SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For The Quarterly Period Ended ~~December~~March 31, ~~2004~~2005

Commission File Number 1-10366

WEIDA COMMUNICATIONS, INC.

(Exact Name of Registrant as Specified in Its Charter)

New Jersey		22-2582847
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)
515 East Las Olas Boulevard, Suite 1350 Fort Lauderdale, Florida		33301
(Address of Principal Executive Offices)		(Zip Code)
(954) 527-7750
(Registrant’s Telephone Number, Including Area Code)

(954) 527-7750

(Registrant’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 ý No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes o No ý

As of ~~April~~June 413, 2005~~, the~~ the registrant had 7577,~~842~~042,073 shares of common stock outstanding.

~~TABLE OF~~EXPLANATORY ~~CONTENTS~~NOTE

~~PART~~As ~~I—Financial~~reported ~~Information~~by ~~ITEM~~Weida ~~1—Condensed~~Communications, Inc. ~~Consolidated~~(the ~~Financial~~“Company”) ~~Statements~~in ~~Condensed~~a Current ~~Consolidated~~Report ~~Balance~~on ~~Sheets—December~~Form 8-K ~~31,~~filed ~~2004~~on ~~and~~ June 30 8, ~~2004 Condensed Consolidated Statement of Operations—Three and six months ended December 31~~2005, ~~2004~~the ~~and~~Company’s former ~~December~~independent 31auditors, ~~2003~~Deloitte ~~Condensed~~Touch ~~Consolidated Statement of Cash Flows—Six months ended December 31~~Tohmatsu, resigned ~~2004~~as ~~and~~the ~~December 31, 2003 Notes to Condensed Consolidated Financial Statements ITEM 2—Management~~Company’s ~~Discussion~~independent ~~and~~auditors ~~Analysis~~on ofMay 31, ~~Financial~~2005. The ~~Condition~~Company ~~and~~has ~~Results~~not ofyet ~~Operations~~selected ~~ITEM~~a ~~3—Quantitative~~new independent ~~and~~registered ~~Qualitative~~public ~~Disclosures~~accounting ~~about~~firm. Consequently, ~~Market~~this ~~Risk~~Quarterly ~~ITEM~~Report ~~4—Controls~~on ~~and~~Form 10-Q ~~Procedures~~was ~~PART~~not reviewed ~~II—Other~~by ~~Information~~an ~~ITEM~~independent ~~1—Legal~~auditor ~~Proceedings~~prior ~~ITEM 2—Unregistered Sales of Equity Securities and Use of Proceeds ITEM 3—Defaults upon Senior Securities ITEM 4—Submission of Matters~~ to ~~a Vote of Security Holders ITEM 5—Other Information ITEM 6—Exhibits SIGNATURES~~filing.

TABLE OF CONTENTS

PART I—Financial Information
ITEM 1—Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets—March 31, 2005 and June 30, 2004
Condensed Consolidated Statement of Operations—Three and nine months ended March 31, 2005 and March 31, 2004
Condensed Consolidated Statement of Cash Flows—Nine months ended March 31, 2005 and March 31, 2004
Notes to Condensed Consolidated Financial Statements
ITEM 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations
ITEM 3—Quantitative and Qualitative Disclosures about Market Risk
ITEM 4—Controls and Procedures
PART II—Other Information
ITEM 1—Legal Proceedings
ITEM 2—Unregistered Sales of Equity Securities and Use of Proceeds
ITEM 3—Defaults upon Senior Securities
ITEM 4—Submission of Matters to a Vote of Security Holders
ITEM 5—Other Information
ITEM 6—Exhibits
SIGNATURES

iii

PART I—FINANCIAL INFORMATION

ITEM 1—Condensed Consolidated Financial Statements

Weida Communications, Inc. and Subsidiary

Condensed Consolidated Balance Sheets

At ~~December~~ March 31, ~~2004~~2005 and June 30, 2004

	December 31, 2004			June 30, 2004
	March 31, 2005			June 30, 2004
	(Unaudited)
ASSETS
Current Assets:
Cash	$	21,~~342~~468,~~993~~112		$	1,617,845
Accounts receivable, net	5970,~~613~~783			—
Interest receivable	~~158,950~~—			80,968
Advances	15,605			—
Related party receivable	—			438,640
Inventories	1,~~573~~460,~~831~~863			—
Prepaid expenses – current	~~218~~230,~~968~~164			173,750
Total Current Assets	43,~~354~~245,~~355~~527			2,311,203
Property, Plant, & Equipment	21,~~092~~515,~~277~~686			18,121
Other Assets:
Notes receivable	2,200,000			2,200,000
Goodwill	9,~~059~~000,~~413~~662			—
Deferred acquisition costs	—			5,704,004
Prepaid expenses – non-current portion	~~24,000~~—			62,500
Other assets	3,880			3,880
Total Other Assets	11,~~287~~204,~~293~~542			7,970,384
Total Assets	$	1715,~~733~~965,~~925~~755		$	10,299,708
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	1,448,416		$	1,360,703
Bank loan	$	2,416,451		$	—
Accrued expenses	102,223			158,100
Short term borrowing	32,599			—
Amounts due to shareholders	200,582			—
Accounts payable	876,616			1,360,703
Amounts due to related parties	1,941,553			756,386
Accrued expenses and other payables	410,373			158,100
Short term borrowing	31,892			—
Claim settlement payable – current portion	250,833			—
Bank loan	2,416,451			—
Amounts due to shareholders	229,994			—
Total Current Liabilities	6,141,117			2,275,189
Amounts due to related parties	1,348,339			756,386
Total Current Liabilities	5,565,205			2,275,189
Long term liabilities:
Claim settlement payable – net of current portion	174,167			—
Long term loan	270,000			270,000
Total Liabilities	6,~~411~~009,~~117~~372			2,545,189
Common stock, $0 par value, 100,000,000 shares authorized, 74,195,497 and 72,334,486 issued and outstanding at December 31, 2004 and June 30, 2004, respectively	15,100,385			9,408,958
Shareholders’ equity:
Common stock to be issued	4,478,666			1,375,955
Preferred stock, $0 par value, 10,000,000 shares authorized, none issued at March 31, 2005	—			—
Accumulated deficit	(8,256,243		)	(3,030,394		)
Common stock, $0 par value, 400,000,000 shares authorized, 75,842,073 and 72,334,486 issued and outstanding at March 31, 2005 and June 30, 2004, respectively, 1,225,000 and 538,332 shares to be issued at March 31, 2005 and June 30, 2004, respectively	19,579,051			9,408,958
Total shareholders’ equity	11,322,808			7,754,519
Common stock to be issued	134,500			1,375,955
Total Liabilities and Shareholders’ Equity	$	17,733,925		$	10,299,708
Accumulated deficit	(9,757,168		)	(3,030,394		)
Total shareholders’ equity	9,956,383			7,754,519
Total Liabilities and Shareholders’ Equity	$	15,965,755		$	10,299,708

See accompanying notes to unaudited condensed consolidated financial statements.

Weida Communications, Inc. and Subsidiary

Condensed Consolidated Statement of Operations

(Unaudited)

For The Three and ~~Six~~Nine Months Ended ~~December~~March 31, ~~2004~~2005 and ~~December~~March 31, ~~2003~~2004

	Three Months Ended December 31,						Six Months Ended December 31,
	Three Months Ended March 31,						Nine Months Ended March 31,
	2004			2003			2004			2003
	2005			2004			2005			2004
Revenue
Sales of VSAT equipment	$	8169,~~881~~758		$	—		$	~~101~~171,~~791~~549		$	—
Transponder utilization revenue	9234,~~437~~761			—			93127,~~044~~805			—
	174,318			—			194,835			—
	104,519			—			299,354			—
Costs and expenses
Cost of sales	~~(345~~442,~~898~~839		)	—			~~(467~~910,~~366~~205		)	—
Selling, general, and administrative costs	(1968,~~707,280~~889		)	~~(989~~682,~~324~~630		)	(45,~~982~~951,~~828~~717		)	(1,~~043~~725,~~233~~863		)
	(2,053,178		)	(989,324		)	(5,450,194		)	(1,043,233		)
	1,411,728			682,630			6,861,922			1,725,863
Operating loss	(1,~~878~~307,~~860~~209		)	(~~989~~682,~~324~~630		)	(56,~~255~~562,~~359~~568		)	(1,~~043~~725,~~233~~863		)
Other income (expenses)
Interest expense	(3634,~~339~~821		)	—			(4883,~~495~~316		)	—
Interest income	43(158,~~963~~895		)	19,145			78(80,~~005~~890		)	~~(31~~51,~~908~~053		)
	7,624			19,145			29,510			(31,908		)
	(193,716		)	19,145			(164,206		)	51,053
Net loss before provision for income taxes	(1,871,236		)	(970,179		)	(5,225,849		)	(1,011,325		)
Net loss	$	(1,500,925	)	$	(663,485	)	$	(6,726,774	)	$	(1,674,810	)
Provision for income taxes	—			—			—			—
Basic and diluted net loss per common share	$	(0.02	)	$	(0.01	)	$	(0.09	)	$	(0.02	)
Net loss and comprehensive loss	$	(1,871,236	)	$	(970,179	)	$	(5,225,849	)	$	(1,011,325	)
Weighted average shares outstanding	75,274,922			68,962,275			73,817,796			68,962,975
Basic and diluted net loss per common share	$	(0.03	)	$	(0.03	)	$	(0.07	)	$	(0.01	)
Weighted average shares outstanding	73,843,981			68,962,975			73,089,233			68,962,975

See accompanying notes to unaudited condensed consolidated financial statements.

