UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the Quarterly Period Ended March 31, 2009

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

For the transition period from to

Commission File No. 000-52930

YINLIPS TECHNOLOGY, INC.

(Exact name of Registrant as specified in its charter)

Delaware		20-8057623
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Building 3, Baiwangxin Hi-tech Industrial District 1

Nanshan District, Shenzhen, Guangdong

People’s Republic of China

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)(ZIP CODE)

(86) 755-2906-0002

(COMPANY’S TELEPHONE NUMBER, INCLUDING AREA CODE)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer o

Non-accelerated filer o		Smaller reporting company x
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The number of shares outstanding of the registrant’s Common Stock, par value $0.0001 per share, was 7,690,795 as of August 20, 2009.

YINLIPS TECHNOLOGY, INC.

FORM 10-Q

For the Quarterly Period Ended March 31, 2009

INDEX

Part I	Financial Information		3

	Item 1.	Financial Statements	3

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35

	Item 4.	Controls and Procedures	35

Part II	Other Information		36

	Item 1.	Legal Proceedings	36

	Item 1A.	Risk Factors	36

	Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	54

	Item 3.	Default Upon Senior Securities	54

	Item 4.	Submission of Matters to a Vote of Security Holders	54

	Item 5.	Other Information	54

	Item 6.	Exhibits	54

Signatures			55

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The accompanying unaudited financial statements reflect all adjustments that, in the opinion of management, are considered necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented. The results of operations for such periods are not necessarily indicative of the results expected for the full fiscal year or for any future period. The accompanying unaudited financial statements should be read in conjunction with the audited financial statements of Yinlips Technology, Inc. as contained in its Annual Report for the fiscal year ended December 31, 2008 on Form 10-K, as filed with the Securities and Exchange Commission on August 20, 2009.

Yinlips Technology, Inc. and Subsidiaries

Consolidated Balance Sheets

(In U.S. Dollars)

	March 31,		December 31,
	2009		2008
	(Unaudited)

Assets
Current Assets
Cash and cash equivalents (Note 3)	$	578,139	$	199,779
Accounts receivable, net (Note 4)		6,559,300		4,692,956
Advances (Note 5)		922,512		1,484,077
Inventories, net (Note 6)		2,784,480		2,910,703
Restricted cash (Note 9)		101,649		293,380
Total current assets		10,946,080		9,580,895
Property and equipment, net (Note 7)		2,734,388		1,669,670
Plant renovation deposit (Note 8)		-		960,453
Other receivables		59,754		57,881
Total Assets	$	13,740,222	$	12,268,899

Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable and accrued liabitlies	$	1,993,276	$	952,488
Various taxes payable (Note 10)		153,086		187,381
Short-term loans payable (Note 9)		937,664		1,114,498
Wages payable		501,299		506,450
Corporate tax payable (Note 15)		225,125		31,877
Total current liabilities		3,810,450		2,792,694
Due to related party (Note 14)		65,930		-
Total Liabilities		3,876,380		2,792,694

Commitments and Contigencies (Note 17)				-

Shareholders' Equity
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, 5,454,545 shares undesignated, 0 and 0 shares issued and outstanding at March 31, 2009 and December 31, 2008, respectively.		-		-
Preferred Stock Series A Convertible, $0.0001 par value, 4,545,455 shares authorized, 4,473,583 and 0 shares issued and outstanding at March 31, 2009 and Decemebr 31, 2008, respectively. Liquidation preference and redemption value of $4,920,945 at March 31, 2009.		447		447
Common stock, $0.0001 par value, 100,000,000 shares authorized, 7,690,795 and 7,690,795 shares issued and outstanding at March 31, 2009 and December 31, 2008, respectively (Note 1)		769		769
Additional paid-in capital		5,034,077		5,034,077
Accumulated other comprehensive income		692,683		691,621
Statutory surplus reserve fund (Note 16)		70,881		70,881
Retained earnings (unrestricted)		4,064,985		3,678,410
Total Shareholders' Equity		9,863,842		9,476,205
Total Shareholders' Liabilities and Equity	$	13,740,222	$	12,268,899

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

Yinlips Technology, Inc. and Subsidiaries

Consolidated Statements of Income

(In U.S. Dollars)

	For The Three Months Ended
	March 31,
	2009			2008
	(Unaudited)			(Unaudited)

Revenue	$	7,797,986		$	6,931,030
Cost of Goods Sold		(5,835,179	)		(5,463,815	)
Gross Profit		1,962,807			1,467,215

Selling Expenses		152,783			211,112

General and administrative
Depreciation (Note 7)		16,118			18,468
Bad debts		2,054			-
Others general and administrative		355,420			120,705
Total general and administravive		373,592			139,173
Research and development		650,030			232,822
Total operating expenses		1,176,405			583,107
Income from operations		786,402			884,108

Other income (expenses)
Interest income		493			18
Interest expense		(29,762	)		-
Penalty on renovation contract		-			(41,931	)
Other income (expense), net		(177,271	)		28
Total other income (expenses)		(206,540	)		(41,885	)
Income (loss) before income taxes		579,862			842,223
Income taxes (Note 15)		(193,287	)		(155,354	)

Net income (loss)	$	386,575		$	686,869


Basic earnings per share	$	0.05		$	0.10

Weighed-average shares outstanding, Basic		7,690,795			6,565,795

Diluted earnings per share	$	0.03		$	0.10

Weighed-average shares outstanding, Diluted		12,829,469			6,565,795

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

Yinlips Technology, Inc. and Subsidiaries

Consolidated Statements of Stockholders' Equities

(In U.S. Dollars)

(unaudited)

											Accumulated
	Preferred Stock								Additional		Other		Statutory		Retained		Total
	Series A				Common Stock				Paid-in		Comprehensive		Reserve		Earnings		Stockholders'		Comprehensive
	Shares		Amount		Shares		Amount		Capital		Income (Loss)		Fund		(Unrestricted)		Equity		Income
Balance at December 31, 2008		4,473,583	$	447		7,690,795	$	769	$	5,034,077	$	691,621	$	70,881	$	3,678,410	$	9,476,205
Foreign currency translation adjustment		-		-		-		-		-		1,062		-		-		1,062		1,062
Net income for the three months ended March 31, 2009		-		-		-		-		-		-		-		386,575		386,575		386,575
Comprehensive income		-		-		-		-		-		-		-		-		-	$	387,637
Balance at March 31, 2009		4,473,583	$	447	$	7,690,795	$	769	$	5,034,077	$	692,683	$	70,881		4,064,985	$	9,863,842

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

Yinlips Technology, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In U.S. Dollars)

	For The Three Months Ended
	March 31,
	2009			2008
	(Unaudited)			(Unaudited)
Cash Flows From Operating Activities

Net Income (loss)	$	386,575		$	686,869
Adjustments to reconcile net income to net cash provided by operating activities:
Bad debt allowance		2,054
Depreciation		75,541			49,186
Changes in operating assets and liabilities:
Accounts receivable		(1,868,398	)		(2,232,028	)
Advances		561,565
Inventories, net		126,223			(64,803	)
Plant renovation deposit		960,453
Other receivables		(1,873	)		(643	)
Restricted cash		191,731			-
Accounts payable and accrued liabilities		1,040,788			1,257,811
Various taxes payable		(34,295	)		(15,394	)
Wages payable		(5,151	)		46,372
Corporate tax payable		193,248			166,856
Net cash provided by (used in) operating activities		1,628,461			(105,774	)

Cash Flows From Investing Activities
Purchases of property and equipment		(1,142,307	)		(928	)
Net cash used in investing activities		(1,142,307	)		(928	)

Cash Flows From Financing Activities
Repayment of short-term demand loans payable		(176,834	)		-
Due to related parties and affiliated companies		65,930			-
Net cash provided by (used in) financing activities		(110,904	)		-
Effect of exchange rate changes on cash		3,110			95,081
Net increase (decrease) in cash and cash equivalents		378,360			(11,621	)

Cash and cash equivalents, beginning of period		199,779			20,287
Cash and cash equivalents, end of period	$	578,139		$	8,666

Supplemental disclosure information:
Interest expense paid	$	29,762		$	-
Income taxes paid	$	-		$	-

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

Yinlips Technology, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Amounts and disclosures at and for the three months ended March 31, 2009 and 2008)

Note 1 - Organization and Nature of Business

Yinlips Technology, Inc. (“Yinlips US”) was incorporated the State of Delaware on December 7, 2006. Yinlips US was organized as a blank check shell company to investigate and acquire a target company or business seeking the perceived advantages of being a publicly held corporation. On October 17, 2008, Yinlips US (i) completed a share exchange transaction pursuant to which it became the 100% parent of Podium Technology Limited (“Podium”), (ii) assumed the operations of Podium and its subsidiaries, and (iii) changed its name to from SRKP 17, Inc. to Yinlips Technology, Inc.

Podium Technology Limited (“Podium”) was established on July 3, 2007 in the British Virgin Islands (“BVI”) with 50,000 shares authorized and issued at par value $1HKD. Podium was organized as a non-operating BVI company with nominal net assets to organize business restructuring of going public. On December 27, 2007, Podium signed an Equity Transfer Agreement with Yinlips Digital Technology (Shenzhen) Co., Ltd. (“Yinlips PRC”).

Yinlips PRC was a private operating company established in 2001. Yinlips PRC business includes design, manufacture, and marketing of CRTs, LCDs, and a series of portable digital devices, including portable DVDs, Palm PCs, MP3s, Mp4s, PMPs, Mp4+Games, Game cards, and digital photo frames.

On January 5, 2008, Podium and Yinlips PRC agreed that the owners would transfer their 100% ownership in its registered capital of RMB 1 million to Podium. This agreement was approved by the Chinese authorities on January 16, 2008. The two parties also agreed that the first payment (10% of the total consideration) to be made on April 2008, and the rest of the payments will be made within the next six months. On April 29, 2008, Podium made its first payment of USD $14,893 to the owners and a subsequent payment of USD $122,943 on June 18, 2008. However, on June 11, 2008 the original Equity Transfer Agreement was restated to increase the equity transfer price to its appraised value of RMB 19,200,000. The balance of RMB 18,200,000 was payable to the Yinlips PRC owner.

On September 22, 2008, Podium entered into a Share and Warrant Exchange agreement (“Exchange Agreement”) with Yinlips US (formerly known as SRKP 17, Inc.). Pursuant to the exchange agreement, the shareholder and warrant holders of Podium would transfer all of the issued and outstanding shares and warrants of Podium to SRKP 17 in exchange for 65,795 shares of Yinlips US’s common stock and warrants to purchase 300,000 shares of common stock at an exercise price of $1.10 per share (the “Share and Warrant Exchange”). On October 17, 2008, the Share and Warrant Exchange closed and Podium became Yinlips US wholly-owned subsidiary. A total of 65,795 shares and 300,000 warrants were issued to the former shareholder and warrant holders of Podium, respectively.

Pursuant to the Share and Warrant Exchange Cancellation agreement, Yinlips US shareholders and warrant holders agreed to cancel 5,971,390 shares of common stock and warrants to purchase 6,431,299 shares of common stock and offered a thirty (30) day right to purchase up to 6,500,000 shares of common stock at a per share purchase price of $0.415 (the “Purchase Right”) to the owners of Yinlips PRC. On October 18, 2009, the Yinlips PRC owner used the receivables from Podium as the conversion for the Yinlips US share purchase.

Yinlips US and its subsidiaries Podium and Yinlips PRC shall be collectively referred throughout as “the Company”.

Pursuant to PRC rules and regulations relating to mergers of PRC companies with foreign entities, an offshore company controlled by PRC citizens that intends to merge with a PRC company will be subject to strict examination by the relevant PRC foreign exchange authorities. To enable Yinlips PRC to go public, the owners of Yinlips PRC (“Yinlips management”) made the following restructuring arrangements: (i) established Podium as a BVI holding company owned by a non PRC-citizen and indirectly controlled the operations of Podium, (ii) had Podium enter into an equity transfer agreement with Yinlips PRC by paying 19,200,000 RMB to the Yinlips management, (iii) had Podium and its subsidiary Yinlips PRC enter into a share exchange agreement with Yinlips US, and (vi) the Yinlips management entered into an agreement to convert the RMB 18,200,000 payables to Yinlips management in exchange for the Company’s common stock purchase.

Upon consummation of the Share Exchange and the Purchase Right, Yinlips management owns a majority of the issued and outstanding shares of common stock of the Company and Zhao Zifeng, Chairman of the Board of Yinlips PRC, was appointed as Chairman of the Board and Chief Executive Officer of Yinlips US.

Yinlips Technology, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Amounts and disclosures at and for the three months ended March 31, 2009 and 2008)

Note 1 - Organization and Nature of Business (continued)

For accounting purposes, this transaction is being accounted for as a reverse merger. The transaction has been treated as a recapitalization of Podium and its subsidiaries, with Yinlips US (the legal acquirer of Podium and its subsidiaries including Yinlips PRC) considered the accounting acquiree and Yinlips PRC, the only operating company, and whose management took control of Yinlips US (the legal acquiree of Yinlips US) is considered the accounting acquirer. The Company did not recognize goodwill or any intangible assets in connection with the transaction.

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

Note 2 - Summary of Significant Accounting Policies

Basis of preparation

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

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

Basis of consolidation

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

Use of estimates

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

Yinlips Technology, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Amounts and disclosures at and for the three months ended March 31, 2009 and 2008)

Note 2 - Summary of Significant Accounting Policies (continued)

Fair values of financial instruments

Statement of Financial Accounting Standards (“SFAS”) No. 107, “Disclosures About Fair Value of Financial Instruments,” defines financial instruments and requires fair value disclosures of those financial instruments. On January 1, 2008, the Company adopted SFAS No. 157, “Fair Value Measurements,” which defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosures requirements for fair value measures. Current assets and current liabilities qualified as financial instruments and management believes their carrying amounts are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and if applicable, their current interest rate is equivalent to interest rates currently available. The three levels are defined as follow:

	·	Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
	·	Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.
	·	Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value.

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

Cash and cash equivalents

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

Accounts Receivable

Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts based on a review of all outstanding amounts periodically. The Company analyzes the aging of accounts receivable balances, historical bad debts, customer concentrations, customer credit-worthiness, current economic trends and changes in our customer payment terms, significant changes in customer concentration or payment terms, deterioration of customer credit-worthiness or weakening in economic trends that could have a significant impact on the collectability of receivables and its operating results. If the financial condition of its customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

The allowance for doubtful accounts is provided using a factor of 0.5% of the year-end or period-end total accounts receivable trade balances.

Inventories

Inventories, which are primarily comprised of raw materials, packaging materials, work-in-progress, semi-assembled goods and finished goods, are stated at the lower of cost or net realizable value, using the first-in, first-out (“FIFO”) method. Cost is determined on the basis of a moving average costing method. The Company evaluates the need for reserves associated with obsolete, slow-moving and non-salable inventory by reviewing net realizable values on a periodic basis and uses specific identification method to make the reserves.

Yinlips Technology, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Amounts and disclosures at and for the three months ended March 31, 2009 and 2008)

Note 2 - Summary of Significant Accounting Policies (continued)

Property and Equipment

Property and equipment are recorded at cost and depreciated using the straight-line method, with an estimated 5% salvage value of original cost, over the estimated useful lives of the assets listed below.

Expenditures for repairs and maintenance, if not to improve or extend the expected useful lives of the assets, are expensed as incurred while major replacements and improvements are capitalized.

When property or equipment is retired or disposed of, the cost and accumulated depreciation are removed from the accounts, with any resulting gains or losses being included in net income or loss in the year of disposition.

Building	20 years
Molds	5 years
Machinery &Equipment	5 years
Electronic Equipment	5 years
Computer Software	5 years
Computer Equipment	5 years
Office Equipment	5 years
Other Equipment	5 years
Automobiles	5 years
Leasehold Improvement	5 years

Comprehensive Income

The Company has adopted SFAS No. 130, Reporting Comprehensive Income, which establishes standards for reporting and displaying comprehensive income, its components, and accumulated balances in a full-set of general-purpose financial statements. Accumulated other comprehensive income represents the accumulated balance of foreign currency translation adjustments.

Revenue recognition

The Company’s revenue is derived from the sale of electronic products. The Company recognizes its revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sale price is fixed or determinable, and collectibility is reasonably assured in accordance with SAB 104. Returns and allowances are recorded as incurred and have been immaterial for all the periods presented.

Advertising

Yinlips expenses advertising costs as incurred. Advertising is included in selling expenses for financial reporting. The Company spent $50,587 and $104,549 on advertising expenses for the three months ended March 31, 2009 and 2008, respectively.

Research and development costs

Research and development costs are expensed to operations as incurred. The Company spent $650,030 and $232,822, on direct research and development (“R&D”) efforts for the three months ended March 31, 2009 and 2008, respectively.

