UNITED STATESTable of Contents

~~SECURITIES~~UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

xþ ANNUAL REPORT PURSUANT TO ~~SECTION1~~SECTION 313 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ~~For the fiscal year ended March 31, 2009~~

~~-OR-~~For the fiscal year ended March 31, 2010

~~¨ 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~~o ~~Number~~TRANSITION ~~033-377099-S~~REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

~~T-BAY HOLDINGS,~~For ~~INC.~~the transition period from to

~~(Exact~~ ~~Name~~Commission ofFile ~~registrant~~Number ~~as specified in its charter)~~033-377099-S

NEVADA		91-1465664
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

T-BAY HOLDINGS, INC.

~~Room~~ (Exact ~~917,~~Name ~~YongSheng~~of ~~Building~~registrant ~~ZhongShan~~as Xispecified ~~Road~~in ~~Xuhui~~its ~~District, Shanghai, China (Address of principal executive offices~~charter) ~~(Zip code)~~

~~Issuer’s telephone~~NEVADA ~~number,~~(State ~~including~~or ~~area~~other ~~code:~~jurisdiction 86of incorporation or organization) 91-~~021~~1465664 ~~51539900~~(I.R.S. Employer Identification No.)

~~(Former name~~Room 917, ~~former~~YongSheng ~~address~~Building orZhongShan ~~former~~Xi ~~fiscal~~Road ~~year~~Xuhui District, ifShanghai, ~~changed~~China ~~since~~(Address ~~last report~~of principal executive offices) (Zip code)

~~Indicate by~~Issuer’s ~~check~~telephone ~~mark~~number, ifincluding ~~the~~area ~~registrant~~code: ~~is a well~~86-~~known~~021 ~~seasoned issuer, as defined in~~51539900 ~~Rule 405 of the Securities Act. Yes ¨ No þ~~

~~Indicate by~~(Former ~~check~~name, ~~mark~~former ifaddress ~~the~~or ~~registrant~~former isfiscal ~~not~~year, ~~required~~if tochanged ~~file~~since ~~reports~~last ~~pursuant to Section 13 or Section 15(d~~report) ~~of the Act. Yes ¨ No þ~~

Indicate by check mark ~~whether~~if the registrant: ~~(1) filed~~is ~~all~~a ~~reports~~well-known ~~required~~seasoned toissuer, ~~be filed~~as bydefined ~~Section~~in Rule 13405 ~~or 15(d)~~ of the Securities ~~Exchange~~ Act. ofYes ~~1934~~o ~~during the~~No ~~preceding 12 months (or for such shorter period that the registrant was~~þ ~~required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.~~

~~Yesþ No~~Indicate by check mark if the registrant is not required to file reports pursuant to Section ¨13 or Section 15(d) of the Act. Yes o No þ

Indicate by check mark whether the registrant: ~~has~~(1) filed ~~submitted~~all ~~electronically~~reports ~~and posted on its corporate Web site, if any, every Interactive Data File~~ required to be ~~submitted~~ ~~and~~filed ~~posted~~by Section 13 ~~pursuant~~or to15(d) ~~Rule 405~~ of ~~Regulation~~the ~~S-T~~Securities ~~(§232.405~~Exchange Act of ~~this chapter)~~1934 during the preceding 12 months (or for such shorter period that the registrant was required to ~~submit~~file such reports), and ~~post~~(2) has been subject to such ~~files)~~filing requirements for the past 90 days. Yes ¨þ No ¨o

Indicate by check mark ifwhether ~~disclosure~~the ofregistrant ~~delinquent~~has ~~filers~~submitted ~~pursuant~~electronically toand ~~Item~~posted ~~405~~on ofits ~~Regulation~~corporate ~~S-K~~Web ~~(§229.405~~site, ofif ~~this~~any, ~~chapter)~~every isInteractive ~~not~~Data ~~contained~~File ~~herein,~~required ~~and~~to ~~will no~~ be ~~contained,~~submitted toand ~~the~~posted pursuant ~~best~~to Rule 405 of ~~registrant’s~~Regulation S-T ~~knowledge,~~during ~~indefinitive~~the ~~proxy~~preceding or12 months ~~information~~(or ~~statements~~for ~~incorporated~~such byshorter ~~reference~~period inthat ~~Part~~the ~~III~~registrant ofwas ~~this~~required ~~Form~~to ~~10-K or~~submit ~~any~~and ~~amendment~~post tosuch ~~this Form 10-K~~files). Yes ¨ o No þ o

Indicate by check mark ~~whether~~if ~~the~~disclosure ~~registrant~~of isdelinquent afilers ~~large~~pursuant ~~accelerated~~to ~~filer,~~Item 405 anof Regulation S-K ~~accelerated~~(§229.405 ~~filer,~~of orthis achapter) ~~non-accelerated~~is ~~filer~~not orcontained ~~smaller~~herein, ~~reporting company. .~~and ~~See~~will ~~definition~~not ofbe ~~“large~~contained, ~~accelerated~~to ~~filer,”~~the ~~“accelerated~~best of ~~filer~~registrant’s knowledge,” ~~and~~in ~~“smaller~~definitive ~~reporting~~proxy or ~~company”~~information statements incorporated by reference in ~~Rule~~Part III ~~12b~~of this Form 10-2K ofor ~~the~~any ~~Exchange~~amendment ~~Act~~to this Form 10-K. Yes o No þ

~~Large~~Indicate by check mark whether the registrant is a large accelerated filer, ¨an ~~Accelerated~~accelerated filer, or ¨a ~~Non~~non-accelerated filer ¨or ~~Smaller~~smaller reporting company. þSee definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

~~Indicate by~~Large ~~check~~accelerated ~~mark~~filer ~~whether~~o ~~the~~Accelerated ~~registrant~~filer iso aNon-accelerated ~~shell~~filer ~~company~~o ~~(as~~Smaller ~~defined~~reporting incompany ~~Rue 12b-2of the Exchange Act). Yes ¨ No~~ þ

~~As of~~Indicate ~~March~~by ~~31,~~check ~~2009,~~mark ~~the~~whether ~~aggregate market value of~~ the registrant’s ~~common~~is ~~stock~~a ~~held by~~shell ~~non-affiliates~~company ~~of the registrant was $4,318,669.60 based on the closing sale price~~ (as ~~reported~~defined onin ~~the~~Rue ~~Over~~12b-~~the-Counter~~2 ~~Bulletin Board. As~~ of ~~June 30, 2009,~~the ~~there~~Exchange ~~were~~Act). ~~30,088,174~~Yes ~~shares~~o ofNo ~~common stock outstanding.~~þ

~~DOCUMENTS~~As of March 31, 2010, the aggregate market value of the registrant’s common stock held by ~~INCORPORATED~~non-affiliates BYof ~~REFERENCE~~the registrant was US$2,185,189 based on the closing sale price as reported on the Over-the-Counter Bulletin Board. As of June 28, 2010, there were 30,088,174 shares of common stock outstanding.

~~None~~DOCUMENTS INCORPORATED BY REFERENCE

~~T-Bay Holdings, Inc.~~None

~~FORM 10~~T-KBay Holdings, Inc.

~~For~~FORM ~~the~~10-K ~~Year Ended March 31, 2009~~

~~TABLE OF~~For ~~CONTENTS~~the Year Ended March 31, 2010

PART I
ITEM 1.	Business	4
ITEM 1A.	Risk Factors	11
ITEM 1B.	Unresolved Staff Comments	18
ITEM 2.	Properties	18
ITEM 3.	Legal Proceedings	18
ITEM 4.	Submission of Matters to a Vote of Security Holders	19
PART II
ITEM 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	19
ITEM 6.	Selected Financial Data	19
ITEM 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21
ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk	29
ITEM 8.	Financial Statements and Supplementary Data	F-1 to F-22
ITEM 9.	Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	30
ITEM 9A.	Controls and Procedures	30
ITEM 9B.	Other Information	32
PART III
ITEM 10.	Directors and Executive Officers of the Registrant	31
ITEM 11.	Executive Compensation	35
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	37
ITEM 13.	Certain Relationships and Related Transactions	39
ITEM 14.	Principal Accountant Fees and Services	39
PART IV
ITEM 15	Exhibits, Financial Statement Schedules	40
SIGNATURES		40

TABLE OF CONTENTS

Page 2 of 41


PART I

ITEM 1. Business			4

ITEM 1A. Risk Factors			8

ITEM 1B. Unresolved Staff Comments			16

ITEM 2. Properties			16

ITEM 3. Legal Proceedings			16

ITEM 4. Submission of Matters to a Vote of Security Holders			16

PART II

ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			17

ITEM 6. Selected Financial Data			18

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			18

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk

ITEM 8. Financial Statements and Supplementary Data			27

ITEM 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure			28

ITEM 9A. Controls and Procedures			28

ITEM 9B. Other Information			29

PART III

ITEM 10. Directors and Executive Officers of the Registrant			30

ITEM 11. Executive Compensation			31

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			34

ITEM 13. Certain Relationships and Related Transactions			35

ITEM 14. Principal Accountant Fees and Services			36

PART IV

ITEM 15 Exhibits, Financial Statement Schedules			37

SIGNATURES			38

Exhibit 21
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

~~INFORMATION~~2 ~~REGARDING FORWARD-LOOKING STATEMENTS~~

This AnnualTable Report on Form 10-K contains forward-looking statements. These statements relate to future events or our future financial performance. 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," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.Contents

~~Although we~~INFORMATION ~~believe~~REGARDING ~~that the expectations reflected in the forward~~FORWARD-~~looking~~LOOKING ~~statements are~~STATEMENTS reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no duty to update any of the forward-looking statements after the date of this report to conform such statements to actual results or to changes in our expectations.

~~Readers are~~This ~~also~~Annual ~~urged~~Report toon ~~carefully~~Form ~~review~~10-K ~~and~~contains ~~consider~~forward-looking ~~the~~statements. ~~various~~These ~~disclosures~~statements ~~made~~relate byto usfuture ~~which~~events ~~attempt~~or toour ~~advise~~future ~~interested~~financial ~~parties~~performance. ofThese ~~the~~statements involve known and unknown risks, uncertainties and other factors ~~which~~that ~~affect~~may cause our actual results, levels of activity, ~~business~~performance or achievements to be materially different from any future results, ~~including~~levels ~~without~~of ~~limitation~~activity, performance, ~~the~~or ~~disclosures~~achievements ~~made~~expressed inor ~~PART~~implied Iby forward-looking statements. ~~ITEM~~In ~~1A:~~some ~~Risk~~cases, ~~Factors~~you ~~and~~can ~~PART~~identify ~~II.~~forward-looking ~~ITEM~~statements 6by terminology such as “may,” “will,” “should,” “expect,” ~~"Management's~~“plan,” ~~Discussion~~“anticipate,” ~~and~~“believe,” ~~Analysis~~“estimate,” “predict,” “potential” or ~~Plan~~“continue,” the negative of such ~~Operation"~~terms ~~included~~or other comparable terminology. These statements are only predictions. Actual events or ~~herein~~results may differ materially.

~~Page~~Although 3we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. 41Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no duty to update any of the forward-looking statements after the date of this report to conform such statements to actual results or to changes in our expectations.

~~PART~~Readers are also urged to carefully review and consider the various disclosures made by us which attempt to advise interested parties of the factors which affect our business, including without limitation the disclosures made in PART I. ITEM 1A: Risk Factors and PART II. ITEM 7 “Management’s Discussion and Analysis or Plan of Operation” included herein.

~~Item 1. Business.~~3

Overview Table of Contents

~~The Company~~PART ~~was incorporated under the laws of the State of Utah on August 8, 1984 with the name of "Sharus Corporation" with authorized common stock of 50,000,000 shares with par value of $0~~I.~~001 per share. On June 13, 1989 the domicile of the~~ Company was changed to the state of Nevada in connection with a name change to "Golden Quest, Inc." On January 7, 2002, the name was changed to "T-Bay Holdings, Inc." as part of a reverse stock split of 400 shares of outstanding stock for one share. On January 17, 2005 the Company carried out a reverse stock split of 20 shares of outstanding stock for one share. After the reverse split, the Company has authorized common stock of 100,000,000 shares common stock and 10,000,000 shares of preferred stock both with par value of $0.001.

OnItem ~~August~~ 1, 2005, the Company entered into an Agreement and Plan of Reorganization (the “Agreement”) between Wise Target International Limited, (“Wise Target”), Amber Link International Limited (“Amber Link”), Ms. ~~Meilian Li and Mr~~Business. Xiaofeng Li. Pursuant to the terms of the Agreement, following due diligence, the Company acquired all of the outstanding stock of Wise Target and Amber Link, making them wholly owned subsidiaries of the Company. Wise Target and Amber Link together owned and controlled 95% of Shanghai Sunplus Communication Technology Co., Ltd., (“Sunplus”), a Sino-foreign joint venture. The Agreement required the Company to issue 18,550,000 shares of restricted common stock in exchange for all of the issued and outstanding shares of Wise Target and Amber Link. This transaction was subsequently completed on August 16, 2005.

WeOverview conduct our business through our 95% owned subsidiary, Shanghai Sunplus Communication Technology Co., Ltd., a Sino-foreign joint venture established in China in 2002, which provides a wide span of mobile handset design and other services to leading mobile handset brand owners in China. Sunplus also provides total solution services to its customers, starting from new product concept identification, handset exterior design, hardware and software design, material procurement, production, and after-sale maintenance services. Historically, our customers included multinational brand names such as Motorola, NEC, Siemens, China Telecom, Panasonic and Alcatel. We also conduct our business through Amber Link. Our major customers in China in fiscal year ended March 31, 2009 were Shenzhen Henkai Co. Ltd., Shenzhen Xuanhua Electronic Technology Co. Ltd., Shenzhen Naide Technology Co., Ltd., Beijing Hocom Co., Ltd. and Huizhou QiaoXing Development Co., Ltd.

WeThe ~~focus on~~Company ~~the~~was ~~vast~~incorporated ~~wireless~~under ~~telecommunication~~the ~~market~~laws inof ~~China.~~the ByState ~~working~~of ~~closely~~Utah ~~with top~~on ~~technology partners~~August 8, we1984 ~~provide~~with ~~tailored~~the ~~mobile~~name ~~handset design solution~~of ~~services~~“Sharus ~~according~~Corporation” towith ~~our~~authorized ~~customers’~~common ~~specifications.~~stock Weof ~~believe~~50,000,000 weshares ~~have~~with ~~strong capabilities~~par tovalue ~~design~~of ~~mobile~~US$0.001 ~~handsets~~per share. toOn ~~support~~June 13, a1989 ~~broad~~the ~~range~~domicile of ~~wireless communications~~the ~~standards,~~Company ~~baseband~~was ~~platforms~~changed ~~and~~to ~~components.~~the Westate ~~also~~of ~~provide~~Nevada in ~~production~~connection ~~support~~with toa ~~facilitate~~name ~~our~~change ~~customers’~~to ~~manufacturing~~“Golden ~~and~~Quest, ~~supply chain management processes~~Inc.” InOn ~~addition~~January 7, ~~our~~2002, ~~special~~the ~~project~~name ~~teams~~was ~~work~~changed ~~closely with~~to ~~our~~“T-Bay ~~customers~~Holdings, toInc.” ~~monitor~~as ~~and~~part ~~coordinate~~of ~~the~~a ~~progress~~reverse ofstock ~~each~~split ~~new~~of ~~design~~400 ~~project. To~~shares ~~further~~of ~~strengthen~~outstanding ~~our~~stock ~~presence~~for inone share. ~~the~~On ~~market~~January 17, we2005 ~~have~~the ~~also~~Company ~~begun~~carried toout ~~work with~~a ~~our~~reverse ~~customers~~stock insplit ~~providing~~of ~~customized~~20 ~~handset~~shares ~~solutions~~of outstanding tostock ~~mobile~~for ~~service operators~~one share. WeAfter ~~believe~~the reverse split, the ~~design~~Company ~~solutions~~has ~~and~~authorized ~~services~~common ~~provided~~stock of by100,000,000 usshares ~~can~~common ~~help our~~stock ~~customers~~and in10,000,000 ~~enhancing~~shares ~~competitive~~of ~~strength~~preferred ~~and~~stock ~~gaining~~both ~~market~~with par value of ~~share~~US$0.001.

~~Corporate~~On August 1, 2005, the Company entered into an Agreement and Plan of Reorganization (the ~~Structure~~“Agreement”) between Wise Target International Limited, (“Wise Target”), Amber Link International Limited (“Amber Link”), Ms. Meilian Li and Mr. Xiaofeng Li. Pursuant to the terms of the Agreement, following due diligence, the Company acquired all of the outstanding stock of Wise Target and Amber Link, making them wholly owned subsidiaries of the Company. Wise Target and Amber Link together own and control 95% of Shanghai Sunplus Communication Technology Co., Ltd., (“Sunplus”), a Sino-foreign joint venture. The Agreement required the Company to issue 18,550,000 shares of restricted common stock in exchange for all of the issued and outstanding shares of Wise Target and Amber Link. This transaction was subsequently completed on August 16, 2005.

~~Sunplus was~~We ~~jointly~~conduct ~~owned~~our bybusiness ~~Wise~~mainly ~~Target,~~through our 100% owned subsidiary Amber Link, ~~and~~which ~~Shanghai~~sells ~~Fanna Industrial~~mobile ~~Product~~phone ~~Design~~components ~~Co.,~~to ~~Ltd.~~mobile ~~(“Shanghai~~phone ~~Fanna”). Wise~~handset ~~Target~~producers ~~and~~in ~~Amber~~China. ~~link are~~We ~~investment~~also ~~holding~~conduct ~~companies~~our ~~incorporated~~business inthrough our ~~the~~95% ~~British~~owned ~~Virgin~~subsidiary, ~~Islands whereas~~ Shanghai ~~Fanna~~Sunplus isCommunication Technology Co., Ltd., a ~~privately~~Sino-~~owned~~foreign ~~company~~joint venture established in China in ~~2001.~~ ~~On August 16~~2002, ~~2005,~~which ~~T-Bay~~provides ~~Holdings~~a ~~completed~~wide aspan ~~reverse~~of ~~merger~~mobile ~~with~~handset ~~Wise Target~~design and ~~Amber~~other services ~~Link,~~to ~~which~~leading ~~jointly~~mobile ~~held~~handset abrand ~~95%~~owners ~~interest~~in ~~of Sunplus~~China.

~~Page~~We 4focus on the wireless telecommunication market in China. By working closely with top technology partners, we provide tailored mobile handset design solution services according to our customers’ specifications. We believe we have strong capabilities to design mobile handsets to support a broad range of wireless communications standards, baseband platforms and components. In addition, our 41special project teams work closely with our customers to monitor and coordinate the progress of each new design project. We believe the design solutions and services provided by us can help our customers in enhancing competitive strength and gaining market share.

~~In January~~Corporate ~~2007, Sunplus established Zhangzhou JiaXun Communication Facility~~Structure Co.,Ltd. (“JiaXun”), a 100% owned subsidiary in Zhangzhou in Fujian province. In March 2007, JiaXun and Sunplus respectively acquired 20% and 80% interest in Fujian QiaoXing Industry Co.,Ltd. (“Fujian QiaoXing”) for the construction of a technology park for long term development in the mobile telecommunication industry. Fujian QiaoXing was established on February 13, 2004, with a registered capital of RMB20,000,000 ($2,590,000).

~~In December~~On ~~2008~~August 16, ~~Sunplus~~2005, ~~entered~~T-Bay ~~into~~Holdings ancompleted ~~agreement~~a reverse merger with ~~Huizhou~~Wise ~~Liyin~~Target ~~Electronics~~and Amber Link which made them wholly owned subsidiaries of the Company. Wise Target owned a 75% interest and Amber Link owned a 20% interest in Sunplus. The remaining 5% interest of Sunplus is owned by Shanghai Fanna Industrial Product Design Co., Ltd. (“~~Huizhou~~Shanghai ~~Liyin~~Fanna”). toWise ~~dispose~~Target ofand Amber Link are investment holding companies incorporated in the British Virgin Islands whereas Shanghai Fanna is a privately-owned company established in China in 2001. In March 2009, Wise Target transferred all its ~~100~~holdings (75%) ~~interest~~ in ~~JiaXun~~Sunplus to Amber Link for US$~~724~~2,885,000 (~~RMB5~~HK$22, ~~000~~500,000). As a result of this transaction, Amber Link directly owned 95% of Sunplus and ~~its~~this 80transaction had no impact on the Company’s effective holdings of Sunplus. Shanghai Fanna Industrial Design Co., Ltd. continued to own the remaining 5% interest ~~inFujian~~in ~~QiaoXing~~Sunplus. ~~for~~On ~~$12~~November 25,~~230~~ 2009,~~000~~ the Company transferred all its holdings (~~RMB84~~100%) in Amber Link to Wise Target for US$2,~~000~~600. As a result of this transaction,~~000)~~ the Company indirectly holds Amber Link and this transaction had no impact on the Company’s effective holdings of Amber Link and Sunplus.

In ~~March 2009~~January 2007, Sunplus ~~terminated~~established ~~the~~Zhangzhou ~~agreement~~JiaXun ~~with~~Communication ~~Huizhou~~Facility ~~Liyin~~Co.,Ltd. ~~and~~(“JiaXun”), ~~entered into an~~a ~~agreement~~100% ~~with~~owned ~~Qiaoxing~~subsidiary ~~Telecommunication~~in ~~Industry~~Zhangzhou ~~Company~~in ~~Limited~~Fujian toprovince. ~~dispose~~In ~~of its~~March 2007, ~~100% interest in~~ JiaXun ~~for~~and ~~$724~~Sunplus,~~000~~ respectively ~~(RMB5,000,000)~~acquired 20% and ~~its~~ 80% interest in Fujian QiaoXing ~~for~~Industry ~~$12~~Co.,~~230,000~~ Ltd.(~~RMB84,000,000~~“Fujian QiaoXing”). for ~~The~~the ~~disposal~~construction of ~~Jia~~a ~~Xun~~technology ~~and~~park for long term development in the mobile telecommunication industry. Fujian QiaoXing was ~~completed~~established on ~~April~~February 13, 92004, ~~and~~with ~~March~~a 20registered capital of RMB20,000,000 ~~2009~~(US$2, ~~respectively~~590,000).

~~In March~~4 ~~2009, Wise Target transferred all its holdings (75%) in Sunplus to Amber Link for US$2,885,000 (HK$22,500,000).~~

The currentTable corporate structure of T-Bay Holdings is as follows:Contents

~~Company~~In December, 2008, Sunplus, our 95%-owned Chinese subsidiary entered an agreement with ~~History~~Huizhou Liyin Electronics Co., Ltd. (“Huizhou Liyin”) to sell 100% of Sunplus’ interest in its wholly-owned subsidiary JiaXun for RMB5,000,000 and Eighty Percent (80%) of Sunplus’ interest in its subsidiary Fujian QiaoXing Industry for RMB84,000,000.

~~October~~In March 2009, Sunplus terminated the agreement with Huizhou Liyin relating to sale of its interest ~~2002~~in -JiaXun and Fujian Qiao Xing and entered into another agreement to sell to Qiaoxing Telecommunication Industry Company Limited (“QiaoXing Telecom”) 100% of Sunplus’ ~~was~~interest ~~established~~in its wholly-owned subsidiary JiaXun for RMB5,000,000 and Eighty Percent (80%) of Sunplus’ interest in its ~~Shanghai~~subsidiary Fujian QiaoXing for RMB84,000,000. ~~with~~The ~~only~~transfers 40of ~~employees~~Jia Xun and Fujian QiaoXing were completed on April 9 and March 20, 2009, respectively.

~~December 2002 - Sunplus established its strategic cooperation with Skyworks, followed by the first mobile phone modules based on Skyworks’ chips platform.~~ The ~~first module~~current ~~developed~~corporate bystructure ~~Sunplus~~of ~~was~~T-Bay ~~used~~Holdings byis ~~Panda~~as ~~Electronics Inc. (“Panda”) for~~follows: ~~making 150,000 mobile handsets and also was used by one of our major customers, CECT.~~

~~Page~~Services 5and ofProducts 41

~~May~~We ~~2003 -~~are ~~Sunplus~~a ~~launched~~provider ~~its~~of ~~first~~high ~~phone~~quality ~~model~~mobile handset design services. We tailor-make our services and products based on the requirements of our customers. Our services mainly include:

~~April 2003~~Design ~~- Sunplus started collaboration with French Wavecom in module R&D.~~Service The module was completed six months later, which was ordered by Huizhou Jialili Telecommunication Co., Ltd. (“Huizhou Jialili”), in its phone model T2, which became one of its most popular products.

~~December 2003~~Mobile -handset ~~Sunplus~~design: ~~completed~~We ~~the~~have ~~development~~special ofproject anteams ~~electronics platform, which was sold~~ to ~~Huaguan~~work ~~Electronics~~closely ~~Inc.~~with ~~(“Huaguan”)~~our ~~for~~customers ~~RMB~~to ~~20 million ($2,480,000),~~monitor ~~which~~and ~~was~~coordinate ~~followed~~the byprogress aof ~~150,000~~each ~~sets~~new ~~order~~design ~~from Panda and 200,000 units order from CECT~~project.

AsIndustrial ~~of January~~and ~~2004~~mechanical -design: ~~more~~We ~~than~~design ~~500,000~~the ~~mobile~~exterior ~~phone~~outlook ~~handsets~~and ~~designed~~mechanical bystructure ~~Sunplus~~of ~~were~~a ~~sold~~mobile ~~in the China market~~handset. ~~Major~~We ~~models~~adopt ~~included~~the ~~A606~~user-orientation ~~Yinghu~~design ~~for~~concept ~~Huaguan,~~and ~~Q747 Zhizhun~~focus ~~for~~our ~~Philips,~~product ~~T520~~design ~~Beetles~~on ~~for Hong Kong Zhongjian Telecom. Subsequently,~~the ~~Sunplus~~personality ~~continuously received large orders from Panda, CECT, Huizhou Jialili, most~~ of ~~which~~target ~~exceed 200,000 units~~end-users.

~~January~~5 2004 - Sunplus established a partnership with Shenzhen Ankai Microelectronics Technology Co., Ltd. in order to establish a multimedia chips platform, which combines Ankai’s applications of multimedia chips and Skyworks’s radio functions.

Our product,Table T520of Beetles, was awarded by Sina.com as the Most Popular Mobile Phone for Female.Contents

~~May~~Hardware ~~2005 -~~design: ~~our~~We design ~~SP-8~~the ~~for~~core ~~the~~printed ~~product~~circuit ~~CECT~~board ~~S569~~layout. ~~was~~We ~~awarded~~also ~~top~~have ~~100~~special engineering iFteams ~~Asia~~on the design~~. SP-8~~ ~~was~~of ~~also~~baseband ~~awarded~~and ~~the~~radio ~~Fashion~~frequency ~~Color~~parts ~~Nominate~~of ~~Prize~~mobile handsets based on chip platforms.

OnSoftware ~~August 16,~~design: ~~2005~~We -design wethe ~~completed~~software asystem ~~reverse~~for ~~merger~~the ~~with~~mobile ~~Amber~~handset ~~Link~~ and ~~Wise~~its ~~Target~~functional ~~and~~modules. ~~currently~~We weare capable of developing our own ~~95%~~software ofin ~~Sunplus~~man-machine-interface and the driver software for LCD display, camera, harmonic ring tones and MP3 functions.

~~May~~Other ~~2006 -~~Design ~~Sunplus~~Services: ~~received~~We ~~the~~can ~~ISO9001:2000~~also ~~certification~~design ofother ~~quality~~electronic ~~management system~~devices based on wireless technology.

~~August 2006~~Production ~~- Sunplus and VIA Technologies Inc., Ltd. (TSEC: 2388), a leading chipset~~Services ~~solution provider, established a partnership for Global Systems for Mobile Communications (GSM) handsets development.~~

~~December 2006~~Based -on ~~Sunplus~~the ~~and~~request ~~MediaTek~~of ~~Inc.~~our customers, ~~Ltd~~we also manufacture handset components. These mainly include printed circuit boards (~~“MTK”~~PCB) and ~~(TSEC:~~printed ~~2454~~circuit board assembly (PCBA),. aThey ~~leading~~are ~~chipset~~the backbones of ~~solution~~mobile ~~provider~~handsets. ~~based~~We insubcontract ~~Taiwan,~~the ~~entered~~production ~~into~~work ato ~~partnership~~third ~~agreement~~party tomanufacturers. We have a ~~jointly~~quality ~~develop~~assurance ~~multi-media~~team ~~Global~~to ~~Systems~~monitor ~~for~~the ~~Mobile~~production ~~Communications~~process ~~(GSM) handsets~~to ~~for~~ensure the ~~mobile~~products ~~telecommunications~~can ~~market~~meet inour quality ~~China~~requirements.

~~January 2007~~Business ~~- Sunplus re-launched a partnership with Anyka Inc., a Silicon Valley based~~Model ~~company, which enabled us to access the new technology of Infineon, a leading chipset solutions provider headquartered in Germany.~~

~~January~~As a wireless telecommunication design house in China, we generate our revenue mainly by selling ~~2007~~mobile -phone ~~Sunplus~~components ~~established~~and ~~JiaXun~~by charging design services fees.

~~February 2007~~Revenue -from ~~Sunplus~~Sales ~~acquired~~of RFHandsets ~~design team from Simiens&BenQ,~~ and ~~extended our~~Components ~~design service in RF design industry.~~

~~March 2007~~We -provide ~~JiaXun,~~production asupport ~~100%~~to ~~subsidiary~~facilitate our customers’ manufacture of ~~Sunplus~~mobile handset components. By closely working with our OEMs, we manufacture and ~~Sunplus~~sell ~~respectively~~PCBs ~~acquired~~and PCBAs to our ~~20%~~customers. ~~and~~We ~~80%~~make ~~interests~~to inorder. ~~Fujian~~No ~~QiaoXing,~~inventory ~~which~~is ~~would~~held ~~focus~~and onpurchases ~~the~~of ~~manufacture~~goods are made only for firm oforders ~~telephone~~received from customers. We are fully responsible for cost control and ~~mobile~~quality ~~components~~control.

~~May~~Revenue ~~2007 -~~from ~~Sunplus~~Design ~~received six copyrights for its designed software. All of them are~~Services ~~games and applications for mobile phone.~~

~~May~~We ~~2007 -~~charge ~~Sunplus~~design ~~was~~fees ~~awarded~~directly ~~“Software~~or ~~Company”~~indirectly for design solutions or services provided by ~~Ministry~~us. ofThe design ~~Information~~fee ~~Industry~~consists of ~~China~~ NRE (non-recurring engineering) fees and royalty fees.

~~October 2007~~NRE fees are one-off ~~Sunplus~~fees ~~kicked~~for ~~off~~a certain design project. Typically, payment of the ~~world’s~~NRE ~~first~~fee ~~phone~~is required before we formally launch the project. We will start the development of a certain solution only ~~which~~if ~~combined~~we ~~with~~have received the pre-paid NRE fee. To minimize the operation risk, the NRE fee should ~~ECG~~be ~~(Electrocardiogram)~~no ~~monitor~~less ~~function~~than the projected R&D fee for a certain design solution.

~~Page~~We 6also charge royalty fees based upon the product sales volume of our customers. When the whole 41handset is sold in the market, we charge royalty fees monthly on every handset manufactured by our customers using our designs. We usually ask for a minimum volume term in our contracts to encourage a larger volume order in a certain period of time.

~~February 2008~~Competitive ~~- Sunplus reached agreement with Infineon Technologies Asia Pacific Pte~~Strengths ~~Ltd. to develop Tire Pressure Monitor System (TPMS) sensors. It’s the first step by Sunplus to enter the Auto-Mobile Electronic Design market.~~

InStrategic ~~2008~~Relationships ~~- Sunplus~~with ~~has~~Business ~~developed GSM-R device and system for railway network in~~Partners ~~China.~~

~~March~~We work closely with the world’s leading technology and platform providers in the mobile handset ~~2009~~industry ~~-Sunplus~~which ~~disposed~~is characterized by rapid technological changes to keep abreast of ~~its~~and ~~80%~~have ~~interest~~access to inthe ~~Fujian~~latest ~~QiaoXing~~technologies.

~~April 2009~~We -have ~~Sunplus~~also ~~disposed~~established ofgood ~~its~~relationships ~~100%~~with ~~interest~~subcontractors inwhich ~~JiaXun~~provide production services for mobile phone components.

~~Services~~6 ~~and Products~~

WeTable seek to maintain and strengthen our position as a provider of high quality mobile handset design services. We tailor-make our services and products based on the requirements of our customers. Our services mainly include:Contents

~~Design~~Quick Market Response ~~Service~~

~~Mobile~~We pursue a market-oriented product development strategy, grasping end-users’ preferences and ~~handset~~tastes. ~~design: We~~Our ~~have~~experience ~~special~~and ~~project~~expertise ~~teams~~enables us to ~~work~~complete ~~closely~~a ~~with~~design ~~our~~solution in only two to three ~~customers~~months, which helps to ~~monitor~~reduce ~~and~~the ~~coordinate~~time for the ~~progress~~mobile ofhandsets ~~each~~designed ~~new~~by ~~design project~~us to reach the market.

~~Industrial and~~Strong ~~mechanical~~R&D ~~design: We design the exterior outlook and mechanical~~capability ~~structure of a mobile handset. We adopt the user-orientation design concept and focus our product design on the personality of target end-users.~~

~~Hardware design: In~~We ~~addition~~have a professional and competent team to handle the ~~design~~wide spectrum of ~~the~~mobile ~~core~~phone ~~printed~~design ~~circuit board layout~~jobs, including weindustrial ~~have~~design, ~~also~~structural ~~set~~design, upelectronics ~~special~~design, ~~engineering~~software ~~teams~~design onand ~~the~~machine-man interface design. Some of ~~baseband and~~our ~~radio~~engineers ~~frequency~~were ~~parts~~formerly ofemployed by mobile ~~handsets~~communication ~~based~~leaders ~~on chip~~such ~~platforms~~as Motorola, Siemens or BenQ.

~~Software design:~~ We ~~design~~are ~~the~~able ~~software~~to ~~system~~develop ~~for~~new ~~the~~ mobile ~~handset~~phones ~~and~~based ~~its functional~~on chip-level modules~~. We~~, ~~are~~which ~~capable~~can ofenhance ~~developing our own software in~~the ~~man-machine-interface~~flexibility ~~and~~of the ~~driver~~product ~~software~~design ~~for~~in ~~LCD~~terms ~~display,~~of ~~camera,~~handset ~~harmonic ring~~size ~~tones~~ and ~~MP3 functions~~functionalities.

~~Auto Mobile~~Customized ~~wireless~~Products ~~device design: As of June 2008, we developed a GPS device~~ and ~~Tire~~Market ~~Pressure Monitor System (TPMS) sensors. We are capable of~~Knowledge ~~designing other devices and systems related to the automobile wireless technology.~~

~~Railway wireless~~We ~~system~~ design: many of our products based on our customers’ specifications. We ~~developed~~work ~~GSM-R~~closely with mobile device manufacturers and ~~system~~brand ~~for railway~~name ~~network~~owners to understand their needs and product roadmaps. We ~~are~~also interface ~~capable~~with ofour ~~developing~~customers ~~devices~~regularly to understand the mobile handset market, consumer preferences and ~~systems~~trends ~~related~~in the industry. This allows us to predict future trends and to assist our ~~railway~~customers ~~wireless~~in ~~technology~~the development of new products and functions and the setting of a price range.

~~Other Design~~Current ~~Services:~~Business ~~We can also provide design services in relation to the design~~Development ~~of other electronic devices based on wireless technology, such as design in GPS device and Radio Frequency design.~~

~~Production~~During the year ended March 31, 2010, we kept working closely with strategic partners and have ~~Services~~developed Wideband Code Division Multiple Access (“W-CDMA”) and, Time Division Synchronous Code Division Multiple Access (“TD-SCDMA”) solutions specially for the China market. As the telecommunication industry in China was affected by the global financial crisis, with its consequence in various manifestations, we postponed long-term projects.

~~Based~~Products ~~on the~~Geographic ~~request of our customers, we also manufacture the components of mobile~~Coverage handsets. We subcontract the production work to third party manufacturers mostly in the Shanghai area. We have a quality assurance team to monitor the production process to ensure the products can meet our quality requirements.

~~Components: These~~In ~~mainly~~terms ~~include~~of ~~printed~~revenue, ~~circuit~~over ~~boards~~90% ~~(PCB)~~of ~~and~~our ~~printed~~mobile ~~circuit board~~handsets ~~assembly~~designed ~~(PCBA)~~by us were within the China and Hong Kong markets. ~~They~~ ~~are~~The Company did not sell products to consumers directly, but instead through the sales ~~backbones~~networks of ~~mobile~~our customers. According to sales information provided by our customers, products ~~handsets~~designed or manufactured by us were sold in major cities, secondary cities and small towns throughout China, covering all provinces of China.

~~Page~~Quality ~~7 of~~Assurance 41

~~Business~~We believe that a high standard quality management system is crucial for maintaining our ~~Model~~reputation. Our quality assurance team monitors hardware, software and mechanical design teams’ performance to ensure strict adherence to the quality standards required by our customers. The team conducts product reliability tests, including accelerated life tests, climatic stress tests and mechanical endurance tests. The team is also responsible for components qualification, prototype quality assurance, and submission of prototypes for FTA (Full Type Approval) and CTA (China Testing Alliance) certifications. In addition, the team collects and organizes all relevant written documents produced and used throughout the design process.

WeFTA ~~are one~~certifies ofthat ~~the~~a ~~larger~~mobile ~~wireless~~handset ~~telecommunication~~submitted ~~design~~for ~~houses~~testing inhas ~~China.~~passed Wetests ~~generate our~~for ~~revenue~~its ~~mainly~~reliability ~~by charging design services fees~~ and ~~royalty fees and by~~ ~~selling~~conformance ~~mobile~~with ~~phone~~global ~~components~~standards.

~~Revenue~~CTA certifies that the use of telecommunication terminal equipment in the national ~~from~~telecommunications ~~Design~~network ~~Services~~has been approved and complies with the requirements for network access and the national standards established by the Ministry of Information Industry.

WeThrough ~~charge design~~our ~~fees~~quality ~~directly~~assurance orteam, ~~indirectly~~we ~~for~~adopt ~~design~~stringent ~~solutions~~quality orprocedures ~~services~~at ~~provided~~the bydesign stage, usincoming quality assurance of components and parts, assembly testing and final quality testing. ~~The~~Our selection ~~design~~criteria ~~fee~~for ~~consists~~suppliers ofemphasize ~~NRE~~reputation, ~~(non-recurring~~time ~~engineering)~~to ~~fees~~supply, ~~and~~availability ~~royalty~~of components ~~fees~~and parts, among other factors.

~~NRE fees~~7 are one-off fees for a certain design project. Typically, NRE fee is required before we formally launch the project. We will start the development of a certain solution only if we have received the pre-paid NRE fee. To minimize the operation risk, the NRE fee should be no less than the projected R&D fee for a certain design solution.

WeTable also charge royalty fees based upon the product sales volume of our customers. When the whole handset is sold in the market, we charge royalty fees monthly on every handset manufactured by our customers using our designs. We usually ask for a minimum volume term in our contracts to encourage larger volume order in a certain period of time.Contents

~~Revenue from~~ Sales ~~of Handsets~~ and ~~Components~~marketing

WeOur ~~also provide~~sales ~~production~~force ~~support~~consists toof ~~facilitate~~approximately ~~our~~13 ~~customers’~~salespeople ~~manufacture~~and support personnel. Most of ~~mobile~~them have ~~handsets~~many ~~and~~years ~~components.~~of Byexperience ~~closely~~in ~~working~~the ~~with~~telecommunication ~~our~~industry. ~~OEMs,~~They weare ~~manufacture~~responsible ~~and~~for establishing ~~sell~~and ~~PCBs,~~maintaining ~~PCBAs~~client ~~and~~relationships, ~~handsets~~trying to ~~our~~fulfill customers.’ Wespecial ~~are~~needs, ~~fully~~and ~~responsible for~~introducing ~~material~~new ~~purchases,~~technologies ~~cost~~and ~~control~~applications ~~and~~in ~~quality~~the ~~control~~telecommunications field.

~~Competitive~~Intellectual Property ~~Strengths~~

~~Strategic~~We believe protection of our intellectual property rights is extremely important for our business. ~~Relationships~~As ~~with~~of ~~Business~~March 31, ~~Partners~~2010, we have registered 17 patents in China, of which 15 have been approved. All of them are patents for product appearance. We have also registered six copyrights for software. All of them are games and applications for mobile phone.

AsOur ~~the~~Competitors mobile handset industry is characterized by rapid technological changes, it is essential for us to keep abreast of and have access to the latest technologies by working closely with the world’s leading technology and platform providers. We continue to work closely with VIA Technologies Inc. (VIA), MediaTek Inc., Ltd.(MTK), Anyka Inc.(Anyka), Infineon Inc.(Infineon) as our strategic partners which enables us to expand our product coverage. We believe we are one of the first independent mobile handset design houses in China to work with Skyworks, Inc (Skyworks), which has established a dedicated support team in Shanghai to support us in our design process.

