UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~December~~June 3130, ~~2012~~2013

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

For the transition period from ___________ to ______________

Commission File Number: 0-51355

STUDIO II BRANDS, INC.

(Exact name of registrant as specified in its charter)

Florida

(State or other jurisdiction of incorporation)

65-0664963

(IRS Employer Identification Number)

16/F Honest Building

9-11 Leighton Road

Causeway Bay, Hong Kong

(Address of principal executive offices)

(852) 2890-1818

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 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.

[ X ] Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

[X ] Yes [] No

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

Large accelerated filer [ ]

Accelerated filer [ ]

Non-accelerated filer [ ] (Do not check if a smaller reporting company)

Smaller reporting company [ X ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

[ ] Yes

[X] No

As of ~~February~~[ 19] August, 2013, the Issuer had 14,838,018 shares of common stock issued and outstanding.

QUARTERLY REPORT ON FORM 10-Q

OF STUDIO II BRANDS, INC.

FOR THE PERIOD ENDED ~~DECEMBER~~JUNE 3130, ~~2012~~2013

TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2117
Item 3	Quantitative and Qualitative Disclosures About Market Risk	2821
Item 4.	Controls and Procedures	2922

PART II

OTHER INFORMATION

Item 1.	Legal Proceedings	2922
Item 1A.	Risk Factors	2922
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2922
Item 3.	Defaults Upon Senior Securities	2922
Item 4.	Removed and Reserved	2922
Item 5.	Other Information	2922
Item 6.	Exhibits	3023
Signatures		3023

PART I-FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS.

STUDIO II BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31, 2012 (Unaudited)	March 31, 2012
	June 30, 2013 (Unaudited)	March 31, 2013
ASSETS
Current assets
Cash	$ ~~34,173~~86	$ 2522,~~912~~705
Due from related party	~~248,558~~-	~~320~~52,~~796~~120
Inventories	5,~~760~~661	36,~~950~~010
	───────	───────
Total current assets	~~288~~5,~~491~~747	~~350~~80,~~658~~835
	───────	───────
Property and equipment, net	~~102~~82,~~847~~149	~~121~~90,~~784~~415
Security deposits	~~111~~135,~~915~~226	~~105~~135,~~514~~226
Goodwill	311,291	311,291
Goodwill Tax recoverable	311,291 4,751	311,291 4,751
	───────	───────
Total assets	$ ~~814~~539,~~544~~164	$ ~~889~~622,~~247~~518
	========	========
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES AND STOCKHOLDER'S (DEFICIENCY) EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$ ~~101~~152,~~607~~124	$ ~~109~~147,~~222~~028
Income tax payable	3,190	4,072
Due to a related party	16,653	-
Payable to stockholder	22,250	88,998
Due to related party	18,239	26,072
	───────	───────
Total current liabilities	~~145~~168,~~286~~777	~~228~~147,~~364~~028
Payable to stockholder	~~535~~378,~~997~~943	~~538~~442,~~296~~722
	───────	───────
Total liabilities	~~681~~547,~~283~~720	~~766~~589,~~660~~750
	───────	───────
COMMITMENS AND CONTINGENCIES
STOCKHOLDER'S EQUITY
Common stock, 100,000,000 shares authorized with par value $0.001; 14,838,018 shares issued and outstanding as of December 31, 2012 and March 31, 2012	14,838	14,838
Common stock, 100,000,000 shares authorized with par value $0.001; 14,838,018 shares issued and outstanding as of June 30, 2013 and March 31, 2013	14,838	14,838
Additional paid-in capital	446,935	446,935
Accumulated deficit	(~~328~~470,~~512~~329)	(~~339~~429,~~186~~005)
	───────	───────
Total stockholder’s equity	133,261	122,587
Total stockholder’s (deficiency) equity	(8,556)	32,768
	───────	───────
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$ 814,544	$ 889,247
TOTAL LIABILITIES AND STOCKHOLDER'S (DEFICIENCY) EQUITY	$ 539,164	$ 622,518
	========	========

See accompanying notes to consolidated financial statements (unaudited)

STUDIO II BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	For the three-months ended December 31, 2012	For the three- months ended December 30, 2011	For the nine-months ended December 31, 2012	For the nine-months ended December 31, 2011
			For the three-months ended June 30, 2013	For the three-months ended June 30, 2012
REVENUE
Food and beverage income	~~$ 168,735~~	~~$ 118,231~~	$ ~~607~~192,~~554~~820	$ ~~301~~213,~~990~~187
Franchise and management fee income	-	2,199	-	12,471
Cost of goods sold (exclusive of depreciation)			(40,788)	(53,351)
	~~────────~~	~~────────~~	────────	────────
	168,735	120,430	607,554	314,461
Gross profit			152,032	159,836
Cost of goods sold (exclusive of depreciation)	(37,850)	(26,709)	(135,898)	(84,578)
Operating expenses			(194,751)	(151,981)
	~~────────~~	~~────────~~	────────	────────
Gross profit	130,885	93,721	471,656	229,883
Operating (loss)/profit			(42,719)	7,855
Operating expenses	(141,515)	(62,902)	(466,199)	(240,630)
			────────	────────
	────────	────────	────────	────────
Operating (loss)/profit	(10,630)	30,819	5,457	(10,747)
	────────	────────	────────	────────
OTHER INCOME/(EXPENSES)
Other income	~~2,490~~	~~900~~	51,~~217~~395	21,~~671~~322
Other expenses	-	(806)	-	(1,372)
			────────	────────
	────────	────────	────────	────────
TOTAL OTHER INCOME, NET			1,395	1,322
TOTAL OTHER INCOME, NET	2,490	94	5,217	1,299
NET (LOSS)/INCOME BEFORE INCOME TAXES			(41,324)	9,177
NET (LOSS)/INCOME BEFORE INCOME TAXES	(8,140)	30,913	10,674	(9,448)
Income tax expenses			-	-
Income tax expenses	-	(2)	-	(1,291)
			────────	────────
	────────	────────	────────	────────
NET (LOSS)/INCOME			$ (41,324)	$ 9,177
NET (LOSS)/INCOME FROM CONTINUING OPERATIONS	(8,140)	30,911	10,674	(10,739)
			────────	────────
Discontinued operations, net of taxes	-	-	-	897
Basic and fully diluted (loss)/income per common share			$ -	$ -
	────────	────────	────────	────────
			=========	=========
NET (LOSS)/INCOME	$ (8,140)	$ 30,911	$ 10,674	$ (9,842)
WEIGHTED AVERAGE SHARES OUTSTANDING			14,838,018	14,838,018
	────────	────────	────────	────────
			=========	=========
Basic and fully diluted (loss)/income per common share	$ -	$ -	$ -	$ -
	=========	=========	=========	=========
WEIGHTED AVERAGE SHARES OUTSTANDING	14,838,018	11,899,276	14,838,018	11,899,276
	=========	=========	=========	=========

See accompanying notes to consolidated financial statements (unaudited)

STUDIO II BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY

FOR THE ~~NINE~~THREE MONTHS ENDED ~~DECEMBER~~JUNE 3130, ~~2012~~2013 (UNAUDITED)

	Common Stock, Par value of $0.001		Additional	Accumulated	Total stockholder's
	Number	Amount	paid-in capital	~~deficit~~Deficit	equity
Balance as of March 31, 2012	14,838,018	$ 14,838	$ 446,935	$ (339,186)	$ 122,587
Balance as of March 31, 2013	14,838,018	$ 14,838	$ 446,935	$ (429,005)	$ 32,768
Net income	-	-	-	10,674	10,674
Net loss	-	-	-	(41,324)	(41,324)
	─────────	────────	────────	────────	─────────
Balance as of December 31, 2012	14,838,018	$ 14,838	$ 446,935	$ (328,512)	$ 133,261
Balance as of June 30, 2013	14,838,018	$ 14,838	$ 446,935	$ (470,329)	$ (8,556)
	==========	=========	=========	=========	=========

See accompanying notes to consolidated financial statements (unaudited)

STUDIO II BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Nine months ended December 31, 2012	Nine months ended December 31, 2011
	Three months ended June 30, 2013	Three months ended June 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net income/(loss) from continuing operations	$ 10,674	$ (10,739)
Net (loss)/income from operations	$ (41,324)	$ 9,177
Adjustments to reconcile net income/(loss) to net cash used in operating activities:
Depreciation	208,~~523~~266	188,~~304~~238
Changes in operating assets and liabilities:
Due from related party	7252,~~238~~120	(2559,~~087~~133)
Account receivables	-	(9,591)
Inventories	349	494
Inventories	(1,810)	(1,320)
Security deposits	-	(8,392)
Security deposits	(6,401)	(450)
Account payables and accrued expenses	5,096	2,715
Account payables and accrued expenses	(7,615)	3,972
Due to related party	16,653	(7,833)
Due to related party	(7,833)	(5,923)
Income tax payable	-	(882)
Income tax payable	(884)	(1,132)
	────────	────────
Net cash generated from/(used in) operating activities-continuing operations	78,892	(31,966)
NET CASH GENERATED FROM/(USED IN) OPERATING ACTIVITIES	41,160	(55,616)
Net cash used in operating activities-discontinued operations	-	(5,136)
	────────	────────
NET CASH GENERATED FROM/(USED IN) OPERATING ACTIVITIES	78,892	(37,102)
	────────	────────
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment	~~(1,584)~~-	(~~657~~913)
	────────	────────
NET CASH USED IN INVESTING ACTIVITIES	~~(1,584)~~-	(~~657~~913)
	────────	────────
CASH FLOWS FROM FINANCING ACTIVITIES
(Advance to)/from stockholder	(6963,~~047~~779)	3254,~~760~~874
	────────	────────
NET CASH (USED IN)/GENERATED FROM FINANCING ACTIVITIES	(6963,~~047~~779)	3254,~~760~~874
	────────	────────
NET INCREASE/(DECREASE) IN CASH	8,261	(4,999)
NET DECREASE IN CASH	(22,619)	(1,655)
Beginning of period	2522,~~912~~705	2325,~~945~~912
	────────	────────
End of period	$ ~~34,173~~86	$ 1824,~~946~~257
	=========	=========
Supplemental disclosures of cash flow information:
Cash paid for interest	$ -	$ -
Cash paid for income taxes	$ ~~884~~-	$ ~~2,421~~884
	=========	=========

See accompanying notes to consolidated financial statements (unaudited)

STUDIO II BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 ORGANIZATION

Studio II Brands, Inc. (the “Company”) was formed on May 6, 1996 in the State of Florida. The Company’s activities before February, 2011 were primarily directed towards the raising of capital and seeking business opportunities.

