**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-Q**




**(Mark
      One)**





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




**For
      the quarterly period ended September 30, 2008**




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




**For
      the transition period from ______________ to
      _______________**





Commission
      File Number 000-30292




**ASIAMART,
      INC.**


(Exact
      name of registrant as specified in its charter)




**Delaware**
              (State
                of Incorporation)
            
            **88-0405437**
              (I.R.S.
                Employer Identification No.)**Room
                1508 Peninsula Square**
              **18
                Sung On Street**
              **Hunghom,
                Kowloon, Hong Kong**
              (Address
                of principal executive offices)
            
            **N/A**
              (Zip
                Code)




**(852)
      3580-8808**


(Registrant’s
      telephone number, including area code)




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




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




Large
                Accelerated filero
            
            Accelerated
                Filero
            
            Non-Accelerated
                Filero
            
            Smaller
                Reporting Companyx





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


Yes  ̈ No x




As
      of
      September 30, 2008, the Registrant had 24,744,177 shares of Common Stock
      outstanding.








**ASIAMART,
      INC.**





**INDEX**





Page
              NumberPART
                I. Financial StatementsItem
                1.
            
            Financial
                Information
            
            F-1Consolidated
                Balance Sheets as of September 30, 2008 (Unaudited) and December
                31,
                2007
            
            F-1Consolidated
                Statements of Operations for the Three Months and Nine Months Ended
                September30, 2008 and September30, 2007 (Unaudited)
            
            F-2Consolidated
                Statements of Shareholders' Equity
            
            F-3Consolidated
                Statements of Cash Flows for the Nine Months Ended September 30,
                2008 and
                September 30, 2007 (Unaudited)
            
            F-4Notes
                to Consolidated Financial Statements - September 30, 2008
                (Unaudited)
            
            F-5Item
                2.
            
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            
            2Item
                3.
            
            Quantitative
                and Qualitative Disclosures About Market Risk
            
            9Item
                4.
            
            Controls
                and Procedures
            
            9**PART
                II. Other Information**Item
                1.
            
            Legal
                Proceedings
            
            10Item
                1A.
            
            Risk
                Factors
            
            10Item
                2.
            
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            
            20Item
                3.
            
            Defaults
                Upon Senior Securities
            
            20Item
                4.
            
            Submission
                of Matters to a Vote of Security Holders
            
            20Item
                5.
            
            Other
                Information
            
            20Item
                6.
            
            Exhibits
            
            21Signatures
            
            
            
            22


1


**PART
      1: FINANCIAL INFORMATION**




ITEM
      1: FINANCIAL
      STATEMENTS




**ASIAMART,
      INC. AND SUBSIDIARIES**


**CONDENSED
        CONSOLIDATED BALANCE SHEETS**
 **Currency
        expressed in United States Dollars (“US$”), except for number of
        shares**
 
 September 30, 2008
              
              December 31, 2007(Unaudited)
              
              (Note
                  2)**ASSETS**Current
                  assets:Cash
                  and cash equivalents
              
              $
              558,382
              
              $
              1,817,148Accounts
                  receivable, net
              
              
              2,968,488
              
              
              1,432,281Due
                  from related party
              
              
              -
              
              
              451,328Inventories
              
              
              2,441,628
              
              
              3,817,215Deposits
                  and prepaid expenses
              
              
              1,767,555
              
              
              1,500,599Other
                  receivables
              
              
              402,561
              
              
              475,513Total
                  current assets
              
              
              8,138,614
              
              
              9,494,084Plant
                  and equipment, net
              
              
              642,556
              
              
              848,978Other
                  assets:Long-term
                  loan receivables, net
              
              
              1,210,281
              
              
              1,211,580Long-term
                  rental and utilities deposits
              
              
              159,651
              
              
              157,922Tax
                  recoverable
              
              
              63,577
              
              
              54,829Total
                  other assets
              
              
              1,433,509
              
              
              1,424,331**TOTAL
                  ASSETS**
              
              $
              10,214,679
              
              $
              11,767,393**LIABILITIES
                  AND STOCKHOLDERS’ EQUITY**Current
                  liabilities:Accounts
                  payable
              
              $
              1,418,988
              
              $
              2,482,382Accrued
                  liabilities
              
              
              989,097
              
              
              1,026,210Customer
                  deposits
              
              
              110,508
              
              
              95,292Due
                  to stockholders
              
              
              287,785
              
              
              286,585Income
                  tax payable
              
              
              76,250
              
              
              -Other
                  payable
              
              
              23,677
              
              
              110,771Current
                  maturities of long-term debt
              
              
              150,048
              
              
              523,435Total
                  current liabilities
              
              
              3,056,353
              
              
              4,524,675Long-term
                  liabilitiesDeferred
                  tax liabilities
              
              
              15,520
              
              
              15,455Long-term
                  debt
              
              
              -
              
              
              115,916Debentures
                  payable, net of discount and issuance costs
              
              
              1,926,457
              
              
              1,079,914Total
                  long-term liabilities
              
              
              1,941,977
              
              
              1,211,285**TOTAL
                  LIABILITIES**
              
              
              4,998,330
              
              
              5,735,960Stockholders’
                  equity:Common
                  stock
              
              
              2,474
              
              
              2,474Additional
                  paid-in capital
              
              
              3,455,421
              
              
              3,455,421Retained
                  earnings
              
              
              1,657,929
              
              
              2,507,417Accumulated
                  other comprehensive income
              
              
              100,525
              
              
              66,121Total
                  stockholders’ equity
              
              
              5,216,349
              
              
              6,031,433**TOTAL
                  LIABILITIES AND STOCKHOLDERS’ EQUITY**
              
              $
              10,214,679
              
              $
              11,767,393
 
 See
        accompanying notes to condensed consolidated financial statements.
 
 F-1
 
 **ASIAMART,
        INC AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF**
 **OPERATIONS
        AND COMPREHENSIVE LOSS**
 **Currency
        expressed in United States Dollars (“US$”), except for number of
        shares**
 **(Unaudited)**
 Three months ended September 30,
                
                Nine months ended September 30,2008
                
                2007
                
                2008
                
                2007**REVENUE**Sales
                
                $
                7,448,632
                
                $
                11,893,386
                
                $
                29,140,060
                
                $
                41,026,452Referral
                    income
                
                
                -
                
                
                -
                
                
                -
                
                
                426,442Related
                    party
                
                
                -
                
                
                -
                
                
                604,264
                
                
                496,753Total
                    revenue
                
                
                7,448,632
                
                
                11,893,386
                
                
                29,744,324
                
                
                41,949,647**COST
                    OF SALES**
                
                
                4,566,826
                
                
                5,742,136
                
                
                16,598,543
                
                
                25,916,759**GROSS
                    PROFIT**
                
                
                2,881,806
                
                
                6,151,250
                
                
                13,145,781
                
                
                16,032,888**OPERATING
                    EXPENSES**Selling,
                    general and administrative expenses
                
                
                4,017,175
                
                
                6,846,560
                
                
                14,385,068
                
                
                16,078,137**LOSS
                    FROM OPERATIONS**
                
                
                (1,135,369
                )
                
                (695,310
                )
                
                (1,239,287
                )
                
                (45,249
                )**OTHER
                    INCOME (EXPENSE), NET**
                
                
                81,650
                
                
                113,671
                
                
                466,049
                
                
                (234,413
                )**LOSS
                    BEFORE PROVISION FOR INCOME TAXES**
                
                
                (1,053,719
                )
                
                (581,639
                )
                
                (773,238
                )
                
                (279,662
                )Provision
                    for Income Tax
                
                
                (10,998
                )
                
                (81,695
                )
                
                76,250
                
                
                131,211**NET
                    LOSS**
                
                
                (1,042,721
                )
                
                (499,944
                )
                
                (849,488
                )
                
                (410,873
                )**OTHER
                    COMPREHENSIVE INCOME:**Foreign
                    currency translation adjustment
                
                
                32,126
                
                
                41,424
                
                
                34,404
                
                
                43,121**COMPREHENSIVE
                    LOSS**
                
                $
                (1,010,595
                )
                $
                (458,520
                )
                $
                (815,084
                )
                $
                (367,752
                )**BASIC
                    AND DILUTED LOSS PER SHARE**
                
                $
                (0.042
                )
                $
                (0.020
                )
                $
                (0.034
                )
                $
                (0.017
                )**BASIC
                    AND DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING**
                
                
                24,744,177
                
                
                24,598,344
                
                
                24,744,177
                
                
                24,589,415
 
 See
        accompanying notes to condensed consolidated financial statements.
 