Income Taxes

The Company has adopted Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes", which requires the Company to recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns using the liability method. Under this method, deferred tax liabilities and assets are determined based on the temporary differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.

Yinlips Technology, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Amounts and disclosures at and for the three months ended March 31, 2009 and 2008)

Note 2 - Summary of Significant Accounting Policies (continued)

Foreign currency translation

The functional currency of Podium Technology Limited is Hong Kong Dollar (“HKD”) prior to September 30, 2008. The functional currency was changed to US Dollar (“USD”) beginning October 1, 2008. The financial statements are maintained using the functional currency of HKD prior to September 30, 2008 and USD beginning October 1, 2008.

The functional currency of Yinlips Digital Technology (ShenZhen) Co. Ltd. is the Renminbi (“RMB”), the PRC’s currency. The financial statements are maintained using the functional currency of RMB.

For financial reporting purposes, the financial statements of Podium Technology Limited prior to September 30, 2008, which are prepared in HKD, are translated into the Company’s reporting currency, United States Dollars (“USD”); the financial statements of Yinlips Digital Technology (ShenZhen) Co. Ltd. , which are prepared in RMB, are translated into the Company’s reporting currency, USD. Balance sheet accounts are translated using the closing exchange rate in effect at the balance sheet date and income and expense accounts are translated using the average exchange rate prevailing during the reporting period. Adjustments resulting from the translation, if any, are included in accumulated other comprehensive income (loss) in stockholder’s equity.

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

Period Covered	Balance Sheet Date Rates		Average Rates
Year ended December 31, 2008		6.81710		6.93722
Three months ended March 31, 2009		6.82547		6.82547
Three months ended March 31, 2008		7.00220		7.15461

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

Period Covered	Balance Sheet Date Rates		Average Rates
Three months ended March 31, 2009		7.75014		7.75374
Three months ended March 31, 2008		7.77968		7.79423

Goodwill

The Company adopted SFAS No. 142, “Goodwill and Intangible Assets” (“SFAS 142”) on January 1, 2002. Under SFAS 142, goodwill is no longer amortized, but tested for impairment annually, or more frequently, if facts and circumstances warrant a review. The provisions of SFAS 142 require that a two-step test be performed to assess goodwill for impairment. First, the fair value of each reporting unit is compared to its carrying value. If the fair value exceeds the carrying value, goodwill is not impaired and no further testing is performed. The second step is performed if the carrying value exceeds the fair value. The implied fair value of the reporting unit’s goodwill must be determined and compared to the carrying value of the goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, an impairment loss equal to the difference will be recorded.

Impairment of Long-Lived Assets

The Company accounts for impairment of plant and equipment and amortizable intangible assets in accordance with SFAS No. 144, “Accounting for Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of”, which requires the Company to evaluate a long-lived asset for recoverability when there is event or circumstance that indicate the carrying value of the asset may not be recoverable. An impairment loss is recognized when the carrying amount of a long-lived asset or asset group is not recoverable (when carrying amount exceeds the gross, undiscounted cash flows from use and disposition) and is measured as the excess of the carrying amount over the asset’s (or asset group’s) fair value.

Yinlips Technology, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Amounts and disclosures at and for the three months ended March 31, 2009 and 2008)

Note 2 - Summary of Significant Accounting Policies (continued)

Related parties

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

Recently Issued Accounting Pronouncements

In April 2009, the FASB issued FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (FSP FAS 157-4). FSP FAS 157-4 amends SFAS 157 and provides additional guidance for estimating fair value in accordance with SFAS 157 when the volume and level of activity for the asset or liability have significantly decreased and also includes guidance on identifying circumstances that indicate a transaction is not orderly for fair value measurements. This FSP shall be applied prospectively with retrospective application not permitted. This FSP shall be effective for interim and annual periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. An entity early adopting this FSP must also early adopt FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments” (FSP FAS 115-2 and FAS 124-2). Additionally, if an entity elects to early adopt either FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (FSP FAS 107-1 and APB 28-1) or FSP FAS 115-2 and FAS 124-2, it must also elect to early adopt this FSP. The Company is currently evaluating this new FSP but do not believe that it will have a significant impact on the determination or reporting of the Company’s financial results.

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairment” (FSP 115-2/124-2). FSP 115-2/124-2 amends the requirements for the recognition and measurement of other-than-temporary impairment for debt securities by modifying the pre-existing “intent and ability” indicator. Under FSP 115-2/124-2, an other-than-temporary impairment is triggered when there is an intent to sell the security, it is more likely then not that the security will be required to be sold before recovery, or the security is not expected to recover the entire amortized cost basis of the security. Additionally, FSP 115-2/124-2 changes the presentation of an other-than-temporary impairment in the income statement for those impairments involving credit losses. The credit loss component will be recognized in earnings and the remainder of the impairment will be recorded in other comprehensive income. FSP 115-2/124-2 is effective for the Company beginning in the second quarter of fiscal year 2009. Upon implementation at the beginning of the second quarter of 2009, FSP 115-2/124-2 is not expected to have a significant impact on the Company’s consolidated financial statements.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, “Interim Disclosure about Fair Value of Financial Instruments” (“FSP 107-1/APB 28-1”). FSP 107-1/APB 28-1 requires interim disclosures regarding the fair values of financial instruments that are within the scope of FAS 107, “Disclosures about the Fair Value of Financial Instruments,” Additionally, FSP 107-1/APB 28-1 requires disclosures of the methods and significant assumptions used to estimate the fair value of financial instruments on an interim basis as well as changes in the methods and significant assumptions from prior periods. FSP 107-1/APB 28-1 does not change the accounting treatment for these financial instruments and is effective for the Group beginning in the second quarter of fiscal year 2009.

Yinlips Technology, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Amounts and disclosures at and for the three months ended March 31, 2009 and 2008)

Note 2 - Summary of Significant Accounting Policies (continued)

Recently adopted accounting pronouncements

In the first quarter of 2009, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 141 (revised 2007), “Business Combinations” (SFAS No. 141(R)) as mended by FASB staff position FSP 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination.” SFAS No. 141(R) generally requires an entity to recognize the assets acquired, liabilities assumed, contingencies, and contingent consideration at their fair value on the acquisition date. In circumstances where the acquisition-date fair value for a contingency cannot be determined during the measurement period and it is concluded that it is probable that an asset or liability exists as of the acquisition date and the amount can be reasonably estimated, a contingency is recognized as of the acquisition date based on the estimated amount. It further requires that acquisition related costs be recognized separately from the acquisition and expensed as incurred, restructuring costs generally be expensed in periods subsequent to the acquisition date, and changes in accounting for deferred tax asset valuation allowances and acquired income tax uncertainties after the measurement period impact income tax expenses. In addition, acquired in-process research and development is capitalized as an intangibles asset and amortized over its estimated useful life. SFAS No. 141(R) is applicable to business combinations on a prospective basis beginning in the first quarter of 2009. The Company did not complete any business combination in the first quarter of 2009.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. In February 2008, the FASB issued FASB Staff Position 157-1, “Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13 (“FSP 157-1”) and FASB Staff Position 157-2, “Effective Date of FASB Statement No. 157” (“FSP 157-2”). FSP 157-1 amends SFAS 157 to remove certain leasing transactions from its scope. FSP 157-2 delays the effective date of SFAS 157 for all non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), until fiscal years beginning after November 15, 2008. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Group adopted SFAS 157 effective January 1, 2008 for all financial assets and liabilities as required. The adoption of SFAS 157 was not material to the Company’s financial statements or results of operations.

Effective January 1, 2009, the Group adopted the provisions of EITF 07-5, "Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity’s Own Stock” (“EITF 07-5”). EITF 07-5 applies to any freestanding financial instruments or embedded features that have the characteristics of a derivative, as defined by SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” and to any freestanding financial instruments that are potentially settled in an entity’s own common stock. The adoption of EITF 07-5 was not material to the Company's financial statements or results of operations.

In July 2006, the FASB issued FASB Interpretation (“FIN”) No. 48, “Accounting for Uncertainty in Income Taxes,” which prescribes a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return (including a decision whether to file or not to file a return in a particular jurisdiction). The accounting provisions of FIN No. 48 are effective for fiscal years beginning after December 15, 2006. The adoption of this Interpretation had no impact on the Company’s financial position or results of operations.

Note 3 - Cash and Cash Equivalents

Cash and Cash Equivalents consist of the following:

	March 31,		December 31,
	2009		2008
Cash on hand	$	5,550	$	7,708
Cash in bank		572,589		192,071
Total	$	578,139	$	199,779

Yinlips Technology, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Amounts and disclosures at and for the three months ended March 31, 2009 and 2008)

Note 4 - Accounts Receivable

Accounts receivable consists of the following:

	March 31,			December 31,
	2009			2008
Accounts receivable	$	6,592,449		$	4,724,088
Allowance for doubtful accounts		(33,149	)		(31,132	)
Total	$	6,559,300		$	4,692,956

The provisions for bad debts were $2,054 and $592 for the three months ended March 31, 2009 and 2008. The change in allowance for doubtful accounts for the three months ended March 31, 2009 and 2008 respectively was as follows:

	March 31,			March 31,
	2009			2008
Beginning of year	$	31,132		$	14,206
Effect of exchange rate		(37	)		-
Current period’s provisions		2,054			592
End of period	$	33,149		$	14,798

Note 5 - Advances

Equipment Purchases

In November 2008, the Company signed two agreements for equipment purchases. The cost of the new equipments is $2,707,754 which was completely assembled in the second quarter of 2009.

In March 2009, the Company signed an agreement for equipment purchases. The cost of the new equipments is $966,966 which will be completed in four months. The Company paid $922,512 to the supplier as an advance. The balance will be paid upon shipment to the Company and in working condition.

Yinlips Technology, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Amounts and disclosures at and for the three months ended March 31, 2009 and 2008)

Note 6 - Inventories

Inventory consists of the following:

	March 31,			December 31,
	2009			2008
Raw materials	$	2,124,497		$	1,383,073
Finished goods		604,511			1,593,775
WIP		146,447			24,942
Less: allowance for obsolete inventories		(90,975	)		(91,087	)
Total	$	2,784,480		$	2,910,703

Management uses the specific identification method to provide an allowance for obsolete or slow-moving inventory items, including finished goods and raw materials. The provisions for allowance for obsolescence were $0 and $0 for the three months ended March 31, 2009 and 2008. The change in allowance for obsolescence for the three months ended March 31, 2009 and 2008, respectively, as follows:

	March 31,			March 31,
	2009			2008
Beginning of year	$	91,087		$	85,132
Current period’s provisions		-			-
Effect of exchange rate		(112	)		3,546
End of year	$	90,975		$	88,678

Note 7- Fixed Assets

Fixed assets consist of the following:

	March 31,			December 31,
	2009			2008
Building	$	890,130		$	891,223
Molds		550,438			391,809
Machinery and Equipments		692,615			672,401
Office equipment		81,281			60,085
Automobiles		86,968			87,075
Leasehold improvements		1,069,816			129,087
		3,371,249			2,231,680
Accumulated Depreciation		(636,891	)		(562,010	)
Total Fixed Assets – Net	$	2,734,388		$	1,669,670

The depreciation expense is $75,541 and $49,186 for three months ended March 31, 2009 and 2008, respectively, as follows:

	March 31,		March 31,
	2009		2008
Cost of goods sold	$	59,423	$	30,718
Operating expenses		16,118		18,468
Total	$	75,541	$	49,186

Yinlips Technology, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Amounts and disclosures at and for the three months ended March 31, 2009 and 2008)

Note 8 - Deposit Paid for Plant Renovation

On November 18, 2008, the Company entered into a renovation contract with an estimated cost of $1,027,447 with a decoration company. The renovation was completed as of March 31, 2009, and the deposit of $960,453 was applied accordingly.

Note 9 - Short Term Loans

On October 28, 2008, the Company obtained a one year term loan of RMB 8,000,000 ($1,114,498) from Pudong Development Bank ("PDB") bearing interest at approximately 110% of the prevailing prime rate (approximately 7%-8%). Pursuant to the loan contract, the monthly payment is RMB 400,000 plus monthly interest and the balance will be repaid in October 2009.

The above loan was part of a package of loans PDB made to 5 different companies where all the companies cross guarantee each others’ loans. In the event when one company defaulted on its loan the other companies are required to pay a penalty based on the percentage of the defaulted loan to PDB. Additionally, each company was required to deposit 25% of the loan amount it received in an account held at PDB to be used as collateral for the loans. The Company deposited RMB 2,000,000 ($293,380) in the bank account as restricted cash.

On March 23, 2009, one of 5 companies’ loans went into default and the Company received a notice from PDB for a penalty fee of $191,731. This amount is deducted from the restricted cash held at PDB subsequent to March 31, 2009. However, the Company reflected the contingency loss as other expenses for the quarter ended March 31, 2009.

Note 10 - Various Taxes Payable

Various taxes payable consists of the following:

	March 31,		December 31,
	2009		2008
Value-added taxes (VAT) payable:	$	146,966	$	180,174
Other misc. taxes/levies		6,120		7,207
Total	$	153,086	$	187,381

The Company pays and collects Value-added taxes (VAT) both at the rate of 17%. The other misc taxes/levies included City development levies and Educational levies. The City development levies and Educational levies are respectively 1% and 3% of last month VAT.

Note 11 – Series A Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock.

On October 15, 2008, the Company filed a Certificate of Designations, Preferences and Rights (the “Certificate”) whereby it designated 4,545,455 shares of its preferred stock, $0.0001 par value per share, as Series A Convertible Preferred Stock, (the “Preferred Stock”). Each share of Preferred Stock has a stated value of $1.10. Each share of Preferred Stock is convertible, at the option of the holder at any time and from time to time after the original issue date of the Preferred Stock, into one share of Common Stock, at a conversion price equal to the per share purchase price, subject to adjustment as more fully described in the Certificate. Each share of Preferred Stock has the right to one vote per share of Common Stock issuable upon conversion of the shares of Preferred Stock.

Yinlips Technology, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Amounts and disclosures at and for the three months ended March 31, 2009 and 2008)

Note 11 – Series A Preferred Stock (continued)

On October 31, 2008, the Company closed a private placement transaction in which the Company received gross proceeds of approximately $4.9 million (the “Private Placement”). Pursuant to the subscription agreements entered into with the investors, the Company sold an aggregate of 4,473,583 shares of Series A Convertible Preferred Stock at a price of $1.10 per share. Each share of Preferred Stock shall be convertible at the option of the holder thereof, at any time and from time to time from and after the Original Issue Date into that number of shares of Common Stock determined by dividing the Stated Value of $1.10 of such share of Preferred Stock by the Conversion Price of $1.10.

In accordance with Emerging Issues Task Force (‘‘EITF’’) 98-5 and EITF 00-27, the Series A convertible preferred stock does not have an embedded beneficial conversion feature (BCF) because the effective conversion price of such shares equals the fair value of the Company’s common stock. The Company determined that the fair value of the common stock at $1.10 per share based on the fact that (1) the common stock is not readily tradable in an open market at the time of issuance, and (2) the Company has recently sold the convertible preferred stock that is convertible into common stock at 1:1 ratio for $1.10 per share in a private placement, therefore the market price of the common stock is $1.10 per share. However, if in the future the Company has a dilutive issuance of securities, as defined in the Preferred Stock Certificate of Designator, the Company must recognize a beneficial conversion if a reset of the conversion price occurs.

Value Allocated to Preferred Stocks:
Proceeds from issuance	$	4,920,941
Less value allocated to warrants		-
Value allocated to preferred stocks	$	4,920,941

Market Value of Shares Issuable Upon Conversion:
Shares issuable upon conversion of the preferred stocks		4,473,583
Market value of stock on preferred stock issuance date	$	1.10
Market value of shares issuable upon conversion	$	4,920,941

Beneficial Conversion Feature:
Market value of shares issuable upon conversion	$	4,920,941
Less value allocated to preferred stocks		4,920,941
Value of beneficial conversion feature	$	-

The Company evaluated whether or not the Series A convertible preferred stock contained any embedded conversion features that meet the definition of derivatives under SFAS 133, “Accounting for Derivative Instruments and Hedging Activities” and related interpretations. Paragraph 12 of SFAS 133 states that an embedded derivative instrument shall be separated from the host contract and accounted for as a derivative instrument pursuant to the statement if and only if all the following criteria are met:

The economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristic and the risks to the host contact. (Additional guidance on applying this criterion to various contracts containing embedded derivative instrument s is included in Appendix A of this statement.)

The contract that embodies both the embedded derivative instrument and the host contract are not measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur.

A separate instrument with the same terms as the embedded derivative instrument would, pursuant to paragraph 6-11, be a derivative instrument subject to the requirements of this statement. However, this criterion is not met if the separate instrument with the same terms as the embedded derivative instrument would be classified as a liability (or an asset in some circumstance) under the provisions of Statement 150 but would be classified in stockholders’ equity absent the provisions in Statement 150.