The Company has transitioned from its development stage to operational activities as of February 10, 2011. On February 10, 2011, the Company entered into and consummated a share exchange agreement with Hippo Lace Limited (“HLL”), a BVI corporation and Mr. Gu Yao (“Gu”), the sole stockholder of HLL to acquire Gu’s 100% interests of HLL and its wholly owned subsidiary, Legend Sun Limited (“Legend Sun”) a limited liability company incorporated and domiciled in Hong Kong and its principal activity is to provide catering services in Hong Kong. In conjunction with the acquisition, the Company completed the closing of the exchange transaction under the terms of the Exchange Agreement and Supplementary Agreement on February 10, 2011 by issued 2,291,100 shares of its Common Stock to Gu as consideration (i) to acquire all of the issued and outstanding shares of HLL owned by Gu valued at $34,450 or approximately $0.015 per share, and (ii) to pay off the outstanding stockholder loan owed to Gu Yao by HLL. Accordingly, after completion of the transaction described above, the outstanding stockholder loan in the amount of $184,226 was owed by HLL to the Company.

On March 29, 2012, the Company through its subsidiary HLL entered into and consummated a stock purchase agreement with Sino Wish Limited (“Sino Wish”) and Ms Vivian Choi (“Vivian”), the sole stockholder of Sino Wish to (i) acquire Vivian’s 100% interests of Sino Wish which is incorporated and domiciled in Hong Kong as a Company’s franchisee to operate Caffé Kenon restaurant at Tai Yau Plaza, Hong Kong, and (ii) repay the stockholder’s loan from Vivian to HLL. The purchase price for the acquisition of Sino Wish amounted to $280,000, and was determined through arm’s length negotiation. A total of $191,002 was paid through issuance to the seller of a total of 2,938,742 shares of common stock of the Company valued at $0.065 per share. Such shares are restricted securities as defined in Rule 144 under the Securities Act of 1933. The balance of the purchase price in the amount of $88,998 is payable through the assumption of the outstanding balance of a stockholder loan owed by Sino Wish to the seller. The stockholder loan assumed by HLL is due and payable, without interest, in four equal quarterly installments, with payments due as of the last day of each calendar quarter following the Closing Date hereunder, with the first such installment due on or before December 31, 2012, and with the entire unpaid balance due on or before March 31, 2013. HLL or its designees may also prepay the stockholder loan in whole or in part at any time during the fiscal year from April 1, 2012 to March 31, 2013.

NOTE 2 GOING CONCERN AND MANAGEMENT’S PLANS

The Company’s independent registered public accounting firm’s report of the financial statements for the year ended March 31, ~~2012~~2013 contained an explanatory paragraph regarding the Company’s ability to continue as a going concern.

These consolidated financial statements have been prepared assuming that the Company will continue as a going concern and, accordingly, they do not include any adjustments that might result from the outcome of this uncertainty. The Company’s minimal revenues, its dependency on continuing funding from its stockholders raise substantial doubt about its ability to continue as a going concern. The Company's business plan includes raising funds from outside potential investors. However, there is no assurance that it will be able to do so.

NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)

Basis of presentation

In the opinion of the management, our financial statements reflect all adjustments, which are of a normal, recurring nature necessary for a fair statement of the results for the periods presented in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and with the instructions to Form 10-Q in Article 10 of SEC Regulation S-X. The results of operations for the interim periods presented are not necessarily indicative of results for the full year.

STUDIO II BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on July 31, ~~2012~~2013.

(b)

Principles of consolidation

The balance sheets as of ~~December~~June 3130 and March 31, ~~2012~~2013 include the Company and its wholly-owned subsidiaries, HLL, Legend Sun and Sino Wish. Additionally, the results of operations and cash flows include the operations of HLL, Legend Sun and Sino Wish from the date of acquisition. All significant intercompany accounts and transactions have been eliminated in consolidation.

(c)

Use of estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management of the Company 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s significant estimates include the reserves related to receivables, the recoverability and useful lives of long lived assets and realizable values for inventories.

(d)

Foreign currency translation

Assets and liabilities of foreign subsidiaries are translated at the rate of exchange in effect on the balance sheet date; income and expenses are translated at the average rate of exchange prevailing during the period; and the stockholders’ equity is translated at historical exchange rate. The related transaction adjustments are reflected in “Accumulated other comprehensive income / (loss)’’ in the equity section of the consolidated balance sheet.

	December 31, 2012	December 31, 2011	March 31, 2012
	June 30, 2013	June 30, 2012	March 31, 2013
Period end HK$:US$ exchange rate	$ 7.~~7507~~7557	$ 7.~~7688~~7570	$ 7.~~7642~~7742
Average three-months ended HK$:US$ exchange rate	$ 7.~~7503~~7573	$ 7.~~7748~~7595	-
Average nine-months ended HK$:US$ exchange rate	$ 7.7529	$ 7.7817	-

(e)

Property and equipment

Property and equipment are stated at cost less accumulated depreciation and impairment losses. Improvements to leased assets or fixtures are amortized over their estimated useful lives or lease period, whichever is shorter. Expenditures for repairs and maintenance, which do not extend the useful life of the assets, are expensed as incurred.

Depreciation expense is recorded over the asset’s estimated useful lives or lease period, using the straight line method, at the following annual rates:-

Furniture and equipment: 10% - 20%, per annum

Computer equipment: 10%, per annum

Leasehold improvements: over the lease term

(f)

Inventories

Inventories consist of finished goods which include food and beverage materials and products for catering service. Inventories are measured at the lower of cost or market value. The cost of inventories comprises all costs of purchases, costs of conversion and other costs incurred in bringing the inventories to their present location and condition and is assigned by using a first-in first-out basis. Market value is determined by reference to selling prices after the balance sheet date or to management’s estimates based on prevailing market conditions. The management also regularly evaluates the composition of its inventories to identify slow-moving and obsolete inventories to determine if a valuation allowance is required.

STUDIO II BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(g)

Accounts receivables

Accounts receivable are shown net of allowance for doubtful accounts. During the period, there were no bad debts incurred and no allowance for doubtful accounts recorded as of ~~December~~June 3130 and March 31, ~~2012~~2013. The allowance for doubtful accounts considers a number of factors, including collection experience, current economic trends, estimates of forecasted write-offs, aging of the accounts receivable portfolios, industry norms, regulatory decisions and other factors. Management reviews the composition of accounts receivable and analyzes any historical bad debts, customer concentrations, and customer credit worthiness. Management’s policy is to record a reserve primarily on a specific identification basis. Accounts are written off after use of a collection agency is deemed to be no longer useful.

(h)

Security deposits

Security deposits mainly consist of five months rental and management fee security deposits, electricity and water meter deposits for company owned restaurants.

(i)

Cash

Cash consist of cash on hand and at banks. The Company's cash deposits are held with financial institutions located in United States and Hong Kong. Management believes these financial institutions are of high credit quality.

(j)

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the identifiable tangible and intangible assets acquired and the fair value of liabilities assumed in an acquisition. Accounting Standards Codification (“ASC”)-350-30-50 “Goodwill and Other Intangible Assets” requires the testing of goodwill and indefinite-lived intangible assets for impairment at least annually. The Company tests goodwill for impairment in the fourth quarter each year. Goodwill impairment is computed using the expected present value of associated future cash flows. There was no impairment of goodwill as of ~~December~~June 3130 and March 31, ~~2012~~2013.

(k)

Impairment of long-lived assets

Long-lived assets are comprised of property and equipment. Pursuant to the provisions of ASC360-10, “Property, plant and equipment”, long-lived assets to be held and used are reviewed for possible impairment whenever events indicate that the carrying amount of such assets may not be recoverable by comparing the undiscounted cash flows associated with the assets to their carrying amounts. If such a review indicates an impairment, the carrying amount would be reduced to fair value.

Based on the Company’s assessment, there were no events or changes in circumstances that would indicate any impairment of long-lived assets as of ~~December~~June 3130 and March 31, ~~2012~~2013.