 F-2
 
 **ASIAMART,
        INC AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS**
 **Currency
        expressed in United States Dollars (“US$”)**
 **(Unaudited)**
 
 Nine months ended September 30,2008
              
              2007**Cash
                  flow from operating activities:**Net
                  cash (used in) provided by operating activities
              
              $
              (805,166
              )
              $
              (1,159,437
              )**Cash
                  flows from investing activities:**Long-term
                  loans to staff
              
              
              -
              
              
              (19,789
              )Decrease
                  in long term rental and utility deposit
              
              
              -
              
              
              (4,084
              )Purchase
                  of property and equipment
              
              
              -
              
              
              (94,212
              )Long-term
                  loans from / (to) travel agencies
              
              
              1,299
              
              
              (257,074
              )Net
                  cash provided by (used in) investing activities
              
              
              1,299
              
              
              (375,159
              )**Cash
                  flows from financing activities:**Repayments
                  of amounts due to shareholders
              
              
              -
              
              
              (19,131
              )Proceeds
                  from short term loan
              
              
              -
              
              
              255,800Repayment
                  of short term loan
              
              
              -
              
              
              (168,798
              )Proceeds
                  from installment loan
              
              
              -
              
              
              128,040Repayment
                  of installment loan
              
              
              (373,387
              )
              
              (383,274
              )Repayment
                  of capital lease obligations
              
              
              (115,916
              )
              
              (354,591
              )Net
                  cash used in financing activities
              
              
              (489,303
              )
              
              (541,954
              )**EFFECT
                  OF EXCHANGE RATE ON CASH**
              
              
              34,404
              
              
              5,180**CHANGE
                  IN CASH**
              
              
              (1,258,766
              )
              
              (2,071,370
              )**CASH
                  AND CASH EQUIVALENTS, BEGINNING OF PERIOD**
              
              
              1,817,148
              
              
              2,560,304**CASH
                  AND CASH EQUIVALENTS, END OF PERIOD**
              
              $
              558,382
              
              $
              488,934**SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION**Interest
                  paid
              
              $
              194,050
              
              $
              210,927Income
                  taxes paid
              
              $
              54,845
              
              $
              243,900
 
 See
        accompanying notes to condensed consolidated financial statements
 
 F-3
 
 **ASIAMART,
        INC AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY**
 **FOR
        THE NINE MONTHS ENDED SEPTEMBER 30, 2008**
 **Currency
        expressed in United States Dollars (“US$”), except for number of
        shares**
 **(Unaudited)**
 Common stock
                    
                    Additional
                    
                    Retained
                    
                    Accumulated other
                      comprehensiveShares
                    
                    Par value
                    
                    paid-in capital
                    
                    Earnings
                    
                    income
                    
                    TotalsBalance
                        as of December 31, 2007
                    
                    
                    24,744,177
                    
                    $
                    2,474
                    
                    $
                    3,455,421
                    
                    $
                    2,507,417
                    
                    $
                    66,121
                    
                    $
                    6,031,433Other
                        comprehensive income (loss):Net
                        loss for the period
                    
                    
                    *-*
                    
                    
                    *-*
                    
                    
                    *-*
                    
                    
                    (849,488
                    )
                    
                    *-*
                    
                    
                    (849,488
                    )Foreign
                        currency translation adjustment
                    
                    
                    *-*
                    
                    
                    *-*
                    
                    
                    *-*
                    
                    
                    *-*
                    
                    
                    34,404
                    
                    
                    34,404Total
                        comprehensive loss:
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (815,084
                    )Balance
                        as of September 30, 2008
                    
                    
                    24,744,177
                    
                    $
                    2,474
                    
                    $
                    3,455,421
                    
                    $
                    1,657,929
                    
                    $
                    100,525
                    
                    $
                    5,216,349
 
 See
        accompanying notes to condensed consolidated financial statements
 
 F-4
 **ASIAMART,
          INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Currency
          expressed in United States Dollars (“US$”))**
 **(Unaudited)**
 **NOTE
        1 – DESCRIPTION OF BUSINESS AND ORGANIZATION**
 
 The
        Company through its subsidiaries engages in two operating segments, trading
        and
        retailing. Trading consists of selling products wholesale to other retail
        operators and retail consists of selling products primarily to tourist through
        two discount shopping centers in Hong Kong.
 
 **Company name**
              
              **Trade Name**
              
              **Place of**
                **incorporation**
              
              **Date of**
                **incorporation**
              
              **Principal**
                **business**1
              
              Raffle
                  Limited
              
              N/A
              
              Hong Kong
              
              August
                  7,
                1998
              
              Trading
                  of general merchandise2
              
              Sure
                  Profits Trading Limited
              
              N/A
              
              Hong
                  Kong
              
              August
                  3,
                2001
              
              Trading
                  of general merchandise3
              
              Manigood
                  International Industrial Limited
              
              Hong
                  Kong (Duty Free) Center
              
              Hong
                  Kong
              
              December 15,
                2003
              
              Operating
                  a discount shopping center in Hong Kong4
              
              Allied
                  Fine Development Limited
              
              Super
                  Star Department Store
              
              Hong
                  Kong
              
              September 19
                2003
              
              Operating
                  a discount shopping center in Hong Kong5
              
              Max
                  Surplus International Development Limited
              
              Golden
                  Bauhinia Duty Free
              
              Hong
                  Kong
              
              July 26,
                2004
              
              Operating
                  a discount shopping center in Hong Kong, closed on Nov,
                  2006
 
 The
        Company’s outlets and discount shopping centers cater to tourists visiting Hong
        Kong from other parts of China (“mainland China”) who are transported directly
        to the Company’s shopping centers by a large network of travel companies and
        tour operators. The Company’s outlets and shopping centers offer the tourists
        discount prices on a limited selection of international branded and selected
        private label products in a wide range of merchandise categories such as
        consumer electronics, cosmetics, watches, dietary supplements, health care
        products and optical instruments. A number of travel companies and tour
        operators have agreements, partnerships or affiliation arrangements with
        the
        Company to transport tourists from mainland China to the Company’s outlets and
        shopping centers for shopping.
 
 All
        current operations and assets of the Company are located in Hong
        Kong.
 
 **NOTE
        2 -** **BASIS
        OF PRESENTATION**
 
 The
        accompanying condensed consolidated balance sheet as of December 31, 2007
        has
        been derived from audited financial statements and the accompanying unaudited
        condensed consolidated financial statements as of September 30, 2008 and
        for the
        three and nine months ended September 30, 2008 and 2007 have been prepared
        in
        accordance with accounting principles generally accepted in the United States
        of
        America (“GAAP”) for interim financial information and the interim reporting
        requirements of Regulation S-X. They do not include all of the information
        and
        footnotes for complete consolidated financial statements as required by GAAP.
        In
        management's opinion, all adjustments (consisting only of normal recurring
        adjustments) considered necessary for a fair presentation have been included.
        The results of operations for the periods ended September 30, 2008 and 2007
        presented are not necessarily indicative of the results to be expected for
        the
        year. These financial statements should be read in conjunction with the annual
        financial statements included in the Company’s Form 10-K filed with the U.S.
        Securities and Exchange Commission on April 15, 2008.
 
 F-5
 **ASIAMART,
          INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Currency
          expressed in United States Dollars (“US$”))**
 **(Unaudited)**
  Prior year
        balances have been reclassified to conform to the current period
        presentation.  The balance sheet includes a reclassification of debt issue
        costs that was shown as part of total asset to debentures payable,
        net.
 
 There
        is
        no provision for dividends for the quarter to which this quarterly report
        relates .
 
 **NOTE
        3 –** **RECENT
        ACCOUNTING PRONOUNCEMENTS**
 
 In
        February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
        Financial Assets and Financial Liabilities" ("SFAS No. 159"). SFAS No. 159
        permits entities to choose to measure, on an item-by-item basis, specified
        financial instruments and certain other items at fair value. Unrealized gains
        and losses on items for which the fair value option has been elected are
        required to be reported in earnings at each reporting date. SFAS No. 159
        is
        effective for fiscal years beginning after November 15, 2007, the provisions
        of
        which are required to be applied prospectively. The Company believes that
        SFAS
        159 will not have a material impact on the consolidated financial position
        or
        results of operations.
 
 In
        December 2007, the FASB issued SFAS No. 141 (Revised 2007), "Business
        Combinations" ("SFAS No. 141R"). SFAS No. 141R will change the accounting
        for
        business combinations. Under SFAS No. 141R, an acquiring entity will be required
        to recognize all the assets acquired and liabilities assumed in a transaction
        at
        the acquisition-date fair value with limited exceptions. SFAS No. 141R will
        change the accounting treatment and disclosure for certain specific items
        in a
        business combination. SFAS No. 141R applies prospectively to business
        combinations for which the acquisition date is on or after the beginning
        of the
        first annual reporting period beginning on or after December 15, 2008.
        Accordingly, any business combinations the Company engages in will be recorded
        and disclosed following existing GAAP until January 1, 2009. The Company
        expects
        SFAS No. 141R will have an impact on accounting for business combinations
        once
        adopted but the effect is dependent upon acquisitions at that time. The Company
        is still assessing the impact of this pronouncement.
 
 In
        December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in
        Consolidated Financial Statements--An Amendment of ARB No. 51, or SFAS No.
        160"
        ("SFAS No. 160"). SFAS No. 160 establishes new accounting and reporting
        standards for the noncontrolling interest in a subsidiary and for the
        deconsolidation of a subsidiary. SFAS No. 160 is effective for fiscal years
        beginning on or after December 15, 2008. The Company believes that SFAS 160
        will
        not have a material impact on the consolidated financial position or results
        of
        operations.
 
 F-6
 **ASIAMART,
          INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Currency
          expressed in United States Dollars (“US$”))**
 **(Unaudited)**
 
 In
        March
        2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments
        and Hedging Activities" ("SFAS No. 161"). SFAS 161 requires companies with
        derivative instruments to disclose information that should enable
        financial-statement users to understand how and why a company uses derivative
        instruments, how derivative instruments and related hedged items are accounted
        for under FASB Statement No. 133 "Accounting for Derivative Instruments and
        Hedging Activities" and how derivative instruments and related hedged items
        affect a company's financial position, financial performance and cash flows.
        SFAS 161 is effective for financial statements issued for fiscal years and
        interim periods beginning after November 15, 2008. The adoption of this
        statement is not expected to have a material effect on the Company's future
        financial position or results of operations.
 
 In
        May
        2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
        Accounting Principles” (“SFAS No. 162”). This statement identifies the
        sources of accounting principles and the framework for selecting the principles
        to be used in the preparation of financial statements in conformity with
        generally accepted accounting principles (GAAP) in the United States. This
        statement is effective 60 days following the SEC’s approval of the Public
        Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of
        Present Fairly in Conformity With Generally Accepted Accounting Principles”. The
        Company does not expect the adoption of SFAS No. 162 to have a material effect
        on the financial condition or results of operations of the Company.
 
