Omphalos (OMPS) CORRESP Correspondence with SEC

CONSOLIDATED AND COMBINED BALANCE SHEETS

December 31, 2007 and 2006

	2007		2006
Assets
Current Assets
Cash and cash equivalents	$	2,783,243	$	9,124,178
Accounts receivable, net		3,892,353		1,795,676
Inventory, net		657,788		941,986
Prepaid and other current assets		132,508		93,213
Short-term investments		-		80,487
Total current assets		7,465,892		12,035,540

Leasehold Improvements and Equipment, net		13,808		196,061

Intangible assets, net		29,946		20,375
Deposits		-		11,601
Long-term investments		1,100,704		1,902,166

Total Assets	$	8,610,350	$	14,165,743

The Accompanying Notes Are an Integral Part of the Financial Statements.

CONSOLIDATED AND COMBINED BALANCE SHEETS

December 31, 2007 and 2006

	2007		2006
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable	$	3,940,816	$	3,194,389
Accrued salaries and bonus		42,081		1,057,659
Accured expenses		180,841		58,332
Advances from shareholders		-		46,998
Total current liabilities		4,163,738		4,357,378

Commitments and contingencies

Shareholders' Equity
Common stock, $0.5 par value, 100,000 shares authorized, issued and outstanding as of 12/31/07		50,000		-
Capital contribution		-		434,215
Subscription receivable		-		(100,000	)
Other comprehensive income		211,407		213,824
Retained Earnings		4,185,205		9,260,326
Total shareholders' equity		4,446,612		9,808,365

Total Liabilities and Shareholders' Equity	$	8,610,350	$	14,165,743

The Accompanying Notes Are an Integral Part of the Financial Statements.

CONSOLIDATED AND COMBINED STATEMENTS OF INCOME

For the Years Ended December 31, 2007 and 2006

	2007		2006

Operating revenue:
Sales of goods, net	$	10,047,118	$	13,782,980
Other operating revenue		378,013		24,175
Total operating revenue		10,425,131		13,807,155

Operating costs:
Cost of sales		7,026,432		10,139,012

Gross profit		3,398,699		3,668,143

Selling, general and administrative expenses		1,922,076		2,378,892

Income from operations		1,476,623		1,289,251

Other income (expenses)
Rental income		174		332
Interest income		284,272		266,076
Gain on foreign currency exchange		38,755		76,257
Gain on investment		-		2,118
Miscellaneous income		899		1,881
Total other income		324,100		346,665

Income before provision for income taxes		1,800,723		1,635,916

Provision for income taxes		-		-

Net Income	$	1,800,723	$	1,635,916

Weighted average number of common shares:
Basic and diluted		100,000		100,000

Not income per share:
Basic and diluted	$	18.01	$	16.36

The Accompanying Notes Are an Integral Part of the Financial Statements.

CONSOLIDATED AND COMBINED STATEMENTS OF SHAREHOLDERS’ EQUITY

AND COMPREHENSIVE INCOME

For the Years Ended December 31, 2007 and 2006

	Common Stock / Capital Contribution					Retained			Subscription			Comprehensive
	Shares		Amount			Earning			Receivable			Income (Loss)			Total

Balance at January 1, 2006			$	434,215		$	7,624,410		$	(100,000	)	$	150,417		$	8,109,042
Translation adjustment				-			-			-			63,407			63,407
Net income				-			1,635,916			-			-			1,635,916
Balance at December 31, 2006				434,215			9,260,326			(100,000	)		213,824			9,808,365
Capital contribution				-			-			100,000			-			100,000
Reorganization		100,000		(384,215	)		(2,045,230	)		-			-			(2,429,445	)
Dividends		-		-			(4,830,614	)		-			-			(4,830,614	)
Translation adjustment		-		-			-			-			(2,417	)		(2,417	)
Net income		-		-			1,800,723			-			-			1,800,723
Balance at December 31, 2007		100,000	$	50,000		$	4,185,205		$	-		$	211,407		$	4,446,612

The Accompanying Notes Are an Integral Part of the Financial Statements.

CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2007 and 2006

	2007			2006
Cash flows from operating activities
Net income	$	1,800,723		$	1,635,916
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and depreciation		11,522			15,407
Loss on disposal of fixed assets		2,541			-
Foreign currency exchange (gains)		(38,755	)		(76,257	)
Changes in assets and liabilities:
(Increase) Decrease in accounts receivable		(2,069,560	)		3,992,622
Decrease in inventory		283,580			451,701
(Increase) Decrease in prepaid and other assets		(27,128	)		49,121
Increase (Decrease) in accounts payable		730,184			(5,274,379	)
Increase (Decrease) in accrued expenses		(886,369	)		536,628
(Decrease) in other long-term liabilities		-			(10,350	)
Net cash provided by (used in) operating activities		(193,262	)		1,320,409

Cash flows from investing activities
Acquisition of fixed assets		(19,228	)		-
Proceeds received from disposition of assets		115,026			-
Distributions to shareholders for reorganization		(2,429,445	)		-
Redemption (Purchase) of investments		877,603			(549,846	)
Net cash (used in) investing activities		(1,456,044	)		(549,846	)

Cash flows from financing activities
Loans from (repayment to) related parties		(46,616	)		110,528
Capital contribution		100,000			-
Dividend distributions		(4,830,614	)		-
Net cash provided by (used in) financing activities		(4,777,230	)		110,528

Effect of exchange rate changes on cash and cash equivalents		85,601			140,931

Net increase (decrease) in cash and cash equivalents		(6,340,935	)		1,022,022

Cash and cash equivalents
Beginning		9,124,178			8,102,156
Ending	$	2,783,243		$	9,124,178

Supplemental disclosure of cash flows
Cash paid during the year for:
Interest expense	$	-		$	-
Income tax	$	-		$	-

The Accompanying Notes Are an Integral Part of the Financial Statements.

The accompanying consolidated financial statements include the accounts of Omphalos Corp. (B.V.I.) and its wholly owned subsidiaries (collectively, the “Company”). Omphalos Corp. (B.V.I.) is the sole owner of all of the outstanding shares of the following subsidiaries: Omphalos Corp.; All Fine Technology Co., Ltd.; and All Fine Technology Co., Ltd. (B.V.I.).

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2007

1.	ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Omphalos Corp. (B.V.I.) was incorporated on October 30, 2001 under the laws of the British Virgin Islands. Omphalos Corp. (Taiwan) was incorporated on February 13, 1991 under the laws of Republic of China. All Fine Technology Co., Ltd. (Taiwan) was incorporated on March 23, 2004 under the laws of Republic of China. All Fine Technology Co., Ltd. (B.V.I.) was incorporated on February 2, 2005 under the laws of the British Virgin Islands. These companies were under common control and owned by same shareholders. On July 4, 2007, Omphalos Corp. (BVI) acquired Omphalos Corp. (Taiwan) and All Fine Technology Co. Ltd. (Taiwan) by paying $334,215 in cash to the shareholders. On October 19, 2007 Omphalos Corp. (BVI) completed the purchase of All Fine Technology Co. Ltd. (BVI) by paying $2,095,230 in cash to the shareholders. Omphalos Corp. (B.V.I) became the 100% shareholder of the other three entities. Omphalos Corp. (B.V.I.) and its subsidiaries supplies a wide range of equipments and parts including reflow soldering ovens and automated optical inspection machines for printed circuit board (PCB) manufacturers in Taiwan and China.

Basis of Consolidation / Combination — For the year 2006, the combined financial statements include the accounts of Omphalos Corp., Omphalos Corp. (B.V.I.), All Fine Technology Co., Ltd., and All Fine Technology Co., Ltd.(B.V.I.). There companies were under common control and ownership. During the year 2007, these companies reorganized and Omphlaos Corp. (B.V.I.) becomes the sole owner of all of the outstanding shares of Omphalos Corp., All Fine Technology Co., Ltd., and All Fine Technology Co., Ltd. (B.V.I.). For the year 2007, the consolidated financial statements include the accounts of Omphalos Corp. (B.V.I.) and its wholly owned subsidiaries. All significant intercompany accounts and transactions are eliminated.

Segment Reporting — The Company determines and discloses its segments in accordance with SFAS No. 131 “ Disclosures about Segments of an Enterprise and Related Information” which uses a “management” approach for determining segments. The management approach designates the internal organization that is used by management for making operating decisions and assessing performance as the source of the Company’s reportable segments. SFAS No. 131 also requires disclosures about products or services, geographic areas, and major customers. The Company’s management reporting structure provided for only one segment in 2007 and 2006 and accordingly, no separate segment information is presented.

Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

1.	ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Contingencies — Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company's management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company's legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company's financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed.

Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.

Cash Equivalents, and Long-term Investments — Cash and cash equivalents include cash on hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.

Long-term investments consist of certificates of deposit (CDs) with maturities in excess of one year.

Accounts Receivable — Accounts receivable are carried at original invoice amount less an estimate for doubtful receivables based on a review of all outstanding amounts at year end. Management determines the allowance for doubtful accounts by using historical experience applied to an aging of accounts. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are recorded when received.

