eps3153.htm

10-K 1 eps3153.htm INTERMOST CORPORATION 10-K eps3153.htm

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-KSB

(Mark One)

x	ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended June 30, 2008

o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to ________________

Commission File Number 0-30430

INTERMOST CORPORATION

(Name of Small Business Issuer in its charter)

Wyoming	87-0418721
(State or other jurisdiction of incorporation	(I.R.S. Employer Identification No.)
or organization)

Suite 5204, Central Plaza, 18 Harbour Road,

Wanchai, Hong Kong

(Address of principal executive offices)(Zip code)

Issuer’s telephone number: 852 2827 6898

Securities to be registered pursuant to Section 12(b) of the Exchange Act:

Title of each class	Name of each exchange on which each is registered
None	None

Securities to be registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 par value

(Title of class)

Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. o

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 ý No o

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosures will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. o

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

State issuer’s revenues for its most recent fiscal year. $4,549,840

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid price and asked price of such common equity, as of a specified date within the past 60 days. (See definition of affiliate in Rule 12b-2 of the Exchange Act). As of September 9, 2007 the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $24,182,461, based on the average bid and asked price of such common stock as reported on the NASD Bulletin Board system. Shares of common stock held by each officer and director and each person who owns more than 10% or more of the outstanding common stock have been excluded because these persons may be deemed to be affiliates. The determination of affiliate status for the purpose of this calculation is not necessarily a conclusive determination for other purposes.

The number of shares of the registrant’s common stock, $.001 par value per share, outstanding as of September 25, 2008 was 213,281,873.

Transition Small Business Disclosure Format: Yes o No ý

TABLE OF CONTENTS

			Page

PART I

	ITEM 1.	DESCRIPTION OF BUSINESS	3
	ITEM 2.	DESCRIPTION OF PROPERTY	12
	ITEM 3.	LEGAL PROCEEDINGS	12
	ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	13

PART II

	ITEM 5.	MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES	13
	ITEM 6.	MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION	15
	ITEM 7.	FINANCIAL STATEMENTS	21
	ITEM 8.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	21
	ITEM 8A.	CONTROLS AND PROCEDURES	21
	ITEM 8B.	OTHER INFORMATION	22

PART III

	ITEM 9.	DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT	22
	ITEM 10.	EXECUTIVE COMPENSATION	25
	ITEM 11.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	27
	ITEM 12.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	28
	ITEM 13.	EXHIBITS	28
	ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	30

SIGNATURES			30

Note Regarding Forward Looking Statements

This Annual Report on Form 10-KSB and any information incorporated herein by reference contain “forward-looking statements.” These forward-looking statements are based on our current expectations, assumptions, estimates and projections about our business and our industry and involve a number of risks and uncertainties, as well as assumptions that, if they never materialize or if they prove incorrect, would likely cause our results to differ materially from those expressed or implied by such forward-looking statements. Although our forward-looking statements reflect the good faith judgment of our management, these statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially from results and outcomes discussed in the forward-looking statements.

Words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “could,” “should,” hope,” “seek,” “may,” and other similar expressions (including their use in the negative) identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, the following:

our lack of capital and whether or not we will be able to raise capital when we need it,

government regulation of the Internet and Internet services in China,

our ability to successfully compete in our markets and industries,

our ability to find suitable acquisition targets and, once acquired, to integrate these acquisitions into our business;

adverse changes to the political, economic or social conditions in China

and other factors, some of which will be outside our control. You are cautioned not to place undue reliance on these forward-looking statements, which relate only to events as of the date on which the statements are made. We undertake no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. You should refer to and carefully review the information in future documents we file with the Securities and Exchange Commission.

These statements include, but are not limited to, statements under the captions “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as other sections in this Annual Report. You should be aware that the occurrence of any of the events discussed under the heading “Risk Factors” and elsewhere in this Annual Report could substantially harm our business, results of operations and financial condition. If any of these events occurs, the trading price of our common stock could decline and you could lose all or a part of the value of your shares of our common stock.

The cautionary statements made in this Annual Report are intended to be applicable to all related forward-looking statements wherever they may appear in this Annual Report. We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report.

Information on Currency Translation

All amounts are in Renminbi (“Rmb”) unless indicated to be in United States Dollars (“$” or “US$”). Our sales are principally in Renminbi. The translation of Renminbi amounts into US dollars are for reference purposes only and have been made at the exchange rate of Rmb6.8718 for US$1. The People’s Bank of China sets and publishes daily a base exchange rate with reference primarily to the supply and demand of Renminbi against the United States dollar in the market during the prior day. The People’s Bank of China also takes into account other factors such as the general conditions existing in the international foreign exchange markets. Although Chinese governmental policies were introduced in 1996 to reduce restrictions on the convertibility of Renminbi into foreign currency for current amount items, conversion of Renminbi into any other currency for capital items, such as foreign direct investment, loans or security, requires the approval of the State Administration for Foreign Exchange. Renminbi which had been tightly pegged at Rmb8.28 for US$1 for the previous decade, was revalued on July 21, 2005 to Rmb8.11 for US$1 following the removal of the peg to the US dollar and pressure for the United States. The Peoples Bank of China also announced that the Renminbi would be pegged to a basket of foreign currencies, rather then being strictly tied to the US dollar and would trade within a narrow 0.3% band against this basket of currencies, which is dominated by the US dollar, Euro, Japanese Yen and South Korean Won, with a smaller proportion made up of the British pound, Thai Baht and Russian Ruble. The translation of Renminbi amounts in this Annual Report on Form 10-KSB is not a representation that the Renminbi amounts could actually be converted into United States dollars at that rate or at any other rate on that date or on any other date.

PART I

ITEM 1. DESCRIPTION OF BUSINESS

History and Development of the Company

Intermost Corporation (as used in this Annual Report on Form 10-KSB, unless the context otherwise requires, the terms “we,” “us,” “the Company,” “IMOT,” and “Intermost” refer to Intermost Corporation and its subsidiaries) was incorporated as La Med Tech, Inc. under the laws of the State of Utah on March 6, 1985. The Company changed its name to Entertainment Concepts International in 1987, to Lord & Lazarus, Inc. in 1988, and to Utility Communication International, Inc. in 1996.

From the date of incorporation through October 1998, the Company’s operations were limited to efforts to identify and acquire, or merge with, one or more operating businesses. In October 1998, the Company acquired all of the issued shares of Intermost Limited, a British Virgin Islands Company (“IML”), by issuing to the then shareholders of IML a total of 4,970,000 shares of the Company’s common stock, par value $0.001 per share (the “Merger”). Following the Merger, (i) IML became a wholly-owned subsidiary of the Company, (ii) the shareholders of IML held 58.7% of all issued and outstanding shares of the Company, (iii) the Company changed its name to Intermost Corporation, (iv) the Company terminated all its prior business activities and adopted IML’s business plan, and (v) all officers and directors of the Company resigned and were replaced by officers and directors of IML.

In February 2003, the Company reincorporated from Utah to the State of Wyoming.

IML was incorporated in January 1998 to develop a Chinese-language Internet business portal and to render services in connection therewith in the People’s Republic of China (“China”). During the period following the Merger, the Company entered into agreements with, and completed acquisitions of, some businesses that provided or supported Internet services in an effort to implement this business plan. The Company also endeavored to develop its own Internet services businesses, including e-commerce business solutions. However, the global decline in the demand for Internet services after mid-2000, which resulted in a significant economic slowdown that affected many of the companies with whom we do business, materially undermined the effectiveness of our efforts. While we continued (and still continue) to offer web design and hosting services to customers in China through our subsidiary, ChinaE.com Information Technology Ltd. (“ChinaE”), we also began to look for ways to diversify or expand our business.

In November 2002 ChinaE purchased eight licenses for HanWEB Publishing Server 3.0, an online real time translation engine that translates traditional Chinese characters, used in most of the world, to simplified Chinese characters, which are used only in China, and vice versa, and six licenses for HanVoice Web to Phone Server 1.0, a real time Internet to telephone conversion server for Cantonese, Putonghua and English. These were purchased from KanHan Technologies Ltd. (“KanHan”) at a cost of $150K. The Company was one of two distributors of these licenses in China.

With the assistance of KanHan, the Company opened an office in Guangzhou in April 2003. The office was staffed with two persons who were responsible for introducing these products to businesses and government agencies in Guangdong Province. For a period of approximately one year, KanHan subsidized the costs related to maintaining this office and developing a market for these products. The amount of the subsidy was approximately $12,800 per month. The office was closed in March 2004 and the Company is no longer receiving the subsidy, although it continues to market the licenses.

In May, 2003, the Company’s wholly owned subsidiary, IMOT Information Technology (Shenzhen) Ltd. (“IMOT Technology”), received approval from the governments of Shenzhen and Shanghai for its proposed acquisition of 51% of the issued and outstanding shares of Shanghai Newray Photographic Equipment Co., Ltd. (“Shanghai Newray”) from Shanghai Newray Business Development Co., Ltd. (“Shanghai Newray Business”), the owner of 75.5% of the issued and outstanding capital stock of Shanghai Newray. Shanghai Newray is located in Shanghai and is engaged in the sale of digital photographic equipment. Approval of the governments of Shenzhen and Shanghai was required to complete the acquisition, which was memorialized by a Shareholding Transfer Agreement entered into on May 23, 2003 between IMOT Technology and Shanghai Newray Business.

