayment
term.
The
Company operates in various countries: United States, British Virgin Island,
Hong Kong and the PRC that are subject to tax in the jurisdictions in which they
operate, as follows:
United
States of America
The
Company is registered in the State of Neveda and is subject to United States
current tax law.
British
Virgin Island
Under the
current BVI law, the Company is not subject to tax on income.
Hong
Kong
For the
three months ended March 31, 2009 and 2008 and for the period from January 19,
2007 (Inception) through March 31, 2009, no provision for Hong Kong Profits Tax
is provided for as the Company’s income neither arises in, nor is derived form
Hong Kong under its tax law.
The
PRC
The
Company’s subsidiary, CICTL is subject to the unified income rate of 25% on the
taxable income. For the three months ended March 31, 2009 and 2008 and for the
period from January 19, 2007 (Inception) through March 31, 2009, CICTL generated
net operating losses and accordingly, no provision for income tax has been
recorded.
NOTE－8 COMMITMENTS
AND CONTINGENCIES
(a) Operating
lease commitment
The
Company leases an office premise under a non-cancelable operating lease for a
term of 2 years due June 15, 2010. Costs incurred under this operating lease are
recorded as rent expense and totaled approximately $32,954, $26,169 and
$$261,029 for the three months ended March 31, 2009 and 2008, and the period
from January 1, 2007 (Inception) through March 31, 2009.
|
Period
ending March 31,
|
|
|
|
|
2009
|
|
$ |
131,889 |
|
|
2010
|
|
|
27,477 |
|
|
|
|
|
|
|
|
Total
|
|
$ |
159,366 |
|
ITEM
2. MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATION
The
following review concerns three months ended March 31, 2009 and March 31, 2008,
which should be read in conjunction with the financial statements and notes
thereto presented in the Form 10-K.
Forward
Looking Statements
The
information in this discussion contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These forward-looking
statements involve risks and uncertainties, including statements regarding our
capital needs, business strategy and expectations. Any statements contained
herein that are not statements of historical facts may be deemed to be
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may", "will", "should", "expect", "plan",
"intend", "anticipate", "believe", "estimate", "predict", "potential" or
"continue", the negative of such terms or other comparable terminology. Actual
events or results may differ materially. We disclaim any obligation to publicly
update these statements, or disclose any difference between its actual results
and those reflected in these statements. The
information constitutes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995.
History
Innocom
Technology Holdings, Inc. (the “Company” or “INCM”) was incorporated in the
State of Nevada on June 26, 1998.
On June
20, 2006, the Company changed its name from “Dolphin Productions, Inc.” to
“Innocom Technology Holdings, Inc.”
On
January 19, 2007, Changzhou Innocom Communication Technology Limited is
incorporated and registered in the People’s Republic of China (“the
PRC”).
On May
16, 2007, the Company purchased a 10 years mobile phone manufacturing license in
a consideration of RMB45 million (approximately $5,770,000) and annual license
fee of RMB500,000 (approximately $64,000).
On May 8,
2008, the Company completed the establishment of a new subsidiary, Changzhou
Innocom Communication Technology Limited in the PRC upon the approval of its
local government.
Overview
and Future Plan of Operations
In
February 2009, the Company determined to have a temporary closure in the
manufacturing facility in Changzhou City, Zhejiang Province, the PRC. Starting
from the fourth quarter 2008, global economic conditions have deteriorated
significantly across the countries and the demand for communication products and
components was adversely slowed down. During such challenging economic times,
the Company temporarily discontinued operation in the manufacture of mobile
communication products and components in the PRC. However, the Company did not
intend to dispose by sale and may continue to operate the manufacturing facility
depending upon the market recovery condition in the next 12 months.
Results
of Operations for Three Months ended March 31, 2009 and March 31,
2008
During
the three months ended March 31, 2009, we experienced a net loss of $115,788
compared to a net loss of $15,038 for three months ended March 31,
2008. The loss is attributable to the significant deteriorated environment and
the challenging economic crisis of the period.
Revenue
As a
result of temporary discontinue of business and operation in the manufacture of
mobile communication products and components in the PRC, the revenue recorded
zero during both three months ended March 31, 2009 and March 31,
2008.
