10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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 September 30, 2012

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934:

For the transition period from______ to _______

Commission File Number 0-26573

PHYSICAL PROPERTY HOLDINGS INC.

(Exact name of Registrant as specified in its charter)

Delaware	98-0203281
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

23/F AIA Tower

No. 183 Electric Road, North Point

Hong Kong

(Address of principal executive offices)

(011) (852) 2917-0000

(Registrant's telephone number)

Check whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.   Yes x  No o

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

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 definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act:

 Large Accelerated Filer o  Accelerated Filer o  Non-accelerated Filer o  Smaller Reporting Company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):    Yes o   No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:  

November 14, 2012, 28,329,353 shares.

PHYSICAL PROPERTY HOLDINGS INC.

Form 10-Q for the period ended September 30, 2012

TABLE OF CONTENTS

			Page
PART I - FINANCIAL INFORMATION
	ITEM 1 - FINANCIAL STATEMENTS
		Unaudited Condensed Consolidated Statements of Operations for the three-month and nine-month periods ended September 30, 2011 and 2012	3
		Condensed Consolidated Balance Sheets as of December 31, 2011 and September 30, 2012 (Unaudited)	4
		Unaudited Condensed Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2011 and 2012	5
		Notes to Condensed Consolidated Financial Statements	6 – 8
	ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		9 - 11
	ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		12
	ITEM 4 - CONTROLS AND PROCEDURES		12
PART II - OTHER INFORMATION
	ITEM 1 - LEGAL PROCEEDINGS		12
	ITEM 6 - EXHIBITS		13
		SIGNATURES	14

2

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

PHYSICAL PROPERTY HOLDINGS INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three months ended September 30,									Nine months ended September 30,
	2011			2012			2012			2011			2012			2012
	HK$’000			HK$’000			US$’000			HK$’000			HK$’000			US$’000
Operating Revenue
Rental income		203			248			32			604			624			80
Total operating revenues		203			248			32			604			624			80
Operating Expenses
Rent and related expenses		(24	)		(24	)		(3	)		(72	)		(73	)		(9	)
Depreciation		(86	)		(86	)		(11	)		(258	)		(258	)		(33	)
Other selling and administrative expenses		(152	)		(190	)		(25	)		(499	)		(518	)		(67	)
Total operating expenses		(262	)		(300	)		(39	)		(829	)		(849	)		(109	)
Loss from operations		(59	)		(52	)		(7	)		(225	)		(225	)		(29	)
Non-operating expenses
Interest expenses		(51	)		(49	)		(6	)		(156	)		(148	)		(19	)
Total non-operating expenses		(51	)		(49	)		(6	)		(156	)		(148	)		(19	)
Loss before income taxes		(110	)		(101	)		(13	)		(381	)		(373	)		(48	)
Provision for income taxes		--			--			--			--			--			--
Net loss and total comprehensive loss		(110	)		(101	)		(13	)		(381	)		(373	)		(48	)
Loss per share of common stock (in cents)		(0.39	)		(0.36	)		(0.05	)		(1.34	)		(1.32	)		(0.17	)
WWeighted average number of shares of common stock outstanding		28,329,353			28,329,353			28,329,353			28,329,353			28,329,353			28,329,353

The financial statements should be read in conjunction with the accompanying notes.

3

PHYSICAL PROPERTY HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	As of December 31, 2011			As of September 30, 2012 (Unaudited)
	HK$’000			HK$’000			US$’000
ASSETS
Current assets
Cash and bank balances		24			14			2
Trade receivables		12			--			--
Management fees and utility deposits		24			26			3
Total current assets		60			40			5
Bank deposits, collateralized		82			82			11
Property, plant and equipment, net of accumulated depreciation of HK$2,841,000 (US$364,000) as of September 30, 2012 (December 31, 2011: HK$2,583,000)		10,205			9,947			1,275
Total assets		10,347			10,069			1,291
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Bank loans - (Note 3)		9,555			9,137			1,171
Other payables		258			242			31
Due to Principal Stockholder - (Note 5)		1,551			2,080			267
Total current liabilities		11,364			11,459			1,469
Commitments and contingencies - (Note 6)
Stockholders' equity
Common stock, par value US$0.001 each, 100 million shares of stock authorized; 28,329,353 shares of stock issued and outstanding		221			221			28
Additional paid-in capital		73,608			73,608			9,437
Accumulated losses		(74,846	)		(75,219	)		(9,643	)
Total stockholders' deficit		(1,017	)		(1,390	)		(178	)
Total liabilities and stockholders' equity		10,347			10,069			1,291

The financial statements should be read in conjunction with the accompanying notes.

4

PHYSICAL PROPERTY HOLDINGS INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended September 30,
	2011			2012			2012
	HK$’000			HK$’000			US$’000
Cash flows from operating activities
Net loss		(381	)		(373	)		(48	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		258			258			33
Changes in working capital:
Trade receivables		(2	)		12			2
Management fees and utility deposits		--			(2	)		--
Other payables		14			(16	)		(2	)
Net cash used in operating activities		(111	)		(121	)		(15	)
Cash flows from financing activities
Repayment of bank loans		(409	)		(418	)		(54	)
Net advance from Principal Stockholder - (Note 5)		556			529			68
Net cash provided by financing activities		147			111			14
Net increase (decrease) in cash and cash equivalents		36			(10	)		(1	)
Cash and cash equivalents at beginning of period		14			24			3
Cash and cash equivalents at end of period		50			14			2

The financial statements should be read in conjunction with the accompanying notes.

