OMPHALOS, CORP - Quarter Report: 2009 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED September 30, 2009

o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT FOR THE TRANSITION PERIOD FROM __________ TO __________ COMMISSION FILE NUMBER ___000-32341_____________

OMPHALOS, CORP.

(Exact name of registrant as specified in its charter)

Nevada

(State or other jurisdiction of incorporation or organization)

84-1482082

(I.R.S. Employer Identification No.)

Unit 2, 15 Fl., 83, Nankan Rd. Sec. 1,

Luchu Taoyuan County

Taiwan

(Address of principal executive offices, Zip Code)

011-8863-322-9658

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Copies to:

Marc Ross, Esq.

Andrew Smith, Esq.

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32nd Floor

New York, New York 10006

Phone: (212) 930-9700

Fax: (212) 930-9725

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

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

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.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x

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 of registrant’s common stock outstanding, as of October 31, 2009 was 30,063,759.

TABLE OF CONTENTS

	Page
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements		3
Item 2. Management’s Discussion and Analysis or Plan of Operation		13
Item 3. Quantitative and Qualitative Disclosures About Market Risk		16
Item 4. Controls and Procedures		16

PART II - OTHER INFORMATION

Item 1. Legal Proceedings		16
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		16
Item 3. Defaults Upon Senior Securities		16
Item 4. Submission of Matters to a Vote of Security Holders		16
Item 5. Other Information		16
Item 6. Exhibits		17

SIGNATURES		19

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

CONTENTS
	Page

Condensed Consolidated Balance Sheets	4 - 5

Condensed Consolidated Statements of Operations	6

Condensed Consolidated Statements of Shareholders' Equity and Comprehensive Income (Loss)	7

Condensed Consolidated Statements of Cash Flows	8

Notes to Consolidated Financial Statements	9- 12

OMPHALOS, CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,		December 31,
	2009		2008
	(Unaudited)
Assets
Current Assets
Cash and cash equivalents	$	2,288,813	$	4,494,963
Accounts receivable, net		1,005,848		712,281
Inventory, net		1,050,794		1,116,918
Prepaid and other current assets		582,338		39,873
Due from shareholders		198,017		201,859
Total current assets		5,125,810		6,565,894

Leasehold Improvements and Equipment, net		8,632		11,864

Intangible assets, net		37,344		37,416
Deposits		69,515		24,842

Total Assets	$	5,241,301	$	6,640,016

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

OMPHALOS, CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,		December 31,
	2009		2008
	(Unaudited)
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable	$	605,716	$	1,724,092
Accrued salaries and bonus		36,129		42,704
Accured expenses		26,642		52,258
Total current liabilities		668,487		1,819,054

Shareholders' Equity
Common stock, $0.0001 par value, 120,000,000 shares authorized, 30,063,759 shares issued and outstanding as of December 31, 2008 and September 30, 2009		3,007		3,007
Additional paid-in capital		47,523		47,523
Other comprehensive income		216,986		161,930
Retained earnings		4,305,298		4,608,502
Total shareholders' equity		4,572,814		4,820,962

Total Liabilities and Shareholders' Equity	$	5,241,301	$	6,640,016

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

OMPHALOS, CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Nine Months Ended September 30, 2009 and 2008

(Unaudited)

	Nine Months Ended						Three Months Ended
	September 30, 2009			September 30, 2008			September 30, 2009			September 30, 2008
Revenues:
Sales of goods, net	$	1,537,744		$	7,683,195		$	598,345		$	2,342,067
Other operating income		-			3,222			-			-
Total revenues		1,537,744			7,686,417			598,345			2,342,067

Operating costs and expenses:
Cost of sales		999,782			5,359,518			378,560			1,649,526
Selling, general and administrative expenses		818,758			1,393,784			264,428			495,396

Income (loss) from operations		(280,796	)		933,115			(44,643	)		197,145

Other income
Interest income		38,759			16,934			3,738			6,344
Gain (loss) on foreign currency exchange		(61,167	)		(222,080	)		(42,979	)		211,331
Miscellaneous income		-			840			518			840
Total other income		(22,408	)		(204,306	)		(38,723	)		218,515

Income (loss) before provision for income taxes		(303,204	)		728,809			(83,366	)		415,660

Provision for income taxes		-			-			-			-

Net Income (loss)	$	(303,204	)	$	728,809		$	(83,366	)	$	415,660

Weighted average number of common stock:
Basic and Diluted		30,063,759			29,714,823			30,063,759			30,063,759