 Also
        in
        May 2008, the FASB issued SFAS No. 163, "Accounting for Financial Guarantee
        Insurance Contracts--an interpretation of FASB Statement No. 60" ("SFAS No.
        163"). SFAS No. 163 interprets Statement 60 and amends existing accounting
        pronouncements to clarify their application to the financial guarantee insurance
        contracts included within the scope of that Statement. SFAS No. 163 is effective
        for financial statements issued for fiscal years beginning after December
        15,
        2008, and all interim periods within those fiscal years. As such, the Company
        is
        required to adopt these provisions at the beginning of the fiscal year ended
        December 31, 2009. The Company is currently evaluating the impact of SFAS
        No.
        163 on its financial statements but does not expect it to have an effect
        on the
        Company's financial position, results of operations or cash flows.
 
 In
        May
        2008, the FASB issued FSP APB 14-1, "Accounting for Convertible Debt Instruments
        that may be Settled in Cash upon Conversion (Including Partial Cash Settlement)"
        ("FSP APB 14-1"). FSP APB 14-1 applies to convertible debtsecurities that, upon conversion, may be settled by the issuer fully or
        partially in cash. FSP APB 14-1 specifies that issuers of such instruments
        should separately account for the liability and equity components in a manner
        that will reflect the entity's nonconvertible debt borrowing rate when interest
        cost is recognized in subsequent periods. FSP APB 14-1 is effective for
        financial statements issued for fiscal years after December 15, 2008, and
        must
        be applied on a retrospective basis. Early adoption is not permitted.The
        adoption of this statement is not expected to have a material effect on the
        Company's future financial position or results of operations.
 
 In
        June
        2008, the FASB issued FASB Staff Position ("FSP") EITF 03-6-1, "Determining
        Whether Instruments Granted in Share-Based Payment Transactions Are
        Participating Securities" ("FSP EITF 03-6-1"). FSP EITF 03-6-1 addresses whether
        instruments granted in share-based payment transactions are participating
        securities prior to vesting, and therefore need to be included in the earnings
        allocation in computing earnings per share under the two-class method as
        described in SFAS No. 128, Earnings per Share. Under the guidance of FSP
        EITF
        03-6-1, unvested share-based payment awards that contain nonforfeitable rights
        to dividends or dividend equivalents (whether paid or unpaid) are participating
        securities and shall be included in the computation of earnings-per-share
        pursuant to the two-class method. FSP EITF 03-6-1 is effective for financial
        statements issued for fiscal years beginning after December 15, 2008 and
        all
        prior-period earnings per share data presented shall be adjusted
        retrospectively. Early application is not permitted. The Company is assessing
        the potential impact of this FSP on the earnings per share
        calculation.
 
 F-7
 **ASIAMART,
          INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Currency
          expressed in United States Dollars (“US$”))**
 **(Unaudited)**
 In
        June
        2008, the FASB ratified EITF No. 07-5, "Determining Whether an Instrument
        (or an
        Embedded Feature) is Indexed to an Entity's Own Stock" ("EITF 07-5"). EITF
        07-5
        provides that an entity should use a two-step approach to evaluate whether
        an
        equity-linked financial instrument (or embedded feature) is indexed to its
        own
        stock, including evaluating the instrument's contingent exercise and settlement
        provisions. EITF 07-5 is effective for financial statements issued for fiscal
        years beginning after December 15, 2008. Early application is not permitted.
        The
        Company is assessing the potential impact of this EITF 07-5 on the financial
        condition and results of operations.
 
 **NOTE
        4 – INVENTORIES**
 
 Inventory
        consisted of the following:
 
 September 30, 2008
              
              December 31, 2007(Unaudited)
              
              (Note 2)Inventories
              
              $
              2,916,923
              
              $
              4,292,510Less:
                  valuation allowance
              
              
              (475,295
              )
              
              (475,295
              )Total
              
              $
              2,441,628
              
              $
              3,817,215
  **NOTE
        5 – INCOME TAXES**
 
 The
        Company is registered in the State of Delaware and conducts all of its business
        through its subsidiaries incorporated in Hong Kong and therefore is not subject
        to U.S. income tax. Pursuant to Hong Kong tax law, the Company’s Hong Kong
        subsidiaries are subject to profits tax at the rate of 16.5%.
 
 **NOTE
        6 – RELATED PARTY TRANSACTIONS**
 
 Trade
        receivable and sales – related party
 
 For
        the
        nine months ended September 30, 2008 and 2007, the Company earned sales revenue
        from Prince Digital in the amounts of $604,264 and $496,753, respectively,
        a
        related company, which is controlled by Mr. Tsoi Kee Kwong Ricky, a beneficial
        shareholder of the Company. As of September 30, 2008, there were no amounts
        due
        from Prince Digital.
 
 **NOTE
        7 – OTHER INCOME (EXPENSE)**
 
 Other
        income (expense) consisted of the following:
  Three months ended September 30,
                
                Nine months ended September 30,2008
                
                2007
                
                2008
                
                2007(Unaudited)
                
                (Unaudited)
                
                (Unaudited)
                
                (Unaudited)Income
                    from concessionaire sales
                
                $
                47,285
                
                $
                124,803
                
                
                406,322
                
                
                369,073Transaction
                    gain
                
                
                228,838
                
                
                252,034
                
                
                766,293
                
                
                677,407Interest
                    income
                
                
                -
                
                
                -
                
                
                136
                
                
                9,821Finance
                    costs
                
                
                (390,740
                )
                
                (361,539
                )
                
                (1,030,231
                )
                
                (1,032,752
                )Others
                
                
                196,267
                
                
                98,373
                
                
                323,529
                
                
                (257,962
                )Total
                
                $
                81,650
                
                $
                113,671
                
                $
                466,049
                
                $
                (234,413
                )
  F-8
 **ASIAMART,
          INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Currency
          expressed in United States Dollars (“US$”))**
 **(Unaudited)**
 **NOTE
        8 – SEGMENT INFORMATION**
 
 The
        Company’s operating businesses are structured and managed separately, according
        to the nature of their operations and the products and services they provide.
        The Company identifies its reportable segments based on management
        responsibility: (i) the trading segment, and (ii) the retailing
        segment.
 Three months ended September 30,
                
                Nine months ended September 30,2008
                
                2007
                
                2008
                
                2007(Unaudited)
                
                (Unaudited)
                
                (Unaudited)
                
                (Unaudited)Revenue:Trading
                
                $
                1,290,699
                
                $
                1,221,435
                
                $
                4,398,622
                
                $
                3,671,781Retailing
                
                
                6,157,933
                
                
                10,672,051
                
                
                25,345,702
                
                
                38,277,866$
                7,448,632
                
                $
                11,893,486
                
                $
                29,744,324
                
                $
                41,949,647
 
 Three months ended September 30,
                
                Nine months ended September 30,2008
                
                2007
                
                2008
                
                2007(Unaudited)
                
                (Unaudited)
                
                (Unaudited)
                
                (Unaudited)Income
                    (loss) before provision for income taxTrading
                
                $
                47,580
                
                $
                389,176
                
                $
                442,909
                
                $
                345,993Retailing
                
                
                (1,101,299
                )
                
                (970,715
                )
                
                (1,216,147
                )
                
                (625,655
                )$
                (1,053,719
                )
                $
                (581,539
                )
                $
                (773,238
                )
                $
                (279,662
                )
 
 September, 30, 2008
                
                December 31, 2007(Unaudited)
                
                (Note 2)Total
                    assets:Trading
                
                $
                1,521,848
                
                $
                6,446,113Retailing
                
                
                8,692,831
                
                
                5,321,280$
                10,214,679
                
                $
                11,767,393
 
 All
        of
        the Company’s revenue and assets are located in Hong Kong.
 
 F-9
 **ASIAMART,
          INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Currency
          expressed in United States Dollars (“US$”))**
 **(Unaudited)**
 **NOTE
        9** **–** **NET LOSS
        PER SHARE**
 
 The
        following table sets forth the computation of basic and diluted net loss
        per share for the three and nine months ended September 30, 2008 and
        2007:
 Three months ended September 30,
                
                Nine months ended September 30,2008
                
                2007
                
                2008
                
                2007Numerator:-
                    Net loss in computing basic and diluted net income per
                    share
                
                $
                (1,042,721
                )
                $
                (499,944
                )
                $
                (849,488
                )
                $
                (410,873
                )Denominator:-
                    Weighted average ordinary shares outstanding in computing basic
                    net loss per share
                
                
                24,744,177
                
                
                24,598,344
                
                
                24,744,177
                
                
                24,598,415-
                    Weighted average incremental warrant shares outstanding
                
                
                -
                
                
                -
                
                
                -
                
                
                -Total
                    weighted average shares outstanding in computing diluted net loss per
                    share
                
                
                24,744,177
                
                
                24,598,344
                
                
                24,744,177
                
                
                24,598,415Basic
                    net loss per share
                
                $
                (0.04
                )
                $
                (0.02
                )
                $
                (0.03
                )
                $
                (0.017
                )Diluted
                    net loss per share
                
                $
                (0.04
                )
                $
                (0.02
                )
                $
                (0.03
                )
                $
                (0.017
                )
  **NOTE
        10 – LEGAL PROCEEDINGS**
 
 On
        or
        about November 5, 2007, Everest Special Situations Fund, LP filed a Complaint
        in
        the Supreme Court for the State of New York, County of New York (the “Court”),
        alleging claims for fraud and breach of contract related to a Securities
        Purchase Agreement entered into with the Company on October 6, 2006. The
        Company
        filed a Motion to Dismiss the Complaint, which was submitted on March 26,
        2008.
        The Court granted the Motion and dismissed the action pursuant to an Order
        entered on April 8, 2008.  Everest Special Situations Fund, LP filed a
        Motion for Reargument of the Motion to Dismiss the Complaint in May
        2008.  On June 24, 2008, the Court entered an order partially granting and
        partially denying the Motion for Reargument.  The Court ruled that Everest
        Special Situations Fund, LP could amend the complaint to assert a claim for
        rescission, but that order dismissing claims for damages was
        affirmed.
 