Weida Communications, Inc. and Subsidiary

Condensed Consolidated Statement of Cash Flows

(Unaudited)

For The ~~Six~~Nine Months Ended ~~December~~March 31, ~~2004~~2005 and ~~December~~March 31, ~~2003~~2004

	Six Months Ended December 31,
	Nine Months Ended March 31,
	2004			2003
	2005			2004
Cash flows from operating activities
Net loss	$	(56,~~225~~726,~~849~~774	)	$	(1,~~011~~674,~~325~~810	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	~~327~~407,~~346~~450			—
Non-cash compensation	12,~~988~~437,~~011~~511			—
(Increase) Decrease in operating assets, net of the effect of subsidiaries acquired:
Accounts receivable, net	(4673,~~535~~310		)	—
Interest receivable	~~(77~~80,~~982~~968		)	(3151,~~908~~053		)
Inventories	(~~851~~738,~~880~~912		)	—
Prepaid expenses	~~230~~243,~~223~~027			—
Accounts payable	(~~667~~1,~~395~~180,444		)	~~621~~1,~~927~~515,579
Accruals and other payables	~~(109~~198,~~727~~423		)	—
Deferred revenue	(70,657		)	—
Net cash used in operating activities	(45,~~504~~422,~~445~~718		)	(~~421~~210,~~306~~284		)
Cash flows from investing activities
Acquisition of subsidiaries	37,368			—
Deferred acquisition cost	(619,197		)	(671,376		)
Decrease in deposit in escrow	—			58,346
Additions to property, plant, and equipment	(496,487		)	—
Deferred acquisition costs	(619,197		)	(1,416,777		)
Additions to property, plant, and equipment	—			(393,950		)
Changes in amounts due from related parties	(400,000		)	—
Net cash used in investing activities	(1981,~~478,316~~829		)	(~~671~~1,~~376~~752,381		)
Cash flows from financing activities
Stock sales	6,806,127			—869,983
Changes in amounts due to shareholders	(36552,~~348~~811		)	—51,856
Changes in amounts due to related parties	(696,~~597~~936		)	~~51,856~~—
Proceeds from short term borrowing	78,~~727~~434			—
Capital contribution by shareholders	—			1,040,826
Cash provided by financing activities	6,~~707~~254,~~909~~814			1,~~092~~962,~~682~~665
Net decrease in cash	~~725~~(149,~~148~~733		)	—
Cash - beginning of period	1,617,845			—
Cash - end of period	$	21,~~342~~468,~~993~~112		$—	—
Supplemental cash flow information:
Cash paid during the period for:
Interest	$	63,131		$	—
Income taxes	—			—
Supplemental schedule of noncash investing activities:
Acquisition of subsidiaries:
Cash acquired	$	37,368		—
Fair value of non cash assets acquired	2,876,985			—
Liabilities assumed	(5,591,814		)	—
Deferred acquisition cost-reclassified to goodwill	(6,323,201		)	—
Goodwill	9,000,662			—
	$	—		$	—

See accompanying notes to unaudited condensed consolidated financial statements.

WEIDA COMMUNICATIONS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND NATURE OF THE BUSINESS

Weida Communications, Inc., formerly Laser Recording Systems, Inc. (“Weida” or the “Company”), provides products and services for satellite-based communications networks in the People’s Republic of China (“PRC” or “China”) through a series of contractual arrangements which give it control of and a 51% profit-sharing interest in Guangzhou Weida Communications Technology Co., Ltd. (a/k/a Weida Communications Technology Company Limited), a communications service company organized under the laws of the PRC and wholly-owned by PRC citizens (“Weida PRC”). The Company conducts its business in China solely through certain contractual arrangements among its affiliates, Weida PRC and the shareholders of Weida PRC. Although the Company does not have an equity interest in Weida PRC, it controls and enjoys the economic benefits of Weida PRC through such contractual arrangements.

Weida PRC is a wholly privately owned company established in 2001 in response to the Chinese government allowing an individual company to obtain a 100% private, non-governmental and non-military, VSAT satellite license. VSAT (Very Small Aperture Terminal) is a relatively small satellite antenna used by corporations and governments for satellite based point-to-multipoint data communications, such as financial transactions, Internet services, multimedia and television. VSAT offers a number of advantages over terrestrial alternatives for businesses and homes.

The scope of the license permits the offer and sale of a variety of broadband satellite communications services, including audio and video services, Internet connectivity, multimedia services, HDTV, and Voice Over IP. The license granted provides Weida PRC the opportunity to develop and deliver such satellite communications in China. Weida PRC is licensed to provide services in the rapidly growing Voice Over IP telephone service market, and to provide such services as a phone operator.

The Company operates through Weida PRC, which has entered into contractual arrangements with our subsidiaries through which we conduct our business activities and will receive substantially all of our revenues in the form of service fees. If Weida PRC or our other subsidiaries incur debt in the future, the instruments governing the debt may restrict their ability to pay fees or make other payments or distributions to us. In addition, Chinese law requires that payment of dividends by our subsidiaries that are incorporated in China can only be made out of their net income, if any, determined in accordance with Chinese accounting standards and regulations. Under Chinese law, those subsidiaries are also required to set aside a portion, up to 10% of their after-tax net income each year to fund certain reserve funds, and these reserves are not distributable as dividends. Any limitation on the payment of fees by Weida PRC or dividends by our subsidiaries generally could materially adversely affect our ability to grow, fund investments, make acquisitions, pay dividends, and otherwise fund and conduct our business.

Weida PRC receives substantially all of its revenues in Renminbi, which currently is not a freely convertible currency. A portion of these revenues may have to be converted into other currencies to meet our foreign currency obligations.

The Share Exchange Transaction

As described in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2004, the Company entered into a share exchange agreement (the “Exchange Agreement”) with SCL Ventures, Ltd. (“SCL”) on May 20, 2003. The Exchange Agreement set forth the terms and conditions of the exchange by the SCL shareholders of their shares of capital stock, representing all of the issued and outstanding shares of capital stock of SCL in exchange for the issuance by the Company to the shareholders of SCL of 69,809,480 shares of common stock, representing approximately 96.5% of the then issued and outstanding shares of the Company. The share exchange with SCL (the “Exchange”) was consummated on June 11, 2004. The Company then changed its name to Weida Communications, Inc. and changed its fiscal year end from January 31 to June 30.

The share exchange transaction was accounted for as a reverse acquisition in which SCL is the accounting acquirer and the Company is the legal acquirer. Since the transaction was accounted for as a reverse acquisition and not a business combination, no goodwill has been recorded in connection with the transaction and such excess of purchase price over net assets acquired (goodwill) and the costs incurred in connection with the transaction have been accounted for as an expense.

As a result of the Exchange (i) the historical financial statements of the Company for periods prior to the Exchange are those of SCL; (ii) all references to the financial statements of the Company apply to the historical financial statements of SCL prior to the Exchange and the consolidated financial statements of the Company and its subsidiaries subsequent to the Exchange; and (iii) all references to the Company apply to SCL prior to the Exchange, and Weida Communications, Inc. and its subsidiaries subsequent to the Exchange.

Acquisition

As described in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2004, SCL entered into a series of contractual arrangements subsequent to June 30, 2004, resulting in it obtaining control of, and a 51% profit-sharing interest in, Weida PRC since August 27, 2004. In particular, SCL entered into a trust agreement (the “Trust Agreement”) with Weida PRC and the existing shareholders of Weida PRC (the “Existing Shareholders”) and pursuant to which, the Existing Shareholders hold 51% of the shares of Weida PRC in trust for the benefit of SCL. Also, as part of the consideration for the acquisition of the equity interest in Weida PRC, the Company is to issue 16,296,296 shares to the Existing Shareholders and to pay $15,805,135 to the Existing Shareholders. However, the issuance of the shares will not be due until certain conditions have been met, and the payment of cash will not be due until certain other conditions have been met. As of December 31, 2004, these conditions had not been met and as a result, such share and cash considerations have not been accrued and have not been included in the calculation of goodwill in the accompanying condensed consolidated financial statements.

As a result of the Exchange (i) the historical financial statements of the Company for periods prior to the Exchange are those of SCL and the historical financial statements of Laser Recording Systems, Inc. for periods prior to the Exchange are no longer presented; (ii) all references to the financial statements of the Company apply to the historical financial statements of SCL prior to the Exchange and the consolidated financial statements of the Company and its subsidiaries subsequent to the Exchange; and (iii) all references to the Company apply to SCL prior to the Exchange, and Weida Communications, Inc. and its subsidiaries subsequent to the Exchange.

The Weida PRC Acquisition

As described in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2004, SCL entered into a series of contractual arrangements subsequent to June 30, 2004, resulting in it obtaining control of, and a 51% profit-sharing interest in, Weida PRC since August 27, 2004. In particular, SCL entered into a trust agreement (the “Trust Agreement”) with Weida PRC and the existing shareholders of Weida PRC (the “Existing Shareholders”) and pursuant to which, the Existing Shareholders hold 51% of the shares of Weida PRC in trust for the benefit of SCL. Also, as part of the consideration for the acquisition of the equity interest in Weida PRC, the Company is to issue 16,296,296 shares to the Existing Shareholders and to pay $15,805,135 to the Existing Shareholders. However, the issuance of the shares will not be due until certain conditions have been met, and the payment of cash will not be due until certain other conditions have been met. As of March 31, 2005, these conditions had not been met and as a result, such share and cash considerations have not been accrued and have not been included in the calculation of goodwill in the accompanying condensed consolidated financial statements.

On February 4, 2005, the Company and the Existing Shareholders agreed in principle to modify the terms of the master agreement by entering into a revised master agreement. As of March 31, 2005, the revised master agreement was not fully effective. The revised master agreement, if and when fully effective, would provide for the transfer of all of the Existing Shareholders equity interest in Weida PRC to the Trust, so that the Trustee holds 100% of the shares of Weida PRC. The Existing Shareholders would then be entitled to receive the following in lieu of the 16,296,296 shares and $15,805,135 described above:

a. $1,000,000 cash, upon the Company completing a private placement of its equity securities or other financing:

b. $1,000,000 cash, at December 31, 2005:

c. $1,000,000 cash, at December 31, 2006:

d. 2,666,666 shares of the Company, upon achieving 2005 financial goals:

e. 2,666,666 shares of the Company, upon achieving 2006 financial goals:

f. 2,666,666 shares of the Company, upon achieving 2007 financial goals:

g. 1,000,000 shares of the Company each year for 4 years, with one-fourth upon signing employment contracts, based upon achieving financial goals and management by objectives (“MBO’s”) (with CEO approval), with a strike price of $.50 to $1.00, exercisable over 3 years, with Board approval, and one-fourth similarly for each year of the employment contract.

In part as a result of the events described in Note 11 below, our current cash and cash equivalents and funding commitments described below are not sufficient for us to sustain present operations beyond the second calendar quarter of 2005. We will need additional funding to continue operations as an ongoing entity. We are in the process of attempting to raise additional private funding to satisfy these requirements.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of accounting - The unaudited condensed consolidated financial statements for the ~~three~~nine months ended ~~December~~March 31, ~~2004~~2005 have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the condensed consolidated financial statements, during the period ended ~~December~~March 31, ~~2004,~~ ~~the Company incurred a net loss of $1~~2005,~~871,236,~~ ~~as compared to~~ the ~~period ended September 30, 2004, when the~~ Company incurred a net loss of $36,~~354~~726,~~613~~774, and, as of ~~December~~March 31, ~~2004~~2005, the Company’s current liabilities exceeded its current assets by $12,~~786~~319,~~762, as compared to September~~678. ~~30,~~ ~~2004, when the Company’s current liabilities exceeded its current assets by $4,662,530.~~ These factors among others may indicate that the Company will be unable to continue as a going concern for a reasonable period of time.

The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to comply with the terms and covenants of its financing agreements, to obtain additional financing or refinancing as may be required, and ultimately to attain successful operations. Management is continuing its efforts to obtain additional funds so that the Company can meet its obligations and sustain operations from sources such as the credit facility available to the Company (see Note 8 to the condensed consolidated financial statements).