Cost
of Sales
As a
result of temporary discontinue of business and operation in the manufacture of
mobile communication products and components in the PRC, the cost of sale
recorded zero during both three months ended March 31, 2009 and March 31,
2008.
Administrative
Expenses
Administrative
expenses mainly included office rental charges, salaries and professional
fee.
Below
table sets out the components of non-cash items:
|
|
|
Three
Months ended
March
31,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Depreciation
|
|
$ |
788 |
|
|
$ |
417 |
|
|
Amortization
of intangible assets
|
|
|
- |
|
|
|
148,671 |
|
|
|
|
$ |
788 |
|
|
$ |
149,088 |
|
The
depreciation policy adopted in for the fiscal year 2009 was consistent with that
adopted in 2008.
Other
Income
No other
income occurred for both three months period ended March 31, 2009 and March 31,
2008.
Net
Loss
Net loss
for the three months ended March 31, 2009 was $115,788 compared to net loss of
$15,038 for the three months ended March 31, 2008. Loss of both periods and the
increase of loss for the three months ended March 31, 2009 is attributable to
the significant deteriorated environment and the challenging economic crisis of
the periods.
Trends,
Events, and Uncertainties
On May 8,
2008, we have completed the establishment of a new subsidiary, Changzhou Innocom
Communication Technology Limited in Changzhou, Jiangsu Province, China upon the
approval of its local government. Trial assembling of mobile phones has been
completed. We will assemble mobile phones under the purchased trade mark namely
“Tsinghua Unisplendour” and other mobile phone components on OEM basis. On
August 13, 2008, this subsidiary has entered into an annual assembling service
agreement for a brand-name mobile phone manufacturer on OEM basis. We expect to
start assembling service in first quarter of 2009.
However,
starting from the fourth quarter 2008, global economic conditions have
deteriorated significantly across the countries and the demand for communication
products and components was adversely slowed down. During challenging economic
times, the Company determined to temporarily discontinue operation in the
manufacture of mobile communication products and components in February
2009.
Liquidity
and Capital Resources for Three Months Ended March 31, 2009 and
2008
Cash
flows from operating activities – continuing operation
We
experienced negative cash flows used in operations in the amount of $106,537 for
three months ended March 31, 2009 as compared with negative cash flow used in
the operations in the amount of $482,497 and positive cash flow generated from
discontinued operation in the amounts of $400,780 for three months ended March
31, 2008.
Cash
flows from investing activities – continuing operations
During
three months ended March 31, 2009, there are no investment
activities.
Cash
flows from financing activities – continuing operations
We
experienced positive cash flow advanced from a related party in the amount of
$97,387 and $87,156 for the three months ended March 31, 2009 and
2008.
Liquidity
On a
long-term basis, our liquidity will be dependent on establishing profitable
operations, receipt of revenues, additional infusions of capital and additional
financing. If necessary, we may raise capital through an equity or debt
offering. The funds raised from this offering will be used to develop and
execute our business plan. However, there can be no assurance that we will be
able to obtain additional equity or debt financing in the future, if at all. If
we are unable to raise additional capital, our growth potential will be
adversely affected. Additionally, we will have to significantly modify our
plans.
Critical
Accounting Policies
The
financial statements are prepared in accordance with accounting principles
generally accepted in the U.S., which requires us to make estimates and
assumptions in certain circumstances that affect amounts reported in the
accompanying financial statements and related footnotes. In preparing these
financial statements, management has made its best estimates and judgments of
certain amounts included in the financial statements, giving due consideration
to materiality. We do not believe there is a great likelihood that materially
different amounts would be reported related to the accounting policies described
below. However, application of these accounting policies involves the exercise
of judgment and use of assumptions as to future uncertainties and, as a result,
actual results could differ from these estimates.
Details
of critical accounting policies are set out in notes to the financial statements
included in Item 1.
Employees
As of
March 31, 2009, we had approximately 5 full-time employees employed in Hong
Kong. From time to time we employ independent contractors to support our
production, engineering, marketing, and sales departments.