 F-10
 **ASIAMART,
          INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Currency
          expressed in United States Dollars (“US$”))**
 **(Unaudited)**
 **NOTE
        11 – SUBSEQUENT EVENTS**
 
 Management
        Service Agreements:
 
 On
        October 28, 2008, three of the subsidiaries of Asiamart, Inc. (the “Company”)
        entered into a series of Management Service Agreements (the “Agreements”) with
        Best Paramount Industrial Limited (“Best Paramount”) whereby they will act as a
        service provider to Best Paramount. The Company shall provide technical,
        commercial and operational management for Best Paramount. Under the terms
        of the
        Agreements, the scope of services provided by the Company includes, but is
        not
        limited to, accounting, human resources, administrative, marketing and sales
        consultancy, retail operation and inventory management. The Company shall
        be in
        charge of running Best Paramount’s premises and will provide its employees to
        staff Best Paramount’s operation. Best Paramount shall be responsible for paying
        its own rent, cost of sales, commissions to travel agents and taxes. The
        Company
        shall be responsible for paying all other expenses of the operation, including,
        but not limited to, advertising, utilities, insurance, salaries, transportation,
        cleaning and administrative (“Actual Costs”) on the behalf of Best Paramount.
        Best Paramount shall reimburse the Company for the Actual Costs, and in addition
        pay Company a 5% mark-up of such Actual Costs as consideration for the Company’s
        services. Under the terms of the Agreements, the Company shall also have
        the
        discretion to charge Best Paramount a discretionary fee, to be negotiated
        in
        detail in three to six months pursuant to actual performance of the operation.
        The Agreements may be terminated by mutual agreement, by either party giving
        the
        other written notice in the event of material breach, or by giving a 60-day
        prior written notice without cause.
  Change
        in Business Model:
 
 The
        Company plans to change its business model from being an outlet and discount
        shopping center operator to a retail service provider. The Company foresees
        a
        significant slowdown in retail sales, anticipates a reduction in tourist
        visits
        from mainland China to Hong Kong, and a reduction in spending per tourist,
        partly as a result of adverse changes in travel policy and the domestic economic
        environment in China. During the third quarter of 2008, the revenue of the
        Company significantly decreased due to these trends. In addition in the period
        leading up to and during the Beijing 2008 Olympic Games, the Chinese government
        restricted outbound travel visas, and this policy has not been reversed
        following the Olympics. Further, management believes that the current ongoing
        global financial crisis is discouraging tourist visits to Hong Kong. In the
        present economic climate, management believes that the Company is not likely
        to
        be able to sustain profitability with operation of its retail outlets in
        their
        current form, and believes that changing its business model will be in its
        best
        interest. Management believes the Company faces fierce competition from other
        local retailers seeking to make sales to a dwindling group of tourists, which
        is
        causing a trend toward lower profits. The Company is considering the closure
        of
        its two outlets in the next few months and shifting its focus to provide
        management services to other retail operators. Best Paramount is reputed
        to be
        an experienced retail operator that sells a wide variety of appealing items
        that
        attract tourists, including, but not limited to, cosmetics, electronics,
        jewelry
        and branded watches, and it also has the advantage of securing an excellent
        location in the coveted Emax within Hong Kong International Trade and Exhibition
        Center, an attractive location with heavy foot traffic from visiting tourists.
        The Company believes its new direction will position the Company to produce
        a
        more stable stream of income and achieve profitability for the Company and
        its
        shareholders.
 
 F-11





**ITEM
      2.**  **MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS**





**Note
      Regarding Forward-Looking Statements**





*This
      quarterly report on Form 10-Q and other reports filed by Registrant from time
      to
      time with the Securities and Exchange Commission (collectively the “Filings”)
      contain or may contain forward-looking statements and information that are
      based
      upon beliefs of, and information currently available to, Registrant’s management
      as well as estimates and assumptions made by Registrant’s management. Readers
      are cautioned not to place undue reliance on these forward-looking statements,
      which are only predictions and speak only as of the date hereof. When used
      in
      the filings, the words “anticipate”, “believe”, “estimate”, “expect”, “future”,
“intend”, “plan”, or the negative of these terms and similar expressions as they
      relate to Registrant or Registrant’s management identify forward-looking
      statements. Such statements reflect the current view of Registrant with respect
      to future events and are subject to risks, uncertainties, assumptions, and
      other
      factors (including the risks contained in the section of this report entitled
      “Risk Factors”) relating to Registrant’s industry, Registrant’s operations and
      results of operations, and any businesses that Registrant may acquire. Should
      one or more of these risks or uncertainties materialize, or should the
      underlying assumptions prove incorrect, actual results may differ significantly
      from those anticipated, believed, estimated, expected, intended, or
      planned.*





*Although
      Registrant believes that the expectations reflected in the forward-looking
      statements are reasonable, Registrant cannot guarantee future results, levels
      of
      activity, performance, or achievements. Except as required by applicable law,
      including the securities laws of the United States, the Registrant does not
      intend to update any of the forward-looking statements to conform these
      statements to actual results. Readers are urged to carefully review and consider
      the various disclosures made throughout the entirety of this quarterly report,
      which attempt to advise interested parties of the risks and factors that may
      affect our business, financial condition, results of operations, and
      prospects.*





*In
      this Form 10-Q, references to “we”, “our”, “us”, “our company”, “Asiamart” or
      the “Registrant” refer to Asiamart, Inc., a Delaware
      corporation.*




**Overview**




We
      operate outlet and discount shopping centers catering principally to tourists
      visiting Hong Kong from other parts of mainland China. We offer tourists
      discount prices on selected international brands in a wide range of merchandise
      categories such as consumer electronics, cosmetics, watches, dietary
      supplements, health care products and optical instruments, producing high sales
      volume and rapid inventory turnover.




We
      own
      and operate five subsidiaries, of which two are trading subsidiaries. The two
      trading subsidiaries, Raffle Limited and Sure Profits Trading Limited, engage
      in
      the import and local distribution of consumer electronic products. We believe
      we
      have established a reputation of reliable, quality service among our business
      and retail customers. We source our products from suppliers worldwide in order
      to provide our customers with an extensive variety of products at competitive
      prices. We have also established a comprehensive quality assurance and service
      protocol. Our customers are entitled to a full refund within 180 days of their
      purchase of a product if the product does not meet their satisfaction. In cases
      where there is a manufacturer’s warranty, during the warranty period our
      customers can bring their products directly to manufacturers in China, including
      Hong Kong and Macau, for repairs. We mark the receipts for our products with
      a
      special symbol to denote our guarantee that the product is authentic and sourced
      directly from the manufacturer or an authorized dealer.





Over
      the
      past few years, our goal has been the development of our retail business with
      a
      focus on international tourists in Hong Kong and we became one of the largest
      retail enterprises in this market. Under the weight of a global recession,
      management has re-evaluated the Company’s current business model and operation.
      In the near future, the Company foresees a significant slowdown in retail sales
      and fierce competition from other retailers, anticipates a reduction in tourist
      visits from mainland China to Hong Kong, and a reduction in spending per
      tourist, partly as a result of adverse changes in travel policy and the domestic
      economic environment in China.


2





During
      the third quarter of 2008, the revenue of the Company significantly decreased
      due to the above-mentioned trends. In addition in the period leading up to
      and
      during the Beijing 2008 Olympic Games, the Chinese government restricted
      outbound travel visas, and this policy has not been reversed following the
      Olympics. Further, management believes that the current ongoing global financial
      crisis is discouraging tourist visits to Hong Kong. In the present economic
      climate, management believes that the Company is unlikely to sustain
      profitability with operation of its retail outlets in their current form, and
      believes that changing its business model will be in its best interest.
      Management believes the Company faces heavy competition from other local
      retailers seeking to make sales to a dwindling group of tourists, which is
      causing a trend toward lower profits. Retailers that wish to stay afloat have
      to
      compete fiercely by drastically marking down their prices, lowering their
      margins, and offering higher commissions to travel operators. Some of our
      competitors are in a better position to weather the economic storm because
      they
      have better locations with heavier foot traffic and attract a higher density
      of
      tourists. Management believes that our sales will not improve in the near future
      due to the difficult economic climate, the location of our outlets, and the
      intense competition surrounding our area. Therefore, the Company is considering
      the closure of its two outlets in the next few months and shifting its focus
      to
      provide management services to other retail operators.





The
      Company plans to change its business model from being an outlet and discount
      shopping center operator to a retail service provider. On October 28, 2008,
      three of the subsidiaries of the Company entered into a series of Management
      Service Agreements (the “Agreements”) with Best Paramount Industrial Limited
      (“Best Paramount”) whereby they will act as a service provider to Best Paramount
      at the Emax premises, a coveted location within Hong Kong International Trade
      and Exhibition Center with heavy foot traffic from visiting tourists. The
      Company shall provide technical, commercial and operational management for
      Best
      Paramount. Under the terms of the Agreements, the scope of services provided
      by
      the Company includes, but is not limited to, accounting, human resources,
      administrative, marketing and sales consultancy, retail operation and inventory
      management. The Company is also planning to set up a website to market the
      products on the internet. The Company shall be in charge of running Best
      Paramount’s Emax premises and will provide its employees to staff Best
      Paramount’s operation at the Emax location. Best Paramount shall be responsible
      for paying its own rent, cost of sales, commissions to travel agents and taxes.
      The Company shall be responsible for paying all other expenses of the operation,
      including, but not limited to, advertising, utilities, insurance, salaries,
      transportation, cleaning and administrative (“Actual Costs”) on the behalf of
      Best Paramount. Best Paramount shall reimburse the Company for the Actual Costs,
      and in addition pay Company a 5% mark-up of such Actual Costs as consideration
      for the Company’s services.





Under
      the
      terms of the Agreements, the Company shall also have the discretion to charge
      Best Paramount a discretionary fee, to be negotiated in detail in three to
      six
      months pursuant to actual performance of the operation. The Management
      Agreements may be terminated by mutual agreement, by either party giving the
      other written notice in the event of material breach, or by giving a 60-day
      prior written notice without cause. Best Paramount is reputed to be an
      experienced retail operator that sells a wide variety of appealing items that
      attract tourists, including, but not limited to, cosmetics, electronics, jewelry
      and branded watches, and it also has the advantage of securing an excellent
      location in the coveted Emax. The Company believes its new direction will
      position the Company to produce a more stable stream of income and achieve
      profitability for the Company and its shareholders.