5

PHYSICAL PROPERTY HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements include the accounts of Physical Property Holdings Inc. and the subsidiaries that it controls (collectively referred to as the "Company"). The Company, through its subsidiaries, is engaged in the real estate business by holding five residential apartments in Hong Kong. Unless otherwise specified in the text, references to the Company include the Company and its subsidiaries. These financial statements should be read in conjunction with the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The balance sheet at December 31, 2011 has been derived from the audited financial statements at that date but the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine-month period ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

Translation of amounts from Hong Kong Dollars ("HK$") into United States Dollars ("US$") for the convenience of the reader has been made at the exchange rate of US$1.00 = HK$7.8. No representation is made that the Hong Kong Dollar amounts could have been, or could be, converted into United States Dollars, at that rate on September 30, 2012 or at any other certain rate.

The Company had negative working capital of HK$11,419,000 as of September 30, 2012 and incurred losses of HK$373,000 and HK$381,000 for the nine months ended September 30, 2012 and 2011 respectively. These conditions raised substantial doubt about the Company’s ability to continue as a going concern.

Continuation of the Company as a going concern is dependent upon attaining profitable operations in the future, exercising tight cost and cash flow controls measures, and the financial support from the Principal Stockholder.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Principal Stockholder has undertaken to make available adequate funds to the Company as and when required to maintain the Company as a going concern.  Having taken into consideration the undertaking provided by the Principal Stockholder, management believes that the Company will be able to settle its liabilities when they become due.  However, there can be no assurance that the financing from the Principal Stockholder will be continued.

For the nine months ended September 30, 2012, Ngai Keung Luk, Chairman, Chief Executive Officer and the Principal Stockholder, made a net advance of HK$529,000 or US$68,000 to the Company as described in note 5 below.  Mr. Luk owns 82.52% of the Company’s issued and outstanding shares of common stock as of the date this quarterly report is filed.

The Company has evaluated subsequent events through the date this quarterly report is filed.

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

As of the date this quarterly report is filed, there are no recently issued accounting pronouncements which adoption would have a material impact on the Company’s financial statements.

3. BANK LOANS

During the nine-month periods ended September 30, 2012 and 2011, the Company repaid HK$418,000 and HK$409,000 of its existing bank loans, respectively. The outstanding loan balances as of September 30, 2012 and December 31, 2011 are analyzed as follows:

End of maturity	Interest rate	Principal
		2011		2012		2012
		HK$’000		HK$’000		US$’000
2026	2.1% per annum		9,555		9,137		1,171

6

PHYSICAL PROPERTY HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3. BANK LOANS (Continued)

Payables during the following periods according to bank repayment terms notices

	Principal
	2011		2012		2012
	HK$’000		HK$’000		US$’000
2012 / 2013		559		567		73
2013 / 2014		570		579		74
2014 / 2015		583		592		76
2015 / 2016		595		604		77
2016 / 2017		607		617		79
Thereafter		6,641		6,178		792
		9,555		9,137		1,171

As the bank loans are repayable on demand upon request at the bank’s discretion, regardless of the expected repayment dates of the outstanding loan principals as set out in the repayment terms notices issued by the bank, the entire balance of the bank loans is presented as current liabilities in the consolidated balance sheet.  

The collateral of the bank loans includes:

(i)	leasehold properties in Hong Kong with a net book value of HK$9,863,000 and HK$10,075,000 as of September 30, 2012 and December 31, 2011 respectively;
(ii)	fixed deposits of HK$82,000 as of September 30, 2012 and December 31, 2011; and
(iii)	joint and several guarantee provided by the Principal Stockholder and his spouse.

4. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

	Three months ended September 30,					Nine months ended September 30,
	2011		2012	2012		2011	2012	2012
	HK$’000	$	HK’000	US$’000	$	HK’000	HK$’000	US$’000
Cash paid for:
Interest expenses	51		49	6		156	148	19

5. RELATED PARTY TRANSACTIONS

During the nine-month periods ended September 30, 2012 and 2011, the Company had net advance from the Principal Stockholder of HK$529,000 and HK$556,000 respectively. The movements of the amount due to the Principal Stockholder are analyzed as follows:

	Nine months ended September 30,
	2011		2012
	HK$’000		HK$’000			US$’000
Balance at beginning of period		826		1,551			199
Advance from the Principal Stockholder		296		516			66
Repayment to the Principal Stockholder		--		(10	)		(1	)
Expenses paid by the Principal Stockholder on behalf of the Company		260		23			3
Net advance from the Principal Stockholder		556		529			68
Balance at end of period		1,382		2,080			267

7

PHYSICAL PROPERTY HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

5. RELATED PARTY TRANSACTIONS (Continued)

In addition, during the nine-month periods ended September 30, 2012 and 2011, a related company which is controlled by the Principal Stockholder of the Company, provided office space and general support for the Company’s activities with an aggregate charge of HK$243,000 and HK$243,000, respectively.

6. COMMITMENTS AND CONTINGENCIES

The Company leases out its properties under operating leases with average lease terms of two years. The future aggregate minimum rental receivables under non-cancellable operating leases are as follows:

	As of December 31, 2011		As of September 30, 2012
	HK$’000		HK$’000		US$’000
Within one year		785		763		98
In the second year		251		324		41
		1,036		1,087		139

Potential administrative proceeding

On or about October 22, 2007, the Securities and Exchange Commission (the “SEC”) sent a “voluntary request letter” seeking certain information and documents about the Company and another company known as Score One, Inc, in connection with an investigation into alleged spam e-mail campaigns and potential securities fraud violations.