(l)

Accounts payable and accrued expenses consist of the following:

	December 31, 2012 (Unaudited)	March 31, 2012
	June 30, 2013 (Unaudited)	March 31, 2013
Accounts payable	$ 2527,~~938~~636	$ 4426,~~025~~145
Accrued expenses
Legal and professional fees	4224,~~489~~544	2215,324
Payroll and other operating expenses	3399,~~180~~944	42105,~~873~~559
	────────	────────
	$ 101,607	$ 109,222
	$ 152,124	$ 147,028
	=========	=========

STUDIO II BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(m)

Fair value measurements

ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC Topic 820 also establishes a fair value hierarchy which requires classification based on observable and unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter.

The carrying values of cash, accounts and other receivables, accounts payable and accrued expenses, and short-term borrowings from related party approximate fair values due to their short maturities.

There was no asset or liability measured at fair value on a non-recurring basis as of ~~December~~June 3130 and March 31, ~~2012~~2013.

(n)

Income Taxes

Income taxes are provided for using the liability method of accounting in accordance with ASC 740 “Income Taxes”. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be effective when the differences are expected to reverse.

Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. 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 the statements of income in the period that includes the enactment date.

The Company adopted ASC 740 which prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken in the tax return. This interpretation also provides guidance on de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods and income tax disclosures.

(o)

Other comprehensive income

The Company has adopted ASC 220 “Comprehensive Income”. This statement establishes rules for the reporting of comprehensive income and its components. Comprehensive income consists of net income and foreign currency translation adjustments. As of ~~December~~June 3130 and March 31, ~~2012~~2013, there is no significant accumulated other comprehensive income.

STUDIO II BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(p)

Revenue recognition

Revenue represents the invoiced value of goods sold or services provided. Revenue is recognized when all the following criteria are met:

(i)

Persuasive evidence of an arrangement exists.

(ii)

Services had been rendered.

(iii)

The seller’s price to the buyer is fixed or determinable, and

(iv)

Collectivity is reasonably assured.

Revenue from sales is recognized when food and beverage products are sold. Franchise fee income on the annual fee for sublicensing of the brand name and trademark “Caffe Kenon” and the 10% management fee on eligible monthly net income of subfranchiee are recognized after granting the non-exclusive rights and all contractual obligations are performed and report of net income from subfranchisee respectively.

(q)

Employee benefits

The Company operates a Mandatory Provident Fund Scheme (the "MPF Scheme") under the Hong Kong Mandatory Provident Fund Schemes Ordinance for those employees employed under the jurisdiction of the Hong Kong Employment Ordinance. The MPF Scheme is a defined contribution scheme, the assets of which are held in separate trustee-administered funds. The Company's contributions to the scheme are expensed as incurred and are vested in accordance with the scheme' vesting scales.

(r)

Segment information

The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s operating segments. Management, including the chief operating decision maker, reviews operating results solely by monthly revenue and operating results of the two operating subsidiaries in Hong Kong. As such, management has determined that the two subsidiaries are the Company’s only operating segment. As the Company’s operations and customers are principally all located in Hong Kong, no geographic information has been presented.

(s)

Commitments and contingencies

In the normal course of business, the Company is subject to contingencies, including legal proceedings and environmental claims arising out of the normal course of businesses that relate to a wide range of matters, including among others, contracts breach liability. The Company records accruals for such contingencies based upon the assessment of the probability of occurrence and, where determinable, an estimate of the liability. Management may consider many factors in making these assessments including past history, scientific evidence and the specifics of each matter.

As of ~~December~~June 3130 and March 31, ~~2012~~2013, the Company's management has evaluated all such proceedings and claims. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company's financial position, liquidity or results of operations.

(t)

Recent accounting pronouncements

There is no recently issued accounting pronouncements adopted by the Company. Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the accompanying financial statements.

STUDIO II BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 4 PROPERTY AND EQUIPMENT

Property and equipment of the Company consist primarily of restaurant facilities and equipment owned and operated by the Company's wholly owned subsidiaries. Property and equipment as of ~~December~~June 3130 and March 31, ~~2012~~2013 are summarized as follows:

	December 31, 2012 (Unaudited)	March 31, 2012
	June 30, 2013 (Unaudited)	March 31, 2013
Furniture & equipment	$ 76,644	$ 7576,~~058~~644
Leasehold improvement	113,150	113,150
Computer equipment	14,703	14,703
	────────	────────
Total	204,497	~~202~~204,~~911~~497
Accumulated depreciation and amortization	(~~101~~122,~~650~~348)	(81114,~~127~~082)
	────────	────────
Balance as at period ended	$ ~~102~~82,~~847~~149	$ ~~121~~90,~~784~~415
	=========	=========

Depreciation and amortization expense for the ~~nine~~three months ended ~~December~~June 3130, ~~2012~~2013 and ~~2011~~2012 were $208,~~523~~266 and $188,~~304~~238, respectively.

NOTE 5 SECURITY DEPOSITS

Security deposits mainly consist of five months rental and management fee security deposits, electricity and water meter deposits for company owned restaurant, and was recorded by the time of payment. Security and deposits as of ~~December~~June 3130 and March 31, ~~2012~~2013 are summarized as follows:

	December 31, 2012 (Unaudited)	March 31, 2012
	June 30, 2013 (Unaudited)	March 31, 2013
Rental and management fee security deposit	$ 98120,~~622~~355	$ 90120,~~198~~355
Electricity deposit	7,~~448~~447	7,447
Water deposit	1,541	1,541
Gas deposit	1,926	1,926
Food supplies deposit	2,~~149~~953	2,953
Other deposit	~~229~~1,004	1,~~449~~004
	────────	────────
	$ 111,915	$ 105,514
	$ 135,226	$ 135,226
	=========	=========

NOTE 6 COST OF GOODS SOLD

Cost of goods sold consists of finished goods include food and beverage materials and products for catering services sold by company-owned restaurant and the subfranchise annual fee expenses.

STUDIO II BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 7 OPERATING EXPENSES

Operating expenses consist of the following for the three ~~and nine~~ months ended ~~December~~June 3130, ~~2012~~2013 and ~~2011~~2012:

	Three months ended	Nine months ended	Three months ended	Nine months ended
			Three months ended June 30, 2013	Three months ended June 30, 2012
	31 December, 2012		December 31,2011
Staff costs			$ 60,645	$ 57,669
Staff costs	$ 40,433	$ 160,903	$ 18,155	$ 57,736
Property rent, rate and management fee			70,386	54,300
Property rent, rate and management fee	67,944	162,401	23,112	69,336
Electricity and utilities			13,386	10,474
Electricity and utilities	8,330	31,407	5,682	16,218
Depreciation			8,266	8,238
Depreciation	4,047	20,523	6,103	18,304
Professional and audit fee			26,653	10,026
Professional and audit fee	15,064	37,245	2,816	45,101
Others			15,415	11,274
Others	5,697	53,720	7,034	33,935
			────────	────────
	─────────	────────	────────	────────
Total			$ 194,751	$ 151,981
Total	$ 141,515	$ 466,199	$ 62,902	$ 240,630
			=========	=========
	==========	=========	=========	=========

NOTE 8 FRANCHISE ARRANGEMENTS

~~Franchise~~As ~~arrangements~~of ~~are~~June ~~pursuant~~30 ~~to franchise agreements entered by the Company as the franchisee~~ and ~~Sizegenic~~March ~~Holdings~~31, ~~Limited~~2013, as the ~~franchisor,~~right ~~including payment~~ to ~~Sizegenic~~the use of ~~franchise~~brand ~~fee~~name ~~payable on anniversary basis~~ and ~~monthly~~trademark ~~management~~“Caffe ~~fee~~Kenon” ~~base upon a percent~~ of ~~franchisees~~the Company’s ~~net~~two ~~income~~operating ~~after~~restaurants ~~tax~~are ~~throughout~~granted ~~the~~by ~~term~~Sizegenic ofHoldings ~~franchise. Under~~Limited ~~this~~(“Sizegenic”) ~~arrangement,~~under ~~two~~a ~~franchise~~Franchise ~~agreements~~Arrangement ~~are~~ entered inby ~~February and March 2010, respectively in which~~ the Company isas ~~granted~~ the ~~right~~franchisee toand ~~operate~~Sizegenic aas ~~café bistro using~~ the ~~brand~~franchisor. The ~~name~~agreement ~~“Caffe~~commenced ~~Kenon”~~on ~~for~~February a10, ~~term~~2010, ofwith 3three years term and ~~sublicense~~included ~~the~~a right toof ~~two~~renewal ~~subfranchisees~~for ina ~~Hong~~second ~~Kong~~three ~~and~~year ~~Beijing~~term, ~~respectively~~which towas ~~use~~exercised ~~brand~~by ~~name~~the ~~“caffe~~Company ~~Kenon”~~on toFebruary ~~operate~~10, a2013. The ~~café~~annual ~~bistro~~payment ~~for~~is aHK$40,000 ~~term~~(approximately of$5,136), 3and ~~years~~payment ~~commencing~~of ~~from~~a ~~April~~monthly 1,management ~~2010. Franchise~~ fee ~~expenses on the use~~ of ~~the~~10% ~~license~~ of the ~~brand~~franchisee’s ~~name~~net ~~and~~income ~~trademark~~including ~~“Caffe~~payment ~~Kenon”~~to isSizegenic ~~recorded~~of ~~upon~~franchise ~~the~~fee ~~granting~~payable ofon ~~the~~anniversary ~~non-exclusive~~basis ~~rights~~and bymonthly ~~Sizegenic~~management ~~as the~~ fee isbase ~~non-refundable~~upon toa ~~and~~percent ~~non-cancellable~~of byfranchisees’ ~~the~~net ~~Company~~income. Franchise fee ~~income~~expenses on the ~~sublicensing~~use of the license of the brand name and trademark “Caffe Kenon” is ~~recognized~~recorded upon the granting of the non-exclusive rights to ~~the~~by ~~franchisee~~Sizegenic as the fee is non-refundable to and non-cancellable by the ~~franchisee and the~~ Company ~~has no further obligations since they are all assumed by franchisee throughout the term~~.