WeThere ~~have~~are more than a hundred mobile phone design houses in China, including market leaders such as ~~also~~China ~~established~~TechFaith ~~good~~Wireless ~~relationships~~Communication ~~with~~Technology ~~subcontractors~~Limited, ~~which~~Shanghai ~~provide~~Longcheer ~~production~~Telecommunication ~~services~~Co.,Ltd ~~for~~and ~~mobile~~SIMCom ~~phone~~Information ~~components~~Technology Ltd. Other major design houses include Shanghai WenTai Communication Technology Co., Ltd., Shanghai Huaqi Telecom Technology Co., Ltd., Shenzhen Jinwave Technology Co., Ltd. and Shenzhen Yulong Communication Technology Co., Ltd. We believe Shanghai Longcheer and Shanghai Simcom are our most direct competitors.

~~Quick~~Certain of our competitors are substantially larger and have significantly greater financial, ~~Market~~marketing, ~~Response~~research and development, technological and operating resources and broader product lines than we do.

We ~~pursue a~~think ~~market-oriented~~that ~~product~~competition ~~development~~in ~~strategy,~~our ~~grasping~~markets ~~end-users’~~is ~~preferences~~based primarily on technology innovation, product ~~and~~performance, ~~tastes.~~reputation, ~~Our~~delivery ~~experience~~times, customer support and ~~expertise~~price. ~~enables~~We usbelieve towe ~~complete~~are aamong ~~design~~the ~~solution~~few indesign ~~only~~houses ~~two~~which toare ~~three~~capable ~~months,~~of tosoftware ~~ensure~~design ~~our~~and ~~designs~~hardware ~~are~~design ~~one~~as ~~step~~well ~~ahead~~as performing the whole spectrum of ~~our~~design ~~competitors~~activities and ~~leading~~developing ~~market~~functions ~~trends~~or applications at chipset-level modules.

~~Strong~~Employees ~~R&D capability~~

WeAs ~~have a professional and competent team to handle the wide spectrum~~ of ~~mobile phone design jobs~~March 31, ~~including industrial design~~2010, ~~structural~~we ~~design,~~had ~~electronics~~approximately ~~design, software~~80 ~~design~~full-time ~~and~~employees ~~machine-man~~employed ~~interface~~in ~~design~~China. ~~Some~~From oftime ~~our engineers used~~ to betime ~~employed~~we byemploy ~~mobile~~independent ~~communication~~contractors ~~leaders~~to ~~such~~support asour ~~Motorola~~production, ~~Siemens~~engineering, ormarketing, ~~BenQ. Our~~and ~~professional industrial design team won the IF Asia Design Award Winner in~~sales ~~2005~~departments.

~~Page~~Web 8Site ofAccess to Our Periodic SEC Reports 41

WeYou ~~are one~~may ofread ~~few~~and ~~design~~copy ~~houses~~any inpublic ~~China~~reports ~~that~~we ~~are~~file ~~able~~with tothe ~~develop~~SEC ~~new~~at ~~mobile~~the ~~phones~~SEC’s Public Reference Room at ~~based~~100 onF ~~chip-level~~Street, ~~modules~~N.E., ~~which~~Room 1580, ~~can~~Washington, ~~enhance~~D.C. ~~the~~20549. ~~flexibility~~You may obtain information on the operation of the ~~product~~Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an ~~design~~Internet insite ~~terms~~http://www.sec.gov ofthat ~~handset~~contains ~~size~~reports and ~~functionalities~~information statements, and other information that we filed electronically.

~~Customized Products~~Item ~~and~~1A. ~~Market~~Risk ~~Knowledge~~Factors.

WeSet ~~design many~~forth ofbelow ~~our~~is ~~products~~a ~~based~~description onof ~~our~~factors ~~customers’~~that ~~specifications.~~may Weaffect ~~work closely with mobile device manufacturers and brand name owners to understand their needs and product roadmaps. We also interface with~~ our ~~customers regularly to understand the mobile handset market~~business, ~~consumer~~results ~~preferences~~of ~~and~~operations ~~trends in the~~and ~~industry.~~share ~~This~~price ~~allows~~from ustime to ~~predict future trends and to assist our customers in the development of new products and functions and the setting of a price range~~time.

~~Current~~Aggregate demand for the types of mobile phone handsets to which our design services were suited ~~Business~~have ~~Development~~been on a downward trend. We are looking at ways to deal with this adverse change in the market. If we do not solve this problem within a reasonable period of time, our long-term financial performance and condition would be adversely affected.

~~During the~~As ~~fiscal~~a ~~year~~result ~~ended~~of ~~March~~the ~~31,~~global ~~2009,~~financial wecrisis ~~launched~~and 32its ~~mobile~~consequence ~~handset~~in ~~solutions~~its various manifestations, and ~~covering~~also the ~~high-end~~change in consumer preference, ~~mid-end~~aggregate ~~and~~demand ~~low-end~~for ~~markets.~~the Wetypes ~~kept~~of ~~working~~mobile ~~closely~~phone ~~with~~handsets to ~~strategic~~which ~~partners~~our ~~VIA,~~design ~~MTK,~~services ~~Anyka,~~were ~~Infineon~~ suited, ~~Skyworks~~in ~~and~~the ~~other~~Mainland ~~technology partners.~~China ~~During~~market ~~the~~as ~~fiscal~~well ~~year~~as ~~ended~~the ~~March~~overseas 31market, have ~~2009,~~been weon ~~developed~~a ~~mobile~~downward ~~phone solutions~~trend. ~~with~~We ~~new~~are ~~functions~~looking ~~including~~at ~~but~~ways ~~not~~to ~~limited~~deal towith ~~smart~~this ~~touch~~adverse ~~screen, voice~~change ~~operation~~in ~~system,~~the market. ~~GPS~~We ~~and~~may ~~CMMB(China~~diversify ~~Mobile~~into ~~Multimedia~~new ~~Broadcasting)~~businesses. ~~We can~~However, ~~tailor-make~~it ~~solutions~~may ~~featuring~~take ~~functions~~time ~~such~~to asfind ~~handwriting~~new ~~recognition,~~businesses to ~~digital~~which ~~cameras,~~we ~~Dual~~are ~~speakers,~~suited ~~GPRS,~~and FMwhich ~~radio,~~offer ~~dictionaries,~~a ~~webcams,~~reasonable ~~blue tooth,~~prospect ~~E-mail,~~of ~~MP3,~~success. ~~MPEG4~~In ~~3GP,~~the ~~WAP~~meantime, ~~USB,~~we ~~T-Flash,~~plan ~~MMS,~~to be ~~CMOS,~~prudent ~~TV-out,~~in ~~fingerprint authentication,~~the ~~firewall~~management ~~and~~of ~~sound~~the ~~recorder.~~Company, Inwith ~~the~~a ~~fiscal~~view ~~year~~to ~~ended~~conserve ~~March~~cash. ~~31,~~If this adverse ~~2009,~~situation wecontinued ~~also~~for ~~extended~~a ~~design~~long oftime, ~~TDS~~our long-~~CDMA~~term ~~solutions~~financial performance and ~~WCDMA~~condition would be ~~solutions~~adversely affected.

~~The~~8 company has postponed development of some new solutions because of less favorable market condition. As a result of the worldwide financial crisis, the demand in the Mainland market, especially the Mid-end and High-end market, as well as the overseas market has been shrinking since the second half of fiscal year ended March 31, 2009.

The companyTable also postponed the development of certain other technologies including TPMS.Contents

~~Following~~Our sales and profitability depend on the continued growth of the mobile communications industry as well as the ~~resignation~~growth of ~~Mr.~~the ~~Jie~~new ~~Shi~~market onsegments ~~March~~within 31that ~~2009~~industry ~~and~~in Mrwhich we have recently invested. ~~Albert~~If ~~Wai~~the ~~Chiu~~mobile ~~Leung~~communications ~~on April~~industry 1,does ~~2009~~not grow as we expect, or if the ~~Board~~new ~~appointed~~market segments ~~Mr.~~on ~~Xiaofeng~~which Liwe have chosen to focus and ~~Mr.~~in ~~Xiangning~~which ~~Qin~~we tohave recently invested grow less than ~~serve~~expected, asor ~~the~~if ~~Chief~~new ~~Executive~~faster-growing ~~Officer~~market ~~and~~segments ~~Chief~~emerge ~~Financial~~in ~~Officer~~which ~~respectively~~we ~~on April~~have 1not invested, ~~2009~~our sales and profitability may be adversely affected.

WeOur ~~moved~~business depends on continued growth in mobile communications in terms of the number of ~~part~~existing mobile subscribers who upgrade or simply replace their existing mobile devices, the number of new subscribers and increased usage. As well, our ~~design~~sales ~~team~~and profitability are affected by the extent to ~~Huizhou~~which ~~city~~there inis ~~Guangdong.~~increasing Asdemand ~~most~~for, and development of, ~~our~~value-added ~~customers~~services, leading ~~are~~to ~~located~~opportunities for us to successfully market mobile devices that feature these services. These developments in ~~Guangdong~~our ~~province~~industry are to a certain extent outside of our control. For example, we ~~set~~are dependent upon anoperators ~~office~~in highly penetrated markets to successfully introduce services that cause a substantial increase in ~~Huizhou~~usage of voice and ~~sent~~data. ~~part~~Further, in order to support a continued increase in mobile subscribers in certain low-penetration markets, we are dependent on operators to increase their sales volumes of lower-cost mobile devices and to offer affordable rates. If operators are not successful in their attempts to increase subscriber numbers, stimulate increased usage or drive replacement sales, our ~~design~~business ~~team~~and ~~there~~results of operations could be materially adversely affected.

~~Products~~Our industry continues to undergo significant changes. First, the mobile communications, ~~Geographic~~information ~~Coverage~~technology, media and consumer electronics industries are converging in some areas into one broader industry leading to the creation of new types of mobile devices, services and ways to use mobile devices. Second, while participants in the mobile communications industry once provided complete products and solutions, industry players are increasingly providing specific hardware and software layers for products and solutions. As a result of these changes, new market segments within our industry have begun to emerge and we have made significant investments in new business opportunities in certain of these market segments, such as smartphones, imaging, games, music and enterprise mobility infrastructure. However, a number of the new market segments in the mobile communications industry are still in the early stages of their development, and it may be difficult for us to accurately predict which new market segments are the most advantageous for us to focus on. As a result, if the segments on which we have chosen to focus grow less than expected, we may not receive a return on our investment as soon as we expect, or at all. We may also forego growth opportunities in new market segments of the mobile communications industry on which we do not focus.

InOur ~~terms~~ results of ~~revenue~~operations, ~~over~~particularly ~~90% of~~ our ~~mobile~~profitability, ~~handsets~~may ~~designed~~be byadversely usaffected ~~were~~if ~~within~~we ~~the~~do ~~China and Hong Kong markets. The company did~~ not ~~sell products to consumers directly,~~ ~~but~~successfully ~~sell~~manage ~~through~~price ~~the~~erosion ~~networks~~related ~~of our customers. According~~ to ~~sales information provided by~~ our ~~customers,~~ products ~~designed or manufactured by us were sold in major cities, secondary cities and small towns throughout China, covering all provinces of China~~.

~~Starting from~~In ~~2006~~the future, if, for competitive reasons, we ~~began~~need to ~~sell~~lower ~~whole~~the ~~mobile~~selling ~~handsets~~prices of certain of our products ~~through~~and if we cannot lower our ~~sales~~costs at the same rate or faster, this may have a material ~~agents~~adverse effect on our business and results of operations, particularly our profitability. ~~Our~~To mitigate the impact of product and service mix shifts on our profitability, we implement product segmentation with the aim of designing appropriate features with an appropriate cost basis for each customer segment. Likewise, we endeavor to mitigate the impact on our profitability of price erosion of certain features and functionalities by seeking to correctly time the introduction of new products, ~~are~~in ~~sold~~order to ~~nine~~align ~~different~~such ~~countries~~introductions ~~mainly~~with declines in ~~Southeast~~the prices of relevant ~~Asia~~components. We cannot predict with any certainty whether or to what extent we may need to lower prices for competitive reasons again and how successful we will be in aligning our cost basis to the pricing at any given point in time. Price erosion is a normal characteristic of the mobile devices industry, ~~Eastern~~and ~~Europe~~the products and ~~Latin~~solutions ~~America~~offered by us are also subject to natural price erosion over time. If we cannot reduce our costs at the same rate, our business may be materially adversely affected.

~~Quality~~9 ~~Assurance~~

We believeTable that a high standard quality management system is crucial for maintaining our reputation. Our quality assurance team monitors hardware, software and mechanical design teams’ performance to ensure strict adherence to the quality standards required by our customers. The team conducts product reliability tests, including accelerated life tests, climatic stress tests and mechanical endurance tests. The team is also responsible for components qualification, prototype quality assurance, and submission of prototypes for FTA (Full Type Approval) and CTA (China Testing Alliance) certifications. In addition, the team collects and organizes all relevant written documents produced and used throughout the design process.Contents

~~Page~~We 9must develop or otherwise acquire complex, evolving technologies to use in our business. If we fail to develop these technologies or to successfully commercialize them as new advanced products and solutions that meet customer demand, or fail to do so on a timely basis, it may have a material adverse effect on our business, our ability to meet our targets and our results of operations. 41

~~FTA certifies~~In order to succeed in our markets, we believe that awe ~~mobile~~must ~~handset~~develop ~~submitted~~or ~~for~~otherwise ~~testing~~acquire ~~has~~complex, evolving ~~passed~~technologies ~~tests~~to use in our business. However, the development and use of new technologies, applications and technology platforms for ~~its~~our mobile devices involves time, substantial costs and ~~reliability~~risks both within and ~~conformance~~outside ~~with~~of ~~global~~our ~~standards~~control. This is true whether we develop these technologies internally, by acquiring or investing in other companies or through collaboration with third parties.

~~CTA certifies~~The ~~that~~technologies, ~~the~~functionalities ~~use~~and offeatures ~~telecommunication~~on ~~terminal~~which ~~equipment~~we inchoose ~~the~~to ~~national~~focus may not achieve as broad ~~telecommunications~~or ~~network~~timely ~~has~~customer ~~been~~acceptance ~~approved~~as ~~and~~we ~~complies~~expect. ~~with~~This may result from numerous factors including the availability ~~requirements~~of more attractive alternatives or a lack of sufficient compatibility with other ~~for~~existing ~~network~~technologies, ~~access~~products and solutions. Additionally, even if we do select the ~~national~~technologies, functionalities ~~standards~~and ~~established~~features bythat customers ultimately want, we or the ~~Ministry~~companies ofthat work with us ~~Information~~may ~~Industry~~not be able to bring them to the market at the right time.

~~Through~~ Furthermore, as a result of ongoing technological developments, our ~~quality~~products ~~assurance~~and ~~team~~solutions are increasingly used together with components or layers that have been developed by third parties, whether or not we ~~adopt~~have ~~stringent~~authorized ~~quality~~their ~~procedures~~use atwith ~~the~~our ~~design~~products and solutions. However, such ~~stage~~components, ~~incoming~~such ~~quality~~as ~~assurance~~batteries, ofor ~~components~~layers, ~~and~~such ~~parts~~as software applications, ~~assembly~~may ~~testing~~not ~~and~~be compatible with ~~final~~our products and solutions and may not meet our and our customers’ quality, ~~testing~~safety or other standards. ~~Our~~As ~~selection~~well, ~~criteria~~certain ~~for~~components ~~suppliers~~or ~~include~~layers ~~reputation,~~that may be used with our products may enable our ~~time~~products and solutions to ~~supply~~be used for objectionable purposes, ~~availability~~such as to transfer content that might be hateful or derogatory. The use of ~~components~~our products and ~~parts~~solutions with incompatible or otherwise substandard components or layers, ~~etc~~or for purposes that are inappropriate, is largely outside of our control and could harm our reputation in the industry.

~~Sales~~We need to understand the different markets in which we operate and meet the needs of our customers, which include mobile network operators, distributors, independent retailers and enterprise ~~marketing~~customers. We need to have a competitive product portfolio, and to work together with our operator customers to address their needs. Our failure to identify key market trends and to respond timely and successfully to the needs of our customers may have a material adverse impact on our market share, business and results of operations.

~~Our~~We ~~sales force~~serve ~~consists~~a diverse range of ~~approximately~~customers, 15ranging ~~salespeople~~from ~~and~~mobile ~~support~~network ~~personnel~~operators, distributors, independent retailers to enterprise customers, across a variety of markets. ~~Most~~In many of these ~~them~~markets, ~~have~~the ~~many~~mobile ~~years~~communications industry is at different stages of ~~experience~~development, and many of these markets have different characteristics and dynamics, for example, in ~~the~~terms ~~telecommunication~~of ~~industry~~mobile penetration rates and technology, features and pricing preferences. ~~They~~Establishing ~~are~~and maintaining ~~responsible~~good ~~for~~relationships ~~maintaining~~with our customers and ~~establishing~~understanding ~~client~~trends ~~relationships,~~and ~~trying~~needs in their markets require us to timely obtain and evaluate a complex array of feedback and other data. We must do this ~~fulfill~~efficiently in order to be able to identify key market trends and address our customers’ ~~special~~ needs, proactively and ~~introducing~~in ~~new~~a ~~technologies~~timely manner. If we fail to analyze correctly and respond timely and ~~applications~~appropriately into ~~telecommunication~~customer ~~field~~feedback and other data, our business may be materially adversely affected.

~~Intellectual~~Certain mobile network operators require mobile devices to be customized to their specifications, ~~Property~~by requesting certain preferred features, functionalities or design, together with co-branding with the network operator’s brand. We believe that customization is an important element in gaining increased operator customer satisfaction and we are working together with operators on product planning as well as accelerating product hardware and software customization programs. These developments may result in new challenges as we provide customized products, such as the need for us to produce mobile devices in smaller lot sizes, which can impede our economies of scale, or the potential for the erosion of the Sunplus brand, which we consider to be one of our key competitive advantages.

~~We believe~~In ~~protection~~order ofto meet our ~~intellectual~~customers’ ~~property~~needs, ~~rights~~we isneed ~~extremely~~to ~~important~~introduce new devices on a timely basis and ~~for~~maintain ~~our~~a ~~continuous~~competitive ~~success~~product portfolio. AsFor ofus, ~~the~~a ~~March~~competitive ~~31,~~product ~~2009,~~portfolio wemeans ~~have~~a ~~registered~~broad 17and ~~patents,~~balanced offering of ~~which~~commercially 15appealing ~~have~~mobile ~~been~~devices ~~approved.~~with ~~All~~attractive offeatures, ~~them~~functionality and ~~are~~design ~~patents~~ for ~~product appearance~~all major user segments and price points. ~~Besides~~If we do not achieve a competitive portfolio, we ~~have~~believe ~~registered~~that ~~six~~we ~~copyrights~~will ~~for~~be ~~software.~~at ~~All~~a ofcompetitive ~~them are~~disadvantage, ~~games~~which ~~and~~may ~~applications~~lead ~~for~~to ~~mobile~~lower revenue ~~phone~~and lower profits.

~~Our~~10 ~~Competitors~~

ThereTable are moreof than a hundred mobile phone design houses in China, including market leaders such as China TechFaith Wireless Communication Technology Limited, Shanghai Longcheer Telecommunication Co.,Ltd and SIMCom Information Technology Ltd. Other major design houses include Beijing Tianyu Communication Equipment Co.Ltd, Shanghai WenTai Communication Technology Co., Ltd., Shanghai Huaqi Telecom Technology Co., Ltd., Shenzhen Jinwave Technology Co., Ltd. and Shenzhen Yulong Communication Technology Co., Ltd. We believe Shanghai Longcheer and Shanghai Simcom are our most direct competitors. Contents

~~Certain~~ The competitiveness of our ~~competitors~~portfolio ~~are~~is ~~substantially~~also ~~larger~~influenced ~~and~~by ~~have~~the ~~significantly~~value ~~greater~~of the Sunplus brand. A number ~~financial,~~of ~~marketing~~factors, ~~research~~including actual or even alleged defects in our products and ~~development~~solutions, ~~technological~~may ~~and~~have ~~operating~~a ~~resources~~negative effect on our reputation and ~~broader~~erode ~~product~~the ~~lines~~value ~~than~~of wethe doSunplus brand.

WeCompetition ~~think that competition~~ in our ~~markets~~industry is ~~based~~intense. ~~primarily~~Our onfailure ~~technology~~to ~~innovation, product~~respond ~~performance,~~successfully ~~reputation,~~to ~~delivery~~changes ~~times,~~in ~~customer support and price. We~~the ~~believe~~competitive welandscape ~~are~~may ~~among~~have ~~the~~a ~~few~~material ~~design~~adverse ~~houses~~impact ~~which~~on ~~are~~our ~~capable~~business ~~of software design~~ and ~~hardware~~results ~~design as well as performing the whole spectrum~~ of ~~design activities and developing functions or applications at chipset-level modules~~operations.

~~Employees~~ The markets for our products and solutions are intensely competitive. This competition has required us to extend lenient payment terms to our customers, which adversely affects cash flows. Industry participants normally compete with each other mainly on the basis of the breadth and depth of their product portfolios, price, operational and manufacturing efficiency, technical performance, product features, quality, customer support and brand recognition. We are facing increased competition from both our traditional competitors in the mobile communications industry as well as a number of new competitors, particularly from countries where production costs tend to be lower. Some of these competitors have used, and we expect will continue to use, more aggressive pricing strategies, different design approaches and alternative technologies than ours. In addition, some competitors have chosen a strategy of focusing on productization based on commercially available technologies and components, which may enable them to introduce products faster and with lower levels of research and development spending than our company.

As a result of ~~March~~ ~~31,~~developments ~~2009~~in our industry, we ~~had~~also ~~approximately~~expect 85to ~~full-time~~face ~~employees~~new ~~employed~~competition infrom ~~Greater~~companies ~~China.~~in ~~From~~related ~~time~~industries, tosuch ~~time~~as weconsumer ~~employ~~electronics ~~independent~~manufacturers ~~contractors~~and tobusiness ~~support~~device ~~our~~and solution ~~production~~providers, ~~engineering~~including but not limited to Dell, ~~marketing~~HP, ~~and~~Microsoft, ~~sales~~Nintendo, ~~departments.~~Palm, ~~The~~Research ~~company~~in ~~cut~~Motion ~~about~~and 40Sony. ~~employees~~Additionally, inbecause ~~fiscal~~mobile ~~year~~network ~~ended~~operators ~~March~~are ~~31,~~increasingly ~~2009~~offering mobile devices under their own brand, ~~because~~we offace ~~the~~increasing ~~decline~~competition infrom non-branded mobile device manufacturers. If we cannot respond successfully to these competitive developments, our business and results of operations may be materially adversely affected.

~~Page~~Reaching 10our sales, profitability, volume and market share targets depends on numerous factors. These include our ability to offer products and solutions that meet the demands of 41the market and to manage the prices and costs of our products and solutions, our operational efficiency, the pace of development and acceptance of new technologies, our success in the business areas that we have recently entered, and general economic conditions. Depending on those factors, some of which we may influence and others of which are beyond our control, we may fail to reach our targets and we may fail to provide accurate forecasts of our sales and results of operations.

~~Web~~A ~~Site~~variety ~~Access~~of factors discussed throughout these Risk Factors could affect our ability to reach our targets and give accurate forecasts. Although we can influence some of these factors, some of them depend on external factors that are beyond our control. In our mobile device businesses, we seek to maintain healthy levels of sales and profitability through offering a competitive portfolio of mobile devices, growing faster than the market, working to improve our operational efficiency, controlling our costs, and targeting timely and successful product introductions and shipments. The quarterly and annual sales and operating results in our mobile device businesses also depend on a number of other factors that are not within our control. Such factors include the global growth in mobile device volumes, which is influenced by, among other factors, regional economic factors, competitive pressures, regulatory environment, the timing and success of product and service introductions by various market participants, including network operators, the commercial acceptance of new mobile devices, technologies and services, and operators’ and distributors’ financial situations. Our ~~Periodic~~sales ~~SEC~~and operating results are also impacted by fluctuations in exchange ~~Reports~~ rates and at the quarterly level by seasonality. In developing markets, the availability and cost, through affordable tariffs, of mobile phone service compared with the availability and cost of fixed line networks may also impact volume growth.

~~You~~In ~~may read~~our ~~and~~mobile ~~copy~~networks ~~any~~business, ~~public~~we ~~reports~~also weseek ~~filed~~to ~~with~~maintain ~~the~~healthy ~~SEC~~levels atof sales and profitability and try to grow faster than the ~~SEC~~market. Our networks business’s ~~Public~~quarterly and annual net sales and ~~Reference~~operating ~~Room~~results atcan ~~100~~be Faffected ~~Street,~~by ~~N.E.,~~a ~~Room~~number ~~1580,~~of ~~Washington~~factors, ~~D.C.~~some ~~20549.~~of ~~You~~which ~~may~~we can influence, such as ~~obtain~~our ~~information~~operational onefficiency, the ~~operation~~level of ~~the~~our ~~Public~~research ~~Reference~~and ~~Room~~development byinvestments ~~calling~~and the ~~SEC~~deployment atprogress ~~1-800-SEC-0330.~~and ~~The~~technical ~~SEC~~success ~~also~~we ~~maintains~~achieve anunder ~~Internet~~network ~~site http://www~~contracts.~~sec.gov~~ Other relevant ~~that~~factors ~~contains~~include ~~reports~~operator ~~and~~investment ~~information~~behavior, ~~statements~~which can vary significantly from quarter to quarter, competitive pressures and ~~other~~general ~~information~~economic ~~that~~conditions ~~we filed~~although ~~electronically~~these are not within our control.

~~Item 1A. Risk Factors.~~11

SetTable forth below is a description of factors that may affect our business, results of operations and share price from time to time.Contents

~~Our sales~~The ~~and~~new ~~profitability~~business ~~depend~~areas onthat ~~the~~we ~~continued~~have ~~growth~~entered ofmay ~~the~~be ~~mobile communications~~less ~~industry~~profitable asthan ~~well~~we ascurrently ~~the~~foresee, ~~growth~~or they ofmay ~~the~~generate ~~new~~more ~~market~~variable ~~segments~~operating ~~within that~~results ~~industry~~than ~~in which~~ we ~~have~~currently ~~recently invested~~foresee. IfWe ~~the~~expect ~~mobile~~to ~~communications~~incur ~~industry~~short-term ~~does~~operating ~~not~~losses ~~grow~~in ascertain weof ~~expect,~~these ~~or if the~~ new ~~market~~business ~~segments~~areas ongiven ~~which~~our weearly stage ~~have~~investments ~~chosen~~in toresearch ~~focus~~ and indevelopment ~~which~~and wemarketing ~~have~~in ~~recently~~particular. ~~invested~~Also ~~grow~~our ~~less~~efforts ~~than~~in managing ~~expected,~~prices orand ifcosts ~~new~~in ~~faster~~the long-~~growing~~term, ~~market~~especially ~~segments~~balancing ~~emerge~~prices inand ~~which~~sales wevolumes ~~have~~with ~~not invested,~~research ~~our sales~~ and development ~~profitability~~costs, may beprove ~~adversely~~to ~~affected~~be inadequate.

~~Our business~~Although ~~depends~~we onmay ~~continued~~announce ~~growth~~forecasts ~~in mobile communications in terms~~ of ~~the number~~our ofresults ~~existing mobile subscribers who upgrade or simply replace their existing mobile devices, the number~~ of ~~new subscribers and increased usage. As well~~operations, ~~our~~uncertainties ~~sales~~affecting ~~and~~any ~~profitability are affected by the extent to which there is~~of ~~increasing~~these ~~demand for~~factors, ~~and~~particularly ~~development~~during ~~of,~~difficult ~~value-added~~economic ~~services~~conditions, ~~leading~~render ~~to opportunities for us to successfully market mobile devices that feature these services. These developments in~~ our ~~industry~~forecasts ~~are~~difficult to ~~a certain extent outside of~~ ~~our control. For example~~make, weand ~~are~~may ~~dependent~~cause onus ~~operators~~not ~~in highly penetrated markets~~ to ~~successfully~~reach ~~introduce~~the ~~services~~targets that ~~cause a substantial increase in usage of voice and data. Further, in order to support a continued increase in mobile subscribers in certain low-penetration markets,~~ we ~~are~~have ~~dependent on operators to increase their sales volumes of lower-cost mobile devices and to offer affordable rate. If operators are not successful in their attempts to increase subscriber numbers~~forecasted, ~~stimulate increased usage~~ or ~~drive~~to ~~replacement sales,~~revise our ~~business and results of operations could be materially adversely~~ ~~affected~~estimates.

Our ~~industry~~ ~~continues~~sales ~~to undergo significant changes. First, the mobile communications, information technology, media~~ and ~~consumer~~results ~~electronics industries are converging in some areas into one broader industry leading to the creation~~ of ~~new~~operations ~~type~~could ofbe ~~mobile~~adversely ~~devices,~~affected ~~services~~if ~~and~~we ~~ways~~fail to ~~use~~efficiently ~~mobile devices.~~manage ~~Second,~~our ~~while~~manufacturing ~~participants~~and inlogistics ~~the~~without ~~mobile communications industry once provided complete products and solutions~~interruption, ~~industry~~or ~~players~~fail ~~are~~to ~~increasingly~~ensure ~~providing specific~~that ~~hardware~~our ~~and software layers for~~ products and solutions. Asmeet ~~a result of these changes, new market segments within~~ our ~~industry have begun to emerge~~ and we ~~have~~our ~~made~~customers’ ~~significant investments in new business opportunities in certain of these market segments~~quality, ~~such~~safety ~~as smartphones, imaging, games, music~~ and ~~enterprise mobility~~other ~~infrastructure.~~requirements ~~However, a number of the new market segments in the mobile communications industry are still in the early states of their development,~~ and ~~it may be difficult for us to accurately predict which new market segments~~ are ~~the~~delivered most advantageous for us to focus on. As a result, if the segments on which we have chosen to focus grow less than expected, we may not receive a return on our investment as soon as we expect, or at all. We may also forego growth opportunities in ~~new market segments of the mobile~~ ~~communications industry on which we do not focus~~time.

Our manufacturing and logistics requirements are complex, call for advanced and costly equipment and include outsourcing to third parties. These operations are continuously modified in an effort to improve manufacturing efficiency and flexibility. We may experience difficulties in adapting our supply to the demand for our products, ramping up or down production at our facilities, adopting new manufacturing processes, finding the timeliest way to develop the best technical solutions for new products, or achieving manufacturing efficiency and flexibility, whether we manufacture our products and solutions ourselves or outsource to third parties. Such difficulties may have a material adverse effect on our sales and results of operations and may result from, ~~particularly~~among other things: delays in adjusting or upgrading production at our ~~profitability~~facilities, ~~may~~delays bein ~~adversely~~expanding production ~~affected~~capacity, failure in our manufacturing and logistics processes, failures in the ifactivities we dohave ~~not~~outsourced, ~~successfully~~and ~~manage~~interruptions ~~price~~in ~~erosion~~the ~~related~~data tocommunication systems that run our operations. Also, a failure or an interruption could occur at any stage of our product creation, manufacturing and delivery processes, resulting in our products and solutions not meeting our and our customers’ quality, safety and other requirements, or being delivered late, which could have a material adverse effect on our sales, our results of operations and reputation and the value of the Sunplus brand.

InWe ~~the future,~~depend ~~if,~~on ~~for~~our ~~competitive~~suppliers ~~reasons,~~for ~~if we need to lower~~ the ~~selling~~timely ~~prices~~delivery of ~~certain~~ ofcomponents ~~our products~~ and iffor wetheir ~~cannot~~compliance ~~lower~~with our supplier ~~costs~~requirements, atsuch ~~the same rate or faster~~as, ~~this~~most ~~may have a material adverse effect on our business and results of operations~~notably, ~~particularly~~ our ~~profitability. To mitigate the impact of product~~ and ~~service mix shifts on~~ our ~~profitability,~~customers’ ~~we implement~~ product ~~segmentation with the aim of designing appropriate features with an appropriate cost basis for each customer segment. Likewise~~quality, wesafety ~~endeavor to mitigate the impact on our profitability of price erosion of certain features~~ and ~~functionalities by~~ ~~seeking~~other ~~to correctly time the introduction of new products, in order to align such introductions with declines in the prices of relevant components~~standards. WeTheir ~~cannot predict~~failure ~~with any certainty whether or~~ to ~~what~~do ~~extent~~so wecould ~~may~~adversely ~~need~~affect ~~to lower prices for competitive reasons again and how successful we will be in aligning~~ our ~~cost basis~~ability to ~~the~~deliver ~~pricing~~our ~~at any given point in time. Price erosion is a normal~~products ~~characteristic of the mobile devices industry,~~ and ~~the~~solutions ~~products~~successfully and ~~solutions offered~~on ~~by us are also subject to natural price erosion over~~ time. ~~If we cannot~~ ~~reduce our costs at the same rate, our business may be materially adversely affected.~~

~~Page~~Our 11manufacturing operations depend to a certain extent on obtaining adequate supplies of fully functional components on a timely basis. Our principal supply requirements are for electronic components, mechanical components and software, which all have a wide range of 41applications in our products. Electronic components include integrated circuits, microprocessors, standard components, memory devices, cameras, displays, batteries and chargers while mechanical components include covers, connectors, key mats and antennas. In addition, a particular component may be available only from a limited number of suppliers. Suppliers may from time to time extend lead times, limit supplies or increase prices due to capacity constraints or other factors, which could adversely affect our ability to deliver our products and solutions on a timely basis. Moreover, even if we attempt to select our suppliers and manage our supplier relationships with scrutiny, a component supplier may fail to meet our supplier requirements, such as, most notably, our and our customers’ product quality, safety and other standards, and consequently some of our products are unacceptable to us and our customers, or we may fail in our own quality controls. Moreover, a component supplier may experience delays or disruption to its manufacturing, or financial difficulties. Any of these events could delay our successful delivery of products and solutions that meet our and our customers’ quality, safety and other requirements, or otherwise adversely affect our sales and our results of operations. Also, our reputation and brand value may be affected due to real or merely alleged failures in our products and solutions.

We12 must develop or otherwise acquire complex, evolving technologies to use in our business. If we fail to develop these technologies or to successfully commercialize them as new advanced products and solutions that meet customer demand, or fail to do so on a timely basis, it may have a material adverse effect on our business, our ability to meet our targets and our results of operations.

InTable order to succeed in our markets, we believe that we must develop or otherwise acquire complex, evolving technologies to use in our business. However, the development and use of new technologies, applications and technology platforms for our mobile devices involves time, substantial costs and risks both within and outside of our control. This is true whether we develop these technologies internally, by acquiring or investing in other companies or through collaboration with third parties.Contents

~~The technologies,~~We ~~functionalities~~are ~~and~~developing ~~features~~a onnumber ~~which~~of weour ~~choose~~new toproducts ~~focus~~and ~~may~~solutions ~~not achieve~~together aswith ~~broad~~other ~~or timely customer acceptance as we expect~~companies. ~~This~~If ~~may result~~any ~~from~~of ~~numerous~~these ~~factors~~companies ~~including~~were ~~the~~to ~~availability~~fail ofto ~~more~~perform, ~~attractive~~we ~~alternatives or~~may anot ~~lack~~be ofable ~~sufficient~~to ~~compatibility~~bring ~~with~~our ~~other existing technologies,~~ products and solutions. to ~~Additionally,~~market ~~even~~successfully ifor wein doa ~~select~~timely ~~the~~way ~~technologies, functionalities~~ and ~~features~~this ~~that~~could ~~customers~~have ~~ultimately~~a ~~want,~~material weadverse orimpact ~~the~~on ~~companies~~our ~~that~~sales ~~work~~and ~~with us may not be able to bring them to the market at the right time~~profitability.

~~Furthermore, as~~We acontinue ~~result~~to ofinvite ~~ongoing~~the ~~technological~~providers ~~developments~~of technology, ~~our~~components ~~products~~or ~~and~~software ~~solutions are~~to ~~increasingly~~work ~~used~~with ~~together~~us ~~with~~to develop ~~components~~technologies or ~~layers~~new ~~that~~products ~~have~~and ~~been developed~~solutions. byThese ~~third~~arrangements ~~parties,~~involve ~~whether~~the orcommitment ~~not~~by each wecompany ~~have~~of ~~authorized~~various ~~their~~resources, ~~use~~including ~~with~~technology, ~~our products~~research and ~~solutions.~~development ~~However~~efforts, ~~such~~and personnel. ~~components,~~Although ~~such~~the astarget ~~batteries,~~of orthese ~~layers, such~~arrangements asis ~~software~~a ~~applications,~~mutually ~~may~~beneficial ~~not~~outcome befor ~~compatible~~each party, ~~with~~ our ability to introduce new products and solutions ~~and~~that ~~may not~~ meet our and our customers' ’ quality, safety orand other standards. Assuccessfully ~~well,~~and ~~certain~~on ~~components~~schedule orcould ~~layers~~be ~~that~~hampered ~~may~~if, befor ~~used~~example, any ~~with~~of ~~our products~~the ~~may~~following ~~enable~~risks ~~our~~were ~~products~~to ~~and~~materialize: ~~solutions~~the toarrangements bewith ~~used~~the ~~for~~companies ~~objectionable~~that work with ~~purposes,~~us ~~such~~do not develop as toexpected, ~~transfer~~the ~~content~~technologies ~~that~~provided ~~might~~by bethe ~~hateful~~companies orthat ~~derogatory.~~work ~~The~~with us are not ~~use~~sufficiently ofprotected ~~our~~or ~~products~~infringe ~~and~~third ~~solutions~~parties’ ~~with~~intellectual ~~incompatible~~property orrights ~~otherwise~~in ~~substandard~~a way that we ~~components~~cannot foresee or ~~layers~~prevent, the technologies, products or ~~for~~solutions ~~purposes~~supplied by the companies that work ~~are~~with ~~inappropriate,~~us isdo ~~largely~~not ~~outside of~~meet ~~our~~the ~~control~~required quality, safety and ~~could~~other ~~harm~~standards or customer needs, our own ~~reputation~~quality incontrols fail, or the ~~industry~~financial standing of the companies that work with us deteriorates.

~~We need~~Our tooperations ~~understand~~rely ~~the~~on ~~different~~complex ~~markets in which we operate~~ and ~~meet~~highly ~~the~~centralized ~~needs of~~information ~~our~~technology ~~customers,~~systems ~~which include mobile network operators, distributors, independent retailers~~ and ~~enterprise customers~~networks. If Weany ~~need~~system toor ~~have~~network adisruption ~~competitive product portfolio~~occurs, ~~and~~this toreliance ~~work~~could ~~together with our operator customers to address their needs. Our failure to identify key market trends and to respond timely and successfully to the needs of our customers may~~ have a material adverse impact on our ~~market share~~operations, ~~business~~sales and ~~results~~operating ~~of operations~~results.

WeOur ~~serve a~~operations ~~diverse~~rely ~~range of customers, ranging from mobile network operators, distributors, independent retailers~~ to ~~enterprise customers, across~~ a ~~variety~~significant ~~of markets.~~degree Inon ~~many of these markets,~~ the ~~mobile~~efficient ~~communications~~and ~~industry~~uninterrupted isoperation ~~at different stages~~ of ~~development, and many of these markets have different~~complex ~~characteristics~~ and ~~dynamics,~~highly ~~for~~centralized ~~example,~~information intechnology ~~terms~~systems ~~of mobile penetration rates~~ and ~~technology~~networks, ~~feature~~which ~~and~~are ~~pricing~~integrated ~~preferences. Establishing and maintaining good relationships~~ with ~~our customers and understanding trends and needs in~~those ~~their~~of ~~markets~~third ~~require~~parties. usAny tofailure ~~constantly~~or ~~obtain~~disruption ~~and evaluate a complex array~~ of ~~feedback~~ ~~and~~our ~~other~~current ~~data.~~or Wefuture ~~must~~systems door ~~this~~networks ~~efficiently~~could ~~in order to be able to~~have ~~identify~~a ~~key~~material ~~market~~adverse ~~trends~~effect ~~and~~on ~~address~~ our ~~customers'~~operations, ~~needs~~sales ~~proactively~~ and inoperating ~~a timely manner~~results. IfFurthermore, weany ~~fail to analyze correctly and respond timely and~~data ~~appropriately~~leakages toresulting ~~customer~~from ~~feedback~~information ~~and~~technology ~~other~~security ~~data,~~breaches ~~our~~could ~~business~~also ~~may be materially~~ adversely ~~affected~~affect us.

~~Certain mobile~~All ~~network~~information ~~operators~~technology ~~require~~systems ~~mobile~~are ~~devices~~potentially vulnerable to bedamage ~~customized~~or tointerruption ~~their~~from a ~~specifications,~~variety byof ~~requesting~~sources. ~~certain~~We ~~preferred~~pursue ~~features,~~various ~~functionalities~~measures ~~or design,~~in ~~together~~order ~~with~~to ~~co-branding~~manage ~~with~~our ~~the~~risks ~~network~~related ~~operator's~~to ~~brand.~~system ~~We believe~~and ~~that~~network ~~customization~~disruptions, isincluding anthe ~~important~~use ~~element~~of inmultiple ~~gaining~~suppliers ~~increased operator customer satisfaction~~ and weavailable ~~are~~information ~~working~~technology security. ~~together~~However, ~~with~~despite ~~operators~~precautions ontaken ~~product planning~~by asus, ~~well~~an asoutage ~~accelerating~~in ~~product~~a ~~hardware~~telecommunications ~~and software customization~~network ~~programs.~~utilized ~~These~~by ~~developments~~any ~~may~~of ~~result~~our ininformation ~~new~~technology ~~challenges as we provide customized products~~systems, ~~such~~virus asor ~~the~~other ~~need~~event ~~for~~that usleads to ~~produce mobile devices in~~an ~~smaller~~unanticipated ~~lot~~interruption ~~sizes,~~of ~~which can impede~~ our ~~economies~~information oftechnology ~~scale,~~systems or ~~the~~networks ~~potential~~could ~~for the~~have ~~erosion~~a ofmaterial adverse ~~the~~effect ~~Sunplus~~on ~~brand~~our operations, ~~which~~sales weand ~~consider~~operating ~~to be one of our key competitive advantages~~results.