Subsequently, on or about January 11, 2008, the SEC sent a subpoena to the Company for additional information and documents concerning the Company and Score One, Inc. in furtherance of its investigation into potential spam e-mail campaigns and securities fraud violations.  Management of the Company retained counsel and responded to the subpoena.

On or about September 16, 2010, the SEC sent a letter to the Company in which they stated that they intended to institute an administrative proceeding against the Company, pursuant to Section 12(j) of the Exchange Act to determine whether it is appropriate to suspend or revoke the registration of the Company’s securities.  

On or about February 1, 2011, the SEC filed a complaint in US District Court, Eastern District of Michigan, Southern District, SEC v. Gregg M.S. Berger, et al., for securities fraud involving spamming stock, pump and dump schemes, misleading press releases, violation of numerous SEC rules governing the issuance of S-8 stock, misleading reverse mergers, etc.  The Company and its officers and directors were not named as defendants in the case.

Other than the above, as of September 30, 2012 and December 31, 2011, the Company had no material outstanding commitments and contingencies.

8

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

THIS REPORT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS ABOUT OUR OPERATIONS. PROSPECTIVE SHAREHOLDERS SHOULD UNDERSTAND THAT SEVERAL FACTORS GOVERN WHETHER ANY FORWARD-LOOKING STATEMENT CONTAINED HEREIN WILL BE OR CAN BE ACHIEVED. ANY ONE OF THOSE FACTORS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED HEREIN. THESE FORWARD-LOOKING STATEMENTS INCLUDE PLANS AND OBJECTIVES OF MANAGEMENT FOR FUTURE OPERATIONS, INCLUDING PLANS AND OBJECTIVES RELATING TO THE PRODUCTS AND THE FUTURE ECONOMIC PERFORMANCE OF THE COMPANY. ASSUMPTIONS RELATING TO THE FOREGOING INVOLVE JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS, FUTURE ECONOMIC, COMPETITIVE AND MARKET CONDITIONS, FUTURE BUSINESS DECISIONS, AND THE TIME AND MONEY REQUIRED TO SUCCESSFULLY COMPLETE DEVELOPMENT PROJECTS, ALL OF WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY AND MANY OF WHICH ARE BEYOND THE CONTROL OF THE COMPANY. ALTHOUGH THE COMPANY BELIEVES THAT THE ASSUMPTIONS UNDERLYING THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE REASONABLE, ANY OF THOSE ASSUMPTIONS COULD PROVE INACCURATE AND, THEREFORE, THERE CAN BE NO ASSURANCE THAT THE RESULTS CONTEMPLATED IN ANY OF THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN WILL BE REALIZED. BASED ON ACTUAL EXPERIENCE AND BUSINESS DEVELOPMENT, THE COMPANY MAY ALTER ITS MARKETING, CAPITAL EXPENDITURE PLANS OR OTHER BUDGETS, WHICH MAY IN TURN AFFECT THE COMPANY'S RESULTS OF OPERATIONS. IN LIGHT OF THE SIGNIFICANT UNCERTAINTIES INHERENT IN THE FORWARD-LOOKING STATEMENTS INCLUDED THEREIN, THE INCLUSION OF ANY SUCH STATEMENT SHOULD NOT BE REGARDED AS A REPRESENTATION BY THE COMPANY OR ANY OTHER PERSON THAT THE OBJECTIVES OR PLANS OF THE COMPANY WILL BE ACHIEVED.

Overview of Company's Business:

The Company, through its wholly-owned subsidiary, Good Partner Limited, owns five residential apartments located in Hong Kong.

RESULTS OF OPERATIONS

The following table sets forth selected data as a percentage of total operating revenue for the periods indicated.

	Three months ended September 30						Nine months ended September 30
	2011			2012			2011			2012
Operating Revenues		100.00	%		100.00	%		100.00	%		100.00	%
Total operating expenses		(129.06	%)		(120.97	%)		(137.25	%)		(136.06	%)
Loss from operations		(29.06	%)		(20.97	%)		(37.25	%)		(36.06	%)
Loss before income taxes		(54.19	%)		(40.73	%)		(63.08	%)		(59.78	%)
Provision for income taxes		--			--			--			--
Net loss		(54.19	%)		(40.73	%)		(63.08	%)		(59.78	%)

9

THREE MONTHS ENDED SEPTEMBER 30, 2012 (UNAUDITED) COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2011 (UNAUDITED)

OPERATING REVENUES. Operating revenues for the third quarter of 2012 totaled HK$248,000 (US$32,000) compared to HK$203,000 for the corresponding period in 2011. This represented an increase of 22% mainly due to all of the properties being let out in the third quarter of 2012, and rental increments for three of the properties, while a property was vacant for one and a half months during the same period in 2011.

OPERATING EXPENSES. The Company's operating expenses totaled HK$300,000 (US$39,000), or 121% of operating revenues, for the third quarter of 2012, compared to HK$262,000, or 129% of operating revenues, for the third quarter of 2011. This represented an increase of 15%, mainly because agency fees, repair and maintenance costs in relation to new tenancies were incurred in this quarter.

TOTAL NON-OPERATING EXPENSES. Total non-operating expenses for the third quarter of 2012 totaled HK$49,000 (US$6,000) compared to HK$51,000 for the third quarter of 2011. This represented a decrease of 4% due to reduction in interest expenses attributable to the decrease in average loan balances as a result of the progress on repayment.