Inventory — Inventory is carried at the lower of cost or market. Cost is determined by using the specific identification method. The Company periodically reviews the age and turnover of its inventory to determine whether any inventory has become obsolete or has declined in value, and charges to operations for known and anticipated inventory obsolescence. Inventory consists substantially of finished goods and is net of an allowance for slow-moving inventory of $188,503 and $203,704 at December 31, 2007 and 2006, respectively.

1.	ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property and Equipment — Property and equipment are recorded at cost, less accumulated depreciation. Depreciation is computed on the straight-line method over the estimated useful lives of the related assets as follows:

Automobile	5 years
Furniture and fixtures	3 years
Machinery and equipment	3 to 5 years
Leasehold improvements	55 years

Expenditures for major renewals and betterment that extend the useful lives of property and equipment are capitalized. Expenditures for repairs and maintenance are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the asset and accumulated depreciation are removed from the accounts and the resulting profit or loss is reflected in the statement of income for the period.

Other Intangible Assets — Other intangible assets consist of patents and are accounted for at historical costs. The Company amortizes other intangible assets over their useful lives, as applicable.

Effective July 2002, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets." The adoption of SFAS No. 142 requires an initial impairment assessment involving a comparison of the fair value of trademarks, patents and other intangible assets to current carrying value. No impairment loss was recognized for the year ended December 31, 2007. Patents, trademarks, and other intangible assets determined to have indefinite useful lives are not amortized. The Company tests such intangible assets with indefinite useful lives for impairment annually, or more frequently if events or circumstances indicate that an asset might be impaired. Trademarks, patents, and other intangible assets determined to have definite lives are amortized over their useful lives or the life of the trademark and other intangible asset, whichever is less.

Revenue Recognition — The Company recognizes revenue in accordance with Staff Accounting Bulletin No. 104, Revenue Recognition ("SAB104"), which superceded Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements ("SAB101"). SAB 104 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectibility is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and services performed and the collectibility of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered or service has not been performed or is subject to refund until such time that the Company and the customer jointly determine that the product or service has been delivered or performed or no refund will be required.

The Company derives revenues from the sale of equipments and parts to customers. The Company recognizes this revenue when title passes to and the risks and rewards of ownership have transferred to the customer based on the terms of the sales, and is recorded net of returns, discounts and allowances. Shipping and handling charges to customers are included in net sales. Shipping and handling charges incurred by the Company are included in cost of good sold.

1.	ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition (Continued) — SAB 104 incorporates Emerging Issues Task Force 00-21 ("EITF 00-21"), Multiple-Deliverable Revenue Arrangements. EITF 00-21 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. The effect of implementing EITF 00-21 on the Company's financial position and results of operations was not significant.

Research and Development Expenses — Research and development costs are generally expensed as incurred.

Advertising Expense — Advertising costs are expensed as incurred. Advertising expense incurred for the years ended December 31, 2007 and 2006 totaled approximately $3,729 and $3,800, respectively.

Warranty Costs — Substantially all of the Company’s equpiments are sold with a one- to two-year warranty. The Company periodically assesses the adequacy of its recorded warranty accrual and adjusts the amounts as necessary. The Company estimates its warranty costs based on historical warranty claim experience and applies this estimate to the revenue stream for products under warranty. Future costs for warranties applicable to revenue recognized in the current period are charged to cost of revenue. The warranty accrual is reviewed quarterly to verify that it properly reflects the remaining obligation based on anticipated expenditures over the balance of the obligation period. Adjustments are made when accrual warranty claim experience differs from estimate.

To date, warranty costs incurred have been minimal in relation to the volume of revenues and have been within management’s expectation.

Income Taxes — Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements.

Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled as prescribed in SFAS No. 109. A valuation allowance is established against deferred tax assets if it is more likely than not that all, or some portion, of such assets will not be realized.

Stock Based Compensation —The Company adopted Statement of Financial Accounting Standards No 123(R), “Share-Based Payments” (“SFAS No. 123R”) effective January 1, 2006. SFAS No. 123R amends existing accounting pronouncements for share-based payment transactions in which an enterprise receives employee and certain non-employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. SFAS No. 123R generally requires such transactions be accounted for using a fair-value-based method. The Company does not have any awards of stock-based compensation issued and outstanding at December 31, 2007.

1.	ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Earnings Per Share — The Company computes net income (loss) per share pursuant to Statement of Financial Accounting Standards No. 128 “Earnings Per Share”. Basic net income (loss) per share is computed by dividing income or loss applicable to common shareholders by the weighted average number of shares of the Company’s common stock outstanding during the period. Diluted net income (loss) per share is determined in the same manner as basic net income (loss) per share except that the number of shares is increased assuming exercise of dilutive stock options, warrants and convertible debt using the treasury stock method and dilutive conversion of the Company’s convertible preferred stock. The basic and diluted earnings per share prior to reorganization on October 19, 2007 are based upon 100,000 shares, as required to comply with SFAS No. 128.