~~Page~~Our 12products and solutions include increasingly complex technology involving numerous new proprietary technologies, as well as some developed or licensed to us by certain third parties. As a consequence, evaluating the protection of 41the technologies we intend to use is more and more challenging, and we expect increasingly to face claims that we have infringed third parties’ intellectual property rights. The use of increasingly complex technology may also result in increased licensing costs for us, restrictions on our ability to use certain technologies in our products and solution offerings, and/or costly and time-consuming litigation. Third parties may also commence actions seeking to establish the invalidity of intellectual property rights on which we depend.

InOur ~~order~~products and solutions include increasingly complex technology involving numerous new proprietary technologies, as well as some developed or licensed to ~~meet~~us by certain third parties. As the amount of such proprietary technologies needed for our ~~customers'~~products ~~needs,~~and wesolutions ~~need~~continues to increase, ~~introduce~~the ~~new~~number ~~devices~~of onparties aclaiming ~~timely~~rights ~~basis~~continues to increase and becomes more fragmented within individual products, and ~~maintain~~as athe ~~competitive~~complexity ~~product~~of ~~portfolio.~~the ~~For~~technology ~~us,~~and athe ~~competitive~~overlap of product ~~portfolio~~functionalities ~~means~~increases, athe ~~broad~~possibility of more infringement and ~~balanced~~related ~~offering~~intellectual property claims against us also continues to increase. The holders of ~~commercially~~patents ~~appealing~~potentially ~~mobile~~relevant to our ~~devices~~product ~~with~~and ~~attractive~~solution ~~features~~offerings may be unknown to us, ~~functionality~~or ~~and~~may ~~design~~otherwise ~~for~~make ~~all~~it ~~major~~difficult ~~user~~for us to ~~segments~~acquire ~~and~~a ~~price~~license ~~points.~~on Ifcommercially weacceptable doterms. ~~not~~There ~~achieve~~may aalso ~~competitive~~be ~~portfolio,~~technologies welicensed to and ~~believe~~relied on by us that weare ~~will~~subject beto atclaims aof ~~competitive~~infringement ~~disadvantage,~~or other corresponding allegations by others which ~~may~~could ~~lead~~damage our ability to ~~lower revenue~~rely ~~and~~on ~~lower~~such ~~profits~~technologies.

~~The~~In addition, although we endeavor to ensure that companies that work with us possess appropriate ~~competitiveness~~intellectual ofproperty ~~our~~rights ~~portfolio~~or islicenses, ~~also~~we ~~influenced~~cannot byfully ~~the~~avoid ~~value~~risks of ~~the~~intellectual ~~Sunplus~~property ~~brand.~~rights Ainfringement ~~number~~created by suppliers of ~~factors,~~components ~~including~~and ~~actual~~various layers in our products and solutions or ~~even~~by ~~alleged~~companies ~~defects~~with which we work in cooperative research and development activities. Similarly, we and our customers may face claims of infringement in connection with our customers’ use of our products and solutions. Finally, ~~may~~as ~~have~~all atechnology ~~negative~~standards, ~~effect~~including those used and relied on ~~our~~by ~~reputation~~us, ~~and~~include ~~erode~~some intellectual property rights, we cannot fully avoid risks of a claim ~~the~~for ~~value~~infringement of such rights due to our reliance on such standards. We believe that the ~~Sunplus~~number of ~~brand~~third parties declaring their intellectual property to be relevant to these standards is increasing, which may increase the likelihood that we will be subject to such claims in the future.

~~Competition~~13 ~~in our industry is intense. Our failure to respond successfully to changes in the competitive landscape may have a material adverse impact on our business and results of operations.~~

The marketsTable for our products and solutions are intensely competitive. Industry participants compete with each other mainly on the basis of the breadth and depth of their product portfolios, price, operational and manufacturing efficiency, technical performance, product features, quality, customer support and brand recognition. We are facing increased competition from both our traditional competitors in the mobile communications industry as well as a number of new competitors, particularly from countries where production costs tend to be lower. Some of these competitors have used, and we expect will continue to use, more aggressive pricing strategies, different design approaches and alternative technologies than ours. In addition, some competitors have chosen a strategy of focusing on productization based on commercially available technologies and components, which may enable them to introduce products faster and with lower levels of research and development spending than our company.Contents

AsAny ~~a result~~restrictions ofon ~~developments~~our inability to sell our ~~industry,~~products weand ~~also~~solutions ~~expect~~due to ~~face~~expected ~~new~~or ~~competition~~alleged ~~from~~infringements ~~companies~~of inthird ~~related~~party ~~industries,~~intellectual ~~such~~property asrights ~~consumer~~and ~~electronics~~any ~~manufacturers and~~intellectual ~~business~~property ~~device~~rights claims, ~~and~~regardless ~~solution~~of ~~providers~~merit, ~~including~~could ~~but~~result ~~not~~in ~~limited~~material tolosses ~~Dell, HP,~~of ~~Microsoft~~profits, ~~Nintendo,~~costly ~~Palm~~litigation, ~~Research~~the payment inof ~~Motion~~damages and ~~Sony.~~other ~~Additionally~~compensation, ~~because~~ ~~mobile~~the ~~network~~diversion ~~operators~~of ~~are~~the ~~increasingly~~attention ~~offering~~of ~~mobile~~our ~~devices~~personnel, ~~under~~product ~~their~~shipment ~~own~~delays ~~brand,~~or wethe ~~face~~need ~~increasing~~for ~~competition~~us ~~from~~to develop non-~~branded~~infringing ~~mobile~~technology ~~device~~or to enter into royalty or ~~manufacturers~~licensing agreements. If we ~~cannot~~were ~~respond~~unable ~~successfully~~ to ~~these~~develop ~~competitive~~non-infringing technology, or if royalty or ~~developments~~licensing agreements were not available on commercially acceptable terms, we could be precluded from making and selling the affected products and solutions. As new features are added to our products ~~business~~and solutions, we may need to acquire further licenses, including from new and ~~results~~sometimes unidentified owners of ~~operations~~intellectual property. The cumulative costs of obtaining any necessary licenses are difficult to predict and may beover ~~materially~~time ~~adversely~~have a negative effect on our operating ~~affected~~results.

~~Reaching our~~In ~~sales~~addition, ~~profitability,~~other ~~volume~~companies ~~and~~may ~~market~~commence ~~share~~actions ~~targets~~seeking ~~depends~~to onestablish ~~numerous factors.~~the ~~These~~invalidity ~~include~~of our intellectual ~~ability~~property, tosuch ~~offer~~as, ~~products~~patent ~~and~~rights. ~~solutions~~In the event that ~~meet~~one ~~the demands~~or more of our patents are challenged, a court may invalidate the ~~market~~patent ~~and~~or todetermine ~~manage~~that the ~~prices~~patent ~~and~~is ~~costs~~not ofenforceable, which could harm our ~~products~~competitive ~~and solutions,~~position. If any of our ~~operational~~key ~~efficiency~~patents are invalidated, ~~the~~or ~~pace~~if the scope of ~~development~~the ~~and~~claims ~~acceptance~~in any of ~~new~~ ~~technologies,~~these ~~our~~patents ~~success~~is inlimited ~~the~~by ~~business~~a ~~areas~~court ~~that~~decision, we ~~have~~could ~~recently~~be prevented ~~entered,~~from ~~and~~licensing ~~general~~the ~~economic~~invalidated ~~conditions.~~or ~~Depending~~limited onportion ~~those~~of ~~factors,~~our ~~some~~intellectual ofproperty rights. Even if such ~~which~~a wepatent ~~may~~challenge ~~influence~~is ~~and~~not ~~others~~successful, ofit ~~which~~could ~~are~~be ~~beyond~~expensive ~~our~~and ~~control~~time consuming, wedivert ~~may fail~~management toattention ~~reach~~from our ~~targets~~business and weharm ~~may~~our ~~fail~~reputation. Any diminution of the protection that our own intellectual property rights enjoy could cause us to ~~provide~~lose ~~accurate~~some ~~forecasts~~of the benefits of our ~~sales~~investments ~~and~~in R&D, which may have a negative effect on our results of operations.

AIf ~~variety of~~we ~~factors~~are ~~discussed~~unable ~~throughout these Risk Factors could affect our ability~~ to ~~reach~~ ~~our~~recruit, ~~targets~~retain and ~~give~~develop ~~accurate~~appropriately ~~forecasts.~~skilled ~~Although~~employees, we ~~can~~may ~~influence~~not ~~some of~~be ~~these factors, some of them depend on external factors that are beyond our~~able ~~control. In our mobile device businesses, we seek~~ to ~~maintain~~implement ~~healthy levels~~our ofstrategies ~~sales~~ and ~~profitability through offering a competitive portfolio of mobile devices~~, ~~growing faster than the market~~consequently, ~~working to improve~~ our ~~operational~~ ~~efficiency, controlling our costs, and targeting timely and successful product introductions and shipments. The quarterly and annual sales and operating~~ results ~~in our mobile device businesses also depend on a number~~ of ~~other~~ ~~factors~~operations that are not within our control. Such factors include the global growth in mobile device volumes, which is influenced by, among other factors, regional economic factors, competitive pressures, regulatory environment, the timing and success of product and service introductions by various market participants, including network operators, the commercial acceptance of new mobile devices, technologies and services, and operators' and distributors' financial situations. Our sales and operating results are also impacted by fluctuations in exchange rates and at the quarterly level by seasonality. In developing markets, the availability and cost, through affordable tariffs, of mobile phone service compared with the availability and cost of fixed line networks may ~~also impact volume growth~~suffer.

~~Page~~We 13must continue to recruit, retain and through constant competence training develop appropriately skilled employees with a comprehensive understanding of 41our businesses and technologies. As competition for skilled personnel remains keen, we seek to create a corporate culture that encourages creativity and continuous learning. We are also continuously developing our compensation and benefit policies and taking other measures to attract and motivate skilled personnel, to deal in particular with the recent demand for pay raises. Nevertheless, we have encountered in the past, and may encounter in the future, shortages of appropriately skilled personnel, which may hamper our ability to implement our strategies and harm our results of operations.

InOur ~~our mobile~~sales ~~networks~~derived ~~business~~from, ~~we also seek to maintain healthy levels of sales~~ and ~~profitability~~ ~~and~~assets ~~try~~located toin ~~grow~~the ~~faster~~PRC, ~~than~~an ~~the~~emerging market. ~~Our~~country, ~~networks~~may ~~business's quarterly and annual net sales and operating results can~~ be adversely affected by ~~a number of factors~~economic, ~~some~~regulatory ofand ~~which~~political wedevelopments ~~can~~there. ~~influence,~~As ~~such~~our assales ~~our~~are ~~operational~~derived ~~efficiency,~~from ~~the~~it, ~~level~~economic ofor ~~our~~political ~~research~~turmoil ~~and~~in ~~development investments and~~ the ~~deployment progress~~PRC ~~and~~could ~~technical~~adversely ~~success~~affect weour ~~achieve~~sales ~~under~~and ~~network~~results ~~contracts~~of operations. ~~Other relevant~~Our ~~factors~~investments ~~include~~in ~~operator~~the ~~investment~~PRC ~~behavior,~~may ~~which~~also ~~can~~be ~~vary significantly~~subject ~~from quarter~~ to ~~quarter,~~other ~~competitive~~risks ~~pressures~~ and ~~general economic conditions although these are not within our control~~uncertainties.

~~The~~We ~~new business~~generate ~~areas~~sales ~~that~~from weand have ~~entered~~invested ~~may~~in bethe ~~less~~PRC. ~~profitable~~As ~~than~~our wesales ~~currently foresee,~~are orderived ~~they~~from ~~may~~the ~~generate~~PRC, economic ~~more~~or ~~variable~~political ~~operating~~turmoil ~~results~~there ~~than~~could weadversely ~~currently foresee.~~affect Weour ~~expect~~sales toand ~~incur~~results ~~short-term~~of ~~operating~~operations. ~~losses~~Our investments in ~~certain~~the ofPRC ~~these~~may ~~new business~~also ~~areas~~be ~~given~~subject ~~our~~to ~~early~~risks ~~stage~~and ~~investments~~uncertainties, inincluding ~~research~~unfavorable taxation ~~and~~treatment, ~~development~~exchange ~~and marketing~~controls, challenges in ~~particular.~~protecting ~~Also~~ our ~~efforts~~intellectual inproperty ~~managing~~rights, nationalization, ~~prices~~inflation, ~~and~~incidents ~~costs~~of interrorist ~~the long-term~~activity, ~~especially~~currency ~~balancing~~fluctuations, ~~prices~~or ~~and~~the ~~sales~~absence of, ~~volumes~~or ~~with~~unexpected ~~research~~changes ~~and development costs~~in, ~~may~~regulation ~~prove~~as towell beas ~~inadequate~~other unforeseeable operational risks.

~~Although~~14 we may announce forecasts of our results of operations, uncertainties affecting any of these factors, particularly during difficult economic conditions, render our forecasts difficult to make, and may cause us not to reach the targets that we have forecasted, or to revise our estimates.

Our salesTable and results of operations could be adversely affected if we fail to efficiently manage our manufacturing and logistics without interruption, or fail to ensure that our products and solutions meet our and our customers' quality, safety and other requirements and are delivered in time.Contents

~~Our manufacturing~~Allegations ~~and~~of ~~logistics~~health ~~are~~risks ~~complex,~~from ~~require~~the ~~advanced~~electromagnetic ~~and~~fields ~~costly~~generated ~~equipment and~~by ~~include~~base ~~outsourcing~~stations ~~to third parties. These operations are continuously modified in an effort to improve manufacturing efficiency~~ and ~~flexibility. We~~mobile ~~may experience difficulties in adapting our supply to the demand for our products~~devices, ~~ramping~~and ~~up or down production at our facilities, adopting new manufacturing processes, finding~~ the ~~timeliest~~lawsuits ~~way to develop the best technical solutions for new products, or achieving manufacturing efficiency~~ and ~~flexibility,~~ ~~whether~~publicity werelating ~~manufacture our products and solutions ourselves or outsource~~ to ~~third~~them, ~~parties.~~regardless ~~Such difficulties may have a material adverse effect on our sales and results~~ of ~~operations and may result from~~merit, ~~among~~could ~~other~~affect ~~things: delays in adjusting or upgrading production at~~ our ~~facilities, delays in~~ ~~expanding production capacity, failure in our manufacturing and logistics processes, failures in the activities we have outsourced, and interruptions in the data communication systems that run our~~ operations. ~~Also,~~negatively aby ~~failure~~leading orconsumers ~~an interruption~~to ~~could~~reduce ~~occur~~their atuse ~~any stage~~ of ~~our~~mobile ~~product~~devices ~~creation, manufacturing and delivery processes, resulting in our products and solutions not meeting our and our customers' quality, safety and other requirements,~~ or ~~being~~by ~~delivered~~causing ~~late,~~us ~~which~~to ~~could~~allocate ~~have~~monetary ~~a material adverse effect on our sales, our results of operations~~ and ~~reputation~~personnel ~~and~~resources ~~the~~to ~~value~~these ~~of the Sunplus brand~~issues.

WeThere has been public speculation about possible health risks to individuals from exposure to ~~depend~~electromagnetic onfields ~~our~~from ~~suppliers~~base ~~for~~stations ~~the~~and ~~timely~~from ~~delivery~~the use of ~~components~~mobile ~~and~~devices. ~~for~~While ~~their~~a substantial ~~compliance~~amount ~~with~~of ~~our~~scientific ~~supplier~~research ~~requirements,~~conducted ~~such~~to ~~as,~~date ~~most~~by ~~notably,~~various ~~our~~independent ~~and~~research ~~our~~bodies has ~~customers'~~indicated ~~product~~that ~~quality~~these radio signals, at levels within the limits prescribed by public health authority safety standards and ~~other~~recommendations, ~~standards.~~present ~~Their~~no ~~failure~~discernable toadverse doeffect soon human ~~could~~health, ~~adversely~~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 ~~ability~~sales toand ~~deliver~~share ~~our~~price. ~~products~~Research into these issues is ongoing by government agencies, international health organizations and ~~solutions~~other scientific bodies in order to develop a better ~~successfully~~scientific and onpublic ~~time~~understanding of these issues.

~~Our manufacturing~~Although ~~operations~~Sunplus ~~depend~~products toand asolutions ~~certain extent on obtaining adequate supplies of fully functional components on a timely basis. Our principal supply requirements~~ are ~~for~~designed ~~electronic~~to ~~components,~~meet ~~mechanical components and software, which~~ all ~~have~~relevant asafety ~~wide~~standards ~~range of applications in our products. Electronic components include integrated circuits, microprocessors, standard components, memory devices, cameras, displays, batteries~~ and ~~chargers while mechanical~~ ~~components~~recommendations ~~include covers~~globally, ~~connectors,~~no ~~key~~more ~~mats~~than ~~and antennas. In addition,~~ a ~~particular~~ ~~component~~perceived ~~may~~risk beof ~~available~~adverse ~~only~~health ~~from~~effects ~~a limited number~~ of ~~suppliers.~~mobile ~~Suppliers~~communications ~~may~~devices ~~from time to time extend lead times, limit supplies or increase prices due to capacity constraints or other factors, which~~ could adversely affect ~~our~~us ~~ability~~through ~~to deliver our products and solutions on~~ a ~~timely~~reduction ~~basis. Moreover,~~in ~~even~~sales if we attempt to select our suppliers and manage our supplier relationships with scrutiny, a component supplier may fail to meet our supplier requirements, such as, most notably, our and our customers' product quality, safety and other standards, and consequently some of ~~our~~mobile ~~products~~devices ~~are~~or ~~unacceptable~~increased todifficulty ~~us and our customers, or we may fail~~ in ~~our~~obtaining ~~own~~sites ~~quality controls.~~for ~~Moreover,~~base ~~a component supplier may experience delays or disruption to its manufacturing~~stations, orand ~~financial difficulties. Any of these events~~ could ~~delay our~~have ~~successful~~a ~~delivery~~negative ofeffect ~~products~~on ~~and solutions, which meet~~ our ~~and our~~ ~~customers' quality, safety and other requirements, or otherwise adversely affect our sales and our results of operations. Also, our~~ reputation and brand value ~~may~~ beas ~~affected~~well ~~due~~as toharm ~~real or merely alleged failures in~~ our ~~products~~share ~~and solutions~~price.

~~Page~~Changes 14 in various types of 41regulation in countries around the world could affect our business adversely.

~~We are~~Our ~~developing~~business ais ~~number~~subject ofto ~~our~~direct ~~new~~and ~~products~~indirect ~~and~~regulation ~~solutions~~in ~~together~~each ~~with~~of ~~other~~the countries in which we, and the companies with which we work, or our customers, do business. IfAs ~~any~~a ofresult, ~~these~~changes ~~companies~~in ~~were~~various types toof ~~fail~~regulations applicable to ~~perform~~current or new technologies, weproducts ~~may~~or ~~not~~services becould ~~able~~affect toour ~~bring~~business adversely. For example, it is in our ~~products~~interest ~~and~~that ~~solutions~~the toFederal ~~market~~Communications Commission ~~successfully~~maintains ora regulatory environment that ensures the continued growth of the wireless sector in athe ~~timely~~United ~~way~~States. In addition, changes in regulation affecting the construction of base stations and ~~this~~other network infrastructure could ~~have~~adversely aaffect ~~material~~the ~~adverse~~timing ~~impact~~and oncosts ~~our~~of ~~sales~~new network construction or expansion and the commercial launch and ultimate commercial success of ~~profitability~~these networks.

~~We continue~~Moreover, ~~to invite~~ the ~~providers~~implementation of ~~technology,~~new ~~components~~technological or ~~software~~legal torequirements, ~~work with~~such usas tothe ~~develop~~requirement ~~technologies~~in the orUnited ~~new~~States ~~products~~that ~~and~~all ~~solutions.~~handsets ~~These arrangements~~must ~~involve~~be ~~the~~able ~~commitment~~to byindicate ~~each~~their ~~company~~physical oflocation, ~~various~~could ~~resources,~~impact ~~including~~our ~~technology,~~products ~~research~~ and ~~development efforts~~solutions, ~~and~~manufacturing ~~personnel.~~or ~~Although the~~distribution ~~target~~processes, ofand ~~these~~could ~~arrangements~~affect isthe atiming ~~mutually beneficial outcome for each~~of ~~party,~~product ~~our ability to introduce new products~~ and ~~solutions~~solution ~~that~~introductions, ~~meet~~the ~~our~~cost ~~and~~of our ~~customers'~~ ~~quality~~production, ~~safety~~products ~~and~~or ~~other~~solutions ~~standards~~as ~~successfully~~well ~~and on schedule~~as ~~could~~their becommercial ~~hampered~~success. ifFinally, ~~for~~export ~~example~~control, ~~any~~tariff, ofenvironmental, ~~the~~safety ~~following~~and ~~risks were to~~other ~~materialize:~~regulation ~~the~~that ~~arrangements~~adversely ~~with~~affect the ~~companies~~pricing ~~that~~or ~~work~~costs ~~with~~of usour doproducts ~~not develop~~and solutions as ~~expected,~~well ~~the~~as ~~technologies~~new services ~~provided~~related byto ~~the~~our ~~companies~~products ~~that~~could ~~work~~affect ~~with us~~our ~~are~~net ~~not~~sales ~~sufficiently~~and ~~protected~~results orof ~~infringe~~operations. ~~third~~The ~~parties' intellectual~~impact ~~property~~of ~~rights~~these changes in aregulation ~~way~~could ~~that~~affect weour ~~cannot~~business ~~foresee~~adversely oreven ~~prevent,~~though the ~~technologies,~~specific ~~products~~regulations ~~or solutions supplied by the companies that work with us~~ do not ~~meet the~~always ~~required~~directly ~~quality,~~apply ~~safety~~to ~~and~~us ~~other standards~~ or ~~customer needs,~~ our ~~own quality~~products ~~controls~~and ~~fail, or the financial standing of the companies that work with us deteriorates~~solutions.

Our ~~operations~~ ~~rely~~stock onprice ~~complex~~has ~~and~~been ~~highly~~historically ~~centralized~~volatile ~~information~~and ~~technology~~may ~~systems and~~continue ~~networks.~~to Ifbe ~~any~~volatile, ~~system~~which ormay ~~network~~make ~~disruption~~it more ~~occurs,~~difficult ~~this~~for ~~reliance~~you ~~could have~~to aresell ~~material~~shares ~~adverse~~when ~~impact~~you onwant ~~our~~at ~~operations,~~prices ~~sales~~you ~~and~~find ~~operating results~~attractive.

~~Our operations~~The ~~rely~~trading toprice aof ~~significant~~our ~~degree~~ordinary onshares ~~the~~has ~~efficient~~been and ~~uninterrupted~~may continue to be subject to considerable ~~operation~~daily fluctuations. During the twelve months ended March 31, 2010, the closing sale prices of ~~complex~~our ordinary ~~and~~shares ~~highly~~on ~~centralized~~the ~~information~~Over-the-Counter ~~technology~~Bulletin ~~systems~~Board ranged from US$0.05 to US$1.01 per share and the ~~networks,~~closing ~~which~~sale ~~are~~price ~~integrated~~on ~~with~~June 28, ~~those~~2010 ofwas ~~third~~US$0.10 ~~parties~~per share. ~~Any~~Our ~~failure~~stock orprice may fluctuate in response ~~disruption~~to a number of ~~our~~events ~~current~~and orfactors, ~~future~~such ~~systems~~as orquarterly ~~networks~~variations ~~could~~in ~~have~~operating aresults, ~~material~~announcements ~~adverse~~of ~~effect~~technological oninnovations or new products and media properties by us or our ~~operations~~competitors, ~~sales~~changes in financial estimates and ~~operating~~recommendations ~~results.~~by ~~Furthermore~~securities analysts, ~~any~~the operating and stock price ~~data~~performance ~~leakages~~of ~~resulting~~other ~~from~~companies ~~information~~that ~~technology~~investors ~~security~~may ~~breaches~~deem ~~could~~comparable, ~~also~~new governmental restrictions or ~~adversely~~regulations ~~affect us~~and news reports relating to trends in our markets.

~~All~~15 information technology systems are potentially vulnerable to damage or interruption from a variety of sources. We pursue various measures in order to manage our risks related to system and network disruptions, including the use of multiple suppliers and available information technology security. However, despite precautions taken by us, an outage in a telecommunications network utilized by any of our information technology systems, virus or other event that leads to an unanticipated interruption of our information technology systems or networks could have a material adverse effect on our operations, sales and operating results.

PageTable 15 of 41Contents

~~Our products~~Item ~~and solutions include increasingly complex technology involving numerous new proprietary technologies, as well as some developed or licensed to us by certain third parties~~1B. AsUnresolved aStaff consequence, evaluating the protection of the technologies we intend to use is more and more challenging, and we expect increasingly to face claims that we have infringed third parties' intellectual property rightsComments. The use of increasingly complex technology may also result in increased licensing costs for us, restrictions on our ability to use certain technologies in our products and solution offerings, and/or costly and time-consuming litigation. Third parties may also commence actions seeking to establish the invalidity of intellectual property rights on which we depend.

~~Our products and solutions include increasingly complex technology involving numerous new proprietary technologies, as well as some developed or licensed to us by certain third parties~~None. ~~As the amount of such proprietary technologies~~ needed for our products and solutions continues to increase, the number of parties claiming rights continues to increase and become more fragmented within individual products, and as the complexity of the technology and the overlap of product functionalities increases, the possibility of more infringement and related intellectual property claims against us also continues to increase. The holders of patents potentially relevant to our product and solution offerings may be unknown to us, or may otherwise make it difficult for us to acquire a license on commercially acceptable terms. There may also be technologies licensed to and relied on by us that are subject to claims of infringement or other corresponding allegations by others which could damage our ability to rely on such technologies.

~~In addition,~~Item although we endeavor to ensure that companies that work with us possess appropriate intellectual property rights or licenses, we cannot fully avoid risks of intellectual property rights infringement created by suppliers of components and various layers in our products and solutions or by companies with which we work in cooperative research and development activities2. ~~Similarly, we and our customers may face claims of infringement in connection with our customers' use of our products and solutions~~Properties. Finally, as all technology standards, including those used and relied on by us, include some intellectual property rights, we cannot fully avoid risks of a claim for infringement of such rights due to our reliance on such standards. We believe that the number of third parties declaring their intellectual property to be relevant to these standards is increasing, which may increase the likelihood that we will be subject to such claims in the future.

~~Any restrictions~~As ~~on our ability to sell our products and solutions due to expected or alleged infringements~~ of ~~third~~March 31, ~~party intellectual property rights and any intellectual property rights claims~~2010, ~~regardless~~we ofhave ~~merit,~~an ~~could~~R&D ~~result~~headquarter in ~~material~~ ~~losses of profits~~Shanghai, ~~costly~~China ~~litigation, the payment of damages~~ and ~~other compensation,~~an ~~the~~office ~~diversion~~in ~~of the attention of our personnel~~Huizhou, ~~product shipment~~ ~~delays or the need for us to develop non-infringing technology or to enter into royalty or licensing agreements. If we were unable to develop non-infringing technology~~Guangdong, ~~or if royalty or licensing agreements were not available on commercially acceptable terms, we could be precluded from making and selling the affected products and solutions~~China. ~~As new features are added to our products and~~ solutions, we may need to acquire further licenses, including from new and sometimes unidentified owners of intellectual property. The cumulative costs of obtaining any necessary licenses are difficult to predict and may over time have a negative effect on our operating results.

~~In addition,~~Our ~~other~~principal ~~companies~~executive ~~may~~offices ~~commence~~occupy ~~actions~~area ~~seeking to establish the invalidity~~ of ~~our~~140 ~~intellectual~~square ~~property,~~meters ~~for~~on ~~example,~~the ~~patent~~9th ~~rights.~~floor ~~In the~~YongSheng ~~event~~Building, ~~that~~Zhongshan ~~one~~Xi orRoad, ~~more~~Xuhui ofDistrict, ~~our patents are challenged~~Shanghai, aChina. ~~court~~The ~~may~~rental ~~invalidate the patent or determine that the patent~~ is ~~not enforceable~~US$2,000 ~~which~~per ~~could~~month. ~~harm our~~We ~~competitive~~also ~~position.~~rent If950 ~~any~~square ofmeters ~~our key patents are invalidated, or if the scope~~ of ~~the~~office ~~claims~~space in ~~any~~the ofQiaoXing ~~these~~Industry ~~patents~~and isTechnology ~~limited by a court decision~~Zone, ~~we could~~Tangquan, beHuizhou, ~~prevented~~Guangdong, ~~from licensing the invalidated or limited portion of our intellectual property rights~~China. ~~Even~~The ifrental ~~such a patent challenge~~ is ~~not successful~~US$1, it400 ~~could~~per ~~be expensive and time consuming, divert management attention from our business and harm our reputation~~month. ~~Any~~These ~~diminution~~leased ofpremises ~~the~~house ~~protection that our own intellectual property rights enjoy could cause us to lose some of~~ the ~~benefits of our investments in~~ R&D, ~~which~~and design ~~may~~department, ~~have~~product atesting ~~negative~~facilities, ~~effect~~maintenance onand ~~our~~administrative ~~results of operations~~departments.

~~Page~~Item ~~16 of~~3. 41Legal Proceedings.

~~If we~~We are ~~unable~~not toinvolved ~~recruit,~~in ~~retain~~any ~~and~~material ~~develop~~pending ~~appropriately~~legal ~~skilled~~proceedings ~~employees,~~at ~~we may~~this ~~not~~time, beand ~~able~~management tois ~~implement~~not aware ~~our~~of ~~strategies~~any ~~and,~~contemplated ~~consequently,~~proceeding ~~our~~by ~~results~~any ~~of operations~~governmental ~~may suffer~~authority.

WeItem ~~must continue~~4. toSubmission ~~recruit, retain and through constant competence training develop appropriately skilled employees with a comprehensive understanding~~ of ~~our businesses~~Matters ~~and technologies. As competition for skilled personnel remains keen, we seek~~ to ~~create~~ a ~~corporate~~Vote culture that encourages creativity and continuous learning. We are also continuously developing our compensation and benefit policies and taking other measures to attract and motivate skilled personnel. Nevertheless, we have encountered in the past, and may encounter in the future, shortages of ~~appropriately~~Security ~~skilled personnel, which may hamper our ability to implement our strategies and harm our results of operations~~Holders.

~~The global networks business relies on a limited number of customers and large multi-year contracts~~None. ~~Unfavorable developments under such a contract or in~~ ~~relation to a major customer may affect our sales, our results of operations and cash flow adversely.~~

~~Large~~16 multi-year contracts, which are typical in the networks industry, include a risk that the timing of sales and results of operations associated with these contracts will be different than expected. Moreover, they usually require the dedication of substantial amounts of working capital and other resources, which impacts our cash flow negatively. Any non-performance by us under these contracts may have significant adverse consequences for us because network operators have demanded and may continue to demand stringent contract undertakings such as penalties for contract violations.

Our salesTable derived from, and assets located in, emerging market countries may be adversely affected by economic, regulatory and political developments in those countries. As sales from these countries represent an increasing portion of our total sales, economic or political turmoil in these countries could adversely affect our sales and results of operations. Our investments in emerging market countries may also be subject to other risks and uncertainties.Contents

~~We generate~~PART ~~sales from and have invested in various emerging market countries~~II. As sales from these countries represent an increasing portion of our total sales, economic or political turmoil in these countries could adversely affect our sales and results of operations. Our investments in emerging market countries may also be subject to risks and uncertainties, including unfavorable taxation treatment, exchange controls, challenges in protecting our intellectual property rights, nationalization, inflation, incidents of terrorist activity, currency fluctuations, or the absence of, or unexpected changes in, regulation as well as other unforeseeable operational risks.

~~Allegations of~~Item ~~health~~5. ~~risks~~Market ~~from~~for ~~the~~Registrant’s ~~electromagnetic~~Common ~~fields generated by base stations and mobile devices~~Equity, ~~and~~Related ~~the~~Stockholder ~~lawsuits~~Matters and ~~publicity~~Issuer ~~relating~~Purchases ~~to them, regardless~~ of ~~merit,~~ ~~could~~Equity ~~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~~Securities.

~~There~~Our ~~has been~~common ~~public~~stock ~~speculation~~is ~~about~~listed ~~possible~~on ~~health~~the ~~risks~~Over-the-Counter toBulletin ~~individuals~~Board ~~from~~under ~~exposure to electromagnetic fields from base stations and from~~ the ~~use~~symbol ~~of mobile devices~~“TBYH. ~~While~~OB”. ~~a substantial amount~~ As of ~~scientific~~May ~~research~~26, ~~conducted to date by various independent research bodies has indicated that these radio signals~~2010, atthere ~~levels within~~were: ~~the~~(i) ~~limits~~319 ~~prescribed~~shareholders byof ~~public health authority safety standards and recommendations~~record, ~~present~~without nogiving ~~discernable adverse~~ effect onto ~~human health, we~~determining ~~cannot~~the benumber ~~certain that future studies, irrespective~~ of ~~their~~shareholders ~~scientific~~who ~~basis, will~~hold ~~not~~shares ~~suggest~~in a“street ~~link~~name” ~~between~~or ~~electromagnetic~~other ~~fields~~nominee ~~and~~status; ~~adverse health~~(ii) no ~~effects~~outstanding ~~that~~options ~~would~~to ~~adversely~~purchase ~~affect~~shares of our ~~sales~~common ~~and~~stock; ~~share~~(iii) 30,088,174 ~~price.~~outstanding ~~Research~~shares ~~into~~of ~~these~~our ~~issues~~common isstock, ~~ongoing~~of bywhich ~~government agencies~~9,640,186 ~~international~~shares ~~health organizations~~are ~~and~~either ~~other~~freely ~~scientific~~tradable ~~bodies~~or ineligible ~~order~~for tosale ~~develop~~under Rule 144 aor ~~better scientific~~Rule 144K, and ~~public~~(iv) no ~~understanding~~shares ofsubject ~~these~~to ~~issues~~registration rights.

~~Although Sunplus~~The ~~products~~following ~~and~~table ~~solutions~~sets ~~are~~forth, ~~designed~~for tothe ~~meet~~fiscal ~~all~~quarters ~~relevant safety standards and recommendations globally~~indicated, nothe ~~more~~high ~~than~~and alow ~~perceived~~closing ~~risk~~prices as ofreported ~~adverse health~~by ~~effects~~the ofOver-the-Counter ~~mobile~~Bulletin ~~communications~~Board. ~~devices~~These ~~could~~quotations ~~adversely~~reflect ~~affect~~inter-dealer usprices, ~~through~~without aretail ~~reduction~~mark-up, inmark-down ~~sales of mobile devices~~ or ~~increased difficulty in obtaining sites for base stations~~commission, and ~~could~~may ~~have~~not arepresent ~~negative~~actual ~~effect on our reputation and brand value as well as harm our share price~~transactions.

~~Page~~Sales 17Price ~~of 41~~

Changes in various types of regulation in countries around the world could affect our business adversely.


	High		Low
Fiscal 2010
First Quarter	US$	1.01	US$	0.21
Second Quarter	US$	0.50	US$	0.11
Third Quarter	US$	0.45	US$	0.20
Fourth Quarter	US$	0.30	US$	0.05

Fiscal 2009
First Quarter	US$	2.70	US$	1.80
Second Quarter	US$	2.36	US$	1.55
Third Quarter	US$	2.01	US$	0.65
Fourth Quarter	US$	0.63	US$	0.20

~~Our business~~Dividend ~~is subject to direct and indirect regulation in each of the countries~~Policy in which we, and the companies with which we work or our customers do business. As a result, changes in various types of regulations applicable to current or new technologies, products or services could affect our business adversely. For example, it is in our interest that the Federal Communications Commission maintains a regulatory environment that ensures the continued growth of the wireless sector in the United States. In addition, changes in regulation affecting the construction of base stations and other network infrastructure could adversely affect the timing and costs of new network construction or expansion and the commercial launch and ultimate commercial success of these networks.

~~Moreover, the~~We ~~implementation~~have ofnever ~~new~~paid ~~technological~~cash ordividends ~~legal~~and ~~requirements,~~have ~~such~~no asplans ~~the requirement~~to do so in the ~~United~~foreseeable ~~States~~future. ~~that~~Our ~~all~~future dividend ~~handsets~~policy ~~must~~will be ~~able~~determined toby ~~indicate their physical location, could impact~~ our ~~products~~Board ~~and~~of ~~solutions,~~Directors ~~manufacturing or distribution processes,~~ and ~~could~~will ~~affect~~depend ~~the~~upon ~~timing~~a ofnumber ~~product and solution~~of ~~introductions~~factors, ~~the~~including ~~cost of~~ our ~~production,~~financial ~~products~~condition orand ~~solutions~~performance, asour ~~well~~cash ~~as their~~needs ~~commercial~~and ~~success.~~expansion ~~Finally~~plans, income ~~export~~tax ~~control~~consequences, ~~tariff, environmental, safety~~ and ~~other~~the ~~regulation~~restrictions that ~~adversely~~applicable ~~affects~~laws ~~the pricing or costs of our products~~ and ~~solutions as well as new services related to~~ our ~~products~~credit ~~could~~arrangements ~~affect our~~then ~~net sales and results of operations~~impose. ~~The impact of these changes in regulation~~ ~~could affect our business adversely even though the specific regulations do not always directly apply to us or our products and solutions.~~

~~Our stock~~Recent ~~price~~Sales ~~has~~of ~~been~~Unregistered ~~historically volatile and may continue to be volatile,~~Securities ~~which may make it more difficult for you to resell shares when you want at prices you find attractive.~~

~~The trading price of our ordinary shares has been and may continue to be subject to considerable daily fluctuations.~~ During the ~~twelve~~year ~~months~~ ended March 31, ~~2009~~2010, ~~the~~ ~~closing~~we ~~sale~~did ~~prices~~not ofissue ~~our~~any ~~ordinary~~securities ~~shares~~that onwere ~~the~~not ~~Over-the-Counter Bulletin~~registered ~~Board~~under ~~ranged from $0.20 to $2.70 per share and~~ the ~~closing~~Securities ~~sale~~Act ~~price on June 24, 2009 was $0.60 per share. Our stock price may fluctuate in response to a number~~ of ~~events and factors~~1933, ~~such~~ as ~~quarterly~~amended variations in operating results, announcements of technological innovations or new products and media properties by us or our competitors, changes in financial estimates and recommendations by securities analysts, (the ~~operating~~“Securities ~~and stock price performance of other companies that investors may deem comparable, new governmental restrictions or regulations and news reports relating to trends in our markets~~Act”). ~~In addition, the~~ ~~stock market in general, and the market prices for China-related and Internet-related companies in particular, have experienced extreme volatility that often has been~~

~~Item~~17 ~~1B. Unresolved Staff Comments.~~

None.Table of Contents

Item 26. ~~Properties~~Selected Financial Data.

AsThe following tables summarize the consolidated financial data of ~~March~~ ~~31,~~T-Bay ~~2009~~Holdings, weInc. ~~have~~for ~~our~~the periods ~~headquarters~~presented. inYou ~~Shanghai,~~should ~~China~~read the following financial information together with the information under “Management’s Discussion and anAnalysis ~~office~~of inFinancial Condition and Results of ~~Huizhou,~~Operations” ~~Guangdong,~~and ~~China~~our consolidated financial statements and the related notes to these consolidated financial statements appearing elsewhere in this Form 10-K.

Our principal executive offices occupy an area of 140 square meters on the 9th floor of YongSheng Building, Zhongshan Xi Road, Xuhui District, Shanghai, China. The rental is $2,000 per month. We also rent 950 square meters of office space in the QiaoXing Industry and Technology Zone, Tangquan, Huizhou, Guangdong, China. The rental is $1,400 per month. These leased premises house the R&D and design department, product testing facilities, maintenance and administrative departments.


	Year Ended March 31
	In thousands, except share amounts
	2008		2009			2010

Revenue	US$	45,681	US$	34,838		US$	35,867
Cost of sales	US$	23,539	US$	24,440		US$	34,930
Gross profit	US$	22,142	US$	10,398		US$	937
Depreciation and amortization	US$	965	US$	1,012		US$	874
Selling and distribution expenses	US$	280	US$	245		US$	129
General and administrative expenses	US$	3,264	US$	10,043		US$	7,959
Other operating expenses	US$	—	US$	5,075		US$	—
Other income	US$	185	US$	545		US$	180
Interest expense	US$	3	US$	—		US$	—
Gain on disposal of a subsidiary	US$	—	US$	—		US$	43
Income (loss) before income taxes and noncontrolling interest	US$	18,780	US$	(4,420	)	US$	(6,928	)
Income tax expense	US$	3,188	US$	1,900		US$	7
Noncontrolling interests	US$	659	US$	429		US$	427
Net income/(loss) attributable to the Shareholders of the Company	US$	14,554	US$	(8,713	)	US$	(6,508	)
Income per Share — basic	US$	0.48	US$	(0.29	)	US$	(0.22	)
Income per Share — diluted	US$	0.48	US$	(0.29	)	US$	(0.22	)

Item 3. Legal Proceedings.