PROVISION FOR INCOME TAXES. The Company did not make any tax provision for the third quarter in view of the losses incurred.

NET LOSS AND TOTAL COMPREHENSIVE LOSS. The Company has recorded a net loss and total comprehensive loss of HK$101,000 (US$13,000) for the third quarter of 2012, compared to a net loss and total comprehensive loss of HK$110,000 for the third quarter of 2011. This represented a decrease in loss of 8% due to the net effect of the increase in rental income and the increase in administrative expenses as mentioned above.

NINE MONTHS ENDED SEPTEMBER 30, 2012 (UNAUDITED) COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2011 (UNAUDITED)

OPERATING REVENUES. Operating revenues for the nine months of 2012 totaled HK$624,000 (US$80,000) compared to HK$604,000 for the corresponding period in 2011. This represented an increase of 3% mainly due to rental increases for three of the properties.

OPERATING EXPENSES. The Company's operating expenses totaled HK$849,000 (US$109,000), or 136% of operating revenues, for the first nine months of 2012, compared to HK$829,000, or 137% of operating revenues, for the first nine months of 2011. This represented an increase of 2%, mainly because certain administrative expenses in relation to new tenancies were incurred in the first nine months of 2012.

TOTAL NON-OPERATING EXPENSES. Total non-operating expenses for the first nine months of 2012 totaled HK$148,000 (US$19,000) compared to HK$156,000 for the first nine months of 2011. This represented a decrease of 5% due to reduction in interest expenses attributable to the decrease in average loan balances as a result of the progress on repayment.

PROVISION FOR INCOME TAXES. The Company did not make any tax provision for the period under review because there were losses incurred.

NET LOSS AND TOTAL COMPREHENSIVE LOSS. The Company has recorded a net loss and total comprehensive loss of HK$373,000 (US$48,000) for the first nine months of 2012, compared to a net loss and total comprehensive loss of HK$381,000 for the first nine months of 2011. This represented a decrease in loss of HK$8,000 (US$1,000) due to the net effect of the increase in rental income and the increase in administrative expenses as mentioned above.

10

LIQUIDITY AND CAPITAL RESOURCES

The Company has financed its operations primarily through advances from the Principal Stockholder.

Cash and cash equivalent balances as of September 30, 2012 and December 31, 2011 were HK$14,000 (US$2,000) and HK$24,000, respectively.

Net cash used in operating activities was HK$121,000 (US$15,000) and HK$111,000 for the nine-month periods ended September 30, 2012 and 2011, respectively.

Net cash provided by financing activities, which mainly includes repayment of bank loans and advances from the Principal Stockholder, were HK$111,000 (US$14,000) and HK$147,000 during the nine-month periods ended September 30, 2012 and 2011, respectively.

During the nine-month period ended September 30, 2012 and 2011, the Company has not entered into any transactions using derivative financial instruments or derivative commodity instruments or held any marketable equity securities of publicly traded companies.

Consistent with the general practice of lessors of residential apartments, the Company receives monthly rentals, which are due on the first day of each billing period and are non-refundable. This practice creates working capital that the Company generally utilizes for working capital purposes.

The Company has no trade receivable balance as of September 30, 2012 and trade receivable balance of HK$12,000 as of December 31, 2011. The Company obtains rental deposits from its tenants and has never experienced any significant problems with collection of accounts receivable. No provision for doubtful receivables is therefore made for the period under review.

During the nine-month periods ended September 30, 2012 and 2011, the Company had no purchases of investments.

Management believes that cash flow generated from the operations of the Company, the tight cost and cash flow control measures and the existing cash and bank balances on hand should be sufficient to satisfy the working capital requirement of the Company for at least the next 12 months as the Principal Stockholder has confirmed his intention to make available adequate funds to the Company as and when required to maintain the Company as a going concern.  However, there can be no assurance that the financing from him will be continued.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. (GAAP) requires 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In recording transactions and balances resulting from business operations, the Company uses estimates based on the best information available for such items as depreciable lives. The Company revises the recorded estimates when better information is available, facts change or actual amounts can be determined. These revisions can affect operating results.

The critical accounting policies and use of estimates are discussed in and should be read in conjunction with the annual consolidated financial statements and notes included in the Company’s latest 10-K, as filed with the SEC on March 26, 2012, which includes audited consolidated financial statements for the year ended December 31, 2011.

11

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The operations of the Company are solely in Hong Kong and they are subject to risks associated with, among others, interest rate and liquidity risk. These risks have similar considerations and risks typically associated with investments in the real estate market of the United States and Western European countries. These are described further in the following:

INTEREST RATE RISK

The Company’s exposure to the risk of changes in market interest rates relates primarily to its long term debt obligations with a floating interest rate.  The Company monitors the movement of interest rates on an ongoing basis and evaluates the exposure of its debt obligations.

LIQUIDITY RISK

The Company’s financial statements have been prepared on a going concern basis. For the nine months ended September 30, 2012, the Company reported a negative working capital of HK$11,419,000, of which HK$8,570,000 would be due for repayment over one year according to the latest repayment terms notices issued by the bank and a net loss of HK$373,000, respectively. The Company has relied on private financing from the Principal Stockholder of the Company, who has confirmed his intention to make available adequate funds to the Company as and when required to maintain the Company as a going concern. However, there can be no assurance that the financing from him will be continued. The accompanying financial statements do not include or reflect any adjustments that might result from the outcome of these uncertainties.