~~The~~For ~~franchisee and~~ the ~~subfranchisees~~three ~~pay~~months ~~related~~ended ~~occupancy~~June ~~costs including rent~~30, ~~property management fee and government rent and rates~~2013, ~~insurance~~the ~~and~~franchise ~~maintenance~~annual ~~for~~fee ~~their~~payable ~~owned restaurant. Franchisor has no obligation~~ to ~~any~~Sizegenic ~~legal~~was ~~consequences arose from what the franchisee and subfranchisees assumed~~$1,285.

The franchisee and subfranchisees have the right to renew for one additional term equal to the initial term granted under Franchisor’s franchise agreement after expiration of the initial term provided that franchisee and subfranchisees have, during the term of the agreement, substantially complied with all its provisions. Franchisee and subfranchisees must pay franchisor, three months prior to the date of renewal, a renewal fee to be agreed between franchisor and the franchisee/subfranchisees.

After acquisition of Sino Wish by HLL, HLL and Sino Wish agreed to terminate the franchise agreement signed on April 1, 2010 with effect from April 1, 2012. In this connection, HLL agreed, based on a supplementary agreement entered with Sizegenic in March 2010, to grant the right to Sino wish to operate the caffé Kenon restaurant at Tai Yau Plaza, Hong Kong at an annual fee of $5,136 for the third year of the term.

In conjunction with the termination of subfranchise agreement:

(a)

no subfranchise fee income of HK$80,000 (approx. $10,272) from Sino Wish for the remaining third year term of the agreement to be recognized in April of 2012.

(b)

franchise fee expenses of HK$40,000 (approx. $5,136) for Sino Wish for the remaining third year term of the agreement to be recognized in April of 2012.

STUDIO II BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~Revenues~~NOTE ~~from~~9 ~~franchised~~INCOME ~~Caffe Kenon are as follows:~~TAX

	Nine months Ended December 31, 2012	Nine months Ended December 31, 2011
Subfranchise annual fee income	$ -	$ 16,482
Subfranchise management fee income	-	2,199
	────────	────────
	$ -	$ 18,681
	=========	=========

Franchise and management fee income due to the Company are as follows:

	December 31, 2012	March 31, 2012
Subfranchise annual and management fee due to the Company:
Beijing Kenon (included in due from related party)	$ -	$ 11,880
	========	=========

Future minimum franchise fee payments due from the Company under existing franchise and subfranchise arrangements are nil.

Future minimum franchise fee payments due to the Company under existing franchise and subfranchise arrangements are nil.

Franchise fees owe to Sizegenic consist of franchise and subfranchise annual fee and monthly franchise management fee applicable to profit after tax of Company-owned restaurant. For nine months ended December 31, 2012, the franchise annual fee expense amounting to $5,136 for Hong Kong was owed by Sino Wish to Sizegenic.

The first year franchise annual fee owe to Sizegenic for the Company-owned restaurant at $5,136 was after a special 50% discount and full amount of $10,272 is due per annum beginning in the second year and throughout the term of the agreement.

NOTE 9 SEGMENT INFORMATION

Business segment reporting – by services

The Company has one reportable segment as of December 31, 2012 and two as of December 31, 2011 that include franchised to operate an owned Caffe Kenon in Hong Kong and subfranchise to operate two Caffe Kenon in Hong Kong and Beijing respectively. The subfranchisee located in Beijing has terminated the franchise agreement with effect from May 31, 2011 with an immaterial early termination fee of $6,210, no geographic information has been presented. The sufranchisee located in Hong Kong has been acquired by the Company in March 2012 and becomes the second owned Caffe Kenon franchised to operate in Hong Kong.

Each reportable segment is separately organized and focuses on different customer groups of consumers and subfranchisees. Each reportable segment prepares a stand-alone set of financial reporting package including information such as revenue, expenses, and goodwill, and the package is regularly reviewed by the Chief Executive Officer.

The following is the summary of relevant information relating to each segment reconciled to amounts on the accompanying consolidated financial statements for the three and nine months ended December 31, 2012.

STUDIO II BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Three Months ended December 31, 2012 (unaudited)

	Franchise	Subfranchise	Corporate	Total
Revenue	$ 168,735	$ -	$ -	$ 168,735
Depreciation and amortization	(4,047)	-	-	(4,047)
Cost of revenues and operating expenses excluding depreciation and amortization	(144,805)	-	(30,513)	(175,318)
	─────────	────────	────────	────────
Operating income/(loss)	19,883	-	(30,513)	(10,630)
Other income	2,490	-	-	2,490
Other expenses	-	-	-	-
	─────────	────────	────────	────────
Total other income (net)	2,490	-	-	2,490
Income tax expenses	-	-	-	-
	─────────	────────	────────	────────
Net income/(loss) after tax	$ 22,373	$ -	$ (30,513)	$ (8,140)
	==========	=========	=========	=========
Total assets, excluding goodwill	$ 536,410	$ 18,090	$ 23,134	$ 577,634
Goodwill	$ 311,291	$ -	$ -	$ 311,291
Capital expenditure	$ 1,582	$ -	$ -	$ 1,582
	==========	=========	=========	=========

Nine Months ended December 31, 2012 (unaudited)

	Franchise	Subfranchise	Corporate	Total
Revenue	$ 607,554	$ -	$ -	$ 607,554
Depreciation and amortization	(20,523)	-	-	(20,523)
Cost of revenues and operating expenses excluding depreciation and amortization	(512,810)	-	(68,764)	(581,574)
	─────────	────────	────────	────────
Operating income/(loss)	74,221	-	(68,764)	5,457
Other income	5,217	-	-	5,217
Other expenses	-	-	-	-
	─────────	────────	────────	────────
Total other income (net)	79,438	-	(68,764)	10,674
Income tax expenses	-	-	-	-
	─────────	────────	────────	────────
Net income/(loss) after tax	$ 79,438	$ -	$ (68,764)	$ 10,674
	==========	=========	=========	=========
Total assets, excluding goodwill	$ 536,410	$ 18,090	$ 23,134	$ 577,634
Goodwill	$ 311,291	$ -	$ -	$ 311,291
Capital expenditure	$ 1,582	$ -	$ -	$ 1,582
	==========	=========	=========	=========

STUDIO II BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Three Months ended December 31, 2011 (unaudited)

	Franchise	Subfranchise	Corporate	Total
Revenue	$ 118,231	$ 2,199	$ -	$ 120,430
Depreciation and amortization	(6,103)	-	-	(6,103)
Cost of revenues and operating expenses excluding depreciation and amortization	(79,308)	-	(4,200)	(83,508)
	─────────	────────	────────	────────
Operating income/(loss)	32,820	2,199	(4,200)	30,819
Other income	900	-	-	900
Other expenses	(806)	-	-	(806)
	─────────	────────	────────	────────
Total other income (net)	94	-	-	94
Income tax expenses	538	(540)	-	(2)
	─────────	────────	────────	────────
Net income/(loss) after tax	$ 33,452	$ 1,659	$ (4,200)	$ 30,911
	==========	=========	=========	=========
Total assets, excluding goodwill	$ 195,280	$ 27,299	$ -	$ 222,579
Goodwill	$ 55,484	$ -	$ -	$ 55,484
Capital expenditure	$ -	$ -	$ -	$ -
	==========	=========	=========	=========

Nine Months ended December 31, 2011 (unaudited)

	Franchise	Subfranchise	Corporate	Total
Revenue	$ 301,990	$ 18,681	$ -	$ 320,671
Depreciation and amortization	(18,304)	-	-	(18,304)
Cost of revenues and operating expenses excluding depreciation and amortization	(241,700)	(10,272)	(60,068)	(312,040)
	─────────	────────	────────	────────
Operating income/(loss)	41,986	8,409	(60,068)	(9,673)
Other income	2,671	-	-	2,671
Other expenses	(1,372)	-	-	(1,372)
	─────────	────────	────────	────────
Total other income (net)	1,299	-	-	1,299
Income tax expenses	(81)	(1,387)	-	(1,468)
	─────────	────────	────────	────────
Net income/(loss) after tax	$ 43,204	$ 7,022	$ (60,068)	$ (9,842)
	==========	=========	=========	=========
Total assets, excluding goodwill	$ 195,280	$ 27,299	$ -	$ 222,579
Goodwill	$ 55,484	$ -	$ -	$ 55,484
Capital expenditure	$ 657	$ -	$ -	$ 657
	==========	=========	=========	=========

STUDIO II BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Business segment reporting – by geography

As its secondary segments, the Company reports two geographical areas, which are the main market areas: Hong Kong and Beijing. There is no any single foreign country market accounting for more than 10% of total revenues for the three months and nine months ended December 31, 2012 and 2011.

The following tables set forth revenues from customers of products sold by geographic segment:

Geographical information:	Three months ended December 31,		Nine months ended December 31,
	2012	2011	2012	2011
Hong Kong	$ 168,735	$ 120,430	$ 607,554	$ 314,461
Beijing	-	-	-	6,210
	─────────	────────	────────	────────
	$ 168,735	$ 120,430	$ 607,554	$ 320,671
	=========	========	=========	=========

All the long lived assets of the Company are located in Hong Kong.