Year Ended March 31

In thousands, except share amounts

2008

2009

2010

Balance Sheet Data:

Cash and cash equivalents

US$

23,330

US$

20,493

US$

703

Total current assets

US$

43,227

US$

48,585

US$

13,230

Assets of discontinued operations

US$

18,954

US$

724

US$

—

Total assets

US$

65,664

US$

51,867

US$

43,356

Accounts Payables

US$

688

US$

466

US$

155

Total current liabilities

US$

9,141

US$

3,415

US$

1,994

Liabilities of discontinued operation

US$

3,313

US$

—

US$

—

Long-term liabilities

US$

4,177

US$

4,255

US$

4,255

Total stockholders’ equity

US$

49,689

US$

41,929

US$

35,445

WeItem ~~are not~~7. ~~involved~~Management’s inDiscussion ~~any~~and ~~material~~Analysis ~~pending~~of ~~legal~~Financial ~~proceedings~~Condition ~~at this time,~~ and ~~management~~ isResults ~~not aware~~ of ~~any contemplated proceeding by any governmental authority~~Operation.

~~Page~~The 18information in this discussion contains forward-looking statements within the meaning of Section 27A of 41the 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.

~~Item 4. Submission of Matters to a Vote of Security Holders.~~18

None.Table of Contents

~~PART II~~The following review concerns the year ended March 31, 2010.

~~Item~~In the wake of the global financial crisis, our customers have become slow in their payments. The Company does not expect settlement from customers within twelve months from the date of sale of goods or services. Therefore, in the financial statements, accounts receivable relating to revenue for the year ended March 31, 2010 have been discounted based on the future contractual cash flows at the current market interest rate that is available to the Company for similar financial instruments of 5%. ~~Market~~US$1,425,000 was debited to revenue accordingly. Also, the customers changed their orders from design services to mobile phone components, to provide some relief to the financial strain that they have. This behavior has the effect of transferring part of the financing of the production of mobile phone handsets from our customers to us. This, together with the reduction in aggregate demand in the types of mobile phones to which our design services were suited, in the Mainland China market as well as the overseas market, resulted in a drastic reduction of customer orders for ~~Registrant’s~~design ~~Common~~services, ~~Equity~~for which the gross margin is relatively high. In addition to accounts receivable from our customers, ~~Related~~our ~~Stockholder~~assets ~~Matters~~in the balance sheet as of March 31, 2010 also included other receivables which mainly represented remaining sales proceeds receivables of US$10,475,000 for disposal of 80% interest in Fujian QiaoXing. We expect to recover this amount in full by March 31, 2011, and no ~~Issuer~~allowance ~~Purchases~~for doubtful receivable had been made. The global financial crisis, and its consequence in various manifestations, has also caused an increase in credit risk on our receivables. We believe that we have made adequate provision for doubtful accounts in our financial statements. However, if the provision turns out to be inadequate, then our financial performance and our financial position will be adversely affected. The decline in purchases of ~~Equity~~design ~~Securities~~services and the slowness in collecting our accounts receivable pose potential risks to our financial performance. While there are limited steps that Management can take to mitigate these potential risks, we cannot be assured that our customers’ financial position will improve. Our business model has been adjusted with a view to conserve cash to allow us to get through this extended period of temporary hardship. The orderly collection of our long-outstanding accounts receivable and other receivables is necessary to the maintenance of sufficient liquidity and capital resources for our operations during the next 12 months. While we believe that adequate provisions on our accounts receivable and other receivables have been made, we cannot assure investors that their carrying amount (net of provision) will be received in full within the anticipated time frame. A failure to collect the anticipated amount within the anticipated time frame would adversely affect our liquidity and capital resources.

~~Our~~Overview common stock is listed on the Over-the-Counter Bulletin Board under the symbol “TBYH.OB”. As of June 24, 2009, there were: (i) 319 shareholders of record, without giving effect to determining the number of shareholders who hold shares in "street name" or other nominee status; (ii) no outstanding options to purchase shares of our common stock; (iii) 30,088,174 outstanding shares of our common stock, of which 12,139,937 shares are either freely tradable or eligible for sale under Rule 144 or Rule 144K, and (v) no shares subject to registration rights.

~~The following~~Our ~~table~~net ~~sets~~revenue ~~forth~~increased 2.9% from US$34,838,000 for the ~~fiscal~~year ~~quarters~~ended ~~indicated~~March 31, 2009 to US$35,867,000 for year ended 31 March 2010, which was the ~~high~~net ~~and~~result ~~low~~of a drop in revenue from design services, ~~closing~~and ~~prices~~an asincrease ~~reported~~in byrevenue ~~the~~from ~~Over-~~our sales of mobile phone components. Our net results for the~~-Counter~~ ~~Bulletin~~year changed ~~Board~~from a loss of US$8,713,000 to a loss of US$6,508,000. ~~These~~This reduction of loss was the net ~~quotations~~result ~~reflect~~of ~~inter-dealer~~the ~~prices~~decrease in gross profit on the one hand, ~~without~~and ~~retail~~the ~~mark-up~~decrease in general and administrative expenses, ~~mark-down~~the ordecrease in other operating expenses, the decrease in income tax and ~~commission~~the decrease in the loss from discontinued operations on the other hand. We recorded a loss per share of US$0.22 for the year ended March 31, 2010, and ~~may~~a ~~not~~loss ~~represent~~per ~~actual~~share ~~transactions~~of US$0.29 for the year ended March 31, 2009.

~~Sales~~Net Revenue ~~Price~~

	High		Low
	Fiscal Year Ended March 31
Fiscal 2009
(in thousands of US dollars)	2010		%		2009		%		Variance			%
First Quarter	$	2.70	$	1.80
Sales of mobile phone components	US$	35,212		98.2		23,614		67.8	US$	11,598			49.1	%
Second Quarter	$	2.36	$	1.55
Revenue from design services	US$	655		1.8		11,224		32.2	US$	(10,569	)		-94.2	%
Third Quarter	$	2.01	$	0.65
NET REVENUE	US$	35,867		100.0		34,838		100.0	US$	1,029			2.9	%
Fourth Quarter	$	0.63	$	0.20
Fiscal 2008
First Quarter	$	4.30	$	2.25
Second Quarter	$	4.20	$	2.15
Third Quarter	$	3.80	$	2.00
Fourth Quarter	$	3.20	$	1.91

~~Dividend~~19 ~~Policy~~

WeTable have never paid cash dividends and have no plans to do so in the foreseeable future. Our future dividend policy will be determined by our Board of Directors and will depend upon a number of factors, including our financial condition and performance, our cash needs and expansion plans, income tax consequences, and the restrictions that applicable laws and our credit arrangements then impose.Contents

~~Recent~~Our net revenue was US$35,867,000 for the year ended March 31, 2010, which represented an increase of ~~Sales~~US$1,029,000, or 2.9%, from US$34,838,000 for the year ended March 31, 2009. Revenue from sales of mobile ~~Unregistered~~phone ~~Securities~~components was US$35,212,000 compared to US$23,614,000 in the previous fiscal year, representing a 49.1% increase. Revenue from design services decreased to US$655,000 from US$11,224,000 in previous fiscal year, representing a 94.2% decrease.

~~During~~Our net revenue increase was the net result of the increase in the sales of mobile phone components and the decrease in design services. In the fiscal year ended March 31, ~~2009~~2010, wecustomers did not place ~~issue~~as ~~any~~many ~~securities~~orders ~~that~~for ~~were~~design ~~not registered~~services, ~~under~~but placed more orders for mobile phone components. As a result, the ~~Securities~~percentage ~~Act~~of our revenue from sales of ~~1933,~~mobile asphone ~~amended~~components ~~(the~~increased ~~“Securities~~substantially ~~Act”)~~as compared with prior year.

~~Item~~For 6the year ended March 31, 2010, revenue from design services represented 1.8% ~~Selected~~of ~~Financial~~total ~~Data~~revenue, while revenue from sales of mobile phone components was 98.2%, compared to 32.2% from design services and 67.8% from sales of mobile phone components for the year ended March 31, 2009.

~~The following~~Detailed ~~tables summarize the consolidated financial data of T-Bay Holdings, Inc. for the periods presented. You should read the following financial~~ information ~~together~~on ~~with~~sale ~~the information under “Management’s Discussion and Analysis~~ of ~~Financial~~mobile ~~Condition~~phone ~~and Results of Operations” and our consolidated~~components ~~financial statements and the related notes to these consolidated financial statements appearing elsewhere in this Form 10-K.~~

~~Page~~Sales 19of mobile phone components (PCB and PCBA, the key components in the manufacture of mobile handsets) increased from US$23,614,000 to US$35,212,000, representing a 49.1% increase. The increase was largely the result of 41the transfer of orders from design services to mobile phone components. For customers who would like to relieve the strain on their finances, they preferred buying mobile phone components rather than design services, which requires more capital investments.

	Year Ended March 31
	In thousands, except per share amounts
	2007		2008		2009
	(Restated)⑴		(Restated) ⑴
Revenue	$	35,236	$	45,681	$	34,838
Cost of sales	$	17,606	$	23,539	$	24,440
Gross profit	$	17,630	$	22,142	$	10,398
Depreciation and amortization	$	656	$	965	$	1,012
Selling and distribution expenses	$	292	$	280	$	245
General and administrative expenses	$	3,002	$	3,264	$	10,043
Other operating expenses	$	-	$	-	$	5,075
Other income	$	7	$	185	$	545
Interest expense	$	3	$	3	$	-
Income/(loss) before income taxes and minority interests	$	14,340	$	18,780	$	(4,420	)
Income tax	$	1,701	$	3,188	$	1,900
Minority interests’ share of income/(loss)	$	429	$	659	$	(429	)
Loss from discontinued operations	$	7	$	379	$	2,822
Net income/(loss) attributable to the Stockholders of the Company	$	12,210	$	14,554	$	(8,713	)
Earning/(loss) per Share — basic	$	0.41	$	0.48	$	(0.29	)
Earning/(loss) per Share — diluted	$	0.41	$	0.48	$	(0.29	)

We design and manufacture PCB and provide PCBA according to our customers’ specifications. We manufactured more PCB and PCBA for our customers for the year ended March 31, 2010 when compared with the year ended March 31, 2009.

	Year Ended March 31
	In thousands
	2007		2008		2009
	(Restated) ⑴		(Restated) ⑴
Balance Sheet Data:
Cash and cash equivalents	$	23	$	23,330	$	20,493
Total current assets	$	25,783	$	43,227	$	48,585
Assets of discontinued operations	$	18,552	$	18,954	$	724
Total assets	$	52,473	$	65,664	$	51,867
Accounts payable	$	2,570	$	688	$	466
Total current liabilities	$	11,560	$	9,141	$	3,415
Liabilities of discontinued operation	$	3,942	$	3,313	$	-
Long-term liabilities	$	3,967	$	4,177	$	4,255
Total stockholders’ equity	$	31,720	$	49,689	$	41,929

Detailed information on revenue from design services

~~(1)~~Revenue ~~The~~from ~~comparative~~design ~~figures~~services ~~have~~decreased ~~been~~from ~~restated~~US$11,224,000 for the year ended March 31, 2009 to US$655,000 ~~conform~~for the year ended March 31, 2010, representing a 94.2% decrease. In the year ended March 31, 2010, there was a drastic reduction of customer orders for design services compared with ~~current~~the previous fiscal year’s. ~~presentation~~We believe that as a result of ~~discontinued~~the ~~operations~~global financial crisis and its consequence in its various manifestations, and also the change in consumer preference, aggregate demand for the types of mobile phone handsets to which our design services were suited, in the Mainland China market as well as the overseas market, had been on a downward trend. The decrease in design services was to a certain extent also the result of order transfer, as customers shifted from purchasing design services to purchasing components. By purchasing components rather than design services, customers have been able to conserve cash.

~~Page~~Cost 20 of 41Revenue

~~Item~~For 7.the ~~Management’s~~fiscal ~~Discussion~~year ~~and~~ended ~~Analysis~~March 31, 2010, cost of ~~Financial~~revenue ~~Condition~~increased ~~and~~to ~~Results~~US$34,930,000 from US$24,440,000 in the fiscal year ended March 31, 2009, representing a 42.9% increase. Cost of ~~Operation~~revenue primarily consisted of the purchase cost of raw and processed materials.

~~The information~~Detailed 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~~on ~~statements~~Cost ~~within the meaning~~ of ~~the Private Securities~~Revenue ~~Litigation Reform Act of 1995.~~

Overview


	Fiscal Year Ended March 31
(in thousands of US dollars)	2010		2009		Variance		%

Cost of revenue	US$	34,930	US$	24,440	US$	10,490		42.9	%
Raw materials	US$	34,104	US$	22,952	US$	11,152		48.6	%
R&D	US$	—	US$	17	US$	-17		-100.0	%
Salaries	US$	791	US$	938	US$	-147		- 15.7	%
Business tax	US$	35	US$	533	US$	-498		- 93.4	%

~~For the~~20 fiscal year ended March 31, 2009, our net revenue decreased by $10,843,000 from $45,681,000 for the fiscal year ended March 31, 2008 to $34,838,000, which represented a 23.7% decrease. Our net results changed from a profit of $14,554,000, to a loss of $8,713,000. We reported loss per share of $0.29 in the fiscal year ended March 31, 2009, compared to earnings per share of $0.48 in the fiscal year ended March 31, 2008.

Net RevenueTable of Contents

(in thousands of US dollars)					Fiscal Year Ended March 31,
	2009		%		2008		%		Variance		%
Sales of mobile phone components	$	23,614		67.8		22,746		49.8	$	868		3.8	%
Revenue from design services	$	11,224		32.2		22,935		50.2	$	-11,711		-51.1	%
NET REVENUE	$	34,838		100.0		45,681		100.0	$	-10,843		-23.7	%

The increase in cost of revenue was mainly attributable to an increase in the purchase of raw materials. As we manufactured more PCB and PCBA boards for our customers, we purchased more raw materials in the current fiscal year than in the fiscal year ended March 31, 2009. Key materials for manufacture such as chipsets and PCB blank boards accounted for a large proportion of cost of raw materials. The cost of raw material increased by US$11,152,000, or 48.6 %, from US$22,952,000 for the fiscal year ended March 31, 2009.

~~Our~~Gross ~~net~~profit revenue was $34,838,000 for the fiscal year ended March 31, 2009, a decrease of $10,843,000, or 23.7%, from $45,681,000 in the previous fiscal year. Revenue from sales of mobile phone components was $23,614,000 compared to $22,746,000 in the last fiscal year, representing a 3.8% increase. Revenue from design services decreased to $11,224,000 from $22,935,000 in the last fiscal year, representing a 51.1% decrease.

Our ~~net revenue~~gross ~~decrease~~profit ~~mainly~~was ~~resulted~~US$937,000 ~~from~~for the ~~decrease~~fiscal ~~relating~~year toended ~~design~~March 31, ~~services.~~2010 as compared to US$10,398,000 Infor the fiscal year ended March 31, 2009, ~~customers~~representing ~~did~~a ~~not~~91.0% ~~place~~decrease. asThe ~~many~~decrease ~~orders~~in gross ~~for~~profit ~~design~~was ~~services.~~mainly Asattributable ato ~~result,~~ the ~~percentage~~significant ofdecrease ~~our~~in revenue from ~~sales~~design ~~of mobile~~services ~~phone components increased as compared~~ with high ~~the~~profit ~~prior year~~margin.

~~For~~Operating ~~the~~Expenses fiscal year ended March 31, 2009, revenue from design services represented 32.2% of total revenue, while revenue from sales of mobile phone components was 67.8%, compared to 50.2% from design services and 49.8% from sales of mobile phone components in the fiscal year ended March 31, 2008.

~~Detailed information~~Operating onexpenses ~~sale~~consist of ~~mobile~~selling ~~phone~~expenses ~~components~~and general and administrative (G&A) expenses and other operating expenses. For the fiscal year ended March 31, 2010, operating expenses were US$8,088,000, as compared to US$15,363,000 for the fiscal year ended March 31, 2009, representing a 47.4% decrease.

~~Sale~~Detailed information of ~~mobile~~ ~~phone~~operating ~~components~~expenses ~~increased~~for ~~from~~the ~~$22,746,000~~years inended ~~fiscal 2008 to $23~~March 31,~~614,000 in~~ ~~fiscal~~2010 ~~2009, representing a 3.8% increase. The increase was mainly attributable to the increase in the sales of PCB~~ and ~~PCBA~~2009 ~~boards,~~is ~~the key~~as ~~components in the manufacture of mobile handsets.~~follows:

We design and manufacture PCB and PCBA boards according to our customers’ specifications. Besides the amount of revenue from selling PCB and PCBA boards to our customers, we charge royalty fees by the number of PCB and PCBA boards we provide. We manufactured more PCB and PCBA boards for our customers for the fiscal year ended March 31, 2009 when compared to the fiscal year ended March 31, 2008. The increase in sales volume of PCB and PCBA boards led to the increase in sales of components, despite the decrease in average selling price of our product in the current year as a result of the worldwide financial crisis, the demand in the Mainland market, especially the Mid-end and High-end market, as well as the overseas market has been shrinking since the second half of fiscal year ended March 31, 2009.


	Fiscal Year Ended March 31,
	2010					2009
(in thousands of US dollars)	Amount		% of net revenue			Amount		% of net revenue

Operating Expenses	US$	8,088		22.5	%	US$	15,363		44.1	%

Selling Expenses	US$	129		0.4	%	US$	245		0.7	%

G&A Expenses	US$	7,959		22.2	%	US$	10,043		28.8	%

Other Operating Expenses	US$	—		0	%	US$	5,075		14.6	%

~~Page~~Operating 21expenses during the fiscal year ended March 31, 2010 were US$8,088,000, 22.5% of revenue, compared to US$15,363,000, or 44.1% of 41revenue, for the fiscal year ended March 31, 2009. The decrease was mainly attributed to the decrease in G&A expenses and the decrease in other operating expenses.

WeSelling ~~have been~~expenses ~~selling~~decreased ~~our~~from ~~products~~US$245,000 into ~~overseas markets through our sales agents in Mainland China and Hong Kong since March 2006~~US$129,000. ~~Our~~The ~~products~~decrease ~~were~~was ~~sold~~mainly attributable to the ~~end-users~~closure inof ~~nine~~our ~~different~~sales ~~countries,~~office ~~mainly~~ in ~~Southeast Asia, Eastern Europe and Latin America~~Shenzhen.

~~Detailed~~G&A expenses were US$7,959,000, 22.2% of revenue, compared to US$10,043,000, or 28.8% of revenue in the ~~information~~last fiscal year. The decrease in G&A expenses was mainly due to the decrease of allowance for doubtful receivables from US$8,077,000 to US$6,227,000 and a decrease of salaries. Included in the G&A expenses was the charge for allowance for doubtful receivables. We increased allowance for doubtful receivables by US$6,227,000 for the year ended 31 March 2010. The allowance for doubtful receivables was US$15,429,000 as of March 31, 2010 compared to US$9,202,000 as of March 31, 2009. Allowance for doubtful receivables is maintained for all customers based on ~~revenue~~a variety of factors, including the overall economy and industry condition, length of time the receivables are past due, significant one-time events and historical experience. For the year ended March 31, 2010, particular consideration was given to the increased credit risk due to the sluggish economic climate, which was evident from ~~design~~the ~~services~~increase in the length of time the receivables were past due. With a view to halting further increases in allowance for doubtful receivables, in its decision to grant credit to its customers, the Company has been using more stringent criteria in the evaluation of their creditworthiness.

~~Revenue~~21 from design services decreased from $22,935,000 for the fiscal year ended March 31, 2008 to $11,224,000, or 51.1%. The significant decrease mainly resulted from the reduction of royalty fees per unit in the weak domestic market in China. As a result of the global financial crisis, demand in the Mainland China market, as well as the overseas market, has been shrinking since the second half of the fiscal year ended March 31, 2009.

During theTable fiscal year ended March 31, 2009, we launched 32 mobile handset solutions covering the high-end, mid-end and low-end markets. We kept working closely with strategic partners VIA, MTK, Anyka, Infineon, Skyworks and other technology partners. During the fiscal year ended March 31, 2009, we developed mobile phone solutions with new functions including but not limited to smart touch screen, voice operation system, GPS and CMMB(China Mobile Multimedia Broadcasting). We can tailor-make solutions featuring functions such as handwriting recognition, digital cameras, dual speakers, GPRS, FM radio, dictionaries, webcams, blue tooth, E-mail, MP3, MPEG4 3GP, WAP, USB, T-Flash, MMS, CMOS, TV-out, fingerprint authentication, firewall, sound recorder and. In the fiscal year 2009, we also extended the design of TDS-CDMA solutions and WCDMA solutions.Contents

~~Cost~~ Other operating expenses for the fiscal year ended March 31,2009 represented compensation of US$5,075,000 ~~Revenue~~(2010: US$nil) to two customers to compensate them for subcontracting fees and raw materials consumed for two defectively designed mobile phone PCBAs.

~~For~~Loss ~~the fiscal year ended March 31, 2009, cost of revenue increased to $24,440,000~~ from ~~$23,539,000~~ ~~in the fiscal year ended March 31, 2008, representing a 3.8%~~Operations increase. Cost of revenue primarily consisted of the purchase cost of raw and processed materials and indirect costs of salaries of engineers and designers, research and development (“R&D”) and quality control expenses.

~~Detailed~~Loss from ~~information~~operations onwas ~~Cost~~US$7,151,000 in fiscal year ended March 31, 2010, compared to loss of US$4,965,000 ~~Revenue~~in year ended March 31, 2009. This increase in loss was the net result of the decrease of revenue in design service with relatively high gross profit margin, which was not adequately made up for by the increase in the sales of mobile phone components with relatively low profit margin on the one hand, and the decrease in compensation to customers on the other hand.

(in thousands of US dollars)			Fiscal Year Ended March 31,
	2009		2008		Variance		%
Cost of revenue	$	24,440	$	23,539	$	901		3.8	%
Raw materials	$	22,952	$	20,464	$	2,488		12.2	%
R&D	$	17	$	420	$	-403		- 96.0	%
Model making	$	-	$	177	$	-177		- 100.0	%
Salaries	$	938	$	1,133	$	-195		- 17.2	%
Business tax	$	533	$	1,149	$	-616		- 53.6	%
Other indirect costs	$	-	$	196	$	-196		- 100.0	%

Income Tax

~~The increase~~Sunplus inis ~~cost~~subject ~~of revenue was mainly attributable~~ to anPRC ~~increase~~Enterprise inIncome ~~the purchase of raw materials~~Tax. AsPursuant weto ~~manufactured~~the ~~more~~PRC ~~PCB~~Income ~~and~~Tax ~~PCBA boards for our customers~~Laws, ~~we purchased more raw materials in~~ the ~~current fiscal year than in~~ ~~the~~prevailing ~~fiscal~~statutory ~~year~~rate ~~ended March 31, 2008. Key materials for manufacture such as chipsets and PCB blank boards accounted for a large proportion~~ of ~~cost~~enterprise ofincome ~~raw materials.~~tax ~~The~~in ~~cost~~Shanghai ~~of raw material~~ was ~~up by $901,000, or 3.8~~25%~~, from $20,464,000 for the fiscal year ended March 31, 2008 to $22,952,000 for the fiscal year ended March 31, 2009~~.

~~Page~~For 22the year ended March 31, 2010, Sunplus recorded an income tax expense US$7,000, compared to US$1,900,000 in the year ended March 31, 2009. The income tax expenses of 41US$7,000 related to an under-provision in the prior year. No income tax expense relating to the current fiscal year was recorded for the year ended March 31, 2010 as Sunplus incurred a loss for this fiscal year.

~~During the~~Non-controlling ~~two years ended March 31, 2009 and 2008, research and development costs~~Interest ~~amounting to $17,000 and $420,000, respectively, were charged to cost of revenue. The decrease was mainly the result of stringent cost control.~~

~~Business tax~~Non-controlling ~~decreased~~interest ~~$616,000~~represents ~~from~~the ~~$1,149,000~~portion ~~for~~of ~~the~~loss ~~fiscal~~of ~~year~~Sunplus ~~ended~~that ~~March~~we ~~31,~~do ~~2008 to~~not ~~$533,000~~own. ~~for~~In the fiscal year ended March 31, ~~2009.~~2010, ~~The~~non-controlling ~~decrease~~interest was ~~mainly due~~attributable to the ~~decrease~~5% inof ~~revenue~~the ~~from~~equity interest ~~design~~of ~~services~~Sunplus ~~which~~owned isby ~~subject~~Shanghai ~~to business tax~~Fanna.

~~Gross~~Loss from Discontinued Operations ~~profit~~

~~Our~~For ~~gross profit~~the ~~was~~year ended March 31, 2009, the Company reported a loss of US$102,~~398~~822,000 (2010: US$nil) from discontinued operations. Loss from discontinued operations for the ~~fiscal~~ year ended March 31, 2009 consisted asof ~~compared~~other to revenue of US$222,~~142~~000, operating losses of US$90,000, ~~for~~loss ~~the~~on ~~fiscal~~disposal ~~year~~of ~~ended~~a subsidiary ~~March~~of 31US$2, ~~2008~~730,000 ~~representing~~and aimpairment 53loss on assets of discontinued operations of US$4,000.0% ~~decrease.~~We ~~The~~recorded ~~decrease~~losses inon ~~gross~~discontinued ~~profit~~operations ~~was~~as ~~mainly~~Sunplus ~~attributable~~disposed toof ~~the significant~~its ~~decrease~~80% interest in ~~revenue~~its subsidiary ~~from~~Fujian ~~design~~QiaoXing ~~services~~for ~~with~~US$12,230,000 ~~high~~(RMB84,000,000), ~~profit~~which was US$2,730,000 less than the ~~margin~~carrying values of Fujian QiaoXing’s net assets.

~~Operating~~22 ~~Expenses~~

Operating expensesTable consist of selling expenses, general and administrative (G&A) expenses and other operating expenses. For the fiscal year ended March 31, 2009, operating expenses were $15,363,000, as compared to $3,544,000 for the fiscal year ended March 31, 2008, representing a 333.5 % increase.Contents

~~Detailed information~~Net ~~of operating expenses for the year ended March 31, 2009 and 2008 is~~loss ~~as follows:~~

(in thousands of US dollars)	2009		Fiscal Year Ended March 31			2008 (restated)
	Amount		% of net revenue			Amount		% of net revenue
Operating Expenses	$	15,363		44.1	%	$	3,544		7.8	%
Selling Expenses	$	245		0.7	%	$	280		0.6	%
G&A Expenses	$	10,043		28.8	%	$	3,264		7.1	%
Other Operating Expenses	$	5,075		14.6	%		-		-

As a result of the above items, net loss attributable to common stockholders was US$6,508,000 for the year ended March 31, 2010, as compared to net loss attributable to common stockholders of US$8,713,000 for the year ended March 31, 2009. This reduction of loss was the net result of the decrease of revenue in design service with relatively high gross profit margin, which was not adequately made up for by the increase in the sales of mobile phone components with relatively low profit margin on the one hand, and the decrease in G&A expenses, the decrease in compensation paid to customers, the decrease in income tax and the decrease in loss from discontinued operations on the other hand.

~~Operating expenses~~Loss ~~during~~per ~~the~~share ~~fiscal~~attributable ~~year ended March 31, 2009 were $15,363,000, or 44.1% of revenue, compared~~ to ~~$3,544,000,~~common ~~or 7.8% of revenue for the fiscal year ended~~stockholders ~~March 31, 2008. The significant increase was mainly attributed to the increase in G&A and other operating expenses.~~

~~Selling expenses~~We ~~decreased~~reported ~~from~~loss per share attributable to common stockholders of US$~~280~~0.22,~~000~~ tobased on a weighted average number of shares outstanding of 30,088,174 for the year ended March 31, 2010, compared with a loss per share of US$~~245~~0.29,~~000~~ based on the same weighted average number of shares for the year ended March 31, 2009. ~~The~~Our ~~decrease~~outstanding common stock was ~~mainly~~30,088,174 shares as of March 31, 2010 and March ~~attributable~~31, to2009. ~~less~~We ~~marketing-related~~do ~~expenses~~not inhave ~~keeping~~any ~~with~~preferred astock ~~shrinking~~issued or outstanding warrants or options as of March ~~business~~31, 2010 and March 31, 2009.

~~G&A~~Assets expenses were $10,043,000, or 28.8% of revenue, compared to $3,264,000, or 7.1% of revenue in the last fiscal year. The increase in G&A expenses was mainly due to the increase in the charges relating to the allowance for doubtful receivables.

~~We increased~~Cash allowance for doubtful receivables by $6,915,000 for the fiscal year ended 31 March 2009. The allowance for doubtful receivables was $8,040,000 as of March 31, 2009 compared to $1,125,000 as of March 31, 2008. As a comparison, we increased allowance for doubtful receivables by $700,000 for the fiscal year ended 31 March 2008. The allowance for doubtful receivables was $1,125,000 as of March 31, 2008 compared to $425,000 as of March 31, 2007. Allowance for doubtful receivables is maintained for all customers based on a variety of factors, including the overall economy and ~~industrial~~cash ~~condition,~~equivalents length of time the receivables are past due, significant one-time events and historical experience. For the fiscal year ended March 31, 2009, particular consideration was given to the increased credit risk due to the current economic downturn.

Page 23 of 41


	As of March 31
	(in thousands of US dollars)
	2010		2009

Cash and cash equivalents		703		20,493

~~Other operating~~Cash ~~expenses~~and ~~represented~~cash ~~compensation~~equivalents ofwere US$5703,~~075,~~000 toas ~~two~~of ~~customers~~March 31, to2010. Decrease in cash and cash equivalents ~~compensate~~was ~~them~~mainly ~~for~~attributed ~~subcontracting~~to ~~fees~~the ~~and~~negative ~~raw~~operating ~~materials~~cash ~~consumed~~flows ~~for~~arising ~~two~~from the paltry gross profit and ~~defectively~~the ~~designed~~significant ~~mobile~~increase ~~phone~~in ~~PCBAs~~accounts receivable.

~~Loss/ Income~~Accounts ~~from~~receivable, ~~Operations~~net

~~Loss~~As ~~from operation~~of ~~was~~March 31, 2010, accounts receivable amounted to US$428,~~965~~493,000, inan ~~fiscal~~increase ~~year~~of ~~ended~~US$14,132,000 compared ~~March~~to US$14,361,000 as of March 31, 2009. The increase was mainly the net result of an increase in the gross amount of accounts receivable and an increase in the allowance for doubtful accounts receivable. The gross amount of the accounts receivable increased by US$21,726,000 ~~compared~~mainly because trade debtors took longer to ~~income~~pay in an economic environment which was deteriorating. The allowance for doubtful accounts receivable increased by an amount of US$187,~~598~~594,000 infor the year ~~2008~~ended March 31, 2010. The ~~decrease~~Company ~~was~~evaluated ~~mainly~~credit ~~attributable~~risk on trade debtors and maintained its allowance policy of 100% provision for accounts receivable overdue more than one year. It is to ~~the~~reflect significant ~~decrease~~credit risk in the wake of ~~revenue~~the financial crisis, with its consequence in ~~design~~various ~~service~~manifestations. ~~and~~If circumstances ~~increase~~related to customers change, estimates of ~~allowance~~the ~~for~~recoverability ~~doubtful~~ of receivables would be further adjusted.

~~Loss~~ Due to the financial crisis, the Company does not expect settlement from ~~Discontinued~~customers ~~Operations~~in the next twelve months, therefore, accounts receivables relating to revenue for the year ended March 31, 2010 have been discounted based on the future contractual cash flows at the current market interest rate that is available to the Company for similar financial instruments of 5%. US$1,425,000 was debited to revenue accordingly.

~~The~~23 Company reported losses of $2,822,000 and $379,000 from discontinued operations for the years ended March 31, 2009 and 2008, respectively. Loss from discontinued operations for the years ended March 31, 2009 and 2008 consisted of other revenue of $2,000 and $nil, operating loss of US$90,000 and $379,000, loss on disposal of a subsidiary of US$2,730,000 and $nil, and impairment loss on assets of discontinued operations of US$4,000 and $nil, respectively. We recorded losses on discontinued operations as Sunplus disposed of its 80% interest in its subsidiary Fujian QiaoXing for $12,230,000 (RMB84,000,000), which was $2,730,000 less than the carrying values of Fujian QiaoXing’s net assets.

Interest ExpenseTable of Contents

~~During the~~Detailed ~~fiscal~~information ~~year~~on ~~ended~~accounts ~~March 31~~receivables, ~~2009, we did not borrow any funds and did not~~net ~~incur any interest expense. We incurred interest expense of $3,000 during the fiscal year ended March 31, 2008 for discounted bills.~~

Income Tax


	As of March 31
	(in thousands of US dollars)
	2010			2009
Accounts receivable, gross		42,769			21,043
Allowance of doubtful debts		(14,276	)		(6,682	)
Accounts receivable, net		28,493			14,361
Classified as current assets		—			14,361
Classified as non-current assets		28,493			—

~~Sunplus is subject to PRC Income Tax. Pursuant to the PRC Income Tax Laws~~Prepayments, ~~the prevailing~~deposits ~~statutory~~and ~~rate~~other ~~of enterprise income tax in Shanghai is 25% as of January 1~~receivables, ~~2008. It was 27% prior to January 1, 2008.~~net

~~Pursuant to~~Prepayments, ~~the~~deposits ~~relevant laws~~ and ~~regulations~~other inreceivable ~~the~~mainly ~~PRC,~~represented ~~Sunplus~~remaining ~~was~~sales ~~entitled~~proceeds ~~to an~~receivables ~~exemption~~of ~~from PRC income tax for two years starting from its first profitable year. As Sunplus’ statutory year-end is December 31~~US$10, ~~the exemption applied from January 1~~475,000 ~~2003~~(2009: ~~to December 31~~US$11,928,000) ~~2004. Sunplus~~for ~~was~~disposal ~~also entitled to three years~~ of 5080% ~~exemption~~interest ~~after~~in Fujian ~~the~~QiaoXing. ~~expiration~~An ofallowance ~~the two years~~ of ~~full~~ ~~exemption. The 50% exemption applied from January~~ US$1,153,000 ~~2005~~(2009: ~~to December 31~~US$2, ~~2007. Therefore~~520,000) ~~Sunplus~~ was ~~subject~~made toagainst along-outstanding ~~13.5%~~other ~~income tax through December 31, 2007 and 25% thereafter~~receivables.

~~For~~Pursuant to the agreement signed between Sunplus and Qiaoxing Telecom in respect of the disposal of ~~fiscal~~Fujian ~~year~~QiaoXing ~~ended~~to ~~March~~Qiaoxing ~~31,~~Telecom in March 2009, ~~Sunplus~~Qiaoxing ~~made~~Telecom anwas ~~income~~to ~~tax~~settle ~~provision~~this ofoutstanding $1balance by June 2009. However,~~900,000~~ Qiaoxing Telecom was unable to obtain approval from the local governmental bureau in ~~total,~~Zhangzhou ~~compared~~to develop the land held by Fujian QiaoXing. This was due to ~~$3,188,000~~the delay in development by Fujian QiaoXing. When the ~~last~~Zhangzhou ~~fiscal~~local ~~year~~government ~~ended~~granted ~~March~~the land use 31right to Fujian QiaoXing in 2006, ~~2008~~Fujian QiaoXing was required to develop the land within three years. ~~The~~However, ~~decrease~~the ~~was~~land ~~mainly~~had ~~due~~not been developed prior to the ~~decrease~~disposal into ~~taxable~~Qiaoxing Telecom and the ~~profits~~local authorities have refused to approve the development plans submitted by Qiaoxing Telecom.

~~Fujian~~Recently, the Company has actively liaised with the Zhangzhou local governmental bureau to apply ~~QiaoXing~~for ~~and~~an ~~JiaXun~~extension ~~were~~of ~~inactive~~the land development. Based on this contact, the Company, in conjunction with its legal counsel, has made its initial assessment of the situation and ~~were~~concluded that it is more likely than not ~~subject~~that the Zhangzhou local government bureau will provide an extension for developing the land and Qiaoxing Telecom can honor the agreement and settle the balance due to ~~any~~Sunplus. Accordingly, ~~income~~no ~~tax~~allowance has been made in respect of the ~~fiscal~~ ~~years~~sales ~~ended~~proceeds ~~March~~receivable ~~31,~~from ~~2009~~QiaoXing Telecom ~~and~~of ~~2008~~US$10,475,000.

~~Minority~~Property, Plant and Equipment ~~Interests~~

Minority interests represent the portion of net results of Sunplus, Fujian QiaoXing and JiaXun that we do not own. In the fiscal year ended March 31, 2009, minority interests were attributable to the minority interests owned by Shanghai Fanna, which owns directly 5% of Sunplus, and indirectly 5% of Fujian QiaoXing and Jia Xun.


	As of March 31
	(in thousands of US dollars)
	2010		2009

Property, Plant and Equipment		1,591		2,493

~~Net~~As of March 31, 2010, our property, plant and equipment amounted to US$1,591,000. ~~loss/income~~

AsThe ~~a result~~detailed ofinformation ~~the~~on ~~above items~~property, ~~net~~plant ~~loss~~and ~~was~~equipment ~~$8,713,000~~is ~~for the fiscal year ended March 31, 2009,~~ as ~~compared to net income of $14,554,000 for the fiscal year~~follows: ~~ended March 31, 2008. This adverse change was mainly the result of the significant decrease of income from design services, increase in operating expenses and loss from discontinued operations.~~

Page 24 of 41


	As of March 31
	(in thousands of US dollars)
	2010		2009
Cost
Machinery		4,766		4,859
Office equipment		104		138
Motor vehicles		—		56

Total		4,870		5,053


Accumulated depreciation
Machinery		3,200		2,426
Office equipment		79		95
Motor vehicles		—		39

Total		3,279		2,560


Carrying value
Machinery		1,566		2,433
Office equipment		25		43
Motor vehicles		—		17

Total		1,591		2,493

~~Earnings/loss~~24 ~~per share~~

We reportedTable loss per share of $0.29, based on 30,088,174 outstanding weighted shares for the fiscal year ended March 31, 2009. Our outstanding common stock was 30,088,174 shares as of March 31, 2009. We do not have any preferred stock issued or outstanding.Contents

~~Assets~~Liabilities

Cash and cash equivalents


	As of March 31
(in thousands of US dollars)	2010		2009

Liabilities		6,249		7,670
Current liabilities		1,994		3,415
Long-term liabilities		4,255		4,255

	As of March 31,
	(in thousands of US dollars)
	2009		2008
			(restated)
Cash and cash equivalents		20,493		23,330

Our total liabilities as of March 31, 2010 were US$6,249,000, which consisted of US$1,994,000 in current liabilities and US$4,255,000 in long-term liabilities.

~~Cash~~Long-term ~~and cash~~liabilities ~~equivalents~~amounted ~~were~~to US$204,~~493~~255,000 as of March 31, ~~2009.~~2010, ~~The~~all ~~decrease~~of inwhich ~~cash~~were ~~and~~liabilities ~~cash~~due ~~equivalents was mainly attributed~~ to ~~the decrease in operating cash flows arising from the reduction in revenue and gross profit~~shareholders.

~~Accounts receivable,~~Liquidity ~~net~~and Capital Resources

AsFor ~~of March~~the ~~31,~~fiscal ~~2009,~~year ~~accounts~~ended ~~receivable amounted to $14,361,000, a decrease of $3,357,000 compared to $17,718,000 as of~~ March 31, ~~2008.~~2010, ~~The~~we ~~decrease~~principally ~~was~~engaged ~~mainly the net result of an increase~~ in ~~the~~provision ~~gross amount~~ of ~~accounts~~design ~~receivable and an~~solutions ~~increase~~of inwireless ~~the~~communication ~~allowance~~devices ~~for~~and ~~doubtful~~sales ~~accounts receivable. The gross amount~~ of ~~the~~ ~~accounts~~mobile ~~receivable~~phone ~~increased~~components. byWe ~~$3,415,000~~did ~~mainly,~~not ~~because~~declare ~~trade~~or ~~debtors~~pay ~~took~~dividends ~~longer to pay~~ in ~~an economic environment which was deteriorating. The allowance for doubtful accounts receivable increased by an amount of $6,772,000 for~~ the fiscal year ended March 31, ~~2009~~2010. ~~The Company revaluated credit risk on trade~~ debtors and adjusted its allowance policy to make a 100% provision for accounts receivable overdue more than one year. The Company believes this reflects the increased credit risk due to the current economic downturn. If circumstances related to customers change, estimates of the recoverability of receivables would be further adjusted.

~~Detailed information~~Cash onand ~~accounts~~cash ~~receivables~~equivalents decreased from US$20,493,000 ~~net~~to US$703,000 as of March 31, 2010.