Pursuant to the Shareholding Transfer Agreement, IMOT Technology paid Shanghai Newray Business Rmb200,000 (approximately $24,000) in cash to reimburse Shanghai Newray Business for certain expenses related to the acquisition and agreed to transfer to Shanghai Newray Business 4,000,000 shares of the Company’s restricted common stock. The cash used to reimburse Shanghai Newray Business for its expenses was paid with the Company’s funds.

On October 3, 2003 IMOT Technology entered into an agreement for the acquisition of 25% of the issued and outstanding shares of Shanghai Fortune Venture Limited (“Shanghai Fortune”) from certain shareholders of Shanghai Fortune. Shanghai Fortune has the right to operate equity exchange transactions in Shanghai, and through its investment in Xi’an Assets and Equity Exchange, operate an equity exchange in Xi’an. In China, equity, including intellectual property rights, may be listed on and transferred through such exchanges. The share transfer was approved by the government of Shanghai on April 12, 2004. The consideration for this acquisition was Rmb600,000, approximately $72,464, in cash plus 10 million shares of our restricted common stock. The value of the common stock was determined to be $0.24 per share, based upon the average of the closing prices for the 10-day period from September 22, 2003 to October 1, 2003. The shares were issued on April 14, 2004.

On May 23, 2006, IMOT signed an agreement to sell the 25% shareholding investment in Shanghai Fortune to Mr. Li Laohu. The net asset value of Shanghai Fortune as of December 31, 2005, the latest audited financial statements date, was Rmb21,957,791. The consideration received by IMOT for the sale of the 25% shareholding was agreed at redemption of 6,500,000 shares of restricted common stock of IMOT with a value of US$0.18 per share, which was the closing price of IMOT share of common stock as of May 23, 2006, held and transferred by Mr. Li Laohu, Mr. Li Xiaoqin and Ms. Huang Xiujuan.

Since December 6, 2002, Shanghai Fortune has been an official registered member of the Shanghai Technology Exchange (the “STE”) and was entitled to conduct exchange business with the STE. The STE was the major entity in the Shanghai Equity Exchange Market. Shanghai Fortune had the exclusive right to manage and operate the North Shanghai Branch (the “NSB”) of the STE. The NSB had the right to conduct the same exchange business as STE and share 80% of the profits with the STE.

Shanghai Fortune was also a founder and major participant in the Yangtze River Delta Equity Exchange Market Place (the “YRDE”). The YRDE included more than 14 major exchanges in Shanghai and the surrounding cities and was the largest equity exchange market place in China.

However, in December 2003, the STE and another exchange were merged into the Shanghai United Assets and Equity Exchange (the “SUAEE”). The SUAEE is a non-profit government-sponsored organization.

As a result of the merger of the STE, although Shanghai Fortune continues to maintain its membership, it is currently still unclear how the NSB and the YRDE will conduct business going forward, and how Shanghai Fortune will participate in the equity exchange markets following the issuance of final regulations by the local PRC government. Due to the uncertainty of the content and timing of governmental regulations, IMOT entered into the May 23, 2006 agreement for the sale of its interest in Shanghai Fortune

On August 10, 2004, we purchased 51% of the issued and outstanding shares of Golden Anke Technology Ltd. (“Golden Anke”) from two of its shareholders, Tu Guoshen and Li Zhiquan, to IMOT Technology for $3.24 million, payable by issuance of 12 million shares of our common stock. The value of our common stock was determined by applying a 20% discount to the average closing price during the period from January 20 to March 19, 2004. On or about February 15, 2007 we sold approximately two percent (2%) of the outstanding shares in Golden Anke to an unaffiliated minority stockholder so that this minority stockholder could seek an independent listing of Golden Anke on a UK exchange, thus reducing our ownership from approximately 51% to approximately 49%. We recently discovered that GATL is no longer seeking a public listing and negotiated an exit settlement under which they will buy back our 49% ownership interest at US$1 million. To date we have collected $200,000 of this amount.

In September 2, 2004, IML incorporated a 100% owned subsidiary, ChinaE.com Technology (Shenzhen) Ltd. (“ChinaE Tech”), to take over the business of ChinaE to provide and support Internet services including, but not limited to, web-hosting, web design, domain name registration and software development.

On December 8, 2004, IMOT Technology entered into an agreement for the acquisition of 15% of the issued and outstanding shares of Shenzhen International Hi-Tech Exchange (“Hi-Tech Exchange”) from Shenzhen Merchant Technology Investment Co., Ltd. Hi-Tech Exchange is an enterprise authorized by the PRC government to carry out business in the transfer of hi-tech property rights and corporate equity interests. The share transfer was approved by the government of Shenzhen on February 25, 2005. The consideration for this acquisition was 2,470,355 shares of our common stock. The value of the common stock was determined to be $0.22 per share based upon the average of the closing prices for the period from October 18, 2004 to November 18, 2004. The shares were issued on February 28, 2005. Subsequently, on December 8, 2006, we redeemed all of these 2,470,355 shares for an aggregate redemption price of US$805,214.75.

On January 6, 2005, all necessary government approvals were obtained to complete the transfer of 80% of the issued and outstanding shares of Hainan Concord Financial Products Development Co., Ltd. (“Hainan Concord”) from Guangzhou Ditai Communication Co., Ltd. and Zhai Xiya to IMOT Technology. Pursuant to the Share Transfer Agreement signed on December 11, 2004 the purchase price paid for the stock was $917,874. On January 12, 2005 we issued to the selling shareholders 5,000,000 shares of our restricted common stock, in full payment of the purchase price. The value of our common stock was determined by applying a 15% discount to the average closing price for the 10 day trading period from November 16, 2004 to November 30, 2004. Hainan Concord’s principal business is to issue and manage multi-functional membership cards for the people who participate in private equity exchange in Hainan. Hainan Concord also provides financial institutions with research and development services for their financial products and instruments.

On October 19, 2005, all necessary government approvals were obtained to complete the transfer of 21% of the issued and outstanding shares of Hainan Special Economic Zone Equity Exchange Center (the “Exchange Center”) from Hainan Concord Investment Holding Co., Ltd. and Guangzhou Keensheng Science and Technology Development Co., Ltd. Pursuant to the Stock Exchange Agreement, the Company issued to the Exchange Stockholders 5,000,000 shares of the Company’s common stock having a value of RMB8,799,350 (approximately US$1,085,000). The consideration for the transaction was agreed to after arm’s-length negotiations between the parties, which are unrelated to each other. On October 19, 2005, we issued to the selling shareholders 5,000,000 shares of our common stock, in full payment of the purchase price.

On July 13, 2006, IML incorporated a 100% owned subsidiary, Leader Palace International Ltd. (“LPI”), to explore businesses in Taiwan region. LPI started to negotiate an investment in touch panel manufacturing and such acquisition was still ongoing.

Management is continuing efforts to identify and explore acquisition, merger and development opportunities.

Products and Services

Internet Services

Through ChinaE Tech, our wholly-owned subsidiary, we offer web design, web hosting, domain name registration, software development and office automation software to our clients. We operate within what is commonly referred to as the “business-to-business” segment of the Internet market, where products and services are offered principally to businesses, as compared to the “business-to-consumer” segment of the Internet services market, where products and services are offered to consumers directly.

We locate web design and hosting customers and secure web design and hosting projects primarily through the efforts of our sales team. We currently employ 10 sales persons for our Internet solution services. All of our sales team members are based in Shenzhen, but occasionally travel throughout China, as necessary. Our sales persons are paid a base salary, and earn commissions on revenues we receive from the customers they secure.

Digital Imaging System

Shanghai Newray is a wholesaler of various brands of consumer digital photographic equipment, including traditional 35mm cameras, digital cameras and camera accessories. Last year, the shareholders in a special meeting passed a resolution (“the Resolution”) to take action to terminate the operation of Shanghai Newray. However the legal representative of Shanghai Newray was lost in contact. The business of Shanghai Newray was written off this year.

Equity Exchange

Equity exchanges are platforms that permit privately-owned and state-owned equity transactions. Subject to the parameters established by the government of China, equity exchanges provide services for the purchase and sale of equity rights, debts, intellectual property rights and technology property rights. Equity listed on the exchanges may be traded through negotiation, auction and bids.

Our subsidiary, Hainan Concord’s principal business is to issue and manage multi-functional membership cards for the people who participate in private equity exchange in Hainan, and has an exclusive agreement with Hainan Exchange Centre Non-Public Company Registration Co., Ltd. to issue multi-functional membership and credit cards to their members.

Through our 15% investment in Hi-Tech Exchange and 21% investment in Exchange Center, we have further expanded our investment in Shenzhen and Hainan, China. Hi-Tech Exchange and Exchange Center are authorized by the government of China to engage in the business of transferring equity and corporate equity interests in Shenzhen and Hainan.

At this time the various equity exchanges in China work, for the most part, independently of one another. We believe that this is inefficient. We are in the process of using our software technology to develop, and we hope to eventually implement, an electronic information and trading platform for equity exchanges that will enable the flow of information regarding rights transfers, as well as payments, among the different equity exchanges in China, including those owned and operated by Hi-Tech Exchange and Exchange Center.