NOTE 10 INCOME TAX

The Company and its subsidiaries are subject to income tax on an entity basis for income arising in or derived from the tax jurisdictions in which they operate.

The Company and HLL have not provided for income tax due to continuing loss. Substantially all of the Company’s income before income tax expenses is generated by its operating subsidiaries, Legend Sun and Sino Wish, in Hong Kong.

A reconciliation of the expected income tax expense (based on HK income tax rate) to the actual income tax expense is as follows:

	Three months ended December 31, 2012 (Unaudited)	Three months ended December 31, 2011 (Unaudited)	Nine months ended December 31, 2012 (Unaudited)	Nine months ended December 31, 2011 (Unaudited)
			Three months ended June 30, 2013 (Unaudited)	Three months ended June 30, 2012 (Unaudited)
(Loss)/Income before tax	~~$ (8,140)~~	~~$ 30,913~~	$ 10(41,~~674~~324)	$ (9,~~448)~~177
HK income tax rate	~~16.5%~~	~~16.5%~~	16.5%	16.5%
Expected income tax (credit)/expenses calculated at HK income tax rate	~~(1,343)~~	~~5,101~~	1(6,~~761~~818)	(1,~~559)~~514
Corporate expenses not deductible for tax purposes	~~5,035~~	~~694~~	114,~~346~~397	72,~~750~~227
Tax exemption	-	-	(3,082)	-
Tax loss not recognized			2,421	(3,741)
Temporary differences not recognized	(3,692)	(5,793)	(10,025)	(4,900)
			────────	────────
	─────────	────────	────────	────────
Total			$ -	$ -
Total	$ -	$ 2	$ -	$ 1,291
			=========	=========
	==========	=========	=========	=========

The Company's income tax provision in respect of operations in Hong Kong is calculated at the applicable tax rates on the estimated assessable profits for the year based on existing legislation, interpretations and practices in respect thereof. The standard tax rate applicable to the Company was 16.5%. No deferred tax liability has been provided as the amount involved is immaterial.

18NOTE 10 OPERATING LEASE COMMITMENTS

The Company entered into rental agreements on June 1, 2009 and March 1, 2010 to lease premises for operation of two restaurants located at ground floor of Nam Hing Fong, Causeway Bay and shop no. 208 and 209 of Tai Yau Plaza, Wanchai respectively. The lease at Nam Hing Fong was for a term of 5 years at a monthly rental rate of $8,333. The lease at Tai Yau Plaza was for a term of 6 years at a monthly rental rate of $11,250.

As of June 30, 2013, the total future minimum lease payments under operating lease in respect of leased premises are payable as follows:-

Year ending March 31,


2013 (nine months)	$ 194,750
2014	170,767
2015	140,238
	─────────
Total	$ 505,755
	==========

STUDIO II BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 11 ~~OPERATING~~RELATED ~~LEASE~~PARTY ~~COMMITMENTS~~TRANSACTIONS

The Company entered into rent agreements on June 1, 2009 and March 1, 2010 to lease premises for operation of two restaurants located at ground floor of Nam Hing Fong, Causeway Bay and shop no. 208 and 209 of Tai Yau Plaza, Wanchai respectively. The lease of premises at Nam Hing Fong was for a term of 5 years at a monthly rental rate of $6,667 for the first three years and $8,333 for the last two years.


Balance with related party	June 30, 2013 (Unaudited)	March 31,2013

Payable to stockholders:
(a) Cheung Ming, stockholder	$ 378,943	$ 442,722
	==========	=========
Due from related party:
(b) Sizegenic Holdings Limited group companies ("Sizegenic group") Common stockholder, Cheung Ming	$ -	$ 52,120
	==========	=========
Due to related party:
(c) Frascona, Joiner, Goodman and Greenstein, P.C (“FJGG”) Common stockholder, Gary Joiner	$ 16,653	$ -
	==========	=========

The lease of premises at Tai Yau Plaza was for a term of 6 years at a monthly rental rate of $7,451 and monthly service charges of $1,304 for the first three years and at the prevailing current market rate for the last three years.

As of December 31, 2012, the total future minimum lease payments under operating lease in respect of leased premises are payable as follows:-

Year ended March 31,

2013	$ 145,037
2014	99,996
2015	16,666
	─────────
Total	$ 261,699
	==========

NOTE 12 RELATED PARTY TRANSACTIONS

Balance with related party	December 31, 2012 (Unaudited)	March 31,2012
Payable to stockholders:
(a) Cheung Ming, stockholder	$ 535,997	$ 525,455
	==========	=========
(b) Gu Yao, stockholder	$ -	$ 12,841
	==========	=========
(c) Vivian Choi, stockholder	$ 22,250	$ 88,998
	==========	=========
Due from related party:
(d) Beijing Kenon Bristro Catering Limited ("BJ Kenon") Common stockholder, Gu Yao	$ 6,353	$ 19,194
	==========	=========
(e) Sizegenic Holdings Limited group companies ("Sizegenic group") Common stockholder, Cheung Ming	$ 242,205	$ 301,602
	==========	=========
Due to related party:
(f) Frascona, Joiner, Goodman and Greenstein, P.C (“FJGG”) Common stockholder, Gary Joiner	$ 18,239	$ 18,239
	==========	=========
(g) Sizegenic Holdings Limited (“Sizegenic”) Common stockholder, Cheung Ming	$ -	$ 7,833
	==========	=========

STUDIO II BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(a) The payables to Cheung Ming mainly represent payment by Cheung Ming on behalf of the Company for primarily the legal and professional expenses. This advance is unsecured, non-interest bearing and without fixed repayment term.

(b) The ~~payables~~amount toreceivable Gufrom ~~Yao~~Sizegenic ~~mainly~~represents ~~represent~~ cash advance byto GuSizegenic ~~Yao~~which ~~for operation need of Sino Wish. This advance~~ is unsecured, non-interest bearing ~~and was fully repaid during the period~~.

(c) The ~~payables~~amount payable to ~~Vivian~~FJGG ~~Choi~~ mainly ~~represent~~represents ~~cash~~the ~~advance~~legal byand ~~Vivian~~professional fee for ~~operation~~provision ~~need~~ of ~~Sino~~legal ~~Wish.~~advice, ~~This~~review ~~advance~~and ~~is unsecured~~comment, ~~non-interest bearing~~ and isfiling ~~repayable~~of bystatutory ~~four installments~~reports.

~~(d)~~NOTE ~~The~~12 ~~amount~~CERTAIN ~~receivable~~RISK ~~from~~AND ~~BJ Kenon mainly represents the franchise annual fee and termination fee income pursuant to the franchise agreement for a term of 3 years entered on April 1, 2010 and terminated on May 31, 2011.~~CONCENTRATION

(e) The amount receivable from Sizegenic group represents cash advance to Sizegenic Holdings Limited and its group companies for operation need. These advances are unsecured, non-interest bearing.

(f) The amount payable to FJGG mainly represents the legal and professional fee for provision of legal advice, review and comment, and filing of statutory reports.

(g) The amount payable to Sizegenic mainly represents coffee supplies and franchise annual fee.

NOTE 13 CERTAIN RISK AND CONCENTRATION

Credit risk

As of ~~December~~June 3130 and March 31, ~~2012~~2013, substantially all of the Company’s cash included bank deposits in accounts maintained within Hong Kong, the Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts.

There were no significant customers or vendors which accounts for 10% or more of the Company’s revenues or purchases during the periods presented.

2016

ITEM. 2.

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

SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS

CERTAIN STATEMENTS IN THIS REPORT, INCLUDING STATEMENTS IN THE FOLLOWING DISCUSSION, ARE WHAT ARE KNOWN AS "FORWARD LOOKING STATEMENTS", WHICH ARE BASICALLY STATEMENTS ABOUT THE FUTURE. FOR THAT REASON, THESE STATEMENTS INVOLVE RISK AND UNCERTAINTY SINCE NO ONE CAN ACCURATELY PREDICT THE FUTURE. WORDS SUCH AS "PLANS," "INTENDS," "WILL," "HOPES," "SEEKS," "ANTICIPATES," "EXPECTS "AND THE LIKE OFTEN IDENTIFY SUCH FORWARD LOOKING STATEMENTS, BUT ARE NOT THE ONLY INDICATION THAT A STATEMENT IS A FORWARD LOOKING STATEMENT. SUCH FORWARD LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING OUR PLANS AND OBJECTIVES WITH RESPECT TO THE PRESENT AND FUTURE OPERATIONS OF THE COMPANY, AND STATEMENTS WHICH EXPRESS OR IMPLY THAT SUCH PRESENT AND FUTURE OPERATIONS WILL OR MAY PRODUCE REVENUES, INCOME OR PROFITS. NUMEROUS FACTORS AND FUTURE EVENTS COULD CAUSE THE COMPANY TO CHANGE SUCH PLANS AND OBJECTIVES OR FAIL TO SUCCESSFULLY IMPLEMENT SUCH PLANS OR ACHIEVE SUCH OBJECTIVES, OR CAUSE SUCH PRESENT AND FUTURE OPERATIONS TO FAIL TO PRODUCE REVENUES, INCOME OR PROFITS. THEREFORE, THE READER IS ADVISED THAT THE FOLLOWING DISCUSSION SHOULD BE CONSIDERED IN LIGHT OF THE DISCUSSION OF RISKS AND OTHER FACTORS CONTAINED IN THIS REPORT ON FORM 10-Q AND IN THE COMPANY'S OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. NO STATEMENTS CONTAINED IN THE FOLLOWING DISCUSSION SHOULD BE CONSTRUED AS A GUARANTEE OR ASSURANCE OF FUTURE PERFORMANCE OR FUTURE RESULTS.