	As of March 31, (in thousands of US dollars)
	2009			2008
Accounts receivable		22,258			18,843
Allowance for doubtful debts		(7,897	)		(1,125	)
Accounts receivable, net		14,361			17,718

For the year ended March 31 2010, US$19,949,000 was used in operating activities and US$14,000 was provided by investing activities and US$142,000 was provided by financing activities. Cash and cash equivalents decreased by US$19,790,000 to US$703,000 as of March 31, 2010 from US$20,493,000 as of March 31, 2009.

~~Notes~~We used US$19, 949,000 in operating activities for the year ended March 31, 2010, as compared to US$3,987,000 for the last fiscal year. Net cash used in operating activities for the year ended March 31, 2010 related to net loss adjusted for items not involving movement of cash for the period, augmented mainly by the increase in accounts receivable of US$21,691,000.

AsIn ~~of March~~arriving ~~31,~~at ~~2009~~the net loss, ~~there~~we ~~were~~made ~~notes~~an ~~receivable~~allowance of US$376,227,000 ~~($nil~~for asdoubtful ofreceivables ~~March~~for ~~31,~~the ~~2008). Notes~~year ~~receivable~~ended ~~were~~March 31, ~~mainly~~2010, ~~settlement~~which ofdid ~~accounts~~not ~~receivable from~~involve ~~customers~~any ~~who~~outflow ~~issued~~of ~~commercial notes for settlement~~cash.

~~Page~~Net 25cash provided by investing activities amounted to US$14,000 for the year ended March 31, 2010, compared to net cash used of 41US$1,000 for the last fiscal year. Cash provided by investing activities for the year ended March 31, 2010 was mainly proceeds from the sale of property, plant and equipment.

~~Inventories~~For the year ended March 31, 2010, net cash provided by financing activities was approximately US$142,000, compared to net cash provided of US$78,000 for the last fiscal year. For the year ended March 31, 2010, net cash flow provided by financing activities related primarily to the increase in advances from a shareholder.

~~Inventories~~25 ~~comprise raw materials, work in progress and finished goods and are stated at the lower of cost or market value.~~

	As of March 31,
	(in thousands of US dollars)
	2009		2008
Inventories		-		242

As of ~~March~~ March 31, ~~2009~~2010, ~~the~~we ~~Company~~ had nocapital ~~inventories.~~commitments ~~All~~of ~~raw~~US$38,000 ~~materials and work-~~in~~-progress~~ ~~had~~relation ~~been~~to ~~sold~~acquisition ~~during~~of intangible ~~the year~~assets.

~~Inventories~~We believe that proceeds from the collection of our long-outstanding accounts and other ~~consisted~~receivables are necessary to support our operations and capital commitments, as well as to meet our working capital needs for the next twelve months. While we believe that adequate provisions on our accounts receivable and other receivables have been made, we cannot assure investors that their carrying amount (net of provision) will be received in full within the ~~following~~anticipated astime atframe. ~~March~~A failure ~~31:~~to collect the anticipated amount within the anticipated time frame would adversely affect our liquidity and capital resources.

	As of March 31,
	(in thousands of US dollars)
	2009		2008
Raw materials		-		583
Work in progress		-		29
Total		-		612
Less: allowance for losses		-		(370	)
Inventories, net		-		242

Critical Accounting Policies

~~Property~~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 ~~Plant~~affect amounts reported in the accompanying financial statements and ~~Equipment~~related footnotes. In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in the financial statements, giving 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.

	As of March 31,
	(in thousands of US dollars)
	2009		2008
			(restated)
Property, Plant and Equipment		2,493		3,383

Revenue Recognition

AsOur revenues are mainly derived from design fees of mobile handset design services and sales of ~~March~~mobile ~~31,~~phone ~~2009,~~components. We earn our ~~property~~revenue mainly through NRE fees, ~~plant~~royalties, and ~~equipment~~sales ~~amounted to~~of ~~$2,493,000~~products.

NRE fee. NRE fees stands for Non Refundable Engineering fees, a fixed one-off fee after an agreement has been signed by both the customer and the Company. The NRE fees are no less than the ~~detailed~~total ~~information~~expenses onof ~~property~~project design which normally includes the cost of market study, ~~plant~~product concept identification, hardware designs, software designs, engineer expenses, mechanical engineering designs, testing and ~~equipment~~quality isassurance, aspilot production and production support. The NRE fees are ~~follows:~~recognized when payments are received.

	As of March 31,
	(in thousands of US dollars)
	2009		2008
			(restated)
Cost
Machinery		4,859		4,804
Office equipment		138		454
Motor vehicles		56		55
Total		5,053		5,313
Accumulated depreciation
Machinery		2,426		1,571
Office equipment		95		331
Motor vehicles		39		28
Total		2,560		1,930
Carrying value
Machinery		2,433		3,233
Office equipment		43		123
Motor vehicles		17		27
Total		2,493		3,383

Royalty. In addition to NRE fees, we also charge royalties to our customers. Royalty is calculated at an agreed rate for each unit manufactured or sold by our customers. The rate is variable based on volume of mobile handsets manufactured or sold. Royalty income is recognized when confirmation of manufacturing or selling volume is obtained from customers.

~~Page~~Component 26 sales. Revenue from sales of 41components including but not limited to PCBAs, PCBs and wireless modules is recognized when title passes to the customers, which is generally when products are delivered to them.

~~Liabilities~~Allowance for doubtful receivables

	As of March 31 (in thousands of US dollars),
	2009		2008
			(restated)
Liabilities		7,670		13,318
Current liabilities		3,415		9,141
Long-term liabilities		4,255		4,177

The Group recognizes an allowance for doubtful receivables to ensure accounts and other receivable are not overstated due to uncollectibility. Allowance for doubtful receivables is maintained for all customers based on a variety of factors, including the length of time the receivables are past due, significant one-time events and historical experience. An additional allowance for individual accounts is recorded when the Group becomes aware of a customer’s or other debtor’s inability to meet its financial obligation, such as in the case of bankruptcy filings or deterioration in the customer’s or other debtor’s operating results or financial position. If circumstances related to customers or debtors change, estimates of the recoverability of receivables would be further adjusted.

~~Our total~~26 ~~liabilities as of March 31, 2009 were $7,670,000, which consisted of $3,415,000 in current liabilities and $4,255,000 in long-term liabilities.~~

Long-term liabilitiesTable amounted to $4,255,000 as of March 31, 2009, all of which were liabilities due to shareholders.Contents

~~Liquidity~~ Item 8. Financial Statements and ~~Capital~~Supplementary ~~Resources~~Data.

~~For~~T-BAY ~~the fiscal year ended March 31~~HOLDINGS, ~~2009,~~INC. weAND ~~principally engaged in provision of design~~SUBSIDIARIES ~~solutions~~INDEX ofTO ~~wireless~~CONSOLIDATED ~~communication~~FINANCIAL ~~devices and sales of mobile phone~~STATEMENTS ~~components. We did not declare or pay dividends in the fiscal year ended March 31, 2009.~~

Cash and cash equivalents decreased from $23,330,000 to $20,493,000 as of March 31, 2009.


Report of Independent Registered Public Accounting Firm			F-1

Consolidated Balance Sheets			F-2

Consolidated Statements of Operations and Comprehensive Income			F-3

Consolidated Statements of Changes in Equity			F-4

Consolidated Statements of Cash Flows			F-5 – F-6

Notes to Consolidated Financial Statements			F-7 – F-19

~~We used~~27 $3,987,000 in operating activities for fiscal year ended March 31, 2009, as compared to $17,988,000 provided by operating activities for the fiscal year ended March 31, 2008. The net cash outflow was mainly caused by the net loss for the fiscal year ended March 31, 2009 adjusted for non-cash items, as well as the increase in accounts receivable and the decrease in receipts in advance. Our average trade debt collection period is approximately eight months.

NetTable cash provided by investing activities amounted to $363,000 for the fiscal year ended March 31, 2009 as compared with net cash provided by investing activities of $4,105,000 for the fiscal year ended March 31, 2008. Net cash provided by investing activities in the fiscal year ended March 31, 2009 related mainly to the initial deposits received for the disposal of Fujian Qiaoxing of $364,000. Net cash provided by investing activities in the fiscal year ended March 31, 2008 related mainly to proceeds from the disposal of property, plant and equipment of $4,864,000. No property, plant and equipment was disposed of by us in the fiscal year ended March 31, 2009.Contents

~~Net~~REPORT ~~cash provided~~OF byINDEPENDENT ~~financing~~REGISTERED ~~activities~~PUBLIC ~~decreased~~ACCOUNTING ~~from $896,000 to $78,000. It mainly~~FIRM ~~represented advance from shareholders.~~

~~Page~~The 27 Board of 41Directors and Stockholders of T-Bay Holdings, Inc.

AsWe have audited the accompanying consolidated balance sheets of T-Bay Holdings, Inc. and ~~March~~subsidiaries (the “Company”) as of March 31, 2010 and 2009, weand ~~had~~the ~~capital~~related ~~commitments~~consolidated statements of ~~$27~~operations and comprehensive income,~~000~~ changes in ~~relation~~equity, toand ~~acquisition~~cash flows for each of the two years in the period ended March 31, 2010. These consolidated financial statements are the responsibility of ~~intangible~~the ~~assets~~Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We ~~expect to~~conducted beour ~~able~~audits toin ~~meet~~accordance ~~our~~with ~~liquidity~~the ~~needs~~standards ~~for~~of the ~~fiscal~~Public ~~year~~Company ~~ending~~Accounting ~~March 31,~~Oversight ~~2010~~Board (United States). We ~~expect~~Those ~~net~~standards ~~revenue~~require tothat bewe atplan ~~about~~and perform the ~~same~~audit ~~level~~to asobtain reasonable ~~for~~assurance about whether the ~~fiscal~~ ~~year~~consolidated ~~ended~~financial ~~March~~statements ~~31,~~are ~~2009~~free of material misstatement. ~~However,~~ itThe ~~may~~Company ~~take~~is ~~trade~~not ~~debtors longer~~required to ~~settle~~have, ~~the~~nor ~~accounts~~were ~~receivable~~we ~~owing~~engaged to aperform, ~~possible~~an ~~worsening~~audit of ~~the~~its ~~economic~~internal ~~situation~~control over financial reporting. We ~~currently~~Our doaudit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not ~~have~~for ~~any~~the ~~plans~~purposes toof ~~incur~~expressing an opinion on the effectiveness of the ~~significant~~Company’s ~~capital~~internal ~~expenditures~~control over financial reporting. We ~~believe~~Accordingly, ~~our~~we ~~cash~~express ~~holdings~~no assuch ofopinion. An ~~March~~audit 31includes examining, ~~2009~~on ofa ~~$20~~test basis,~~493,000~~ ~~together~~evidence ~~with~~supporting the ~~remaining~~amounts ~~balance~~and ~~of consideration~~disclosures ~~for~~in the consolidated ~~disposal~~financial ofstatements. ~~our~~An ~~subsidiaries~~audit toalso beincludes ~~received~~assessing ofthe ~~$11~~accounting principles used and significant estimates made by management,~~866,000~~ as well as evaluating the overall financial statement ispresentation. ~~sufficient~~We tobelieve ~~support~~that our ~~operations~~audits ~~and~~provide toa ~~meet~~reasonable ~~our~~basis ~~working~~for ~~capital needs~~our opinion.

~~Critical~~In our opinion, the consolidated financial statements referred to above present fairly, in all ~~Accounting~~material ~~Policies~~respects, the consolidated financial position of the Company as of March 31, 2010 and 2009 and the results of its operations and cash flows for each of the two years in the period then ended in conformity with accounting principles generally accepted in the United States of America.

~~The financial~~/s/ ~~statements~~Moore ~~are prepared in accordance with accounting principles~~Stephens generally accepted in the U.S., which require 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 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.

~~Revenue~~Certified Public Accountants ~~Recognition~~Hong Kong

~~Our revenues are mainly derived from design fees of mobile handset design services and sales of mobile phone components. We earn our revenue mainly through NRE fees~~June 29, ~~royalties, and sales of products.~~2010

~~NRE fee. NRE fees stands for Non Refundable Engineering fees, a fixed one~~F-~~off fee after an agreement has been~~1 signed by both customers and the Company. The NRE fees are no less than the total expenses of project design which normally includes the cost of market study, product concept identification, hardware designs, software designs, engineer expenses, mechanical engineering designs, testing and quality assurance, pilot production and production support. The NRE fees are recognized when payments are received.

Royalty.Table In addition to NRE fees, we also charge royalties to our customers. Royalty is calculated at an agreed rate for each unit manufactured or sold by our customers. The rate is variable based on volume of mobile handsets manufactured or sold. Royalty income is recognized when confirmation of manufacturing or selling volume is obtained from customers.Contents

~~Component~~T-BAY ~~and~~HOLDINGS, ~~product sales~~INC. ~~Revenue~~ ~~from~~AND ~~sales of components including but not limited to PCBAs,~~SUBSIDIARIES ~~PCBs, whole handsets designed by us and manufactured by OEMs, and wireless modules are recognized when products are delivered to our customers.~~

~~Allowance for~~CONSOLIDATED ~~doubtful~~BALANCE ~~receivables~~SHEETS

~~Our determination~~March 31, of2010 ~~the~~and ~~allowance for doubtful receivables is based on a general~~2009 ~~reserve~~(In ~~established~~thousands ~~for all customers based on a range~~ of ~~percentages~~United ~~applied~~States ~~to aging categories. These percentages are based on historical collection and write-off experience.~~dollars)

Page 28 of 41


	Note(s)	MARCH 31,
		2010		2009
ASSETS
CURRENT ASSETS
Cash and cash equivalents		US$	703	US$	20,493
Notes receivable			10		37
Accounts receivable, net	3, 7		—		14,361
Prepayments, deposits and other receivables, net	3, 7		12,517		13,694


Total current assets			13,230		48,585

PROPERTY, PLANT AND EQUIPMENT, NET	4		1,591		2,493
ACCOUNTS RECEIVABLE, NET	2(m), 7		28,493		—
INTANGIBLE ASSETS, NET	5		42		65
ASSETS OF DISCONTINUED OPERATIONS	12		—		724


TOTAL ASSETS		US$	43,356	US$	51,867


LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable		US$	155	US$	466
Accruals and other payables
Related parties	9		437		285
Third parties			1,259		1,412
Receipts in advance			143		990
Income taxes payable			—		262


Total current liabilities			1,994		3,415

LONG-TERM LIABILITIES
Due to shareholders	9		4,255		4,255


Total liabilities			6,249		7,670


COMMITMENTS AND CONTINGENCIES	11

STOCKHOLDERS’ EQUITY
Preferred stock, authorized 10,000,000 shares, par value US$0.001, issued and outstanding Nil	2(p)		—		—
Common stock, authorized 100,000,000 shares, par value US$0.001, issued and outstanding 30,088,174			30		30
Additional paid-in capital			1,462		1,462
Public welfare fund			2,109		2,109
Statutory surplus fund			4,219		4,219
Retained earnings			21,795		28,303
Accumulated other comprehensive income			5,830		5,806


Total stockholders’ equity			35,445		41,929


NON-CONTROLLING INTEREST			1,662		2,268


TOTAL EQUITY			37,107		44,197


TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		US$	43,356	US$	51,867

~~Item 7A. Quantitative~~The ~~and Qualitative~~accompanying ~~Disclosures~~notes ~~About~~are ~~Market~~an ~~Risk~~integral part of these consolidated financial statements.

~~The~~F-2 majority of our revenues derived and expenses and liabilities incurred are in Chinese Renminbi (“RMB”) with a relatively small amount in Hong Kong dollars (“HK$”) and the United States dollars (“$”). Thus, our revenues and operating results may be impacted by exchange rate fluctuations in the currencies of China and Hong Kong. We have not tried to reduce our exposure to exchange rate fluctuations by using hedging transactions. However, we may choose to do so in the future. The availability and effectiveness of any hedging transactions may be limited and we may not be able to successfully hedge our exchange rate risks. Accordingly, we may experience economic losses and negative impacts on earnings and equity as a result of foreign exchange rate fluctuations.

PageTable 29 of 41Contents

~~Item 8. Financial Statements~~T-BAY ~~and~~HOLDINGS, ~~Supplementary Data~~INC. AND SUBSIDIARIES

~~T-BAY HOLDINGS,~~CONSOLIDATED ~~INC.~~STATEMENTS OF OPERATIONS AND ~~SUBSIDIARIES~~COMPREHENSIVE INCOME

~~INDEX~~For the years ended March 31, 2010 and 2009 TO(In ~~CONSOLIDATED~~thousands ~~FINANCIAL~~of ~~STATEMENTS~~United States dollars, except per share data)

Report of Independent Registered Public Accounting Firm	F-2
		Note(s)	YEAR ENDED MARCH 31,
Consolidated Balance Sheets	F-3
			2010			2009
Consolidated Statements of Operations	F-4
NET REVENUE		2(m), 7	US$	35,867		US$	34,838
Consolidated Statements of Changes in Stockholders’ Equity	F-5
COST OF REVENUE				34,930			24,440
Consolidated Statements of Cash Flows	F-6 – F-7
GROSS PROFIT				937			10,398
Notes to Consolidated Financial Statements	F-8 – F-22
OPERATING EXPENSES
Selling expenses				129			245
General and administrative expenses				7,959			10,043
Other operating expenses		10		—			5,075
TOTAL OPERATING EXPENSES				8,088			15,363
LOSS FROM OPERATIONS				(7,151	)		(4,965	)
OTHER INCOME				180			545
GAIN ON DISPOSAL OF A SUBSIDIARY		12		43			—
LOSS BEFORE INCOME TAX				(6,928	)		(4,420	)
INCOME TAX: CURRENT		6		(7	)		(1,900	)
NET LOSS FROM CONTINUING OPERATIONS				(6,935	)		(6,320	)
LESS: NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST				427			429
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS FROM CONTINUING OPERATIONS				(6,508	)		(5,891	)
LOSS FROM DISCONTINUED OPERATIONS		12		—			(2,822	)
NET LOSS				(6,508	)		(8,713	)
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment				24			953
COMPREHENSIVE LOSS			US$	(6,484	)	US$	(7,760	)
WEIGHTED AVERAGE NUMBER OF SHARES (in thousands)				30,088			30,088
LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS (in dollars)		2(n)
- CONTINUING OPERATIONS				(0.22	)		(0.20	)
- DISCONTINUED OPERATIONS				—			(0.09	)
				(0.22	)		(0.29	)

~~F-1~~The accompanying notes are an integral part of these consolidated financial statements.

~~REPORT~~F-3 ~~OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~

TheTable Board of Directors and Stockholders ofContents

T-~~Bay Holdings~~BAY HOLDINGS, ~~Inc~~INC. AND SUBSIDIARIES

WeCONSOLIDATED ~~have audited~~STATEMENTS ~~the~~OF ~~accompanying~~CHANGES ~~consolidated~~IN balance sheet of T-Bay Holdings, Inc. and subsidiaries (the “Company”) as of March 31, 2009 and 2008, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the two years in the period ended March 31, 2009. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.EQUITY

~~We conducted~~For ~~our audits in accordance with~~ the ~~standards~~years ofended ~~the~~March 31, ~~Public~~2010 ~~Company Accounting Oversight Board (United States). Those standards require that we plan~~ and ~~perform the audit to obtain reasonable assurance about whether the~~2009 ~~consolidated~~(In ~~financial~~thousands ~~statements are free~~ of ~~material misstatement. The~~United ~~Company~~States is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.dollars)

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of March 31, 2009 and 2008 and the results of its operations and cash flows for each of the two years in the period then ended in conformity with accounting principles generally accepted in the United States of America.


														Accumulated other		Total			Non-
	Common stock				Additional		Public		Statutory		Retained			comprehensive		stockholders’			controlling
	No. of shares				paid-in capital		welfare fund		surplus fund		earnings			income		equity			interest			Total

Balance, March 31, 2008		30,088,174		30		1,462		2,109		4,219		37,016			4,853		49,689			2,657			52,346
Net loss		—		—		—		—		—		(8,713	)		—		(8,713	)		(429	)		(9,142	)
Repayment to minority shareholder		—		—		—		—		—		—			—		—			69			69
Foreign currency translation adjustment		—		—		—		—		—		—			953		953			(29	)		924


Balance, March 31, 2009		30,088,174	US$	30	US$	1,462	US$	2,109	US$	4,219	US$	28,303		US$	5,806	US$	41,929		US$	2,268		US$	44,197
Net loss		—		—		—		—		—		(6,508	)		—		(6,508	)		(427	)		(6,935	)
Disposal of a subsidiary		—		—		—		—		—		—			—		—			(36	)		(36	)
Repayment to minority shareholder		—		—		—		—		—		—			—		—			(10	)		(10	)
Foreign currency translation adjustment		—		—		—		—		—		—			24		24			(133	)		(109	)


Balance, March 31, 2010		30,088,174	US$	30	US$	1,462	US$	2,109	US$	4,219	US$	21,795		US$	5,830	US$	35,445		US$	1,662		US$	37,107

~~/s/~~The ~~Moore~~accompanying notes are an integral part of these consolidated financial statements. ~~Stephens~~

~~Certified~~F-4 ~~Public Accountants~~

Hong KongTable of Contents

~~July~~T-BAY 9HOLDINGS, INC. AND SUBSIDIARIES ~~2009~~

~~F-2~~CONSOLIDATED STATEMENTS OF CASH FLOWS

~~T-BAY HOLDINGS~~For the years ended March 31, ~~INC.~~2010 ~~AND~~and ~~SUBSIDIARIES~~2009 (In thousands of United States dollars)

CONSOLIDATED BALANCE SHEETS


	Note(s)	FOR THE YEAR ENDED MARCH 31,
		2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss from continuing operations		US$	(6,935	)	US$	(6,320	)
Adjustments to reconcile net income to net cash generated from operating activities:
Depreciation			874			933
Amortization			23			37
Gain on disposal of subsidiary	12		(43	)		—
Loss on disposal of property, plant and equipment			17			44
Allowance for doubtful receivables			6,227			8,077
Reversal of allowance for obsolete inventories			—			(370	)
Changes in operating assets and liabilities:
Decrease/(increase) in notes receivable			27			(37	)
Increase in accounts receivable			(21,691	)		(2,201	)
Decrease/(increase) in prepayments, deposits and other receivables			3,134			(2,387	)
Decrease in inventories			—			612
Decrease in accounts payable			(312	)		(222	)
(Decrease) / increase in accruals and other payables			(154	)		255

Decrease in receipts in advance			(847	)		(1,108	)
Decrease in income tax payable			(269	)		(1,254	)

Operating cash flows used in operating activities			(19,949	)		(3,941	)
Operating cash flows provided by discontinued operations			—			(46	)


Net cash used in operating activities			(19,949	)		(3,987	)


CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of property, plant and equipment			—			(1	)
Proceeds from disposal of property, plant and equipment			14			—

Net cash flows provided by/(used in) investing activities			14			(1	)
Net cash flows provided by investing activities of discontinued operations, (including proceeds from sale of a subsidiary, net of cash at date of sale)			—			364


Net cash provided by investing activities			14			363


CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of cash advance to the minority shareholder			(10	)		—
Cash advance from shareholders			152			78


Net cash flows provided by financing activities			142			78


Effect of exchange rate changes on cash			3			685

~~March~~F-5 ~~31, 2009 and 2008~~

(In thousandsTable of United States dollars)Contents

		MARCH 31,
	Note(s)	2009		2008
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	20,493	$	23,330
Notes receivable			37		-
Accounts receivable, net	3		14,361		17,718
Prepayments, deposits and other receivables, net	3		13,694		1,937
Inventories	4		-		242
Total current assets			48,585		43,227
PROPERTY, PLANT AND EQUIPMENT, NET	5		2,493		3,383
INTANGIBLE ASSETS, NET	6		65		100
ASSETS OF DISCONTINUED OPERATIONS	13		724		18,954
TOTAL ASSETS		$	51,867	$	65,664
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable		$	466	$	688
Accruals and other payables
Related parties	10		285		247
Third parties			1,412		1,279
Receipts in advance			990		2,098
Income tax payable			262		1,516
Liabilities of discontinued operations	13		-		3,313
Total current liabilities			3,415		9,141
LONG-TERM LIABILITIES
Due to shareholders	10		4,255		4,177
Total liabilities			7,670		13,318
MINORITY INTERESTS			2,268		2,657
COMMITMENTS AND CONTINGENCIES	12
STOCKHOLDERS’ EQUITY
Preferred stock, authorized 10,000,000 shares, par value $0.001, issued and outstanding Nil	2(t)		-		-
Common stock, authorized 100,000,000 shares, par value $0.001, issued and outstanding 30,088,174			30		30
Additional paid-in capital			1,462		1,462
Public welfare fund			2,109		2,109
Statutory surplus fund			4,219		4,219
Retained earnings			28,303		37,016
Accumulated other comprehensive income			5,806		4,853
Total stockholders’ equity			41,929		49,689
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	51,867	$	65,664

T-BAY HOLDINGS, INC. AND SUBSIDIARIES

~~The accompanying~~CONSOLIDATED ~~notes~~STATEMENTS ~~are~~OF anCASH ~~integral~~FLOWS ~~part of these consolidated financial~~(continued) ~~statements.~~

~~F-3~~For the years ended March 31, 2010 and 2009 (In thousands of United States dollars)

T-BAY HOLDINGS, INC. AND SUBSIDIARY


	Note(s)	FOR THE YEAR ENDED MARCH 31,
		2010			2009

Net decrease in cash and cash equivalents			(19,790	)		(2,861	)

Cash and cash equivalents at beginning of year			20,493			23,355


Cash and cash equivalents at end of year (including cash of discontinued operations of US$nil and US$1,000, respectively)		US$	703		US$	20,494


SUPPLEMENTAL INFORMATION
Income taxes paid		US$	269		US$	3,188

~~CONSOLIDATED STATEMENTS~~The OFaccompanying ~~OPERATIONS~~notes are an integral part of these consolidated financial statements.

~~For~~F-6 ~~the years ended March 31, 2009 and 2008~~

(In thousandsTable of United States dollars, except per share data)Contents

	Note(s)	YEAR ENDED MARCH 31,
		2009			2008
NET REVENUE		$	34,838		$	45,681
COST OF REVENUE			24,440			23,539
GROSS PROFIT			10,398			22,142
OPERATING EXPENSES
Selling expenses			245			280
General and administrative expenses			10,043			3,264
Other operating expenses	11		5,075			-
TOTAL OPERATING EXPENSES			15,363			3,544
(LOSS)/INCOME FROM OPERATIONS			(4,965	)		18,598
OTHER INCOME			545			185
INTEREST EXPENSE			-			(3	)
(LOSS)/INCOME BEFORE INCOME TAX AND MINORITY INTERESTS			(4,420	)		18,780
INCOME TAX: CURRENT	7		(1,900	)		(3,188	)
(LOSS)/INCOME BEFORE MINORITY INTERESTS			(6,320	)		15,592
MINORITY INTERESTS			429			(659	)
(LOSS)/INCOME FROM CONTINUING OPERATIONS			(5,891	)		14,933
LOSS FROM DISCONTINUED OPERATIONS	13		(2,822	)		(379	)
NET (LOSS)/INCOME			(8,713	)		14,554
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment			953			2,889
COMPREHENSIVE (LOSS) INCOME		$	(7,760	)	$	17,443
WEIGHTED AVERAGE NUMBER OF SHARES (in thousands)			30,088			30,088
EARNINGS (LOSS) PER SHARE (in dollars)
- Continuing operations		$	( 0.20	)	$	0.50
- Discontinued operations	2(a)		( 0.09	)		( 0.02	)
	2(r)	$	( 0.29	)	$	0.48

T-BAY HOLDINGS, INC. AND SUBSIDIARIES

~~The accompanying~~NOTES ~~notes~~TO ~~are~~CONSOLIDATED anFINANCIAL ~~integral part of these consolidated financial statements.~~STATEMENTS

~~F-4~~MARCH 31, 2010 and 2009

~~T-BAY HOLDINGS, INC~~1. ~~AND~~The ~~SUBSIDIARIES~~Company and Subsidiaries

~~CONSOLIDATED~~T-Bay Holdings, Inc. (the “Company” or T-Bay) was incorporated under the laws of the State of Utah ~~STATEMENTS~~on OFAugust 8, ~~CHANGES~~1984 INas ~~STOCKHOLDERS’~~“Sharus ~~EQUITY~~Corporation” with authorized common stock of 50,000,000 shares with a par value of US$0.001. On June 13, 1989, the domicile of the Company was changed to the state of Nevada in connection with a name change to “Golden Quest, Inc.”. On January 7, 2002, the name was changed to “T-Bay Holdings, Inc.” as part of a reverse stock split of 400 shares of outstanding stock for one share and on November 23, 2004, the Company increased the authorized common stock to 100,000,000 shares with a par value of US$0.001 as part of a reverse stock split of 20 outstanding shares for one share.

~~For~~On August 16, 2005, pursuant to an Agreement and Plan of Reorganization, T-Bay issued 18,550,000 shares of its common stock for all of Amber Link International Limited’s (“Amber Link”) and Wise Target International Limited’s (“Wise Target”) outstanding shares of common stock (the ~~years~~“Merger”). Amber ~~ended~~Link and Wise Target were two of the owners of Shanghai Sunplus Communication Technology Co., Ltd. (“Sunplus”). Wise Target owned a 75% interest and Amber Link owned a 20% interest in Sunplus. After the Merger, T-Bay indirectly owned a 95% interest in Sunplus. In March 2009, 31Wise Target transferred all its holdings (75%) in Sunplus to Amber Link for US$2,885,000 (HK$22,500,000). As a result of this transaction, Amber Link directly owned 95% of Sunplus and this transaction had no impact on the Company’s effective holdings of Sunplus. Shanghai Fanna Industrial Design Co., Ltd. owned the remaining 5% interest in Sunplus. On November 25, 2009, the Company transferred all its holdings (100%) in Amber Link to Wise Target for US$2,600. As a result of the transaction, the Company indirectly holds Amber Link and ~~2008~~this transaction had no impact on the Company’s effective holdings of Amber Link and Sunplus.

~~(In thousands~~Wise ofTarget ~~United~~was ~~States~~incorporated ~~dollars)~~on April 24, 2002 under the International Business Companies Act in the British Virgin Islands.

	COMMON STOCK			ADDITIONAL PAID-IN CAPITAL		PUBLIC WELFARE FUND		STATUTORY SURPLUS FUND		RETAINED EARNINGS			ACCUMULATED OTHER COMPREHENSIVE INCOME		TOTAL STOCKHOLDERS’ EQUITY
	No. of shares
Balance, April 1, 2007		30,088,174	30		1,462		1,430		2,859		23,975			1,964		31,720
Net income		-	-		-		-		-		14,554			-		14,554
Transfer		-	-		-		504		1,009		(1,513	)		-		-
Foreign currency translation adjustment		-	-		-		175		351		-			2,889		3,415
Balance, March 31, 2008		30,088,174	30		1,462		2,109		4,219		37,016			4,853		49,689
Net loss		-	-		-		-		-		(8,713	)		-		(8,713	)
Foreign currency translation adjustment		-	-		-		-		-		-			953		953
Balance, March 31, 2009		30,088,174	30		1,462		2,109		4,219		28,303			5,806		41,929

Amber Link was incorporated on May 10, 2002 under the International Business Companies Act in the British Virgin Islands. During the year ended March 31, 2007, Amber Link commenced the sales of mobile phones and components.

~~The~~Sunplus was established on October 17, 2002 under the laws of the People’s Republic of China ~~accompanying~~(“PRC”) ~~notes~~as ~~are~~a anSino-foreign ~~integral~~joint ~~part~~venture specialized in the development, production and sales of electronic ~~these~~telecommunication ~~consolidated~~devices. ~~financial~~Sunplus commenced operations on May 1, 2003. At March 31, ~~statements~~2010, Sunplus has approximately 80 staff, mostly engineers and software programmers.

FOn February 12, 2007, Sunplus established a wholly-5owned subsidiary, Zhangzhou JiaXun Communication Facility Co., Ltd. (“Zhangzhou JiaXun”) under the laws of the PRC. Zhangzhou JiaXun is an investment holding company.

~~T-BAY~~On March 19, 2007, Sunplus and Zhangzhou JiaXun acquired 80% and 20%, respectively, of Fujian ~~HOLDINGS~~Qiaoxing Industry Co., ~~INC~~Ltd. ~~AND~~(“Fujian ~~SUBSIDIARIES~~Qiaoxing”).

~~CONSOLIDATED~~On March 20, 2009, Sunplus disposed of its 80% interest in Fujian Qiaoxing to Qiaoxing ~~STATEMENTS~~Telecommunication OFIndustry ~~CASH~~Company ~~FLOWS~~Limited (“QiaoXing Telecom”), a third party, at a consideration of US$12,230,000 (RMB84,000,000) (See Note 12).

~~For the~~On ~~years~~April 9, ~~ended~~2009, ~~March~~Sunplus 31disposed of Zhangzhou JiaXun to QiaoXing Telecom at a consideration of US$731,000 ~~2009~~(RMB5,000,000) ~~and~~(See ~~2008~~Note 12).

~~(In~~F-7 ~~thousands of United States dollars)~~

	FOR THE YEAR ENDED MARCH 31,
	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$	(8,713	)	$	14,554
Adjustments to reconcile net income to net cash generated from operating activities:
Depreciation		933			884
Amortization		37			36
Allowances for doubtful receivables		6,915			700
Reversal of allowance for obsolete inventories		(370	)		(306	)
Loss/(gain) on disposal of property, plant and equipment		44			(5	)
Minority interests		(429	)		659
Changes in operating assets and liabilities:
(Increase)/decrease in notes receivable		(37	)		4,156
(Increase)/decrease in accounts receivable		(2,201	)		2,316
Decrease in prepayments, deposits and other receivables		(1,225	)		580
Decrease in VAT recoverable		-			21
Decrease in inventories		612			988
Decrease in accounts payable		(222	)		(1,995	)
Increase/(decrease) in accruals and other payables		255			(2,835	)
Decrease in receipts in advance		(1,108	)		(690	)
Decrease in income tax payable		(1,254	)		(833	)
Operating cash flow (used in)/provided by continuing operations		(6,763	)		17,070
Operating cash flow provided by discontinued operations		2,776			918
Net cash (used in)/provided by operating activities		(3,987	)		17,988
CASH FLOWS FROM INVESTING ACTIVITES
Acquisition of property, plant and equipment		(1	)		-
Proceeds received from disposal of property, plant and equipment		-			13
Deposit refunded for property, plant and equipment		-			4,864
Acquisition of intangible assets		-			(97	)
Investing activities of continuing operations		(1	)		4,780
Investing activities of discontinued operations, (including proceeds from sale of a subsidiary (net of cash at date of sale)		364			(675	)
Net cash provided by investing activities		363			4,105

FT-6BAY HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) MARCH 31, 2010 and 2009

~~T-BAY HOLDINGS, INC~~1. ~~AND~~The ~~SUBSIDIARIES~~Company and Subsidiaries (continued)

~~CONSOLIDATED STATEMENTS~~As OFof ~~CASH~~March 31, ~~FLOWS~~2010, ~~(Continued)~~the Group structure is as follows:-

~~For the~~2. ~~years~~Summary ~~ended~~of ~~March~~Significant ~~31,~~Accounting ~~2009 and 2008~~Policies

(~~In thousands~~a) Basis of ~~United States dollars)~~Preparation

	FOR THE YEAR ENDED MARCH 31,
	2009			2008
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in minority interests		-			638
Increase in amounts due to shareholders		78			258
Financing activities of continuing operations		78			896
Financing activities of discontinued operations		-			-
Net cash provided by financing activities		78			896
Effect of exchange rate changes on cash		685			299
Net (decrease)/increase in cash and cash equivalents		(2,861	)		23,288
Cash and cash equivalents at beginning of year		23,355			67
Cash and cash equivalents at end of year (including cash of discontinued operations of $1,000 and $25,000, respectively)	$	20,494		$	23,355
SUPPLEMENTAL INFORMATION
Income taxes paid	$	3,188		$	3,854
Interest paid	$	-		$	3

The consolidated financial statements for the two years ended March 31, 2010 and 2009 included the financial statements of T-Bay and its subsidiaries (hereinafter, referred to collectively as the “Group”) and are prepared in conformity with accounting principles generally accepted in the United States of America (US GAAP). All significant inter-company balances and transactions have been eliminated on consolidation.

~~The~~F-8 ~~accompanying notes are an integral part of these consolidated financial statements.~~

F-7Table of Contents

T-BAY HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) MARCH 31, 2010 and 2009

~~NOTES TO~~2. ~~CONSOLIDATED~~Summary ~~FINANCIAL~~of ~~STATEMENTS~~Significant Accounting Policies (continued)

~~MARCH 31,~~(b) Basis ~~2009~~of ~~and 2008~~Consolidation

1. The ~~Company~~consolidated balance sheet as of March 31, 2010 included T-Bay, Wise Target, Amber Link and Sunplus. ~~Subsidiaries~~The consolidated balance sheet as of March 31, 2009 also included Zhangzhou JiaXun. As mentioned in Note 1, Zhangzhou JiaXun was disposed of on April 9, 2009; therefore, the financial position of Zhangzhou JiaXun has been presented as assets of discontinued operations as of March 31, 2009.

~~T-Bay Holdings,~~The ~~Inc.~~consolidated ~~(the~~statement ~~“Company” or T-Bay) was incorporated under the laws~~ of ~~the State~~operations offor ~~Utah on August 8, 1984 as “Sharus Corporation” with authorized common stock of 50,000,000 shares with a par value of US$0.001. On June 13, 1989,~~ the ~~domicile~~year ofended ~~the Company was changed to the state of Nevada in connection with a name change to “Golden Quest~~March 31, ~~Inc.”. On~~2010 ~~January~~included ~~7, 2002, the name was changed to “~~T-Bay, ~~Holdings~~Wise Target, ~~Inc.”~~Amber asLink ~~part~~and ofSunplus. aThe ~~reverse~~consolidated ~~stock~~statement ~~split~~ of ~~400~~operations ~~shares of outstanding stock~~ for ~~one share and on November 23, 2004,~~ the ~~Company~~ ~~increased~~year ~~the~~ended ~~authorized common stock to 100~~March 31,~~000,000~~ ~~shares~~2009 ~~with~~also aincluded ~~par value~~Fujian ofQiaoxing ~~US$0.001~~and asZhangzhou ~~part of a reverse stock split of 20 outstanding shares for one share~~JiaXun.

~~On August 16, 2005, pursuant to an Agreement and Plan of Reorganization, T-Bay issued 18,550,000 shares of its common stock for all of Amber Link International Limited’s~~ (~~“Amber Link”~~c) Use ~~and Wise Target International Limited’s (“Wise Target”) outstanding shares~~ of ~~common stock (the “Merger”). Amber Link and Wise Target~~Estimates were two of the owners of Shanghai Sunplus Communication Co., Ltd. (“Sunplus”). Wise Target owned a 75% interest and Amber Link owned a 20% interest in Sunplus. After the Merger, T-Bay indirectly owned a 95% interest in Sunplus. In March 2009, Wise Target transferred all its holdings (75%) in Sunplus to Amber Link for US$2,885,000 (HK$22,500,000). As a result of this transaction, Amber Link directly owned 95% of Sunplus and this transaction had no impact on the Company’s effective holdings of Sunplus. Shanghai Fanna Industrial Design Co., Ltd. owned the remaining 5% interest in Sunplus.

~~Wise Target~~In ~~was~~preparing ~~incorporated~~financial onstatements ~~April~~in 24conformity with US GAAP, ~~2002~~management ~~under~~is required to make estimates and assumptions that affect the ~~International~~reported ~~Business~~amounts of assets and liabilities and the ~~Companies~~disclosure ~~Act~~of incontingent assets and liabilities at the ~~British~~date ~~Virgin~~of ~~Islands~~the financial statements and revenues and expenses during the reported periods. Significant estimates include useful lives of depreciable and amortizable assets and allowance for doubtful receivables. Actual results could differ from those estimates.

~~Amber Link~~(d) Cash ~~was~~and ~~incorporated~~Cash ~~on May 10, 2002 under the International Business Companies~~Equivalents ~~Act in the British Virgin Islands. During the year ended March 31, 2007, Amber Link commenced the sales of mobile phones and components.~~

~~Sunplus was~~The ~~established~~Group onconsiders ~~October~~all ~~17,~~highly ~~2002~~liquid ~~under~~investments ~~the~~with ~~laws~~original maturities of ~~the~~three ~~People’s~~months ~~Republic~~or ofless ~~China~~at ~~(“PRC”) as a Sino-foreign joint venture specialized in~~ the ~~development, production~~time ~~and~~of ~~sales~~purchase ofto ~~electronic~~be ~~telecommunication~~cash ~~devices~~equivalents. ~~Sunplus commenced~~ ~~operations~~As onof ~~May 1, 2003. At~~ March 31, 2010 and 2009, ~~Sunplus~~the ~~has approximately~~Group 85did ~~staff,~~not have ~~mostly~~any ~~engineers~~cash ~~and software programmers~~equivalents.