Website
Access to our SEC Reports
Our
Internet website address is www.innocomtechnology.com. Through our Internet
website, we will make available, free of charge, the following reports as soon
as reasonably practicable after electronically filing them with, or furnishing
them to, the SEC: our Annual Reports on Form 10-K; our Quarterly Reports on Form
10-Q; our Current Reports on Form 8-K; and amendments to those reports filed or
furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Our Proxy Statements for our Annual Stockholder
Meetings are also available through our Internet website. Our Internet website
and the information contained therein or connected thereto are not intended to
be incorporated into this Annual Report on Form 10-K.
You may
also obtain copies of our reports without charge by writing to:
Attn:
Investor Relations
Suite
1501, Bank of East Asia Harbour View Centre
56
Gloucester Road
Wanchai,
Hong Kong, PRC
The
public may also read and copy any materials filed with the SEC at the SEC's
Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, or through
the SEC website at www.sec.gov. The Public Reference Room may be contact at
(800) SEC-0330. You may also access our other reports via that link to the SEC
website.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Foreign
Exchange Risk
While our
reporting currency is the U.S. Dollar, all of our consolidated revenues and
consolidated costs and expenses are denominated in Renminbi. All of our assets
are denominated in RMB except for cash. As a result, we are exposed to foreign
exchange risk as our revenues and results of operations may be affected by
fluctuations in the exchange rate between U.S. Dollars and RMB. If the RMB
depreciates against the U.S. Dollar, the value of our RMB revenues, earnings and
assets as expressed in our U.S. Dollar financial statements will decline. We
have not entered into any hedging transactions in an effort to reduce our
exposure to foreign exchange risk.
Inflation
Inflationary
factors such as increases in the cost of our product and overhead costs may
adversely affect our operating results. Although we do not believe that
inflation has had a material impact on our financial position or results of
operations to date, a high rate of inflation in the future may have an adverse
effect on our ability to maintain current levels of gross margin and selling,
general and administrative expenses as a percentage of net revenues if the
selling prices of our products do not increase with these increased
costs.
ITEM
4T. CONTROLS AND PROCEDURES.
Evaluation of Disclosure
Controls and Procedures.
Based on
an evaluation under the supervision and with the participation of management,
our Chief Executive Officer and Chief Financial Officer have concluded that our
disclosure controls and procedures as defined in Section 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as amended
("Exchange Act") were effective as of March 31, 2008 to ensure that
information required to be disclosed by us in reports that we file or submit
under the Exchange Act is (i) recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange Commission
rules and forms and (ii) accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer, as
appropriate to allow timely decisions regarding required
disclosure.
Changes in Internal Control
over Financial Reporting
There
were no changes in our internal control over financial reporting during the
quarter ended September 30, 2008, which were identified in connection with
management's evaluation required by paragraph (d) of rules 13a-15 and 15d-15
under the Exchange Act, that have materially affected, or are reasonably likely
to materially affect, our internal control over financial
reporting.
PART
II - OTHER INFORMATION
ITEM
1. LEGAL PROCEEDINGS
We are
not involved in any material pending legal proceedings at this time, and
management is not aware of any contemplated proceeding by any governmental
authority.
ITEM
1A. RISK FACTORS
N/A
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM
3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS
None.
ITEM
5. OTHER INFORMATION
None.
ITEM
6. EXHIBITS
INDEX
TO EXHIBITS
OF
INNOCOM
TECHNOLOGY HOLDINGS, INC.
|
31.1
|
Rule
13a-14 (a)/15d-14 (a) Certification of Chief Executive
Officer
|
| |
|
|
31.2
|
Rule
13a-14 (a)/15d-14 (a) Certification of Chief Financial
Officer
|
| |
|
|
32.1
|
Section
1350 Certification of Chief Executive Officer
|
| |
|
| |
|
|
32.2
|
Section
1350 Certification of Chief Financial
Officer
|
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
| |
|
|
INNOCOM
TECHNOLOGY HOLDINGS, INC.
|
|
| |
|
|
|
|
| |
|
|
|
|
|
Dated:
May 20, 2009
|
|
|
|
|
|
|
|
|
William
Yan Sui Hui, Chief Executive Officer
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
/s/
Cheung Wai Hung, Eddie
|
|
|
|
|
|
Cheung
Wai Hung, Eddie, Chief Financial Officer
|
|
|
|
|
|
(Principal
financial officer)
|
|