Impairment of Long-Lived Assets —The Company adopted SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets", effective December 15, 2001. The Company periodically evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. If the estimated future cash flows (undiscounted and without interest charges) from the use of an asset were less than the carrying value, a write-down would be recorded to reduce the related asset to its estimated fair value.

The assumptions used by management in determining the future cash flows are critical. In the event these expected cash flows are not realized, future impairment losses may be recorded. Management has determined that no impairments of long-lived assets currently exist.

Concentrations—

Credit Risk: Financial instruments that subject the Company to credit risk consist primarily of trade accounts receivable and investments. The Company performs ongoing credit evaluations of its customers and maintains an allowance for potential credit losses. The Company regularly evaluates securities to determine whether there has been any diminution in value that is deemed to be other than temporary.

Customers: The Company sells equipments and parts to printed circuit board (PCB) manufacturers in Taiwan and China. The Company performs ongoing credit evaluations of its customers’ financial condition and generally, requires no collateral. For the year ended December 31, 2007, three customers, each of who accounted for more than 10% of the Company’s total revenues, represented approximately 74% of its total revenues, and 67% of accounts receivable in aggregate at December 31, 2007. For the year ended December 31, 2006, three customers, each of who accounted for more than 10% of the Company’s total revenues, represented approximately 74% of its total revenues, and 72% of accounts receivable in aggregate at December 31, 2006.

Suppliers: For the year ended December 31, 2007, 98% of the Company’s inventory is purchased from two vendors. Management believes other vendors could supply similar products, but their terms may not be as favorable as currently being offered by these vendors. A change in suppliers, however, could cause a delay in availability of products and a possible loss of sales, which could adversely affect operating results.

1.	ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Foreign-currency Transactions — Foreign-currency transactions are recorded in New Taiwan dollars (“NTD”) at the rates of exchange in effect when the transactions occur. Gains or losses resulting from the application of different foreign exchange rates when cash in foreign currency is converted into New Taiwan dollars, or when foreign-currency receivables or payables are settled, are credited or charged to income in the year of conversion or settlement. On the balance sheet dates, the balances of foreign-currency assets and liabilities are restated at the prevailing exchange rates and the resulting differences are charged to current income except for those foreign currency denominated investments in shares of stock where such differences are accounted for as translation adjustments under stockholders’ equity.

Translation Adjustment — The accounts of the Company was maintained, and its financial statements were expressed, in New Taiwan Dollar (“NTD”). Such financial statements were translated into U.S. Dollars (“$” or “USD”) in accordance SFAS No. 52, "Foreign Currency Translation", with the NTD as the functional currency. According to the Statement, all assets and liabilities are translated at the current exchange rate, stockholder's equity are translated at the historical rates and income statement items are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with SFAS No. 130, "Reporting Comprehensive Income" as a component of shareholders’ equity.

As of December 31, 2007 and December 31, 2006 the exchange rates between the NTD and the USD ($) were NTD1=$0.03077 and NTD1=$0.03069, respectively. The weighted-average rates of exchange between NTD and USD were NTD1=$0.03044 and NTD1=$0.03075 for the years ended December 31, 2007 and December 31, 2006, respectively. Total translation adjustment recognized as of December 31, 2007 and December 31, 2006 is $211,407 and $213,824, respectively.

Statement of Cash Flows — In accordance with SFAS No. 95, "Statement of Cash Flows", cash flows from the Company's operations are based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.

Comprehensive Income — Comprehensive income includes accumulated foreign currency translation gains and losses. The Company has reported the components of comprehensive income on its statements of stockholders’ equity and comprehensive income (loss).

Fair Value of Financial Instruments — The carrying amounts of cash and cash equivalents, accounts receivable, deposits and accounts payable approximate their fair value because of the short maturity of those instruments.

The carrying amounts of the Company's long-term debt approximate their fair value because of the short maturity and/or interest rates which are comparable to those currently available to the Company on obligations with similar terms.