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. They do not include all information and notes required by generally accepted accounting principles for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals only) considered necessary for a fair presentation have been included. The results for the three months ended December 31, 2004 are not necessarily indicative of results for a full year. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with Management’s Discussion and Analysis and the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K of the Company for the fiscal year ended June 30, 2004.5

~~Principle~~should ~~of consolidation~~the -Company be unable to continue as a going concern. The ~~condensed~~Company’s ~~consolidated~~continuation ~~financial~~as ~~statements~~a ~~include~~going ~~the~~concern ~~financial~~is dependent upon ~~statements~~its ofability to generate sufficient cash flow to meet its obligations on a timely basis, to comply with the ~~Company~~terms and covenants of its ~~subsidiaries.~~financing agreements, to obtain additional financing or refinancing as may be required, and ultimately to attain successful operations. The Company’s ~~consolidates~~need for ~~companies~~additional financing has become more urgent in ~~which~~recent itweeks, ~~has~~in apart ~~controlling~~as ~~interest~~a result of ~~over~~the ~~50%~~events described in Note 11. ~~All~~Management ~~significant~~is continuing its efforts ~~intercompany~~to ~~accounts,~~obtain ~~transactions~~additional funds so that the Company can meet its obligations and sustain ~~cash~~operations. ~~flows~~These ~~have~~efforts ~~been~~may ~~eliminated~~include onobtaining additional private ~~consolidation~~financing in the form of secured or unsecured debt or preferred equity financing.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. They do not include all information and notes required by generally accepted accounting principles for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals only) considered necessary for a fair presentation have been included. The results for the three and nine months ended March 31, 2005 are not necessarily indicative of results for a full year. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with Management’s Discussion and Analysis and the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K of the Company for the fiscal year ended June 30, 2004.

Principles of consolidation - The condensed consolidated financial statements include the financial statements of the Company and its subsidiaries, SCL, Ocean International Holdings Limited, Ocean Tian Di Communication Technology Co., Ltd. and Weida PRC. The Company consolidates companies in which it has a controlling interest of over 50%. All significant intercompany accounts, transactions and cash flows have been eliminated on consolidation.

Use of estimates - The preparation of financial statements 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 reported period. Actual results could differ from those estimates.

Property, plant and equipment - These are recorded at cost less accumulated depreciation. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets. Estimated useful lives of property, plant and equipment are as follows:

VSAT and other equipment		5 years
Office equipment		5 years
Computers		3 years
Motor vehicles		5 years

Major improvements of property, plant and equipment are capitalized, while expenditures for repairs, maintenance and minor renewals and betterments are expensed.

Inventories - Inventories, which primarily consist of VSAT equipment, are stated at the lower of cost or market value. Cost is determined by the first-in, first-out method.

Long-lived assets - The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future undiscounted net cash flows expected to be generated by the assets. If the carrying amounts of long-lived assets are not recoverable, impairment is recognized for the amount by which the carrying amounts of the assets exceed their fair values. No impairment loss was recorded for the period presented.

Income taxes - Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities and their respective tax bases as well as operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the

~~which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the~~ period that includes the enactment date. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized.

Revenue recognition - Revenue from the satellite bandwidth provision agreement is recognized on a straight-line basis over the period of the agreements. The excess of amounts received or receivable from customers over the revenue recognized is included in deferred revenue account.

Sales of VSAT equipment are recorded when the equipment is delivered, title has passed to the customers and the Company has no further obligations to provide services related to the operation of such equipment.

Foreign currency translation – All transactions in currencies other than functional currencies during the period are translated at the exchange rate prevailing on the respective transactions. Monetary assets and liabilities existing at the balance sheet date denominated in currencies other than functional currencies are translated at the exchange rates existing on that date. Exchange differences are recorded in the condensed consolidated statement of operations. The functional currency of the Company ~~and~~ ~~its subsidiaries are~~ is the United States dollar (“USD”) and of its subsidiaries is the Renminbi (“RMB”)~~, respectively~~. The financial statements of all subsidiaries with functional currencies other than USD are translated into USD for reporting purposes. All assets and liabilities are translated at the rates of exchange ruling at the balance sheet date and all income and expenses are translated at the average rates of exchange over the period. All exchange differences arising from the translation of subsidiaries’ financial statements are recorded as a component of comprehensive income.

Goodwill – The excess of the purchase price over the fair value of net assets acquired is recorded on the condensed consolidated balance sheet as goodwill. Goodwill will not be amortized but will be tested for impairment at the reporting unit level on at least an annual basis. The evaluation of goodwill for impairment involves two steps: (1) the identification of potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill and (2) the measurement of the amount of goodwill loss by comparing the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill and recognizing a loss by the excess of the latter over the former. For future impairment tests, the Company will measure fair value based either on internal models or independent valuations. As of ~~December~~March 31, ~~2004~~2005, the goodwill of $9,~~059~~000,~~413~~662 is subject to change pending a final analysis of the fair values of the assets acquired and liabilities assumed by the Company. Some of the goodwill amount will be allocated to licenses with definite or indefinite lives. The impact of any such changes on future results of operations and reported assets and liabilities could be material.

Fair value of financial instruments - The carrying amounts of cash, short term borrowing and bank loan approximate their fair values due to the short-term maturity of these instruments. The carrying amounts of the long term loan approximates its fair value due to the variable nature of the interest calculations.

Minority interest - No minority interest balance is presented in the condensed consolidated financial statements because it is an amount receivable from the minority interest as of ~~December~~March 31, ~~2004~~2005. There is no binding agreements nor contractual arrangements in place in which the minority interest is obligated to fund the subsidiaries. Accordingly, no minority interest balance is presented.

Stock-Based Payments – During the three months ended March 31, 2005, the Company granted common stock as incentive to sign in for service and has accounted for the transaction in accordance with SFAS 123. Compensation expense was recorded for the fair market value of the common stock at the date of grant. The number of shares granted is included in the common stock to be issued at March 31, 2005. For stock issued to nonemployees as payment for services, the Company accounts for the transaction using either the fair value of (a) the goods or services received or (b) the equity instrument issued whichever, is more readily measured.

Recently issued accounting pronouncements - In November 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 151, “Inventory Costs - an amendment of ARB No. 43, Chapter 4”. SFAS No. 151 clarifies the accounting that requires abnormal amounts of idle facility expenses, freight, handling costs, and spoilage costs to be recognized as current-period charges. It also requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS No. 151 will be effective for inventory costs incurred on or after June 15, 2005. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

In December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment”. This statement is a revision to SFAS No. 123 and supercedes APB Opinion No. 25. This statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services, primarily focusing on the accounting for transactions in which an entity obtains employee services in share-based payment transactions. Entities will be required to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service, the requisite service period (usually the vesting period), in exchange for the award. The grant-date fair value of employee share options and similar instruments will be estimated using option-pricing models. If an equity award is modified after the grant date, incremental compensation cost will be recognized in an amount equal to the excess of the fair value of the modified award over the fair value of the original award immediately before the modification. This statement is effective as of the beginning of the first interim or annual reporting period that begins after June 15, 2005. In accordance with the standard, the Company will adopt SFAS No. 123R effective July 1, 2005.

6Upon adoption, the Company has two application methods to choose from: the modified-prospective transition approach or the modified-retrospective transition approach. Under the modified-prospective transition method, the Company would be required to recognize compensation cost for share-based awards to employees based on their grant-date fair value from the beginning of the fiscal period in which the recognition provisions are first applied as well as compensation cost for awards that were granted prior to, but not vested as of the date of adoption. Prior periods remain unchanged and pro forma disclosures previously required by SFAS No. 123 continue to be required. Under the modified-retrospective transition method, the Company would restate prior periods by recognizing compensation cost in the amounts previously reported in the pro forma footnote disclosure under SFAS No. 123. Under this method, the Company is permitted to apply this presentation to all periods presented or to the start of the fiscal year in which SFAS No. 123R is adopted. The Company would follow the same guidelines as in the modified-prospective transition method for awards granted subsequent to adoption and those that were granted and not yet vested. The adoption of SFAS No. 123R is not expected to have a material impact on the Company’s consolidated financial statements.

Upon adoption, the Company has two application methods to choose from: the modified-prospective transition approach or the modified-retrospective transition approach. Under the modified-prospective transition method, the Company would be required to recognize compensation cost for share-based awards to employees based on their grant-date fair value from the beginning of the fiscal period in which the recognition provisions are first applied as well as compensation cost for awards that were granted prior to, but not vested as of the date of adoption. Prior periods remain unchanged and pro forma disclosures previously required by SFAS No. 123 continue to be required. Under the modified-retrospective transition method, the Company would restate prior periods by recognizing compensation cost in the amounts previously reported in the pro forma footnote disclosure under SFAS No. 123. Under this method, the Company is permitted to apply this presentation to all periods presented or to the start of the fiscal year in which SFAS No. 123R is adopted. The Company would follow the same guidelines as in the modified-prospective transition method for awards granted subsequent to adoption and those that were granted and not yet vested. As the Company has not exchanged any equity instruments for employee service, nor does it anticipate the exchange of any equity instruments for employee service to be provided, the adoption of SFAS No. 123R is not expected to have a material impact on the Company’s consolidated financial statements.

In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets-An Amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions”. SFAS No. 153 eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets in paragraph 21(b) of Accounting Principles Board Opinion No. 29, “Accounting for Nonmonetary Transactions”, and replaces it with an exception for exchanges that do not have commercial substance. SFAS No. 153 specifies that a nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. SFAS No. 153 is effective for the fiscal periods beginning after June 15, 2005. The Company is currently evaluating the effect that the adoption of SFAS No. 153 will have on its financial statements but does not expect it to have a material impact.

3. NOTE RECEIVABLE FROM RELATED PARTY

On August 1, 2003, SCL signed a promissory note receivable with Glendora, Ltd. (“Glendora”), a British Virgin Islands corporation, in the amount of $2.2 million, representing advances paid on behalf of Glendora as of that date in connection with a then proposed acquisition by Glendora of a 51% interest in a Sino-foreign Equity Joint Venture with Guangzhou Suntek New Tech R&D Co., Ltd. (“Suntek”). Glendora has ~~certain~~ certain shareholders that are also shareholders of ~~SCL~~the Company, and in August 2003 the ~~Company~~chief executive officer of Glendora was also the chief executive of SCL. Borrowings under the note receivable bear interest at the London Interbank Offered Rate plus 200 basis points (effective rate of 45.3284% at ~~December~~March 31, ~~2004~~2005), with interest and principal due five years from the date of the note. Glendora has granted a general security interest in and to all of its tangible and intangible property and assets of any kind as collateral for the note receivable (which assets as of March 31, 2005 consisted solely of a loan receivable to Glendora’s acquisition subsidiary from Suntek). Glendora previously also had the right to complete the acquisition of Suntek described above but Glendora terminated the proposed acquisition in 2004 and has requested the return of the $2.2 million advance. The carrying amount of this note receivable approximates its fair value.