ITEM 4 - CONTROLS AND PROCEDURES

The Chief Executive Officer and Chief Financial Officer (the principal executive officer and principal financial officer, respectively) of the Company have concluded, based on their evaluation as of September 30, 2012, that the design and operation of the Company's "disclosure controls and procedures" (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act")) are effective to ensure that information required to be disclosed in the reports filed or submitted by the Company under the Exchange Act is accumulated, recorded, processed, summarized and reported to the management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding whether or not disclosure is required.

During the nine months ended September 30, 2012, there were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

There are no pending material legal proceedings to which the Company or any of its properties is subject, nor to the knowledge of the Company, are any such legal proceedings threatened, except as described below.

On or about October 22, 2007, the Securities and Exchange Commission (the “SEC”) sent a “voluntary request letter” seeking certain information and documents about the Company and another company known as Score One, Inc, in connection with an investigation into alleged spam e-mail campaigns and potential securities fraud violations.

Subsequently, on or about January 11, 2008, the SEC sent a subpoena to the Company for additional information and documents concerning the Company and Score One, Inc. in furtherance of its investigation into potential spam e-mail campaigns and securities fraud violations.  Management of the Company retained counsel and responded to the subpoena.

On or about September 16, 2010, the SEC sent a letter to the Company in which they stated that they intended to institute an administrative proceeding against the Company, pursuant to Section 12(j) of the Exchange Act to determine whether it is appropriate to suspend or revoke the registration of the Company’s securities.

12

On February 1, 2011, the SEC filed a complaint in US District Court, Eastern District of Michigan, Southern District, SEC v. Gregg M.S. Berger, et al., for securities fraud involving spamming stock, pump and dump schemes, misleading press releases, violation of numerous SEC rules governing the issuance of S-8 stock, misleading reverse mergers, etc.  The Company and its officers and directors were not named as defendants in the case.

ITEM 6 – EXHIBITS

31.1	Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934*
31.2	Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934*
32.1	Certification of the Company's Chief Executive Officer Pursuant to 18 U.S.C. SS. 1350 Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
32.2	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. SS. 1350 Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

101 The following materials from our Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Cash Flows, and (iv) Notes to Condensed Consolidated Financial Statements.**

*	Filed herewith
**	Information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

13

SIGNATURES

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

PHYSICAL PROPERTY HOLDINGS INC.

(Registrant)

November 14, 2012	/s/ Ngai Keung Luk
	Ngai Keung Luk
	Chairman and Chief Executive Officer
	(Principal Executive Officer)
November 14, 2012	/s/ Darrie Lam
	Darrie Lam
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

14

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Ngai Keung Luk, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Physical Property Holdings Inc. (the "registrant");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

November 14, 2012	/s/ Ngai Keung Luk
	Ngai Keung Luk
	Chairman and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Darrie Lam, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Physical Property Holdings Inc. (the "registrant");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

November 14, 2012	/s/ Darrie Lam
	Darrie Lam
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SS. 1350 ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Report of Physical Property Holdings Inc. (the "Company") on Form 10-Q for the quarter ended September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Ngai Keung Luk, Chairman and Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Ngai Keung Luk

Ngai Keung Luk

Chairman and Chief Executive Officer

November 14, 2012

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SS. 1350 ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Report of Physical Property Holdings Inc. (the "Company") on Form 10-Q for the quarter ended September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Darrie Lam, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Darrie Lam

Darrie Lam

Chief Financial Officer

November 14, 2012

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Note 4 - Supplemental Discosures of Cash Flow Information

9 Months Ended

Sep. 30, 2012

Cash Flow, Supplemental Disclosures [Text Block]

4. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

	Three months ended September 30,					Nine months ended September 30,
	2011		2012	2012		2011	2012	2012
	HK$’000	$	HK’000	US$’000	$	HK’000	HK$’000	US$’000
Cash paid for:
Interest expenses	51		49	6		156	148	19

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Note 3 - Bank Loans

9 Months Ended

Sep. 30, 2012

Debt Disclosure [Text Block]

3. BANK LOANS

During the nine-month periods ended September 30, 2012 and 2011, the Company repaid HK$418,000 and HK$409,000 of its existing bank loans, respectively. The outstanding loan balances as of September 30, 2012 and December 31, 2011 are analyzed as follows:

End of maturity	Interest rate	Principal
		2011		2012		2012
		HK$’000		HK$’000		US$’000
2026	2.1% per annum		9,555		9,137		1,171

Payables during the following periods according to bank repayment terms notices

	Principal
	2011		2012		2012
	HK$’000		HK$’000		US$’000
2012 / 2013		559		567		73
2013 / 2014		570		579		74
2014 / 2015		583		592		76
2015 / 2016		595		604		77
2016 / 2017		607		617		79
Thereafter		6,641		6,178		792
		9,555		9,137		1,171

As the bank loans are repayable on demand upon request at the bank’s discretion, regardless of the expected repayment dates of the outstanding loan principals as set out in the repayment terms notices issued by the bank, the entire balance of the bank loans is presented as current liabilities in the consolidated balance sheet.  

The collateral of the bank loans includes:

(i)	leasehold properties in Hong Kong with a net book value of HK$9,863,000 and HK$10,075,000 as of September 30, 2012 and December 31, 2011 respectively;
(ii)	fixed deposits of HK$82,000 as of September 30, 2012 and December 31, 2011; and
(iii)	joint and several guarantee provided by the Principal Stockholder and his spouse.