~~Background~~Corporate history

~~The~~Studio II Brands, INC. (the “Company”) was incorporated under the laws of the State of Florida on May 6, 1996. The Company was formed as a “blank check” or “shell company” for the purpose of seeking, investigating, and, if warranted, acquiring one or more properties or businesses. From inception to February 10, 2011, itthe Company remained in the development stage. ~~Our~~The Company’s only activities during this period were organizational activities, compliance with SEC reporting obligations, and seeking a suitable business acquisition.

On February 10 2011, the Company acquired all of the issued and outstanding shares of Hippo Lace Limited, a BVI corporation (“HLL”), which was incorporated in December, 2009. As a result of completion of this share exchange transaction, HLL became our wholly-owned subsidiary. Also, as more fully described below, HLL’s subsidiary, Legend Sun Limited, a Hong Kong corporation (“Legend Sun”), which HLL acquired in February, 2010, became ~~the~~our ~~Company’s~~ operating subsidiary.

OnThe ~~March 29 2012, the~~ Company ~~acquired~~completed ~~through its subsidiary all of~~ the ~~issued~~share ~~and~~exchange ~~outstanding~~transaction ~~shares~~with ofHLL ~~Sino Wish Limited, a Hong Kong corporation, which was incorporated~~ in ~~November~~order ~~2009~~to ~~and~~acquire ~~was~~ the ~~franchisee~~business ofoperations ~~the~~carried ~~Company~~on tothrough ~~operate~~its ~~Caffé Kenon restaurant at Tai Yau Plaza~~subsidiary, ~~Hong~~Legend ~~Kong since March~~Sun, ~~2010. As~~and awith ~~result~~the ofintent ~~completion~~ of ~~this~~focusing ~~share~~our ~~exchange~~business ~~transaction,~~activity ~~Sino~~exclusively ~~Wish~~on ~~became~~those ~~the Company’s wholly-owned subsidiary~~operations.

21On March 29 2012, the Company acquired through its subsidiary all of the issued and outstanding shares of Sino Wish Limited, a Hong Kong corporation (“Sino Wish”), which was incorporated in November, 2009 and became the franchisee of the Company to operate Caffé Kenon restaurant at Tai Yau Plaza, Hong Kong since March, 2010. As a result of completion of this share exchange transaction, Sino Wish became our wholly-owned subsidiary.

Corporate Structure

The Chart below depicts our corporate structure. As depicted below, Studio II Brands owns 100% of Hippo Lace Limited and Hippo Lace Limited owns 100% of Legend Sun Limited and Sino Wish Limited.

[studioii10qjune302013001.jpg]

~~Through~~Current the Company’s operating subsidiaries, Legend Sun and Sino Wish, the Company is in the business of operating coffee shop restaurants under the tradename “Caffe Kenon.” The Company currently owns and operates two Caffé Kenon coffee shops located in Hong Kong which have been in operation since June 2009 and March 2010 respectively. These shops are operated under the terms of a franchise agreement between HLL and Sizegenic Holdings Limited (“Sizegenic”). On May 31, 2011, HLL terminated the subfranchise agreement for the restaurant in Beijing, PRC. Accordingly, the location is no longer operated as a Caffe Kenon restaurant. Subsequent to the share exchange transaction with stockholder of Sino Wish on March 29, 2012, HLL terminated the subfranchise agreement with Sino Wish on April 1, 2012.operations

Through the Company’s operating subsidiaries, Legend Sun and Sino Wish, the Company is in the business of operating coffee shop restaurants under the tradename “Caffe Kenon.” The Company currently owns and operates two Caffé Kenon coffee shops located in Hong Kong which have been in operation since June, 2009 and March, 2010 respectively. These shops are operated under the terms of a franchise agreement between HLL and Sizegenic Holdings Limited (“Sizegenic”), a British Virgin Islands corporation. The Company previously had a third restaurant in Beijing, PRC, which was operated under the terms of a subfranchise agreement. However, on May 31, 2011, HLL terminated the subfranchise agreement for the restaurant in Beijing, PRC, and that restaurant is no longer operated as a Caffe Kenon restaurant.

Sizegenic entered into an International Exclusive Distribution and Promotion Agreement (the “Café Centro Agreement”) with Café Centro Brazil Wurzburger Vittorio &C. S.a.s., an Italian corporation (“Café Centro”) on June 26, 2009, pursuant to which Sizegenic has the exclusive right to distribute and sell coffee products supplied by Café Centro and the exclusive license to use the brand name and trademark “Caffe Kenon” in business operations for a period of ten (10) years within the region consisting of Hong Kong, Macau, Taiwan and China. On February 10, 2010 and April 1, 2012, Sizegenic entered into franchise agreements with HLL pursuant to which HLL was granted the right to operate a Caffe Kenon restaurant at 38 Yiu Wa Street, Causeway Bay, Hong Kong and shop no. 208 and 209 of the 2^nd floor of the Tai Yau Plaza shopping center in Wanchai, Hong Kong, respectively.

At the two restaurants they offer Italian-style espresso drinks using “Kenon” brand coffee imported from Italy. They also serve breakfast, lunch and dinner with a moderately-priced Italian style standard menu which includes pizza, spaghetti, risotto, salads, sandwiches and desserts. In addition, Caffé Kenon Bistro serves periodic specialty meals in addition to the standard menu items. The Company seeks to establish restaurant locations in shopping and commercial areas with significant foot traffic and with easy access to underground railroad or other public transportation. Our restaurants are designed comfortably with seating areas for customers around a counter area which includes display cases for pastries and other items and a work area where staff prepare espresso drinks. The Company uses a modern stylish design for the interior with a flexible combination of tables and chairs designed to allow us to host various types of events and to accommodate a total of approximately 50 and 80 guests, respectively.

22Future Plan of Operations

The Company’s future plan of operations is to seek to continue to expand by adding additional Café Kenon locations in Hong Kong and in China. Some of the new locations may be Company owned and operated as franchises of Sizegenic, and some may be subfranchise operations from which the Company receives franchise and management fees. The Company also plans to search possible investment and business opportunities in different potential restaurant and catering service business segments including hotpot and traditional Chinese cuisine restaurants, and possible investment and business opportunities related to ownership and operation of a coffee farm and production of our own brand of packed coffee beans and canned coffee to be sold to wholesale and retail customers. The Company will require additional working capital in order to open new Company owned Café Kenon locations or to pursue other potential investment and business opportunities, and there is no assurance that such additional working capital funding will be available, or will be available on terms which are acceptable to the Company.

Recently, our management is actively seeking business opportunities in various regions in China, including Beijing, Shanghai and Sichuan Province. As a result of China’s economic development, accelerated urbanization process and the change of household consumption habits, people's demand for restaurant/catering services is increasingly growing. Management believes that the Company can apply its previous experience providing restaurant/catering services in Beijing to explore business opportunities in China. The potential plans include acting as a franchisor, operating Company-owned restaurants, and entering in to joint venture to operate restaurants with potential business partners.

Critical Accounting Policies and Estimates

A summary of significant accounting policies is provided in Note 3 to our financial statements included in our filing on Form 10-K for the fiscal year ended March 31, ~~2012~~2013, and filed with the SEC on July 31, ~~2012~~2013. Our officers and directors believe that the application of these policies on a consistent basis enables the Company to provide useful and reliable financial information about the Company's operating results and financial condition.

The preparation of financial statements in conformity with generally accepted accounting principles requires our officers and directors to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results will differ from those estimates.

Results for the Three ~~and Nine~~ Months Ended ~~December~~June 3130, ~~2012~~2013 compared to Three ~~and Nine~~ Months Ended ~~December~~June 3130, ~~2011~~2012

The following discussion regarding unaudited results of operation relates to the business operations which are carried on through our operating subsidiaries, Legend Sun and Sino Wish. The ~~Company believes the~~ following information is relevant to an assessment and understanding of our results of operation and financial condition for the three months ended December 31, 2012 and 2011 which is before and after the Company acquired Sino Wish through HLL in March, 2012. The following discussion should be read in conjunction with the Consolidated Financial Statements and related Notes appearing elsewhere in this Form.