Yinlips Technology, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Amounts and disclosures at and for the three months ended March 31, 2009 and 2008)

Note 11 – Series A Preferred Stock (continued)

The Series A Preferred Stock has a fixed conversion provision of 1 preferred share for 1 common share and is convertible at the option of the holder and automatically based upon certain events happening. Based upon the above requirement of paragraph 12 of SFAS 133, it is clear that any potential embedded derivatives in the Series A Preferred Stock are clearly and closely related and do not require bifurcation from the host.

The Company evaluated whether or not the convertible preferred stock should be classified as a liability or equity under SFAS 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity” and Topic D-98 “Classification and Measurement of Redeemable Securities”. The Company concluded that under EITF Topic D-98, preferred securities that are redeemable for cash or other assets are to be classified outside of permanent equity if they are redeemable (i) at a fixed or determinable price on a fixed or determinable date, (ii) at the option of the holder, or (iii) upon the occurrence of an event that is not solely within the control of the issuer. Accordingly, the Company classified the Series A Preferred Stock as permanent equity since there was no deemed liquidation event that requires one or more class or type of equity security to be redeemed.

Note 12 – Warrants

Original shareholders warrants

In January 2007, the Company sold to its original shareholders warrants to purchase 7,096,390 shares of common stock at an exercise price of $0.0001. On October 17, 2008, these shareholders canceled an aggregate of 6,431,299 warrants such that the shareholders held an aggregate of 665,091 warrants immediately after the Share Exchange. The warrant has a 5 year term and is not exercisable until at least one year from the date of Share Exchange.

Bridge loans warrants

On May 30, 2008, Podium was indebted for two bridge loans from Midsouth Investment and Trillion Investment. A warrant was issued to each lender to purchase conversions shares of the Company. The warrant is exercisable for that number of conversion shares determined by dividing the Warrant Coverage Amount (50% of the principal amount of the note) by the Conversion Price prior to May 30, 2013. The fair market value of the warrant is equal to 0.01% of the principal amount of the note to which it relates.

On September 22, 2008, the Company signed Share and Warrants Exchange Agreement (“Exchange”) with Podium Technology Limited (“BVI”) that the Company issues 65,795 shares of common stock (par value of $0.0001), and 300,000 warrants to purchase 300,000 shares of common stock at $1.10 each in exchange for the 100% of all issued and outstanding shares of common stock and all outstanding warrants. The bridge loans are repaid in cash as of December 31, 2008

The fair market value of the warrants used were estimated on the date of grant using the Black-Scholes option pricing model in accordance with SFAS No. 123R using the following assumptions: risk-free interest rate of 1.6%, expected volatility of 10%, and a term of 5 years. The value the warrants was determined to be $594,000 and was recorded as bridge loans warrants interest expense.

The summary of the status of the Company’s outstanding warrants and changes during the period ended is as follows:

	March 31, 2009				December 31, 2008
	Number of Warrants		Average Exercise Price		Number of Warrants		Average Exercise Price
Original stockholders warrants		665,091	$	0.0001		665,091	$	0.0001
Bridge loans warrants		300,000	$	1.10		300,000	$	1.10
Exercised		-	$	-		-	$	-
Forfeited/canceled		-	$	-		-	$	-
End of the Period		965,091				965,091

In accordance with EITF 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in a Company’s Own Stock”, the warrants are considered freestanding instruments and are classified as equity instruments and included in additional paid-in capital.

Yinlips Technology, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Amounts and disclosures at and for the three months ended March 31, 2009 and 2008)

Note 13 – Reconciliation of Earnings per Share (EPS)

	Three months ended
	March 31,
	2009		2008
Numerator
Net Income (loss) available to common stockholders		386,575		686,869

Denominator
Weighted-average shares outstanding for earnings per share, basic		7,690,795		6,565,795

Effect of dilutive securities:
Warrants		665,091		-
Convertible preferred stock		4,473,583		-
Weighted-average shares outstanding for earnings per share, diluted		12,829,469		6,565,795
Net income per share:
Basic	$	0.05	$	0.10
Diluted	$	0.03	$	0.10

The following were excluded from the computation of the diluted securities outstanding as they would have been an anti-dilutive impact.

	Three months ended
	March 31,
	2009		2008
Stock warrants		-		-
Convertible preferred stock		-		-

Note 14 – Due to related party

Due to related party consist of the following:

	March 31,		December 31,
	2009		2008

Due to Mr. Zhao, Zifeng, President and Chairman of Board of Directors	$	65,930	$	-

Total	$	65,930	$	-

On January 14, 2009, the Company borrowed $65,930 from Mr. Zhao, Zifeng. The loan is due on July 14, 2009 and carried monthly interest rate of 0.75%.

Yinlips Technology, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Amounts and disclosures at and for the three months ended March 31, 2009 and 2008)

Note 15 - Income Taxes

The Company’s subsidiary - Yinlips as a manufacturing enterprise established in Shenzhen, PRC, was entitled to a preferential Enterprise Income Tax (”EIT”) rate. In 2008, the local government has increased the EIT rate from 15% to 18%. In 2009, the local government has increased the EIT rate from 18% to 20%.Yinlips is currently applying for the High-Tech Enterprise title, if the application is approved by the local government Yinlips will have a tax holiday of 2 years 100% exemption starting from the first profitable year, and followed by 3 years of 50% tax deduction.

The corporate income tax expense are as follows:

	Three months ended
	March 31,
	2009		2008
Current income taxes expense:				-
PRC Enterprises Income Tax	$	193,287	$	155,354
United States Federal Income Taxes		-		-
Total	$	193,287	$	155,354

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

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

	March 31,			December 31,
	2009			2008
U.S. statutory rate		34	%		34	%
Foreign income not recognized in the U.S.		-34	%		-34	%
PRC preferential enterprise income tax rate		20	%		18	%
Provision for income tax		20	%		18	%

The corporate income tax payables are as follows:

	March 31,		December 31,
	2009		2008
Corporate tax payable	$	225,125	$	31,877

Effective January 1, 2008, the new "Law of the People's Republic of China on Enterprise Income Tax" was implemented. The new law requires that:

(i)

For all resident enterprises, domestic or foreign, the Enterprise Income Tax rate is unified 25%.

(ii)

Enterprises that are categorized as the "High Tech Enterprise" will have a reduced tax rate of 15%.

(iii)

From January 1, 2008 onwards, enterprises that enjoyed a preferential tax rate before, will need to adopt the new law within the next five years. Specifically; enterprises with a current preferential tax rate of 15% for 2007, the tax rate will be 18%, 20%, 22%, 24%, and 25% for the years ended December 31 2008, 2009, 2010, 2011, and 2012, respectively.

The Company’s tax expense will increase as a result of the new tax rate when adopted.

Yinlips Technology, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Amounts and disclosures at and for the three months ended March 31, 2009 and 2008)

Note 16 - Statutory Reserves

As stipulated by the relevant laws and regulations for enterprises operating in the PRC is required to make annual appropriations to a statutory surplus reserve fund that is to allocate total 10-15% its profits after taxes, as determined in accordance with the PRC accounting standards applicable to the Company’s subsidiary - Yinlips, to a statutory surplus reserve until such reserves reach 50% of the registered capital. The management has an appropriation of $70,881 for this surplus reserve as of March 31, 2009 and December 31, 2008, which is 50% of the registered capital.

Note 17 - Commitments and Contingencies

Operating Lease Commitments

On November 17, 2008, the Company has entered into a new 5 years lease tenancy plant and the office agreement which effects on January 1, 2009. The terms on the contract are revised on March 2009. As of December 31, 2008, the commitment of minimum lease payments under these non-cancelable operating leases for the next five years and thereafter is as follows:

Years	Amounts
2009	$	248,184
2010		248,184
2011		248,184
2012		248,184
2013		248,184
Thereafter		-
	$	1,240,920

Lack of Insurance

The Company could be exposed to liabilities or other claims for which the Company would have no insurance protection. The Company does not currently maintain any business interruption insurance, products liability insurance, or any other comprehensive insurance policy except for property insurance policies with limited coverage. For example, because the Company does not carry products liability insurance, a failure of any of the products marketed by the Company may subject it to the risk of product liability claims and litigation arising from injuries allegedly caused by the improper functioning or design of its products. The Company cannot assure that it will have enough funds to defend or pay for liabilities arising out of a products liability claim. To the extent the Company incurs any product liability or other litigation losses, its expenses could materially increase substantially. There can be no assurance that the Company will have sufficient funds to pay for such expenses, which could end its operations. There can be no guarantee that the Company will be able to obtain additional insurance coverage in the future, and even if it can obtain additional coverage, the Company may not carry sufficient insurance coverage to satisfy potential claims. All investors of the Company stock could lose their entire investment should uninsured losses occur.

Loan guarantee and contingencies

On October 28, 2008, the Company acquired a short term loan (that cross guarantees by four other companies’ loans). (Refer to Note 9). On March 23, 2009, one of 5 companies’ loans went into default and the Company received a notice from the bank for a penalty fee of $191,731. This amount is deducted from the restricted cash held at the bank subsequent to March 31, 2009. However, the Company reflected the contingency loss as other expenses for the quarter ended March 31, 2009. The cross guarantee is limited to the remaining $101,694 restricted cash held at the bank.

Note 18 - Current Vulnerability Due to Certain Concentrations

The Company’s operations are all carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC’s economy.

Yinlips Technology, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Amounts and disclosures at and for the three months ended March 31, 2009 and 2008)

Note 18 - Current Vulnerability Due to Certain Concentrations (continued)

The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in the North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

Note 19 - Segment Information

The segment information for revenue is as follows:

	Three months ended
	March 31,
	2009		2008
China Mainland	$	5,458,590	$	3,118,963
North America		623,839		1,386,206
South America		389,899		1,039,654
Asia (other than China)		155,960		693,103
Europe		1,167,689		693,103
Total	$	7,797,986	$	6,931,030

The Company has not segregated business units for managing different products and services that the Company has been carrying and selling on the market. The assets and resources of the Company have been utilized, on a corporate basis, for overall operations of the Company. All revenues were from external sources for all reporting periods.

The following financial information indicates the revenue, cost, gross profit, and gross margin for major product and service categories for the three months ended March 31, 2009 and 2008 is as follows:

	Three months ended
	March 31,
Micro-PC Series:	2009			2008
Revenues	$	383,305		$	2,068,656
Cost of sales		260,344			1,574,667
Gross Profits	$	122,961		$	493,989
Gross margin		32.07	%		23.88	%

	Three months ended
	March 31,
MP4 Series:	2009			2008
Revenues	$	-		$	1,214,518
Cost of sales		-			972,128
Gross Profits	$	-		$	242,389
Gross margin		-			19.96	%

	Three months ended
	March 31,
MP4 +GARE Series:	2009			2008
Revenues	$	727,854		$	1,270,516
Cost of sales		541,020			1,026,180
Gross Profits	$	186,834		$	244,336
Gross margin		25.67	%		19.23	%

Yinlips Technology, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Amounts and disclosures at and for the three months ended March 31, 2009 and 2008)

Note 19- Segment Information (continued)

	Three months ended
	March 31,
MP5+GARE Series:	2009			2008
Revenues	$	5,352,584		$	1,814,680
Cost of sales		4,134,760			1,438,139
Gross Profits	$	1,217,824		$	376,541
Gross margin		22.75	%		20.75	%

	Three months ended
	March 31,
Digital Frame Series:	2009			2008
Revenues	$	-		$	562,661
Cost of sales		-			452,701
Gross Profits	$	-		$	109,960
Gross margin		-			19.54	%

	Three months ended
	March 31,
MP6+GARE Series:	2009			2008
Revenues	$	1,053,620		$	-
Cost of sales		709,307			-
Gross Profits	$	344,313		$	-
Gross margin		32.68	%		-

	Three months ended
	March 31,
Mobile TV Series:	2009			2008
Revenues	$	280,623		$	-
Cost of sales		189,748			-
Gross Profits	$	90,875		$	-
Gross margin		32.38	%		-

Note 20 - Condensed Parent Company Financial Information

Basis of Presentation

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

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

Yinlips Technology, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Amounts and disclosures at and for the three months ended March 31, 2009 and 2008)

Note 20 - Condensed Parent Company Financial Information (continued)

Yinlips Technology, Inc.

(Formerly SRKP 17, Inc.)

Condensed Parent Company Balance Sheets

(Dollars In Thousands)

	March 31,		December 31,
	2009		2008
	(Unaudited)

ASSETS
Investment in subsidiaries, at equity in net assets	$	9,864	$	9,526
Total Assets		9,864		9,526

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued liabilities and other payable				50
Total Current Liabilities		-		50

COMMITMENTS AND CONTINGENCIES		-		-

STOCKHOLDERS' EQUITY
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, 5,454,545 shares undesignated, 0 and 0 shares issued and outstanding at March 31, 2009 and December 31, 2008, respectively.
Preferred stock Series A Convertible, $0.0001 par value, 4,545,455 shares authorized, 4,473,583 and 0 shares issued and outstanding at March 31, 2009 and Decemebr 31, 2008, respectively. Liquidation preference and redemption value of $4,920,945 at March 31, 2009.		1		1
Common stock, $0.0001 par value, 100,000,000 shares authorized, 7,690,795 and 7,690,795 shares issued and outstanding at March 31, 2009 and December 31, 2008, respectively.		1		1
Additional paid-in capital		5,033		5,033
Accumulated other comprehensive income		693		692
Statutory surplus reserve fund		71		71
Retained earnings (unrestricted)		4,065		3,678
Total Stockholders' Equity		9,864		9,476
Total Liabilities and Stockholders' Equity	$	9,864	$	9,526

Yinlips Technology, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Amounts and disclosures at and for the three months ended March 31, 2009 and 2008)

Note 20 - Condensed Parent Company Financial Information (continued)

Yinlips Technology, Inc.

(Formerly SRKP 17, Inc.)

Condensed Parent Company Statements of Operations

(Dollars In Thousands)

	For The Three Months Ended
	March 31,
	2009		2008
	(Unaudited)		(Unaudited)

Revenue	$	-	$	-

Merger cost				-
Bridge loans warrants interest expense
Other general and administrative		89		-
Total Expenses		89		-

Equity in undistributed income of subsidiaries		476		687
Income before income taxes		387		687

Provision for income tax		-		-

Net income	$	387	$	687

Yinlips Technology, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Amounts and disclosures at and for the three months ended March 31, 2009 and 2008)

Note 20 - Condensed Parent Company Financial Information (continued)

Yinlips Technology, Inc.

(Formerly SRKP 17, Inc.)

Condensed Parent Company Statement of Cash Flows

(Dollars In Thousands)

	For The Three Months Ended
	March 31,
	2009			2008
	(Unaudited)			(Unaudited)

Cash Flows from Operating Activities
Net income	$	387		$	687
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Increase in accrued liabilities and other payable		(50	)
Equity in undistributed income of subsidiaries		(476	)		(687	)
Net Cash Provided (Used) by Operating Activities		(139	)		-

Cash Flows from Investing Activities
Capital contribution to subsidiaries		139			-
Net Cash Provided (Used) by Investing Activities		139			-

Net Increase in Cash and Cash Equivalents		-			-
Cash and Cash Equivalents, beginning of period		-			-
Cash and Cash Equivalents, end of period	$	-		$	-

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion relates to the financial condition and results of operations of Yinlips Technology, Inc. (the “Company”or “Yinlips US”) and its wholly-owned subsidiary Podium Technology Limited, a company organized under the laws of the British Virgin Islands (“Podium”), and its wholly-owned subsidiary Yinlips Digital Technology (Shenzhen) Co., Ltd., a company organized under the laws of the People’s Republic of China (“Shenzhen Yinlips”). Although Shenzhen Yinlips is a subsidiary of Yinlips US, the acquisition of Podium and its subsidiary Shenzhen Yinlips by Yinlips US, which was consummated on October 17, 2008, has been treated as a reverse merger of Shenzhen Yinlips. This means that Shenzhen Yinlips is the continuing entity for financial reporting purposes. This management’s discussion and analysis of financial condition and results of operations should be read in conjunction with the Company’s financial statements and the related notes included in this report.

Forward-Looking Statements

This report contains forward-looking statements. The words “anticipated,” “believe,” “expect, “plan,” “intend,” “seek,” “estimate,” “project,” “could,” “may,” and similar expressions are intended to identify forward-looking statements. These statements include, among others, information regarding future operations, future capital expenditures, and future net cash flow. Such statements reflect our management’s current views with respect to future events and financial performance and involve risks and uncertainties, including, without limitation, general economic and business conditions, changes in foreign, political, social, and economic conditions, regulatory initiatives and compliance with governmental regulations, the ability to achieve further market penetration and additional customers, and various other matters, many of which are beyond our control. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove to be incorrect, actual results may vary materially and adversely from those anticipated, believed, estimated or otherwise indicated. Consequently, all of the forward-looking statements made in this report are qualified by these cautionary statements and there can be no assurance of the actual results or developments.