~~On February 12, 2007, Sunplus established a wholly-owned subsidiary, Zhangzhou JiaXun Communication Facility Co., Ltd.~~ (~~“Zhangzhou JiaXun”~~e) Allowance ~~under~~for ~~the~~Doubtful ~~laws of~~Receivables ~~the PRC. Zhangzhou JiaXun is an investment holding company.~~

OnThe ~~March~~Group recognizes an allowance for doubtful receivables to ensure accounts and other receivable 19are not overstated due to uncollectibility. Allowance for doubtful receivables is maintained for all customers based on a variety of factors, ~~2007~~including the length of time the receivables are past due, ~~Sunplus~~significant one-time events and ~~Zhangzhou~~historical ~~JiaXun~~experience. ~~acquired~~An ~~80%~~additional ~~and~~allowance ~~20%,~~for ~~respectively~~individual accounts is recorded when the Group becomes aware of a customer’s or other debtor’s inability to meet its financial obligation, such as in the case of bankruptcy filings or deterioration in the ~~Fujian~~customer’s ~~Qiaoxing~~or ~~Industry~~other Codebtor’s operating results or financial position. If circumstances related to customers or debtors change, ~~Ltd.~~estimates of the recoverability of receivables would be further adjusted (~~“Fujian~~See ~~Qiaoxing”~~Note 3).

~~F-8~~(f) Property, Plant and Equipment

~~Pursuant to an agreement signed on December 31~~Property, ~~2008,~~plant ~~Sunplus~~and ~~agreed~~equipment tois ~~dispose~~stated ofat ~~its entire interest in Zhangzhou JiaXun (100%) to Huizhou Liyin Electronics Co~~cost.~~, Ltd.~~ ~~(“Huizhou~~Depreciation ~~Liyin”),~~is aprovided ~~third~~principally ~~party,~~by ~~for~~use ~~US$724,000~~of ~~(RMB5,000,000). However,~~the onstraight-line ~~March~~method ~~10,~~over ~~2009, pursuant to a supplemental agreement between Sunplus and Huizhou Liyin, Huizhou Liyin and Sunplus rescinded~~ the ~~original agreement. On~~estimated ~~the~~useful ~~same~~lives ~~date, Sunplus entered into another agreement with Qiaoxing Telecommunication Industry Company Limited (“Qiaoxing Telecom”), a third party, to dispose~~ of ~~all~~the ~~its~~related ~~interest~~assets. inExpenditure ~~Zhangzhou JiaXun at a~~for ~~consideration~~maintenance ~~of US$724,000 (RMB5,000,000). The ownership~~ and ~~legal title were transferred on April 9~~repairs, ~~2009. The~~which ~~disposal~~does ~~criteria~~not ~~were met~~improve ~~before~~or ~~March~~extend ~~31,~~the ~~2009. As~~expected auseful ~~result,~~life ~~assets~~ of ~~Zhangzhou~~the ~~JiaXun~~assets, ~~were~~is ~~classified~~expensed ~~and~~to ~~grouped~~operations inwhile ~~assets~~major ofrepairs ~~discontinued~~are ~~operations~~capitalized. ~~(See Note~~ ~~13)~~

~~On December~~Management ~~31,~~estimates ~~2008~~that property, ~~Sunplus~~plant ~~entered~~and ~~into~~equipment anhave ~~agreement with Huizhou Liyin to dispose of its 80% interest in Fujian Qiaoxing for~~ a ~~consideration of US$12,230,000 (RMB84,000,000). However, on March~~ 10,% ~~2009,~~residual ~~pursuant to a supplemental agreement between Sunplus and Huizhou Liyin, Huizhou Liyin and Sunplus rescinded the original agreement~~value. On ~~the~~The ~~same date, Sunplus~~estimated ~~entered~~useful ~~into~~lives ~~another~~are ~~agreement~~as ~~with Qiaoxing Telecom to dispose of all its~~follows: ~~interest in Fujian Qiaoxing at a consideration of US$12,230,000 (RMB84,000,000) and the transaction was completed on March 20, 2009. (See Note 13)~~

As of March 31, 2009, the Group structure is as follows:-


Machinery		5 years
Office equipment		5 years
Motor vehicles		5 years

~~F-9~~The gain or loss on disposal of property, plant and equipment is the difference between the net sales proceeds and the carrying amount of the relevant assets, and, if any, is recognized in the statement of operations and comprehensive income.

2.F-9 ~~Summary of Significant Accounting Policies~~

(a) BasisTable of Preparation and ConsolidationContents

~~The consolidated financial statements for the year ended March 31, 2009 and 2008 included the financial statements of~~ T-~~Bay~~BAY ~~and its subsidiaries (hereinafter~~HOLDINGS, ~~referred~~ toINC. ~~collectively~~AND ~~as the “Group”) and are prepared in conformity with~~SUBSIDIARIES ~~accounting~~NOTES ~~principles~~TO ~~generally~~CONSOLIDATED ~~accepted~~FINANCIAL inSTATEMENTS ~~the United States of America~~ (~~US GAAP~~continued). MARCH ~~All~~31, ~~significant~~2010 ~~inter-company balances~~ and ~~transactions have been~~2009 ~~eliminated in consolidation.~~

As mentioned in Note 1, on March 20, 2009, the Group disposed of its 80% interest in Fujian Qiaoxing, for net proceeds of US$12,230,000 and disposed of its entire interest in Zhangzhou Jiaxun, on April 9, 2009 for net proceeds of US$724,0002. ~~Criteria~~ ~~for~~Summary ~~disposal~~ of ~~Zhangzhou~~Significant ~~JiaXun~~Accounting ~~were~~Policies met before March 31, 2009, but legal ownership and legal title had not been transferred. As a result, the financial position of Zhangzhou Jiaxun and results of operations of Fujian Qiaoxing and Zhangzhou Jiaxun have been presented as discontinued operation for all periods shown in the accompanying consolidated financial statements (~~see Note 13~~continued).

(bg) Intangible Assets ~~Reclassifications~~

~~Certain reclassifications~~Intangible ~~were~~assets ~~made~~consist toof ~~conform~~software ~~prior~~and ~~year’s~~patents ~~financial~~and ~~statements~~are toamortized using the straight-line method ~~current~~over ~~presentation~~their estimated useful life of 5 years.

(ch) Impairment of Long-Lived Assets ~~Goodwill~~

~~Goodwill arising~~In onaccordance ~~consolidation~~with ~~represents~~Statement ~~the~~of ~~excess~~Auditing ofStandards ~~the~~(“SFAS”) ~~cost~~No. 144, of“Accounting ~~acquisition~~for ~~over~~Impairment or ~~the~~Disposal ~~Group’s~~of ~~interest~~Long-Lived inAssets”, ~~the~~which ~~fair~~is ~~value~~now ofcodified ~~the~~as ~~identifiable~~Financial ~~assets~~Accounting ~~and~~Standards Board ~~liabilities~~Accounting ofStandards ~~subsidiary~~Codification at(“FASB ASC”) No. 360-10-35, the ~~date~~Group ofevaluates ~~acquisition.~~its ~~Goodwill~~long-lived assets isto ~~recognized~~determine ~~as an~~whether ~~asset~~later events and ~~carried~~circumstances atwarrant ~~cost~~revised ~~less~~estimates of useful lives or a reduction in carrying value due to impairment. In ~~accordance~~If ~~with Statement~~indicators of ~~Financial~~impairment ~~Accounting~~exist ~~Standards~~and ~~(“SFAS”)~~if the ~~No.~~value ~~142,~~of ~~goodwill~~the assets is ~~tested for~~impaired, an impairment onloss anwould ~~annual~~be ~~basis~~recognized. ~~Recognized~~ For the year ended March 31, 2009, an impairment ~~losses~~loss of ~~goodwill~~ ~~cannot~~US$4,000 behas ~~reversed~~been recognized. No Impairment loss was recognized in 2010.

~~Goodwill arising~~(i) Income ~~on the acquisition of subsidiaries is presented separately in the~~Taxes ~~balance sheet.~~

~~(d)~~The Group accounts for income taxes under SFAS No. 109, “Accounting for Income Taxes”, which is now ~~Use~~codified as FASB ASC No. 740. Under FASB ASC No. 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of ~~Estimates~~existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC No. 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

~~In preparing~~The ~~financial~~Group ~~statements~~reviews inthe ~~conformity~~differences ~~with~~between USthe ~~GAAP,~~tax ~~management~~bases ~~is required~~under toPRC ~~make~~tax ~~estimates~~laws and ~~assumptions~~financial ~~that~~reporting under ~~affect~~US ~~the~~GAAP. ~~reported~~As ~~amounts~~ of ~~assets~~ ~~and~~March 31, ~~liabilities~~2010 and ~~the~~2009, ~~disclosure~~no ofmaterial ~~contingent~~differences ~~assets~~were ~~and~~found; ~~liabilities~~therefore, there atwere ~~the~~no ~~date~~material ofdeferred ~~the~~tax ~~financial~~assets ~~statements~~or ~~and~~liabilities ~~revenues~~arising ~~and~~from ~~expenses during~~ the ~~reported~~ ~~periods.~~operations ~~Significant estimates include useful lives~~ of ~~depreciable~~the ~~and~~subsidiaries ~~amortizable~~in ~~assets~~the ~~and allowance for doubtful receivables~~PRC. ~~Actual~~ ~~results could differ from those estimates.~~

~~(e)~~FASB ASC No 740 clarifies the accounting for uncertainty in income taxes recognized in an ~~Cash~~enterprise’s financial statements and ~~Cash~~it ~~Equivalents~~prescribes a recognition threshold and measurement attributable for the financial statements recognition and measurement of a tax position taken or expected to be taken in a tax return. FASB ASC No. 740 also provides guidance on derecognizing, classification, interest and penalties, accounting in interim periods, disclosures and transitions. Interest and penalties from tax assessments, if any, are included in general and administrative expenses in the consolidated statements of operations and comprehensive income.

The Group ~~considers~~ ~~all~~recognizes ~~highly~~that ~~liquid~~virtually ~~investments~~all ~~with~~tax ~~original~~positions ~~maturities~~in ofthe ~~three~~PRC ~~months or~~are ~~less~~not atfree ~~the~~of ~~time~~some degree of uncertainty ~~purchase~~due to betax ~~cash~~law ~~equivalents.~~and Aspolicy ofchanges ~~March~~by ~~31,~~the ~~2009~~PRC ~~and 2008~~government. However, the Group ~~did~~cannot reasonably ~~not~~quantify ~~have~~political ~~any~~risk ~~cash~~factors ~~equivalents~~and thus must depend on guidance issued by current PRC government officials.

~~F-10~~Based on all known facts and circumstances and current tax law, the Group believes that the total amount of unrecognized tax benefits as of March 31, 2010 and 2009 is not material to its results of operations, financial condition or cash flows. The Group also believes that the total amount of unrecognized tax benefits as of March 31, 2010 and 2009, if recognized, would not have a material effect on its effective tax rate. The Group further believes that there are no tax positions for which it is reasonably possible, based on current Chinese tax law and policy, that the unrecognized tax benefits will significantly increase or decrease over the next twelve months producing, individually or in the aggregate, a material effect on the Group’s results of operations, financial condition or cash flows.

~~(f) Allowance~~Under ~~for~~current ~~Doubtful~~PRC ~~Receivables~~tax laws, no tax is imposed in respect to distributions paid to owners except individual income tax.

The Group recognizes an allowance for doubtful receivables to ensure accounts and other receivable are not overstated due to uncollectibility. Allowance for doubtful receivables is maintained for all customers based on a variety of factors, including the length of time the receivables are past due, significant oneF-~~time events and historical experience. An additional allowance~~10 for individual accounts is recorded when the Group becomes aware of a customer’s or other debtor’s inability to meet its financial obligation, such as in the case of bankruptcy filings or deterioration in the customer’s or other debtor’s operating results or financial position. If circumstances related to customers or debtors change, estimates of the recoverability of receivables would be further adjusted (See Note 3).

(g) InventoriesTable of Contents

~~Inventories comprise~~T-BAY ~~raw materials~~HOLDINGS, ~~work in progress and finished goods and are stated at the lower of cost or market~~INC. ~~Market~~ ~~value~~AND ~~represents replacement cost~~SUBSIDIARIES ~~for~~NOTES ~~raw~~TO ~~materials~~CONSOLIDATED ~~and~~FINANCIAL ~~net~~STATEMENTS ~~realizable value for finished goods and work in~~(continued) ~~progress. Substantially~~MARCH ~~all inventory costs are determined using the weighted average basis. Costs of finished goods include direct materials~~31, ~~subcontracting~~ ~~charges~~2010 and ~~other overhead before the goods are ready for~~2009 ~~sale. Inventory costs do not exceed net realizable value.~~

~~(h) Property,~~2. ~~Plant~~Summary ~~and~~of ~~Equipment~~Significant Accounting Policies (continued)

~~Property, plant~~(j) Revenue ~~and equipment is stated at cost. Depreciation is provided principally by~~Recognition use of the straight-line method over the estimated useful lives of the related assets. Expenditure for maintenance and repairs, which does not improve or extend the expected useful life of the assets, is expensed to operations while major repairs are capitalized.

~~Management estimates~~Revenue ~~that~~from ~~property,~~goods ~~plant~~sold ~~and~~is ~~equipment~~recognized ~~have~~when atitle ~~10%~~has ~~residual~~passed to the purchaser, which generally is at ~~value~~the time of delivery. ~~The~~ ~~estimated~~Revenue ~~useful~~from ~~lives~~design ~~are~~services asis ~~follows:~~recognized when earned on the basis of the terms specified in the underlying contractual agreements.

Buildings	20 years
Machinery	5 years
Office equipment	5 years
Motor vehicles	5 years

(k) Research and Development Costs

~~The~~Research ~~gain or~~and ~~loss~~development oncosts ~~disposal~~consist of ~~property,~~expenditure ~~plant~~incurred during the course of planned research and ~~equipment~~investigation isaimed ~~the~~at ~~difference~~discovery ~~between~~of new knowledge which will be useful for developing ~~the~~new ~~net~~products ~~sales~~or ~~proceeds~~significantly enhancing existing products, and the ~~carrying~~implementation ~~amount~~of such through design and testing of product alternatives. All expenses incurred in connection with the ~~relevant~~Group’s research ~~assets~~and development activities are charged to current income. During the two years ended March 31, 2010 and 2009, ifresearch and development costs amounting to nil and US$17,000, ~~any~~respectively, iswere ~~recognized~~charged into the statement of ~~operations~~operation and ~~comprehensive income~~are included in cost of revenue.

(il) ~~Construction~~ Foreign inCurrency ~~Progress~~Translation and Transactions

~~Construction in~~The ~~progress~~functional ~~represents~~currencies ~~factory~~of ~~buildings~~the ~~under~~Group ~~construction~~are U.S. dollars, Hong Kong dollars and ~~machinery~~Renminbi, ~~under~~and its ~~installation~~reporting ~~and~~currency is ~~stated~~U.S. dollars. The Group’s balance sheet accounts are translated into U.S. dollars at ~~cost~~the year-end exchange rates and ~~not~~all ~~depreciated~~revenue and expenses are translated into U. ~~Construction~~S. indollars ~~progress~~at isthe ~~reclassified~~average toexchange rates prevailing during the ~~appropriate~~periods ~~category~~in ofwhich ~~property,~~these ~~plant~~items arise. Translation gains and losses are deferred and accumulated as a component of other comprehensive ~~equipment~~income ~~when~~in ~~completed~~stockholders’ equity. Transaction gains and ~~ready~~losses ~~for~~that ~~use~~arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are included in the consolidated statement of operations as incurred.

~~(j)~~The PRC government imposes significant exchange restrictions on fund transfers out of the PRC that ~~Land-use~~are ~~Rights~~not related to business operations. These restrictions have not had a material impact on the Group because it has not engaged in any significant transactions that are subject to the restrictions.

~~Land-use rights~~(m) Fair ~~are~~Value ~~stated at cost, less amortization. Amortization~~ of ~~land-use~~Financial ~~rights is~~Instruments ~~calculated on the straight-line method, based on the period over which the right is granted by the relevant authorities in Fujian Province, PRC.~~

~~F-11~~SFAS No. 107, “Disclosures about Fair Values of Financial Instruments”, which is now codified as FASB ASC No. 825, requires disclosing fair value to the extent practicable for financial instruments that are recognized or unrecognized in the balance sheet. The fair value of the financial instruments disclosed herein is not necessarily representative of the amount that could be realized or settled, nor does the fair value amount consider the tax consequences of realization or settlement.

~~(k)~~For certain financial instruments, including cash, accounts, notes and other receivables, accounts ~~Intangible~~payable, ~~Assets~~accruals and other payables, it was assumed that the carrying amounts approximate fair value because of the near term maturities of such obligations.

~~Intangible assets~~The ~~consist~~long-term ofaccounts ~~software~~receivable ~~and~~are ~~patents~~discounted ~~and~~based ~~are~~on ~~amortized~~the ~~using~~future ~~the~~contractual ~~straight-line~~cash flows at the ~~method~~current ~~over~~market ~~their~~interest ~~estimated~~rate ~~useful~~that ~~life~~is ofavailable to the Group for similar financial instruments of 5%. ~~years~~US$1,425,000 was debited to revenue accordingly.

~~(l) Impairment of Long~~F-~~Lived Assets~~11

In accordanceTable with SFAS No. 144, "Accounting for Impairment or Disposal of Long-Lived Assets", the Group evaluates its long-lived assets to determine whether later events and circumstances warrant revised estimates of useful lives or a reduction in carrying value due to impairment. If indicators of impairment exist and if the value of the assets is impaired, an impairment loss would be recognized. For the years ended March 31, 2009, an impairment loss of US$4,000 has been recognized (2008: nil) (See Note 13).Contents

T-BAY HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (mcontinued) ~~Income~~MARCH ~~Taxes~~31, 2010 and 2009

~~The Group accounts for income taxes under SFAS No~~2. ~~109,~~Summary "Accounting for Income Taxes". Under SFAS No. 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of ~~existing~~Significant ~~assets~~Accounting ~~and~~Policies ~~liabilities and~~(continued) their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

~~The~~(m) Fair ~~Group reviews~~Value ~~the differences between the tax bases under PRC tax laws and financial reporting under US GAAP. As~~ of ~~March~~Financial ~~31,~~Instruments ~~2009 and 2008, no material~~(continued) ~~differences were found; therefore, there were no material deferred tax assets or liabilities arising from the operations of the subsidiaries in the PRC.~~

~~Under~~The Group complies with FASB ASC No. 820 “Fair Value Measurements and Disclosures”. FASB ASC No. ~~current~~820 ~~PRC~~clarifies ~~tax~~the ~~laws~~definition of fair value, noprescribes ~~tax~~methods isfor ~~imposed~~measuring infair ~~respect~~value toand establishes ~~distributions~~a ~~paid~~fair value hierarchy to ~~owners~~ ~~except~~classify ~~individual~~the ~~income~~inputs ~~tax.~~used in measuring fair value as follows:

~~(n)~~Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities ~~Revenue~~available ~~Recognition~~at the measurement date.

~~Revenue from~~Level ~~goods~~2-Inputs ~~sold~~are isunadjusted ~~recognized~~quoted ~~when~~prices ~~title~~for ~~has~~similar ~~passed~~assets toand ~~the~~liabilities ~~purchaser,~~in ~~which~~active markets, ~~generally~~quoted isprices atfor ~~the~~identical ~~time~~or ofsimilar ~~delivery. Revenue~~assets ~~from~~and ~~design~~liabilities ~~services~~in ismarkets that are not active, ~~recognized~~inputs ~~when~~other ~~earned~~then onquoted ~~the~~prices ~~basis~~that ofare ~~the~~observable, ~~terms~~and ~~specified~~inputs inderived ~~the~~from ~~underlying~~or corroborated by ~~contractual~~observable ~~agreements~~market data.

~~(o)~~Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what ~~Research~~assumptions ~~and~~the ~~Development~~market ~~Costs~~participants would use in pricing the asset or liability based on the best available information.

~~Research and~~The ~~development~~Group ~~costs~~currently ~~consist~~does ofnot ~~expenditure~~have ~~incurred~~any ~~during~~balance ~~the~~sheet ~~course~~components ~~of planned~~deemed ~~research~~financial assets, and ~~investigation~~we ~~aimed at discovery of new knowledge which~~do ~~will~~not behave ~~useful~~any ~~for~~nonfinancial ~~developing~~assets ~~new products~~ or ~~significantly~~liabilities ~~enhancing existing products, and the implementation~~ of ~~such~~our ~~through~~continuing ~~design~~operations ~~and~~that ~~testing~~have ofbeen ~~product~~marked ~~alternatives. All expenses incurred in connection with the Group’s research and development activities are charged~~ to ~~current income. During~~fair ~~the two years ended March 31~~value, ~~2009 and 2008~~however, ~~research and~~our ~~development~~financial ~~costs~~statements ~~amounting~~in tothe ~~US$17,000~~future ~~and~~may ~~US$420,000,~~be ~~respectively,~~impacted ~~were charged~~by tothis ~~operations and are included in cost of revenue~~standard.

~~F-12~~(n) Loss Per Share

~~(p)~~Basic loss per share is computed by dividing the loss for the year by the weighted average number ~~Foreign~~of ~~Currency~~common ~~Transactions~~shares outstanding for the year.

~~The functional currencies of the Group are U.S. dollars, Hong Kong dollars and Renminbi, and its reporting currency is U.S. dollars.~~(o) ~~The Group’s~~Profit ~~balance sheet accounts are translated into U.S. dollars at the year-end~~Appropriation exchange rates and all revenue and expenses are translated into U.S. dollars at the average exchange rates prevailing during the periods in which these items arise. Translation gains and losses are deferred and accumulated as a component of other comprehensive income in stockholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are included in the consolidated statement of operations as incurred.

~~The~~In accordance with PRC ~~government~~ ~~imposes~~regulations, ~~significant~~the ~~exchange~~PRC ~~restrictions~~subsidiaries are required to make appropriations to the statutory surplus reserve, based on ~~fund~~after-tax ~~transfers~~net ~~out~~income ofdetermined in accordance with PRC GAAP. Appropriation to the statutory surplus reserve should be at least 10% of the after-tax net income determined in accordance with PRC ~~that~~GAAP ~~are~~until ~~not~~the ~~related~~reserve is equal to ~~business~~50% ~~operations~~of the entity’s registered capital. ~~These~~Appropriations ~~restrictions~~to ~~have~~the ~~not had~~statutory apublic ~~material~~welfare ~~impact~~fund and discretionary surplus reserve fund are made on the ~~Group~~same ~~because~~basis itas ~~has~~statutory ~~not~~surplus ~~engaged~~fund, innormally ~~any~~at ~~significant transactions~~5%-10% ~~that~~or higher rates and are generally ~~subject~~optional toat the ~~restrictions~~discretion of the Board of Directors. Statutory surplus reserve is non-distributable other than in liquidation.

(qp) ~~Fair~~ Preferred ~~Value of Financial Instruments~~Stock

~~SFAS~~ No~~. 107,~~ ~~“Disclosures~~shares ~~about Fair Values~~ of ~~Financial~~preferred ~~Instruments”,~~stock ~~requires disclosing~~have ~~fair~~been ~~value~~issued toor ~~the~~are ~~extent~~outstanding. ~~practicable~~Dividends, ~~for~~voting ~~financial~~rights ~~instruments that~~and ~~are~~other ~~recognized~~terms, orrights ~~unrecognized~~and inpreferences ~~the balance sheet. The fair value~~ of the ~~financial~~preferred ~~instruments~~shares ~~disclosed~~have ~~herein is~~ not ~~necessarily~~been ~~representative of~~designated ~~the~~but ~~amount~~may ~~that could~~ be ~~realized or settled, nor does the fair value amount~~ ~~consider~~designated ~~the~~by ~~tax~~our ~~consequences~~board of ~~realization~~directors orfrom ~~settlement~~time to time.

~~For certain~~3. ~~financial~~Allowance ~~instruments,~~for ~~including~~Doubtful ~~cash, accounts, notes and other~~Receivables ~~receivables, accounts payable, accruals and other payables, it was assumed that the carrying amounts approximate fair value because of the near term maturities of such obligations.~~

(r) Earnings (Loss) Per Share


	MARCH 31,
	2010		2009
	US$’000		US$’000

Balance, beginning of year	US$	9,202	US$	1,125
Additions		6,227		8,077


Balance, end of year	US$	15,429	US$	9,202

~~Basic~~F-12 earnings (loss) per share is computed by dividing the earnings for the year by the weighted average number of common shares outstanding for the year. Diluted earnings per share reflects the potential dilution of securities by including other potential common stock, including stock options and warrants, in the weighted average number of common shares outstanding for the year, if dilutive. There are no common stock equivalents in 2009 and 2008.

(s) ProfitTable Appropriationof Contents

~~In accordance~~T-BAY ~~with PRC regulations~~HOLDINGS, ~~the PRC subsidiaries are required to make appropriations to the statutory surplus reserve, based on after-tax net income determined in accordance with PRC GAAP~~INC. ~~Appropriation~~AND ~~to the statutory surplus~~SUBSIDIARIES ~~reserve~~NOTES ~~should~~TO beCONSOLIDATED atFINANCIAL ~~least~~STATEMENTS ~~10% of the after-tax net income determined in~~(continued) ~~accordance~~MARCH with PRC GAAP until the reserve is equal to 50% of the entity’s registered capital. Appropriations to the statutory public welfare fund and discretionary surplus reserve fund are made on the same basis as statutory surplus fund31, ~~normally~~2010 ~~at 5%-10% or higher rates~~ and ~~are generally optional at~~2009 ~~the discretion of the Board of Directors. Statutory surplus reserve is non-distributable other than in liquidation.~~

~~F-13~~4. Property, Plant and Equipment, Net

(t) Preferred Stock


	MARCH 31,
	2010		2009
	US$’000		US$’000

Cost
Machinery	US$	4,766	US$	4,859
Office equipment		104		138
Motor vehicles		—		56

		4,870		5,053

Accumulated depreciation
Machinery		3,200		2,426
Office equipment		79		95
Motor vehicles		—		39

		3,279		2,560

Carrying value
Machinery		1,566		2,433
Office equipment		25		43
Motor vehicles		—		17

	US$	1,591	US$	2,493

NoDepreciation ~~shares of~~expense ~~preferred~~for ~~stock~~each ~~have~~of ~~been~~years ~~issued~~ended ~~or are outstanding. Dividends~~March 31, ~~voting~~2010 ~~rights~~ and ~~other~~2009 ~~terms,~~was ~~rights~~approximately US$874,000 and ~~preferences~~US$975,000, ~~of the preferred shares have not been designated but may be designated by our board of directors from time to time~~respectively.

35. ~~Allowance~~ ~~for~~Intangible ~~Doubtful~~Assets, ~~Receivables~~Net

	MARCH 31,
	2009		2008
	US$’000		US$’000
Balance, beginning of year	$	1,125	$	425
Additions		6,915		700
Balance, end of year	$	8,040	$	1,125

Changes in the carrying amount of intangible assets for the years ended March 31, 2010 and 2009 were as follows:

4. Inventories


	Software			Patent			Total
	US$’000			US$’000			US$’000
Cost:
Balance, March 31, 2009 and 2010	US$	183		US$	4		US$	187

Less: Accumulated amortization Balance, March 31, 2009		(119	)		(3	)		(122	)
Amortization expenses		(22	)		(1	)		(23	)


Balance, March 31, 2010		(141	)		(4	)		(145	)


Net balance, March 31, 2010	US$	42		US$	—		US$	42

AsThe ~~of March~~estimated amortization expense for the five years ending March 31, ~~2009~~2011, 2012, 2013, 2014 and 2015 ~~2008~~amounts to approximately US$22,000, ~~inventories~~US$18,000, ~~consisted~~US$2,000, ofUS$ ~~the~~nil ~~following:~~and US$ nil, respectively.

	MARCH 31,
	2009		2008
	US$’000		US$’000
Raw materials	$	-	$	583
Work in progress		-		29
Finished goods		-		-
		-		612
Less: allowance for losses		-		(370	)
Total	$	-	$	242

F-13

The changesTable inof the inventory allowances are summarized as follows:Contents

	MARCH 31,
	2009			2008
	US$’000			US$’000
Balance, beginning of year	$	370		$	676
Reversal		(370	)		(306	)
Balance, end of year	$	-		$	370

T-BAY HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
MARCH 31, 2010 and 2009

~~F-14~~6. Income Taxes

~~5. Property,~~Amber ~~Plant~~Link and ~~Equipment,~~Wise ~~Net~~Target are not subject to income taxes in any tax jurisdiction.

	MARCH 31,
	2009		2008
	US$’000		US$’000
Cost
Machinery	$	4,859	$	4,804
Office equipment		138		454
Motor vehicles		56		55
		5,053		5,313
Accumulated depreciation
Machinery		2,426		1,571
Office equipment		95		331
Motor vehicles		39		28
		2,560		1,930
Carrying value
Machinery		2,433		3,233
Office equipment		43		123
Motor vehicles		17		27
	$	2,493	$	3,383

No provision for current income tax for T-Bay has been made as it incurred a loss for each of the years ended March 31, 2010 and 2009, respectively.

~~Depreciation expense~~Sunplus ~~for~~is ~~each~~subject ofto PRC Income Tax. Pursuant to the ~~years~~PRC ~~ended~~Income ~~March~~Tax 31Laws, ~~2009~~the ~~and~~prevailing ~~2008~~statutory rate ~~was~~of ~~approximately US$975,000~~enterprise ~~and~~income ~~US$929,000,~~tax ~~respectively~~is 25%.

~~6. Intangible~~Zhangzhou ~~Assets~~JiaXun and Fujian Qiaoxing were inactive during the year ended March 31, ~~Net~~2009 up to date of disposal.

~~Changes in~~A ~~the~~reconciliation ~~carrying~~between ~~amount~~taxes ofcomputed ~~intangible~~at ~~assets~~the ~~for~~PRC ~~the~~statutory ~~year~~rate ~~ended~~of ~~March~~25% ~~31,~~and ~~2009~~the Group’s effective ~~were~~tax rate is as follows:-

	Software			Patent			Total
	YEAR ENDED MARCH 31,
	US$’000			US$’000			US$’000
	2010			2009
Cost:
	US$’000			US$’000
Balance, March 31, 2008		178			4			182
Loss before income tax	US$	(6,928	)	US$	(4,420	)
Foreign currency translation		5			-			5
Income benefit on pretax income at statutory rate		(1,732	)		(1,105	)
Balance, March 31, 2009		183			4			187
Effect of different tax rates of Group company operating in other jurisdictions		382			142
Less: Accumulated amortisation
Tax effect of non-deductible expenses		862			334
Balance, March 31, 2008		(80	)		(2	)		(82	)
Tax effect of non-taxable income		—			(2	)
Amortisation expenses		(36	)		(1	)		(37	)
Change in valuation allowance		488			2,531
Foreign currency translation		(3	)		-			(3	)
Under-provision in prior year		7			—
Balance, March 31, 2009		(119	)		(3	)		(122	)
Income tax expense	US$	7		US$	1,900
Net balance, March 31, 2009		64			1			65

~~The estimated~~As ~~amortization~~of ~~expense~~March 31, ~~for~~2010, ~~the~~T-Bay ~~five~~had ~~years~~accumulated ~~ending~~net ~~March~~operating ~~31,~~loss ~~2010,~~carryforwards ~~2011, 2012,~~for ~~2013~~United ~~and~~States federal ~~2014~~tax ~~amounts~~purposes toof approximately US$23649,000, that are available to offset future taxable income. As of March ~~US$22~~31,~~000~~ 2010, Sunplus had net operating loss carryforwards of approximately US$182,949,000 that are available to offset future taxable income up to 2015. Realization of the net operating loss carryforwards is dependent upon future profitable operations. In addition, the ~~US$2~~carryforwards may be limited upon a change of control in accordance with Internal Revenue Code Section 382,~~000~~ ~~and~~as ~~US$~~amended. ~~Nil~~Accordingly, ~~respectively~~management has recorded a valuation allowance to reduce deferred tax assets associated with the net operating loss carryforwards to zero at March 31, 2010. T-Bay’s net operating loss carryforwards expire in years 2012 through 2030.

FAs of March 31, 2010, deferred tax assets consist of:-15

7. Income Taxes


	MARCH 31,
	2010			2009
	US$’000			US$’000

Net operating loss carryforwards	US$	3,598		US$	3,110
Less: valuation allowance		(3,598	)		(3,110	)

	US$	—		US$	—

~~Amber~~F-14 ~~Link and Wise Target are not subject to income taxes in any tax jurisdiction.~~

No provisionTable for current income tax for T-Bay has been made as it incurred a loss for each of the two years ended March 31, 2009 and 2008, respectively.Contents

Sunplus is subject to PRC Income Tax. Pursuant to the old laws and regulations in the PRC, Sunplus was entitled to an exemption from PRC income tax for two years starting from its first profitable year. As Sunplus’ statutory yearT-~~end~~BAY ~~is December 31~~HOLDINGS, ~~the tax exemption applied to the period from January 1, 2003 to December 31, 2004~~INC. ~~Sunplus~~ ~~was~~AND ~~also entitled to~~SUBSIDIARIES ~~three~~NOTES ~~years~~TO ofCONSOLIDATED ~~50%~~FINANCIAL ~~exemption~~STATEMENTS ~~after the expiration of the two years of full~~(continued) ~~exemption. The~~MARCH ~~50% tax exemption applied to the period from January 1, 2005 to December~~ 31, ~~2007. For~~2010 ~~the~~and ~~period from April 1, 2006 to 31~~2009 December 31, 2007, Sunplus is subject to PRC Income Tax at a reduced rate of 13.5%. Pursuant to the New PRC Income Tax Laws, the prevailing statutory rate of enterprise income tax is 25% as of January 1, 2008; prior to that date, it was 27%.

~~Zhangzhou JiaXun~~7. Concentrations and ~~Fujian~~Credit ~~Qiaoxing were inactive during each of the years ended March~~Risk ~~31, 2009 and 2008.~~

~~A reconciliation~~The ~~between~~Group ~~taxes~~operates ~~computed~~principally atin the ~~United~~PRC ~~States~~(including ~~statutory~~Hong ~~rate~~Kong) ofand ~~34%~~grants credit to its customers ~~and~~in this geographic region. Although the ~~Group’s~~PRC ~~effective~~is ~~tax~~economically ~~rate~~stable, it is asalways ~~follows:-~~possible that unanticipated events in foreign countries could disrupt the Group’s operations.

	YEAR ENDED MARCH 31,
	2009			2008
	US$’000			US$’000
(Loss)/income before income tax	$	(4,420	)	$	18,780
Income tax/(benefit) on pretax income at statutory rate	$	(1,503	)	$	6,385
Effect of different tax rates of subsidiary operating in other jurisdictions		540			(2,222	)
Tax effect of non-deductible expenses		334			504
Tax effect of non-taxable income		(2	)		(1	)
Change in valuation allowance		2,531			23
Tax effect of exemption		-			(1,501	)
Income tax	$	1,900		$	3,188

Financial instruments that potentially subject the Group to a concentration of credit risk consist of cash, accounts and other receivables.

As of ~~March~~ March 31, ~~2009~~2010 and ~~2008~~2009, ~~T-Bay~~the Group had ~~accumulated~~credit ~~net~~risk ~~operating~~exposure ~~loss carryforwards~~of ~~for~~uninsured ~~United~~cash ~~States~~in ~~federal~~banks ~~tax purposes~~ of ~~approximately~~ approximately US$5703,~~630,~~000 and US$520,~~501~~494,000, respectively~~, that are available to offset future taxable income~~. ~~Realization of the net operating loss carryforwards is~~ dependent upon future profitable operations. In addition, the carryforwards may be limited upon a change of control in accordance with Internal Revenue Code Section 382, as amended. Accordingly, management has recorded a valuation allowance to reduce deferred tax assets associated with the net operating loss carryforwards to zero at March 31, 2009 and 2008. The net operating loss carryforwards expire in years 2012 through 2029.

~~F-16~~As of March 31, 2010 and 2009, the Group had credit risk exposure of sales proceeds receivable from Qiaoxing Telecom of approximately US$10,475,000 and US$11,928,000, respectively. (See Note 1)

AsPursuant to the agreement signed between Sunplus and Qiaoxing Telecom in respect of the disposal of ~~March~~Fujian 31Qiaoxing to Qiaoxing Telecom in March 2009, Qiaoxing Telecom was to settle this outstanding balance by June 2009. ~~and~~However, ~~2008~~Qiaoxing Telecom was unable to obtain approval from the local governmental bureau in Zhangzhou to develop the land held by Fujian Qiaoxing. This was due to the delay in development by Fujian Qiaoxing. When the Zhangzhou local government granted the land use right to Fujian Qiaoxing in 2006, ~~deferred~~Fujian ~~tax~~Qiaoxing ~~assets~~was ~~consist~~required ~~of:-~~to develop the land within three years. However, the land had not been developed prior to the disposal to Qiaoxing Telecom and the local authorities have refused to approve the development plans submitted by Qiaoxing Telecom.

	MARCH 31,
	2009			2008
	US$’000			US$’000
Net operating loss carryforwards	$	4,427		$	1,896
Less: valuation allowance		(4,427	)		(1,896	)
	$	-		$	-

Recently, the Company has actively liaised with the Zhangzhou local governmental bureau to apply for an extension of the land development. Based on this contact, the Company, in conjunction with its legal counsel, has made its initial assessment of the situation and concluded that it is more likely than not that the Zhangzhou local government bureau will provide an extension for developing the land and Qiaoxing Telecom can honor the agreement and settle the balance due to Sunplus. Accordingly, no allowance has been made in respect of the sales proceeds receivable from QiaoXing Telecom of US$10,475,000.

8.A substantial portion of revenue was generated from one group of customers for the years ended ~~Concentrations~~March 31, 2010 and ~~Credit Risk~~2009.

The ~~Group operates~~net ~~principally~~sales ~~in the PRC (including Hong Kong) and grants credit~~ to ~~its~~ customers inrepresenting ~~this~~at ~~geographic~~least ~~region. Although~~10% ~~the~~of ~~PRC~~net istotal ~~economically stable,~~sales itare isas ~~always possible that unanticipated events in foreign countries~~follows:- ~~could disrupt the Group’s operations.~~

Financial instruments that potentially subject the Group to a concentration of credit risk consist of cash, accounts and notes receivable.


	YEAR ENDED MARCH 31,
	2010				2009
	US$’000		%		US$’000		%

Customer A		7,453		21		2,708		8
Customer B		5,710		16		1,734		5
Customer C		4,501		13		1,258		4
Customer D*		4,066		11		848		3
Customer E*		3,816		11		2,603		7
Customer F		3,898		11		479		1
Customer G		3,721		10		6,951		20
Customer H		—		—		6,945		20
Customer I		—		—		6,251		18
Customer Group A*		7,882		22		3,451		10

~~At March~~F-15 31, 2009 and 2008, the Group had credit risk exposure of uninsured cash in banks of approximately US$20,494,000 and US$23,355,000, respectively (including cash of discontinued operations of US$1,000 and US$25,000 respectively).

A substantialTable portion of revenue was generated from one group of customers for the years ended March 31, 2009 and 2008.Contents

~~The~~T-BAY ~~net sales~~HOLDINGS, toINC. ~~customers~~AND ~~representing~~SUBSIDIARIES NOTES atTO ~~least~~CONSOLIDATED ~~10%~~FINANCIAL ofSTATEMENTS ~~net~~(continued) MARCH ~~total~~31, ~~sales~~2010 ~~are~~and as2009 ~~follows:~~

	YEAR ENDED MARCH 31,
	2009				2008
	US$’000		%		US$’000		%
Customer A	$	6,251		18	$	4,410		10
Customer B		6,951		20		6,977		15
Customer C		6,945		20		4,902		11
Customer group A*		3,451		10		3,755		8

7. Concentrations and Credit Risk (continued)

*AtThe ~~March 31,~~following ~~2009 and 2008, this group of~~ customers ~~accounted~~had ~~for~~balances ~~15%~~greater ~~and~~than 10%~~, respectively,~~ of ~~net~~the ~~accounts~~total ~~receivable. The~~ accounts receivable ~~have~~ ~~repayment~~as ~~terms~~ of ~~not more than twelve months. The Group does~~March ~~not~~31, ~~require~~2010 ~~collateral~~and toMarch 31, ~~support financial instruments that are subject to~~2009: ~~credit risk.~~

F-17


	MARCH 31, 2010				MARCH 31, 2009
	US$’000		%		US$’000		%

Customer A		8,248		19		3,505		16
Customer B		6,846		16		3,219		14
Customer E*		4,731		11		2,551		11
Customer G		4,497		11		2,241		10
Customer H		2,025		5		2,808		13
Customer J		3,917		9		2,762		12
Customer group A*		8,499		20		3,261		15

~~The following~~* ~~customers~~Customer ~~had~~Group ~~balances~~A ~~greater~~includes ~~than~~customers ~~10%~~D ~~of the total accounts receivable as of March 31, 2009~~ and ~~2008:~~E.

	MARCH 31,
	2009				2008
	US$’000		%		US$’000		%
Customer B	$	2,241		10	$	3,603		19
Customer C		2,808		13		645		3
Customer D		3,505		16		2,529		13
Customer E		2,762		12		2,517		13
Customer F		1,742		8		2,030		11
Customer G*		2,551		11		1,734		9
Customer H		3,219		14		3,220		17
Customer group A*		3,261		15		1,941		10

At March 31, 2010 and March 31, 2009, this group of customers accounted for 20% and 15%, respectively, of accounts receivable.