Recently Issued Accounting Pronouncements — In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements. SFAS 157 is effective January 1, 2008. In February 2008, the FASB deferred for one year the effective date of SFAS 157 only with respect to nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring

1.	ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recently Issued Accounting Pronouncements (Continued)—basis, and removed certain leasing transactions from the scope of SFAS 157. The Company does not believe that the adoption of SFAS 157 will have a material impact on its financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities - including an amendment to FASB Statement No. 115, which permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS 159 is effective January 1, 2008. The Company has evaluated the impact of SFAS 159 and believes it will not significantly impact its financial statements.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations, ("SFAS 141R"), which changes how business combinations are accounted for and will impact financial statements both on the acquisition date and in subsequent periods. SFAS 141R is effective January 1, 2009, and will be applied prospectively. The impact of adopting SFAS 141R will depend on the nature and terms of future acquisitions.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, which changes the accounting and reporting standards for the noncontrolling interests in a subsidiary in consolidated financial statements. SFAS 160 recharacterizes minority interests as noncontrolling interests and requires noncontrolling interests to be classified as a component of shareholders' equity. SFAS 160 is effective January 1, 2009 and requires retroactive adoption of the presentation and disclosure requirements for existing minority interests. The Company is currently evaluating the impact of SFAS 160 on its consolidated financial statements.

2.	PROPERTY AND EQUIPMENT

The following is a summary of the Company’s property and equipment for the years ended December 31:

	2007			2006

Automobiles	$	29,232		$	29,156
Building and fixtures		-			147,890
Machinery and equipment		59,128			49,709
Leashold improvements		3,569			3,560
Land		-			78,506
		91,929			308,821
Less: accumulated depreciation		(78,121	)		(112,760	)

Property and equipment, net	$	13,808		$	196,061

3.	OTHER INTANGIBLE ASSETS

The following reconciliation of other intangible assets is as follows:

	Gross Carrying Value		Accumulated Amortization
Amortized intangible assets:
Patents	$	31,205	$	1,259

Amortization of intangible assets was $630 and $504 for the year ended December 31, 2007 and 2006, respectively.

Estimated amortization expense for the years ending December 31 is as follows:

2008	$	502
2009	$	502
2010	$	502
2011	$	502
2012	$	502

4.	INCOME TAXES

Income before income taxes for the years ended December 31, 2007 and 2006 includes the results of operations of Taiwan and British Virgin Islands. Omphalos Corp. (B.V.I.) and All Fine Technology Co., Ltd. (B.V.I.) are incorporated in British Virgin Islands and are not required to pay income tax. Omphalos Corp. and All Fine Technology Co., Ltd. are incorporated in Taiwan and are subject to Taiwan tax law. The provision for income taxes calculated at the statutory rates in the combined statements of income is as follows for the years ended December 31:

	2007		2006
Current provision:
Computed (provision for) income taxes at statutory rates in BVI	$	-	$	-
Computed (provision for) income taxes at statutory rates in Taiwan		-		-
Total current provision		-		-

Deferred provision:		-		-
BVI		-		-
Taiwan		-
Valuation allowance		-		-
Total deferred provision		-		-
Provision for income taxes	$	-	$	-

4.	INCOME TAXES (CONTINUED)

Deferred tax assets and liabilities are measured based on the difference between the financial statement and tax bases of assets and liabilities at the applicable tax rates. There were no significant components of the deferred tax for the years ended December 31, 2007 and 2006.

5.	RELATED-PARTY TRANSACTIONS

Operating Leases---The Company leases its facility from a shareholder under an operating lease agreement which expires on December 31, 2007, and is currently on month to month lease arrangement. The monthly base rent is approximately $2,200. Rent expense under this lease agreement amounted to approximately $26,000 and $26,000 for the years ended December 31, 2007 and 2006, respectively.

Advances to / from Shareholders – The advances to or from shareholders are non-interest bearing and without fixed terms of repayment.

6.	COMPENSATED ABSENCES

Employees earn annual vacation leave at the rate of seven days per year for the first year. Upon completion of the first year of employment, employees earn one additional day for each additional year. At termination, employees are paid for any accumulated annual vacation leave. As of December 31, 2007, vacation liability existed in the amount of $15,610.

7.	OTHER COMPREHENSIVE INCOME

	Foreign Currency Translation Adjustment			Accumulated Other Comprehensive Income

Balance at January 1, 2006	$	150,417		$	150,417
Change for 2006		63,407		$	63,407

Balance at December 31, 2006		213,824			213,824
Change for 2007		(2,417	)		(2,417	)

Balance at December 31, 2007	$	211,407		$	211,407

8.	COMMON STOCK

Stock split- On December 14, 2007, the Board of Directors authorized a two-for-one stock split of the Company’s common stock. All references to the number of common shares and the per common share amounts have been restated to reflect this stock split.

9.	PENSION PLAN

Omphalos Corp. (Taiwan) and All Fine Technology Co., Ltd. (Taiwan) were required to make monthly contributions, equal to 2% of salaries and wages, to a pension fund that is administered by a pension fund monitoring committee and deposited in the Central Trust of China in the Republic of China (Taiwan).