Competition

Internet Services

The market for Internet services and software is intensely competitive and we expect it to become more competitive in the future. Increased competition could result in pricing pressures, low operating margins and the realization of little or no market value. Currently, our competitors are primarily other Chinese owned and operated Internet services and software development companies.

Most of our current and potential competitors may have longer operating histories, larger customer bases, greater brand recognition and greater financial, marketing and other resources than we do, and may enter into strategic or commercial relationships on more favorable terms than we can. In addition, new technologies and the expansion of existing technologies may increase competitive pressure on us. We are a significant presence in the Chinese market for Internet services.

Equity Exchange

There is no national equity exchange in China. It has been estimated that there are approximately 100 equity exchanges in China, most of them small in scale and serving only the local area. There are also a few large equity exchanges serving the largest cities in China, including the Beijing Equity Exchange Center, the Tianjin Equity Exchange Center and the Shanghai Equity Exchange Center. Even the operations of the large equity exchanges are localized.

Currently, because of the localized nature of equity exchanges, there is not significant competition among them. However, further development and expansion of other large equity exchanges, or the nationalization of equity exchanges, would be likely to result in an increase in competition. If that were to happen, it could have a material adverse effect on our ability to attract property owners to list their properties for sale on our exchange and to identify and secure investors or buyers for the properties we list.

Regulation

Since we operate principally through our subsidiaries in China, we are subject to and affected by laws, regulations, administrative determinations, court decisions and similar constraints that apply to business operations located in China.

China has enacted regulations governing Internet connection and the distribution of information via the Internet. Pursuant to Article 6 of the Revised Provisional Regulations Governing the Management of Chinese Computer Information Networks Connected to International Networks, individuals or entities operating computer networks within China, which are connected to the Internet and conduct international information exchange, must use the international access channels provided by the Ministry of Information Industry (“MII”) and obtain various licenses and approvals. Our relevant subsidiaries have secured the necessary licenses and approvals, and access the Internet through ChinaNet, an approved channel of MII.

The operation of our equity exchange will be largely dependent upon the development of China’s policies and laws relating to the transfer of private and state-owned equity. The transfer and management of state-owned equity are subject to the supervision of the Administrative Bureau of State-owned Assets, whereas the equity of privately-owned enterprises must be transferred in compliance with the Company Law and related regulations.

According to the Provisional Procedures on the Administration of the Transfer of State-owned Equity in Enterprises, all the transfers of state-owned equity must be carried out through duly authorized equity exchange centers. NSB and Xi’an Assets and Equity Exchange have secured the necessary licenses and approvals for their operations and qualify to transfer state-owned equity.

We work diligently to assure compliance with all applicable regulations which impact our business, including cooperating with the MII, the Ministry of Public Security and the Administrative Bureau of State-owned Assets. There can be no assurance, however, that additional regulations will not be enacted that might adversely affect our operations.

Employees

As of June 30, 2008, we employed 23 full-time employees consisting of 2 management executives and 21 administrative and clerical staff. None of our employees are members of any labor union, and we have never experienced any business interruption as a result of any labor disputes. We do not provide any special benefit or incentive programs for our employees. We believe that we enjoy good relations with all of our employees.

RISK FACTORS

In addition to other information in this Form 10-KSB, including many risks presented in our Management’s Discussion and Analysis, the following risk factors should be carefully considered in evaluating our business since it operates in a highly changing and complex business environment that involves numerous risks, some of which are beyond our control. The following discussion highlights a few of these risk factors, any one of which may have a significant adverse impact on our business, operating results and financial condition. As a result of the risk factors set forth below and elsewhere in this 10-KSB, and the risks discussed in our other Securities and Exchange Commission filings, actual results could differ materially from those projected in any forward-looking statements.

We face significant risks, and the risks described below may not be the only risks we face. Additional risks that we do not know of or that we currently consider immaterial may also impair our business operations. If any of the events or circumstances described in the following risks actually occurs, our business, financial condition or results of operations could be harmed and the trading price of our common stock could decline.

We are restating several of our financial statements and may have other or future restatements.

On August 12, 2008, the Company’s current management team, following discussions with its Board of Directors and its auditors, concluded that the previously filed audited financial statements and other financial information as of and for the year ended June 30, 2007, issued with the Company’s Form 10-KSB filed with the Commission on October 26, 2007 should no longer be relied upon. In response to an inquiry from the Securities and Exchange Commission concerning the Company’s financial statements, the Company reexamined certain accounts which it has now determined should have been impaired. Impairment of these accounts is not temporary and expected to result in an increased loss for the fiscal year ended June 30, 2007 of $5,507,510 from the loss of $3,090,547 reported in the Annual Report, to a loss of $8,598,057.

Owing to the above mentioned impairment, the Company will restate the audited financial statements as of and for the year ended June 30, 2007 by filing amendments to the Form 10-KSB for the year ended June 30, 2007 and to the Form 10-QSB for the period ended December 31, 2007 and March 31, 2008 as soon as practicable.

Similarly, on October 14, 2008, the Company announced that its board of directors and its officers also concluded that, in the same context and for the same reasons, the Company must also file amendments to its quarterly reports for the periods ended September 30, 2007, December 31, 2007 and March 31, 2008.

In connection with these restatements, the Company is re-evaluating its procedures concerning long-life asset impairment, its disclosure and presentation criteria, and its internal controls over financial reporting. The Company intends to examine enhancements to its internal controls over financial reporting to provide reasonable assurance that errors of this type will not recur. In addition, the Company is examining the implementation of well-defined standards for long-life asset impairment. The Company expects to complete this reporting examination by December 31, 2008.

The above conclusions were reached in consultation with the Company’s Board of Directors and the Company’s independent registered public accounting firm, Albert Wong & Co. A copy of these disclosures was provided to Albert Wong & Co.

Our success depends on identifying and closing acquisitions of emerging and growing businesses in China.

Our success is largely dependent on our identifying good acquisition targets, negotiating and structuring transactions that are beneficial to us, closing those transactions, finding suitable management to operate those businesses and successfully operate and grow the businesses we acquire.

We must work cooperatively with governmental authorities.

We are engaged in business in a country with a planned economy heavily influenced by government activities and we must work cooperatively with a variety of national, federal, regional, state, provincial, and local government authorities and entities. The economy of China differs significantly from the economies of the “western” industrialized nations in such respects as structure, level of development, gross national product, growth rate, capital reinvestment, resource allocation, self-sufficiency, rate of inflation and balance of payments position, among others. Only recently has the Chinese government encouraged substantial private economic activities. The Chinese economy has experienced significant growth in the past several years, but such growth has been uneven among various sectors of the economy and geographic regions. Actions by the Chinese government to control inflation have significantly restrained economic expansion in the recent past. Similar actions by the Chinese government in the future could have a significant adverse effect on economic conditions in China and the results of operations of the Company.

If we deliver products with defects, our credibility will be harmed and the sales and market acceptance of our products will decrease.

Our product and services are complex and may at times contained errors, defects and bugs. If we deliver products with errors, defects or bugs, our credibility and the market acceptance and sales of our products would be harmed. Further, if our products contain errors, defects or bugs, we may be required to expend significant capital and resources to alleviate such problems. We may agree to indemnify our customers in some circumstances against liability arising from defects in our products. Defects could also lead to product liability as a result of product liability lawsuits against us or against our customers. We carry product and information liability and errors and omissions insurance, but in the event that we are required to defend more than a few such actions, or in the event that we are found liable in connection with such an action, our business and operations may be severely and materially adversely affected.

We compete with large companies.

We operate in a highly competitive industry. Although we believe that some of our technology is unique, can be protected, and, if adopted, will confer benefits that will be otherwise unavailable for some time, we face very large competitors with greater resources who may adopt various strategies to block or slow our market penetration, thereby straining our more limited resources. We are aware of efforts by competitors to introduce doubt about our financial stability as we compete to make sales and win customers and business. Large competitors may also seek to hinder our operations through attempts to recruit key staff with exceptionally attractive terms of employment, including signing bonuses, or by offer of highly competitive terms to potential or newly acquired customers.

We will need to continue our product development efforts.

We believe that our market will be characterized by increasing technical sophistication. We also believe that our eventual success will depend on our ability to continue to provide increased and specialized technical expertise. There is no assurance that we will not fall technologically behind competitors with greater resources. Although we believe that we enjoy a lead in our product development, and are hopeful that our patents provide some protection, we will likely need significant additional capital in order to continue to enjoy such a technological lead over competitors with more resources.

If we are unable to protect our intellectual property, our competitive position would be adversely affected.