**Quarterly
      Results May Fluctuate**




Our
      sales
      may be influenced by general economic cycles. A prolonged period of depressed
      consumer spending would have a material adverse effect on our profitability.
      Our
      business is also subject to some seasonality, with decrease in sales during
      the
      winter months due to decrease in travel and tourist activities, and increase
      in
      sales during the summer months due to an increase in such activities. Due to
      the
      swing of the economy and the seasonality of our sales, our quarterly results
      will fluctuate, perhaps significantly. Our operating results can also be
      impacted by the supply of products from suppliers caused by manufacturing delays
      or delivery issues. Additionally, the offering of new products or utilization
      of
      new sales channels can also cause our quarterly operating results to fluctuate.
      For a discussion of these and other risks related to economic cycles and
      seasonality of our business, see *“* Risk
      Factors *”* in Part
      II below.




3





**Critical
      Accounting Policies and Estimates**




Management’s
      discussion and analysis of our financial condition or plan of operations are
      based on our consolidated financial statements, which have been prepared in
      accordance with accounting principles generally accepted in the United States.
      The preparation of these financial statements requires us to make estimates
      and
      assumptions that affect the reported amounts of assets and liabilities and
      the
      disclosure of contingent assets and liabilities at the date of the financial
      statements as well as the reported net sales and expenses during the reporting
      periods. We evaluate our estimates and assumptions on an ongoing basis. We
      base
      our estimates on historical experience and on various other factors that we
      believe are reasonable under the circumstances, the results of which form the
      basis for making judgments about the carrying value of assets and liabilities
      that are not readily apparent from other sources. Actual results may differ
      from
      these estimates under different assumptions or conditions.





While
      our
      significant accounting policies are described in Note 2 to our consolidated
      financial statements, we believe that the following accounting policies are
      the
      most critical to assist you in fully understanding and evaluating our reported
      financial results.




*Revenue
      recognition.* Revenue
      of the Company includes sales and referral income. Referral income is derived
      from referring our customers to other non-directly competitive shops. Sales
      and
      referral income are recognized when the following four revenue criteria are
      met:
      persuasive evidence of an arrangement exists, delivery has occurred, the selling
      price is fixed or determinable, and collectability is reasonably assured. Sales
      revenue is recognized net of sales discount and the actual returns at the time
      when the merchandise is sold to the customer. Based on historical experience,
      the management estimates that sales returns are immaterial and has not made
      allowance for estimated sales returns. Referral income is the income derived
      from referring customers to other non-directly competitive duty-free shops.
      The
      Company recognized referral income according to the number of visitors referred
      during the financial period.




*Accounts
      receivable* .
      Accounts receivable consist primarily of trade receivables and amounts due
      from
      banks for customer credit card transactions. Accounts receivable are recognized
      and carried at the original invoiced amount less an allowance for any
      uncollectible accounts. Management reviews and adjusts this allowance
      periodically based on historical experience, current economic climate as well
      as
      its evaluation of the collectability of outstanding accounts. We evaluate the
      credit risks of our customers utilizing historical data and estimates of future
      performance.





*Inventories* .
      We
      value inventory at the lower of cost or market, using the first-in, first-out
      or
      weighted average basis method, and regularly review the book value of
      discontinued product lines and SKUs to determine if these items are properly
      valued. If the market value of the product is less than cost, the management
      will write down the related inventory to the estimated net realizable value.
      The
      management regularly evaluates the composition of its inventory to identify
      slow-moving and obsolete inventories to determine if additional write-downs
      are
      required. This valuation requires significant judgment from management as to
      the
      salability of its inventories based on forecasted sales. It is particularly
      difficult to judge the potential sales of new products. Should the forecasted
      sales fail to materialize, it would have a significant impact on the company’s
      results of operations and the valuation of its inventory, resulting in a change
      to income in the period such determination is made.





*Property
      and equipment* .
      Property and equipment are recorded at cost less accumulated depreciation and
      amortization and impairment losses. Gains or losses on disposals are reflected
      as either a gain or a loss in the year of disposal. The cost of improvements
      that extend the life of plant, property and equipment are capitalized. These
      capitalized costs may include structural improvements, equipment and fixtures.
      All ordinary repair and maintenance costs are expensed as incurred. Property
      and
      equipment held-for-sale are measured at the lower of their carrying amount
      or
      fair value less cost to sell. Depreciation or amortization for financial
      reporting purposes is provided using the straight-line method over the estimated
      useful lives of the assets.




*Impairment
      of long-lived assets* .
      We
      account for impairment of property, plant and equipment and amortizable
      intangible assets in accordance with SFAS No. 144, *Accounting
      for the Impairment or Disposal of Long-Lived Assets* ,
      which
      requires us to evaluate a long-lived asset for recoverability when there is
      an
      event or circumstance that indicates the carrying value of the asset may not
      be
      recoverable. An impairment loss is recognized when the carrying amount of a
      long-lived asset or asset group is not recoverable (when the carrying amount
      exceeds the gross, undiscounted cash flows from use and disposition) and is
      measured as the excess of the carrying amount over the asset’s (or asset
      group’s) fair value.


4





**Results
      of Operations**





***Comparisons
      of Nine Months Ended September 30, 2008 Compared to Nine Months Ended September
      30, 2007***





*Sales* .
      For the
      nine months ended September 30, 2008, sales decreased 29% from $42 million
      to
      $29.7 million relative to the nine months ended September 30, 2007. The decrease
      in sales is attributable to both decreases in retail sales and luxury watches.
      The marked slowdown in sales is most evident in the last three months of the
      nine months ended September 30, 3008, coinciding with the pace of the aggressive
      breakdown of the global financial system. Management believes that we are
      entering into a period of uncertainty regarding future economic prospects,
      and
      as a result, consumer spending, particularly on discretionary items, and
      disposable income is in decline. Aside from a global recession, China also
      suffered from several of its own financial mishaps in 2008, such as the Sichuan
      earthquake and the nationwide tainted milk scandal. In the current economic
      climate, the Company experienced a significant slowdown in overall retail sales
      and the sale of our luxury watches has also heavily declined. For the
      first nine months of 2008, watch sales totaled $1.5 million as
      compared to $14 million for the same period in 2007. Of the remaining $28.2
      million in sales for 2008, $23.8 million was generated by our retail segment
      (excluding watches), and $4.4 million was generated from our trading segment
      as
      compared to $24 million and $4 million, respectively, for 2007. The average
      spending per capita slightly increased from $73 for the nine months ended
      September 30, 2007 to $77 for the same period in 2008. During the nine months
      ended September 30, 2008 and especially during the third quarter of 2008,
      management believes overall group tour visits from China to Hong Kong declined
      dramatically and this trend is reflected in our sales. For a discussion of
      the
      factors affecting travel to Hong Kong during third quarter 2008, see section
      below on *“Comparison
      of Three Months Ended September 30, 2008 and September 30,
      2007”* .
      Our
      retail sales (excluding watches) decreased due to decreased patronage from
      332,412 customer visits in the nine months ended September 30, 2007 to
      263,033 customer visits in the nine months ended September 30, 2008, a
      decrease of 20.9% for the corresponding periods. In the period leading up to
      and
      during the 2008 Beijing Olympic Games, the Chinese government restricted
      outbound travel visas which management believes had a big impact on tourists
      visiting Hong Kong. Management also believes that the current ongoing global
      financial crisis is discouraging tourist visits to Hong Kong.





*Cost
      of Sales.* Cost of
      sales decreased from $25.9 million for the nine months ended September 30,
      2007
      to $16.6 million for the nine months ended September 30, 2008, a decrease of
      36%
      as compared to a 29% decrease in sales over the same comparable nine month
      periods in 2008 and 2007. The decrease of the cost of sales is in line with
      our
      decrease in sales. Our gross profit margin increased from 38% for the nine
      months ended September 30, 2007 to 44% for the same period this year. The
      increase of margin was mainly due to increased sales proportion of the higher
      margin retail products as compared to the luxury watch line.





*Selling,
      General and Administrative Expenses.* Selling,
      general and administrative expenses decreased from $16.1 million for the nine
      months ended September 30, 2007 to $14.4 million for the same period in 2008.
      Our selling expenses slightly decreased from $9.9 million for the nine
      months period in 2007 to $9.1 million for the same period of 2008. As to
      the percentage of retail sales, our selling expenses increased to 57% for the
      nine months ended September 30, 2008 from 42% for the same period in 2007.
      The
      percentage of our selling expenses increased due to our special incentives
      to
      agents. In the first nine months of 2008, there were increased competition
      from
      other local retailers seeking to make sales to a dwindling group of tourists,
      and therefore we had to offer more attractive incentives to agents in order
      to
      encourage them to bring us business over other retailers. Salaries and other
      administrative expenses decreased from $6.2 million in the first nine month
      period of 2007, to $5.3 million for the same period of 2008. Salaries and other
      administrative expenses in 2008 were lower due to our continuous cost-cutting
      efforts and reduction in sales commissions to staff. During downturn of the
      economy when job cuts are increasing, we were able to offer slimmer commissions
      to our staff and still be able to retain talent.





*Other
      Income* .
      Other
      income primarily represents the gain on the exchange rate from converting RMB
      received from customers to Hong Kong Dollars and amortization expenses on the
      debt discount. The total of other income increased from a net expense of
      $0.2 million for the nine months ended September 30, 2007 to net income of
      $0.5 million for the same period in 2008.