* CustomerThe ~~Group~~accounts Areceivable ~~includes~~that ~~customers~~have Grepayment ~~and~~terms ~~other~~of ~~customers~~more ~~in the same group that~~than ~~individually~~twelve domonths ~~not~~have ~~meet~~been ~~the~~discounted ~~greater~~(See ~~than~~Note ~~10% threshold~~2(m)).

9.The Group does not require collateral to support financial instruments that are ~~Retirement~~subject ~~and~~to ~~Welfare~~credit ~~Benefits~~risk.

The full-time employees of the PRC subsidiaries are entitled to staff welfare benefits including medical care, casualty, housing benefits, education benefits, unemployment insurance and pension benefits through a PRC government-mandated multi-employer defined contribution plan8. ~~The~~ ~~PRC~~Retirement ~~subsidiaries are required to accrue the employer-portion for these benefits based on certain percentages of the employees’ salaries. The total provision for such employee benefits was US$189,000~~ and ~~US$212,000~~Welfare ~~for the two years ended March 31, 2009~~Benefits and 2008, respectively. The PRC subsidiaries are required to make contributions to the plans out of the amounts accrued for all staff welfare benefits except for education benefits. The PRC government is responsible for the staff welfare benefits including medical care, casualty, housing benefits, unemployment insurance and pension benefits to be paid to these employees.

10The full-time employees of the PRC subsidiaries are entitled to staff welfare benefits including medical care, casualty, housing benefits, education benefits, unemployment insurance and pension benefits through a PRC government-mandated multi-employer defined contribution plan. The PRC ~~Related~~subsidiaries ~~Party~~are ~~Transactions~~required to accrue the employer-portion for these benefits based on certain percentages of the employees’ salaries. The total provision for such employee benefits was US$164,000 and US$189,000 for the years ended March 31, 2010 and 2009, respectively. The PRC subsidiaries are required to make contributions to the plans out of the amounts accrued for all staff welfare benefits except for education benefits. The PRC government is responsible for the staff welfare benefits including medical care, casualty, housing benefits, unemployment insurance and pension benefits to be paid to these employees.

~~The~~9. ~~Group engages~~Related inParty ~~business transactions with the following related~~Transactions ~~parties:~~

The Group engages in business transactions with the following related parties: a. Li Xiaofeng, a director and stockholder of T-Bay. b. Li Meilian, a stockholder of T-Bay.

b.The ~~Li Meilian,~~Group ahas ~~stockholder~~the offollowing Ttransactions and balances with related parties:-~~Bay.~~

The Group has the following transactions and balances with related parties:-


	MARCH 31,2010		MARCH 31, 2009
	US$’000		US$’000

Other payable — Li Meilian	US$	437	US$	285


Long-term liabilities
Other payable — Li Meilian	US$	3,482	US$	3,482
Other payable — Li Xiaofeng		773		773

	US$	4,255	US$	4,255

	MARCH 31,
	2009		2008
	US$’000		US$’000
Other payable – Li Meilian	$	285	$	247
Long-term liabilities
Other payable – Li Meilian	$	3,482	$	3,404
Other payable – Li Xiaofeng		773		773
	$	4,255	$	4,177

The balances have no stated terms for repayment, are not interest bearing, and are the result of cash advances from related parties and the repayment thereof. Those payables to Li Meilian and Li Xiaofeng which are classified as long-term liabilities are not repayable within the next twelve months.

F-1816

The balancesTable haveof no stated terms for repayment and are not interest bearing. The payables to Li Meilian and Li Xiaofeng are not repayable within the next twelve months.Contents

11T-BAY HOLDINGS, INC. AND SUBSIDIARIES ~~Other~~NOTES ~~Operating~~TO ~~Expenses~~CONSOLIDATED FINANCIAL STATEMENTS (continued) MARCH 31, 2010 and 2009

On10. ~~March 20,~~Other ~~2009,~~Operating ~~Sunplus signed a compensation agreement with one of its major customer~~Expenses ~~to compensate the customer for subcontracting fees and raw materials consumed for a defectively designed cell phone printed circuit board assembly (“PCBA”) of US$2,593,000.~~

OnOther operating expenses for the year ended March 23 31, 2009, ~~Sunplus~~represented ~~signed~~compensation ~~another~~of ~~compensation~~US$5,075,000 (2010: ~~agreement~~US$nil) ~~with~~to ~~another~~two ~~major customer~~customers to compensate itthem for subcontracting fees and raw materials consumed ~~for~~ ~~another~~for two defectively designed ~~cell~~mobile phone ~~PCBA~~printed ofcircuit ~~US$2,482,000~~board accessories.

~~Total compensation~~11. ofCommitments ~~US$5,075,000~~and ~~was recorded as other operating expenses for the~~Contingencies ~~year ended March 31, 2009.~~

12a. ~~Commitments~~ As of March 31, 2010, Sunplus leased office premises and ~~Contingencies~~staff quarters under several agreements expiring from 2010 to 2012.

a.Rental Asexpenses offor ~~March~~the years ended March 31, 2010 and 2009 amounted to US$ 91,000 ~~Sunplus~~and ~~leased~~US$ ~~office~~246,000 respectively, ~~premises~~and are included in general and ~~staff~~administrative ~~quarters~~expenses ~~under~~in ~~several~~the ~~agreements~~consolidated statements ~~expiring~~of ~~from~~operations ~~2010~~and tocomprehensive ~~2012~~income.

~~Rental expenses~~The ~~for~~future ~~the~~minimum ~~two~~lease ~~years~~payments ~~ended~~under ~~March~~the ~~31,~~above-mentioned ~~2009~~leases ~~and~~as ~~2008~~of ~~amounted to US$246~~March 31,~~000 and~~ ~~US$439,000,~~2010 ~~respectively, and~~ are ~~included in general and administrative~~as ~~expenses in the consolidated statements of operations and comprehensive~~follows:- ~~income.~~

The future minimum lease payments under the above-mentioned leases as of March 31, 2009 are as follows:-


Year Ending March 31,	US$’000

2011	US$	58
2012		38


Total	US$	96

	US$’000
Year Ending March 31,
2010	$	58
2011		38
2012		38
Total	$	134

As of March 31, 2010, the Group had capital commitments in relation to acquisition of intangible assets of US$38,000.

b12. AsDiscontinued ~~of March 31, 2009, the Group had capital commitments in relation to acquisition of intangible assets of US$27,000.~~Operations

13On December 31, 2008, Sunplus entered into an agreement with Huizhou Liyin Electronics Co., Ltd. ~~Discontinued~~(“Huizhou ~~Operations~~Liyin”) to dispose of, among other things, its 100% interest in Zhangzhou JiaXun for RMB5,000,000 (US$733,000). However, on March 10, 2009, pursuant to a supplemental agreement between Sunplus and Huizhou Liyin, Huizhou Liyin and Sunplus rescinded the original agreement. On the same date, Sunplus entered into another agreement with Qiaoxing Telecom to dispose of, among other things, its interest in Zhangzhou JiaXun at a consideration of RMB5,000,000 (US$724,000). As of March 31, 2009, the net assets of discontinued operations amounted to US$728,000. An impairment loss of US$4,000 was recognized.

On ~~December~~ 31March 20, ~~2008~~2009, Sunplus ~~entered~~disposed ~~into~~of ~~an agreement with Huizhou Liyin to sell~~ its ~~entire~~80% interest in ~~Zhangzhou~~its ~~JiaXun. The~~subsidiary ~~sales~~Fujian ~~price~~QiaoXing ~~of Zhangzhou JiaXun is RMB5,000,000 (US$724,000). However, on March 10, 2009, pursuant~~ to ~~a supplemental agreement between Sunplus and Huizhou Liyin, Huizhou~~ ~~Liyin and Sunplus rescinded the original agreement. On the same date, Sunplus entered into another agreement with~~ Qiaoxing Telecom tofor ~~dispose of all its interest in Zhangzhou JiaXun at~~ a consideration of ~~US$724~~RMB84,000 ~~(RMB5~~,000 (US$12,230,000). ~~The~~ ~~disposal criteria were met before March 31, 2009. On April 9, 2009 legal title and ownership of Zhangzhou Jiaxun had been transferred~~ (See Note 151).

~~F-19~~The following table summarises the result of these discontinued operations, net of income taxes for the year ended March 31, 2009.

Ona) ~~March 20,~~Discontinued ~~2009,~~Operations ~~Sunplus disposed of its 80% interest in its subsidiary~~ (Fujian ~~QiaoXing to~~ Qiaoxing ~~Telecom,~~and aZhangzhou ~~third party, for a consideration of RMB84,000,000 (US$12,230,000~~Jiaxun).

The following table summarises the result of these discontinued operations, net of income taxes.


	2009
	US$’000

Other revenue	US$	2
Operating loss		90
Loss on disposal of Fujian Qiaoxing		2,730
Impairment loss on assets of discontinued operations		4

Net loss	US$	2,822

~~Discontinued~~F-17 ~~Operations (Fujian Qiaoxing and Zhangzhou Jiaxun)~~

	2009		2008
	US$’000		US$’000
Other revenue	$	2	$	-
Operating loss		90		379
Loss on disposal of Fujian Qiaoxing		2,730		-
Impairment loss on assets of discontinued operations		4		-
Net loss	$	2,822	$	379

~~The carrying~~T-BAY ~~values~~HOLDINGS, ofINC. ~~the~~AND ~~assets~~SUBSIDIARIES NOTES ~~and~~TO ~~liabilities~~CONSOLIDATED ofFINANCIAL ~~the~~STATEMENTS ~~disposal group classified~~(continued) asMARCH ~~held for sale as at March~~ 31, ~~2009~~2010 ~~were~~and ~~as follows:~~2009

	MARCH 31, 2009			MARCH 31, 2008
	US$’000			US$’000
Fixed assets	$	-		$	748
Construction in progress		-			2,035
Land-use rights		-			10,647
Investment at cost		585			-
Goodwill		-			5,362
Deposits and other receivables		83			137
Due from minority shareholder		59			-
Cash and bank balances		1			25
		728			18,954
Impairment		(4	)		-
Assets of discontinued operations		724			18,954
Liabilities of discontinued operations		-			(3,313	)
Assets held for sales, net	$	724		$	15,641
Total consideration	$	724		$	-

12. Discontinued Operations (continued)

~~F-20~~a) Discontinued Operations (Fujian Qiaoxing and Zhangzhou JiaXun)

~~14.~~The carrying values of the assets of Zhangzhou JiaXun classified as held for sale as at March 31, ~~New~~2009 ~~Accounting~~were ~~Pronouncements~~as follows:

In December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51” (“SFAS No. 160”). SFAS No. 160 requires that a noncontrolling interest in a subsidiary be reported as equity and the amount of consolidated net income specifically attributable to the noncontrolling interest be identified in the consolidated financial statements. It also calls for consistency in the manner of reporting changes in the parent’s ownership interest and requires fair value measurement of any noncontrolling equity investment retained in a deconsolidation. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The Company is currently evaluating the impact adopting SFAS No. 160 will have on its consolidated financial condition, results of operations, and cash flows.


	MARCH 31, 2009
	US$’000

Investment at cost	US$	585
Deposits and other receivables		83
Due from minority shareholder		59
Cash and bank balances		1


		728
Impairment		(4	)


Assets of discontinued operations	US$	724

~~In December 2007, the FASB issued SFAS No. 141 (revised 2007~~b), ~~“Business Combinations”~~Disposal ~~(“SFAS No. 141(R)”). SFAS No. 141(R) broadens the guidance~~ of ~~SFAS~~ No. 141, extending its applicability to all transactions and other events in which one entity obtains control over one or more other businesses. It broadens the fair value measurement and recognition of assets acquired, liabilities assumed, and interests transferred as a ~~result of business~~subsidiary combinations. SFAS No. 141(R) expands on required disclosures to improve the statement users’ abilities to evaluate the nature and financial effects of business combinations. SFAS No. 141(R) is effective for the first annual reporting period beginning on or after December 15, 2008. The adoption of SFAS No. 141(R) will have an impact on the Company’s consolidated financial statements for any further acquisitions.

~~In February~~On April ~~2008~~9, ~~the~~2009, ~~FASB~~Sunplus ~~issued~~disposed ~~FASB~~of ~~Staff~~its ~~Position~~100% ~~(“FSP”)~~interest ~~FAS No. 157-1,~~in ~~“Application~~Zhangzhou ofJiaXun ~~FASB Statement No. 157~~ to ~~FASB~~Qiaoxing ~~Statement No. 13~~Telecom ~~and Other Accounting Pronouncements That Address Fair Value~~at ~~Measurements~~a ~~for~~consideration ~~Purposes~~ of ~~Lease Classification or Measurement under Statement 13”~~US$731,000 ~~or FSP FAS No. 157-1. FSP FAS No. 157-1 provides a scope exception from SFAS No. 157 for the evaluation criteria on lease classification and capital lease measurement under SFAS No. 13~~(RMB5,000,000) ~~“Accounting~~(See ~~for~~Note ~~Leases” and other related accounting pronouncements. The Company adopted FSP FAS No. 157-~~1 ~~effective October 1, 2008~~). ~~Accordingly, the provisions of SFAS~~ ~~No. 157 will not be applied to lease transactions under SFAS No. 13 except when applying SFAS No. 157 to business combinations recorded by the Company.~~

In February 2008, the FASB issued FSP FAS No. 157-2, “Effective Date of FASB Statement No. 157” (“FSP FAS 157-2”) which delays the effective date of SFAS No. 157 to fiscal years beginning after November 15, 2008 for certain nonfinancial assets and nonfinancial liabilities. The Company is in the process of evaluating the impact of applying FSP FAS 157-2 to nonfinancial assets and liabilities measured on a nonrecurring basis.


	APRIL 9, 2009
	US$’000

Net assets disposed:-
Investment at cost	US$	585
Other receivables		83
Due from minority shareholder		59
Cash and bank balances		1


Net assets disposed		728

Impairment		(4	)


Assets of discontinued operations		724
Less: Non-controlling interest — 5%		(36	)

Assets held by the Group		688
Consideration to be satisfied by cash		731


Gain on disposal of a subsidiary	US$	43

~~In March 2008, the FASB issued SFAS No. 161, Disclosures About Derivative Instruments and Hedging Activities -~~ An ~~Amendment~~analysis of ~~FASB Statement No. 133 ("SFAS No. 161"). SFAS No. 161 expands and amends~~ the ~~disclosure~~net ~~requirements~~inflow ~~for~~of ~~derivative instruments~~cash and ~~hedging~~cash ~~activities.~~equivalents ~~SFAS~~in ~~No.~~respect ~~161~~of isthe ~~effective~~disposal ~~for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company does not expect that adoption~~ of ~~SFAS No. 161 will have a~~Zhangzhou ~~material~~JiaXun ~~impact~~is onas ~~its consolidated financial statements.~~follows:-

F-21


	US$’000
Cash and bank balances disposed	US$	(1	)
Cash consideration received		731


Net cash inflow	US$	730

~~In April 2008, the FASB issued FSP FAS No. 142~~F-~~3, “Determination of the~~18 Useful Life of Intangible Assets” (“FSP FAS No. 142-3”). FSP FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS No. 142”). FSP FAS No. 142-3 is intended to improve the consistency between the useful life of an intangible asset determined under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS No. 141(R) and other U.S. GAAP. FSP FAS No. 142-3 is effective for fiscal years beginning after December 15, 2008. Early adoption is prohibited. The Company is currently evaluating the impact of the adoption of FSP FAS No. 142-3 on its consolidated financial statements.

14. NewTable Accountingof Pronouncements (continued)Contents

InT-BAY ~~May 2008~~HOLDINGS, ~~the FASB issued SFAS No~~INC. ~~162,~~AND ~~“The Hierarchy of Generally Accepted~~SUBSIDIARIES ~~Accounting~~NOTES ~~Principles”.~~TO ~~The~~CONSOLIDATED ~~statement~~FINANCIAL ~~identifies~~STATEMENTS ~~the~~(continued) MARCH ~~sources~~31, of2010 ~~accounting principles~~ and ~~the framework to be used in preparation of financial statements~~2009 ~~of nongovernmental entities. The adoption is not expected to have a material impact on the Company’s consolidated financial statements.~~

~~In April 2009, the FASB issued FSP FAS No~~13. ~~115-2~~New and FAS No. 124-2, “Recognition of Other-Than- Temporary Impairments (“FSP FAS No. 115-2 and FAS No. 124-2”). FSP FAS No. 115-2 and FAS No. 124-2 amends the other-than-temporary impairment guidance in SFAS No. 115, “Accounting ~~for~~Pronouncements Certain Investments in Debt and Equity Securities”, for debt securities and the presentation and disclosure requirements of other-than-temporary impairments on debt and equity securities in the financial statements. FSP FAS No. 115-2 and FAS No. 124-2 are effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The Company is currently evaluating the impact of the adoption of FSP FAS No. 115-2 and FAS No. 124-2 on its financial statements.

15In June 2009, the FASB issued ASC No. 105 (Prior authoritative guidance: SFAS No. 168 “The FASB ~~Subsequent~~Accounting ~~Event~~Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162”), which establishes the FASB Accounting Standards Codification as the source of authoritative accounting principles recognized by the FASB to be applied in the preparation of financial statements in conformity with generally accepted accounting principles. FASB ASC No. 105 explicitly recognizes rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under federal securities laws as authoritative GAAP for SEC registrants. ASC No. 105 is effective for the current year. Adoption of FASB ASC No. 105 did not have a material impact on the Company’s consolidated financial statements.

OnIn ~~April 9~~December 2007, ~~2009~~the Financial Accounting Standards Board (“FASB”) issued SFAS No. 160, “Noncontrolling ~~legal~~Interests ~~title~~in Consolidated Financial Statements — an amendment of ~~Zhangzhou~~ARB ~~JiaXun~~No. 51” ~~was~~(“SFAS No. 160”), ~~transferred~~which ~~from~~is ~~Sunplus~~now codified as FASB ASC No. 815. FASB ASC No. 815 requires that a noncontrolling interest in a subsidiary be reported as equity and the amount of consolidated net income specifically attributable to the noncontrolling interest be identified in the consolidated ~~Qiaoxing~~financial ~~Telecom~~statements. ~~(see~~It ~~Note~~also ~~13)~~calls for consistency in the manner of reporting changes in the parent’s ownership interest and requires fair value measurement of any noncontrolling equity investment retained in a deconsolidation. FASB ASC No. 815 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Accordingly, minority interest has been renamed noncontrolling interest, net loss is reported at amounts that include the amounts attributable to both noncontrolling interests and common stockholders for all period presented. In addition, noncontrolling interest has been reported as a component of equity in the consolidated balance sheets and consolidated statements of changes in equity for all periods presented. The Company has retrospectively applied the presentation to its prior year balances in the consolidated financial statements.

~~F-22~~In December 2007, the FASB issued ASC No. 815 (Prior authoritative guidance: FASB issued SFAS 141 (revised 2007), Business Combinations (ASC 815). ASC No. 815 amends and clarifies the accounting guidance for the acquirer’s recognition and measurement of assets acquired, liabilities assumed and noncontrolling interests of an acquiree in a business combination. The adoption of ASC No. 815 had no material effect on the Company’s consolidated financial statements.

~~Item~~In 9April 2008, the FASB issued ASC No. 350-30-35-1 ~~Changes~~(Prior authoritative guidance: FSP FAS No. 142-3, “Determination of the Useful Life of Intangible Assets”). ASC No. 350-30-35-1 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under ASC No. 350-30-35-1, Goodwill and ~~Disagreements~~Other Intangible ~~With~~Assets. ~~Accountants~~ASC onNo. 350-30-35-1 ~~Accounting~~is intended to improve the consistency between the useful life of an intangible asset and ~~Financial~~the ~~Disclosure~~period of expected cash flows used to measure the fair value of the asset under other applicable accounting literature. ASC No. 350-30-35-1 is effective for fiscal years beginning after December 15, 2008. Early adoption is prohibited. The adoption of ASC No. 350-30-35-1 had no material effect on the Company’s consolidated financial statements.

~~Not~~In May 2009, the FASB issued FASB ASC No. 855-10 (Prior authoritative guidance: SFAS No. 165, ~~applicable~~“Subsequent Events”), which sets forth general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. ASC No. 855-10 is effective after June 15, 2009. The adoption of ASC No. 855-10 had no material effect on the Company’s financial statements. Effective February 24, 2010, the Company adopted FASB ASU No. 2010-09, “Subsequent Events (Topic 855) — Amendments to Certain Recognition and Disclosure Requirements.” ASU 2010-09 requires an entity that is an SEC filer to evaluate subsequent events through the date that the financial statements are issued and removes the requirement that an SEC filer disclose the date through which subsequent events have been evaluated. The adoption of this ASU had no effect on the Company’s consolidated financial position or results of operations.

~~Item 9A(T). Controls and Procedures.~~F-19

(a) EvaluationTable of Disclosure Controls and ProceduresContents

AsItem of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer ("CEO") and our Chief Financial Officer ("CFO"), of the effectiveness of the design and operation of our disclosure controls and procedures, or “disclosure controls,” pursuant to Exchange Act Rule 13a-15(b)9. ~~Disclosure~~ ~~controls~~Changes ~~are controls and procedures designed to reasonably ensure that information required to be disclosed~~ in ~~our reports filed under the Exchange Act, such as this annual report, is recorded, processed, summarized~~ and ~~reported~~Disagreements ~~within~~With ~~the~~Accountants ~~time~~on ~~periods~~Accounting ~~specified in the U.S. Securities~~ and ~~Exchange~~Financial ~~Commission’s rules and forms.~~ Disclosure controls include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Our disclosure controls include some, but not all, components of our internal control over financial reporting. In making this evaluation, our management considered the material weaknesses in our internal control over financial reporting as discussed below. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were not effective as of March 31, 2009. However, giving full consideration to the material weaknesses described below, we performed adequate analyses and procedures, including among other things, transaction reviews and account reconciliations, in order to provide assurance that our consolidated financial statements included in this annual report were prepared in accordance with generally accepted accounting principles (“GAAP”) and present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP.

~~(b)~~None. ~~Management’s Report on Internal Control Over Financial Reporting~~

~~Our management~~Item ~~is responsible for establishing and maintaining effective internal control over financial reporting~~9A(T). ~~This~~Controls ~~system is designed to provide reasonable assurance regarding the reliability of financial reporting~~ and ~~the preparation of consolidated financial statements for external purposes in accordance with GAAP~~Procedures.

~~Our internal control over financial reporting includes those policies and procedures that:~~ (1a) Evaluation ~~pertain to the maintenance~~ of ~~records~~Disclosure ~~that,~~Controls ~~in reasonable detail, accurately~~ and ~~fairly reflect our transactions and dispositions of our assets;~~Procedures (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the consolidated financial statements.

~~Our~~As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, ~~performed~~including anour ~~assessment~~Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our ~~internal~~disclosure ~~control~~controls and procedures, or “disclosure controls,” pursuant to Exchange Act Rule ~~over~~13a-15(b). ~~financial~~Disclosure ~~reporting~~controls are controls and procedures designed to reasonably ensure that information required to be disclosed in our reports filed under the Exchange Act, such as ofthis annual ~~March~~report, 31is recorded, ~~2009~~processed, ~~utilizing~~summarized and reported within the ~~criteria~~time ~~described~~periods specified in the U.S. Securities and Exchange Commission’s rules and forms. Disclosure controls include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the ~~“Internal~~Exchange ~~Control~~Act —is ~~Integrated~~accumulated ~~Framework”~~and ~~issued~~communicated byto ~~the~~our ~~Committee~~management, including ofour CEO and CFO, or persons performing similar functions, as appropriate, to allow timely ~~Sponsoring~~decisions ~~Organizations~~regarding required disclosure. Our disclosure controls include some, but not all, components of ~~the~~our ~~Treadway~~internal ~~Commission~~control ~~(COSO)~~over financial reporting. ~~The~~In ~~objective~~making of this ~~assessment~~evaluation, ~~was~~our management toconsidered ~~determine~~the ~~whether~~material weaknesses in our internal control over financial reporting ~~was~~and the status of remediation as discussed below. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were not effective as of March 31, ~~2009~~2010. ~~Management’s~~However, giving ~~assessment~~full ~~included evaluation~~consideration ofto ~~such~~the ~~elements~~material asweaknesses ~~the~~described ~~design~~below, we performed adequate analyses and ~~operating~~procedures, ~~effectiveness~~including ofamong ~~key~~other things, transaction reviews and account reconciliations, in order to provide assurance that our consolidated financial ~~reporting~~statements ~~controls~~included in this annual report were prepared in accordance with generally accepted accounting principles (“GAAP”) and present fairly, ~~process~~in ~~documentation~~all material respects, ~~accounting~~our ~~policies~~financial position, ~~and~~results of ~~our~~operations ~~overall~~and ~~control~~cash ~~environment~~flows for the periods presented in conformity with GAAP.

~~Page~~(b) Management’s ~~30 of~~Report 41on Internal Control Over Financial Reporting

AOur management is responsible for establishing and maintaining effective internal control over ~~material~~financial ~~weakness~~reporting. This system is adesigned ~~deficiency,~~to orprovide areasonable ~~combination~~assurance regarding the reliability of ~~deficiencies,~~financial inreporting ~~internal control~~and ~~over~~the preparation of consolidated financial statements for external purposes in accordance with GAAP.

Our internal control over financial reporting ~~such~~ includes those policies and procedures that: ~~there~~(1) pertain isto athe ~~reasonable~~maintenance ~~possibility~~of records that, ain ~~material~~reasonable ~~misstatement~~detail, accurately and fairly reflect our transactions and dispositions of ~~the~~our assets; (2) provide reasonable assurance that transactions are ~~Company’s~~recorded ~~annual~~as ornecessary ~~interim~~to permit preparation of consolidated financial statements ~~will~~in ~~not~~accordance bewith generally ~~prevented~~accepted oraccounting principles, and that our receipts and expenditures are being made ~~detected~~only onin aaccordance ~~timely~~with ~~basis.~~authorizations Inof our ~~assessment~~management ofand ~~the~~directors; ~~effectiveness~~and of(3) provide ~~internal~~reasonable ~~control~~assurance ~~over~~regarding ~~financial~~prevention ~~reporting~~or astimely detection of ~~March~~unauthorized 31acquisition, ~~2009~~use, weor ~~identified the~~disposition ~~following~~of ~~material~~our ~~weaknesses,~~assets ~~which~~that could have ~~not~~a ~~been~~material ~~fully~~effect ~~remedied~~on ~~and~~the ~~continued to~~consolidated ~~exist:~~financial statements.

·Our ~~There~~management ~~was~~performed aan ~~lack~~assessment of 1)the ~~effective~~effectiveness ~~communication~~of our internal control over financial reporting as of March 31, 2010, utilizing the ~~importance~~criteria described in the “Internal Control — Integrated Framework” issued by the Committee of ~~internal~~Sponsoring ~~controls~~Organizations of the Treadway Commission (COSO). The objective of this assessment was to determine whether our internal control over financial reporting ~~throughout~~was ~~the~~effective ~~structure~~as of March 31, 2010. Management’s assessment included evaluation of such elements as the ~~Company~~design and 2)operating aneffectiveness ~~adequate~~of ~~tone~~key ~~set~~financial byreporting controls, ~~management~~process ~~around~~documentation, accounting policies, and our overall control ~~consciousness~~environment.

· We do not have sufficient in-house capacity to review and supervise the accounting operations. Our policies and procedures with respect to the review, supervision and monitoring of accounting operations were not operating in a fully effective manner. Timely review of vouchers, general ledger and sub-ledger was not sufficient.28

·Table Our accounting staffs were not familiar with U.S. GAAP and SEC reporting requirements. In addition, we did not maintain effective controls over the preparation and review of the period-end closing procedures to ensure the completeness and accuracy of the consolidated financial statements and that balances and disclosures reported in the consolidated financial statements reconciled to the underlying supporting schedules and accounting records.Contents

·A ~~There~~material ~~was~~weakness is a ~~lack~~deficiency, ofor ~~effective~~a ~~anti-fraud~~combination ~~program~~of ~~designed~~deficiencies, toin ~~detect~~internal ~~and~~control ~~prevent~~over financial reporting ~~fraud~~such ~~relating~~that tothere anis ~~effective~~a ~~whistle-blower~~reasonable ~~program,~~possibility ~~consistent~~that ~~background~~a ~~checks~~material misstatement of ~~personnel~~the inCompany’s annual ~~positions~~or interim financial statements will not be prevented or detected on a timely basis. In our assessment of ~~responsibility~~the ~~and~~effectiveness anof ~~ongoing~~internal ~~program~~control toover ~~manage~~financial reporting as of March 31, 2010, we identified ~~fraud~~the ~~risks.~~following material weaknesses, which have not been fully remedied and continue to exist:

·• WeThere ~~did~~was ~~not~~a ~~maintain~~lack anof 1) effective ~~risk~~communication ~~assessment~~of ~~and~~the ~~management~~importance ~~mechanism.~~of ~~Specifically,~~internal wecontrols doover ~~not~~financial ~~have~~reporting ~~sufficient~~throughout ~~internal~~the ~~mechanisms~~structure toof ~~prevent~~the ~~management~~Company ~~override~~and in2) aan ~~fully~~adequate ~~effective~~tone ~~manner~~set by management around control consciousness.

·• ~~Our~~We ~~internal~~do ~~audit function was~~ not have sufficient. ~~Specifically,~~in-house ~~there~~capacity ~~were~~to noreview ~~personnel~~and ~~with~~supervise anthe ~~appropriate~~accounting ~~level~~operations. ofOur ~~experience,~~policies ~~training~~ and ~~there~~procedures ~~were~~with norespect ~~lines~~to ofthe ~~reporting~~review, tosupervision ~~allow~~and anmonitoring ~~internal~~of ~~audit~~accounting ~~group~~operations towere ~~function~~not ~~effectively~~operating in ~~determining~~a ~~the~~fully ~~adequacy~~effective ofmanner. ~~our~~Timely ~~internal~~review ~~control~~of ~~over~~vouchers, ~~financial~~general ~~reporting~~ledger and ~~monitoring~~sub-ledger ~~the~~was ~~ongoing~~not ~~effectiveness thereof~~sufficient.

In• ~~light of~~Our ~~these~~accounting ~~material~~staff ~~weaknesses~~were ~~management~~not ~~concluded~~familiar ~~that~~with ~~our~~U.S. ~~internal~~GAAP ~~control~~and ~~over financial~~SEC reporting ~~was~~requirements. In addition, we did not maintain effective ascontrols over the preparation and review of ~~March~~the ~~31,~~period-end ~~2009~~closing procedures to ensure the completeness and accuracy of the consolidated financial statements and that balances and disclosures reported in the consolidated financial statements reconciled to the underlying supporting schedules and accounting records.

~~However, giving~~• ~~full~~There ~~consideration~~was toa ~~the~~lack ~~material~~of ~~weaknesses~~an ~~described~~effective ~~above,~~anti-fraud ~~we performed~~program ~~adequate~~designed ~~analyses~~to ~~and~~detect ~~procedures, including among other things, transaction reviews~~ and ~~account~~prevent ~~reconciliations,~~fraud inrelating ~~order~~ to ~~provide~~an ~~assurance that~~effective ~~our~~whistle-blower ~~consolidated~~program, ~~financial~~consistent ~~statements~~background ~~included~~checks inof ~~this~~personnel ~~annual report were prepared~~ in ~~accordance~~positions ~~with~~of ~~generally~~responsibility ~~accepted accounting principles (“GAAP”)~~ and ~~present~~an ~~fairly,~~ongoing inprogram ~~all~~to ~~material~~manage ~~respects,~~identified ~~our~~fraud ~~financial position, results of operations and cash flows for the periods presented in conformity with GAAP~~risks.

• We ~~have made~~did ~~certain~~not ~~changes~~maintain inan ~~internal~~effective ~~control~~risk ~~over~~assessment ~~financial~~and ~~reporting~~management ~~during~~mechanism. ~~the fiscal year ended March 31~~Specifically, ~~2009,~~we ~~that~~do ~~have~~not ~~a material effect or, are reasonably likely to~~ have asufficient ~~material effect, on our~~ internal ~~control~~mechanisms ~~over financial reporting. In regard~~ to ~~the~~prevent ~~safeguarding~~management ofoverride ~~documentation, we~~in ~~have~~a ~~implemented~~fully ~~procedures~~effective ~~to safeguard all important documentation by purchasing new sets of safeguarding equipment to secure important documentation~~manner. ~~We have also implemented the policy of reviewing all of our contracts and agreements and storing them properly.~~

~~Page~~• 31 Our internal audit function was not sufficient. Specifically, there were no personnel with an appropriate level of 41experience, training and there were no lines of reporting to allow an internal audit group to function effectively in determining the adequacy of our internal control over financial reporting and monitoring the ongoing effectiveness thereof. On September 2, 2009, the two independent directors who composed the audit committee resigned from their positions as independent directors of the Company effective September 2, 2009. There is no audit committee since that date.

~~This annual~~In ~~report~~light ~~does~~of ~~not~~these ~~include~~material anweaknesses ~~attestation~~management ~~report~~concluded ofthat our ~~independent registered public accounting firm regarding~~ internal control over financial reporting. ~~Management's report~~ was not ~~subject~~effective toas ~~attestation by our independent registered public accounting firm pursuant to temporary rules~~ of ~~the~~March 31, ~~Securities and Exchange Commission that permit us to provide only management's report in this annual report~~2010.

~~Item~~However, ~~9B.~~giving ~~Other~~full ~~Information~~consideration to the material weaknesses described above, we performed adequate analyses and procedures, including among other things, transaction reviews and account reconciliations, in order to provide assurance that our consolidated financial statements included in this annual report were prepared in accordance with generally accepted accounting principles (“GAAP”) and present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP.

~~On January~~This 9,annual ~~2009,~~report ~~the~~does ~~Company~~not ~~filed~~include ~~with~~an ~~the~~attestation ~~Commission~~report aof ~~Form~~our ~~8-K~~independent ~~stating~~registered ~~that~~public onaccounting ~~December~~firm ~~31,~~regarding ~~2008,~~internal ~~Sunplus,~~control aover ~~95%~~financial ~~owned~~reporting. ~~subsidiary~~Management’s ofreport ~~the~~was ~~Company had entered~~not ~~into~~subject ~~an agreement with Huizhou Liyin~~ to ~~sell~~attestation ~~100%~~by ofour ~~Sunplus’~~independent ~~interest~~registered inpublic ~~its wholly-owned~~accounting ~~subsidiary~~firm ~~JiaXun.~~pursuant ~~The~~to ~~purchase price was RMB5,000,000 with an~~temporary ~~initial~~rules ~~payment~~ of ~~RMB500,000~~the Securities and ~~the~~Exchange ~~remaining~~Commission ~~balance~~that ofpermit ~~RMB4,500,000~~us to ~~be paid~~provide ~~within~~only 3management’s ~~months~~report in ~~following~~this ~~the~~annual ~~completion of the transaction~~report.

~~The filing~~Item ~~also stated that Sunplus has entered into another agreement with Huizhou Liyin to sell 80% of Sunplus’ interest in its subsidiary Fujian QiaoXing~~9B. ~~The purchase~~Other ~~price was RMB84,000,000 with an initial payment of RMB2,000,000 and the remaining balance of RMB82,000,000 to be paid within 3 months following the completion of the transaction~~Information.

In March 2009, Sunplus terminated the agreement with Huizhou Liyin on acquisition of JiaXun and Fujian Qiao Xing and entered into another agreement with QiaoXing Telecommunication Industrial Company Limited to sell One Hundred Percent (100%) of JiaXun for RMB5,000,000 and Eighty Percent (80%) of Fujian QiaoXing for RMB84,000,000None. ~~The disposal of JiaXun and Fujian QiaoXing were completed on~~ ~~April 9 and March 20, 2009, respectively.~~

~~PART~~29 ~~III.~~

ItemTable 10.of Directors, Executive Officers and Corporate Governance.Contents

~~DIRECTORS AND~~PART ~~EXECUTIVE OFFICERS~~III.

~~Our directors~~Item ~~and~~10. ~~officers~~Directors, asExecutive ofOfficers ~~March 31, 2009, are set forth below. The directors hold office for their respective term~~ and ~~until~~Corporate ~~their successors are duly elected and qualified~~Governance. ~~Vacancies in the existing Board are filled by a majority vote of the remaining directors. The officers serve at the will of the Board of Directors.~~

Name	Age	Position	Since
Xiaofeng Li	32	Director	August 2005
Wai Chiu Albert Leung *	52	Chief Financial Officer	September 2008
Jiancheng Fang	54	Independent Director	June 2008
Chao Jiang	38	Independent Director	June 2008
Chengning Zhang	46	Independent Director	June 2008

DIRECTORS AND EXECUTIVE OFFICERS

*MrOur directors and officers, as of March 31, 2010, are set forth below. ~~Wai~~The directors hold office ~~Chiu~~for ~~Albert~~their ~~Leung~~respective ~~resigned~~term onand ~~April~~until 1,their ~~2009~~successors are duly elected and ~~was~~qualified. ~~replaced~~Vacancies in the existing Board are filled by Mra majority vote of the remaining directors. ~~Xiangning~~The officers serve at ~~Qin~~the will of the Board of Directors.

The following is a brief summary of the business experience of our management.


Name	Age		Position	Director Since

Xiaofeng Li		35	Chief Executive Officer and Director	April 2009

Xiangning Qin		32	Chief Financial Officer	April 2009

Zhaohui Xu		38	Independent Director	September 2009

~~Mr.~~The ~~Xiaofeng~~following ~~Li,~~is ~~Chief Executive Officer and Director. Mr. Li holds~~ a ~~Bachelor~~brief ~~Degree~~summary from Shanghai University, Industrial Design Department. From August 1998 to February 2001, Mr. Li was employed by Inventec Appliances Corp. where he was an Industrial Designer. From 2001 to March 2002, Mr. Li was employed by Shanghai Fanna Industrial Product Design Co., Ltd. as executive director and general manager. Since April 2002, Mr. Li has been Chairman of the ~~Board~~business experience of ~~Shanghai~~our ~~Sunplus Communication Technology Co~~management.~~, Ltd.~~

~~Page~~Mr. Xiaofeng ~~32 of~~Li, 41Director and Chief Executive Officer.

Mr. Li holds a Bachelor Degree from Shanghai University, Industrial Design Department. From August ~~Xiaofeng~~1998 to February 2001, Mr. Li was ~~first~~employed ~~appointed~~by ~~Chief~~Inventec ~~Executive~~Appliances ~~Officer~~Corp. ofwhere ~~the~~he ~~Company~~was inan ~~August~~Industrial ~~2005~~Designer. From 2001 to March 2002, ~~resigned~~Mr. Li ~~from~~was ~~the~~employed ~~office~~by ofShanghai ~~Chief~~Fanna ~~Executive~~Industrial ~~Officer~~Product inDesign Co., ~~June~~Ltd. ~~2008~~as executive director and ~~was~~general manager. Since April 2002, Mr. Li has been Chairman of ~~re-appointed~~the ~~Chief~~Board ~~Executive~~of ~~Officer~~Shanghai inSunplus ~~April~~Communication ~~2009~~Technology Co., Ltd.

~~Wai Chiu~~Mr. Xiaofeng ~~Albert~~Li ~~Leung~~was first appointed Chief Executive Officer of the Company in August 2005, ~~Former~~resigned from the office of Chief ~~Financial~~Executive Officer in June 2008 and was re-appointed Chief Executive Officer in April 2009.

Mr. Xiangning ~~Leung prior to joining the Company~~Qin, ~~served~~Director as CFO of Qiao Xing Universal Telephone, Inc. (NASDAQ:XING) from December 2003 to August 2008. Mr. Leung served as Consultant for AB Management Consulting Company, Hong Kong from March 2001 to December 2003; his duties included: accounting services, tax compliance and ~~finance~~ ~~for~~Chief ~~small~~Executive ~~and medium enterprises, designing and implementing tailor-made~~Officer ~~accounting computer software packages for clients and proved financial services (mainly US-based external financial reporting) to Mainland Chinese businesses quoted on the OTCBB.~~

Mr. Qin ~~Leung served~~currently inserves ~~various~~as ~~financial~~the ~~oversight~~Chief ~~responsibilities~~Financial ~~since~~Officer ~~February~~of ~~1985, including~~the ~~from~~Company. ~~February~~From ~~1985~~2000 to ~~September~~2006, Mr. Qin ~~1988~~was asemployed ~~Group~~by ~~Internal~~Guangxi ~~Auditor~~Liugong ~~for L’Air~~Machinery ~~Liquide S~~Co.A., ~~from September 1988 to February 1990 as Finance Director for Liquid Air Far East~~ Ltd. (~~subsidiary~~SZSE: ~~of L’Air Liquide S.A.~~000528), ~~from~~a ~~May~~Top ~~1990~~500 toenterprise in ~~December~~China, ~~1994~~serving as ~~Tax~~the &Accounting ~~Accounts~~ Manager, ~~for~~Accounting ~~Dragages~~Director Etand ~~Travaux~~Internal ~~Public~~Auditor ~~(HK)~~during the six ~~Ltd~~years with Guangxi. ~~(part~~Before ofhis ~~Bouygues~~appointment ~~Group),~~as ~~from~~the ~~January~~Chief ~~1995~~Financial toOfficer ~~May~~of ~~1997~~the asCompany ~~Financial~~on ~~Controller~~April 1, ~~for~~2009, ~~BYME~~Mr. Qin ~~Engineering~~was ~~(HK)~~Director ~~Ltd.~~of ~~(also~~Shanghai ~~part~~Sunplus ofCommunication ~~Bouygues~~Technology ~~Group)~~Co., ~~from~~Ltd., which ~~May~~is ~~1997~~a tosubsidiary ~~August~~of ~~1998~~the asCompany. ~~CFO~~Mr. Qin -holds ~~Asia~~a ~~for~~Bachelors ~~DMC~~Degree ~~Group~~of ~~and~~Accounting from ~~November 1999 to~~Zhongnana ~~October~~University ~~2000~~of asEconomics ~~Regional~~and ~~Financial Controller for Euro RSCG Asia Pacific~~Law. ~~Prior to 1985,~~ Mr. Qin ~~Leung~~also ~~served~~holds as a ~~Junior~~Certificate ~~then~~of Assistant Auditor, ~~from July 1980 to~~and ~~October~~Certificate ~~1981,~~of ~~with~~Medium ~~Deloitte,~~Level ~~Haskins & Sells, Hong Kong~~Accountant.