Overview

We engage in the development, production and sales of portable electronic products such as Micro PCs, HD hard disk multimedia players, MP6s, MP5s, MP4s with gaming features, MP3s and digital photo frames. Our digital products have a solid reputation and established brand name in the PRC and abroad.

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

A small number of customers account for a very significant percentage of our revenue. For the three months ended March 31, 2009, we had nine customers that each accounted for at least 5% of the revenues that we generated. These nine customers accounted for a total of approximately 58% of our revenue for that period. During the three months ended March 31, 2008, we had six customers that generated revenues of at least 5% of our revenues. These six customers accounted for a total of approximately 42% of our revenue for that period. Unless we replace a customer, the loss of any of these customers could have a material adverse effect upon our revenue and net income. We have long term supply contracts with stable supply source. This practice reduces our risk on shortage of raw material supply. But any future purchase price fluctuations will affect our production costs and gross margin

Recent Events

On September 22, 2008, we entered into a share and warrant exchange agreement (the “Exchange Agreement”), with Podium Technology Limited, a company organized in the British Virgin Islands (“Podium”), and the sole shareholder and all of the warrantholders of Podium, pursuant to which the shareholder would transfer all of the issued and outstanding shares of Podium to the Company in exchange for 65,795 shares our common stock and the warrantholders would transfer all of the issued and outstanding warrants of Podium to the Company in exchange for warrants to purchase 300,000 shares of our common stock at an exercise price of $1.10 per share (the “Exchange”). On October 17, 2008, the Exchange closed and Podium became our wholly-owned subsidiary and we immediately changed our name from “SRKP 17, Inc.” to “Yinlips Technology, Inc.” A total of 65,795 shares and 300,000 warrants were issued to the former shareholder and warrantholders of Podium, respectively.

In addition, on October 31, 2008, we closed a private placement transaction (the “Private Placement”). Pursuant to subscription agreements entered into with the investors, we sold an aggregate of 4,473,583 shares of Series A Convertible Preferred Stock at $1.10 per share. As a result, we received gross proceeds in the amount of approximately $4.9 million.

On November 14, 2008, Zhao Zifeng, our Chief Executive Officer and Chairman of the Board, purchased 6,500,000 shares of our common stock at a per share purchase price of $0.415 (the “Purchase Right”). Each of the shareholders and warrantholders of the Company prior to the Exchange agreed to cancel 0.91867 shares of common stock and warrants to purchase 0.98943 shares of common stock held by each of them for each one (1) share of common stock purchased by Mr. Zhao pursuant to the Purchase Right (the “Share and Warrant Cancellation”). As a result of the Purchase Right and Share and Warrant Cancellation, we cancelled an aggregate of 5,971,390 shares of common stock and warrants to purchase 6,431,299 shares of common stock held by certain of our stockholders and warrantholders prior to the Exchange and Mr. Zhao owns approximately 53.43% of our outstanding common stock (assuming the full conversion of the maximum number of shares of Series A Convertible Preferred Stock issued in the Private Placement).

Our BVI subsidiary, Podium, was owned by a non-PRC individual. Podium obtained all the equity interests of Shenzhen Yinlips, further to an Equity Transfer Agreement dated December 28, 2007 (the “Original Equity Agreement”) by and among Podium, Zhao Zifeng, our Chief Executive Officer and Chairman of the Board, and Zhang Weiqiang. The Original Equity Agreement was amended and restated in September 2008 (the “Restated Equity Agreement”) to increase the total purchase price of the equity interests of Shenzhen Yinlips to RMB 19,200,000.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations is based upon our financial statements which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities. On an on-going basis, we evaluate our estimates including the allowance for doubtful accounts, the salability and recoverability of inventory, income taxes and contingencies. We base our estimates on historical experience and on other assumptions that we believes to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We cannot predict what future laws and regulations might be passed that could have a material effect on our results of operations. We assess the impact of significant changes in laws and regulations on a regular basis and update the assumptions and estimates used to prepare our financial statements when we deem it necessary.

Revenue recognition. We recognize revenue from the sales of products. Sales are recognized when the following four revenue criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed or determinable, and collectivity is reasonably assured. Sales revenue is presented net of value added tax (VAT), sales rebates and returns. No return allowance is made as product returns are insignificant based on historical experience.

Allowance for doubtful accounts. In estimating the collectability of accounts receivable we analyze historical write-offs, changes in our internal credit policies and customer concentrations when evaluating the adequacy of our allowance for doubtful accounts. Differences may result in the amount and timing of expenses for any period if we make different judgments or use different estimates. Our accounts receivable represent a significant portion of our current assets and total assets. Our realization on accounts receivable, expressed in terms of United States dollars may be affected by fluctuations in currency rates since the customer’s currency is frequently a currency other than United States dollars.

Inventories. Inventories comprise raw materials and finished goods are stated at the lower of cost or market. Substantially all inventory costs are determined using the weighted average basis. Costs of finished goods include direct labor, direct materials, and production overhead before the goods are ready for sale. Inventory costs do not exceed net realizable value.

Taxation. Under the tax laws of PRC, Shenzhen Yinlips has had tax advantages granted by local government for corporate income taxes and sales taxes commencing from the establishment of the Company. As a manufacturing enterprise established in Shenzhen, PRC, the Company was entitled to a preferential Enterprise Income Tax (“EIT”) rate of 15%. On March 16, 2007, the National People’s Congress of China enacted a new PRC Enterprise Income Tax Law, under which foreign invested enterprises and domestic companies will be subject to enterprise income tax at a uniform rate of 25%. The new law became effective on January 1, 2008. Since 2008, the local government has increased the EIT rate from 15% to 18%. During the transition period for enterprises established before March 16, 2007, the tax rate will be gradually increased starting in 2008 and be equal to the new tax rate in 2012. We believe that our profitability will be negatively affected in the near future as a result of the new EIT Law.

Recently Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Results of Operations

Three Months Ended March 31, 2009 and 2008

Revenue Mix for the Three Months Ended March 31, 2009 and 2008

	Revenues			Micro-PC			MP4		MP4+			MP5+			Digital Frame		MP6+		Mobile TV
	Total			Series			Series		Series			Series			Series		Series		Series
2009	$	7,797,986		$	383,305		$	-	$	727,854		$	5,352,584		$	-	$	1,053,620	$	280,623
2008	$	6,931,030		$	2,068,656		$	1,214,518	$	1,270,516		$	1,814,680		$	562,660	$	-	$	-
% of Change		12.51	%		-81.47	%		n/a		-42.71	%		194.96	%		n/a		n/a		n/a

Revenues, which consist of sales of our products, were $ 7,797,986 for the three months ended March 31, 2009, an increase of $866,956, or 12.5%, compared to $$6,931,030 for the same period in 2008. The increase in revenue was attributed mainly to our new products, MP6+ series and Mobile TV series, and the increased sales of our MP5+ products.

Cost of Sales for the Three Months Ended March 31, 2009 and 2008

	Cost			Micro-PC			MP4		MP4+			MP5+			Digital Frame		MP6+		Mobile TV
	Total			Series			Series		Series			Series			Series		Series		Series
2009	$	5,835,179		$	260,344		$	-	$	541,020		$	4,134,760		$	-	$	709,307	$	189,748
2008	$	5,463,815		$	1,574,667		$	972,128	$	1,026,180		$	1,438,139		$	452,701	$	-	$	-
% of Change		6.80	%		-83.47	%		n/a		-47.28	%		187.51	%		n/a		n/a		n/a

Cost of sales, which include raw material, labor and manufacturing overhead, were $5,835,179 for the three months ended March 31, 2009, an increase of $371,364, or 6.8%, compared to $5,463,815 for the same period in 2008. This increase in cost of sales was in line with the increase of our sales.

Gross Profit Rate for the Three Months Ended March 31, 2009 and 2008

	Total			Micro-PC			MP4			MP4+			MP5+			Digital Frame			MP6+			Mobile TV
	Products			Series			Series			Series			Series			Series			Series			Series
2009		25.17	%		32.07	%		0.00	%		25.67	%		22.75	%		0.00	%		32.68	%		32.38	%
2008		21.17	%		23.88	%		19.96	%		19.23	%		20.75	%		19.54	%		0.00	%		0.00	%
% of Change		18.89	%		34.30	%		n/a			33.49	%		9.64	%		n/a			n/a			n/a

Gross profit for the three months ended March 31, 2009 was $1,962,807, or 25.17% of revenues, compared to $1,467,215, or 21.17% of revenues, for the comparable period in 2008. Gross profit rate improved by 4.00 percentage points, or increased by 18.89%. Management considers gross profit to be a key performance indicator in managing our business. The increase in our gross profit margin for the three months ended March 31, 2009 is attributable to the new products sales, such as MP6+ series and Mobile TV series, which have higher gross margin than that of our other products.

Operating Expenses for the Three Months Ended March 31, 2009 and 2008

				For the Three Months Ended
	% of			March 31,
	Change			2009		2008
Operating Expenses:
Selling expenses		-27.63	%	$	152,783	$	211,112
Other general and administrative expenses		196.16	%		357,474		120,705
Research and development expenses		179.20	%		650,030		232,822
Depreciation expense		-12.72	%		16,118		18,468
Total Operating Expenses		101.75	%	$	1,176,405	$	583,107

Selling expenses, which mainly include marketing, shipping, insurance, wage and other expenses, were $152,783 for the three months ended March 31, 2009, decreased by 58,329, or 27.63%, compared to $211,112 for the same period in 2008. The decrease in selling expenses was resulted from our reduced expenditures on advertisement during the first quarter of 2009.

Research and development expenses, which were $650,030 for the three months ended March 31, 2009, an increase of $417,208, or 179%, compared to $232,822 for the same period in 2008. The increase was due to the development of new products. We expect research and development expenses to increase as a result of increasing efforts to develop more sophisticated technology products.

Other general and administrative expenses, which include wage, benefit, bad debts, utility, consulting, professional fees, various taxes and levies and other expenses, were $357,474 for the three months ended March 31, 2009, an increase of $236,769 , or 196%, compared to $ 120,705 for the same period in 2008. The increase was caused by increase in professional service fees and wages. We expect our professional service fee is to increase continually in the next year as a result of being a publicly reporting company in the United States.

Other Income (Expenses) for the Three Months Ended March 31, 2009 and 2008

	For the Three Months Ended
	March 31,
	2009			2008
Other Income (Expenses)
Interest income (expense), net	$	(29,269	)	$	18
Penalty on renovation contract		-			(41,931	)
Miscellaneous other income (expenses), net		(177,271	)		28
Total Other Income (Expenses)	$	(206,540	)	$	(41,885	)

Total other expenses was $206,540 for the three months ended March 31, 2009, increased by $164,655, compared to $41,885 for the three months ended March 31, 2008. The increase in other expenses was attributable to the $191,731 finance charge paid to the bank (see Note 9 and Note 17 to consolidated financial statements). It was offset by $14,460 in rental income received for the three months ended March 31, 2009.

Provision for Income tax was $193,287 for the three months ended March 31, 2009, an increase of $37,933, as compared to $155,354 for the three months ended March 31, 2008. Shenzhen Yinlips is registered in the PRC and has had tax advantages granted by local government for corporate income taxes and sales taxes commencing in 2001. Our effective income tax rates for the three months ended March 31, 2009 and 2008 were 20% and 18%, respectively. On March 16, 2007, the National People’s Congress of China enacted a new PRC Enterprise Income Tax Law (“EIT Law”), under which foreign invested enterprises and domestic companies will be subject to an enterprise income tax at a uniform rate of 25%. The new law became effective on January 1, 2008. During the transition period for enterprises established before March 16, the tax rate will be gradually increased starting in 2008 and be equal to the new tax rate in 2012. We believe that our profitability will be negatively affected in the near future as a result of the new EIT Law.

We had net income of $386,575 for the three months ended March 31, 2009, a decrease of $300,294, compared to net income of $686,869 for the same period in 2008. The decrease was primary attributable to the increase in research and development expenses.

Liquidity and Capital Resources

We had working capital of $7,135,630 and $6,788,201 as of March 31, 2009 and December 31, 2008, respectively. The increase of working capital was the result of increased revenues.

Our accounts receivable has been an increasingly significant portion of our current assets, representing $6,559,300 and $4,692,956, or 59% and 49%, of current assets, as of March 31, 2009 and December 31, 2008, respectively. If customers responsible for a significant amount of accounts receivable were to become insolvent or otherwise unable to pay for our products, or to make payments in a timely manner, our liquidity and results of operations could be materially adversely affected. An economic or industry downturn could materially adversely affect the servicing of these accounts receivable, which could result in longer payment cycles, increased collections costs and defaults in excess of management’s expectations. A significant deterioration in our ability to collect on accounts receivable could affect our cash flow and working capital position and could also impact the cost or availability of financing available to us.

Percentage of aged accounts receivable

	Total			Current			31-90		91-120		121-360		Over 361
March 31, 2009		100.00	%		56.00	%	33.00	%	9.00	%	2.00	%		0.00	%
December 31, 2008		100.00	%		60.00	%	30.00	%	8.00	%	2.00	%		0.00	%
December 31, 2007		100.00	%		90.00	%	10.00	%	0.00	%	0.00	%		0.00	%

As of March 31, 2009, there was seven customers’ receivables, totaled $595,088, over 90 days and three customers’ receivables, totaled $90,280 over 121 days, compared to six customers’ receivables, totaled $358,872, over 90 days and one customer’s receivable, $80,093 over 121 days as of December 31, 2008. The prolonged aged accounts receivable was resulted from increased sales in the Chinese domestic market. We typically offer major of our customers 30 to 90 days credit terms for payment. We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Allowance for doubtful accounts is based on our assessment of the collectability of specific customer accounts, the aging of accounts receivable, our history of bad debts, and the general condition of the industry. If a major customer’s credit worthiness deteriorates, or our customers’ actual defaults exceed historical experience, our estimates could change and impact our reported results. We have not experienced any significant amount of bad debt since the inception of our operation.

As of March 31, 2009, inventories amounted to $2,784,480, compared to $2,910,703 at December 31, 2008. Our production lead time is approximately three weeks, from the inspection of incoming materials, to production, testing and packaging. We need to keep a large supply of raw materials and work in process and finished goods inventory on hand to ensure timely delivery of our products to our customers. We keep certain reserve amounts of raw materials in our inventories and engage in long-term agreements with certain suppliers to assure minimum additional expense from any condition of rising prices and shortages of raw materials used to manufacture our products.

As of March 31, 2009, accounts receivable amounted to $6,559,300, compared to $4,692,956 as of December 31, 2008. Accounts receivable increased with the increase of our sales volume accordingly.

As of March 31, 2009, accounts payable and accrued liabilities amounted to $1,993,276, compared to $952,488 as of December 31, 2008. The increase in accounts payable and accrued liabilities compared to end of last year was due to the increase in payables to our suppliers.

As of March 31, 2009, various taxes payable amounted to $153,086, compared to $187,381 as of December 31, 2008. The decrease in various taxes payable was due to the decrease in VAT payable.

As of March 31, 2009, wages payable amounted to $501,299, compared to $506,450 as of December 31, 2008.

As of March 31, 2009, corporate taxes payable amounted to $ 225,125, compared to $31,877 as of December 31, 2008. The increase in corporate taxes payable was due to the increased accrual for corporate tax.

On October 31, 2008, upon the closing of a private placement transaction (the “Private Placement”), we received gross proceeds of approximately $4.9 million. Pursuant to subscription agreements entered into with the investors, we sold an aggregate of 4,473,583 shares of Series A Convertible Preferred Stock at $1.10 per share. We agreed to file a registration statement covering the common stock underlying the Series A Convertible Preferred Stock sold in the Private Placement within 60 days of the closing of the Share and Warrant Exchange pursuant to the subscription agreement with each investor. For its services as placement agent, WestPark received an aggregate commission equal to 9% of the gross proceeds from the financing, in addition to a $90,000 success fee for the Share and Warrant Exchange, for an aggregate fee of $533,000.

We are required to contribute a portion of our employees’ total salaries to the Chinese government’s social insurance funds, including pension insurance, medical insurance, unemployment insurance, and job injuries insurance, and maternity insurance, in accordance with relevant regulations. Total company contributions to the funds are approximately $2,400 and $1,800, for the three months ended March 31, 2009 and 2008, respectively. We expect that the amount of our contribution to the government’s social insurance funds will increase in the future as we expand our workforce and operations and commence contributions to an employee housing fund.