Additionally, SCL and Glendora on August 1, 2003 had signed an assignment agreement whereby SCL ~~has~~had granted Glendora the rights to enter into athe acquisition transaction with ~~Guangzhou~~ Suntek ~~New Tech R&D Co., Ltd. (“Suntek”)~~ which ~~was~~ were previously held by SCL., ~~Management~~in ofexchange ~~the~~for ~~Company~~a ~~has not assigned~~right ~~any~~granted ~~value~~ to ~~the~~SCL ~~assignment agreement as the assignment agreement assigns the right~~ to ~~pursue~~require aGlendora ~~purchase~~at ~~agreement~~any ~~with~~time ~~Suntek and not a negotiated purchase~~within ~~agreement~~the ~~and,~~next ~~therefore,~~24 ~~does~~months ~~not~~to ~~have~~negotiate ~~any~~in ~~measurable value.~~good

~~4. INCOME TAXES~~8

faith with SCL with respect to a possible acquisition of Glendora by SCL using SCL shares. Management of the Company had not assigned any value to the assignment agreement or to the rights granted to Glendora or received from Glendora, as the assignment agreement assigns the right to pursue a purchase agreement with Suntek and not a negotiated purchase agreement, neither SCL nor Glendora then had contractually binding rights to acquire an interest in Suntek and, therefore, the agreement and rights did not have any measurable value. As noted above, Glendora has since terminated its proposed acquisition of Suntek.

During the period ended March 31, 2005, Glendora through its legal representative in China filed a claim with the Guangzhou authorities against Suntek for recovery of the $2.2 million advance, asserting that Suntek breached its obligations under the acquisition agreement between Suntek and Glendora’s acquisition subsidiary. This filing now gives Glendora the right to arbitrate. In connection with such filing, the Company based on the advice of its legal counsel in China, has determined that Glendora can recover the principal balance of $2.2 million; however, Glendora is unlikely to be able to recover interest accrued on the advance. Consequently, as Glendora has no other assets or sources of income, during the three months ended March 31, 2005, interest income was not accrued and interest accrued through December 31, 2004 of $158,950 was reversed.

4. ACQUISITIONS

In August 2004, SCL completed a series of contractual arrangements. As part of the contractual arrangements, SCL acquired 99.99% of the registered capital of Ocean International Holdings Limited (“OIHL”), a company incorporated in Hong Kong. The remaining 0.01% of the registered capital of OIHL is held by one of the Company’s executives as a nominal holder in order to meet local Hong Kong legal requirements. OIHL is the sole owner and holder of all the registered capital of Ocean Tian Di Communication Technology Co., Ltd. (Guangzhou), a wholly owned foreign enterprise (“OTDC”). OTDC has entered into an exclusive service and support agreement with Weida PRC, effective as of September 1, 2004, which provides for OTDC to provide support services to Weida PRC in exchange for receiving service fees.

As described in Note 1, pursuant to the terms of the contractual arrangements, SCL has acquired effective majority ownership and control of Weida PRC through a trust agreement for 51% of its shares and an effective 51% profit-sharing interest in Weida PRC. Pursuant to the trust agreement, the shareholders of Weida PRC hold 51% of the shares of Weida PRC in trust for the benefit of SCL. These shareholders may only transfer or dispose of the shares held in trust upon written instructions from SCL and must at all times exercise the voting rights of the shares held in trust at the direction of SCL Under the contractual arrangements, SCL can designate three of Weida PRC’s five directors.

As part of the contractual arrangements, when the conversion of Weida PRC into a Sino-foreign Equity Joint Venture (the “Weida EJV”) is approved by the PRC authorities, SCL’s profit-sharing interest will be reduced to 26% so as to maintain its effective 51% majority interest in Weida PRC.

The acquisitions of the Company were made for the purpose of providing products and services for satellite-based communications network in the People’s Republic of China.

The acquisitions were accounted for as a purchase in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141, Business Combinations. The assets and liabilities acquired are based upon fair value. The excess of the liabilities assumed over total assets acquired was recorded as goodwill.

The following is a summary of the assets acquired and liabilities assumed as of the date of acquisition of Weida PRC:

Current Assets:
Cash	$	37,368
Accounts receivable, net	13,078
Inventories	721,951
Prepaid expenses	236,941
Total current assets	1,009,338

Property, plant and equipment	1,905,015

Total Assets	$	2,914,353

Current Liabilities:
Accounts payable	$	696,357
Accrued expenses	53,850
Deferred revenue	70,657
Amounts due to shareholders	236,930
Amounts due to related parties	2,093,404
Short term borrowing	24,165
Bank loan	2,416,451
Total current liabilities	$	5,591,814

Net Liabilities (Goodwill)	$	(2,677,461	)

The following unaudited pro forma consolidated results of operations give effect to the acquisition of Weida PRC as if it occurred as of the beginning of the period:

	Nine months ended
	March 31,
	2005			2004

Revenue	$	346,793		$	72,207
Loss from operations	$	(6,792,957	)	$	(2,935,261	)
Net loss	$	(6,981,082	)	$	(3,014,853	)
Basic and diluted net loss per common share	$	0.09		$	0.04

5. BANK LOAN

The bank loan outstanding as of March 31, 2005 payable in RMB 20,000,000 ($2,416,451) bears interest at 5.84% per annum, was due on May 13, 2005 and has been extended to June 30, 2005. The loan is guaranteed by a related party, who is one of the Existing Shareholders who holds 95% of the shares of Weida PRC. That guarantee is in turn secured by the shares of Weida PRC held by the related party, including substantially all of the 51% held in trust by Existing Shareholders for the benefit of SCL.

6. INCOME TAXES

The Company is located in a jurisdiction where it has no actual operations and such jurisdiction does not impose income taxes. As such, no provision for income taxes for the Company has been provided.

The income tax rate applicable to enterprises in the PRC is generally 33%. However, preferential tax treatment of a wholly owned subsidiary of the Company in the PRC has been agreed with the relevant tax authorities. The subsidiary is entitled to a one year exemption from income tax for any profit-making year commencing the calendar year 2003.

~~5. NET LOSS PER SHARE~~10

~~Basic and diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock outstanding during the period~~7. SHAREHOLDERS’ For periods in which a net loss has been incurred, the calculation of diluted net loss per share excludes potential common stock equivalents, as their effect is anti-dilutive. Potential common stock includes incremental shares of common stock issuable upon the exercise of 3,114,412 outstanding stock warrants as of December 31, 2004.EQUITY

6On August 20, 2004, the Company filed a restated Certificate of Incorporation. ~~BANK~~ The ~~LOAN~~total number of shares the Company is authorized to issue is 400,000,000 shares of common stock and 10,000,000 shares of preferred stock, no par value per share. The common stock has voting rights and subject to any preferences relating to dividends, voting and liquidation rights of preferred stock which may be issued in the future.

~~The bank loan outstanding as of December 31, 2004 of $2,416,451 bears interest at 5~~8.~~84%~~ NET ~~per~~LOSS ~~annum~~PER ~~and is due on May 13, 2005. The loan is guaranteed by related parties.~~SHARE

7Basic and diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock outstanding during the period. For periods in which a net loss has been incurred, the calculation of diluted net loss per share excludes potential common stock equivalents, as their effect is anti-dilutive. Potential common stock includes incremental shares of common stock issuable upon the exercise of 3,919,128 outstanding stock warrants as of March 31, 2005.

79. COMMITMENTS AND CONTINGENCIES

(i) An On ~~employee~~March 30, 2005, ofthe ~~SCL~~Company ~~has~~settled ~~asserted~~a ~~claims~~dispute ~~for unpaid~~with ~~salary~~a informer ~~the~~employee ~~amount~~relating ofto ~~$0.5 million~~claims for ~~and~~unpaid ~~3.3 million~~salaries ~~shares~~and ~~of Weida’s~~severance ~~common~~payments ~~stock~~under ~~based~~the onterms of an asserted employment ~~agreement~~contract dated March 1, 2003 between him and SCL,. The ~~and~~settlement agreement ~~has~~requires ~~indicated~~the ~~through~~Company ~~his~~to ~~counsel~~pay ~~that~~the ifformer ~~terminated~~employee he$425,000 ~~will~~payable ~~also~~as ~~assert~~follows: $150,000 adue ~~claim~~April 15, 2005 ~~for~~and ~~severance~~the balance payable in ~~the~~thirty ~~additional~~equal ~~amount~~monthly ofinstallments, ~~$0.75 million.~~plus ~~The~~interest ~~Company’s~~at ~~management~~6% ~~believes~~per annum. In addition, the Company ~~has~~is ~~meritorious~~required ~~defenses~~ to ~~the claims~~issue 1,200,000 ~~including~~shares ~~that~~of restricted stock to the former employee inas ~~question~~part ~~did~~of ~~not~~the ~~perform~~settlement. During the ~~services contemplated~~period byended ~~the~~March 31, ~~alleged~~2005, ~~agreement.~~selling, Ageneral ~~portion~~and administrative costs include $327,000 of ~~the~~compensation ~~employee’s~~cost ~~alleged unpaid~~in ~~salary~~connection ~~had~~with this ~~been~~settlement and ~~continues~~claim tosettlement bepayable ~~included~~was inincreased ~~the~~by ~~Company’s~~$315,000 ~~condensed~~and ~~consolidated~~shareholders’ ~~financial~~equity ~~statements~~by as$12,000 ~~accounts~~for ~~payable~~the value of the 1,200,000 shares to be issued.

SCL has commenced legal proceedings against the employee for breach of contract and declaratory relief and has given him notice of termination of employment. The employee has moved to compel arbitration of the matter. The employee’s motion has been granted, but no decision has been made as to whether to appeal that decision. Arbitration proceedings with respect to the employee’s claims are probable. There can be no assurance as to the outcome of the current litigation or any arbitration proceedings. Any adverse decision in such proceedings could adversely affect the financial condition of the Company.

The claim was recently settled by mutual agreement in late March 2005.

(ii) A shareholder and former chief financial officer of Teleflex Technologies, Inc. (“Teleflex”), a currently inactive privately-held company which had attempted to pursue joint venture opportunities in the PRC in late 2001 and in 2002, and of which Mitchell Sepaniak, the president, chief executive officer and a shareholder of the Company, was also a chief executive officer, commencing early 2003, has recently asserted claims in New York State court against SCL, Teleflex and Mr. Sepaniak. The plaintiff’s petition alleges failure on the part of Mr. Sepaniak and Teleflex to comply with corporate formalities such as holding annual meetings and also alleges corporate waste, and is seeking various relief, including allowing shareholders to inspect the books and records, including balance sheets and earnings statements. The former chief financial officer has also asserted claims against SCL, Teleflex and Mr. Sepaniak for unpaid salary and compensation.

Litigation proceedings with respect to the plaintiff’s claims have commenced. The proceedings are at an early stage, and therefore there can be no assurance as to the outcome of such proceedings. Any adverse decision in such proceedings could adversely affect the financial condition of the Company.