XML

Unaudited Condensed Consolidated Statements of Operations In Thousands, except Share data, unless otherwise specified	3 Months Ended			9 Months Ended
	Sep. 30, 2012 USD ($)	Sep. 30, 2012 HKD	Sep. 30, 2011 HKD	Sep. 30, 2012 USD ($)	Sep. 30, 2012 HKD	Sep. 30, 2011 HKD
Operating Revenue
Rental income	$ 32	248	203	$ 80	624	604
Total operating revenues	32	248	203	80	624	604
Operating Expenses
Rent and related expenses	(3)	(24)	(24)	(9)	(73)	(72)
Depreciation	(11)	(86)	(86)	(33)	(258)	(258)
Other selling and administrative expenses	(25)	(190)	(152)	(67)	(518)	(499)
Total operating expenses	(39)	(300)	(262)	(109)	(849)	(829)
Loss from operations	(7)	(52)	(59)	(29)	(225)	(225)
Non-operating expenses
Interest expenses	(6)	(49)	(51)	(19)	(148)	(156)
Total non-operating expenses	(6)	(49)	(51)	(19)	(148)	(156)
Loss before income taxes	(13)	(101)	(110)	(48)	(373)	(381)
Net loss and total comprehensive loss	$ (13)	(101)	(110)	$ (48)	(373)	(381)
Loss per share of common stock (in cents) (in Dollars per share and Dollars per share)	$ (0.05)	(0.36)	(0.39)	$ (0.17)	(1.32)	(1.34)
Weighted average number of shares of common stock outstanding (in Shares)	28,329,353	28,329,353	28,329,353	28,329,353	28,329,353	28,329,353

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Note 1 - Basis Of Presentation

9 Months Ended

Sep. 30, 2012

Basis of Accounting [Text Block]

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements include the accounts of Physical Property Holdings Inc. and the subsidiaries that it controls (collectively referred to as the "Company"). The Company, through its subsidiaries, is engaged in the real estate business by holding five residential apartments in Hong Kong. Unless otherwise specified in the text, references to the Company include the Company and its subsidiaries. These financial statements should be read in conjunction with the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The balance sheet at December 31, 2011 has been derived from the audited financial statements at that date but the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine-month period ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

Translation of amounts from Hong Kong Dollars ("HK$") into United States Dollars ("US$") for the convenience of the reader has been made at the exchange rate of US$1.00 = HK$7.8. No representation is made that the Hong Kong Dollar amounts could have been, or could be, converted into United States Dollars, at that rate on September 30, 2012 or at any other certain rate.

The Company had negative working capital of HK$11,419,000 as of September 30, 2012 and incurred losses of HK$373,000 and HK$381,000 for the nine months ended September 30, 2012 and 2011 respectively. These conditions raised substantial doubt about the Company’s ability to continue as a going concern.

Continuation of the Company as a going concern is dependent upon attaining profitable operations in the future, exercising tight cost and cash flow controls measures, and the financial support from the Principal Stockholder.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Principal Stockholder has undertaken to make available adequate funds to the Company as and when required to maintain the Company as a going concern.  Having taken into consideration the undertaking provided by the Principal Stockholder, management believes that the Company will be able to settle its liabilities when they become due.  However, there can be no assurance that the financing from the Principal Stockholder will be continued.

For the nine months ended September 30, 2012, Ngai Keung Luk, Chairman, Chief Executive Officer and the Principal Stockholder, made a net advance of HK$529,000 or US$68,000 to the Company as described in note 5 below.  Mr. Luk owns 82.52% of the Company’s issued and outstanding shares of common stock as of the date this quarterly report is filed.

The Company has evaluated subsequent events through the date this quarterly report is filed.

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Note 5 - Related Party Transactions (Detail) - Amounts due to the Principal Stockholder:	9 Months Ended
	Sep. 30, 2012 USD ($)	Sep. 30, 2012 HKD	Sep. 30, 2011 HKD	Sep. 30, 2012 Principal Stockholder [Member] USD ($)	Sep. 30, 2012 Principal Stockholder [Member] HKD	Sep. 30, 2011 Principal Stockholder [Member] HKD
Balance at beginning of period	$ 199,000	1,551,000	826,000
Advance from the Principal Stockholder				66,000	516,000	296,000
Repayment to the Principal Stockholder				(1,000)	(10,000)
Expenses paid by the Principal Stockholder on behalf of the Company				3,000	23,000	260,000
Net advance from the Principal Stockholder	68,000	529,000	556,000	68,000	529,000	556,000
Balance at end of period	$ 267,000	2,080,000	1,382,000

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Note 6 - Commitments and Contingencies (Detail) - Future aggregate minimum rental receivables In Thousands, unless otherwise specified	Sep. 30, 2012 USD ($)	Sep. 30, 2012 HKD	Dec. 31, 2011 HKD
Within one year	$ 98	763	785
In the second year	41	324	251
	$ 139	1,087	1,036

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Note 2 - Recently Issued Accounting Pronouncements

9 Months Ended

Sep. 30, 2012

Description of New Accounting Pronouncements Not yet Adopted [Text Block]

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

As of the date this quarterly report is filed, there are no recently issued accounting pronouncements which adoption would have a material impact on the Company’s financial statements.