Net income (loss) per share:
Basic and Diluted		(0.01	)		0.02			(0.00	)		0.01

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

OMPHALOS, CORP.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

AND COMPREHENSIVE INCOME (LOSS)

For the Nine Months Ended September 30, 2009

(Unaudited)

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

Balance at December 31, 2008		30,063,759	$	3,007	$	47,523	$	4,608,502		$	161,930	$	4,820,962
Translation adjustment		-		-		-		-			55,056		55,056
Net loss		-		-		-		(303,204	)		-		(303,204	)
Balance at September 30, 2009		30,063,759	$	3,007	$	47,523	$	4,305,298		$	216,986	$	4,572,814

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

OMPHALOS, CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 2009 and 2008

(Unaudited)

	September 30, 2009			September 30, 2008
Cash flows from operating activities
Net income (loss)	$	(303,204	)	$	728,809
Adjustments to reconcile net income to net cash provided by		.			.
(used in) operating activities:
Amortization and depreciation		3,847			4,254
Loss due to inventory valuation allowance		-			3,383
Reduction in inventory valuation allowance		(55,969	)		-
Loss (gain) on sale of property		-			(3,222	)
Foreign currency exchange loss		61,167			222,080
Changes in assets and liabilities:
Decrease (Increase) in accounts receivable		(276,775	)		1,803,556
Decrease (Increase) in inventory		134,625			(666,322	)
(Increase) Decrease in prepaid and other assets		(570,920	)		13,878
Increase (Decrease) in accounts payable		(1,111,078	)		(567,980	)
(Decrease) in accrued expenses		(32,562	)		(147,980	)
Net cash provided by (used in) operating activities		(2,150,869	)		1,390,456

Cash flows from investing activities
Maturities of held-to-maturity securities		-			1,152,574
Payments of patent registration					(8,950	)
Proceeds received from disposition of equipment		-			3,222
Net cash provided by investing activities		-			1,146,846

Cash flows from financing activities
Dividend distribution		-			(229,576	)
Proceeds from repayment of loans from shareholders		6,319			-
Loans to shareholders		-			(115,264	)
Net cash provided by (used in) financing activities		6,319			(344,840	)

Effect of exchange rate changes on cash and cash equivalents		(61,600	)		(258,674	)

Net increase (decrease) in cash and cash equivalents		(2,206,150	)		1,933,788

Cash and cash equivalents
Beginning		4,494,963			2,783,243
Ending	$	2,288,813		$	4,717,031

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

Supplemental disclosure of noncash financing and investing activities Shares issued for acquisition of Soyodo Group Holdings, Inc.	$	-		$	530

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

OMPHALOS, CORP.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(Unaudited)

1.	ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation— The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial reporting and in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the unaudited condensed consolidated financial statements contained in this report reflect all adjustments that are normal and recurring in nature and considered necessary for a fair presentation of the financial position and the results of operations for the interim periods presented. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. The results of operations for the interim period are not necessarily indicative of the results expected for the full year. These unaudited, condensed consolidated financial statements, footnote disclosures and other information should be read in conjunction with the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

Organization — Soyodo Group Holdings, Inc. (the “Soyodo”) was incorporated on May 15, 1997 as Quixit, Inc. under the laws of the state of Colorado. In March 2003, the Company changed its state of incorporation from Colorado to Delaware, and changed its name from Quixit, Inc. to TOP Group Holdings, Inc. In August of 2005, the company changed its name from TOP Group Holdings, Inc. to Soyodo Group Holdings, Inc. The Company's purpose was to investigate opportunities to be acquired by a company that desired to be registered under the Securities Exchange Act of 1934, as amended.

On February 5, 2008, Soyodo Group Holdings, Inc. 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. (B.V.I.), a British Virgin Islands corporation, pursuant to which Soyodo purchased from the Shareholders all issued and outstanding shares of Omphalos Corp. (B.V.I.)’ 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 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 Corp. (B.V.I.) became a wholly-owned subsidiary of Soyodo and (ii) the Soyodo succeeded to the business of Omphalos Corp. (B.V.I.) as its sole business.