(iii) The Company is also subject to various legal proceedings and claims that arise in the ordinary course of business. In the opinion of management, the amount of any ultimate liability with respect to these actions will not materially affect the Company’s financial position, liquidity, or results of operations.

~~8. RELATED~~(iv) See ~~PARTY~~Note ~~TRANSACTIONS~~11 below for events subsequent to March 31, 2005 that may materially adversely affect the Company, its operations and financial condition.

~~(i) On December 3, 2003, the Company entered into a consulting agreement with Carl Lanzisera, the former president and current member of the Company’s board of directors~~10. RELATED ~~The~~PARTY agreement provides for Mr. Lanzisera to assist the Company in structuring, operating and growing the Company’s business. The agreement is for a term ending on December 31, 2004 and provides for cash payments aggregating $100,000 and the issuance of 25,000 restricted shares of the Company’s common stock. The shares were issued in June 2004 at the market value of $5.5 per share. The total consideration under the agreement amounted to $237,500. This consulting agreement has expired and will not be renewed.TRANSACTIONS

(iii) ~~SCL~~On ~~has~~December 3, 2003, the Company entered into a consulting agreement with ~~Anthony~~Carl ~~Giordano~~Lanzisera, athe ~~beneficial~~former ~~holder~~president and current member of the Company’s ~~common stock,~~board ~~effective as~~ of ~~April 1, 2004~~directors. The agreement provides for Mr. ~~Giordano~~ Lanzisera to assist ~~SCL or~~ the Company asin ~~a consultant by evaluating prospective merger~~structuring, ~~acquisition~~ operating and ~~financing~~growing ~~transactions that are presented to SCL or~~ the Company’s business. The agreement iswas for a term ending on ~~March~~December 3031, ~~2006, with~~ ~~subsequent~~2004 ~~one-year~~and ~~extensions~~provided ~~unless~~for ~~otherwise~~cash ~~terminated.~~payments ~~The~~aggregating ~~agreement provides~~$100,000 ~~for~~and athe ~~one-time~~issuance ~~initial~~of 25,000 ~~consulting~~restricted ~~fee~~shares ~~equal~~of tothe ~~$150,000,~~Company’s ~~which~~common ~~was paid~~stock. toThe ~~Mr. Giordano~~shares were issued in ~~April~~June 2004. Inat ~~addition, during~~ the ~~term~~market value of ~~the~~ ~~agreement,~~$5.50 ~~commencing~~per ~~April 2004, Mr~~share. ~~Giordano~~ ~~will~~The ~~receive a~~total ~~monthly~~consideration ~~consulting~~under ~~fee,~~the inagreement ~~arrears,~~amounted into an$237,500. This ~~amount~~consulting ~~equal~~agreement tohas ~~$20,000~~expired ~~plus~~and ~~reimbursement~~will ofnot ~~expenses~~be renewed.

(iii) Certain shareholders contributed capital to fund the Company’s operations through to December 31, 2003. In 2004, a founding shareholder of the Company contributed $600,000 capital and loaned $270,000 to the Company to fund its operations. The shareholder has indicated it will not demand the repayment of $270,000 prior to July 2006.11

In(ii) SCL ~~addition~~has entered into a consulting agreement with Anthony Giordano, ona ~~September~~beneficial holder of the Company’s common stock, effective as of April 31, 2004,. The agreement provides for Mr. Giordano to assist SCL or the Company as a consultant by evaluating prospective merger, acquisition and ~~together~~financing ~~with~~transactions ~~one~~that ofare Mrpresented to SCL or the Company. ~~Giordano’s~~ ~~family~~The ~~limited~~agreement ~~partnerships~~is for a term ending on March 30, ~~has~~2006, with ~~granted~~subsequent one-year extensions unless otherwise terminated. The agreement provides for a ~~credit~~one-time ~~facility~~initial ~~amounting~~consulting fee equal to $~~5 million~~150,000, which was paid to ~~fund~~Mr. Giordano in April 2004. In addition, during the ~~Company’s~~term of ~~future~~the ~~operations~~agreement, commencing April 2004, Mr. Giordano ~~This~~will ~~credit~~receive ~~facility~~a monthly isconsulting ~~unsecured~~fee, ~~bears~~in ~~interest~~arrears, in an amount equal to $20,000 plus ~~the~~reimbursement ~~London~~of ~~Interbank~~expenses. Subsequent ~~Offered~~to March 31, ~~Rate~~2005, ~~plus~~Mr. Giordano ~~200~~had ~~basis~~agreed ~~points,~~to ~~has~~terminate nopayments ~~equity~~under ~~component,~~the ~~and~~agreement ~~terminates~~effective onas ~~October~~of May 312005. Payments under this consulting agreement have been suspended as of April 30, 2005 pending the outcome of the events described in Note 11.

8(iii) Certain shareholders contributed capital to fund the Company’s operations through December 31, 2003. In 2004, a founding shareholder of the Company contributed $600,000 capital and loaned $270,000 to the Company to fund its operations. The shareholder has indicated he will not demand the repayment of $270,000 prior to July 2006.

911. ~~ACQUISITIONS~~ SUBSEQUENT EVENTS

~~In August~~On April ~~2004~~22, ~~SCL~~2005, ~~completed~~Anthony aGiordano, ~~series~~one of ~~contractual~~ ~~arrangements.~~the AsCompany’s ~~part~~major ofshareholders, and ~~the~~Joseph ~~contractual arrangements~~Zumwalt, ~~SCL~~then ~~acquired 99.99%~~chief offinancial officer of the ~~registered~~Company, ~~capital~~were ofarrested ~~Ocean~~and ~~International~~charged ~~Holdings~~with ~~Limited~~thirty ~~(“OIHL”),~~five counts of fraud aassociated ~~company~~with ~~incorporated~~alleged illegal activities in ~~Hong~~connection ~~Kong.~~with ~~The~~an ~~remaining~~independent investment ~~0.01%~~entity that is also one of the ~~registered capital~~Company’s ofshareholders. The ~~OIHL~~Company iswas ~~held~~not charged by ~~one~~the ofFederal government; however, the Company’s ~~executives~~bank asaccounts awere ~~nominal~~initially ~~holder in~~frozen by court order toat ~~meet~~the ~~local~~request ~~Hong~~of ~~Kong~~the ~~legal~~Federal ~~requirements.~~government, ~~OIHL~~apparently isdue to the ~~sole~~Company’s association ~~owner~~with ~~and holder~~the oftwo ~~all~~individuals. In addition, the ~~registered~~SEC ~~capital~~suspended oftrading ~~Ocean~~in ~~Tian~~the DiCompany’s ~~Communication~~shares ~~Technology~~from April 15, ~~Co.~~2005, ~~Ltd.~~through ~~(Guangzhou)~~May 6, a2005. ~~wholly~~The ~~owned~~freeze ~~foreign~~on ~~enterprise~~the ~~(“OTDC”).~~Company’s ~~OTDC~~operating ~~has~~cash bank ~~entered~~accounts ~~into~~was anlater ~~exclusive~~voluntarily ~~service~~lifted ~~and~~by ~~support~~the ~~agreement~~federal ~~with Weida PRC~~government, ~~effective~~ asat ofWeida’s ~~September 1~~request, ~~2004,~~and ~~which~~the ~~provides~~Company’s ~~for~~shares ~~OTDC~~resumed ~~to provide~~trading ~~support~~on ~~services~~May 9, to2005. The ~~Weida~~Company ~~PRC~~has since interminated ~~exchange~~Mr. Zumwalt for ~~receiving service fees~~cause.

~~Pursuant~~On May 6, to2005, the ~~terms~~Company ofreceived ~~the~~a ~~contractual arrangements,~~subpoena ~~SCL~~from ~~has~~the ~~acquired~~SEC ~~effective~~requesting documents ~~majority~~in ~~ownership~~connection ~~and~~with ~~control~~its investigation of ~~Weida~~ ~~PRC~~certain ~~through~~matters ~~trust~~involving ~~agreements~~Weida’s ~~for~~securities, ~~51%~~and ofon ~~its~~May 16, ~~shares~~2005 ~~and~~received an ~~effective 51%~~ ~~profit-sharing~~additional ~~interest~~subpoena infrom ~~Weida PRC. Under~~ the ~~contractual~~SEC ~~arrangements,~~for ~~SCL can~~certain ~~designate~~computer ~~three of Weida PRC’s five directors~~records.

AsThe Company ~~part~~is ofcooperating ~~the~~with ~~contractual arrangements, when~~ the ~~conversion~~ ofSEC ~~Weida~~and ~~PRC~~federal ~~into~~and aFlorida ~~Sino-foreign~~State ~~Equity Joint Venture (the “Weida~~legal ~~EJV”)~~enforcement isin ~~approved~~connection bywith ~~the~~these ~~PRC~~investigations. ~~authorities,~~The ~~SCL’s~~Company ~~profit-sharing~~has ~~interest~~also ~~will be~~begun ~~reduced~~its toown ~~26%~~internal soinvestigation asby tooutside ~~maintain~~counsel ~~its~~and ~~effective 51% majority interest~~accountants.

~~The following is a summary of the financial position of Weida PRC as of the date of acquisition:~~12

Current Assets:
Cash	$	37,368
Accounts receivable, net	13,078
Inventories	721,951
Prepaid expenses	236,941
Total current assets	1,009,338
Property, plant and equipment	1,905,015
Total Assets	$	2,914,353
Current Liabilities:
Accounts payable	$	755,108
Accrued expenses	53,850
Deferred revenue	70,657
Amounts due to shareholders	236,930
Amounts due to related parties	2,093,404
Short term borrowing	24,165
Bank loan	2,416,451
Total current liabilities	$	5,650,565
Net Liabilities	$	(2,736,212	)

The following unaudited pro forma consolidated results of operations give effect to the acquisition of Weida PRC as if it occurred as of the beginning of the period:

	Six months ended
	June 30,
	2004			2003
Revenue	$	242,274		$	72,207
Loss from operations	$	(5,485,748	)	$	(2,252,631	)
Net loss	$	(5,480,157	)	$	(2,351,368	)
Basic and diluted net loss per common share	$	0.07		$	0.03

ITEM 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and notes thereto included elsewhere in this report. In addition to historical ~~information~~ information contained herein, this discussion and analysis contains forward-looking statements. These statements involve risks and uncertainties and can be identified by the use of forward-looking terminology such as “estimates,” “projects,” “anticipates,” “plans,” “future,” “may,” “should,” “predicts,” “potential,” “continue,” “expects,” “intends,” “believes,” and similar expressions. ~~These~~ These statements are based on the current expectations of the management of the Company only, and are subject to a number of risk factors and uncertainties, including but not limited to current SEC and federal investigations involving the Company and persons associated with the Company, the Company’s urgent need for additional financing to continue perations, the need for equity financing in order to consummate the acquisition of a legal ownership interest in Weida PRC, limited operating history, the Company’s historical and likely future losses, uncertain regulatory landscape in the People’s Republic of China, fluctuations in quarterly operating results, the Company’s reliance on the provision of VSAT-based communications services for the majority of its revenues, changes in ~~technology~~ technology and market requirements, decline in demand for the Company’s products, inability to timely develop and introduce new technologies, products ~~and~~ and applications, difficulties or delays in absorbing and integrating acquired operations, products, technologies and personnel, loss of market share, and pressure on pricing resulting from competition, which could cause the actual results or performance of the Company to differ materially from those described therein. We undertake no obligation to update these forward- looking statements. For a more detailed description of the risk factors and uncertainties affecting the Company, refer to the Company’s reports filed from time to time with the Securities and Exchange Commission, including the information about risk factors provided in Item 1, “Business,” in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2004.