We may rely on patent protection, as well as trademark and copyright law, trade secret protection and confidentiality agreements with our employees and others to protect our intellectual property. Despite our precaution, unauthorized third parties may copy our products and services or reverse engineer or obtain and use information that we regard as proprietary. We have filed eleven patent applications with the United States Patent and Trademark Office and intend to file more. Six patents have been granted; however, we do not know if the remaining applications will be granted or whether we will be successful in prosecuting any future patents. In addition, the laws of some foreign countries do not protect proprietary rights to the same extent, as do the laws of the United States. Our means of protecting our proprietary rights may not be adequate and third parties may infringe or misappropriate our patents, copyrights, trademarks and similar proprietary rights. If we fail to protect our intellectual property and proprietary rights, our business, financial condition and results of operations would suffer. We believe that we do not infringe upon the proprietary rights of any third party, and no third party has asserted an infringement claim against us. It is possible, however, that such a claim might be asserted successfully against us in the future. We may be forced to suspend our operations to pay significant amounts to defend our rights, and a substantial amount of the attention of our management may be diverted from our ongoing business, all of which would materially adversely affect our business.

We focus on the research and development of our proprietary technologies and the marketing of our first product.

We believe that these technologies are the basis for marketable commercial products. However, there can be no assurance of this, and it is possible that our proprietary technologies and products will have no commercial benefit or potential. In addition, from our inception to the present, we have not recognized any substantial operating revenues.

We depend on our key personnel and may have difficulty attracting and retaining the skilled staff we need to execute our growth plans.

Our success will be dependent largely upon the efforts of our management team. The loss of key staff could have a material adverse effect on our business and prospects. To execute our plans, we will have to retain current employees. Competition for highly skilled employees with technical, management, marketing, sales, product development and other specialized training is intense. We may not be successful in retaining such qualified personnel. Specifically, we may experience increased costs in order to retain skilled employees. If we are unable to retain experienced employees as needed, we would be unable to execute our business plan.

We may face rapid technological change.

The market for our products and services may be characterized by rapidly changing technologies, extensive research and the introduction of new products and services. We believe that our future success will depend in part upon our ability to continue to enhance our existing products and to develop, manufacture and market new products and services. As a result, we expect to continue to make a significant investment in engineering, research and development. There can be no assurance that we will be able to develop and introduce new products and services or enhance our initial products in a timely manner to satisfy customer needs, achieve market acceptance or address technological changes in our target markets. Failure to develop products and services and introduce them successfully and in a timely manner could adversely affect our competitive position, financial condition and results of operations.

If we experience rapid growth, we will need to manage such growth well.

We may experience substantial growth in the size of our staff and the scope of our operations, resulting in increased responsibilities for management. To manage this possible growth effectively, we will need to continue to improve our operational, financial and management information systems, will possibly need to create entire departments that do not now exist, and hire, train, motivate and manage a growing number of staff. Due to a competitive employment environment for qualified technical, marketing and sales personnel, we expect to experience difficulty in filling our needs for qualified personnel. There can be no assurance that we will be able to effectively achieve or manage any future growth, and our failure to do so could delay product development cycles and market penetration or otherwise have a material adverse effect on our financial condition and results of operations.

We could face information and product liability risks and may not have adequate insurance.

Our products may be used in connection with critical business applications. We may become the subject of litigation alleging that one or more of our products are ineffective or disruptive in our treatment of data, or with regard to critical business information. Thus, we may become the target of lawsuits from injured or disgruntled businesses or other users. In the event that we are required to defend more than a few such actions, or in the event that it is found liable in connection with such an action, our business and operations may be severely and materially adversely affected.

Future profitability is not guaranteed.

We have not recognized any substantial operating revenues to date. Assuming we can attract sufficient financing, and revenues increase, there is no assurance that our plans will be realized or that we will achieve break-even status or profitability in the future.

Changes to financial accounting standards may affect our results of operations and cause us to change business practices.

We prepare financial statements in conformity with U.S. generally accepted accounting principles. These accounting principles are subject to interpretation by the American Institute of Certified Public Accountants, the Public Company Accounting Oversight Board, the SEC and various other bodies formed to interpret and create appropriate accounting principles. A change in those principles can have a significant effect on our reported results and may affect our reporting of transactions completed before a change is announced. Changes to those rules or the questioning of current practices may adversely affect our reported financial results or the way we conduct business. For example, accounting principles affecting many aspects of our business, including rules relating to equity-related compensation, have recently been revised. The Financial Accounting Standards Board and other agencies finalized changes to U.S. generally accepted accounting principles that required us, starting January 1, 2006, to record a charge to earnings for employee stock option grants and other equity incentives. We will have significant ongoing accounting charges resulting from option grant and other equity incentive expensing that could reduce net income or increase losses. In addition, since we historically used equity-related compensation as a component of our total employee compensation program, the accounting change could make the use of equity-related compensation less attractive and therefore make it more difficult to attract and retain employees.

There is a limited market for our common stock.

Our common stock is not listed on any exchange and trades in the over-the-counter (the “OTC”) market. Additionally, one stockholder holds a majority of our stock. As such, the market for our common stock is limited and is not regulated by the rules and regulations of any exchange. Further, the price of our common stock and its volume in the OTC market may be subject to wide fluctuations. Our stock price could decline regardless of our actual operating performance, and stockholders could lose a substantial part of their investment as a result of industry or market-based fluctuations. Our stock trades relatively thinly. If a more active public market for our stock is not sustained, it may be difficult for stockholders to sell shares of our common stock. Because we do not anticipate paying cash dividends on our common stock for the foreseeable future, stockholders will not be able to receive a return on their shares unless they are able to sell them. The market price of our common stock will likely fluctuate in response to a number of factors, including but not limited to, the following:

sales, sales cycle and market acceptance or rejection of our product;

economic conditions within our industry;

our failure to meet performance estimates or the performance estimates of securities analysts;

the timing of announcements by us or our competitors of significant products, contracts or acquisitions or publicity regarding actual or potential results or performance thereof; and

domestic and international economic, business and political conditions.

Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on our stock price.

Section 404 of the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the SEC require annual management assessments of the effectiveness of our internal control over financial reporting and a report by our independent registered public accounting firm attesting to and reporting on these assessments. If we fail to adequately maintain compliance with, or maintain the adequacy of, our internal control over financial reporting, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the SEC. If we cannot favorably assess, or our independent registered public accounting firm is unable to provide an unqualified attestation report on our assessment of the effectiveness of our internal control over financial reporting, investor confidence in the reliability of our financial reports may be adversely affected, which could have a material adverse effect on our stock price.

ITEM 2. DESCRIPTION OF PROPERTY

Our principal executive office consists of approximately 200 square feet of office space that is located at Suite 5204, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong. The premises are leased from a related third party with free rental.

Our operating office in China consists of approximately 5,600 square feet of office space located at Suite 1506-09, Landmark, 4028 Jintian Road, Futian District, Shenzhen 518026, PRC. The premises are leased from an unrelated third party with rental payments and management fees of approximately $99,000 per year. This lease will expire in February 2011.

All of our office facilities are in good condition and we believe they are adequate to support our operations for the foreseeable future.

ITEM 3. LEGAL PROCEEDINGS

We are a party to the following legal proceedings:

(1) Hainan Concord Financial Products Co., Ltd.

On December 11, 2004, the Company’s wholly-owned subsidiary, IMOT Information Technology (Shenzhen) Ltd. (“IMOT Technology”) entered into a stock exchange agreement and a profit guarantee agreement (respectively, the “Stock Swap Agreement” & “Profit Guarantee Agreement”) with Guangzhou Di Tai Communication Co. Ltd & Mr. Zai (collectively “Sellers”). The Stock Swap Agreement called for the Company to ultimately issue 5,000,000 shares of common stock in January 2005 in exchange for 80% of the issued and outstanding capital of Hainan Financial Products Development Co., Ltd (“Hainan Financial Products”). Under the Profit Guarantee Agreement, the Sellers guaranteed that the net profit after taxation of Hainan Financial Products for the year ended December 31, 2005 would not be less than Rmb5,000,000. On February 7, 2005, the Sellers received the share certificates of the 3,000,000 common stocks of the Company from IMOT Technology. In late 2006, IMOT Technology discovered that the profit requirement of Rmb5,000,000 of Hainan Financial Products had not met and Hainan Financial Products was a shelf company without any registered capital.

In accordance with the terms of Stock Swap Agreement, any dispute in a deadlock situation should be referred to an Arbitration tribunal in Shenzhen to be resolved. As such, IMOT Technology and the Company decided to refer the dispute (“the Dispute”) and apply to China International Economic and Trade Arbitration Commission, South China Sub-Commission in Shenzhen (“Arbitration Commission”). On December 20, 2006, Arbitration Commission approved the application. Under the application, IMOT Technology and the Company were named as joint applicants (“the Applicants”); and the Sellers together with Hainan Special Economic Zone Property Rights Exchange Centre and a securities-broker in Hainan province as respondents (“the Respondents”). The three orders sought under this arbitration include rescission of Share Swap Agreement and Profit Guarantee Agreement; return of 3,000,000 shares of common stock of the Company by the Sellers to the Applicants; and to have all the legal costs and other costs incurred in this arbitration to be reimbursed or born by the Sellers. The share certificate of the remaining 2,000,000 shares common stock is currently under the custody of IMOT Technology.

The Respondents at the same time also applied to a court in Haikou of the Hainan province to request that the Dispute be handled by the court. On April 29, 2007, this court ruled that the Dispute could be subject to its jurisdiction. IMOT Technology appealed to the Haikou Intermediate Court arguing that the dispute should be under the jurisdiction of the Arbitration Commission. On January 24, 2008, the Arbitration Commission had issued a verdict to state that the Stock Swap Agreement was invalid and the Respondents should return all IMOT shares to the Applicant.