Taiwan has a new pension scheme law effective July 1, 2005. The new pension scheme is a defined contribution scheme. All new employees who joined Omphalos Corp. (Taiwan) and All Fine Technology Co., Ltd. (Taiwan) after July 1, 2005 must participate in the new scheme. Existing employees can choose to stay with the old scheme or to join the new scheme. Under the new scheme, Omphalos Corp. (Taiwan) and All Fine Technology Co. (Taiwan) are required to contribute 6% of the employees’ salary into employees’ own pension fund accounts managed by the government.

Contributions to the pension plan totaled $19,635 and $20,073 for the years ended December 31, 2007 and 2006, respectively.

10.

SUBSEQUENT EVENTS

On February 5, 2008, each of the shareholders (the “Shareholders”) of Omphalos Corp. (B.V.I.) entered into and completed the transactions contemplated under a Share Exchange Agreement (the “Exchange Agreement”) with Soyodo Group Holdings, Inc. (the “Soyodo”)., pursuant to which Soyodo purchased from the Shareholders all issued and outstanding shares of Omphalos’ common stock in consideration for the issuance of an aggregate of 81,996,275 shares of Soyodo common stock (the "Share Exchange").

The Share Exchange resulted in a change in control of Soyodo with the Shareholders owning 81,996,275 shares of common stock of Soyodo out of a total of 90,191,275 issued and outstanding shares after giving effect to the Share Exchange. Also, the Shareholders were elected directors of Soyodo, subject to Soyodo’s disclosure obligations under the Securities Exchange Act of 1934, as amended, and appointed as its executive officers. As a result of the Exchange Agreement, (i) Omphalos became a wholly-owned subsidiary of Soyodo and (ii) the Soyodo succeeded to the business of Omphalos as its sole business.

Pro Forma Financial Information

The following unaudited pro forma financial statements are presented to illustrate the estimated effects of Soyodo Group Holdings, Inc.'s (“Soyodo”) acquisition of Omphalos Corp (B.V.I.) (“Omphalos”) (the “Share Exchange”) on our historical financial position and our results of operations. We have derived our historical financial data from our audited financial statements for the year ended December 31, 2007. We have derived Omphalos's historical financial data from its audited financial statements for the year ended December 31, 2007.

The pro forma statement of operations for the year ended December 31, 2007 assumes that the Share Exchange was consummated on January 1, 2007. The pro forma balance sheet as of December 31, 2007 assumes the Share Exchange was consummated on that date. The information presented in the pro forma financial statements does not purport to represent what our financial position or results of operations would have been had the Share Exchange occurred as of the dates indicated, nor is it indicative of our future financial position or results of operations for any period. You should not rely on this information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined company will experience after the Share Exchange.

The pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable under the circumstances.

These pro forma financial statements should be read in conjunction with the accompanying notes and assumptions and the historical financial statements and related notes of Soyodo and Omphalos.

PRO FORMA CONDENSED CONBINED BALANCE SHEET

AS OF DECEMBER 31, 2007

	Omphalos		Soyod Group		Pro forma		Pro forma
	Corp.		Holdings, Inc.		Adjustments		Combined
Assets
Current Assets
Cash and cash equivalents	$	2,783,243	$	530	$	-	$	2,783,773
Accounts receivable, net		3,892,353		-		-		3,892,353
Inventory, net		657,788		-		-		657,788
Prepaid and other current assets		132,508		-		-		132,508
Short-term investments		-		-		-		-
Total current assets		7,465,892		530		-		7,466,422

Property and Equipment, net		13,808		-		-		13,808

Intangible assets, net		29,946		-		-		29,946
Deposits		-		-		-		-
Long-term investments		1,100,704		-		-		1,100,704
								-
Total Assets	$	8,610,350	$	530	$	-	$	8,610,880

PRO FORMA CONDENSED CONBINED BALANCE SHEET

AS OF DECEMBER 31, 2007

	Omphalos		Soyodo Group			Pro forma			Pro forma
	Corp.		Holdings, Inc.			Adjustments			Combined
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable	$	3,940,816	$	-		$	-		$	3,940,816
Accrued salaries and bonus		42,081		-			-			42,081
Accured expenses		180,841		-			-			180,841
Loan from shareholders		-		498,834			(498,834	)		-
Total current liabilities		4,163,738		498,834			(498,834	)		4,163,738
										-
Commitments and contingencies										-
										-
Shareholders' Equity										-
Common stock		50,000		820			(41,800	)		9,020
Additional paid in capital		-		585,223			(543,713	)		41,510
Other comprehensive income		211,407		-			-			211,407
Retained Earnings (deficit)		4,185,205		(1,084,347	)		1,084,347			4,185,205
Total shareholders' equity		4,446,612		(498,304	)		498,834			4,447,142