The ability of Shenzhen Yinlips to pay dividends may be restricted due to the foreign exchange control policies and availability of cash balance. A majority of our revenue being earned and currency received are denominated in RMB, which is subject to the exchange control regulation in China, and, as a result, we may be unable to distribute any dividends outside of China due to PRC exchange control regulations that restrict our ability to convert RMB into US Dollars. Accordingly, Shenzhen Yinlips’ funds may not be readily available to us to satisfy obligations which have been incurred outside the PRC, which could adversely affect our business and prospects or our ability to meet our cash obligations.

Net cash provided by operating activities was $1,628,461 for the three months ended March 31, 2009, compared to net cash used in operations of $105,774 for the three months ended March 31, 2008. The $1,734,235 increase was due to the decrease in advances, inventory and plant deposit during the three months ended March 31, 2009.

Net cash used in investing activities amounted to $1,142,307 for the three months ended March 31, 2009, compared to net cash used in investing activities of $928 for the same period of 2008. The change was due to the increase of expenditures on leasehold improvement.

Net cash used in financing activities amounted to $110,904 for the three months ended March 31, 2009, compared to none for the same period of 2008. During the three months ended March 31, 2009, the Company repaid $176,834 short term loan payable and received $65,930 from Mr. Zhao, Zifeng, a related party.

Our ability to maintain sufficient liquidity depends partially on our ability to achieve anticipated levels of revenue, while continuing to control costs. If we did not have sufficient available cash, we would have to seek additional debt or equity financing through other external sources, which may not be available on acceptable terms, or at all. Failure to maintain financing arrangements on acceptable terms would have a material adverse effect on our business, results of operations and financial condition.

Seasonality

Sales of our products are somewhat seasonal due to consumer spending patterns, which tend to result in significantly stronger sales in our third and fourth fiscal quarters, especially as a result of the holiday season. This pattern will probably not change significantly in the future. Although we believe that the seasonality of our business is based on the timing of consumer demand for our products, fluctuations in operating results can also result from other factors affecting us and our competitors, including new product developments or introductions, availability of products for resale, competitive pricing pressures, changes in product mix, pricing and product reviews and other media coverage.

Off-Balance Sheet Arrangements

On October 28, 2008, the Company acquired a short term loan (that cross guarantees four other companies’ loans) (refer to Note 9 of the consolidated financial statements). On March 23, 2009, one of the other company’s loans went into default and the Company received a notice from the bank for a penalty fee of $191,731. This amount will be deducted from the restricted cash held at the bank subsequent to March 31, 2009. However, the Company reflected the contingency loss as other expenses for the quarter ended March 31, 2009. The cross guarantee is limited to the remaining $101,694 restricted cash held at the bank.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, which are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, as appropriate to allow timely decisions regarding required disclosure.

Based on an evaluation carried out as of the end of the period covered by this quarterly report, under the supervision and with the participation of our management, including our CEO and CFO, our CEO and CFO have concluded that, as of the end of such period, our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were not effective as of March 31, 2009. Factors which led our management to conclude that our disclosure controls and procedures were not effective include, but are not limited to:

the late filing of our Annual Report on Form 10-K for the year ended December 31, 2008; and

the late filing of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2009.

Changes in Internal Control Over Financial Reporting

Based on the evaluation of our management as required by paragraph (d) of Rule 13a-15 or 15d-15 of the Exchange Act, there were no changes in our internal control over financial reporting that occurred during the first quarter of the fiscal year that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. However, we recognize certain weaknesses in our control procedures and are in the process of implementing remediation measures to correct them.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not currently a party to any material legal proceedings.

ITEM 1A. RISK FACTORS

Any investment in our common stock involves a high degree of risk. Potential investors should carefully consider the material risks described below and all of the information contained in this Quarterly Report on Form 10-Q before deciding whether to purchase any of our securities. Our business, financial condition or results of operations could be materially adversely affected by these risks if any of them actually occur. None of our securities are currently listed or quoted for trading on any national securities exchange or national quotation system. If and when our securities are traded, the trading price could decline due to any of these risks, and an investor may lose all or part of his investment. Some of these factors have affected our financial condition and operating results in the past or are currently affecting us. This report also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks faced described below and elsewhere in this Quarterly Report on Form 10-Q.

RISKS RELATED TO OUR OPERATIONS

If we are unsuccessful in establishing and increasing awareness of our brand and recognition of our products, or if we incur excessive expense promoting and maintaining our brand or our products, our potential revenues could be limited, our costs could increase and our operating results and financial condition would be harmed.

We believe that acceptance of our digital products by an expanding customer base depends in large part on increasing awareness of the Yinlips brand and that brand recognition will be even more important as competition in our market increases. Successful promotion of our brand depends largely on the effectiveness of our marketing efforts and on our ability to develop reliable and quality products at competitive prices. In addition, globalizing and extending our brand and recognition of our products and services is costly and involves extensive management time to execute successfully. Further, the markets in which we operate are highly competitive and some of our competitors already have substantially more brand name recognition and greater marketing resources than we do. Our future brand promotion activities may involve significant expense and may not generate desired levels of increased revenue, and even if such activities generate some increased revenue, such increased revenue may not offset the expenses we incurred in endeavoring to build our brand. If we fail to successfully promote and maintain our brand, or incur substantial expenses in our attempts to promote and maintain our brand, we may fail to attract enough new customers or retain our existing customers to the extent necessary to realize a sufficient return on our brand-building efforts, and as a result our operating results and financial condition would suffer.

We derive a substantial portion of our revenues from sales in the PRC and any downturn in the Chinese economy could have a material adverse effect on our business and financial condition.

A substantial portion of our revenues are generated from sales in the PRC. We anticipate that revenues from sales of our products in the PRC will continue to represent a substantial proportion of our total revenues in the near future. Our sales and earnings can also be affected by changes in the general economy since purchases of portable electronic devices are generally discretionary for consumers. Our success is influenced by a number of economic factors which affect disposable consumer income, such as employment levels, business conditions, interest rates, oil and gas prices and taxation rates. Adverse changes in these economic factors, among others, may restrict consumer spending, thereby negatively affecting our sales and profitability.

We are and will continue to be subject to rapidly declining average selling prices which may harm our results of operations.

Consumer electronic devices such as those we offer are subject to rapid declines in average selling prices due to rapidly evolving technologies, industry standards and consumer preferences. Consumer electronics products are subject to rapid technological changes which often cause product obsolescence. Companies within the consumer electronics industry are continuously developing new products with heightened performance and functionality. This puts pricing pressure on existing products and constantly threatens to make them, or causes them to be, obsolete. Our typical product’s life cycle is extremely short, generating lower average selling prices as the cycle matures. If we fail to accurately anticipate the introduction of new technologies, we may possess significant amounts of obsolete inventory that can only be sold at substantially lower prices and profit margins than we anticipated. In addition, if we fail to accurately anticipate the introduction of new technologies, we may be unable to compete effectively due to our failure to offer products most demanded by the marketplace. If any of these failures occur, our sales, profit margins and profitability will be adversely affected.

In addition, electronic device distributors expect suppliers, such as our Company, to cut their costs and lower the price of their products to lessen the negative impact on the electronic device distributor’s own profit margins. As a result, we have previously reduced the price of some of our portable electronic products and expect to continue to face market-driven downward pricing pressures in the future. Our results of operations will suffer if we are unable to offset any declines in the average selling prices of our products by developing new or enhanced products with higher selling prices or gross profit margins, increasing our sales volumes or reducing our production costs.

We are subject to intense competition in the industry in which we operate, which could cause material reductions in the selling price of our products or losses of our market share.

The consumer electronics industry is highly competitive, especially with respect to pricing and the introduction of new products and features. Our products compete in the medium- to high- priced sector of the consumer electronics market and compete primarily on the basis of:

reliability;

brand recognition;

quality;

price;

design;

consumer acceptance of our trademark; and

quality service and support to retailers and our customers.

In recent years, we and many of our competitors, have regularly lowered prices, and we expect these pricing pressures to continue. If these pricing pressures are not mitigated by increases in volume, cost reductions from our supplier or changes in product mix, our revenues and profits could be substantially reduced. As compared to us, many of our competitors have:

significantly longer operating histories;

significantly greater managerial, financial, marketing, technical and other competitive resources; and

greater brand recognition.

As a result, our competitors may be able to:

adapt more quickly to new or emerging technologies and changes in customer requirements;

devote greater resources to the promotion and sale of their products and services; and

respond more effectively to pricing pressures.

These factors could materially adversely affect our operations and financial condition. In addition, competition could increase if:

new companies enter the market;

existing competitors expand their product mix; or

we expand into new markets.

An increase in competition could result in material price reductions or loss of our market share.

Our revenues and earnings could be materially and adversely affected if we cannot anticipate market trends or enhance existing products or achieve market acceptance of new products.

Consumers for portable electronic devices have many products to choose from and we must compete with these devices in order to sell our products and generate revenues. Our success is dependent on our ability to successfully anticipate and respond to changing consumer demands and trends in a timely manner, as well as expanding into new markets and developing new products. In addition, to increase our penetration of current markets and gain footholds in new markets for our products, we must maintain our existing products as well as integrate them with new products. We may not be successful in developing, marketing and releasing new products that respond to technological developments or changing customer needs and preferences. We may also experience difficulties that could delay or prevent the successful development, introduction and sale of these new products. In addition, these new products may not adequately meet the requirements of the marketplace and may not achieve any significant degree of market acceptance. If release dates of any future products or enhancements to our products are delayed, or if these products or enhancements fail to achieve market acceptance when released, our sales volume may decline and earnings would be materially and adversely affected. In addition, new products or enhancements by our competitors may cause customers to defer or forego purchases of our products, which could also materially and adversely affect our revenues and earnings.

If we do not correctly forecast demand for our products, we could have costly excess production or inventories and we may not be able to secure sufficient or cost effective quantities of our products or production materials and our revenues, cost of revenues and financial condition could be adversely affected.

The demand for our products depends on many factors, including pricing and inventory levels, and is difficult to forecast due in part to variations in economic conditions, changes in consumer and business preferences, relatively short product life cycles, changes in competition, seasonality and reliance on key third party carriers. It is particularly difficult to forecast demand by individual product. Significant unanticipated fluctuations in demand, the timing and disclosure of new product releases or the timing of key sales orders could result in costly excess production or inventories or the inability to secure sufficient, cost-effective quantities of our products or production materials. This could adversely impact our revenues, cost of revenues and financial condition.

Our products may contain errors or defects, which could result in the rejection of our products, damage to our reputation, lost revenues, diverted development resources and increased service costs, warranty claims and litigation.

Our products are complex and must meet stringent user requirements. In addition, we must develop our products to keep pace with the rapidly changing portable electronic device market. Sophisticated electronic products like ours are likely to contain undetected errors or defects, especially when first introduced or when new models or versions are released. Our products may not be free from errors or defects after commercial shipments have begun, which could result in the rejection of our products and jeopardize our relationship with carriers. End users may also reject or find issues with our products and have a right to return them even if the products are free from errors or defects. In either case, returns or quality issues could result in damage to our reputation, lost revenues, diverted development resources, increased customer service and support costs, and warranty claims and litigation which could harm our business, results of operations and financial condition.

The loss or significant reduction in business of any of our key customers could materially and adversely affect our revenues and earnings.

We are highly dependent upon sales of our products to certain of our customers, including Shenzhen Yuanjinda Import & Export Co., Ltd., Beijing Jin Suo Neng Technology, Co., Ltd, Shenzhen Prance Electronics Technology Co. Ltd., Shenzhen Baoheng Digital Technology Co., Ltd., Shanghai Siwan Electronics Technology Co. Ltd., Shenzhen Lixin Technology Co., Ltd., Shenzhen Lufang Technology Co., Ltd., Shenzhen Chuang Rong Fa Digital Technology Co., Ltd and Lanzhou JiaHeng Dianqi Co.,Ltd.. During the quarter ended March 31, 2009, they accounted for approximately 10%, 8%, 7%, 7%, 6%, 5%, 5%, 5% and 5% of our net revenue, respectively. No other customer accounted for greater than 5% of our net revenues for the periods. All purchases of our products by customers are made through purchase orders and we do not have long-term contracts with any of our customers. The loss of the above customers, or any of our other customers to which we sell a significant amount of our products or any significant portion of orders from the above customers, or such other customers or any material adverse change in the financial condition of such customers could negatively affect our revenues and decrease our earnings.

We cannot rely on long-term purchase orders or commitments to protect us from the negative financial effects of a decline in demand for our products. The limited certainty of product orders can make it difficult for us to forecast our sales and allocate our resources in a manner consistent with our actual sales. Moreover, our expense levels are based in part on our expectations of future sales and, if our expectations regarding future sales are inaccurate, we may be unable to reduce costs in a timely manner to adjust for sales shortfalls. Furthermore, because we depend on a small number of customers for the vast majority of our sales, the magnitude of the ramifications of these risks is greater than if our sales were less concentrated with a small number of customers. As a result of our lack of long-term purchase orders and purchase commitments we may experience a rapid decline in our sales and profitability.

We depend on a limited number of suppliers for components for our products. The inability to secure components for our products could reduce our revenues and adversely affect our relationship with our customers.

We rely on a limited number of suppliers for our component parts and raw materials. Although there are many suppliers for each of our component parts and raw materials, we are dependent on a limited number of suppliers for many of the significant components and raw materials. This reliance involves a number of significant potential risks, including:

lack of availability of materials and interruptions in delivery of components and raw materials from our suppliers;

manufacturing delays caused by such lack of availability or interruptions in delivery;

fluctuations in the quality and the price of components and raw materials, in particular due to the petroleum price impact on such materials; and

risks related to foreign operations.

We generally do not have any long-term or exclusive purchase commitments with any of our suppliers. Shenzhen Huaxinhang Indusrial Co.,Ltd, Shenzhen Huashike Industrial Co., Ltd and Shenzhen Yachuangwei Technology Co., Ltd are our largest suppliers of components for our products, each of which accounted for more than 10% of our purchases of components for our products for the quarter ended March 31, 2009. Our failure to maintain existing relationships with our suppliers or to establish new relationships in the future could also negatively affect our ability to obtain our components and raw materials used in our products in a timely manner. If we are unable to obtain ample supply of products from our existing suppliers or alternative sources of supply, we may be unable to satisfy our customers’ orders which could materially and adversely affect our revenues and our relationship with our customers.

Certain disruptions in supply of and changes in the competitive environment for raw materials integral to our products may adversely affect our profitability.

We use a broad range of materials and supplies, including displays, control ICs, flashes, WiFi modules, GPS modules and other electronic components in our products. A significant disruption in the supply of these materials could decrease production and shipping levels, materially increase our operating costs and materially adversely affect our profit margins. Shortages of materials or interruptions in transportation systems, labor strikes, work stoppages, war, acts of terrorism or other interruptions to or difficulties in the employment of labor or transportation in the markets in which we purchase materials, components and supplies for the production of our products, in each case may adversely affect our ability to maintain production of our products and sustain profitability. If we were to experience a significant or prolonged shortage of critical components from any of our suppliers and could not procure the components from other sources, we would be unable to meet our production schedules for some of our key products and to ship such products to our customers in a timely fashion, which would adversely affect our sales, margins and customer relations.

Substantial defaults by our customers on accounts receivable or the loss of significant customers could have a material adverse effect on our business.

A substantial portion of our working capital consists of accounts receivable from customers. If customers responsible for a significant amount of accounts receivable were to become insolvent or otherwise unable to pay for products and services, or to make payments in a timely manner, our business, results of operations or financial condition could be materially adversely affected. An economic or industry downturn could materially adversely affect the servicing of these accounts receivable, which could result in longer payment cycles, increased collection costs and defaults in excess of management’s expectations. A significant deterioration in our ability to collect on accounts receivable could also impact the cost or availability of financing available to us.

In addition, our business is characterized by long periods for collection from our customers and short periods for payment to our suppliers, the combination of which may cause us to have liquidity problems. We experience an average accounts settlement period ranging from one month to as high as four months from the time we sell our products to the time we receive payment from our customers. In contrast, we typically need to place certain deposits and advances with our suppliers on a portion of the purchase price in advance and for some suppliers we must maintain a deposit for future orders. Because our payment cycle is considerably shorter than our receivable cycle, we may experience working capital shortages. Working capital management, including prompt and diligent billing and collection, is an important factor in our results of operations and liquidity. We cannot assure you that system problems, industry trends or other issues will not extend our collection period, adversely impact our working capital.

Our operations would be materially adversely affected if third-party carriers were unable to transport our products on a timely basis.

All of our products are shipped through third party carriers. If a strike or other event prevented or disrupted these carriers from transporting our products, other carriers may be unavailable or may not have the capacity to deliver our products to our customers. If adequate third party sources to ship our products were unavailable at any time, our business would be materially adversely affected.

The seasonality of our business, as well as changes in consumer spending and economic conditions, may cause our quarterly operating results to fluctuate and cause our stock price to decline.