5





***Comparison
      of Three Months Ended September 30, 2008 and September 30,
      2007.***





*Sales* .
      For the
      three months ended September 30, 2008, sales decreased 37% from $11.9 million
      to
      $7.4 million relative to the three months ended September 30, 2007. During
      the
      third quarter of 2008, management believes that our revenue significantly
      decreased due to several domestic factors affecting travel, such as the Beijing
      Olympics in August and the Chinese tainted milk scandal in September. Instead
      of
      visiting Hong Kong, we believe that many tourists from other parts of mainland
      China either opted to travel to Beijing to join the festivity of the Olympics
      in
      August or chose to stay home and watch the Olympics on television. The Chinese
      government also restricted outbound travel visas in the period leading up to
      and
      during the Olympics which further discouraged outbound travel and led
      to fewer tourists visiting Hong Kong. We postulate that the tainted milk
      scandal that unraveled early September 2008 which caused a nationwide panic
      in
      mainland China also caused many tourists, especially those with children, to
      opt
      out of traveling to stay close to home. For the three months ended September
      30,
      2008, we faced especially strong competition from other retailers around our
      area, which management believes pulled away a lot of our business. These
      competitors have the advantage of having their shopping outlets in better
      locations with a higher density of tourists and heavier foot traffic; they
      are
      also willing to drastically mark down their prices, lower their margins, and
      offer higher commissions to travel operators in order to compete for tourist
      business. For the three months ended September 30, 2008, there was such a sharp
      decline in retail sales that we decided to consolidate the operation of our
      two
      outlets. During this period, our primary outlet would be open full time and
      our
      secondary outlet would only be open when the primary outlet has reached full
      capacity. We asked our staff to take annual leaves and the staff that resigned
      were not replaced since we had enough staff to rotate between the two outlets.
      By consolidating our operation during third quarter 2008, we were able to cut
      down on employee salaries and utilities expenses to save costs. Management
      believes that our sales will not improve in the near future due to the difficult
      economic climate, the location of our outlets, and the fierce competition
      surrounding our area. Considering these trends, management decided not to renew
      the leases of our outlets when they expire in the next few months, and to switch
      business direction from being a retail operator to a service provider. For
      the
      three months ended 2008, watch sales totaled $0.4 million as compared to $1
      million for the same period in 2007. Of the remaining $7 million in sales
      for 2008, $5.7 million was generated by our retail segment (excluding watches),
      and $1.3 million was generated from our trading segment as compared to $8.5
      million and $2.4 million, respectively, for 2007. The average spending per
      capita decreased from $77 for the three months ended September 30, 2007 to
      $75
      for the same period in 2008, a decrease of 2.7% mainly due to more cautious
      spending by tourists. Retail sales (excluding watches) decreased also due to
      decreased patronage from 112,886 customer visits during the three months ended
      September 30, 2007 to 60,083 customer visits during the three months ended
      September 30, 2008, a decrease of 47% for the corresponding periods; and such
      significant decrease in the number of tourists is reflected in the considerable
      decrease of our sales during the third quarter of 2008.





*Cost
      of Sales.* Cost of
      sales decreased from $5.7 million for the three months ended September 30,
      2007
      to $4.6 million for the three months ended September 30, 2008, a decrease of
      20%
      as compared to a 37% decrease in sales over the same comparable quarters in
      2008
      and 2007, in line with the decrease in our sales. Our gross profit margin
      decreased from 51% for the three months ended September 30, 2007 to 38% for
      the
      same period this year. The decrease in margins was mainly due to our
      competitive pricing strategy which was required due to fierce competition from
      other retailers. Due to the economic downturn and fewer tourists in the third
      quarter of 2008, we took aggressive measures to compete for sales revenue
      from a diminishing group of tourists with strategies such as paying higher
      commissions to agents, promotion and lower prices, and this led to a
      decrease of our margins.




*Selling,
      General and Administrative Expenses.* Selling,
      general and administrative expenses decreased from $6.8 million for the three
      months ended September 30, 2007 to $4 million for the same period in 2008.
      Our
      selling expenses decreased from $3.3 million for the third quarter in 2007
      to
      $2.3 million for the same period in 2008. Management decided to cut down on
      advertising spending during this period in order to save costs. As to the
      percentage of retail sales, our selling expenses increased to 37% for the three
      months ended September 30, 2008 from 33% for the same period in 2007. The
      percentage of our selling expenses increased due to the increase of our
      incentives to agents. As above-mentioned, since all our competitors are offering
      greater incentives to agents in order to compete for diminishing tourist
      business, we had to keep up with more attractive incentives as well to compete
      in this difficult retail climate. Salaries and other administrative expenses
      decreased from $3.5 million in the third quarter of 2007 to $1.7 million for
      the
      same period of 2008. Salaries and other administrative expenses in 2008 were
      lower due to our continuous cost-cutting efforts in 2008. Also, with fewer
      employment opportunities during economic slowdown, we were able to retain our
      staff even with fewer incentives.


6





*Other
      Income* .
      Other
      income primarily represents the gain on the exchange rate from converting RMB
      received from customers to Hong Kong Dollars and amortization expenses on the
      debt discount. The total of other income slightly decreased from $0.11
      million for the three months ended September 30, 2007 to less than $0.08 million
      for the same period in 2008.





**Business
      Segments**





Our
      operating businesses are structured and managed separately, according to the
      nature of their operations and the products and services they provide. We
      identify our reportable segments based on management responsibility, and these
      reportable segments are (i) the trading segment (“Trading Segment”) and
      (ii) the retail segment (“Retail Segment”). Information on segments and
      reconciliations to income before income taxes are described in Note 8 to our
      consolidated financial statements and is incorporated herein by
      reference.





*Trading
      Segment*





Segment
      sales and profit for our Trading Segment were as follows:




Sales
      revenues from external customers in the Trading Segment during the first nine
      months of 2008 increased 20%, from $3.7 million for the nine month period ended
      September 30, 2007 to $4.4 million for the same period in 2008. Our sales
      revenue increased because we were able to take advantage of lower product prices
      with purchases paid with cash.





Total
      segment profit as a percentage of sales for the Trading Segment was 10% for
      the
      nine months period ended September 30, 2008, as compared to 9% for the same
      period in 2007.





*Retail
      Segment*





Segment
      revenue and profit for the Retail Segment, were as follows:





Sales
      revenues from external customers in the Retail Segment during the first nine
      months of 2008 decreased 34%, from $38.3 million for the nine months period
      ended September 30, 2007 to $25.3 million for the same period in 2008. The
      decrease in revenues is attributed to more cautious spending from tourists
      with
      the downturn of the economy.





Total
      segment loss as a percentage of sales for the Retail Segment was 4.8% and
      1.6% in loss for the nine month period ended September 30, 2008 and 2007,
      respectively.





**Liquidity
      and Capital Resources**





*Cash
      Flows.* For the
      nine months period ended September 30, 2008, the net cash flow drawn by
      operations was $805,166, which was due to pre-payment to vendors for new models
      of their products. Net cash flow used in investing activities in the third
      quarter of 2008 was $1,299, which was minimal.




Net
      cash
      flow used in financing activities was $489,303 mainly due to the repayment
      of
      capital lease arrangements and payments for installment loans.




We
      believe that our existing cash balances and anticipated cash flows from
      operations will be sufficient to meet our operating and capital requirements
      for
      at least the next twelve months. There is no assurance, however, that we will
      not need to raise additional equity or debt financing within this period. We
      also may require additional capital for other purposes not presently
      contemplated. If we are unable to obtain sufficient capital, we could be
      required to curtail our expenditures, including capital expenditures for
      property and equipment, which could potentially harm our
      business.


7





**Contractual
      Obligations**





We
      have
      certain fixed contractual obligations and commitments that include future
      estimated payments. Changes in our business needs, cancellation provisions,
      changing interest rates, and other factors may result in actual payments
      differing from the estimates. We cannot provide certainty regarding the timing
      and amounts of payments. We present below a summary of the most significant
      assumptions used in our determination of amounts presented in the tables in
      order to assist in the review of this information within the context of our
      consolidated financial position, results of operations, and cash
      flows.





The
      following tables summarize our contractual obligations as of September 30,
      2008,
      and the effect that these obligations are expected to have on our liquidity
      and
      cash flows in future periods.


**Payments Due by Period****Total**
              
              **Less than 1**
                **year**
              
              **1-3 Years**
              
              **4-5 Years**
              
              **5 Years +****(in thousands of dollars)***Contractual
                  Obligations*:Total
                  Indebtedness
              
              $
              61
              
              $
              61
              
              $
              0
              
              
              0
              
              $
              0Capital
                  Lease Obligations
              
              
              92
              
              
              91
              
              
              1
              
              
              0
              
              
              0Operating
                  Leases
              
              
              457
              
              
              451
              
              
              6
              
              
              0
              
              
              0Total
                  Contractual Obligations:
              
              $
              610
              
              $
              603
              
              $
              7
              
              $
              0
              
              $
              0


Total
      indebtedness consists of installment loans from financial institutions in Hong
      Kong.





Capital
      lease amounts primarily consist of vehicles and equipment to support our retail
      operations.





Operating
      lease amounts include minimum lease payments under our non-cancelable operating
      leases for office facilities, as well as limited computer and office equipment
      that we utilize under certain lease arrangements. The leases for our shopping
      centers are about to expire in the next few months. As previously discussed,
      the
      Company is considering the closure of its two outlets at the expiration of
      its
      lease agreements and shifting its focus to provide management services to other
      retail operators.





Other
      purchase obligation amounts include minimum purchase commitments for advertising
      and other goods and services that were entered into through our ordinary course
      of business.





**Off-Balance
      Sheet Arrangements**





We
      have
      not entered into any off-balance sheet arrangements that have or are reasonably
      likely to have a current or future effect on our financial condition, changes
      in
      financial condition, revenues or expenses, results of operations, liquidity,
      capital expenditures, or capital resources that would be considered material
      to
      investors.


8





**Effects
      of Inflation**





We
      are
      subject to price risks arising from price fluctuations in the market prices
      of
      the products that we sell. Price risks are managed by each business segment
      through productivity improvements and cost-containment measures. Management
      does
      not believe that inflation risk is material to our business or our consolidated
      financial position, results of operations, or cash flows.