Total Liabilities and Shareholders' Equity	$	8,610,350	$	530		$	-			8,610,880

PRO FORMA CONDENSED CONBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2007

	Omphalos		Soyodo Group			Pro forma		Pro forma
	Corp.		Holdings, Inc.			Adjsutments		Combined

Operating revenue:
Sales of goods, net	$	10,047,118	$	-		$	-	$	10,047,118
Other operating revenue		378,013						$	378,013
Total operating revenue		10,425,131		-			-		10,425,131

Operating costs:
Cost of sales		7,026,432		-			-		7,026,432

Gross profit		3,398,699		-					3,398,699

Selling, general and administrative expenses		1,922,076		13,503			-		1,935,579

Income (loss) from operations		1,476,623		(13,503	)		-		1,463,120

Other income (expenses)
Interest income		284,272		-			-		284,272
Gain on foreign currency exchange		38,755		-			-		38,755
Miscellaneous income		1,073		9,676			-		10,749
Total other income		324,100		9,676			-		333,776

Income (loss) before provision for income taxes		1,800,723		(3,827	)		-		1,796,896

Provision for income taxes		-		-			-		-

Net Income (loss)	$	1,800,723	$	(3,827	)	$	-	$	1,796,896

Weighted average shares outstanding: Basic and diluted									90,191,275

Earnings per share: Basic and diluted								$	0.02

NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

YEAR ENDED DECEMBER 31, 2007

NOTE 1. DESCRIPTION OF TRANSACTION AND BASIS OF PRESENTATION

On February 5, 2008, Soyodo Group Holdings, Inc. (the “Soyodo”) entered into and completed the transactions contemplated under a Share Exchange Agreement (the “Exchange Agreement”) with each of the shareholders (the “Shareholders”) of Omphalos Corp., a British Virgin Islands corporation (”Omphalos), pursuant to which Soyodo purchased from the Shareholders all issued and outstanding shares of Omphalos’ common stock in consideration for the issuance of an aggregate of 81,996,275 shares of Soyodo common stock (the "Share Exchange") (the “Merger”).

The Share Exchange resulted in a change in control of Soyodo with the Shareholders owning 81,996,275 shares of common stock of the Company out of a total of 90,191,275 issued and outstanding shares after giving effect to the Share Exchange. Also, the Shareholders were elected directors of the Company, subject to Soyodo’s disclosure obligations under the Securities Exchange Act of 1934, as amended, and appointed as its executive officers. As a result of the Exchange Agreement, (i) Omphalos became a wholly-owned subsidiary of Soyodo and (ii) the Soyodo succeeded to the business of Omphalos as its sole business. Accordingly, Soyodo intends to change its name to Omphalos Corp.

As a result of the Merger, Omphalos is a wholly-owned subsidiary of Soyodo. Soyodo intends to operate Omphalos in the same manner and to continue in the business that Omphalos engaged in prior to the Merger. Prior to the Merger, no material relationship existed between Omphalos and its subsidiaries and Soyodo. The Merger will be accounted for as a reverse merger to be reflected as a recapitalization with Omphalos as the accounting acquirer.

NOTE 2. PRO FORM ADJUSTMENTS

Adjustments included in the column under the heading “Pro forma adjustments” include the following:

(a)

To reflect the deemed issuance of 81,996,275 shares of Soyodo common stock to Omphalos stockholders.

(b)

To eliminate the accumulated deficit of Soyodo as the accounting acquiree under the reverse merger application of the purchase method of accounting.

(c)

To reflect the waiver of loan to a shareholder based on the waiver letter signed by the shareholder.

NOTE 3. PRO FORM EARNINGS PER SHARE

The pro forma earnings per share is computed based on the number of shares outstanding, after adjustment for shares issued in the acquisition, as though all shares issued in the acquisition had been outstanding from the beginning of the periods presented.

******

OMPHALOS, CORP.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2008

CONTENTS

	Page

Condensed Consolidated Balance Sheets	1 - 2

Condensed Consolidated Statements of Operations	3

Condensed Consolidated Statements of Shareholders' Equity and Comprehensive Income	4

Condensed Consolidated Statements of Cash Flows	5

Notes to Consolidated Financial Statements	6- 11

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31,		December 31,
	2008		2007
	(Unaudited)
Assets
Current Assets
Cash and cash equivalents	$	3,972,249	$	2,783,243
Accounts receivable, net		2,383,066		3,892,353
Inventory, net		916,374		657,788
Prepaid and other current assets		173,089		132,508
Due from shareholders		95,520		-
Total current assets		7,540,298		7,465,892

Leasehold Improvements and Equipment, net		13,519		13,808

Intangible assets, net		35,958		29,946
Deposits		28,116		-
Long-term investments		300,230		1,100,704

Total Assets	$	7,918,121	$	8,610,350

The Accompanying Notes Are an Integral Part of the Financial Statements.