Fluctuations in operating results or the failure of operating results to meet the expectations of public market analysts and investors may negatively impact the value of our securities. Quarterly operating results may fluctuate in the future due to a variety of factors that could affect revenues or expenses in any particular quarter. Fluctuations in quarterly operating results could cause the value of our securities to decline. Investors should not rely on quarter-to-quarter comparisons of results of operations as an indication of future performance. As a result of the factors listed below, it is possible that in future periods results of operations may be below the expectations of public market analysts and investors. This could cause the market price of our securities to decline. Factors that may affect our quarterly results include:

seasonal variations in operating results;

variations in the sales of our products to our significant customers;

increases in returned consumer electronics products in the first quarter which follows our peak third and fourth quarter sales;

variations in manufacturing and supplier relationships;

if we are unable to correctly anticipate and provide for inventory requirements from quarter to quarter, we may not have sufficient inventory to deliver our products to our customers in a timely fashion or we may have excess inventory that we are unable to sell;

the discretionary nature of our customers’ demands and spending patterns;

fluctuation and unpredictability of costs related to the raw material used to manufacture our products;

changes in the laws of the PRC that affect our operations;

our ability to obtain necessary government certifications and/or licenses to conduct our business;

changes in market and economic conditions;

vulnerability of our business to a general economic downturn in China and globally; and

competition.

In addition, our quarterly operating results could be materially adversely affected by political instability, war, acts of terrorism or other disasters.

Sales of our products are somewhat seasonal due to consumer spending patterns, which tend to result in significantly stronger sales in our third and fourth fiscal quarters, especially as a result of the holiday season. This pattern will probably not change significantly in the future. Although we believe that the seasonality of our business is based primarily on the timing of consumer demand for our products, fluctuations in operating results can also result from other factors affecting us and our competitors, including new product developments or introductions, availability of products for resale, competitive pricing pressures, changes in product mix, pricing and product reviews and other media coverage. Due to the seasonality of our business, our results for interim periods are not necessarily indicative of our results for the year.

As a result of these and other factors, revenues for any quarter are subject to significant variation, which may adversely affect our results of operations and the market price for our common stock.

We depend upon patents we license from a third party, Zhao Zifeng, our Chief Executive Officer and Chairman of the Board. The loss of these licenses, an increase in the costs of these licenses or Mr. Zhao’s failure to properly maintain or enforce the patents underlying such licenses may require us to suspend our operations until we obtain replacements and/or redesign our products.

We rely upon certain patents licensed from our Chief Executive Officer and Chairman of the Board, Zhao Zifeng, which gives us rights to third party intellectual property that is necessary or useful for our business. We may also enter into additional licenses to third party intellectual property in the future. In addition, because we do not own any patents relating to our technologies, we do not have the right to defend perceived infringements of patents relating to such technologies. Thus, our success will depend in part on the ability and willingness of our licensors to obtain, maintain and enforce patent protection for our licensed intellectual property, in particular, those patents to which we have secured exclusive rights. Our licensors may not successfully prosecute the patent applications for the intellectual property we have licensed. Even if patents are issued in respect of these patent applications, our licensors may fail to maintain these patents, may determine not to pursue litigation against other companies that are infringing these patents, or may pursue such litigation less aggressively than we would. Without protection for the intellectual property we license, other companies might be able to offer substantially identical products for sale, which could adversely affect our competitive business position and harm our business prospects.

Our ability to compete partly depends on the superiority, uniqueness and value of our technologies, including both internally developed technology and technology licensed from third parties. To protect our proprietary rights, we rely on a combination of trademark, patent, copyright and trade secret laws, confidentiality agreements with our employees and third parties, and protective contractual provisions. Despite our efforts to protect our intellectual property, any of the following occurrences may reduce the value of our intellectual property:

our applications for trademarks or patents may not be granted and, if granted, may be challenged or invalidated;

issued patents, copyrights and trademarks may not provide us with any competitive advantages;

our efforts to protect our intellectual property rights may not be effective in preventing misappropriation of our technology or dilution of our trademarks;

our efforts may not prevent the development and design by others of products or technologies similar to or competitive with, or superior to those that we develop; or

another party may obtain a blocking patent that would force us to either obtain a license or design around the patent to continue to offer the contested feature or service in our technologies.

We rely on trade secret protections through confidentiality agreements with our employees, customers and other parties; the breach of such agreements could adversely affect our business and results of operations.

We also rely on trade secrets, which we seek to protect, in part, through confidentiality and non-disclosure agreements with our employees, customers and other parties. There can be no assurance that these agreements will not be breached, that we would have adequate remedies for any such breach or that our trade secrets will not otherwise become known to or independently developed by competitors. To the extent that consultants, key employees or other third parties apply technological information independently developed by them or by others to our proposed projects, disputes may arise as to the proprietary rights to such information that may not be resolved in our favor. We may be involved from time to time in litigation to determine the enforceability, scope and validity of our proprietary rights. Any such litigation could result in substantial cost and diversion of effort by our management and technical personnel.

We may need additional capital to implement our current business strategy, which may not be available to us, and if we raise additional capital, it may dilute your ownership in us.

We currently depend on bank loans and net revenues to meet our short-term cash requirements. In order to grow revenues and sustain profitability, we will need additional capital. We intend to conduct a public offering of shares of common stock registered in a registration statement and we may conduct additional financing transactions in the future. Obtaining additional financing will be subject to a number of factors, including market conditions, our operating performance and investor sentiment. These factors may make the timing, amount, terms and conditions of additional financing unattractive to us. We cannot assure you that we will be able to obtain any additional financing. If we are unable to obtain the financing needed to implement our business strategy, our ability to increase revenues will be impaired and we may not be able to sustain profitability.

Adverse capital and credit market conditions may significantly affect our ability to meet liquidity needs, access to capital and cost of capital.

The capital and credit markets have been experiencing extreme volatility and disruption for more than twelve months. In recent months, the volatility and disruption have reached unprecedented levels. In some cases, the markets have exerted downward pressure on availability of liquidity and credit capacity for certain issuers. We have historically relied on credit to fund our business and we need liquidity to pay our operating expenses. Without sufficient liquidity, we will be forced to curtail our operations, and our business will suffer. Disruptions, uncertainty or volatility in the capital and credit markets may also limit our access to capital required to operate our business. Such market conditions may limit our ability to replace, in a timely manner, maturing liabilities and access the capital necessary to operate and grow our business. As such, we may be forced to delay raising capital or bear an unattractive cost of capital which could decrease our profitability and significantly reduce our financial flexibility. Our results of operations, financial condition, cash flows and capital position could be materially adversely affected by disruptions in the financial markets.

Our failure to effectively manage growth could harm our business.

We have rapidly and significantly expanded the number and types of products we sell, and we will endeavor to further expand our product portfolio. We must continually introduce new products and technologies, enhance existing products in order to remain competitive, and effectively stimulate customer demand for new products and upgraded versions of our existing products.

This expansion of our products places a significant strain on our management, operations and engineering resources. Specifically, the areas that are strained most by our growth include the following:

New Product Launch: With the growth of our product portfolio, we experience increased complexity in coordinating product development, manufacturing, and shipping. As this complexity increases, it places a strain on our ability to accurately coordinate the commercial launch of our products with adequate supply to meet anticipated customer demand and effective marketing to stimulate demand and market acceptance. If we are unable to scale and improve our product launch coordination, we could frustrate our customers and lose retail shelf space and product sales;

Forecasting, Planning and Supply Chain Logistics: With the growth of our product portfolio, we also experience increased complexity in forecasting customer demand and in planning for production, and transportation and logistics management. If we are unable to scale and improve our forecasting, planning and logistics management, we could frustrate our customers, lose product sales or accumulate excess inventory; and

Support Processes: To manage the growth of our operations, we will need to continue to improve our transaction processing, operational and financial systems, and procedures and controls to effectively manage the increased complexity. If we are unable to scale and improve these areas, the consequences could include: delays in shipment of product, degradation in levels of customer support, lost sales, decreased cash flows, and increased inventory. These difficulties could harm or limit our ability to expand.

We are dependent on certain key personnel and loss of these key personnel could have a material adverse effect on our business, financial condition and results of operations.

Our success is, to a certain extent, attributable to the management, sales and marketing, and operational and technical expertise of certain key personnel. Each of the named executive officers performs key functions in the operation of our business. The loss of a significant number of these employees could have a material adverse effect upon our business, financial condition, and results of operations.

We are dependent on a technically trained workforce and an inability to retain or effectively recruit such employees could have a material adverse effect on our business, financial condition and results of operations.

We must attract, recruit and retain a sizeable workforce of technically competent employees to develop and manufacture our products and provide service support. Our ability to implement effectively our business strategy will depend upon, among other factors, the successful recruitment and retention of additional highly skilled and experienced engineering and other technical and marketing personnel. There is significant competition for technologically qualified personnel in our business and we may not be successful in recruiting or retaining sufficient qualified personnel consistent with our operational needs.

We do not carry any business interruption insurance, products liability insurance or any other insurance policy except for a limited property insurance policy. As a result, we may incur uninsured losses, increasing the possibility that you would lose your entire investment in our Company.

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

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

We are subject to market risk through our sales to international markets.

A growing percentage of our sales are being derived from international markets. These international sales are primarily focused in Europe, Southeast Asia, and North America. These operations are subject to risks that are inherent in operating in foreign countries, including the following:

foreign countries could change regulations or impose currency restrictions and other restraints;

changes in foreign currency exchange rates and hyperinflation or deflation in the foreign countries in which we operate;

exchange controls;

some countries impose burdensome tariffs and quotas;

political changes and economic crises may lead to changes in the business environment in which we operate;

international conflict, including terrorist acts, could significantly impact our financial condition and results of operations; and

economic downturns, political instability and war or civil disturbances may disrupt distribution logistics or limit sales in individual markets.

In addition, we utilize third-party distributors to act as our representative for the geographic region that they have been assigned. Sales through distributors represent approximately 18% of total revenue. Significant terms and conditions of distributor agreements include FOB source, net 30 days payment terms, with no return or exchange rights, and no price protection. Since the product transfers title to the distributor at the time of shipment by us, the products are not considered inventory on consignment. Our success is dependent on these distributors finding new customers and receiving new orders from existing customers.

Our facilities and information systems could be damaged as a result of disasters or unpredictable events, which could have an adverse effect on our business operations.

Our headquarters and major facilities including manufacturing plants, sales offices and research and development centers are located in China. We also operate procurement, logistics, sales and marketing facilities in other parts of the world. If major disasters such as earthquakes, fires, floods, wars, terrorist attacks, computer viruses, transportation disasters or other events occur, or our information system or communications network breaks down or operates improperly as a result of such events, our facilities may be seriously damaged, and we may have to stop or delay production and shipment. We may incur expenses relating to such damages.

RISKS RELATED TO DOING BUSINESS IN CHINA

Substantially all of our assets are located in the PRC and substantially all of our revenues are derived from our operations in China, and changes in the political and economic policies of the PRC government could have a significant impact upon the business we may be able to conduct in the PRC and accordingly on the results of our operations and financial condition.

Our business operations may be adversely affected by the current and future political environment in the PRC. The Chinese government exerts substantial influence and control over the manner in which we must conduct our business activities. Our ability to operate in China may be adversely affected by changes in Chinese laws and regulations, including those relating to taxation, import and export tariffs, raw materials, environmental regulations, land use rights, property and other matters. Under the current government leadership, the government of the PRC has been pursuing economic reform policies that encourage private economic activity and greater economic decentralization. There is no assurance, however, that the government of the PRC will continue to pursue these policies, or that it will not significantly alter these policies from time to time without notice.

Our operations are subject to PRC laws and regulations that are sometimes vague and uncertain. Any changes in such PRC laws and regulations, or the interpretations thereof, may have a material and adverse effect on our business.

The PRC’s legal system is a civil law system based on written statutes. Unlike the common law system prevalent in the United States, decided legal cases have little value as precedent in China. There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including but not limited to, the laws and regulations governing our business, or the enforcement and performance of our arrangements with customers in the event of the imposition of statutory liens, death, bankruptcy or criminal proceedings. The Chinese government has been developing a comprehensive system of commercial laws, and considerable progress has been made in introducing laws and regulations dealing with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade. However, because these laws and regulations are relatively new, and because of the limited volume of published cases and judicial interpretation and their lack of force as precedents, interpretation and enforcement of these laws and regulations involve significant uncertainties. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively.

Our principal operating subsidiary, Yinlips Digital Technology (Shenzhen) Co., Ltd., (“Shenzhen Yinlips”) is considered a foreign invested enterprise under PRC laws, and as a result is required to comply with PRC laws and regulations, including laws and regulations specifically governing the activities and conduct of foreign invested enterprises. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our businesses. If the relevant authorities find us in violation of PRC laws or regulations, they would have broad discretion in dealing with such a violation, including, without limitation:

levying fines;

revoking our business license, other licenses or authorities;

requiring that we restructure our ownership or operations; and

requiring that we discontinue any portion or all of our business.

Investors may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in China based upon U.S. laws, including the federal securities laws or other foreign laws against us or our management.

Most of our current operations, including the manufacturing and distribution of our products, are conducted in China. Moreover, all of our directors and officers are nationals and residents of China or Hong Kong. All or substantially all of the assets of these persons are located outside the United States and in the PRC. As a result, it may not be possible to effect service of process within the United States or elsewhere outside China upon these persons. In addition, uncertainty exists as to whether the courts of China would recognize or enforce judgments of U.S. courts obtained against us or such officers and/or directors predicated upon the civil liability provisions of the securities laws of the United States or any state thereof, or be competent to hear original actions brought in China against us or such persons predicated upon the securities laws of the United States or any state thereof.

The scope of our business license in China is limited, and we may not expand or continue our business without government approval and renewal, respectively.

Our principal operating subsidiary, Shenzhen Yinlips, is a wholly foreign-owned enterprise, commonly known as a WFOE. A WFOE can only conduct business within its approved business scope, which ultimately appears on its business license. Our license permits us to design, manufacture, sell and market portable electronic products throughout the PRC and we have also obtained approval for foreign trade rights. Any amendment to the scope of our business requires further application and government approval. In order for us to expand our business beyond the scope of our license, we will be required to enter into a negotiation with the PRC authorities for the approval to expand the scope of our business. We cannot assure investors that Shenzhen Yinlips will be able to obtain the necessary government approval for any change or expansion of its business.

Our labor costs are likely to increase as a result of changes in Chinese labor laws.

We expect to experience an increase in our cost of labor due to recent changes in Chinese labor laws which are likely to increase costs further and impose restrictions on our relationship with our employees. In June 2007, the National People’s Congress of the PRC enacted new labor law legislation called the Labor Contract Law and more strictly enforced existing labor laws. The new law, which became effective on January 1, 2008, amended and formalized workers’ rights concerning overtime hours, pensions, layoffs, employment contracts and the role of trade unions. As a result of the new law, the Company has had to reduce the number of hours of overtime its employees can work, substantially increase the salaries of its employees, provide additional benefits to its employees, and revise certain other of its labor practices. The increase in labor costs has increased the Company’s operating costs, which increase the Company has not always been able to pass through to its customers. As a result, the Company has incurred certain operating losses as its cost of manufacturing increased. In addition, under the new law, employees who either have worked for the Company for 10 years or more or who have had two consecutive fixed-term contracts must be given an “open-ended employment contract” that, in effect, constitutes a lifetime, permanent contract, which is terminable only in the event the employee materially breaches the Company’s rules and regulations or is in serious dereliction of his duty. Such non-cancelable employment contracts will substantially increase its employment related risks and limit the Company’s ability to downsize its workforce in the event of an economic downturn. No assurance can be given that the Company will not in the future be subject to labor strikes or that it will not have to make other payments to resolve future labor issues caused by the new laws. Furthermore, there can be no assurance that the labor laws will not change further or that their interpretation and implementation will vary, which may have a negative effect upon our business and results of operations.

We are subject to a variety of environmental laws and regulations related to our manufacturing operations. Our failure to comply with environmental laws and regulations may have a material adverse effect on our business and results of operations.

We are subject to various environmental laws and regulations that require us to obtain environmental permits for our manufacturing operations. Our environmental permit from the Shenzhen Environment Protection Bureau covering our manufacturing operations are currently in effect and do not expire until February 5, 2010. If we are unable to renew our permit when it expires or we fail to comply with the provisions of the permit, we could be subject to fines, criminal charges or other sanctions by regulators, including the suspension or termination of our manufacturing operations.

We cannot assure you that at all times we will be in compliance with environmental laws and regulations or our environmental permits or that we will not be required to expend significant funds to comply with, or discharge liabilities arising under, environmental laws, regulations and permits.