Overview

We are a company organized under the laws of, and with our executive offices in, the United States, and managed by United States citizens and residents, that is participating in the fast-growing China telecommunications market through control of and a 51% profit-sharing interest, and our planned 51% combined equity ownership and profit-sharing interest, in the only wholly privately-owned company in China holding licenses for bi-directional VSAT communications (the only other privately-owned company recently holding a license was merged into a joint government venture in January 2004). Weida PRC’s satellite ~~operations~~ operations in China provide ground-based equipment and related services to ~~support~~ support government and corporate applications, including broadband Internet access, remote meter monitoring, and mission-critical data backup systems. On May 20, 2003, we and three shareholders owning an aggregate of approximately 67% of our outstanding common stock (prior to giving effect to a one-for-four reverse stock split that took effect on June 11, 2004) entered into a share exchange agreement with SCL and certain of its shareholders. Upon satisfaction of the terms and conditions of the share ~~exchange~~ exchange agreement, as amended, the closing of the share exchange (the “Exchange”) was consummated on June 11, 2004, at which time SCL became our wholly-owned subsidiary and the shareholders of SCL were issued shares representing approximately 96.5% of our outstanding shares. The ~~share~~Exchange ~~exchange with SCL~~ has been accounted for as a reverse acquisition in which SCL is the acquirer for accounting purposes. Upon completion of the ~~share exchange~~Exchange, we changed our name from Laser Recording Systems, Inc. to Weida Communications, Inc.

As a result of the Exchange (i) the ~~historical~~ historical financial statements of the Company for periods prior to the Exchange are those of SCL and the historical financial statements of Laser Recording Systems, Inc. for periods prior to the Exchange are no longer presented; (ii) all references to the financial statements of the Company apply to the historical financial statements of SCL prior to the Exchange and the consolidated financial statements of the Company and its subsidiaries subsequent to the Exchange; and (iii) all references to the Company apply to SCL prior to the Exchange, and Weida Communications, Inc. and its subsidiaries subsequent to the Exchange.

Our principal executive offices are located at 515 East Las Olas Boulevard, Suite 1350, Fort Lauderdale, Florida 33301. Our telephone number is (954) 527-7750. Our Internet address is http://www.weida.com.

Results of Operations

~~On April 29, 2003, SCL entered into a master agreement with~~ Weida PRC, ~~as more fully described elsewhere in our Annual Report on Form 10-K for the fiscal year ended June 30, 2004. Weida PRC~~ is currently our only source of revenue,. Our ~~and our~~ operations ~~prior~~up tothrough ~~December~~September 30, 2004 have been ~~limited~~principally to activities to complete the ~~transaction~~acquisition ~~with~~of Weida PRC. Consequently, management does not believe aan analysis ~~period~~of third quarter 2005 to ~~period~~third ~~analysis~~quarter of2004 change in revenue, ~~costs~~and cost of ~~goods~~sales ~~sold and other expenses~~ is ~~relevant~~meaningful toat ~~an understanding~~this of time. For the ~~Company’s~~three ~~results~~months ofand ~~operations~~nine ~~for~~months ~~periods~~ended ~~through December~~March 31, ~~2004.~~ ~~For~~2005, ~~the~~cost ~~three~~of ~~months~~sales ~~ended~~of $442,839 ~~December 31~~and $910,205, ~~2004~~respectively, weexceeded ~~incurred~~revenues ~~total~~because cost of sales ~~operating~~include ~~expenses~~fixed cost for leasing of ~~$1,707,280.~~equipment

10Selling, General and Administrative Costs

~~Selling~~For the three months ended March 31, ~~General~~2005, we incurred total selling, general and ~~Administrative~~administrative costs of $968,889 which included $131,923 for salaries, ~~Expenses~~$(264,120) for legal fees (the latter reflecting a reversal of $450,000 in fees payable and settled by the issuance of common stock prior to June 30, 2004), $231,270 for accounting and auditor fees and $327,000 for cost of settlement of claims. For the three months ended March 31, 2004, we incurred total selling, general and administrative cost of $682,630.

~~Operating expenses totaled $1,707,280 for~~ For the ~~three~~ nine months ended ~~December~~March 31, ~~2004.~~2005, ~~These~~we ~~expenses~~incurred ~~reflect~~total ~~the~~selling, ~~expected one~~general ~~time~~and administrative costs of ~~building~~$5,951,717 ~~our~~which ~~infrastructure~~includes in$370,531 ~~order~~for ~~to fulfill certain contracts~~salaries, ~~and~~$595,289 ~~prospective~~for ~~contracts.~~legal ~~Included~~fees, in$553,612 ~~these~~for ~~expenses~~accounting ~~are~~and ~~legal~~auditor fees and $327,000 ~~accounting~~for ~~fees,~~cost ~~and~~of ~~consultant~~settlement ~~fees~~of ~~paid~~claims. The costs ~~These~~incurred ~~expenses~~during ~~also~~this ~~reflect~~period ~~numerous~~included expenses of ~~due~~Weida PRC ~~diligence~~consolidated ~~trips~~for the toperiod ~~China~~from ~~for~~August 2004 ~~certain~~through ~~executives~~March 31, of2005. For the ~~Company~~nine asmonths ~~well~~ended asMarch 31, ~~their~~2004, ~~advisors~~we incurred total selling, general and administrative costs of $1,725,863.

Liquidity and Capital Resources

As shown in the condensed consolidated financial statements, at ~~December~~March 31, ~~2004~~2005 we had consolidated negative working ~~capital~~ capital of approximately $12.793 million and an accumulated deficit of approximately $89.26 8 million. Since SCL’s formation in May 2003, we have funded all of our operating expenses and deficit from the net proceeds of private placements of our shares and warrants to private investors and, to a lesser extent, from shareholder loans.

AtDuring ~~December~~the nine months ended March 31, ~~2004~~2005, proceeds weof ~~had~~private ~~total~~placements ~~consolidated assets~~ of our shares totaled approximately $176.8 million,~~733,925~~ thereby providing the approximately $5.4 ~~Included~~million in ~~total~~net cash used in ~~assets~~operating isactivities aand ~~promissory~~the ~~note~~approximately ~~issued~~$1.0 bymillion ~~Glendora~~used ~~Management~~in ~~Ltd.~~investing activities ~~(“Glendora”),~~during athe period. During the ~~British~~nine ~~Virgin~~months ~~Islands~~ended ~~corporation~~March 31, to2004, ~~SCL~~proceeds inof ~~the~~private ~~amount~~placements of our shares totaled approximately $20.29 million~~. Certain~~, ofand ~~Glendora’s~~additional ~~shareholders~~capital ~~are~~contributions from ~~also~~existing shareholders oftotaled ~~the~~approximately ~~Company~~$1.0 million, thereby ~~Borrowings~~providing ~~under~~almost ~~the~~all ~~note~~of ~~bear~~the ~~interest~~approximately at$0.2 ~~the~~million ~~London~~in ~~Interbank~~net ~~Offered~~cash ~~Rate~~used in ~~plus~~operating ~~200~~activities ~~basis~~and ~~points~~the ~~(effective~~approximately ~~rate~~$1.8 ofmillion 4used in investing activities during the period.~~32%~~ Our operations atup ~~December~~through September 3130, 2004), ~~with interest~~were ~~and~~principally ~~principal~~activities ~~due~~to complete ~~five~~the ~~years~~Share ~~from~~Exchange and the ~~date~~acquisition of ~~the note~~Weida PRC. ~~Glendora has~~ ~~granted~~Consequently, tomanagement ~~SCL~~does anot ~~security~~believe ~~interest~~an inanalysis ~~and~~of year-to-year changes ~~certain~~in ofcash ~~its~~flow ~~property~~items ~~and~~for ~~assets as~~the ~~collateral~~nine ~~for~~months ~~repayment~~ended ofMarch 31, ~~the~~2005 compared ~~note.~~to ~~The~~the ~~carrying~~nine ~~amount~~months ofended ~~this~~March 31, ~~note receivable~~2004 ~~approximates~~is ~~its~~meaningful ~~fair~~at ~~value~~this time.

~~Additionally~~At March 31, ~~SCL~~2005, ~~and~~we ~~Glendora~~had ~~signed~~total anconsolidated assets ~~assignment~~of $15,965,755. Included in total assets is a promissory note issued by ~~agreement~~Glendora ~~whereby~~Management Ltd. (“Glendora”), a British Virgin Islands corporation, to SCL ~~has~~in ~~granted~~the amount of $2.2 million representing advances paid on behalf of Glendora ~~the~~as ~~rights~~of tothat ~~enter~~date ~~into~~in connection with a then proposed acquisition by ~~transaction~~Glendora ~~with~~of a 51% interest in a Sino-foreign Equity Joint Venture with Guangzhou Suntek New Tech R&D Co., Ltd. (“Suntek”). Glendora has certain shareholders that are also shareholders of the Company, ~~which~~and during 2003 the chief executive officer of Glendora was ~~previously~~also ~~held~~the bychief executive of SCL. Borrowings under Nothe ~~value~~note receivable bear interest at the London Interbank Offered Rate plus 200 basis points (effective rate of 5.84% at March 31, 2005), with interest and principal due five years from the date of the note. Glendora has ~~been~~granted ~~designated~~a general security interest in and to ~~the~~all ~~assignment~~of its tangible and intangible property ~~agreement~~and assets of any kind as itcollateral ~~assigns~~for the ~~right~~note toreceivable ~~pursue~~(which assets as of March 31, 2005 consisted solely of a ~~purchase~~loan ~~agreement~~receivable ~~with~~to Glendora’s acquisition subsidiary from Suntek). Glendora previously also had the right to complete the acquisition of Suntek described above but Glendora terminated the proposed acquisition in 2004 and ~~not~~has arequested ~~negotiated~~the return ~~purchase~~of ~~agreement~~the $2.2 million advance. The carrying amount of this note receivable approximates its fair value.