(2) Hainan Special Economic Zone Property Rights Exchange Centre

Pursuant to an agreement (“the Agreement”) signed with a third party on December 16, 2003, IMOT Information Technology (Shenzhen) Ltd. (“IMOT Technology”) acquired 21% of the issued and outstanding capital of Hainan Special Economic Zone Property Rights Exchange Centre (“Hainan Exchange”).

In 2006, Hainan Exchange rejected the request of IMOT Technology to hold a general meeting for its shareholders, and Hainan Exchange also declined to provide any current financial information or reports. In addition, Hainan refused to fulfill certain obligations under the Co-operative Agreement. The Company is currently seeking legal advice as to those matters. The Company believes that Hainan Exchange has contravened its Articles of Association, and IMOT Technology has the right to sue under the current legislation.

(3) Shanghai Newray Photographic Equipment Co. Ltd

In prior years, IMOT Information Technology (Shenzhen) Ltd. (“IMOT Technology”) acquired 51% of the issued and outstanding capital of Shanghai Newray Photographic Equipment Co. Ltd (“Shanghai Newray”) from Mr. Tang who in turn acts as the trustee of IMOT Technology, holding shares in Shanghai Newray on behalf of IMOT Technology. On September 30, 2006, the shareholders in a special meeting passed a resolution (“the Resolution”) to take action to terminate the operation of Shanghai Newray. On November 2, 2006, Shanghai Newray set up a liquidation working team to take over the operations with one of its duties being to commence all the necessary procedures for the members’ voluntary liquidation.

Mr. Zhu, as the legal representative, manager and the executive director of Shanghai Newray, refused to comply with all the requests of the liquidation working team, resulting in delay of the liquidation procedures. On January 18, 2007, Mr. Tang took civil action under the Companies Law against Mr. Zhu. Under this action, Mr. Zhu Wei was requested to comply with the Resolution passed on September 30, 2006 to reimburse legal and other related costs of Rmb30,000 incurred by Mr. Tang for this case and also to bear all the court costs to be incurred.

On January 24, 2007, Shanghai Hongkou District Court accepted the case. Recently discovery was completed. However, IMOT could not contact Mr. Zhu. Consequently, the IMOT board of directors approved to write off the business of Shanghai Newray.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were put before our shareholders for a vote during the last quarter of our fiscal year.

PART II

ITEM 5.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is quoted on the National Association of Securities Dealers, Inc. Over-The-Counter Electronic Bulletin Board (the “OTC Bulletin Board”), and is traded under the symbol “IMOT”.

The following table represents the high and low bid prices for our common stock on the OTC Bulletin Board for each quarter during the last two fiscal years.

		High	Low

Fiscal 2007

	Quarter ended September 30, 2006	0.16	0.09
	Quarter ended December 31, 2006	0.11	0.08
	Quarter ended March 31, 2007	0.50	0.097
	Quarter ended June 30, 2007	0.28	0.145

Fiscal 2008

	Quarter ended September 30, 2007	0.25	0.15
	Quarter ended December 31, 2007	0.255	0.092
	Quarter ended March 31, 2008	0.20	0.12
	Quarter ended June 30, 2008	0.15	0.06

The above bid information is obtained from the “Finance” section of yahoo.com and reflects inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

As of September 25, 2008, there were approximately 616 holders of record of the Company’s common stock. This number does not include an indeterminate number of shareholders whose shares are held by brokers in street name.

We have never declared or paid any cash dividend on our common stock and do not expect to declare or pay any cash dividend in the foreseeable future.

In the fiscal year ended June 30, 2008, the Company issued common stock to various parties and redeemed common stock. The following transactions have not been reported by the Company in previous quarterly reports. The value of the common stock for each issuance was based on one of the following: the market price of the shares on the date of the transactions, the market price of the shares on the date the negotiations between the parties began or on the fair value of services received. The issuances were as follows:

On December 27, 2007 we redeemed 6,500,000 shares and 2,470,355 shares returned from the investment in Shanghai Fortune and Hi-Tech exchange respectively.

On June 16, 2008 we authorized the issuance of 881,950 shares and 6,000,000 shares of common stock with a value of $0.1258 per share to Alfredo Properties Limited for private placement and Rocky Wulianghai for bonus of services rendered for Intermost respectively. The stock was issued in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933. There was no general solicitation or advertising engaged in by the Company in making this offering, and the offerees and the parties they designated to receive the stock were accredited investors.

Equity Compensation Plan

On December 1, 2003 our Board of Directors adopted, and on January 28, 2004 our stockholders approved, the Intermost Corporation 2003 Equity Incentive Plan. As of June 30, 2008, no awards had been granted from the Plan.

Equity Compensation Plan Information (1)


Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted average exercise price of outstanding options warrants and rights (b)	Number of securities remaining available for future issuance under the equity compensation plan (excluding securities reflected in column (a) (c)

Shareholder Approved	0	N/A	20,000,000

Not Approved by Shareholders	N/A	N/A	N/A

(1) Pursuant to the terms of the Intermost Corporation 2003 Equity Incentive Plan, awards may be granted for options to purchase common stock or for common stock.

ITEM 6.

MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

Critical Accounting Policies and Estimates

Management’s discussion and analysis of results of operations and financial condition are based upon the Company’s consolidated financial statements. These statements have been prepared in accordance with the generally accepted accounting principles as used in the United States of America. These principles require management to make certain estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The following critical accounting policies rely upon assumptions, judgments and estimates and were used in the preparation of the Company’s consolidated financial statements:

Revenue Recognition

Revenues are recognized (i) with respect to services, at the time a project (or a milestone thereof) is completed and accepted by the customer, and (ii) with respect to products, at the time products are delivered to customers and collectability for such sales is reasonably assured. We have adopted Staff Accounting Bulletin No.101, Revenue Recognition (“SAB 101”) in our financial statements. SAB 101 provides in part further interpretive guidance for public companies on the recognition, presentation, and disclosure of revenues in financial statements. The adoption of SAB 101 did not have a material impact on our revenue recognition practices.

Accounts Receivable

We typically extend credit to our customers. From time to time, e-commerce solution services are provided under fixed-price contracts where the revenues and the payment of related receivable balances are due upon the achievement of certain milestones. Management estimates the probability of collection of the receivable balances and provides an allowance for doubtful accounts based upon its judgment in assessing the realization of these receivable balances taking into account aging, historical experience, the customer’s financial condition and general economic conditions.

Long-lived assets and goodwill

The Company periodically evaluates the carrying value of long-lived assets held or used whenever events and circumstances indicate that the carrying value of the asset may no longer be recoverable. An impairment loss, measured on the fair value of the asset, is recognized if expected future undiscounted cash flows are less than the carrying value of the assets.

We evaluate goodwill, at a minimum, on an annual basis and whenever events and changes in circumstances suggest that the carrying amount may not be recoverable in accordance with SFAS No. 142 “Goodwill and Other Intangible Assets”. Impairment of goodwill is tested at the reporting unit level by comparing the reporting unit’s carrying amount, including goodwill, to the fair value of the reporting unit. The fair values of the reporting units are estimated using discounted cash flows approach. If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered impaired and a second step is performed to measure the amount of impairment loss, if any.

Overview

We believe that the People’s Republic of China represents an exciting emerging world market whose role in the global economy is increasing steadily. China’s economic growth rate, measured by its gross domestic product, has consistently been higher than 7% over the past 10 years. This economic growth is attributable to many factors, including investment in the country’s infrastructure, increased privatization of businesses and an abundant source of labor. Currently, we offer products and services to businesses and consumers located primarily in China. Our plan is to take advantage of China’s economic growth to expand our existing businesses and, possibly, in the future, to sell our products and services outside of China. We also have begun to acquire diverse businesses that are not dependent on, or directly related to, each other. We believe that diversification is a good hedge against the collapse of a single industry, such as the global collapse of the technology industry that occurred in 2000. We expect that any acquisitions we make will improve our financial condition, although we cannot guarantee any such result.

Currently our revenues are generated primarily by our subsidiaries, ChinaE and ChinaE Tech both of which distributes licenses for Chinese language translation software and offer web design and hosting services.

In response to the economic recovery, we began to diversify our business, so that we will no longer be dependent on one market for revenue. Generally, the issuance of our common stock represents some or all of the purchase price we pay for an acquired business. We believe that the continued active trading of our common stock will be important to the principals of target companies and future acquisitions may be dependent on the active trading of our common stock. However, our common stock has not been actively traded and, if our common stock continues to trade with limited volume and at current levels we may not be able to make acquisitions as planned.

During the fiscal year ended June 30, 2008 we incurred a net operating loss of $1,557,054. Our auditor, Albert Wong & Co., CPA, has issued a “going concern” opinion for our financial statements as of June 30, 2008.

Results of Operations

Following is summary financial information reflecting our operations for the periods indicated.