Effective April 18, 2008 Soyodo entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Omphalos, Corp., a Nevada corporation. Pursuant to the Merger Agreement, Soyodo was merged with and into the surviving corporation, Omphalos Corp. The certificate of incorporation and bylaws of the surviving corporation became the certificate of incorporation and bylaws of the Company, and the directors and officers of Soyodo became the members of the board of directors and officers of the Company. Following the execution of the Merger Agreement, the Company filed with the Secretary of State of Delaware and Nevada, a Certificate of Merger. Omphalos, Corp is incorporated on April 15, 2008 under the laws of the state of Nevada. The main purpose of the merger is to change the company’s name to Omphalos, Corp.

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

Organization (Continued) —

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. Collectively Omphalos, Corp. (formerly Soyodo Group Holdings Inc.) and these four corporations are referred to herein as the "Company".

Basis of Consolidation / Combination — The aforementioned stock exchange transaction made Omphalos Corp. (B.V.I.) a wholly owned subsidiary of Soyodo after issuing 81,996,275 shares of Soyodo's common stock and resulted in the shareholders of Omphalos (B.V.I.) obtaining a majority voting interest in Soyodo. Accounting principles generally accepted in the United States require an assessment of which entity is considered the accounting acquirer when an exchange of stock occurs regardless of the legal form of the acquisition. The factors to consider include which entity's shareholders will own the majority of the voting common stock after the acquisition and the composition of the governing body and the management of the company after the acquisition. Omphalos was determined to be the acquirer for accounting purposes. Additionally, when an acquisition takes place between a company with minimal or no operations (a shell company) and an operating company, the transaction is treated as a recapitalization rather than a business combination. As Soyodo is considered to be a shell company, the transaction was treated as a recapitalization of Omphalos Corp. (B.V.I.).

The consolidated financial statements include the accounts of Omphalos Corp. and its wholly owned subsidiaries. All significant intercompany accounts and transactions are eliminated.

Use of 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.

Cash and Cash Equivalents— 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.

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 $244,940 and $298,502 at September 30, 2009 and December 31, 2008, respectively.

Intangible Assets —Include cost of patent applications that are deferred and charged to operations over their useful lives. The accumulated amortization is $2,576 and $1,988 at September 30, 2009 and December 31, 2008, respectively. Annual amortization expense of such intangible assets is expected to be $725 per year for the next five years.

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 currencies 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 September 30, 2009 and December 31, 2008 the exchange rates between the NTD and the USD ($) were NTD1=$0.03090. and NTD1=$0.03050, respectively The weighted-average rates of exchange between NTD and USD were NTD1=$0.03009 and NTD1=$0.03222 for the nine months ended September 30, 2009 and September 30, 2008, respectively. Total translation adjustment recognized as of September 30, 2009 and December 31, 2008 is $216,986 and $161,930, respectively.

Recently Issued Accounting Pronouncements — In August 2009, the FASB issued Accounting Standards Update 2009-05, “Measuring Liabilities at Fair Value” to provide guidance on measuring the fair value of liabilities under ASC 820, “Fair Value Measurements and Disclosures.” It establishes that a Level 1 fair value measurement should be used to measure the fair value of a liability and alternative valuation techniques that should be used in the absence of a Level 1 measurement. ASU 2009-05 is effective for the first reporting period beginning after issuance; thus, it became effective for the Company on October 1, 2009. The Company is evaluating the impact of ASU 2009-05 on its consolidated financial statements.

Recently Issued Accounting Pronouncements (Continued)— In October 2009, the FASB issued Accounting Standards Update 2009-13, “Multiple-Deliverable Revenue Arrangements — a consensus of the FASB Emerging Issues Task Force,” to provide amendments to the criteria in Subtopic 609-24 of the Codification for separating consideration into multiple-deliverable revenue arrangements. ASU 2009-13 establishes a selling price hierarchy for determining the selling price of each specific deliverable which includes vendor-specific objective evidence (“VSOE”) if available, third party evidence if VSOE is not available or estimated selling price if neither VSOE nor third party evidence is available. ASU 2009-13 also eliminates the residual method for allocating revenue between the elements of an arrangement and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method, which allocates any discount in the arrangement proportionally to each deliverable on the basis of each deliverable’s selling price. This Update expands the disclosure requirements regarding a vendor’s multiple-deliverable revenue arrangements. ASU 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. The Company is currently evaluating the impact of ASU 2009-13 on its consolidated financial statements.

2.	RELATED-PARTY TRANSACTIONS

Operating Leases—The Company leases its facility from a shareholder under an operating lease agreement which expires on December 31, 2009. The monthly base rent is approximately $2,200. Rent expense under this lease agreement amounted to approximately $19,800 and $19,800 for the periods ended September 30, 2009 and 2008, respectively.