XML

Condensed Consolidated Balance Sheets (Unaudited) In Thousands, unless otherwise specified	Sep. 30, 2012 USD ($)	Sep. 30, 2012 HKD	Dec. 31, 2011 HKD
Current assets
Cash and bank balances	$ 2	14	24
Trade receivables			12
Management fees and utility deposits	3	26	24
Total current assets	5	40	60
Bank deposits, collateralized	11	82	82
Property, plant and equipment, net of accumulated depreciation of HK$2,841,000 (US$364,000) as of September 30, 2012 (December 31, 2011: HK$2,583,000)	1,275	9,947	10,205
Total assets	1,291	10,069	10,347
Current liabilities
Bank loans - (Note 3)	1,171	9,137	9,555
Other payables	31	242	258
Due to Principal Stockholder - (Note 5)	267	2,080	1,551
Total current liabilities	1,469	11,459	11,364
Commitments and contingencies - (Note 6)
Stockholders' equity
Common stock, par value US$0.001 each, 100 million shares of stock authorized; 28,329,353 shares of stock issued and outstanding	28	221	221
Additional paid-in capital	9,437	73,608	73,608
Accumulated losses	(9,643)	(75,219)	(74,846)
Total stockholders' deficit	(178)	(1,390)	(1,017)
Total liabilities and stockholders' equity	$ 1,291	10,069	10,347

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Note 3 - Bank Loans (Detail)	9 Months Ended
	Sep. 30, 2012 USD ($)	Sep. 30, 2012 HKD	Sep. 30, 2011 HKD	Dec. 31, 2011 HKD
Repayments of Bank Debt	$ 54,000	418,000	409,000
Real Estate Investments, Net		9,863,000		10,075,000
Security Deposit		82,000

XML

Document And Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 14, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	PHYSICAL PROPERTY HOLDINGS, INC.
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		28,329,353
Amendment Flag	false
Entity Central Index Key	0001048055
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3

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Note 3 - Bank Loans (Detail) - Outstanding loan balances In Thousands, unless otherwise specified	171 Months Ended
	Sep. 30, 2026	Sep. 30, 2012 USD ($)	Sep. 30, 2012 HKD	Dec. 31, 2011 HKD
	Dec. 31, 2026
		$ 1,171	9,137	9,555

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Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2012 USD ($)	Sep. 30, 2012 HKD	Dec. 31, 2011 HKD
Property, plant and equipment, accumulated depreciation (in Dollars and Dollars)	$ 364	2,841	2,583
Common stock par value (in Dollars per share and Dollars per share)	$ 0.001	0.001	0.001
Common stock, shares authorized	100,000,000	100,000,000	100,000,000
Common stock, shares issued	28,329,353	28,329,353	28,329,353
Common stock, shares outstanding	28,329,353	28,329,353	28,329,353

XML

Note 3 - Bank Loans (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Maturities of Long-term Debt [Table Text Block]

End of maturity	Interest rate	Principal
		2011		2012		2012
		HK$’000		HK$’000		US$’000
2026	2.1% per annum		9,555		9,137		1,171

Schedule of Long-term Debt Instruments [Table Text Block]

	Principal
	2011		2012		2012
	HK$’000		HK$’000		US$’000
2012 / 2013		559		567		73
2013 / 2014		570		579		74
2014 / 2015		583		592		76
2015 / 2016		595		604		77
2016 / 2017		607		617		79
Thereafter		6,641		6,178		792
		9,555		9,137		1,171

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Note 6 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2012

Commitments and Contingencies Disclosure [Text Block]

6. COMMITMENTS AND CONTINGENCIES

The Company leases out its properties under operating leases with average lease terms of two years. The future aggregate minimum rental receivables under non-cancellable operating leases are as follows:

	As of December 31, 2011		As of September 30, 2012
	HK$’000		HK$’000		US$’000
Within one year		785		763		98
In the second year		251		324		41
		1,036		1,087		139

Potential administrative proceeding

On or about October 22, 2007, the Securities and Exchange Commission (the “SEC”) sent a “voluntary request letter” seeking certain information and documents about the Company and another company known as Score One, Inc, in connection with an investigation into alleged spam e-mail campaigns and potential securities fraud violations.

Subsequently, on or about January 11, 2008, the SEC sent a subpoena to the Company for additional information and documents concerning the Company and Score One, Inc. in furtherance of its investigation into potential spam e-mail campaigns and securities fraud violations.  Management of the Company retained counsel and responded to the subpoena.

On or about September 16, 2010, the SEC sent a letter to the Company in which they stated that they intended to institute an administrative proceeding against the Company, pursuant to Section 12(j) of the Exchange Act to determine whether it is appropriate to suspend or revoke the registration of the Company’s securities.  

On or about February 1, 2011, the SEC filed a complaint in US District Court, Eastern District of Michigan, Southern District, SEC v. Gregg M.S. Berger, et al., for securities fraud involving spamming stock, pump and dump schemes, misleading press releases, violation of numerous SEC rules governing the issuance of S-8 stock, misleading reverse mergers, etc.  The Company and its officers and directors were not named as defendants in the case.

Other than the above, as of September 30, 2012 and December 31, 2011, the Company had no material outstanding commitments and contingencies.