Recent PRC regulations relating to acquisitions of PRC companies by foreign entities may create regulatory uncertainties that could restrict or limit our ability to operate. Our failure to obtain required prior approval for the Share and Warrant Exchange, and the listing and trading of our common stock could have a material adverse effect on our business, operating results, reputation and trading price of our common stock.

The PRC State Administration of Foreign Exchange, or “SAFE,” issued a public notice in November 2005, known as Circular 75, concerning the use of offshore holding companies controlled by PRC residents in mergers and acquisitions in China. This circular requires that (1) a PRC resident shall register with a local branch of the SAFE before he or she establishes or controls an overseas special purpose vehicle, or SPV, for the purpose of overseas equity financing (including convertible debt financing); (2) when a PRC resident contributes the assets of or his or her equity interests in a domestic enterprise to an SPV, or engages in overseas financing after contributing assets or equity interests to an SPV, such PRC resident must register his or her interest in the SPV and any changes in such interest with a local branch of the SAFE; and (3) when the SPV undergoes a material change outside of China, such as a change in share capital or merger or acquisition, the PRC resident shall, within 30 days from the occurrence of the event that triggers the change, register such change with a local branch of the SAFE. In addition, SAFE issued updated internal implementing rules, or the Implementing Rules in relation to Notice 75. The Implementing Rules were promulgated and became effective on May 29, 2007. Such Implementing Rules provide more detailed provisions and requirements regarding the overseas investment foreign exchange registration procedures. However, even after the promulgation of Implementing Rules there still exist uncertainties regarding the SAFE registration for PRC residents’ interests in overseas companies.

In connection with the Purchase Right (as described below), Mr. Zhao made a SAFE registration with respect to his investment in the Company. However, as of the date hereof, such registration has not been approved and there can be no assurance that it will be approved. If Mr. Zhao's SAFE registration is not approved or if any other PRC resident stockholder fails to make the required SAFE registration, the onshore PRC subsidiaries of that offshore company may be prohibited from distributing their profits and the proceeds from any reduction in capital, share transfer or liquidation to the offshore entity. Failure to comply with the SAFE registration and amendment requirements described above could result in liability under PRC laws for evasion of applicable foreign exchange restrictions. Because of uncertainty in how the SAFE notice will be interpreted and enforced, we cannot be sure how it will affect our business operations or future plans. For example, Shenzhen Yinlips’ ability to conduct foreign exchange activities, such as the remittance of dividends and foreign currency-denominated borrowings, may be subject to compliance with the SAFE notice by Mr. Zhao and any other of our PRC resident beneficial holders over whom we have no control. In addition, we cannot assure you that either Mr. Zhao or any other such PRC residents will be able to complete the necessary approval and registration procedures required by the SAFE regulations. Failure by Mr. Zhao or any other PRC resident beneficial holder to register as required with the relevant branch of SAFE could subject these PRC resident beneficial holders to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit Shenzhen Yinlips’ ability to make distributions or pay dividends or affect our ownership structure, which could adversely affect our business and prospects.

On August 8, 2006, the PRC Ministry of Commerce (“MOFCOM”), joined by the State-owned Assets Supervision and Administration Commission of the State Council, the State Administration of Taxation, the State Administration for Industry and Commerce, the China Securities Regulatory Commission and SAFE, released a substantially amended version of the Provisions for Foreign Investors to Merge with or Acquire Domestic Enterprises (the “Revised M&A Regulations”), which took effect September 8, 2006. These new rules significantly revised China’s regulatory framework governing onshore-to-offshore restructurings and foreign acquisitions of domestic enterprises. These new rules signify greater PRC government attention to cross-border merger, acquisition and other investment activities, by confirming MOFCOM as a key regulator for issues related to mergers and acquisitions in China and requiring MOFCOM approval of a broad range of merger, acquisition and investment transactions. Further, the new rules establish reporting requirements for acquisition of control by foreigners of companies in key industries, and reinforce the ability of the Chinese government to monitor and prohibit foreign control transactions in key industries.

Among other things, the revised M&A Regulations include new provisions that purport to require that an offshore special purpose vehicle, or a SPV, formed for listing purposes and controlled directly or indirectly by PRC companies or individuals must obtain the approval of the CSRC prior to the listing and trading of such SPV’s securities on an overseas stock exchange. On September 21, 2006, the CSRC published on its official website procedures specifying documents and materials required to be submitted to it by SPVs seeking CSRC approval of their overseas listings. However, the application of this PRC regulation remains unclear with no consensus currently existing among the leading PRC law firms regarding the scope and applicability of the CSRC approval requirement.

According to the M&A Regulations, a “Related Party Acquisition” is defined as having taken place when a PRC business that is owned by PRC individual(s) is sold to a non-PRC entity that is established or controlled, directly or indirectly, by those same PRC individual(s). Under the M&A Regulations, any Related Party Acquisition must be approved by MOFCOM and any indirect arrangement or series of arrangements which achieves the same end result without the approval of MOFCOM is a violation of PRC law.

Our BVI subsidiary, Podium, was owned by a non-PRC individual. Podium obtained all the equity interests of Shenzhen Yinlips further to an Equity Transfer Agreement dated December 28, 2007 (the “Original Equity Agreement”) by and among Podium, Zhao Zifeng, our Chief Executive Officer and Chairman of the Board, and Zhang Weiqiang. The Original Equity Agreement received approval by the Shenzhen Bureau of Trade and Industry on January 15, 2008 and Shenzhen Yinlips filed all required applications and received all appropriate SAFE approvals from the Shenzhen branch of MOFCOM. The Original Equity Agreement was amended and restated in September 2008 (the “Restated Equity Agreement”) to increase the total purchase price of the equity interests of Shenzhen Yinlips to RMB 19,200,000 although no additional governmental approvals were obtained for the Restated Equity Agreement. The Original Equity Agreement was amended because the purchase price of the equity interests of Shenzhen Yinlips as set forth in the Original Equity Agreement was not based upon the valuation value of the equity interests. In the Restated Equity Agreement, the parties agreed to change the purchase price of the equity interests of Shenzhen Yinlips from RMB 1,000,000, as set forth in the Original Equity Agreement, to RMB 19,200,000 based on a valuation report issued by Shenzhen Guosong Assets Appraisal Co., Ltd. on June 27, 2008.

Our Chief Executive Officer, Zhao Zifeng, purchased 6,500,000 shares of our common stock at a per share purchase price of $0.415 (the “Purchase Right”). Each of the stockholders and warrantholders of the Company prior to the Share and Warrant Exchange agreed to cancel 0.91867 shares of common stock and warrants to purchase 0.98943 shares of common stock held by each of them for each one (1) share of common stock purchased by Mr. Zhao pursuant to the Purchase Right. As a result of the full exercise of the Purchase Right, Mr. Zhao owns approximately 53.43% of our outstanding common stock (assuming the full conversion of the maximum number of shares of Series A Convertible Preferred Stock issued in the Private Placement).

The PRC regulatory authorities may take the view that the acquisition of Shenzhen Yinlips by Podium, the Share and Warrant Exchange and the Purchase Right are part of an overall series of arrangements which constitute a Related Party Acquisition, because at the end of these transactions, PRC individuals become majority owners and effective controlling parties of a foreign entity that acquired ownership of Shenzhen Yinlips. The PRC regulatory authorities may also take the view that the registration of the acquisition of Shenzhen Yinlips by Podium with the Shenzhen Bureau of Trade and Industry and the filings with the Shenzhen SAFE and MOFCOM may not evidence that the acquisition has been properly approved because the relevant parties did not fully disclose to the Shenzhen Bureau of Trade and Industry, SAFE or MOFCOM of the overall restructuring arrangements, the existence of the Share and Warrant Exchange and its link with the acquisition of Shenzhen Yinlips by Podium. The PRC legal counsel of Shenzhen Yinlips, Han Kun Law Offices, has opined that: (1) the Original Equity Agreement and the transactions thereunder have received all requisite approvals from the competent authorities, and all required registrations, certifications and approvals for the Original Equity Agreement and the transactions thereunder have been received by Shenzhen Yinlips; (2) Shenzhen Yinlips has filed all required applications for the Original Equity Agreement and the transactions thereunder and has received any and all required foreign exchange registrations, certifications and approvals as required, including, but not limited to, those as required from the appropriate national and local branches of SAFE and MOFCOM; (3) to their best knowledge, the Original Equity Agreement and the transactions thereunder do not (a) contravene or circumvent any provision of applicable PRC laws and regulations, including without limitation, the M&A Regulations, the Circular on Certain Administrative Measures on Financing and Inbound Investments by PRC Residents Through Offshore Special Purpose Vehicle effectives as of November 1, 2005 and its implementing rules; or (b) contravene the articles of association, business license or other constituent documents of Shenzhen Yinlips; and (4) to their best knowledge, they are not aware of any issue, fact or circumstance which would lead them to believe that the PRC regulatory authorities would revoke the Original Equity Agreement and the transactions thereunder which the Shenzhen Bureau of Trade and Industry has duly approved and that although approval of the Restated Equity Agreement has not been obtained, the Restated Equity Agreement is in compliance with the applicable PRC laws and regulations.

We, however, cannot assure you that the PRC regulatory authorities, MOFCOM in particular, may take the same view as the PRC legal counsel. If the PRC regulatory authorities take the view that the acquisition constitutes a Related Party Acquisition under the M&A Regulations, we cannot assure you we may be able to obtain the approval required from the national offices of MOFCOM.

If the PRC regulatory authorities take the view that the acquisition of Shenzhen Yinlips by Podium constitutes a Related Party Acquisition without the approval of the national offices of MOFCOM, they could invalidate our acquisition and ownership of Shenzhen Yinlips. Additionally, the PRC regulatory authorities may take the view that the Share and Warrant Exchange constitutes a transaction which requires the prior approval of the China Securities Regulatory Commission, or CSRC. If this takes place, we would attempt to find a way to re-establish control of Shenzhen Yinlips’ business operations through a series of contractual arrangements rather than an outright purchase of Shenzhen Yinlips. But we cannot assure you that any such contractual arrangements will be protected by PRC law or that the Company can receive as complete or effective economic benefit and overall control of Shenzhen Yinlips’ business than if the Company had direct ownership of Shenzhen Yinlips. In addition, we cannot assure you that any such contractual arrangements can be successfully effected under PRC law. If we cannot obtain MOFCOM or CSRC approval if required by the PRC regulatory authorities to do so, and if we cannot put in place or enforce relevant contractual arrangements as an alternative and equivalent means of control of Shenzhen Yinlips, our business and financial performance will be materially adversely affected.

If the CSRC approval is not obtained, we may face regulatory actions or other sanctions from the CSRC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operations in the PRC, limit our operating privileges in the PRC, delay or restrict the repatriation of the proceeds from this offering into the PRC, or take other actions that could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our common stock.

Any uncertainties and/or negative publicity regarding this CSRC approval requirement could have a material adverse effect on the trading price of our common stock. Furthermore, published news reports in China recently indicated that the CSRC may have curtailed or suspended overseas listings for Chinese private companies. These news reports have created further uncertainty regarding the approach that the CSRC and other PRC regulators may take with respect to us.

It is uncertain how our business operations or future strategy will be affected by the interpretations and implementation of the aforementioned rules and regulations. It is anticipated that application of the new rules will be subject to significant administrative interpretation, and we will need to closely monitor how MOFCOM and other ministries apply the rules to ensure that our domestic and offshore activities continue to comply with PRC law. Given the uncertainties regarding interpretation and application of the new rules, we may need to expend significant time and resources to maintain compliance.

The ability of our Chinese operating subsidiaries to pay dividends may be restricted due to foreign exchange control and other regulations of China.

Under applicable PRC regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, a foreign-invested enterprise in China is required to set aside at least 10.0% of its after-tax profit based on PRC accounting standards each year to its general reserves until the accumulative amount of such reserves reach 50.0% of its registered capital. These reserves are not distributable as cash dividends. The board of directors of a foreign-invested enterprise has the discretion to allocate a portion of its after-tax profits to staff welfare and bonus funds, which may not be distributed to equity owners except in the event of liquidation.

Furthermore, the ability of our Chinese operating subsidiaries to pay dividends may be restricted due to the foreign exchange control policies and availability of cash balance of the Chinese operating subsidiaries. Because substantially all of our operations are conducted in China and a substantial majority of our revenues are generated in China, a majority of our revenue being earned and currency received are denominated in Renminbi (RMB). RMB is subject to the exchange control regulation in China, and, as a result, we may unable to distribute any dividends outside of China due to PRC exchange control regulations that restrict our ability to convert RMB into US Dollars.

Our inability to receive dividends or other payments from our Chinese operating subsidiary could adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business. Shenzhen Yinlips’ funds may not be readily available to us to satisfy obligations which have been incurred outside the PRC, which could adversely affect our business and prospects or our ability to meet our cash obligations. Accordingly, if we do not receive dividends from our Chinese operating subsidiary, our liquidity, financial condition and ability to make dividend distributions to our stockholders will be materially and adversely affected.

The foreign currency exchange rate between U.S. Dollars and Renminbi could adversely affect our financial condition.

To the extent that we need to convert U.S. Dollars into Renminbi for our operational needs, our financial position and the price of our common stock may be adversely affected should the Renminbi appreciate against the U.S. Dollar at that time. Conversely, if we decide to convert our Renminbi into U.S. Dollars for the operational needs or paying dividends on our common stock, the dollar equivalent of our earnings from our subsidiaries in China would be reduced should the U.S. Dollar appreciate against the Renminbi.

Until 1994, the Renminbi experienced a gradual but significant devaluation against most major currencies, including U.S. Dollars, and there was a significant devaluation of the Renminbi on January 1, 1994 in connection with the replacement of the dual exchange rate system with a unified managed floating rate foreign exchange system. Since 1994, the value of the Renminbi relative to the U.S. Dollar has remained stable and has appreciated slightly against the U.S. Dollar. Countries, including the United States, have argued that the Renminbi is artificially undervalued due to China’s current monetary policies and have pressured China to allow the Renminbi to float freely in world markets. In July 2005, the PRC government changed its policy of pegging the value of the Renminbi to the U.S. Dollar. Under the new policy the Renminbi is permitted to fluctuate within a narrow and managed band against a basket of designated foreign currencies. While the international reaction to the Renminbi revaluation has generally been positive, there remains significant international pressure on the PRC government to adopt an even more flexible currency policy, which could result in further and more significant appreciation of the Renminbi against the U.S. Dollar.

Inflation in the PRC could negatively affect our profitability and growth.

While the PRC economy has experienced rapid growth, such growth has been uneven among various sectors of the economy and in different geographical areas of the country. Rapid economic growth can lead to growth in the money supply and rising inflation. During the past decade, the rate of inflation in China has been as high as approximately 20% and China has experienced deflation as low as approximately minus 2%. If prices for our products and services rise at a rate that is insufficient to compensate for the rise in the costs of supplies such as raw materials, it may have an adverse effect on our profitability. In order to control inflation in the past, the PRC government has imposed controls on bank credits, limits on loans for fixed assets and restrictions on state lending. The implementation of such policies may impede economic growth. In October 2004, the People’s Bank of China, the PRC’s central bank, raised interest rates for the first time in nearly a decade and indicated in a statement that the measure was prompted by inflationary concerns in the Chinese economy. In April 2006, the People’s Bank of China raised the interest rate again. Repeated rises in interest rates by the central bank would likely slow economic activity in China which could, in turn, materially increase our costs and also reduce demand for our products and services. The People’s Bank of China may cut interest rates in the near future in order to offset the negative effects caused by the worldwide financial crisis. This action might have a positive effect on our market, but such positive effect will not offset the negative effects on our market caused by financial crisis.

Because our funds are held in banks which do not provide insurance, the failure of any bank in which we deposit our funds could affect our ability to continue in business.

Banks and other financial institutions in the PRC do not provide insurance for funds held on deposit. A significant portion of our assets are in the form of cash deposited with banks in the PRC, and in the event of a bank failure, we may not have access to our funds on deposit. Depending upon the amount of money we maintain in a bank that fails, our inability to have access to our cash could impair our operations, and, if we are not able to access funds to pay our suppliers, employees and other creditors, we may be unable to continue our business.

Failure to comply with the United States Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences.

As our ultimate holding company is a Delaware corporation, we are subject to the United States Foreign Corrupt Practices Act, which generally prohibits United States companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including some that may compete with us, are not subject to these prohibitions. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices may occur from time-to-time in the PRC. We can make no assurance, however, that our employees or other agents will not engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results of operations.

If we make equity compensation grants to persons who are PRC citizens, they may be required to register with the State Administration of Foreign Exchange of the PRC, or SAFE. We may also face regulatory uncertainties that could restrict our ability to adopt an equity compensation plan for our directors and employees and other parties under PRC law.