Our current cash and cash equivalents and funding commitments described below are not sufficient for us to sustain present operations beyond the third calendar quarter of 2005. We will need additional funding to continue operations as an ongoing entity. We are in the process of negotiating to raise additional private funding to satisfy these requirements. We are also in preliminary negotiations with certain banking and financial institutions to secure a corporate credit line.14

~~Effective~~Additionally, asSCL ofand ~~September~~Glendora on August 31, ~~2004,~~2003 ahad ~~credit facility~~signed ~~for~~an upassignment toagreement $5whereby ~~million~~SCL ~~has~~had ~~been~~granted ~~made~~Glendora ~~available~~the rights to usenter byinto ~~Anthony~~the ~~Giordano,~~acquisition atransaction ~~Company~~with ~~shareholder~~Suntek which were previously held by SCL, ~~together~~in ~~with~~exchange ~~one~~for ofa ~~Mr. Giordano’s~~right ~~family~~granted ~~limited~~to ~~partnerships,~~SCL to ~~fund~~require ~~the~~Glendora ~~Company’s~~at ~~future~~any ~~operations.~~time ~~This~~within ~~credit~~the ~~facility~~next is24 ~~unsecured,~~months ~~bears~~to ~~interest~~negotiate onin ~~any~~good ~~funds~~faith ~~advanced~~with atSCL with respect to a ~~rate~~possible acquisition of Glendora by SCL ~~equal~~using SCL shares. Management of the Company had not assigned any value to the ~~London~~assignment ~~Interbank~~agreement ~~Offered~~or ~~Rate~~to ~~plus~~the ~~200~~rights ~~basis~~granted ~~points~~to Glendora or received from Glendora, ~~has~~as nothe ~~equity~~assignment agreement assigns the right to ~~component,~~pursue ~~and~~a ~~terminates~~purchase onagreement ~~October 31,~~with ~~2005.~~Suntek ~~For~~and ~~additional~~not ~~disclosure~~a ~~concerning~~negotiated ~~Mr. Giordano~~purchase agreement, ~~see~~neither ~~Item~~SCL ~~12,~~nor Glendora ~~“Security~~then ~~Ownership~~had ofcontractually ~~Certain Beneficial~~binding ~~Owners~~rights to acquire an interest in Suntek and, ~~Management–Matters~~therefore, ~~concerning~~the aagreement ~~beneficial~~and ~~shareholder”~~rights did not inhave ~~our~~any ~~Annual~~measurable ~~Report~~value. onAs ~~Form 10-K~~noted ~~for~~above, ~~the~~Glendora ~~fiscal~~has ~~year~~since ~~ended~~terminated ~~June 30,~~its ~~2004~~proposed acquisition of Suntek.

The Company operates through Weida PRC. If Weida PRC or our other subsidiaries incur debt in the future, the instruments governing the debt may restrict their ability to pay fees or make other payments or distributions to us. In addition, Chinese law requires that payment of dividends by our subsidiaries that are incorporated in China can only be made out of their net income, if any, determined in accordance with Chinese accounting standards and regulations. Under Chinese law, those subsidiaries are also required to set aside a portion, up to 10% of their after-tax net income each year to fund certain reserve funds, and these reserves are not distributable as dividends. Any limitation on the payment of fees by Weida PRC or dividends by our subsidiaries generally could materially adversely affect our ability to grow, fund investments, make acquisitions, pay dividends, and otherwise fund and conduct our business.

As of March 31, 2005, the bank loan payable of RMB 20,000,000 $2,416,451 has been extended to June 30, 2005 and as part of the settlement and to obtain 100% ownership of Weida PRC (including the shares in Weida PRC held by a guarantor of the loan), the Company has agreed in principle to repay this loan over the next twelve months beginning in June 2005 and ending in June 2006.

In part as a result of the events described in Note 11 to our financial statements, our current cash and cash equivalents and funding commitments described below are not sufficient for us to sustain present operations beyond the second calendar quarter of 2005. We will need additional funding to continue operations as an ongoing entity. We are in the process of attempting to raise additional private funding to satisfy these requirements.

Certain Risks Associated with Our Company and its Common Stock that May Impact our Future Liquidity and Capital Structure

Potentially dilutive business combination transactions.

From time to time our management has, and may continue to, consider possible acquisition or business combination transactions with other parties, including enterprises engaged in, or seeking to engage in telecommunications or related technologies and services in the PRC. Such potential business combination parties may be privately owned or publicly traded entities, and may be located in the PRC, elsewhere in Asia, in the United States, or in another jurisdiction. In view of our limited operating history, our lack of substantial revenues to date, our substantial operating losses, and, in particular, the highly limited public “float”, otherwise limited liquidity and thin trading volume of our shares and the prospect of substantial numbers of shares becoming freely tradeable within the next six to nine months (which risks are described in greater detail below), if we were to consummate a business combination transaction with a third party, there is a substantial likelihood that the terms of such combination transaction will not fully reflect the current market price of our Common Stock, and will in fact be at a substantial discount to such market price.

Sales of large amounts of our common stock in the public market could depress the market price of our common stock and impair the ability to raise capital through offerings of equity securities.

None of the shares of our common stock issued to SCL’s shareholders in the June 2004 share exchange were, and none of the shares of our common stock sold and issuable to investors and advisors in recent private placement transactions or which may be issued to the former OIHL shareholders will be, registered under the Securities Act. Accordingly, most of our shareholders will not be able to sell their shares unless they are later registered or covered by an available exemption such as Rule 144. As a result of these restrictions, the market for our common stock has remained “thin” for some time, with trading in the shares limited to less than 1 million shares (excluding shares subject to a one-year lockup) out of almost 75 million shares outstanding. We may determine to register the shares of one or more other holders of common stock, at any time or from time to time. If holders of our common stock sell substantial numbers of shares in the public markets, the price of our common stock may fall, making it more difficult to raise capital.

to the former OIHL shareholders will be, registered under the Securities Act. Accordingly, most of our shareholders will not be able to sell their shares unless they are later registered or covered by an available exemption such as Rule 144. As a result of these restrictions, the market for our common stock has remained “thin” for some time, with trading in the shares limited to less than 1 million shares (excluding shares subject to a one-year lockup) out of almost 75 million shares outstanding. We may determine to register the shares of one or more other holders of common stock, at any time or from time to time. If holders of our common stock sell substantial numbers of shares in the public markets, the price of our common stock may fall, making it more difficult to raise capital.

Under Rule 144, each of the holders of the 69,809,480 shares issued to SCL’s shareholders in the exchange will be eligible to sell up to 1% of our outstanding common stock every three months commencing June 11, 2005, and each of the holders of shares of our common stock sold to investors and advisors in recent private placement transactions or to the former OIHL shareholders will be eligible to sell up to 1% of our outstanding common stock every three months commencing 12 months after those shares are issued (subject in each case to the restrictions on volume, manner of sale and other conditions of Rule 144). SCL shareholders who received shares of our common stock in the exchange and who are not “affiliates” of the Company will be able to sell all of their shares of common stock commencing June 11, 2006. Recent investors and advisors in private placement transactions and the former OIHL shareholders who are not “affiliates” of the Company will be able to sell all of their shares of common stock commencing 24 months after those shares are issued. The sale or prospective sale of these shares could impede the ability to raise capital for some time to come.

Recently Issued Accounting Pronouncements

In November 2004, the FASB issued SFAS No. 151, “Inventory Costs – an amendment of ARB No. 43, Chapter 4”. SFAS No. 151 clarifies the accounting that requires abnormal amounts of idle facility expenses, freight, handling costs, and spoilage costs to be recognized as current-period charges. It also requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS No. 151 will be effective for inventory costs incurred on or after June 15, 2005. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

Upon adoption, the Company has two application methods to choose from: the modified-prospective transition approach or the modified-retrospective transition approach. Under the modified-prospective transition method, the Company would be required to recognize compensation cost for share-based awards to employees based on their grant-date fair value from the beginning of the fiscal period in which the recognition provisions are first applied as well as compensation cost for awards that were granted prior to, but not vested as of the date of adoption. Prior periods remain unchanged and pro forma disclosures previously required by SFAS No. 123 continue to be required. Under the modified-retrospective transition method, the Company would restate ~~prior~~ prior periods by recognizing compensation cost in the amounts previously reported in the pro forma footnote disclosure under SFAS No. 123. Under this method, the Company is permitted to apply this presentation to all periods presented or to the start of the fiscal year in which SFAS No. 123R is adopted. The Company would follow the same guidelines as in the modified-prospective transition method for awards granted subsequent to adoption and those that were granted and not yet vested. As the Company has not exchanged any equity instruments for employee service, nor does it anticipate the exchange of any equity instruments for employee service to be provided, the adoption of SFAS No. 123R is not expected to have a material impact on the Company’s consolidated financial statements.

fiscal year in which SFAS No. 123R is adopted. The Company would follow the same guidelines as in the modified-prospective transition method for awards granted subsequent to adoption and those that were granted and not yet vested. The adoption of SFAS No. 123R is not expected to have a material impact on the Company’s consolidated financial statements.

Contractual Obligations

As of ~~December~~March 31, ~~2004~~2005, our future contractual cash obligations are as follows:

	Payments due by period
Contractual Obligations (1)	Total		2005		2006 – 2007	2008 – 2009		2010 and thereafter
	Total			2005		2006 – 2007			2008 – 2009		2010 and thereafter
Operating Leases	4,386,840		1,363,484		2,592,023	431,333		0
Contractual Obligations (1)
Long-Term Obligations (2)	270,000		0		270,000	0		0
Operating Leases	$	4,060,486		$	346,706	$	2,631,749		$	1,082,031	$	0
Total	5,019,783		1,398,904		2,866,046	754,833		0
Long-Term Obligations (2)	270,000			0		270,000			0		0
Total	$	4,330,486		$	346,706	$	2,901,749		$	1,082,031	$	0

(1) We do not have any purchase obligations other than standard purchase orders in the ordinary course of business. We do not have any capital lease obligations.

(2) Our long-term obligations are primarily comprised a long-term loan from a shareholder. The shareholder has agreed that he will not seek repayment prior to July 2006. This loan is a non-interest bearing note. Although there is no commitment that the loan will be repaid in 2007-2008, our board of directors believes the loan will be repaid during such time.

Contingent Consideration

In connection with our acquisition of control of and a 51% profit-sharing interest in Weida PRC, we will be required to issue 16,296,296 shares of the Company’s common stock and to pay approximately $15.8 million as follows:

• $805,153 in cash to the Weida PRC shareholders, which payment shall also be deemed to satisfy our obligation to make a capital contribution to the Weida EJV (which payment has been deposited and is reserved for payment); and

• $15,000,000, payable in cash to the former shareholders of OIHL.

The issuance of the shares is only required to be made upon the consummation of a service and support agreement, execution and delivery of all of the other agreements described in our Annual Report on Form 10-K for the fiscal year ended June 30, 2004 and satisfaction of certain due diligence requests of SCL, as more fully described in our Annual Report on Form 10-K for the fiscal year ended June 30, 2004. Not all of these conditions had been satisfied as of December 31, 2004 or as of the date of this Quarterly Report on Form 10-Q. The payments of cash are required to be made only if the conditions to the formation of the Weida EJV discussed in the Form 10-K for the fiscal year ended June 30, 2004 have been completed and the Weida EJV has been formed and has a valid business license showing SCL’s 25% equity ownership. Such contingent consideration have not been recorded as a liability or included in determining the cost of the acquired entities.