	Year Ended June 30
	2007			2008
	(Restated)
Net revenues	$	4,680,532		$	26,108
Cost of revenues		(4,608,566	)		(68,328	)
Gross profit		71,966			(42,220	)
Selling, general and administrative expenses		(1,016,653	)		(1,565,844	)
Exchange difference		(6,413	)		8,734
Amortization of intangible assets		(5,459	)		(5,862	)
Impairment of goodwill		(3,119,872	)		0
Impairment of associated companies		(3,454,693	)		0
Impairment of deposit of investment		(1,217,475	)		0
Written off of loan receivables		(49,818	)		0
Interest income		83,861			81,123
Investment income		102,230			277,755
Loss from operations		(8,612,326	)		(1,246,314	)
Share of loss of associated companies		(3,398	)		0
Loss on disposal of a subsidiary		0			(353,377	)
Other income, net		458			42,097
Loss before taxation		(8,615,266	)		(1,557,594	)
Taxation		0			0
Loss before minority interest		(8,615,266	)		(1,557,594	)
Minority interests		17,209			540
Net loss		(8,598,057	)		(1,557,054	)

Year Ended June 30, 2008 Compared to Year Ended June 30, 2007

Net revenues.

Net revenues for the year ended June 30, 2008 decreased by $4,654K1, or 99%, to $26K from $4,680K for the year ended June 30, 2007.

1 As used in this Annual Report on Form 10-KSB, the letter “K” appearing immediately after a dollar amount denotes rounding to the nearest $1,000; as an example, $380,499 may be rounded to “$380K”

Net revenues during fiscal 2008 were derived principally from e-commerce solutions. Net revenues during fiscal 2007 were derived principally from e-commerce solutions, sales of photographic equipment and VOIP services. The term “e-commerce solutions” includes web site design and development and web hosting.

The following table reflects the total net revenues and percentage of net revenues by major category for the periods indicated:

	Total Net Revenues		Percentage of Total Net Revenues
	Year Ended June 30		Year Ended June 30
	2007	2008	2007	2008
	US$	US$
E-commerce solutions
- Web site design and development	80,285	26,108	1.72%	100.00%
Sales of photographic equipment	1,628	0	0.03%	0.00%
VOIP services	4,598,619	0	98.25%	0.00%

Total	4,680,532	26,108	100.00%	100.00%

Total revenues derived from e-commerce solutions decreased by $54K, or 67%, to $26K in fiscal 2008 as compared to $80K in fiscal 2007. Sales of photographic equipment decreased by $2K, or 100%, to $0K in fiscal 2007 as compared to $2K in fiscal 2007. Sales of VOIP services decreased by $4,599K, or 100%, to $0K in fiscal 2008 as compared to $4,599K in fiscal 2007.

The decrease in total net revenues and the character of those sales was primarily attributable to management’s decision to revise the Company’s plan of operation to develop our business beyond the market for Internet products and services as well as to the recovery of the economy of China.

Costs of Revenues.

Costs of revenues consist principally of salaries for computer network technicians, depreciation, and other costs including travel, employee benefits, office expenses and related expenses allocated to the engineering and technician staff.

The following table reflects the principal components of costs of revenues and the percentage of net revenues represented by each component for the periods indicated:

	Total Cost of Revenues		Percentage of Total Net Revenues
	Year Ended June 30		Year Ended June 30
	2007	2008	2007	2008
	US$	US$
Engineers/technician salaries	116,879	33,921	2.50%	49.64%
Cost of photographic equipment	1,798	0	0.04%	0.00%
VOIP services	4,427,016	166	94.58%	0.24%
Depreciation	17,835	19,574	0.38%	28.65%
Other	45,038	14,667	0.96%	21.47%
Total	4,608,566	68,328	98.46%	100.00%

Compared to the 2007 fiscal year, the total costs of revenues for the 2008 fiscal year decreased by $4,540K, or 99%, to $68K. The decrease in costs of revenues was due to the exclusion of cost from digital security system, cost containment effort implemented by management and a deadline in sales. The decrease in salaries was due to the decrease of engineer and technician to develop the equity platform in the PRC. The principal components of costs of revenues during the 2008 fiscal year were costs associated with support of the engineering and technician staff, engineer and technician salaries, and depreciation of equipment utilized in connection with services.

Selling, General and Administrative Expense.

Selling, general and administrative expense (“SG&A”) consists principally of (1) sales commissions, advertising, trade show and seminar expenses, and direct-field sales expense, (2) salaries for administrative and sales staff, (3) corporate overhead, and (4) allowances for bad and doubtful accounts. The following table reflects the principal components of SG&A and the percentage of net revenues represented by each component for the periods indicated:

	Total SG&A		Percentage of Total Net Revenues
	Year Ended June 30		Year Ended June 30
	2007	2008	2007	2008
	US$	US$
Sales and marketing salaries and
commission	55,887	42,407	1.19%	22.28%
Other sale and marketing	52,510	13,009	1.12%	6.83%
Rent obligation	75,856	50,802	1.62%	26.69%
Administrative salaries	166,209	274,587	3.55%	144.26%
Corporate overhead	666,191	1,185,039	14.23%	622.58%
Total	1,016,653	1,565,844	21.72%	822.65%

The principal components of SG&A during the 2008 year were sales and marketing salaries and commissions, other marketing expenditures, administrative salaries and benefits, and other corporate expenses, which includes legal and professional fees, general office expenses, traveling expenses, general employee benefit expense, depreciation consultancy fees.

For the 2008 fiscal year, SG&A increased by $549K, or 54%, to $1,566K as compared to $1,017K for the 2007 fiscal year. Sales and marketing salaries and commissions decreased 24% during the 2008 fiscal year, to $42K, as compared to $56K for the 2007 fiscal year. During the 2008 fiscal year, administrative salaries increased by $107K or 65% to $275K during the 2008 fiscal year, as compared to $166K in the 2007 fiscal year. Other corporate expense increased during the 2008 fiscal year, by $519K or 78% to $1,185K, as compared to $666K in the 2007 fiscal year. The increase in SG&A was principally attributable to the payment to Mr. Rocky Wulianghai in term of IMOT shares as a one-time bonus for services already rendered to IMOT.

Minority Interest.

We reported a minority interest in our losses of $1K for the 2008 fiscal year, reflecting the proportionate interest in the losses of Intermost Focus Advertising Company Ltd. owned by other parties as compared to a minority interest in an earnings of $17K for the 2007 fiscal year, reflecting the ownership of third parties in Shanghai Newray and Hainan Concord.

Liquidity and Capital Resources

To date, we have funded our operations with cash from our operating activities, sales of our securities and by using our common stock to make acquisitions and purchases.

At June 30, 2008 we had cash and cash equivalents of $640K and working capital of $1,747K as compared to $530K of cash and cash equivalents and $2,553K of working capital as of June 30, 2007.

Net cash used in operating activities totaled $1,300K during the 2008 fiscal year as compared to $1,848K of cash in operating activities used during the 2007 fiscal year. Cash generated from operating activities was partially offset by non-cash charges, including depreciation expense in the amount of $31K and amortization of intangible assets in the amount of $6K.

Net cash provided by investing activities was $134K for the 2008 fiscal year while net cash used in investing activities was $1,390K for the 2007 fiscal year. Funds used in investing activities consisted of addition of office equipment, increased in short-term investment and deposit of investment.

Net cash provided by financing activities was $555K for the 2008 fiscal year while net cash used in financing activities was $2,174K for the 2007 fiscal year. Funds provided by financing activity were the net proceeds from the issuance of common stock during fiscals 2008 and 2007.

We had no long term debt as of June 30, 2008. Except as otherwise described herein, we have no plans to make any major capital expenditures during the next 12 months and we are not aware of any trends or uncertainties that could affect sales of our products. We do not have any off balance sheet arrangements.

We have implemented various cost management measures to reduce our overhead. The Company will likely need to borrow money or obtain additional equity financing in order to sustain operations. At present, we have no commitments for funding and there is no assurance that funding will be available to us, or that any such funding would be on acceptable terms. If we need financing and cannot obtain it, we may be required to severely curtail, or even cease, our operations.

Our operating results have been, and will continue to be, affected by a wide variety of factors that could have a material adverse effect on revenues and profitability during any particular period. Some of these factors include:

Our ability to successfully implement our business plan;

Whether or not we will be able to obtain the additional capital necessary to support our operations;

Whether or not we will find joint venture prospects or acquisition prospects with which to enhance our business;

Whether or not we can successfully integrate acquisitions that we make into our business;

The level and rate of acceptance of our products and services by the Chinese people;

Continued growth in the use of the Internet in China;

Entry of new competition (including established companies from outside China and companies with substantially greater resources) into our market;

Fluctuations in the level of orders for services delivered in a quarter;

Rescheduling or cancellation of orders by customers;

Competitive pressures on selling prices;

Changes in product, service or customer mix;

Rapid changes in technology, which result in our technology becoming obsolete;

Availability and cost of computer technicians;

Loss of any strategic relationships;

Loss of our largest customers;

Our ability to introduce new products and services on a timely basis;

New product and service introductions by our competitors;

Fluctuations in exchange rates, and

Adverse changes in the general economic, social or political conditions in the People’s Republic of China.

ITEM 7.

FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To: The board of directors and stockholders of

Intermost Corporation

Report of Independent Registered Public Accounting Firm

We have audited the accompanying consolidated balance sheet of Intermost Corporation and subsidiaries as of June 30, 2008 and 2007 and the related consolidated statements of income, stockholders' equity and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Intermost Corporation as of June 30, 2008 and 2007 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 15 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flows from operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 15. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Hong Kong	Albert Wong & Co.
October [ ], 2008	Certified Public Accountants
[Missing Graphic Reference]

	Note		2008		2007
ASSETS					(Restated)
Current Assets
Cash and cash equivalents	2	(e)	$	640,200	$	530,468
Accounts receivable, net	2	(g)		3,949,653		4,085,123
Inventories				0		195,946
Deposits, prepayment and other receivable	3			1,318,880		1,538,435
Deposit of investment	4			0		150,000
Short-term loan	6			670,288		670,763
Short-term investment	2	(i)		0		368,083

Total current assets			$	6,579,021	$	7,538,818
Long term assets
Restricted cash	2	(f)		313,732		303,525
Unlisted investment	2	(i)		937,363		893,526
Plant and equipment, net	7			74,568		51,414
Intangible assets, net				16,365		20,354
Investment in associated companies	2	(m)		1,258,742		1,134,433

TOTAL ASSETS			$	9,179,791	$	9,942,070

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable			$	3,353,240	$	3,927,964
Accrued liabilities and other payable	8			759,353		792,560
Customer deposits				83,999		105,708
Advance from a shareholder				159,600		160,000
Advance from a related company	9			475,173		0
Business and other taxes payable				1,047		0

Total Current Liabilities			$	4,832,412	$	4,986,232

												Accumulated
	Total									Additional		other
	number of			Common			Treasury			paid in		comprehensive			Retained
	shares			stock			stock			capital		income/(loss)			deficit			Total

Balance, July 1, 2006		153,290,278		$	153,291		$			$	21,715,793	$	152,369		$	(10,691,452	)	$	11,330,001
Net loss																(8,598,057	)		(8,598,057	)
Issuance of common stocks		62,080,000			62,080						2,500,912								2,562,992
Redemption of common stocks		0						(2,470	)										(2,470	)
Cancellation of common stocks								(6,500	)										(6,500	)
Foreign currency translation adjustment													(597,174	)					(597,174	)


Restated Balance, June 30, 2007		215,370,278		$	215,371		$	(8,970	)	$	24,216,705	$	(444,805	)	$	(19,289,509	)	$	4,688,792

Balance, July 1, 2007		215,370,278		$	215,371		$	(8,970	)	$	24,216,705	$	(444,805	)	$	(19,289,509	)	$	4,688,792
Net loss																(1,557,054	)		(1,557,054	)
Prior year adjustment																			0
Redemption of common stocks		(8,970,355	)		(8,970	)		8,970											0
Issuance of common stocks		6,881,950			6,881						626,426								633,307
Foreign currency translation adjustment													415,116						415,116
Adjustment on shares paid for compensation													154,800						154,800


Balance, June 30, 2008		213,281,873		$	213,282		$	0		$	24,843,131	$	125,111		$	(20,846,563	)	$	4,334,961

Name	Age	Position

Fred Peck	49	Director

Chia Hsun Wu	47	Director

Hiroshi Shinohara	52	Director

Rocky Wulianghai	49	President, Chief Executive Officer and Director

Thomas Lee	58	Chief Financial Officer

Name and Principal Position (a)	Year (b)	Salary ($) (c)	Bonus ($) (d)	Stock awards ($) (e)	Option Awards ($) (4) (f)	Non-Equity Incentive Plan Compensation ($) (g)	Non-Qualified Deferred Compensation Earnings ($) (h)	All Other Compensation ($) (i)	Total ($) (j)
Rocky Wulianghai, CEO and President (1)	2008	41,230	0	754,800	0	0	0	0	796,030
Thomas Lee, CFO (2)	2008	107,199	0	0	0	0	0	0	107,199

Name (a)	Fees Earned or Paid in Cash ($) (b)	Stock Awards ($) (c)	Option Awards ($) (d)	Non-Equity Incentive Plan Compensation ($) (e)	Nonqualified Deferred Compensation Earnings (f)	All Other Compensation ($) (g)	Total ($) (h)
Rocky Wulianghai	41,230	754,800	0	0	0	0	796,030

Class of Stock	Name and Address of Beneficial Owner1	Number of Shares Beneficially Owned	Percent of Class
Common	Alfredo Properties Limited2	20,881,950	9.79%
Common	First Core Capital Finance Limited2	22,000,000	10.31%
Common	First Federal Holdings Limited2	40,000,000	18.75%
Common	Magnate Trading Services Limited2	6,666,000	3.13%
Common	Piaster Assets Inc. 2	6,666,000	3.13%
Common	Original Group Holdings Limited2	6,668,000	3.13%
Common	Rocky Wulianghai3	6,000,000	2.81%

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under Equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	0	Not applicable	20,000,000
Equity compensation plans not approved by security holders	0	Not applicable	0
Total	0	Not Applicable	20,000,000

(a)	Exhibits

Exhibit
Number	Description of Exhibit

2.1	Articles of Merger (1)
3.1	Articles of Incorporation (1)
3.2	Bylaws (1)
10.1	Cooperative Agreement re: formation of Jiayin E-Commerce joint venture (2)
10.2	Agreement Regarding Transfer of Properties on 38th Floor, Guomao Building (3)
10.3	Shareholding Transfer Agreement dated May 23, 2003 between IMOT Information Technology (Shenzhen) Ltd. and Shanghai Newray Business Development Co., Ltd. (4)
10.4	Share Transfer Agreement among IMOT Information Technology (Shenzhen) Ltd., Shenzhen Golden Anke Technology Co. Ltd., Intermost Corporation, Tu Guoshen and Li Zhiquan (5)
10.5	Sale and Purchase Agreement among IMOT Information Technology (Shenzhen) Ltd., Shanghai Fortune Venture Limited, North Shanghai Branch of Shanghai Technology Property Right Exchange Center and Intermost Corporation (6)
10.6	Distributorship Agreement dated November 28, 2002 between KanHan Technologies Limited and ChinaE.com Information Technology Ltd. (7)
10.7	Intermost Corporation 2003 Equity Incentive Plan (8)
10.8	Joint Venture Agreement among Intermost Corporation and Entities and/or Individuals Collectively Referred to as “Investors.”*
14	Code of Ethics (9)
16	Letter on Change in Certifying Accountant (10)
21	Significant Subsidiaries *
31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) and 15d-14(a)*
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) and 15d-14(a)*
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*


(1)	Incorporated by reference to the respective exhibits filed with the Registrant’s 10-KSB Amendment filed with the SEC on October 15, 2004
(2)	Incorporated by reference to the respective exhibits filed with Registrant’s Registration Statement on Form 10-SB (Commission File No. 0-30430).
(3)	Incorporated by reference to the respective exhibits filed with the Registrant’s Quarterly Report on Form 10-QSB for the quarter ended March 31, 2000.
(4)	Incorporated by reference to the exhibit filed with the Registrant’s Current Report on Form 8-K filed with the SEC on June 9, 2003.

		June 30, 2008			June 30, 2007

(i)	Audit Fees	$	45,000	*	$	159,500
(ii)	Audit Related Fees	$	--		$	--
(iii)	Tax Fees	$	--		$	--
(iv)	All Other Fees	$	--		$	--

	PAGE

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	39

CONSOLIDATED BALANCE SHEET	40

CONSOLIDATED STATEMENT OF INCOME	42

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY	43

CONSOLIDATED STATEMENT OF CASH FLOWS	44

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	46

SIGNATURES AND EXHIBITS	68

	Notes		2008		2007
ASSETS					(Restated)
Current assets
Cash and cash equivalents	2	(e)	$	640,200	$	530,468
Accounts receivable, net	2	(g)		3,949,653		4,085,123
Inventories				-		195,946
Deposits, prepayment and other receivables	3			1,318,880		1,538,435
Deposit of investment	4			-		150,000
Short-term loan	6			670,288		670,763
Short-term investment	2	(i)		-		368,083


Total current assets			$	6,579,021	$	7,538,818
Restricted cash	2	(f)		313,732		303,525
Unlisted investment	2	(i)		937,363		893,526
Plant and equipment, net	7			74,568		51,414
Intangible assets, net				16,365		20,354
Investment in associated companies	2	(m)		1,258,742		1,134,433


TOTAL ASSETS			$	9,179,791	$	9,942,070

LIABILITIES AND
STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable			$	3,353,240	$	3,927,964
Accrued liabilities and other payable	8			759,353		792,560
Customers deposits				83,999		105,708
Advance from a shareholder				159,600		160,000
Advance from a related company	10			475,173		-
Business and other taxes payable				1,047		-


Total current liabilities			$	4,832,412	$	4,986,232


TOTAL LIABILITIES			$	4,832,412	$	4,986,232

										Additional		Accumulated
	No.									paid		Other
	shares			Common			Treasury			In		comprehensive			Accumulated
	outstanding			stock			stock			capital		Income/(loss)			deficit			Total