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31,		December 31,
	2008		2007
	(Unaudited)
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable	$	4,001,346	$	3,940,816
Accrued salaries and bonus		45,321		42,081
Accured expenses		44,164		180,841
Total current liabilities		4,090,831		4,163,738

Shareholders' Equity
Common stock, $0.0001 par value, 120,000,000 shares authorized, 81,996,275 and 90,191,275 shares issued and outstanding as of December 31, 2007 and March 31, 2008, respectively		9,020		8,200
Additional paid-in capital		41,510		41,800
Other comprehensive income		443,681		211,407
Retained earnings		3,333,079		4,185,205
Total shareholders' equity		3,827,290		4,446,612

Total Liabilities and Shareholders' Equity	$	7,918,121	$	8,610,350

The Accompanying Notes Are an Integral Part of the Financial Statements.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended March 31, 2008 and 2007

(Unaudited)

	March 31, 2008			March 31, 2007

Operating revenue:
Sales of goods, net	$	1,543,978		$	810,322
Other operating revenue		3,171			-
Total operating revenue		1,547,149			810,322

Operating costs:
Cost of sales		1,210,768			531,377

Gross profit		336,381			278,945

Selling, general and administrative expenses		421,605			410,160

Loss from operations		(85,224	)		(131,215	)

Other income (expenses)
Interest income		4,759			71,606
Gain (loss) on foreign currency exchange		(589,943	)		183,244
Gain on investment		-			15,879
Miscellaneous income		-			1,590
Total other income		(585,184	)		272,319

Income (loss) before provision for income taxes		(670,408	)		141,104

Provision for income taxes		-			-

Net Income (loss)	$	(670,408	)	$	141,104

Weighted average number of common shares:
Basic and diluted		28,983,099			27,332,092

Not income (loss) per share:
Basic and diluted	$	(0.02	)	$	0.01

The Accompanying Notes Are an Integral Part of the Financial Statements.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

AND COMPREHENSIVE INCOME

For the Three Months Ended March 31, 2008

(Unaudited)

	Common Stock				Additonal			Retained			Comprehensive
	Shares		Amount		Paid-in Capital			Earning			Income (Loss)		Total

Balance at December 31, 2007		81,996,275	$	8,200	$	41,800		$	4,185,205		$	211,407	$	4,446,612
Reorganization and recapitalization		8,195,000		820		(290	)		-			-		530
Dividend Distributions		-		-		-			(181,718	)		-		(181,718	)
Translation adjustment		-		-		-			-			232,274		232,274
Net loss		-		-		-			(670,408	)		-		(670,408	)
Balance at March 31, 2008		90,191,275	$	9,020	$	41,510		$	3,333,079		$	443,681	$	3,827,290

The Accompanying Notes Are an Integral Part of the Financial Statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31, 2008 and 2007

(Unaudited)

	March 31, 2008			March 31, 2007
Cash flows from operating activities
Net income (loss)	$	(670,408	)	$	141,104
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and depreciation		1,339			3,579
Loss due to inventory value decline		5,823			-
Gain on sales of property		(3,171	)		-
Foreign currency exchange loss (gains)		589,943			(183,244	)
Changes in assets and liabilities:
(Increase) Decrease in accounts receivable		1,715,787			183,623
(Increase) Decrease in inventory		(210,632	)		120,098
Decrease in prepaid and other assets		(57,254	)		(53,428	)
Increase (Decrease) in accounts payable		(206,931	)		(1,185,430	)
Increase (Decrease) in accrued expenses		(143,536	)		(810,357	)
Net cash provided by (used in) operating activities		1,020,960			(1,784,055	)

Cash flows from investing activities
Redemption of investments		845,135			272,246
Acquisition of patents		(3,906	)		-
Proceeds received from disposition of equipment		3,171			-
Net cash provided by investing activities		844,400			272,246

Cash flows from financing activities
Due to (from) related parties		(92,009	)		564,506
Dividend distribution		(181,718	)		-
Capital contribution		-			96,789
Net cash provided by (used in) financing activities		(273,727	)		661,295

Effect of exchange rate changes on cash and cash equivalents		(402,627	)		46,808

Net increase (decrease) in cash and cash equivalents		1,189,006			(803,706	)

Cash and cash equivalents
Beginning		2,783,243			9,124,178
Ending	$	3,972,249		$	8,320,472

Supplemental disclosure of cash flows
Cash paid during the period for:
Interest expense	$	-		$	-
Income tax	$	-		$	-

The Accompanying Notes Are an Integral Part of the Financial Statements.