On February 4, 2005, the Company and the Existing Shareholders agreed in principle to modify the terms of the master agreement by entering into a revised master agreement. As of March 31, 2005, the revised master agreement was not fully effective. The revised master agreement, if and when fully effective, would provide for the transfer of all of the Existing Shareholders’ equity interest in Weida PRC to the Trust, so that the Trustee holds 100% of the shares of Weida PRC. The Existing Shareholders would then be entitled to receive the following in lieu of the 16,296,296 shares and $15,805,135 described above:

h. $1,000,000 cash, upon the Company completing a private placement of its equity securities or other financing:

i. $1,000,000 cash, at December 31, 2005:

j. $1,000,000 cash, at December 31, 2006:

k. 2,666,666 shares of the Company, upon achieving 2005 financial goals:

l. 2,666,666 shares of the Company, upon achieving 2006 financial goals:

m. 2,666,666 shares of the Company, upon achieving 2007 financial goals:

n. 1,000,000 shares of the Company each year for 4 years, with one-fourth upon signing employment contracts, based upon achieving financial goals and management by objectives (“MBO’s”) (with CEO approval), with a strike price of $.50 to $1.00, exercisable over 3 years, with Board approval, and one-fourth similarly for each year of the employment contract.

ITEM 3—Quantitative and Qualitative Disclosures about Market Risk

Market-Rate Sensitive Instruments and Risk Management

We are exposed to certain market risks from transactions that are entered into during the normal course of business. Fluctuating foreign exchange rates for the Renminbi may impact our financial condition and results of operations. Our foreign exchange exposure is presently exclusively related to activities associated with Weida PRC. The Company does not attempt to manage these risks by entering into forward exchange contracts. We do not use derivative financial instruments for speculative or trading purposes. Therefore, no quantitative tabular disclosures are required.

Our interest income is sensitive to changes in interest rates. Note receivable of $2,200,000 as of December 31, 2004 is subject to interest rate changes as it bears interest at the London Interbank Offered Rate plus 200 basis points. As such, interest income will fluctuate with changes in interest rates.

ITEM 4—Controls and Procedures

The Company is required to maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”)) that are designed to ensure that information that is required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

In conjunction with the Company’s decision to restate its condensed consolidated financial statements for the period ended September 30, 2004 and to delay the filing of the Form 10-Q for the period ended December 31, 2004 for several weeks (the Form 10-Q not being filed until April 2005), the Company identified a material weakness in its internal control over financial reporting (as defined in Public Company Accounting Oversight Board, Auditing Standard No. 2, a material weakness is a significant deficiency, or or a combination of significant deficiencies, that results in more than a ~~remote~~ remote likelihood that a material misstatement of the annual or interim ~~financial~~ financial statements will not be prevented or detected) and, as a result thereof, reevaluated its disclosure controls and procedures over the consolidation of the Company’s acquisition and concluded that these controls were not effective. In addition, the Company also identified that the Company’s disclosure control and procedures are not effective in view of the delay of its Form 10-Q filing for the period ended December 31, 2004. The Company is taking steps to identify, rectify and prevent the recurrence of the circumstances that resulted in the determination to restate the condensed consolidated financial statements for the period ended September 30, 2004 and the delay in the filing of the Form 10-Q for the period ended December 31, 2004. As part of this undertaking, the Company intends to incorporate additional levels of review of the processes and supporting documentation, including but not limited to those for the consolidation process. The Company believes these enhancements to its systems of internal control over financial reporting and disclosure controls and procedures will be adequate to provide reasonable assurance that the control objectives will be met.

14The Company is taking steps to identify, rectify and prevent the recurrence of the circumstances that resulted in the determination to restate the condensed consolidated financial statements for the period ended September 30, 2004 and the delay in the filing of the Form 10-Q for the period ended December 31, 2004. As part of this undertaking, the Company intends to incorporate additional levels of review of the processes and supporting documentation, including but not limited to those for the consolidation process. The Company believes these enhancements to its systems of internal control over financial reporting and disclosure controls and procedures will be adequate to provide reasonable assurance that the control objectives will be met.

PART II—OTHER INFORMATION

ITEM 1—Legal Proceedings

(a) AnA ~~employee~~shareholder ofand ~~SCL~~former ~~has~~chief ~~asserted~~financial officer ~~claims~~of ~~for unpaid~~Teleflex ~~salary~~Technologies, Inc. in(“Teleflex”), ~~the~~a ~~amount~~currently ofinactive privately-held ~~$0.5~~company ~~million~~which ~~and~~had ~~3.3~~attempted ~~million~~to ~~shares~~pursue ofjoint ~~Weida’s~~venture ~~common~~opportunities ~~stock~~in ~~based~~the onPRC anin ~~asserted~~late ~~employment~~2001 ~~agreement~~and ~~between~~in ~~him~~ 2002, and ~~SCL~~of which Mitchell Sepaniak, ~~and has~~the ~~indicated~~president, ~~through~~chief executive ~~his~~officer ~~counsel~~and ~~that~~a ifshareholder ~~terminated~~of hethe ~~will~~Company, was also ~~assert~~ a chief executive ~~claim~~officer, ~~for~~commencing ~~severance~~early 2003, has asserted claims in ~~the~~New ~~additional~~York ~~amount~~State ofcourt against ~~$0.75~~SCL, ~~million~~Teleflex and Mr. Sepaniak. The ~~Company~~plaintiff’s ~~management~~ ~~believes~~petition alleges failure on the part ~~Company~~of ~~has~~Mr. Sepaniak ~~meritorious~~and ~~defenses~~Teleflex to ~~the~~comply ~~claims,~~with ~~including~~corporate ~~that~~formalities ~~the~~such ~~employee~~as inholding ~~question~~annual ~~did~~meetings ~~not~~and ~~perform~~also ~~the services~~alleges ~~contemplated~~corporate bywaste, ~~the~~and ~~alleged~~is ~~agreement.~~seeking Avarious ~~portion~~relief, ofincluding allowing shareholders to inspect the ~~employee’s~~books ~~alleged unpaid~~and ~~salary~~records, ~~had~~including ~~been~~balance sheets and ~~continues~~earnings statements. toThe beformer ~~included~~chief infinancial ~~the~~officer ~~Company’s~~has ~~condensed~~also asserted claims against ~~consolidated~~SCL, ~~financial~~Teleflex ~~statements~~and asMr. Sepaniak for ~~accounts~~unpaid ~~payable~~salary and compensation.

The claim was recently settled by mutual agreement in late March 2005.

(b) A shareholder and former chief financial officer of Teleflex Technologies, Inc. (“Teleflex”), a currently inactive privately-held company which had attempted to pursue joint venture opportunities in the PRC in late 2001 and in 2002, and of which Mitchell Sepaniak, the president, chief executive officer and a shareholder of the Company, was also a chief executive officer, commencing early 2003, has recently asserted claims in New York State court against SCL, Teleflex and Mr. Sepaniak. The plaintiff’s petition alleges failure on the part of Mr. Sepaniak and Teleflex to comply with corporate formalities such as holding annual meetings and also alleges corporate waste, and is seeking various relief, including allowing shareholders to inspect the books and records, including balance sheets and earnings statements. The former chief financial officer has also asserted claims against SCL, Teleflex and Mr. Sepaniak for unpaid salary and compensation.

(b) On April 22, 2005, Anthony Giordano, one of the Company’s major shareholders, and Joseph Zumwalt, then former chief financial officer of the Company, were arrested and charged with thirty five counts of fraud associated with alleged illegal activities in connection with an independent investment entity that specializes in hedge funds, which is also one of the Company’s shareholders. The Company was not charged by the Federal government; however, the Company’s bank accounts were initially frozen by court order at the request of the Federal government, apparently due to the Company’s its association with the two individuals. In addition, the SEC suspended trading in the Company’s shares from April 15, 2005, through May 6, 2005. The freeze on the Company’s operating cash bank accounts was later voluntarily lifted by the federal government, at Weida’s request, and the Company’s shares resumed trading on May 9, 2005. The Company is cooperating fully with the FBI, Federal Prosecutor and the State of Florida with their ongoing investigations of Anthony Giordano and Joseph Zumwalt. The Company has since terminated Mr. Zumwalt for cause.

On May 6, 2005, the Company received a subpoena from the SEC requesting documents in connection with its investigation of certain matters involving Weida’s securities, and on May 16, 2005 received an additional subpoena from the SEC for certain computer records, needed for its investigation of the private funding and procedures of the Company.

The Company is cooperating fully with the SEC and federal and Florida State legal enforcement in connection with these investigations.

The Company has also begun its own internal investigation by outside counsel and accountants.

(c) The Company is also subject to various legal proceedings and claims that arise in the ordinary course of business. In the opinion of management, the amount of any ultimate liability with respect to these actions will not materially affect the Company’s financial position, liquidity, or results of operations.

ITEM 2—Unregistered Sales of Equity Securities and Use of Proceeds

~~Recent~~Not ~~Sales of Unregistered Securities~~applicable.

During the three months ended December 31, 2004, we sold (i) to investors 1,731,031 shares of Weida common stock in a private placement transaction at a price of $3.00 per share (121,600 shares of which were issued on October 18, 2004 and 1,609,431 shares of which will be issued in the third quarter) and warrants to purchase an additional 865,516 shares of our common stock at an exercise price of $2.75 per share (60,800 of which were issued on October 18, 2004 and 804,716 of which will be issued in the third quarter) and (ii) to advisors 37,145 shares of our common stock in connection with the services provided by these advisors (all of which will be issued in the third quarter). The shares and warrants were sold under common individual purchase agreements and advisory agreements. The warrants carry a three and one-half year term from the time such warrants are exercisable. Our common stock and warrants were sold and are issuable pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended, pursuant to Regulation D promulgated thereunder.

ITEM 3—Defaults upon Senior Securities

Not applicable.

1519

ITEM 4—Submission of Matters to Vote of Security Holders

Not applicable.

ITEM 5—Other Information

Not applicable.

ITEM 6—Exhibits

(a)		Exhibits:

31.1		Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of 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).

1620

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.

	~~Weida Communications, Inc.~~	Weida Communications, Inc.
Dated: April 7, 2005	By:				/s/ Mitchell Sepaniak
Dated: June 13, 2005	By:		/s/ Mitchell Sepaniak
		Mitchell Sepaniak	~~Mitchell Sepaniak~~
		President and Chief Executive Officer
Dated: April 7, 2005	By:			/s/ Joseph Zumwalt
Dated: June 13, 2005	By:		/s/ Meilin Yu
			Joseph Zumwalt
		Meilin Yu
			Chief Financial Officer
		Interim Chief Financial Officer

1721

EXHIBIT INDEX

Exhibit No.		Description
31.1		Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of 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).

1822

Filing Compare · WEIDA COMMUNICATIONS, INC.