Balance, July 1, 2006		153,290,278		$	153,291		$	-		$	21,715,793	$	152,369		$	(10,691,452	)	$	11,330,001
Net loss		-			-			-			-		-			(8,598,057	)		(8,598,057	)
Issuance of common stocks		62,080,000			62,080			-			2,500,912		-			-			2,562,992
Redemption of common stocks		-			-			(2,470	)		-		-			-			(2,470	)
Cancellation of common stocks		-			-			(6,500	)		-		-			-			(6,500	)
Foreign currency translation adjustment		-			-			-			-		(597,174	)		-			(597,174	)


Restated Balance, June 30, 2007		215,370,278		$	215,371		$	(8,970	)	$	24,216,705	$	(444,805	)	$	(19,289,509	)	$	4,688,792



Balance, July 1, 2007		215,370,278		$	215,371		$	(8,970	)	$	24,216,705	$	(444,805	)	$	(19,289,509	)	$	4,688,792
Net loss		-			-			-			-		-			(1, 557,054	)		(1,557,054	)
Redemption of common stocks		(8,970,355	)		(8,970	)		8,970			-		-			-			-
Issuance of common stocks		6,881,950			6,881			-			626,426		-			-			633,307
Foreign currency translation adjustment		-			-			-			-		415,116			-			415,116
Adjustment on shares paid for ompensation												154,800						154,800

Balance, June 30, 2008		213,281,873		$	213,282		$	-		$	24,843,131	$	125,111		$	(20,846,563	)	$	4,334,961

Name	Place of incorporation of organization	Percentage of Equity Interest Attributable to the Company	Principal Activities
Intermost Limited (“IL”)	British Virgin Islands	100%	Investment holding
ChinaE.com E-Commerce Co. Ltd. (Formerly known as China E.com Information Technology Ltd. (“CECITL”))*	PRC	100%	Business portal and e-commerce solutions
IMOT Information Technology (Shenzhen) Ltd. (“IITSL”)*	PRC	100%	Investment holding
ChinaE.com Investment Consultants (Shenzhen) Company Ltd. (“CECICSL”)**	PRC	100%	Inactive
Intermost (H.K.) Limited (“IHKL”)	Hong Kong	100%	Inactive
Shenzhen Bank Union & Jiayin E-commerce Company Ltd. (“SBUJE”)**	PRC	55.30%	Inactive
Intermost Focus Advertising Company Ltd.(“IFACL”)**	PRC	90%	Inactive
Shanghai Newray Photographic Equipment Co., Ltd. (“SNPE”)**	PRC	51%	Inactive
ChinaE.com Technology (Shenzhen) Ltd.(“CECTSL”)*	PRC	100%	Business postal and e-commerce solutions
Hainan Concord Financial Products Development Co., Ltd. (“HCFPDCL”)**	PRC	80%	Inactive
Shenzhen International Hi-Tech Property Right Exchange Centre (“SIHTPREC”)***	PRC	15%	Private equity exchange
Golden Anke (GATL) ***	PRC	49%	Inactive
Hainan Special Economic Zone Property Right Exchange Center (PREC)***	PRC	21%	Private Property Right Exchange
Leader Palace (LP)	British Virgin Islands	100%	Inactive

Computer equipment	3 years
Motor vehicles	5 years
Furniture and office equipment	5 years

Rate	Over	But not over	Of Amount Over
15%	-	50,000	-
25%	50,000	75,000	50,000
34%	75,000	100,000	75,000
39%	100,000	335,000	100,000
34%	335,000	10,000,000	335,000
35%	10,000,000	15,000,000	10,000,000
38%	15,000,000	18,333,333	15,000,000
35%	18,333,333	-	-

	June 30, 2008	June 30, 2007
Year end HKD : US$ exchange rate	7.8037	7.8172
Average yearly HKD : US$ exchange rate	7.7949	7.7959

	June 30, 2008	June 30, 2007
Year end TWD : US$ exchange rate	30.4355	32.8599
Average yearly TWD : US$ exchange rate	31.8569	32.9517

	June 30, 2008	June 30, 2007
Year end RMB : US$ exchange rate	6.8718	7.6248
Average yearly RMB : US$ exchange rate	7.2906	7.8285

	2008		2007

Rental and utilities deposits	$	27,671	$	7,508
Advance to employees		6,785		2,142
Prepaid expenses		2,428		35,889
Loan Interest receivable (a)		68,350		116,547
Due from stockholders (b)		-		65,575
Other Loan		92,843		-
Advance to supplier (c)		-		298,931
Trade deposit paid (d)		-		1,293
Other receivables (e)		1,000,000		1,000,000
Others		120,803		10,550


	$	1,318,880	$	1,538,435

	RMB			USD

Goodwill acquired in GATL transaction on August 10, 2004	$	17,152,456		$	2,114,976
Impairment for the year ended June 30, 2006		-			-


Balance at June 30, 2006		17,152,456		$	2,114,976
Foreign currency translation adjustment		-			75,927
Impairment for the year ended June 30, 2007		(17,152,456	)		(2,190,903	)


Balance at June 30, 2007	$	-		$	-

	RMB			USD
Goodwill acquired in HCFPDCL transaction on Jan 6, 2005	$	7,272,437		$	896,725
Impairment for the year ended June 30, 2006		-			-


Balance at June 30, 2006	$	7,272,437		$	896,725
Foreign currency translation adjustment		-			32,244
Impairment for the year ended June 30, 2007		(7,272,437	)		(928,969	)


Balance at June 30, 2007	$	-		$	-

	2008			2007
At cost
Computer equipment	$	116,047		$	166,813
Furniture and office equipment		71,276			51,562
Motor vehicles		-			7,049


	$	187,323		$	225,424
Less: Accumulated depreciation		(112,755	)		(174,010	)


	$	74,568		$	51,414

	2008		2007
Wages and bonus	$	27,202	$	23,031
Consultancy fees		100,097		100,071
Legal and professional fees		23,637		37,737
Audit and review fees		45,000		43,000
Loan interest payable		59,106		7,275
Loan from shareholder		500,000		500,000
Other		4,311		81,446


	$	759,353	$	792,560

	2008			2007

Net operating loss carry forwards	$	1,557,054		$	8,598,057
Valuation allowance		(1,557,054	)		(8,598,057	)


Deferred tax assets, net	$	-		$	-

June 30,
2008	$	122,187
2009		112,733
2010 and thereafter		72,136


	$	307,056

	Original		Restated
	June 30,
ITEMS	2007		2007
Current assets
Cash and cash equivalents	$	833,993	$	530,468
Accounts receivable, net		4,085,123		4,085,123
Inventories		195,946		195,946
Deposits, prepayment and other receivables		2,269,083		1,538,435
Deposit of investment		-		150,000
Short-term loan		670,763		670,763
Short-term investment		368,083		368,083
Stock in custodian		-		-


Total current assets	$	8,422,991	$	7,538,818
Restricted cash		-		303,525
Unlisted investment		893,526		893,526
Plant and equipment, net		51,414		51,414
Intangible assets, net		20,354		20,354
Investment in associated companies		6,497,267		1,134,433
Goodwill		-		-


TOTAL ASSETS	$	15,885,552	$	9,942,070

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	3,927,964	$	3,927,964
Accrued liabilities and other payable		792,560		792,560
Customers deposits		105,708		105,708
Advance from shareholder		160,000		160,000
Business and other taxes payable		-		-


Total current liabilities	$	4,986,232	$	4,986,232


TOTAL LIABILITIES	$	4,986,232	$	4,986,232

	Original			Restated
	For the year ended June 30,
ITEMS	2007			2007
Net revenues	$	4,680,532		$	4,680,532
Cost of net revenues		(4,608,566	)		(4,608,566	)


Gross profit	$	71,966		$	71,966
Selling, general and administrative expenses		(1,957,494	)		(1,028,525	)


(Loss)/profit from operations	$	(1,885,528	)	$	(956,559	)
Investment income		102,230			102,230
Interest income		83,861			83,861
Other income		458			458
Written off of loan receivables		-			(49,818	)
Equity in earnings of associated companies		-			(3,398	)


	$	(1,698,979	)	$	(823,226	)
Unusual items
Impairment of goodwill		-			(3,119,872	)
Impairment of associated company		-			(3,454,693	)
Impairment of deposit of investment		-			(1,217,475	)
Loss on disposal of an associated company		-			-


Loss before income taxes and minority interests	$	(1,698,979	)	$	(8,615,266	)
Income taxes		-			-


Net loss before minority interests	$	(1,698,979	)	$	(8,615,266	)
Minority interests		17,209			17,209
Equity in earnings of associated companies		(1,408,777	)		-


Net loss	$	(3,090,547	)	$	(8,598,057	)


Net loss per share:
-Basic	$	(0.0242	)	$	(0.0469	)


-Diluted	$	(0.0242	)	$	(0.0469	)


Weighted average number of common stock
-Basic	$	127,894,970		$	183,458,168


-Diluted	$	127,894,970		$	183,458,168

Signature	Title	Date: November 6, 2008


/s/ Fred Peck	Director
Fred Peck


/s/ Chia Hsun Wu	Director
Chia Hsun Wu


/s/ Hiroshi Shinohara	Director
Hiroshi Shinohara


/s/ Rocky Wulianghai	Director, President and Chief Executive Officer
Rocky Wulianghai	Director, President and Chief Executive Officer