Mr. ~~Leung is~~Zhaohui aXu, ~~member~~Independent ~~of the Association of Chartered Certified Accountants of Great~~Director Britain and Hong Kong Institute of Certified Public Accountants. Mr. Leung holds a Diplome de l’Ecole des Hautes Etudes Commerciales (Master of Science in Management) from l’Ecole des Hautes Etudes Commerciales of France and a Higher Diploma in Accountancy from Hong Kong Polytechnic.

Mr.~~Leung~~ Xu holds a Master’s degree of accounting. From 1994 to 2005, Mr. Xu served as accountant and ~~resigned~~manager onof ~~April~~financial 1department with Jiangxi Coal Mining Machinery Co., ~~2009~~Ltd successively. From 2005 to the present, Mr. Xu serves as CFO of Shenzhen Xianxun Technology Co., Ltd.

~~Xiangning Qin,~~(a) Significant ~~Chief Financial Officer~~Employees

~~Mr.~~Other ~~Qin currently~~than ~~serves~~our asofficers, ~~the~~there ~~Financial~~are ~~Director~~no ofemployees ~~Shanghai~~who ~~Sunplus~~are ~~Communication Technology~~expected ~~Co., Ltd.. From 2000~~ to ~~2006,~~make ~~Mr. Qin was employed by Guangxi Liugong Machinery Co., Ltd. (SZSE: 000528),~~ a ~~Top~~significant ~~500 enterprise in~~contribution ~~China,~~to ~~serving~~our ~~as the Accounting Manager, Accounting Director and Internal Auditor during the six years with Guangxi~~corporation. ~~Mr. Qin holds a Bachelors~~ Degree of Accounting from Zhongnana University of Economics and Law. Mr. Qin also holds a Certificate of Assistant Auditor and Certificate of Medium Level Accountant. Mr. Qin was appointed as Chief Financial Officer on April 1, 2009.

~~Jiancheng Fang~~ (~~Independent Director~~b) Family Relationships

~~Dr. Jiancheng~~There ~~Fang,~~are ~~Doctoral~~no ~~Supervisor,~~family isrelationships ~~the~~among ~~Chief~~any of ~~College~~our ofdirectors ~~Optoelectronic Engineering~~ and ~~Vice-Chief~~executive ~~of R&D Center of Information and Control in Beijing University of Aeronautics and Astronautics~~officers. ~~Dr.~~There ~~Fang~~are ~~has been the First~~no ~~and~~family ~~Second~~relationships ~~place~~among ~~winner~~our ofofficers, ~~the National Tech & Invention Award and has received the National Science Fund. He is now in charge of nine National Science Projects~~directors, ~~three~~or ofpersons ~~which~~nominated ~~are~~for ~~included~~such ~~in “National 863 Plan Program”~~positions. ~~He is the~~ ~~member of Electric Control & Testing Standards Department in State Administration of Science Technology and Industry for National Defense.~~

~~Chao Jiang (Independent~~30 ~~Director)~~

Mr.Table Chao Jiang, current serves as the Executive Director, the chief Financial Officer, and Vice President of China Wireless Technologies Limited (02369.HK) since June 2002. With more than 15 years experience in accounting and finance, he is an associate member of the Association of Chartered Certified Accountants and a Certified Public Accountant in the PRC. Previously, he worked for the State Audit Bureau. Mr. Jiang has also worked for Qiaoxing Electronic Company Limited and Shenzhen Zhong Xing Xin Telecom Equipment Company Limited (00763.HK). Mr. Jiang obtained a Bachelor Degree in Economics from Sun Yat-Sen University in 1991.Contents

~~Page~~LEGAL 33PROCEEDINGS ~~of 41~~

~~Chengning~~No ~~Zhang~~officer, ~~(Independent~~director, or persons nominated for these positions, and no promoter or significant ~~Director)~~employee of our corporation has been involved in legal proceedings that would be material to an evaluation of our management.

~~Chengning Zhang,~~AUDIT ~~Doctor Tutor for the Beijing Institute of Technology, is an expert in~~COMMITTEE “vehicle electric control” & “Electric Power System”. He has dedicated his research to the study of Electric Power Control System, Battery Management System and Battery Charge System. Mr. Zhang is the head of one of “National 863 Plan Program” and the holder of 4 national patents. More than 20 of his essays have been published in professional journals in China and overseas. He also was the Co-Editor of the first professional book of “Electric Vehicle” in China.

~~(a)~~The Board of Directors adopted an Audit Committee Charter authorizing the establishment of an Audit ~~Significant~~Committee ~~Employees~~as noted on the Form 8-K filed with the Commission on August 15, 2008. On September 2, 2009, the two independent directors who composed the audit committee resigned from their positions as independent directors of the Company effective September 2, 2009. There is no audit committee since that date.

~~Other than~~CODE ~~our~~OF ~~officers, there are no employees who are expected to make a significant~~ETHICS ~~contribution to our corporation.~~

As noted on the Form 8-K filed with the Commission on August 15, 2008, on August 15, 2008, the Board of Directors approved a Business Code of Conduct and a Financial Code of Conduct (bcollectively the “Codes”). Our Codes define the standard of conduct expected by our officers, ~~Family~~directors ~~Relationships~~and employees. The Codes were filed as Exhibits 14.1 and 14.2 to our Form 8-K filed with the Commission on August 15, 2008 and are incorporated herein by reference.

~~There~~COMPLIANCE ~~are no~~WITH ~~family~~SECTION ~~relationships~~16 ~~among~~OF ~~any~~THE ofSECURITIES ~~our~~EXCHANGE ~~directors~~ACT ~~and~~OF ~~executive officers. There~~1934 ~~are no family relationships among our officers, directors, or persons nominated for such positions.~~

~~LEGAL~~Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and ~~PROCEEDINGS~~executive officers and beneficial holders of more than 10% of our common stock to file with the Commission initial reports of ownership and reports of changes in ownership of our equity securities on Forms 3, 4 and 5. Based on the copies of filings received by the Company during the most recent fiscal year the directors, officers, and beneficial owners of more than ten percent of the equity securities of the Company registered pursuant to Section 12 of the Exchange Act have filed on a timely basis all required Forms 3, 4, and 5 and any amendments thereto.

~~No officer,~~Item ~~director,~~11. orExecutive ~~persons nominated for these positions, and no promoter or significant employee of our corporation has been involved in legal proceedings that would be material to an evaluation of our management~~Compensation.

~~AUDIT~~Background and Compensation Philosophy ~~COMMITTEE~~

AsThere ~~noted on~~are ~~the~~altogether ~~Form~~three ~~8-K~~(3) persons ~~filed~~acting ~~with~~individually ~~the~~either ~~Commission~~as ona ~~August~~director ~~15,~~or ~~2008,~~an ~~on August 13,~~executive ~~2008,~~officer ~~the~~or ~~Board~~both ofin ~~Directors~~our ~~approved~~Company: ~~the~~(1) Mr. Xiaofeng ~~creation~~Li, ofour anChief ~~Audit~~Executive ~~Committee~~Officer and ~~its~~director, and ~~Charter~~beneficial owner of 6.64 ~~Furthermore,~~% ~~the~~of ~~Board~~our ~~appointed~~common stock; (2) Mr. Xiangning ~~Chao Jiang~~Qin, ~~independent~~our ~~director~~Chief Financial Officer and ~~financial expert~~director, and (3) Mr. Zhaohui ~~Chengning Zhang~~Xu, an independent director,. toOur ~~the~~board of directors have ~~Audit~~historically ~~Committee,~~determined ~~thus~~the ~~ensuring~~compensation ~~that~~to itbe ~~has~~paid ato ~~qualified~~our ~~"audit~~executive ~~committee~~officers based on our financial ~~expert"~~and asoperating ~~defined~~performance and prospects, the level of compensation paid to similarly situated executives in ~~Item~~comparably ~~407(d)(5)(ii)~~sized companies and contributions made by the officers’ to our success. Each of ~~Regulation~~the ~~S-K~~named officers will be measured by a series of performance criteria by the board of directors, ~~and~~or the compensation committee when it is established, on a yearly basis. Such ~~"independent"~~criteria will be set forth based on certain objective parameters such as ~~the~~job ~~term~~characteristics, required isprofessionalism, ~~used~~management inskills, ~~Item~~interpersonal ~~407(d)~~skills, ofrelated ~~Regulation~~experience, ~~S-K~~personal performance and overall corporate performance.

~~CODE OF~~31 ~~ETHICS~~

AsTable noted on the Form 8-K filed with the Commission on August 15, 2008, on August 15, 2008, the Board of Directors approved a Business Code of Conduct and a Financial Code of Conduct (collectively the “Codes”). Our Codes define the standard of conduct expected by our officers, directors and employees. The Codes were filed as Exhibits 14.1 and 14.2 to our Form 8-K filed with the Commission on August 15, 2008 and are incorporated herein by reference.Contents

~~COMPLIANCE~~Our board of directors have not adopted or established a formal policy or procedure for determining ~~WITH~~the ~~SECTION~~amount 16of OFcompensation ~~THE~~paid ~~SECURITIES~~to ~~EXCHANGE~~our ~~ACT~~executive OFofficers. ~~1934~~Mr. Li and Mr. Qin have been and may continue to be involved when our board of directors deliberate compensation issues related to their own compensation.

~~Section 16(a)~~As ~~of the Securities Exchange Act of 1934, as amended, requires~~ our ~~directors and~~ executive ~~officers~~leadership and ~~beneficial~~board ~~holders~~ of ~~more~~directors ~~than~~grow, ~~10% of~~ our ~~common stock~~board ~~to file with the Commission initial reports~~ of ~~ownership~~directors ~~and~~may ~~reports~~decide ~~of changes~~to ~~in ownership of our equity securities on Forms 3, 4 and 5. Based on the~~form ~~copies~~a ofcompensation ~~filings~~committee ~~received~~charged bywith the ~~Company~~oversight ~~during the most recent fiscal year the directors, officers, and beneficial owners~~ of ~~more~~executive ~~than~~compensation ~~ten percent of the equity securities of the Company registered pursuant to Section 12 of the Exchange Act have filed on a timely basis all required Forms 3~~plans, 4,policies and ~~5 and any~~ ~~amendments thereto~~programs.

~~Page~~Elements 34 of 41Compensation

~~Item~~We 11provide our executive officers solely with a base salary to compensate them for services rendered during the year. ~~Executive~~Our ~~Compensation~~policy of compensating our executives with a cash salary has served us well. Because of our history of attracting and retaining executive talent, we do not believe it is necessary at this time to provide our executives discretionary bonuses, equity incentives, or other benefits in order for us to continue to be successful.

~~Background and~~Base ~~Compensation Philosophy~~Salary

~~There~~The ~~are altogether~~yearly ~~five~~base ~~(5)~~salary ~~persons~~of ~~acting~~Mr. Xiaofeng ~~individually~~Li ~~either~~for asthe afiscal ~~director~~years orended ~~an executive~~March 31, ~~officer~~2010 orand ~~both~~2009 inwas US$66,000 ~~our~~and ~~Company: (1)~~US$61,000 respectively. Mr. Xiangning ~~Xiaofeng~~Qin Lireceived US$15,000 ~~our Chief Executive Officer~~ and ~~director~~US$11,000 ~~and~~for ~~beneficial~~the ~~owner~~fiscal years ofended ~~6.64~~March 31, %2010 ofand ~~our common~~2009 ~~stock~~respectively; ~~(2)~~he ~~Mr.~~was appointed ~~Xiangning~~as ~~Qin,~~CFO ~~our~~on ~~Chief~~April ~~Financial Officer~~1, ~~(3)~~2009. Mr. ~~Jiancheng~~ ~~Fang,~~Zhaohui ~~our~~Xu ~~independent~~received ~~director;~~US$Nil ~~(4)~~during ~~Mr.~~the ~~Chao~~fiscal ~~Jiang,~~year ~~our~~ended ~~independent director and (5)Chengning Zhang~~March 31, ~~our~~2010; ~~independent~~he ~~director.~~was ~~Our~~appointed ~~board~~as ofan ~~directors~~Independent ~~have~~Director ~~historically~~in ~~determined~~September 2009. ~~the~~Mr. Jie ~~compensation~~Shi toreceived beUS$Nil ~~paid~~during tothe ~~our executive~~fiscal ~~officers~~year ~~based~~ended ~~on our financial and operating performance and~~March ~~prospects~~31, ~~the~~2009; ~~level~~he ofwas ~~compensation~~appointed ~~paid~~as tothe ~~similarly~~CEO ~~situated executives~~ in ~~comparably~~ ~~sized~~June 2008 ~~companies~~ and ~~contributions~~resigned ~~made~~in byMarch 2009. ~~the~~Mr. Wai ~~officers’~~Chiu ~~to our~~Albert ~~success. Each~~Leung ofreceived ~~the~~US$26,000 ~~named~~for ~~officers~~the ~~will~~fiscal beyears ~~measured~~ended byMarch 31, a2009; ~~series~~he ~~of performance~~served ~~criteria~~as byCFO ~~the~~from ~~board of directors~~October, ~~or the compensation committee~~ ~~when~~2008 itto isMarch 2009. ~~established, on a yearly basis~~Mr. ~~Such~~ Murry ~~criteria~~Zuhe ~~will~~Xiao bereceived ~~set forth~~US$23,000 ~~based~~for onthe ~~certain~~fiscal ~~objective~~years ~~parameters~~ended ~~such~~March 31, ~~as job characteristics~~2009, ~~required~~he ~~professionalism,~~served ~~management~~as ~~skills,~~CFO ~~interpersonal~~from ~~skills~~August, ~~related experience,~~2005 ~~personal~~to ~~performance and overall corporate performance~~September 2009.

~~Our~~Discretionary ~~board~~Bonus of directors have not adopted or established a formal policy or procedure for determining the amount of compensation paid to our executive officers. Mr. Li has been and may continue to be involved when our board of directors deliberates compensation issues related to his or Mr. Qin’s compensation.

AsWe have not provided our executive ~~leadership~~officers ~~and~~with ~~board~~any ofdiscretionary ~~directors~~bonuses ~~grow,~~at ~~our~~the moment but our board of directors may ~~decide~~ toconsider ~~form~~the anecessity ~~compensation~~of ~~committee~~bonuses ~~charged~~in ~~with~~the future based on our financial and operating performance and prospects, the ~~oversight~~level of ~~executive~~ compensation ~~plans,~~paid ~~policies~~to similarly situated executives in comparably sized companies and ~~programs~~contributions made by the officers’ to our success.

~~Elements of~~Equity ~~Compensation~~Incentives

We ~~provide~~ ~~our~~have ~~executive~~not ~~officers~~established ~~solely~~equity ~~with~~based aincentive ~~base~~program ~~salary~~and tohave ~~compensate~~not ~~them~~granted ~~for services~~stock ~~rendered~~based ~~during~~awards ~~the~~as ~~year. Our~~a component ~~policy~~ of ~~compensating~~compensation. ~~our executives~~In ~~with~~the afuture, ~~cash~~we ~~salary~~may ~~has~~adopt ~~served~~and usestablish ~~well. Because~~an ofequity ~~our~~incentive plan ~~history~~pursuant ofto ~~attracting~~which ~~and~~awards ~~retaining~~may ~~executive~~be ~~talent,~~granted weif doour ~~not~~board ~~believe~~of itdirectors ~~is necessary~~determines atthat ~~this~~it ~~time~~is toin ~~provide~~the ~~our executives discretionary bonuses, equity~~best ~~incentives,~~interests orof ~~other~~our ~~benefits~~stockholders inand ~~order~~the ~~for~~Company us to ~~continue~~do ~~to be successful~~so.

~~Base~~Retirement Benefits ~~Salary~~

~~The yearly~~Two ~~base salary~~ of ~~Mr.~~our ~~Xiaofeng~~executive Liofficers for the fiscal years ended March 31, 2009 and 2008 was $61,000 and $61,000, respectively. Mr. Xiangning Qin received $11,000 and $7,000 for the fiscal years ended March 31, 2009 and March 31, 2008, respectively. He was appointed as CFO on April 1, 2009. Mr. Jie Shi received $Nil during the fiscal years ended March 31, 2009. He was appointed as the CEO in ~~June~~Shanghai ~~2008~~participated ~~and resigned~~ in ~~March 2009. Mr. Wai Chiu Albert Leung received $26,000 for~~ the ~~fiscal~~government ~~years~~-mandated ~~ended March 31,~~multi-employer ~~2009. He~~defined ~~served~~contribution asretirement ~~CFO from September 2008 to April 2009~~plan. ~~Mr. Murry~~ ~~Zuhe Xiao received $23,000 and $46,000 for the fiscal years ended March 31, 2009 and March 31, 2008, respectively. He served as CFO from August 2005 to September 2009.~~

~~Discretionary~~Perquisites ~~Bonus~~

We have not provided our executive ~~officers~~ with any ~~discretionary~~material ~~bonuses~~perquisites atand ~~the~~other ~~moment but~~personal ~~our board of directors may consider the necessity of such a scheme in the~~benefits ~~future based on our financial~~ and, ~~operating performance and prospects~~therefore, ~~the~~we ~~level of~~do ~~compensation~~not ~~paid~~view toperquisites ~~similarly~~as ~~situated~~a ~~executives~~significant inor ~~comparably~~necessary ~~sized companies~~element ~~and~~of ~~contributions made by the officers~~our executive’s ~~to our success~~compensation.

~~Page~~Deferred 35Compensation ~~of 41~~

~~Equity~~We do not provide our executives the opportunity to defer receipt of annual compensation. ~~Incentives~~

~~We have~~32 not established an equity based incentive program and have not granted stock based awards as a component of compensation. In the future, we may adopt and establish an equity incentive plan pursuant to which awards may be granted if our board of directors determines that it is in the best interests of our stockholders and the Company to do so.

Retirement BenefitsTable of Contents

~~One~~The ~~of our~~following ~~executive~~table ~~officers,~~sets ~~namely,~~forth ~~Xiaofeng~~information ~~Li,~~for the ~~Chief~~period ~~Executive~~indicated ~~Officer~~with inrespect to the persons who ~~Shanghai~~served ~~participates~~as inour ~~the~~CEO, ~~government~~CFO ~~–mandated~~and ~~multi-employer~~other ~~defined contribution~~most ~~retirement~~highly ~~plan~~compensated executive officers who served on our board of directors.

~~Perquisites~~SUMMARY COMPENSATION TABLE

We have not provided our executive with any material perquisites and other personal benefits and, therefore, we do not view perquisites as a significant or necessary element of our executive’s compensation.


													Nonqualified
											Non-Equity		Deferred
					Bonus		Stock		Option		Incentive Plan		Compensation		All Other
			Salary		Shares		Awards		Awards		Compensation		Earnings		Compensation		Total
Name and Position	Year		(US$)		(US$)		(US$)		(US$)		(US$)		(US$)		(US$)		(US$)
Xiaofeng Li		2010		66,000		—		—		—		—		—		6,700		72,700
Chief Executive Officer		2009		61,000		—		—		—		—		—		6,400		67,400

Xiangning Qin		2010		15,000		—		—		—		—		—				15,000
Chief Financial Officer		2009		11,000		—		—		—		—		—				11,000

Murry Zuhe Xiao Ex-Chief Financial Officer		2009		23,000														23,000

Wai Chiu Albert Leung Ex-Chief Financial Officer		2009		26,000														26,000

Jie Shi Ex-Chief Executive Officer		2009		—														—

~~Deferred~~SERVICE AGREEMENTS WITH DIRECTORS AND EXECUTIVE OFFICERS ~~Compensation~~

We dowill ~~not~~bear all travelling and travel-related expenses, entertainment expenses and other ~~provide~~out-of-pocket ~~our~~expenses ~~executives~~reasonably ~~the~~incurred ~~opportunity~~by toMr. Li ~~defer~~or ~~receipt~~Mr. Qin in the process of ~~annual~~discharging their ~~compensation~~respective duties on our behalf.

~~The following~~Except ~~table~~as ~~sets~~disclosed ~~forth~~herein, ~~information~~we ~~for~~have ~~the~~no ~~period~~other ~~indicated~~existing ~~with~~or ~~respect~~proposed ~~to the~~agreements ~~persons~~with ~~who~~any ~~served~~of as our ~~CEO, CFO and other most highly compensated~~ ~~executive~~ officers ~~who~~and ~~served on our board of~~ directors.

~~SUMMARY COMPENSATION~~BONUSES ~~TABLE~~AND DEFERRED COMPENSATION

Name and Position	Year	Salary ($)		Bonus Shares ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Xiaofeng Li	2009		61,000		-		-		-		-		-		6,400		67,400
Chief Executive Officer	2008		61,000		-		-		-		-		-		5,200		66,200
Murry Zuhe Xiao	2009		23,000		-		-		-		-		-		-		23,000
EX-Chief Financial Officer	2008		46,000		-		-		-		-		-		-		46,000
Xiangning Qin	2009		11,000		-		-		-		-		-		-		11,000
Chief Financial Officer	2008		7,000												-		7,000
															-
Wai Chiu Albert Leung	2009		26,000		-		-		-		-		-		-		26,000
Ex-Chief Financial Officer
Jie Shi	2009		-		-		-		-		-		-		-		-
Ex-Chief Executive Officer

We do not have an incentive bonus plan at this time.

~~SERVICE~~We do not have any deferred compensation or retirement plans. We do not have a compensation ~~AGREEMENTS~~committee; ~~WITH~~all ~~DIRECTORS~~decisions ~~AND~~regarding ~~EXECUTIVE~~compensation ~~OFFICERS~~are determined by our entire board of directors.

WeOPTION ~~will bear~~GRANTS ~~all~~IN ~~travelling~~THE ~~and~~LAST ~~travel-related~~FISCAL ~~expenses, entertainment expenses and~~YEAR ~~other out-of-pocket expenses reasonably incurred by Mr. Li and Mr. Qin in the process of discharging their respective duties on our behalf.~~

~~Page~~We 36did not grant any options or stock appreciation rights to our named executive officers or directors in the fiscal year ended March 31, 2010. As of 41March 31, 2010, Mr. Xiaofeng Li, Chief Executive Officer and Director, owned 1,998,237 shares of common stock in our Company, which represented 6.64% of the total number of shares issued and outstanding.

~~Except as~~33 ~~disclosed herein, we have no other existing or proposed agreements with any of our officers and directors.~~

BONUSES ANDTable DEFERREDof COMPENSATIONContents

WeINDEMNIFICATION doOF ~~not have~~DIRECTORS anAND ~~incentive~~EXECUTIVE ~~bonus plan at this time.~~OFFICERS

WeOur dobylaws ~~not~~provide for the indemnification of our present and prior directors and officers or any person who may have ~~any~~served ~~deferred~~at ~~compensation~~our request as a director or ~~retirement~~officer ~~plans.~~of Weanother docorporation ~~not~~in ~~have~~which we own shares of capital stock or of which we are a creditor, against expenses actually and ~~compensation~~necessarily ~~committee;~~incurred ~~all~~by ~~decisions~~them ~~regarding~~in ~~compensation~~connection with the defense of any actions, suits or proceedings in which they, or any of them, are ~~determined~~made parties, or a party, by reason of being or having been ~~our~~director(s) ~~entire~~or ~~board~~officer(s) of ~~directors~~us or of such other corporation, in the absence of negligence or misconduct in the performance of their duties. This indemnification policy could result in substantial expenditure by us, which we may be unable to recoup.

~~OPTION~~Insofar as indemnification by us for liabilities arising under the Securities Exchange Act of 1934 ~~GRANTS~~may INbe ~~THE~~permitted ~~LAST~~to ~~FISCAL~~our ~~YEAR~~directors, officers and controlling persons pursuant to provisions of the Amended Articles of Incorporation and Bylaws, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy and is, therefore, unenforceable. In the event that a claim for indemnification by such director, officer or controlling person of us is in the successful defense of any action, suit or proceeding is asserted by such director, officer or controlling person in connection with the securities being offered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

WeAt ~~did not~~the ~~grant~~present ~~any~~time, ~~options~~there oris ~~stock~~no ~~appreciation~~pending ~~rights~~litigation toor ~~our~~proceeding ~~named~~involving ~~executive~~a director, officer, ~~officers~~employee or ~~directors~~other inagent ~~the~~of ~~fiscal~~ours ~~year~~in ~~2009.~~which Asindemnification ofwould ~~March~~be ~~31,~~required ~~2009,~~or Mrpermitted. ~~Xiaofeng~~ ~~Li,~~We aare ~~director,~~not aware ~~owned 1,998,237 shares~~ of ~~common~~any ~~stock~~threatened inlitigation ~~our~~or ~~Company,~~ proceeding which ~~represented~~may ~~6.64%~~result ofin ~~the~~a ~~total~~claim ~~number~~for ~~of shares issued and~~such ~~outstanding~~indemnification.

~~INDEMNIFICATION OF~~Compensation ~~DIRECTORS~~of ~~AND EXECUTIVE OFFICERS~~Directors

Our ~~bylaws~~ ~~provide~~Board ~~for the indemnification~~ of ~~our~~Directors ~~present~~receive ~~and~~no prior directors and officers or any person who may have served at our request as a director or officer of another corporation in which we own shares of capital stock or of which we are a creditor, against expenses actually and necessarily incurred by them in connection with the defense of any actions, suits or proceedings in which they, or any of them, are made parties, or a party, by reason of being or having been director(s) or officer(s) of us or of such other corporation, in the absence of negligence or misconduct in the performance of their dutiescompensation. ~~This~~ ~~indemnification policy could result in substantial expenditure by us, which we may be unable to recoup.~~

~~Insofar as~~Item ~~indemnification~~12. bySecurity usOwnership ~~for liabilities arising under the Securities Exchange Act~~ of ~~1934~~Certain ~~may~~Beneficial beOwners ~~permitted to our directors, officers~~ and ~~controlling~~Management ~~persons pursuant to provisions of the Amended Articles of Incorporation~~ and ~~Bylaws,~~Related ~~or otherwise,~~Stockholder ~~we have been advised that in the opinion of the SEC, such indemnification is against public policy and is, therefore, unenforceable~~Matters. In the event that a claim for indemnification by such director, officer or controlling person of us is in the successful defense of any action, suit or proceeding is asserted by such director, officer or controlling person in connection with the securities being offered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

AtSecurity ~~the present~~Ownership ~~time,~~— ~~there~~Certain isBeneficial ~~no pending litigation or proceeding involving a director,~~Owners ~~officer, employee or other agent of ours in which indemnification would be~~ ~~required or permitted. We are not aware of any threatened litigation or proceeding which may result in a claim for such indemnification.~~

~~Compensation~~Beneficial ownership is shown as of ~~Directors~~June 28, 2010, for shares held by (i) each person or entity known to us to be the beneficial owner of more than 5% of our issued and outstanding shares of common stock based solely upon a review of filings made with the Commission and our knowledge of the issuances by us, (ii) each of our directors, (iii) our Chief Executive Officer and our three other most highly compensated officers whose compensation exceeded US$100,000 during the fiscal year ended March 31, 2010, or the Named Executive Officers, and (iv) all of our current directors and executive officers as a group. Unless otherwise indicated, the persons listed below have sole voting and investment power with respect to the shares and may be reached at 9th Floor, YongSheng Building, ZhongShan Xi Road, Xuhui District, Shanghai, China.

~~Our~~Security ~~Board of~~Ownership ~~Directors~~— ~~receives~~Certain noBeneficial ~~compensation.~~Owners

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Amount

And

Percentage

Nature of

of Class

Beneficial

Beneficially

Beneficial Owner (including address)

Title of class

Ownership ⁽¹⁾

Total

Owned

Meilian Li

Common

15,950,000D

15,950,000

53.01

Room 917, YongSheng Building
Xhong Shang Xi Road
Xuhui District, Shanghai, China

~~Security~~34 ~~Ownership - Certain Beneficial Owners~~

Beneficial ownershipTable is shown as of June 24, 2009, for shares held by (i) each person or entity known to us to be the beneficial owner of more than 5% of our issued and outstanding shares of common stock based solely upon a review of filings made with the Commission and our knowledge of the issuances by us, (ii) each of our directors, (iii) our Chief Executive Officer and our three other most highly compensated officers whose compensation exceeded $100,000 during the fiscal year ended March 31, 2009, or the Named Executive Officers, and (iv) all of our current directors and executive officers as a group. Unless otherwise indicated, the persons listed below have sole voting and investment power with respect to the shares and may be reached at Room 917, YongSheng Building, ZhongShan Xi Road, Xuhui District, Shanghai, China.Contents

~~Page~~Security ~~37 of~~Ownership 41— Management

Security Ownership - Certain Beneficial Owners


			Amount
			And					Percentage
			Nature of					of Class
			Beneficial					Beneficially
Beneficial Owner (including address)	Title of class		Ownership ⁽¹⁾			Total		Owned

Xiaofeng Li (2)(3)	Common			1,998,237	D		1,998,237		6.64	%
Room 917, YongSheng Building Xhong Shang Xi Road Xuhui District, Shanghai, China

Xiangning Qin (2)(3)		—		—			—		—
Room 917, YongSheng Building Xhong Shang Xi Road Xuhui District, Shanghai, China

Zhaohui Xu (3)		—		—			—		—
Room 917, YongSheng Building Xhong Shang Xi Road Xuhui District, Shanghai, China

Officers and Directors as a group Three (3) People	Common			1,998,237			1,998,237		6.64	%

NoNotes: ~~individual shareholder, outside of those listed below in “Security Ownership – Management” held 5% or more of the Company’s stock as of June 24, 2009.~~

Security Ownership – Management


(1)		(D) stands for direct ownership; (I) stands for indirect ownership

(2)		Officer

(3)		Director

			Amount
			And					Percentage
			Nature of					of Class
			Beneficial					Beneficially
Beneficial Owner (including address)	Title of class		Ownership (1)			Total		Owned
Xiaofeng Li (2)(3)	Common			1,998,237	D		1,998,237		6.64	%
9th Fl, YongSheng Building Xhong Shang Xi Road Xuhui District, Shanghai, China
Xiangning Qin (2)		-		-			-		-
9th Fl, YongSheng Building Xhong Shang Xi Road Xuhui District, Shanghai, China
Jiancheng Fang (3)		-		-			-		-
9th Fl, YongSheng Building Xhong Shang Xi Road Xuhui District, Shanghai, China
Jiang Chao (3)		-		-			-		-
9th Fl, YongSheng Building Xhong Shang Xi Road Xuhui District, Shanghai, China
Chengning Zhang (3)		-		-			-		-
9th Fl, YongSheng Building Xhong Shang Xi Road Xuhui District, Shanghai, China
Officers and Directors as a group Five (5) People	Common			17,948,237			17,948,237		59.65	%

Changes in Control

~~Notes:~~There are no arrangements, known to the Registrant, including any pledge by any person of securities of the Registrant which may at a subsequent date result in a change in control of the Registrant.

~~(1)~~Item ~~(D)~~13. ~~stands~~Certain ~~for~~Relationships ~~direct~~and ~~ownership;~~Related ~~(I)~~Transactions, ~~stands~~and ~~for~~Director ~~indirect ownership~~Independence.

~~(2)~~Certain ~~Officer~~Relationships and Related Transactions

~~(3) Director~~None.

~~Page~~Director 38Independence ~~of 41~~

~~Changes~~As of March 31, 2010, the Board of Directors consisted of three (3) members: Mr. Xiaofeng Li, Mr. inXiangning ~~Control~~Qin and Mr. Zhaohui Xu. Mr.Zhaohui Xu meets the requirement to be considered “independent” as defined by the governance rules of the NASDAQ Global Market.

~~There are~~35 ~~no arrangements, known to the Registrant, including any pledge by any person of securities of the Registrant which may at a subsequent date result in a change in control of the Registrant.~~

ItemTable 13.of Certain Relationships and Related Transactions, and Director Independence.Contents

~~Certain Relationships~~Item ~~and~~14. ~~Related~~Principal ~~Transactions~~Accounting Fees and Services.

~~None.~~ The following is a summary of the fees billed to us by Moore Stephens for professional services rendered for the years ended March 31, 2010 and 2009:

Director Independence


Service	2010		2009
Audit Fees	US$	127,000	US$	154,000

Audit Related Fees
Tax Fees
All Other Fees

TOTAL	US$	127,000	US$	154,000

AsAudit ~~of March~~fees ~~31,~~consist ~~2009,~~of the ~~Board~~aggregate offees ~~Directors~~billed ~~consisted~~for onservices ~~four~~rendered ~~(4)~~for ~~members:~~the ~~Mr. Xiaofeng~~audit ~~Li,~~of ~~Mr.~~our ~~Jiancheng~~annual financial ~~Fang~~statements, ~~Mr.Chao~~the ~~Jiang~~reviews ~~and~~of ~~Mr.Chengning~~the ~~Zhang.~~financial ~~Mr. Jiancheng~~statements ~~Fang,~~included ~~Mr.Chao~~in ~~Jiang~~our Forms 10-Q and ~~Mr.Chengning~~for any ~~Zhang~~other ~~meet~~services ~~the~~that ~~requirement~~are tonormally ~~be considered~~provided ~~“independent”~~by asour ~~defined~~independent byauditors ~~Rule~~in ~~407(a)~~connection ofwith ~~Regulation~~our ~~S-K~~statutory and regulatory filings or engagements.

~~Item~~Audit ~~14.~~related ~~Principal~~fees ~~Accounting~~consist ~~Fees~~of the aggregate fees billed for professional services rendered for assurance and ~~Services~~related services that reasonably related to the performance of the audit or review of our financial statements that were not otherwise included in Audit Fees.

~~The following~~Tax isfees aconsist ~~summary~~ of the aggregate fees billed tofor usprofessional byservices ~~Moore~~rendered ~~Stephens~~ for tax ~~professional~~compliance, ~~services~~tax ~~rendered~~advice ~~for~~and ~~the~~tax ~~years~~planning. ~~ended~~These ~~March~~services 31include assistance regarding federal, ~~2009~~state and local tax compliance and consultation in connection with various transactions and acquisitions. ~~2008:~~

Service	2009		2008
Audit Fees	$	154,000	$	154,000
Audit Related
Fees		-		-
Tax Fees		-		-
All Other Fees		-		-
TOTAL	$	154,000	$	154,000

All other fees consist of the aggregate fees billed for products and services provided by our independent auditors and not otherwise included in Audit Fees, Audit Related fees or Tax Fees.

~~Audit~~36 fees consist of the aggregate fees billed for services rendered for the audit of our annual financial statements, the reviews of the financial statements included in our Forms 10-QSB and for any other services that are normally provided by our independent auditors in connection with our statutory and regulatory filings or engagements.

Audit relatedTable fees consist of the aggregate fees billed for professional services rendered for assurance and related services that reasonably related to the performance of the audit or review of our financial statements that were not otherwise included in Audit Fees.Contents

~~Tax fees~~Item ~~consist of the aggregate fees billed for professional services rendered for tax compliance, tax advice and tax planning~~15. ~~These services include assistance regarding federal~~Exhibits, ~~state~~Financial ~~and~~Statement ~~local tax compliance and consultation in connection with various transactions and acquisitions~~Schedules.

~~All~~(a)(1) ~~other fees~~Financial ~~consist of the aggregate fees billed for products and services provided by~~Statements ~~our independent auditors and not otherwise included in Audit Fees, Audit Related fees or Tax Fees.~~

~~Page~~The 39 financial statements and notes are listed in the Index to Financial Statements on page F-1 of this 41Report.

~~Item 15.~~(a)(2) Exhibits~~, Financial Statement Schedules.~~

(a)(1) Financial Statements


	14			Business Code of Conduct and Financial Code of Conduct (Incorporated by reference to Exhibit 14.1 and 14.2 to Form 8-K filed with the Commission on August 15, 2008)

	21			*Subsidiaries List

	31.1			*Certification of Chief Executive Officer pursuant to 13a-14 and 15d-14 of the Exchange Act

	31.2			*Certification of Chief Financial Officer pursuant to 13a-14 and 15d-14 of the Exchange Act

	32.1			*Certificate pursuant to 18 U.S.C. ss. 1350 for Michael Mak, Chief Executive Officer

	32.2			*Certificate pursuant to 18 U.S.C. ss. 1350 for Michael Mak, Chief Financial Officer

~~The financial~~* ~~statements and notes are listed in the Index to Financial Statements on page F~~-1 ofFiled ~~this Report.~~herein

(a)(23) Financial Statement Schedules ~~Exhibits~~

14Financial *statement ~~Business~~schedules ~~Code~~not offiled ~~Conduct~~herein ~~and~~have ~~Financial~~been ~~Code~~omitted ofas ~~Conduct~~they ~~(Exhibit~~are ~~14.1~~not ~~and~~applicable ~~14.2~~or tothe required ~~Form~~information ~~8-K~~or ~~filed~~equivalent ~~with~~information has been included in the ~~Commission~~financial onstatements ~~August~~or ~~15,~~the notes ~~2008)~~thereto.

21 37 *Subsidiaries List

31.1 *Certification ofTable Chief Executive Officer pursuant to 13a-14 and 15d-14 of the Exchange ActContents

~~31.2 *Certification~~SIGNATURES ~~of Chief Financial Officer pursuant to 13a-14 and 15d-14 of the Exchange Act~~

~~32.1 *Certificate~~Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the ~~pursuant~~registrant has duly caused this report to 18be ~~U.S.C.~~signed ~~ss.~~on ~~1350~~its ~~for~~behalf ~~Xiaofeng~~by Lithe undersigned, ~~Chief~~thereunto duly ~~Executive~~authorized. ~~Officer~~

32.2 *Certificate pursuant to 18 U.S.C. ss. 1350 for Xiangning Qin, Chief Financial Officer


		T-BAY HOLDINGS, INC.

		/s/ Xiaofeng Li Xiaofeng Li, Chief Executive Officer
Dated: June 29, 2010		(Principal executive officer)

		/s/ Xiangning Qin Xiangning Qin, Chief Financial Officer
Dated: June 29, 2010		(Principal financial officer)

*Pursuant -to ~~Filed~~the requirements of the Securities Exchange Act of 1934, this report has been signed ~~herein~~below by the following persons on behalf of the registrant and in the capacities indicated on June 29, 2010.

~~(a)(3)~~Each person whose signature appears below constitutes and appoints Xiaofeng Li and Xiangning Qin as ~~Financial~~his ~~Statement~~true ~~Schedules~~and lawful attorneys-in-fact and agents, each acting alone, with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all said attorneys-in-fact and agents, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue thereof.

Financial statement schedules not filed herein have been omitted as they are not applicable or the required information or equivalent information has been included in the financial statements or the notes thereto.


Signature	Title	Date

/s/ Xiaofeng Li Xiaofeng Li	Chief Executive Officer (Chief principal officer) and Director	June 29, 2010

/s/ Xiangning Qin Xiangning Qin	Chief Financial Officer and Director	June 29, 2010

/s/ Zhaohui Xu Zhaohui Xu	Independent Director	June 29, 2010

~~SIGNATURES~~38

Pursuant to the requirements of Section 13 or 15(d) 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.

	T-BAY HOLDINGS, INC.
	/s/ Xiaofeng Li
Dated: July 13, 2009	Xiaofeng Li, Chief Executive Officer (Principal executive officer)

/s/ Xiangning Qin Xiangning Qin, Chief Financial Officer (Principal financial officer)

Dated: July 13, 2009

Page 40 of 41

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on July 14, 2009.

Each person whose signature appears below constitutes and appoints Xiaofeng Li and Xiangning Qin as his true and lawful attorneys-in-fact and agents, each acting alone, with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all said attorneys-in-fact and agents, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue thereof.

Signature Title Date /s/ Xiaofeng Li Chief Executive Officer Xiaofeng Li (Chief principal officer) and Director /s/ Xiangning Qin Xiangning Qin Chief Financial Officer (Chief financial officer) /s/ Jiancheng Fang Jiancheng Fang Director /s/ Chao Jiang Chao Jiang Director /s/ Chengning Zhang Chengning Zhang Director

Page 41 of 41

Filing Compare · T BAY HOLDINGS INC