OMPHALOS, CORP (OMPS) - Description of business

Company Description
," identifies important factors that could cause or contribute to such differences. See "Description of Business-Risk Factors." All forward looking statements should be read with caution." PART IItem 1. Description of BusinessGeneralThe Company was incorporated as "Quixit, Inc." on May 15, 1997, under the laws of the State of Colorado. On January 16, 2003, we engaged in the Change in Control, whereby TOP Group Corp. (New York) purchased 4,400,000 shares of the Company's common stock from H. Daniel Boone, who was then President and Chairman of the board of directors. Right after the purchase, TOP Group Corp. (New York) owned 88% of our outstanding capital stock. On August 22, 2005, due to its inactive status and its intension to wind up, TOP Group Corp. (New York) conveyed its 4,400,000shares to Song Ru-hua, the Company's President and Chairman of the Board, in partial satisfaction of his personal loan to TOP Group Corp. (New York).Prior to the Change in Control, our 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 (the "Exchange Act"). Since the Change in Control, we have no longer pursued this objective.In the second quarter of 2005, we decided to commence a chain of member-only stores in locations with large Chinese immigrant populations, offering Chinese culture-related merchandise such as books, pre-recorded CDs, stationery, gifts, and sports goods. As of December 31, 2005, the Company has opened up six stores in Temple City of California, San Francisco of California, Irvine of California, Westmont of Illinois, Hacienda Heights of California and Alhambra of California.Description of BusinessThe Company has been in the retail business in locations within continental USA with large Chinese immigrant populations, offering Chinese culture-related merchandise such as books, pre-recorded CDs, stationery, gifts, and sports goods from China. We import our merchandises directly from China. Our customers for books and CDs are mainly Chinese-reading immigrants while our lines of stationery, gifts and sports goods cater to the public as a whole. As of December 31, 2005, we have six stores in California and Illinois.CompetitionCompetition in the retail business is intense. The barrier of new entries is quite low. Currently, our competitors are retail stores and online retailers selling similar merchandises to the public in those locations. Down the road, the Company may expand its line of merchandises and consequently encounter new competitors.EmployeesWe presently have about 25 part-time and 17 full-time employees, inclusive of our officers.Risk FactorsAll forward-looking statements should be read with caution. Statements in this annual report on form 10-KSB under the captions "Description of Business," "Management's Discussion and Analysis or Plan of Operations," and elsewhere in this form 10-KSB, as well as statements made in press releases and oral statements that may be made by us or by officers, directors or employees acting on our behalf, that are not statements of historical fact, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, including those described in this form 10-KSB under the caption "Risk Factors," that could cause our actual results to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms "believes," "belief," "expects," "plans," "anticipates," or "intends," to be uncertain and forward-looking. All cautionary statements made in this form 10-KSB should be read as being applicable to all related forward-looking statements wherever they appear. Investors should consider the following risk factors as well as the risks described elsewhere in this form 10-KSB.Minimal Operating History or Revenue and Minimal AssetsWe started our retail operation only in the second quarter of 2005. Prior to that, we did not have any revenues for duration of more that 7 years. Right now, we have no significant assets or financial resources. We are likely to have net operating losses in the near future.Speculative Nature of Company's Proposed OperationsThe success of our operation will depend to a great extent on the operations, financial condition and management of the business. This must be considered a speculative venture in all regards.Continued Management Control & Limited Time AvailabilityAt this time, none of our officers has entered into a written employment agreement with the Company. We have not obtained key man life insurance on any of our officers or directors. Loss of the services of any of these individuals would adversely affect development of our business and the likelihood of continuing operations.Conflicts of InterestCurrently, the company imports all of its merchandise from a trading company in China, where our director, Fang Ye, has been its president and the majority shareholder. In addition, Mr. Song Ru-hua has been a majority owner of three privately held companies in California and New York, which are in the same line of retail business and import their merchandise from this same trading company in China. Based upon our internal review, all the transactions involving those related companies during 2005 are all arms-length transactions.Lack of Market Research or Marketing OrganizationWe have neither conducted, nor have others made available to us, results of market research indicating that market demand exists for our contemplated future business. We have no marketing organization as of date of this report.