**ITEM
      3.**  **QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.**





**Derivative
      Financial Instruments**





We
      do not
      use derivative financial instruments in our investment portfolio and do not
      have
      any foreign exchange contracts. Our financial instruments consist of cash and
      cash equivalents, trade accounts receivable, accounts payable, and long-term
      obligations. We consider investments in highly-liquid instruments purchased
      with
      a remaining maturity of 90 days or less at the date of purchase to be cash
      equivalents.





**Interest
      Rates**





Our
      exposure to market risk for changes in interest rates relates primarily to
      our
      short-term investments and short-term obligations; thus, fluctuations in
      interest rates do not have a material impact on the fair value of these
      securities. At September 30, 2008, we had approximately $0.6 million in cash
      and
      cash equivalents. A hypothetical 5% increase or decrease in either short-term
      or
      long-term interest rates would not have a material impact on our earnings or
      loss, or the fair market value or cash flows of these instruments.





**Foreign
      Exchange Rates**





We
      generally transact business in Hong Kong Dollars, and we do not have significant
      exposure to exchange rates between and among the U.S. Dollar or Chinese Renminbi
      (RMB). Since 1983, the Hong Kong Dollar has been pegged to the U.S. Dollar
      and
      currently has an exchange rate of 7.8 Hong Kong Dollars for each U.S. Dollar.
      Our stores typically hold insignificant amounts of U.S. Dollars and RMB, i.e.,
      100,000 to 150,000 RMB, and $2,000 to $3,000 in U.S. Dollars. However, see
      the
      risk factor in Part II below entitled “Fluctuation in the value of RMB and the
      Hong Kong Dollar relative to other currencies may have a material adverse effect
      on our business and/or an investment in our shares.”





**ITEM
      4.****CONTROLS
      AND PROCEDURES**





Based
      on
      an evaluation of the effectiveness of our disclosure controls and procedures
      (as
      defined in Rule 13a-15(e) or Rule 15d-15(e) under the Securities Exchange Act
      of
      1934 (the “Exchange Act”)) as of September 30, 2008, our Chief Executive Officer
      and Chief Financial Officer believe that our disclosure controls and procedures
      (as defined in Rule 13a-15(e) or 15d-15(e) of the Exchange Act) are effective
      to
      ensure that information required to be disclosed by us in this report is
      accumulated and communicated to our management, including our principal
      executive officer and principal financial officer, as appropriate, to allow
      timely decisions regarding required disclosure. There were no changes in our
      internal control over financial reporting (as defined in Rules 13a-15(f) and
      15d-15(f) under the Securities Exchange Act of 1934, as amended) during the
      quarter ended September 30, 2008 that have been materially affected, or are
      reasonably likely to materially affect, our internal control over financial
      reporting.


9




**PART
      II. OTHER INFORMATION**




**ITEM 1.****LEGAL
      PROCEEDINGS**





Other
      than the proceeding described below, we are not currently involved in any
      material legal proceedings, nor have we been involved in any such proceeding
      that has had, or may have, a significant effect on us. We are not aware of
      any
      material legal proceedings pending against us.





Everest
      Special Situations Fund, LP v. Asiamart, Inc. (Index No. 603666/07). On or
      about
      November 5, 2007, Everest Special Situations Fund, LP filed a Complaint in
      the
      Supreme Court for the State of New York, County of New York (the “Court”),
      alleging claims for fraud and breach of contract related to a Securities
      Purchase Agreement entered into with the Company on October 6, 2006. The Company
      filed a Motion to Dismiss the Complaint, which was submitted on March 26, 2008.
      The Court granted the Motion and dismissed the action pursuant to an Order
      entered on April 8, 2008. Everest Special Situations Fund, LP filed a Motion
      for
      Reargument of the Motion to Dismiss the Complaint in May 2008. On June
      24, 2008, the Court entered an order partially granting and partially denying
      the Motion for Reargument. The Court ruled that Everest Special Situations
      Fund,
      LP could amend the complaint to assert a claim for rescission, but the order
      dismissing claims for damages was affirmed.




**ITEM 1A.****RISK
      FACTORS**





*You
      should carefully consider the risks described below together with all of the
      other information included in this report before making an investment decision
      with regard to our securities. The statements contained in or incorporated
      into
      this report that are not historic facts are forward-looking statements that
      are
      subject to risks and uncertainties that could cause actual results to differ
      materially from those set forth in or implied by forward-looking statements.
      If
      any of the following risks actually occurs, our business, financial condition
      or
      results of operations could be harmed. In that case, the trading price of our
      common stock could decline, and you may lose all or part of your
      investment.*





**Risks
      Relating to Our Business**





**Our
      sales are influenced by general economic cycles. A prolonged period of depressed
      consumer spending would have a material adverse effect on our
      profitability.**




Retail
      is
      a cyclical industry that is dependent upon the overall level of consumer
      spending. The global economy is currently experiencing a downturn. Retail tends
      to decline in periods of uncertainty regarding future economic prospects, when
      consumer spending, particularly on discretionary items, and disposable income
      decline. Many factors affect the level of consumer spending in the retail
      industry, including, among others: prevailing economic conditions, levels of
      employment, salaries and wage rates, energy costs, interest rates, the
      availability of consumer credit, taxation and consumer confidence in future
      economic conditions. During periods of economic uncertainty, we may not be
      able
      to maintain or increase our sales or maintain or improve our margins from
      operations as a percentage of net sales. A prolonged period of depressed
      consumer spending would have a material adverse effect on our
      profitability.




**We
      face intense competition and operate in an industry with limited barriers to
      entry, and some of our competitors may be better positioned to capitalize on
      the
      rapidly growing retail sector in our geographic area.**





The
      retail sector in our geographic area is rapidly evolving and intensely
      competitive. Many of our current and potential competitors have longer operating
      histories, larger customer bases, greater brand recognition and significantly
      greater financial, marketing, technical, management and other resources than
      we
      do. In addition, some of our competitors have used, and may continue to use,
      aggressive pricing or carry a larger inventory than we do. We expect that
      competition will further intensify in the future. Because barriers to entry
      are
      limited, current and new competitors may open retail locations that will compete
      with ours.


10




We
      believe that the primary competitive factors in the retail sector include brand
      recognition, price, shipping offers, product selection, product availability
      and
      customer service. We currently compete against other retailers within the
      specialized niche of travel retail in Asia.




We
      may
      also experience significant competitive pressure if any of our suppliers were
      to
      initiate their own retail operations in the locations we serve. Since our
      suppliers have access to merchandise at very low costs, they could sell products
      at lower prices and maintain a higher gross margin on their product sales than
      we can. In this event, our current and potential customers may decide to
      purchase directly from these suppliers. Increased competition from any supplier
      capable of maintaining high sales volumes and acquiring products at lower prices
      than us could significantly reduce our market share and adversely impact our
      financial results.





We
      compete not only for customers, but also for favorable product allocations
      from
      product manufacturers. Some of our competitors could enter into exclusive
      distribution arrangements with our suppliers, deny us access to their products
      and devote greater resources to marketing and promotional
      campaigns.




**The
      seasonality of our business places increased strain on our
      operations.**





We
      generally experience an increase in sales during the summer months, as travel
      and tourist activity increases. On the other hand, we generally experience
      a
      decrease in sales during the winter months when there are fewer travelers.
      In
      addition, if we are unable to meet customer demand for our products during
      these
      peak periods, our revenues and future growth could be adversely affected.
      Furthermore, we may be unable to adequately staff our retail outlets and
      warehousing operations during these periods.





**Our
      future operating results may fluctuate and cause the price of our common stock
      to decline.**





We
      expect
      that our revenues and operating results will continue to fluctuate significantly
      from quarter to quarter due to various factors, many of which are beyond our
      control. The factors that could cause our operating results to fluctuate
      include, but are not limited to:




·
            seasonality
                of the business;




·
            price
                competition from other retailers;




·
            general
                price increases by suppliers and
                manufacturers;




·
            our
                ability to maintain and expand our distribution
                relationships;




·
            increases
                in the cost of advertising;




·
            unexpected
                increases in shipping costs or delivery
                times;




11




·
            our
                ability to build and maintain customer
                loyalty;




·
            the
                introduction of new services, products and strategic alliances by
                us and
                our competitors;




·
            the
                success of our brand-building and marketing
                campaigns;




·
            government
                regulations, changes in tariffs, duties, and
                taxes;




·
            our
                ability to maintain, upgrade and develop our retail
                stores;




·
            changes
                in our store leasing costs;




·
            the
                amount and timing of operating costs and capital expenditures relating
                to
                expansion of our business, operations and infrastructure;
                and




·
            general
                economic conditions as well as economic conditions specific to the
                retail
                sector.




If
      our
      quarterly revenues or operating results fall below the expectations of investors
      or securities analysts, the price of our common stock could significantly
      decline.





**Our
      efforts to successfully develop private label brands are costly and may not
      generate corresponding revenues.**





Developing
      private label brands is an important part of our strategy to build future
      revenue and achieve higher profit margins. Accordingly, we intend to continue
      to
      invest in the development of our own brand of products in selected categories.
      These initiatives require significant expenditures. If we are unsuccessful
      in
      our development efforts, we may not be able to recover these expenses or
      increase our revenues or margins.





To
      promote our private label brands in response to competitive pressures, we may
      increase our marketing budget or otherwise increase our financial commitment
      to
      creating and maintaining brand loyalty among our customers. We cannot be certain
      that our advertising efforts will be a successful means of attracting customers
      or that this measure of resource allocation will correspond with providing
      additional revenues. If we fail to promote and maintain our brand, or if we
      incur excessive expenses while attempting to promote and maintain our brand,
      our
      business may be adversely affected.