2319

OnResult ~~March 29, 2012, the Company consummated its acquisition~~ of ~~Sino Wish. The following unaudited pro forma information presents the Company’s consolidated results of continuing~~ operations as if the acquisition had occurred at the beginning of each period presented and is provided for the purpose of comparative analysis since Sino Wish results of operations is significant to the Company:

	Pro Forma Comparisons
	Three Months Ended
	As Reported December 31, 2011	Sino Wish Three months	Pro Forma December 31, 2011 (including Sino Wish)
Revenue	120,430	109,015	229,445
Cost of revenue	(26,709)	(37,774)	(64,483)
	─────────	────────	────────
Gross profit	93,721	71,241	164,962
Operating expense:
Staff cost	18,155	30,219	48,374
Rent, government fee, management fee	23,112	27,460	50,572
Electricity, gas and utilities	5,682	4,604	10,286
Depreciation	6,103	2,109	8,212
Professional and audit fee	2,816	381	3,197
Others	7,034	9,225	16,259
	─────────	────────	────────
Total operating expense	62,902	73,998	136,900
(Loss)/Income from operation	30,819	(2,757)	28,062
Interest & other income/ (expense)
Other income	900	615	1,515
Other expenses	(806)	-	(806)
	─────────	────────	────────
(Loss)/Income before income taxes	30,913	(2,142)	28,771
Income tax benefit	(2)	-	(2)
	─────────	────────	────────
Net (loss)/income	30,911	(2,142)	28,769
	─────────	────────	────────

	Pro Forma Comparisons
	Nine Months Ended
	As Reported December 31, 2011	Sino Wish Nine months	Pro Forma December 31, 2011 (including Sino Wish)
Revenue	314,461	356,370	670,831
Cost of revenue	(84,578)	(107,513)	(192,091)
	─────────	────────	────────
Gross profit	229,883	248,857	478,740
Operating expense:
Staff cost	57,736	92,283	150,019
Rent, government fee, management fee	69,336	82,385	151,721
Electricity, gas and utilities	16,218	14,756	30,974
Depreciation	18,304	6,323	24,627
Professional and audit fee	45,101	381	45,482
Others	33,935	42,538	76,473
	─────────	────────	────────
Total operating expense	240,630	238,666	479,296
(Loss)/Income from operation	(10,747)	10,191	(556)
Interest & other income/ (expense)
Other income	2,671	3,028	5,699
Other expenses	(1,372)	-	(1,372)
	─────────	────────	────────
(Loss)/Income before income taxes	(9,448)	13,219	3,771
Income tax benefit	(1,291)	-	(1,291)
	─────────	────────	────────
Net (loss)/income	(10,739)	13,219	2,480
	─────────	────────	────────

	For the three months ended December 31,			For the Nine months ended December 31,
	2012	2011 Pro forma	2012 to 2011	2012	2011 Pro forma	2012 to 2011
Revenue
Food and beverage income	168,735	227,246	(58,511)	607,554	658,360	(50,806)
Franchise and management fee income	-	2,199	(2,199)	-	12,471	(12,471)
	─────────	────────	────────	─────────	────────	────────
Total revenue	168,735	229,445	(60,710)	607,554	670,831	(63,277)
Cost of goods sold	(37,850)	(64,483)	26,633	(135,898)	(192,091)	56,193
	─────────	────────	────────	─────────	────────	────────
Gross profit	130,885	164,962	(34,077)	471,656	478,740	(7,084)
Operating expenses	(141,515)	(136,900)	(4,615)	(466,199)	(479,296)	13,097
	─────────	────────	────────	─────────	────────	────────
Operating income/(loss)	(10,630)	28,062	(38,692)	5,457	(556)	6,013
	─────────	────────	────────	─────────	────────	────────
Other income	2,490	1,515	975	5,217	5,699	(482)
Other expenses	-	(806)	806	-	(1,372)	1,372
	─────────	────────	────────	─────────	────────	────────
Total other income, net	2,490	709	1,781	5,217	4,327	890
	─────────	────────	────────	─────────	────────	────────
Income tax expenses	-	(2)	2	-	(1,291)	1,291
	─────────	────────	────────	─────────	────────	────────
Net income/(loss)	(8,140)	28,769	(36,909)	10,674	2,480	8,194
	==========	==========	========	=========	=========	=======

The following tables summarize the unaudited franchise and subfranchise results for three and nine months ended December 31, 2012 and 2011, respectively per note 9 segment information to financial statements:

	For the three months ended December 31,
	2012		2011		2012 to 2011	2012 to 2011
	Franchise	Subfranchise	Franchise	Subfranchies	Franchise	Subfranchies
Revenue	168,735	-	118,231	2,199	50,504	(2,199)
Cost of revenue	(37,850)	-	(26,709)	-	(11,141)	-
	─────────	────────	────────	─────────	────────	────────
Gross profit	130,885	-	91,522	2,199	39,363	(2,199)
Operating expenses	(111,002)	-	(58,702)	-	(52,300)	-
	─────────	────────	────────	─────────	────────	────────
Operating (loss)/ income	19,883	-	32,820	2,199	(12,937)	(2,199)
Net (loss)/income after income tax by Segment	22,373	-	33,452	1,659	(11,079)	(1,659)
	=========	=========	========	=========	=========	=========

	For the Nine months ended December 31,
	2012		2011		2012 to 2011	2012 to 2011
	Franchise	Subfranchise	Franchise	Subfranchies	Franchise	Subfranchies
Revenue	607,554	-	301,990	18,681	305,564	(18,681)
Cost of revenue	(135,898)	-	(84,578)	(10,272)	(51,320)	10,272
	────────	────────	────────	────────	────────	────────
Gross profit	471,656	-	217,412	8,409	254,244	(8,409)
Operating expenses	(397,435)	-	(175,426)	-	(222,009)	-
	────────	────────	────────	────────	────────	────────
Operating (loss)/ income	74,221	-	41,986	8,409	32,235	(8,409)
Net (loss)/income after income tax by Segment	79,438	-	43,204	7,022	36,234	(7,022)
	=========	=========	========	=========	=========	=========

Result of continuing operations

Revenues

~~Three~~Revenue ~~Months~~for ~~Ended~~the ~~December~~three 31months ended June 30, ~~2012~~2013, was $192,820, as compared to revenue of $213,187 for the ~~Three~~three ~~Months~~months ~~Ended~~ended ~~December~~June 3130, ~~2011~~2012. The decrease of $20,367, or approximately 9%, represented the normal fluctuation in turnover for the operation of catering services.

Revenue for the three months ended December 31, 2012, was $168,735, as compared to revenue of $227,246 (on a pro forma basis) for the three months ended December 31, 2011. The decrease of $58,511, or approximately 26%, was mainly caused by the decoration of the Tai Yau Plaza, where one of the restaurants (Sino Wish) is located, in October 2012, resulting in decrease in number of visitors to the plaza as well as number of customers to the restaurants.

Nine Months Ended December 31, 2012 compared to Nine Months Ended December 31, 2011

Revenue for the nine months ended December 31, 2012, was $607,554, as compared to revenue of $658,360 (on a pro forma basis) for the nine months ended December 31, 2011. The decrease of $50,806, or approximately 8%, the reason is similar to the decrease for the three months period which we mentioned above.

Cost of Revenues

~~Three~~Cost ~~Months~~of ~~Ended~~revenues ~~December~~represents 31finished goods including food and beverage materials and products for catering services sold by our company-owned restaurants. Cost of revenue for the three months ended June 30, ~~2012~~2013 was $40,788, as compared to cost of revenue of $53,351 for the ~~Three~~three ~~Months~~months ~~Ended~~ended ~~December~~June 3130, ~~2011~~2012. The decrease of $12,563, or approximately 23%, was in line with the decrease of revenue mentioned above.

~~Cost~~Gross ofprofit ~~revenues~~as ~~represents~~a ~~finished~~percentage ~~goods including food and beverage materials and products for catering services sold by our company-owned restaurants. Cost~~ of ~~revenue~~revenues for the three months ended ~~December~~June 3130, ~~2012~~2013 was ~~$37~~79%,~~850,~~ as compared to ~~cost~~75% ~~of revenue of $64,483 (on a pro forma basis)~~ for the three months ended ~~December~~June 3130, ~~2011~~2012. ~~The~~There ~~decrease~~was inno ~~cost~~significant ofchange ~~revenues of $26,633, or approximately 41%, for the period ended December 31, 2012, as compared to the same period~~ in ~~2011~~gross ~~was~~profit ~~in line with the decrease of income due to the decoration of Tai Yau Plaza mentioned above~~margin.

Nine Months Ended December 31, 2012 compared to the Nine Months Ended December 31, 2011

Cost of revenues represents finished goods including food and beverage materials and products for catering services sold by our company-owned restaurants. Cost of revenue for the nine months ended December 31, 2012 was $135,898, as compared to cost of revenue of $192,091 (on a pro forma basis) for the nine months ended December 31, 2011. The decrease in cost of revenues of $56,193, or approximately 29%, for the period ended December 31, 2012, as compared to the same period in 2011 was mainly in line with the decrease in income due to the decoration of Tai Yau Plaza mentioned above.

Gross Profit

Three Months Ended December 31, 2012 compared to the Three Months Ended December 31, 2011

Gross profit represents the result of the revenues and costs of revenues from our company owned restaurants. Gross profit for the three months ended December 31, 2012 was $130,885, as compared to gross profit of $164,962 (on a pro forma basis) for the three months ended December 31, 2011. The decrease of gross profit $34,077, or approximately 21%, in gross profit from restaurant operations for the period ended December 31, 2012, as compared to the same period in 2011 is in line with decrease in sales income.

Nine Months Ended December 30, 2012 compared to the Nine Months Ended December 31, 2011

Gross profit represents the result of the revenues and costs of revenues from our company owned restaurants. Gross profit for the nine months ended December 31, 2012 was $471,656, as compared to gross profit of $478,740 (on a pro forma basis) for the nine months ended December 31, 2011. The decrease in gross profit of $7,084, or approximately 1%, for the period ended December 31, 2012, as compared to the same period in 2011 is in line with decrease in sales income.