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Note 6 - Commitments and Contingencies (Detail)	9 Months Ended
	Sep. 30, 2012
Length Of Operating Lease Agreement	2 years

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Note 3 - Bank Loans (Detail) - Long Term Debt Maturities In Thousands, unless otherwise specified	Sep. 30, 2012 USD ($)	Sep. 30, 2012 HKD	Dec. 31, 2011 HKD
2012 / 2013	$ 73	567	559
2013 / 2014	74	579	570
2014 / 2015	76	592	583
2015 / 2016	77	604	595
2016 / 2017	79	617	607
Thereafter	792	6,178	6,641
	$ 1,171	9,137	9,555

XML

Note 6 - Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2012

ture Minimum Rental Receivable For Operating Leases [Table Text Block]

	As of December 31, 2011		As of September 30, 2012
	HK$’000		HK$’000		US$’000
Within one year		785		763		98
In the second year		251		324		41
		1,036		1,087		139

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Note 4 - Supplemental Discosures of Cash Flow Information (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Cash Flow, Supplemental Disclosures [Table Text Block]

	Three months ended September 30,					Nine months ended September 30,
	2011		2012	2012		2011	2012	2012
	HK$’000	$	HK’000	US$’000	$	HK’000	HK$’000	US$’000
Cash paid for:
Interest expenses	51		49	6		156	148	19

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Note 5 - Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Related Party Transactions [Table Text Block]

	Nine months ended September 30,
	2011		2012
	HK$’000		HK$’000			US$’000
Balance at beginning of period		826		1,551			199
Advance from the Principal Stockholder		296		516			66
Repayment to the Principal Stockholder		--		(10	)		(1	)
Expenses paid by the Principal Stockholder on behalf of the Company		260		23			3
Net advance from the Principal Stockholder		556		529			68
Balance at end of period		1,382		2,080			267

XML

Note 1 - Basis Of Presentation (Detail)	9 Months Ended
	Sep. 30, 2012 USD ($)	Sep. 30, 2012 HKD	Sep. 30, 2011 HKD	Sep. 30, 2012 US Dollars [Member]	Sep. 30, 2012 HK [Member]
Property Subject to or Available for Operating Lease, Number of Units	5	5
Foreign Currency Exchange Rate, Translation				1.00	7.8
Stockholders' Equity, Other (in Dollars)		11,419,000
Net Income (Loss) Attributable to Parent (in Dollars)	48,000	373,000	381,000
Proceeds from Contributed Capital (in Dollars and Dollars)	$ 68,000	529,000	556,000
Equity Method Investment, Ownership Percentage	82.52%	82.52%

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Note 5 - Related Party Transactions (Detail)	3 Months Ended			9 Months Ended
	Sep. 30, 2012 USD ($)	Sep. 30, 2012 HKD	Sep. 30, 2011 HKD	Sep. 30, 2012 USD ($)	Sep. 30, 2012 HKD	Sep. 30, 2011 HKD	Sep. 30, 2012 Principal Stockholder [Member] USD ($)	Sep. 30, 2012 Principal Stockholder [Member] HKD	Sep. 30, 2011 Principal Stockholder [Member] HKD
Proceeds from Contributed Capital				$ 68,000	529,000	556,000	$ 68,000	529,000	556,000
Other Selling, General and Administrative Expense	$ 25,000	190,000	152,000	$ 67,000	518,000	499,000		243,000	243,000

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Unaudited Condensed Consolidated Statements of Cash Flows	9 Months Ended
	Sep. 30, 2012 USD ($)	Sep. 30, 2012 HKD	Sep. 30, 2011 HKD
Cash flows from operating activities
Net loss	$ (48,000)	(373,000)	(381,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	33,000	258,000	258,000
Changes in working capital:
Trade receivables	2,000	12,000	(2,000)
Management fees and utility deposits		(2,000)
Other payables	(2,000)	(16,000)	14,000
Net cash used in operating activities	(15,000)	(121,000)	(111,000)
Cash flows from financing activities
Repayment of bank loans	(54,000)	(418,000)	(409,000)
Net advance from Principal Stockholder - (Note 5)	68,000	529,000	556,000
Net cash provided by financing activities	14,000	111,000	147,000
Net increase (decrease) in cash and cash equivalents	(1,000)	(10,000)	36,000
Cash and cash equivalents at beginning of period	3,000	24,000	14,000
Cash and cash equivalents at end of period	$ 2,000	14,000	50,000

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Note 5 - Related Party Transactions

9 Months Ended

Sep. 30, 2012

Related Party Transactions Disclosure [Text Block]

5. RELATED PARTY TRANSACTIONS

During the nine-month periods ended September 30, 2012 and 2011, the Company had net advance from the Principal Stockholder of HK$529,000 and HK$556,000 respectively. The movements of the amount due to the Principal Stockholder are analyzed as follows:

	Nine months ended September 30,
	2011		2012
	HK$’000		HK$’000			US$’000
Balance at beginning of period		826		1,551			199
Advance from the Principal Stockholder		296		516			66
Repayment to the Principal Stockholder		--		(10	)		(1	)
Expenses paid by the Principal Stockholder on behalf of the Company		260		23			3
Net advance from the Principal Stockholder		556		529			68
Balance at end of period		1,382		2,080			267

In addition, during the nine-month periods ended September 30, 2012 and 2011, a related company which is controlled by the Principal Stockholder of the Company, provided office space and general support for the Company’s activities with an aggregate charge of HK$243,000 and HK$243,000, respectively.

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Note 4 - Supplemental Discosures of Cash Flow Information (Detail) - Cash Paid For: In Thousands, unless otherwise specified	3 Months Ended			9 Months Ended
	Sep. 30, 2012 USD ($)	Sep. 30, 2012 HKD	Sep. 30, 2011 HKD	Sep. 30, 2012 USD ($)	Sep. 30, 2012 HKD	Sep. 30, 2011 HKD
Interest expenses	$ 6	49	51	$ 19	148	156