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

3.	OTHER COMPREHENSIVE INCOME

Balances of related after-tax components comprising accumulated other comprehensive income (loss), included in stockholders' equity, at September 30, 2009 and December 31, 2008 are as follows:

	Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Income

Balance at December 31, 2008	$	161,930	$	161,930
Change for the period		55,056	$	55,056

Balance at September 30, 2009	$	216,986	$	216,986

******

Item 2. Management’s Discussion and Analysis or Plan of Operation.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, including this discussion and analysis by management, contains or incorporates forward-looking statements. All statements other than statements of historical fact made in report are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. These forward-looking statements can be identified by the use of words such as “believes,” “estimates,” “could,” “possibly,” “probably,” anticipates,” “projects,” “expects,” “may,” “will,” or “should” or other variations or similar words. No assurances can be given that the future results anticipated by the forward-looking statements will be achieved. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Our actual results may differ significantly from management’s expectations. The potential risks and uncertainties that could cause our actual results to differ materially from those expressed or implied herein are set forth in our Annual Report on Form 10-K for the year ended December 31, 2008.

The following discussion and analysis should be read in conjunction with our financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management.

Results of Operations

Three Months and Nine Months Ended September 30, 2009 Compared to the Three Months and Nine Months Ended September 30, 2008

Three Months Ended September 30, 2009 Compared to the Three Months Ended September 30, 2008

Net sales for the three months ended September 30, 2009 were $598,345 as compared to $2,342,067 for the three months ended September 30, 2008. This represents a decrease of $1,743,722 or 74.5% comparing the two periods. The decrease in net sales for the three months ended September 30, 2009 is primarily the result of a decrease in demand for end products due to the economic downturn.

Cost of sales decreased by $1,270,966 or 77.1%, to $378,560 for the three months ended September 30, 2009 as compared to $1,649,526 for the three months ended September 30, 2008. The decrease in cost of sales is primarily the result of a decrease in sales volume.

For the three months ended September 30, 2009, selling, general and administrative expenses totaled $264,428. This was a decrease of $230,968 or 46.6% as compared to the same period 2008. The decrease in selling, general and administrative expenses is primarily the result of decreases in commission, salary and wages, travel, entertainment expenses, and professional service fees.

For the three months ended September 30, 2009, income from operations decreased to $(44,643) as compared to $197,145 for the three months ended September 30, 2008. This represents a decrease of $241,788 or 122.6 % comparing the two periods. The decrease in income from operations for the three months ended September 30, 2009 is primarily the result of a decrease in net sales which partially offset by a decrease in selling, general and administration expenses.

Other income was $(38,723) and $218,515 for the three months ended September 30, 2009 and 2008, respectively. This was a decrease of $257,238 or 117.7%. The main reason for this decrease was due to a loss on foreign currency exchange.

Our net income (loss) was $(83,366) for the three months ended September 30, 2009 compared to a net income of $415,660 for the three months ended September 30, 2008. The decrease in profitability for the three months ended September 30, 2009 was due to the reasons described above.

Nine Months Ended September 30, 2009 Compared to the Nine Months Ended September 30, 2008

Net sales for the nine months ended September 30, 2009 were $1,537,744 as compared to 7,686,417 for the nine months ended September 30, 2008. This represents a decrease of $6,148,673 or 80.0% comparing the two periods. The decrease in net sales for the nine months ended September 30, 2009 is primarily the result of a decrease in demand for end products due to the economic downturn.

Cost of sales decrease by $4,359,736 or 81.3%, to $999,782 for the nine months ended September 30, 2009 as compared to $5,359,518 for the nine months ended September 30, 2008. The decrease in cost of sales is primarily the result of a decrease in sales volume.

For the nine months ended September 30, 2009, selling, general and administrative expenses totaled $818,758. This was a decrease of $575,026 or 41.3% as compared to the same period 2008. The decrease in selling, general and administrative expenses is primarily the result of decreases in commission, salary and wages, travel, entertainment expenses, and professional service fees.

For the nine months ended September 30, 2009, income (loss) from operations decrease to $(280,796) as compared to $933,115 for the nine months ended September 30, 2008. This represents a decrease of $1,213,911 or 130.1% comparing the two periods. The decrease in income from operations for the nine months ended September 30, 2009 is primarily the result of a decrease in net sales which partially offset by a decrease in selling, general and administration expenses.