On April 6, 2007, SAFE issued the “Operating Procedures for Administration of Domestic Individuals Participating in the Employee Stock Ownership Plan or Stock Option Plan of An Overseas Listed Company,” also known as “Circular 78.” It is not clear whether Circular 78 covers all forms of equity compensation plans or only those which provide for the granting of stock options. For any plans which are so covered and are adopted by a non-PRC listed company after April 6, 2007, Circular 78 requires all participants who are PRC citizens to register with and obtain approvals from SAFE prior to their participation in the plan. In addition, Circular 78 also requires PRC citizens to register with SAFE and make the necessary applications and filings if they participated in an overseas listed company’s covered equity compensation plan prior to April 6, 2007. We intend to adopt an equity compensation plan in the future and make substantial option grants to our officers and directors, most of who are PRC citizens. Circular 78 may require our officers and directors who receive option grants and are PRC citizens to register with SAFE. We believe that the registration and approval requirements contemplated in Circular 78 will be burdensome and time consuming. If it is determined that any of our equity compensation plans are subject to Circular 78, failure to comply with such provisions may subject us and participants of our equity incentive plan who are PRC citizens, including or Chief Executive Officer, to fines and legal sanctions and prevent us from being able to grant equity compensation to our PRC employees. In that case, our ability to compensate our employees and directors through equity compensation would be hindered and our business operations may be adversely affected.

Shenzhen Yinlips has enjoyed certain preferential tax concessions and the loss of these preferential tax concessions may cause our tax liabilities to increase and our profitability to decline.

Under the tax laws of the PRC, Shenzhen Yinlips has had tax advantages granted by local government for corporate income taxes and sales taxes commencing April 6, 2004. As a manufacturing enterprise established in Shenzhen, PRC, the Company was entitled to a preferential Enterprise Income Tax (”EIT”) rate. On March 16, 2007, the National People’s Congress of China enacted a new PRC Enterprise Income Tax Law, under which foreign invested enterprises and domestic companies will be subject to enterprise income tax at a uniform rate of 25%. The new law became effective on January 1, 2008. During the transition period for enterprises established before March 16, the tax rate will be gradually increased starting in 2008 and be equal to the new tax rate in 2012. Since 2008, the local government has increased the EIT rate from 15% to 18%. The expiration of the preferential tax treatment will increase our tax liabilities and reduce our profitability.

Any recurrence of Severe Acute Respiratory Syndrome (SARS), Avian Flu, or another widespread public health problem in the PRC could adversely affect our operations.

A renewed outbreak of SARS, Avian Flu or another widespread public health problem in China, where our manufacturing facilities are located and where the substantial portion of our sales occur, could have a negative effect on our operations. Our business is dependent upon its ability to continue to manufacture products. Such an outbreak could have an impact on our operations as a result of:

quarantines or closures of some of our manufacturing facilities, which would severely disrupt our operations;

the sickness or death of our key officers and employees; or

a general slowdown in the Chinese economy.

Any of the foregoing events or other unforeseen consequences of public health problems could adversely affect our operations.

A downturn in the economy of the PRC may slow our growth and profitability.

The growth of the Chinese economy has been uneven across geographic regions and economic sectors. There can be no assurance that growth of the Chinese economy will be steady or that any downturn will not have a negative effect on our business, especially if it results in either a decreased use of our products or in pressure on us to lower our prices.

Because our business is located in the PRC, we may have difficulty establishing adequate management, legal and financial controls, which we are required to do in order to comply with U.S. securities laws.

PRC companies have historically not adopted a Western style of management and financial reporting concepts and practices, which includes strong corporate governance, internal controls and, computer, financial and other control systems. Most of our middle and top management staff are not educated and trained in the Western system, and we may difficulty hiring new employees in the PRC with such training. In addition, we may have difficulty in hiring and retaining a sufficient number of qualified employees to work in the PRC. As a result of these factors, we may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet Western standards. Therefore, we may, in turn, experience difficulties in implementing and maintaining adequate internal controls as required under Section 404 of the Sarbanes-Oxley Act of 2002. This may result in significant deficiencies or material weaknesses in our internal controls which could impact the reliability of our financial statements and prevent us from complying with SEC rules and regulations and the requirements of the Sarbanes-Oxley Act of 2002. Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on our business.

RISKS RELATED TO OUR CAPITAL STRUCTURE

We may not be able to achieve the benefits we expect to result from the Share and Warrant Exchange.

On September 22, 2008, we entered into the Exchange Agreement with the sole stockholder and all of the warrantholders of Podium, pursuant to which we agreed to acquire 100% of the issued and outstanding securities of Podium in exchange for shares of our common stock and warrants to purchase our common stock. On October 17, 2008, the Share and Warrant Exchange closed, Podium became our 100%-owned subsidiary and our sole business operations became that of Podium and its subsidiaries. We also have a new board of directors and management consisting of persons from Podium and Shenzhen Yinlips and we changed our corporate name from SRKP 17, Inc. to Yinlips Technology, Inc.

We may not realize the benefits that we hoped to receive as a result of the Share and Warrant Exchange, which include:

access to the capital markets of the United States;

the increased market liquidity expected to result from exchanging stock in a private company for securities of a public company that may eventually be traded;

the ability to use registered securities to make acquisition of assets or businesses;

increased visibility in the financial community;

enhanced access to the capital markets;

improved transparency of operations; and

perceived credibility and enhanced corporate image of being a publicly traded company.

There can be no assurance that any of the anticipated benefits of the Share and Warrant Exchange will be realized in respect to our new business operations. In addition, the attention and effort devoted to achieving the benefits of the Share and Warrant Exchange and attending to the obligations of being a public company, such as reporting requirements and securities regulations, could significantly divert management’s attention from other important issues, which could materially and adversely affect our operating results or stock price in the future.

Our common stock may be considered a “penny stock,” and thereby be subject to additional sale and trading regulations that may make it more difficult to sell.

Our common stock, which is not currently listed or quoted for trading, may be considered to be a “penny stock” if it does not qualify for one of the exemptions from the definition of “penny stock” under Section 3a51-1 of the Securities Exchange Act for 1934, as amended (the “Exchange Act”) once, and if, it starts trading. Our common stock may be a “penny stock” if it meets one or more of the following conditions: (i) the stock trades at a price less than $5.00 per share; (ii) it is NOT traded on a “recognized” national exchange; (iii) it is NOT quoted on the Nasdaq Capital Market, or even if so, has a price less than $5.00 per share; or (iv) is issued by a company that has been in business less than three years with net tangible assets less than $5 million.

The principal result or effect of being designated a “penny stock” is that securities broker-dealers participating in sales of our common stock will be subject to the “penny stock” regulations set forth in Rules 15-2 through 15g-9 promulgated under the Exchange Act. For example, Rule 15g-2 requires broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document at least two business days before effecting any transaction in a penny stock for the investor’s account. Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor’s financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult and time consuming for holders of our common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.

There is no current trading market for our common stock, and there is no assurance of an established public trading market, which would adversely affect the ability of our investors to sell their securities in the public market.

Our common stock is not currently listed or quoted for trading on any national securities exchange or national quotation system. We applied for the listing of our common stock on the NYSE Amex on March 16, 2009. There is no guarantee that the NYSE Amex, or any other exchange or quotation system, will permit our shares to be listed and traded. If we fail to obtain a listing on the NYSE Amex, we may seek quotation on the OTC Bulletin Board. The NASD has enacted changes that limit quotations on the OTC Bulletin Board to securities of issuers that are current in their reports filed with the Securities and Exchange Commission. The effect on the OTC Bulletin Board of these rule changes and other proposed changes cannot be determined at this time. The OTC Bulletin Board is an inter-dealer, over-the-counter market that provides significantly less liquidity than the NASDAQ Global Market. Quotes for stocks included on the OTC Bulletin Board are not listed in the financial sections of newspapers as are those for the NASDAQ Global Market. Therefore, prices for securities traded solely on the OTC Bulletin Board may be difficult to obtain and holders of common stock may be unable to resell their securities at or near their original offering price or at any price.

Shares eligible for future sale may adversely affect the market price of our common stock, as the future sale of a substantial amount of outstanding stock in the public marketplace could reduce the price of our common stock.

Pursuant to the terms of the Share and Warrant Exchange, we agreed to file a registration statement with the Securities and Exchange Commission to register the 4,473,583 shares of common stock underlying our Series A Convertible Preferred Stock issued in an equity financing that was conducted in connection with the Share and Warrant Exchange. The registration statement must be filed within 60 days of the closing of the Share and Warrant Exchange. We also agreed to register 1,125,000 shares of common stock and 665,091 shares of common stock issuable upon the exercise of outstanding warrants held by our stockholders immediately prior to the Share and Warrant Exchange. Of these shares, 229,613 shares of common stock and 135,745 shares of common stock underlying warrants would be covered by the registration statement filed in connection with the Private Placement, and 895,387 shares of common stock and 529,346 shares of common stock underlying warrants, which are beneficially owned by affiliates of the placement agent would be included in a subsequent registration statement filed by us within 10 days after the end of the six-month period that immediately follows the date on which we file the registration statement to register the shares issued in the Private Placement. Each investor may sell or transfer any shares of the common stock after the effective date of the registration statement except that they entered into a lock-up agreement pursuant to which they agreed not to conduct any sales until 90 days after our common stock is listed or quoted on a national securities exchange, at which time one-twelfth of the shares purchased may be sold, and thereafter the shares will be automatically released from the lock-up restrictions every 30 days in eleven equal installments. In addition, WestPark, in its discretion, may release some or all the shares earlier than the schedule set forth in this section. Any early release by WestPark will apply equally to each of the investors in the Private Placement.

Additionally, the former stockholders of Podium and their designees, may be eligible to sell all or some of our shares of common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144 (“Rule 144”), promulgated under the Securities Act of 1933, as amended (the “Securities Act”), as early as October 23, 2009, subject to certain limitations. Under Rule 144, an affiliate stockholder who has satisfied the required holding period may, under certain circumstances, sell within any three-month period a number of securities which does not exceed the greater of 1% of the then outstanding shares of common stock or the average weekly trading volume of the class during the four calendar weeks prior to such sale. As of April 15, 2009, 1% of our issued and outstanding shares of common stock was approximately 121,644 shares (assuming the full conversion of the maximum number of shares of Series A Convertible Preferred Stock issued in the Private Placement). Rule 144 also permits, under certain circumstances, the sale of securities, without any limitations, by a non-affiliate that has satisfied a one-year holding period. Furthermore, non-affiliate stockholders are not subject to volume limitations. Any substantial sale of common stock pursuant to any resale prospectus or Rule 144 may have an adverse effect on the market price of our common stock by creating an excessive supply.

Our Chief Executive Officer and Chairman of the Board exercises significant influence over us.

Our Chief Executive Officer and Chairman of the Board, Zhao Zifeng, beneficially owns or controls approximately 53.43% of our outstanding shares (assuming the full conversion of the maximum number of shares of Series A Convertible Preferred Stock issued in the Private Placement). Mr. Zhao has a controlling influence in determining the outcome of any corporate transaction or other matters submitted to our stockholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets, election of directors, and other significant corporate actions. Mr. Zhao may also have the power to prevent or cause a change in control. In addition, without the consent of Mr. Zhao, we could be prevented from entering into transactions that could be beneficial to us. The interests of Mr. Zhao may differ from the interests of our other stockholders.

Compliance with changing regulation of corporate governance and public disclosure will result in additional expenses.

Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and related SEC regulations, have created uncertainty for public companies and significantly increased the costs and risks associated with accessing the public markets and public reporting. Our management team will need to invest significant management time and financial resources to comply with both existing and evolving standards for public companies, which will lead to increased general and administrative expenses and a diversion of management time and attention from revenue generating activities to compliance activities.

If we fail to maintain effective internal controls over financial reporting, the price of our common stock may be adversely affected.

We are required to establish and maintain appropriate internal controls over financial reporting. Failure to establish those controls, or any failure of those controls once established, could adversely impact our public disclosures regarding our business, financial condition or results of operations. Any failure of these controls could also prevent us from maintaining accurate accounting records and discovering accounting errors and financial frauds. Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 require annual assessment of our internal control over financial reporting, and attestation of this assessment by our independent registered public accountants. The SEC extended the compliance dates for non-accelerated filers, as defined by the SEC. Accordingly, we believe that the annual assessment of our internal controls requirement first applied to our annual report for the 2007 fiscal year and the attestation requirement of management’s assessment by our independent registered public accountants will first apply to our annual report for the 2009 fiscal year. The standards that must be met for management to assess the internal control over financial reporting as effective are new and complex, and require significant documentation, testing and possible remediation to meet the detailed standards. We may encounter problems or delays in completing activities necessary to make an assessment of our internal control over financial reporting. In addition, the attestation process by our independent registered public accountants is new and we may encounter problems or delays in completing the implementation of any requested improvements and receiving an attestation of our assessment by our independent registered public accountants. If we cannot assess our internal control over financial reporting as effective, or our independent registered public accountants are unable to provide an unqualified attestation report on such assessment, investor confidence and share value may be negatively impacted.

In addition, management’s assessment of internal controls over financial reporting may identify weaknesses and conditions that need to be addressed in our internal controls over financial reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting, disclosure of management’s assessment of our internal controls over financial reporting, or disclosure of our public accounting firm’s attestation to or report on management’s assessment of our internal controls over financial reporting may have an adverse impact on the price of our common stock.

We may be exposed to risks relating to our disclosure controls and our internal controls and may need to incur significant costs to comply with applicable requirements.

Based on the evaluation done by our management at March 31, 2009, our disclosure controls were deemed ineffective, in that we could not assure that information required to be disclosed in our SEC reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and communicated to our management, so as to allow timely decisions regarding required disclosures. Factors which led our management to conclude that our disclosure controls and procedures were not effective include, but are not limited to, the late filing of our Annual Report on Form 10-K for the year ended December 31, 2008 and the late filing of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2009.

We are seeking to engage experienced professionals, if necessary, to augment our financial staff to address issues of timeliness and completeness in financial reporting when we are preparing SEC filings. No assurances can be given that we will be able to adequately remediate existing deficiencies in disclosure controls and not have deficiencies when we report on internal controls. Although we believe that these corrective steps will enable management to conclude that our disclosure controls are effective and these measures will remediate the material weaknesses discussed above when all of the additional financial staff positions are filled and other remediation plans are implemented, we cannot assure you that this will be sufficient. We may be required to expend additional resources to identify, assess and correct any additional weaknesses in disclosure or internal control and to otherwise comply with the internal controls rules under Section 404 of the Sarbanes-Oxley Act, when applicable.

Because most of our sales are made in U.S. Dollars and most of our expenses are paid in RMB, devaluation of the U.S. Dollar could negatively impact our results of operations.

The value of RMB is subject to changes in China’s governmental policies and to international economic and political developments. In January 1994, the PRC government implemented a unitary managed floating rate system. Under this system, the People’s Bank of China, or PBOC, began publishing a daily base exchange rate with reference primarily to the supply and demand of RMB against the U.S. Dollar and other foreign currencies in the market during the previous day. Authorized banks and financial institutions are allowed to quote buy and sell rates for RMB within a specified band around the central bank’s daily exchange rate. On July 21, 2005, PBOC announced an adjustment of the exchange rate of the U.S. Dollar to RMB from 1:8.27 to 1:8.11 and modified the system by which the exchange rates are determined. This modification has resulted in an approximate 7.3% appreciation of the RMB against the U.S. Dollar from July 21, 2005 to May 2, 2007. While the international reaction to the RMB revaluation has generally been positive, there remains significant international pressure on the PRC government to adopt an even more flexible currency policy, which could result in further fluctuations of the exchange rate of the U.S. Dollar against the RMB, including future devaluations. Because most of our net sales are made in U.S. Dollars and most of our expenses are paid in RMB, any future devaluation of the U.S. Dollar against the RMB could negatively impact our results of operations.

We do not foresee paying cash dividends in the foreseeable future and, as a result, our investors’ sole source of gain, if any, will depend on capital appreciation, if any.

We do not plan to declare or pay any cash dividends on our shares of common stock in the foreseeable future and currently intend to retain any future earnings for funding growth. As a result, investors should not rely on an investment in our securities if they require the investment to produce dividend income. Capital appreciation, if any, of our shares may be investors’ sole source of gain for the foreseeable future. Moreover, investors may not be able to resell their shares of the Company at or above the price they paid for them.

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

None.

ITEM 3. DEFAULT UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

(a) Exhibits

Exhibit Number		Description of Document

31.1		Certification of Chief Executive Officer Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

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

YINLIPS TECHNOLOGY, INC.

SIGNATURES

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

	Yinlips Technology, Inc.

Date: August 20, 2009	By:	/s/ Zhao Zifeng
		Zhao Zifeng
		Chief Executive Officer and Chairman of the Board

Date: August 20, 2009	By:	/s/ Wang Xinggui
		Wang Xinggui
		Interim Chief Financial Officer

Yinlips Technology, Inc. 10-Q