Operating Expenses

Operating expenses for the Company and subsidiaries consist of the following items:

	~~For the three months ended December 31~~			For the ~~nine~~three months ended December 31
	2012	2011 Pro forma	2012 to 2011	2012	2011 Pro forma	2012 to 2011
				2013	2012	2013 to 2012
Staff costs	~~40,433~~	~~48,374~~	~~(7,941)~~	~~160~~60,~~903~~645	~~150~~57,~~019~~669	102,~~884~~976
Rent, government fee, management fee	~~67,944~~	~~50,572~~	~~17,372~~	~~162~~70,~~401~~386	~~151~~54,~~721~~300	1016,~~680~~086
Electricity, gas and utilities	~~8,330~~	~~10,286~~	~~(1,956)~~	3113,~~407~~386	3010,~~974~~474	~~433~~2,912
Depreciation	~~4,047~~	~~8,212~~	~~(4,165)~~	208,~~523~~266	248,~~627~~238	~~(4,104)~~28
Professional and audit fee	~~15,064~~	~~3,197~~	~~11,867~~	3726,~~245~~653	4510,~~482~~026	(816,~~237)~~627
Others	~~5,697~~	~~16,259~~	~~(10,562)~~	5315,~~720~~415	7611,~~473~~274	~~(22~~4,~~753)~~141
	~~─────────~~	~~────────~~	~~────────~~	─────────	────────	────────
	141,515	136,900	4,615	466,199	479,296	(13,097)
				194,751	151,981	42,770
	~~=========~~	~~=========~~	~~========~~	=========	=========	=========

~~Three~~The ~~Months~~increase ~~Ended~~of ~~December~~operating 31expenses to $194,751 ~~2012~~for the three months ended June 30, 2013 as compared to operating expenses of $151,981 for the ~~Three~~same ~~Months~~period ~~Ended~~for ~~December~~2012, 31which represents an increase of $42,770 ~~2011~~or approximately 28%, was mainly due to the increase in property rental due to renewal of new tenancy agreement in one of our leased restaurant at Tai Yau Plaza and the increase in legal and professional fee which was mainly the US SEC filing fee.

~~The~~Net ~~increase of~~ operating ~~expenses to $141,515 for the three months ended December 31, 2012 as compared to operating expenses of $136,900~~ (~~on a pro forma basis~~loss) ~~for the same period for 2011, which represents an increase of $4,615 or approximately 3%, is insignificant as our mode of operations remained the same.~~/income

~~Nine~~As ~~Months~~a ~~Ended~~result ~~December~~of 31the decrease in revenue and increase in operating cost in particular the increase in rental fee, there was an operating loss of $41,234 for the three months ended June 30, 2012 as compared towith a profit of $9,177 for the ~~Nine~~three ~~Months~~months ~~Ended~~ended ~~December~~June 30, ~~2011~~2012.

The decrease of operating expenses to $466,199 for the nine months ended December 31, 2012 as compared to operating expenses of $479,296 (on a pro forma basis) for the same period for 2011, which represents a decrease of $13,097 or approximately 3%, is mainly due to less professional and audit fees and others occurred comparing to the same period for 2011.20

Operating income/(loss)

Three Months Ended December 31, 2012 compared to the Three Months Ended December 31, 2011

The decrease in operating income from profit of $28,062 (on a pro forma basis) for the three months ended December 31, 2011 to loss of $10,630 for the three months ended December 31, 2012, an decrease of $38,692, is mainly caused by the decoration of the Tai Yau Plaza, where one of the restaurants (Sino Wish) is located, in October 2012, resulting in decrease in number of visitors to the plaza as well as number of customers to the restaurants.

Nine Months Ended December 31, 2012 compared to the Nine Months Ended December 31, 2011

The difference in operating loss from $556 (on a pro forma basis) for the nine months ended December 31, 2011 to profit of $5,457 for the nine months ended December 31, 2012, an increase of $6,013, is insignificant because our operations remained significantly the same for both periods.

Net income/(loss)

Three Months Ended December 31, 2012 compared to the Three Months Ended December 31, 2011

Net income for the three months ended December 31, 2012 and 2011 remained significantly the same for both periods as our operation remained the same for both periods.

Nine Months Ended December 31, 2012 compared to the Nine Months Ended December 31, 2011

Net income for the nine months ended December 31, 2012 and 2011remained significantly the same for both periods as our operation remained the same for both periods.

Impact of Inflation

WeInflation ~~believe~~and ~~that~~changing ~~the~~prices ~~rate~~have ofhad an effect on our business and we expect that inflation ~~has~~or ~~had~~changing aprices ~~negligible~~could ~~effect~~materially onaffect our business in the foreseeable future. Our management will closely monitor the price change and make efforts to maintain effective cost control in operations.

Liquidity and Capital Resources

Net cash generated from operating activities for the ~~nine~~three months period ended ~~December~~June 3130, ~~2012~~2013 was $8541,~~245~~160. It mainly represents cash income on daily operations and decrease in amount due from related party.

~~Net~~A ~~cash~~stockholder ~~used~~of inthe ~~investing~~Company, ~~activities~~Cheung ~~for~~Ming, has paid expenses on behalf of the ~~nine~~Company ~~months~~with ~~ended~~no ~~December~~interest and without a fixed repayment term. Amounts payable to the aforesaid stockholder at June 30, 2013 and March 31, ~~2012~~2013, ~~was~~were $1378,~~584~~943 and $442,722, respectively. The payable is an internal source of liquidity for payment of operational expenses and ~~represents~~to ~~purchase~~provide working capital. Possible external sources of ~~equipment~~liquidity may include loan borrowing from financial institutions or possible completion of a share exchange transaction to acquire potential and profitable businesses which can generate additional cash flow.

AThe ~~stockholder of the~~ Company, ~~Cheung~~believes ~~Ming,~~that ~~has paid expenses on behalf of~~ the ~~Company~~existing ~~with~~cash ~~no interest~~ and ~~without~~cash aequivalents ~~fixed~~on ~~repayment~~hand ~~term. Amounts~~together ~~payable~~with toapproximately ~~the aforesaid stockholder at December 31, 2012 and March 31, 2012, were~~ $~~529~~7,~~644~~000 ~~and~~monthly ~~$538,296,~~average ~~respectively. The~~net ~~payable~~cash isinflow angenerated ~~internal~~from ~~source~~the ofCompany-owned ~~liquidity~~restaurants, ~~for~~will ~~payment~~be ofsufficient ~~operational expenses and~~ to ~~provide~~meet our working capital. ~~Possible~~requirements ~~external~~for ~~sources~~the ofcurrent ~~liquidity~~level ~~may include loan borrowing from financial institutions or possible completion~~ of aoperations ~~share~~and ~~exchange transaction~~ to ~~acquire~~sustain ~~potential~~business ~~and~~operations ~~profitable~~at ~~businesses~~the ~~which~~current ~~can~~levels ~~generate~~for ~~additional~~the ~~cash~~next ~~flow~~twelve months.

The Company believes that the existing cash and cash equivalents on hand in Hong Kong as at December 31, 2012 at approximately $34,173 together with approximately $7,000 monthly average net cash inflow generated from the Company-owned restaurants, will be sufficient to meet our working capital requirements for the current level of operations and to sustain business operations at the current levels for the next twelve months.

The unaudited consolidated financial statements have been prepared assuming that the Company will continue as a going concern and, accordingly, they do not include any adjustments that might result from the outcome of this uncertainty. The Company’s minimal revenues and its dependency on continuing funding from its stockholders, raise substantial double about its ability to continue as a going concern. The Company's business plan includes raising funds from outside potential investors. However, there is no assurance that it will be able to do so.

As of ~~December~~June 3130, ~~2012~~2013, there were no material commitments for capital expenditures for business operations.

Off Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4.

CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our chief executive officer and chief financial officer have identified a material weakness in connection with the preparation of our consolidated financial statements as of and for the period ended ~~December~~June 3130, ~~2012~~2013 and have thus concluded that our disclosure controls and procedures were not effective to provide reasonable assurance of the achievement of these objectives. A "material weakness" is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. The identified material weakness and control deficiency primarily related to absence of a Chief Financial Officer with appropriate professional experience with U.S. GAAP and SEC rules and regulations.

We believe that the material weakness and other control deficiencies we have identified are temporary because our management intends to hire a consultant with experience in U.S. GAAP accounting and SEC rules and regulations, but based on the current size and cashflow of the company, we are not able to do so. Our management intends to conduct an assessment of the effectiveness of our disclosure control and procedures, and internal control over financial reporting in the coming months if we acquire another operating business or assets, and re-consider the need for hiring a consultant.

internal control over financial reporting in the coming months if we acquire another operating business or assets, and re-consider the need for hiring a consultant.

Changes in Internal Control over Financial Reporting

There was no change in the Company's internal control over financial reporting during the period ended ~~December~~June 3130, ~~2012~~2013, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II-OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated. No director, officer or affiliate of the Company, and no owner of record or beneficial owner of more than 5.0% of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.

ITEM 1A.

RISK FACTORS.

Not Applicable.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.

MINE SAFETY DISCLOSURES

Not Applicable

ITEM 5.

OTHER INFORMATION.

ITEM 6.

EXHIBITS.

(a)

The following exhibits are filed herewith:

31.1

Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101

SCH XBRL Scheme Document.

101

INS XBRL Instance Document.

101

CAL XBRL Taxonomy Extension Calculation Linkbase Document.

101

LAB XBRL Taxonomy Extension Label Linkbase Document.

101

PRE XBRL Taxonomy Extension Presentation Linkbase Document.

101

DEF XBRL Taxonomy Extension Definition Linkbase Document.

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.

STUDIO II BRANDS, INC.

By: /S/ Cheung Ming

Cheung Ming, President, Principal Executive Officer, Principal Financial Officer

Date: ~~February~~August 1914, 2013

3023

Filing Compare · STUDIO II BRANDS INC