Other income (expense) was $(22,408) and $(204,306) for the nine months ended September 30, 2009 and 2008, respectively. This was an increase of $181,898, or 89.0%. The main reason for this increase was due to a decrease of loss on foreign currency exchange.

Our net income (loss) was $(303,204) for the nine months ended September 30, 2009 compared to a net income of $728,809 for the nine months ended September 30, 2008. The decrease in profitability for the nine months ended September 30, 2009 was due to the reasons described above.

Liquidity and Capital Resources

Cash and cash equivalents were $2,288,813 at September 30, 2009 and $4,494,963 at December 31, 2008. Our total current assets were $5,125,810 at September 30, 2009 as compared to $6,565,894 at December 31, 2008. Our total current liabilities were $668,487 at September 30, 2009 as compared to $1,819,054 at December 31, 2008.

We had working capital at September 30, 2009 of $4,457,323 compared with working capital of $4,746,840 at December 31, 2008. This decrease in working capital was primarily due to the net loss and the payment for the general administrative costs.

During the nine months period ended September 30, 2009, net cash used in operating activities was $(2,150,869). Net cash used in investing activities was $0, and net cash provided by financing activities was $6,319. Net change in cash and cash equivalents was a decrease of $(2,206,150).

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

N/A.

Item 4. Controls and Procedures.

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2009 to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (1) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure; and (2) recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms.

There was no change to our internal controls or in other factors that could affect these controls during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

Item 1. Legal Proceedings.

We are not a party to any pending legal proceeding, nor is our property the subject of a pending legal proceeding, that is not in the ordinary course of business or otherwise material to the financial condition of our business. None of our directors, officers or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business.

Item 1A.Risk Factors.

Not Applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Not Applicable.

Item 3. Defaults Upon Senior Securities.

Not Applicable.

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

None.

Item 5. Other Information.

Not applicable.

Item 6. Exhibits.

Exhibit Number		Description
2.1		Share Exchange Agreement dated February 5, 2008, between the Company and the parties set forth on the signature page thereof. (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on March 14, 2008)

2.2		Agreement and Plan of Merger (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on April 15, 2008)

3.1		Articles of Amendment to the Articles of Incorporation of the Company (incorporated by reference to the Company's proxy statement on Schedule 14A filed with the Commission on March 5, 2003 (the "Proxy Statement")

3.2		Agreement and Plan of Merger between Quixit, Inc., a Colorado corporation, and TOP Group Corporation (now known as TOP Group Holdings, Inc.), a Delaware corporation (incorporated by reference to the Proxy Statement)

3.3		Certificate of Incorporation of the Company (incorporated by reference to the Proxy Statement)

3.4		By-Laws of the Company (incorporated by reference to the Proxy Statement)

3.5		Restated Certificate of Incorporation of the Company (incorporated by reference to the Company’s proxy statement on Schedule 14C filed with the commission on March 15, 2005 for an increase of authorized shares)

3.6		Restated Certificate of Incorporation of the Company (incorporated by reference to the Company’s proxy statement on Schedule l4C filed with the commission on August 26, 2005 for a name change)

3.7		Restated Certificate of Incorporation of the Company (incorporated by reference to the Company’s proxy statement on Schedule l4C filed with the commission on June 20, 2006 to set the new total authorized shares)

3.8		Certificate of Merger filed with the Secretary of State of Delaware (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on April 15, 2008)

3.9		Certificate of Merger filed with Secretary of State of Nevada (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on April 15, 2008)

3.10		Certificate of Amendment to the Articles of Incorporation (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on April 15, 2008)

10.1		Employment Agreement with Pi-Yun Chu (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on March 14, 2008)

10.2		Employment Agreement with Shen-Ren Li (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on March 14, 2008)

10.3		Employment Agreement with Sheng-Peir Yang (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on March 14, 2008)

31.1		Certification by Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.

31.2		Certification by Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.

32.1		Certification by Chief Executive Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code.

32.2		Certification by Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	OMPHALOS, CORP.

Date: November 10, 2009	By:	/s/ Sheng-Peir Yang
		Sheng-Peir Yang
		Chief Executive Officer, President and Chairman of the Board

Date: November 10, 2009	By:	/s/ Chu Pi Yun
		Chu Pi Yun
		Chief Financial Officer, Chief Accounting Officer and Director