12




**We
      depend on our relationships with tour companies to bring customers to retail
      locations, and losing these sources would adversely affect our revenues and
      financial results.**





We
      attract retail traffic by entering into arrangements with tour companies who
      schedule shopping tours with their customers. In order to maintain a flow of
      tourist traffic, we must continually monitor and maintain our relationships
      with
      the tour companies with which we do business. If the tour companies modify
      or
      terminate their relationship with us, we could lose customers, and traffic
      in
      our retail stores could decrease.




**If
      we fail to offer a broad selection of products and brands that customers find
      attractive, our revenues could decrease.**





In
      order
      to meet our strategic goals, we must successfully offer, on a continuous basis,
      a broad selection of appealing products that reflect our customers’ preferences.
      The taste of consumers is subject to frequent, significant and sometimes
      unpredictable changes. To be successful in our line of business, our product
      offerings must be broad, deep in scope and affordable to a wide range of
      consumers whose preferences may change regularly. We cannot predict with
      certainty that we will be successful in offering products that meet these
      requirements. If our product offerings fail to satisfy our customers’ taste or
      respond to changes in customers’ preferences, our revenues could decline. In
      addition, any failure to offer products that satisfy customers’ preferences
      could allow our competitors to gain market share.





**If
      we do not successfully optimize and operate our retail locations, our business
      could decline.**





If
      we do
      not successfully operate our retail locations, this could significantly limit
      our ability to meet customer demand. Because it is difficult to predict demand,
      we may not manage our facilities optimally, which may result in excess or
      insufficient inventory, and distribution capacity. Failure to optimize inventory
      will increase our net shipping cost by requiring us to make long-distance
      shipments or partial shipments from different locations. As we continue to
      add
      warehouse capability or add new businesses with different inventory management
      requirements, operating our inventory management system becomes more challenging
      and there can be no assurance that we will be able to operate our system
      effectively.




**We
      have limited control over the actions of our distributors, retailers or their
      vendors.**





We
      rely
      on distributors for the sale of our branded products, and those distributors
      maintain inventory and prepare merchandise for shipment to retailers and
      individual customers. We have limited control over the products that our
      distributors purchase or keep in stock, and our arrangements with our
      distributors do not require them to set aside any amount of inventory to satisfy
      demand. Our distributors may not accurately forecast the products that will
      be
      in high demand. In addition, we have limited control over their sales process,
      shipping and order processing procedures. Although we have not experienced
      disruptions in the past, and we do not presently foresee possible disruptions
      in
      the near future, a widespread inability of our distributors to successfully
      supply our branded products, if it occurred, would substantially harm our
      business.





**We
      are dependent upon third parties for significant functions, and if these
      functions or operations are interrupted for any significant period of time
      or if
      we experience other problems with our third-party service providers, our
      business and results of operations would be substantially
      harmed.**





In
      addition, we rely upon third party tour operators for a large portion of our
      customer flow. As a result, we are subject to cancellations and disruptions
      due
      to factors that are beyond our control, including employee strikes and inclement
      weather. Further, increased fuel costs may adversely affect tourist traffic.
      If
      cooperating tour companies were to experience cancellations and disruptions,
      this could negatively affect our sales revenue.





**We
      rely on foreign sources for the supply of many of the products we
      sell.**





We
      rely
      on long term supply relationships with several manufacturers in the PRC, and
      in
      the future may rely upon supply relationships with other foreign sources.
      Regional disruptions relating to political or environmental conditions could
      cause shipping delays, which could interfere with our ability to supply our
      customers and harm our financial results. A significant breakdown in the
      manufacturing process or among suppliers could result in product shortages,
      and
      our revenues could decline due to the loss of these suppliers and
      manufacturers.


13




**Our
      ability to manage our future growth is uncertain.**





Our
      corporate growth strategy aims to among other things, further develop our
      distribution channels, expand our merchandise offerings, leverage our customer
      database, reach new customer segments, and increase traffic. In pursuing these
      objectives, the resulting strain on our managerial, operational, financial
      and
      other resources could be significant. Success in managing such expansion and
      growth will depend, in part, upon the ability of senior management to manage
      effectively. Any failure to manage the anticipated growth and expansion could
      have a material adverse effect on our business.





**Our
      operations are based, to a certain extent, on the successful integration of
      certain supply chain and operating technologies. Our inability to integrate
      these technologies may negatively impact our ability to effectively manage
      inventory, and may harm our business and operating
      results.**





We
      rely
      on certain hardware and software systems, purchased from a third-party and
      customized by our technicians, to perform vital functions with respect to our
      operations. In addition, we rely upon hardware and software systems for
      warehouse management. Our inability to properly operate, implement or integrate
      these technologies will negatively impact our product supply chain and may
      harm
      our business and operating results.





**Increased
      product returns will decrease our revenues and impact
      profitability.**





We
      make
      allowances for product returns in our financial statements based on historical
      return rates. In order to keep product returns low or within our estimates,
      we
      continuously monitor product purchases and returns and may change our product
      offerings based on the return rates. If our actual product returns significantly
      exceed our allowances for returns, our revenues and profitability could
      decrease, especially as we expand into new product categories. In addition,
      because our allowances are based on historical return rates, the introduction
      of
      new merchandise categories or new products, changes in our product mix or
      other factors may cause actual returns to increase. Any new policies intended
      to
      reduce the number of product returns may result in customer dissatisfaction
      and
      fewer repeat customers.





**Our
      growth and operating results could be impaired if we are unable to meet our
      future capital needs.**





We
      may
      need to raise additional capital in the future to:




·
            fund
                more rapid expansion;




·
            acquire
                or expand into new retail locations, warehousing facilities or office
                space;




·
            maintain,
                enhance and further develop our information technology
                systems;




·
            develop
                new product categories or enhanced
                services;




·
            fund
                acquisitions; or




14




·
            respond
                to competitive pressures.




If
      we
      raise additional funds by issuing equity or convertible debt securities, the
      percentage ownership of our stockholders will be diluted. Furthermore, any
      new
      securities could have rights, preferences and privileges senior to those of
      our
      common stock. We currently do not have any commitments for additional financing.
      We cannot be certain that additional financing will be available when and to
      the
      extent required or that, if available, it will be on acceptable terms. If
      adequate funds are not available on acceptable terms, we may not be able to
      fund
      our expansion, develop or enhance our products or services or respond to
      competitive pressures.





**The
      loss of key members of our executive management could negatively affect our
      business.**





We
      depend
      on the continued services and performance of our executive management and other
      key personnel, in particular, Alex Chun Shan Yue, our Chief Executive Officer,
      and Danny Sau Kwong Leung, our Chief Operating Officer. The loss of either
      of
      these executive officers or any other key persons could harm our
      business.





**We
      may be adversely affected by the financial health of the retail industry in
      Asia.**





We
      are
      subject to broad economic factors that drive consumer spending and maintain
      the
      health of the retail industry in Asia. These factors include, but are not
      limited to, unemployment rates, consumer credit levels, consumer confidence,
      and
      household discretionary income. If any of these or other economic factors should
      erode, consumer spending may fall and the Asian retail industry may suffer
      a
      downturn. Consequently, our earnings would be adversely impacted by lower
      sales.





**We
      may be adversely affected by the trend towards retail trade
      consolidation.**





As
      we
      pursue our retail distribution strategy, our sales will be contingent upon
      favorable wholesale prices that we can obtain from retailers. If retailers
      merge
      or the retail industry consolidates, the larger, combined retailers will have
      significant pricing power because of the sheer size of their retail networks.
      As
      a result, we may not be able to obtain reasonable prices for our products.
      Consequently, our margins may decline and our results of operations may be
      reduced. There can be no assurance that we will be able to obtain reasonable
      wholesale prices for our products under a scenario where retailers merge and
      consolidate into larger entities.





**Risks
      Related to Doing Business in China**





**Adverse
      changes in economic and political policies of the PRC government could have
      a
      material adverse effect on the overall economic growth of China, which could
      adversely affect our business.**





All
      of
      our business operations are currently conducted in Hong Kong, under the
      jurisdiction of the PRC government. Accordingly, our results of operations,
      financial condition and prospects are subject to a significant degree to
      economic, political and legal developments in China. China’s economy differs
      from the economies of most developed countries in many aspects, including
      with respect to the amount of government involvement, level of development,
      growth rate, control of foreign exchange and allocation of resources. While
      the
      PRC economy has experienced significant growth in the past 20 years, growth
      has
      been uneven across different regions and among various economic sectors of
      China. The PRC government has implemented various measures to encourage economic
      development and guide the allocation of resources. Some of these measures
      benefit the overall PRC economy, but may also have a negative effect on us.
      For
      example, our financial condition and results of operations may be adversely
      affected by government control over capital investments or changes in tax
      regulations that are applicable to us. Since early 2004, the PRC government
      has
      implemented certain measures to control the pace of economic growth. Such
      measures may cause a decrease in the level of economic activity in China, which
      in turn could adversely affect our results of operations and financial
      condition.


15





**Abrupt
      and forceful regulation by governmental authorities may impose costly
      requirements on our business, which could have a material adverse effect on
      our
      business and overall financial results.**





Our
      industry, particularly the market segment dealing with inbound visitors from
      China, is relatively new, and until recent times it has been left unregulated.
      Governmental authorities in the PRC and in Hong Kong may impose regulations
      designed to protect consumers, or even to curtail what the PRC government might
      view as a loss of domestic retail sales, import duties and tax revenue. Changes
      in policies affecting the tourist retail industry may be enacted abruptly
      without transitional periods that may force us to make rapid and costly
      adjustments in our operations in an effort to comply. It is not always possible
      for management to anticipate changes in government policies, or the impact
      of
      those changes to our business.





On
      June
      15, 2007, the Hong Kong government implemented its “Refund Protection Scheme for
      Mainland China’s Inbound Tour Group Shoppers,” enacted by the Travel Industry
      Council of Hong Kong. The Refund Protection Scheme is aimed at protecting the
      consumer rights of mainland China’s tourist visitors to Hong Kong, and improving
      the service standards in the industry as a whole.





Under
      the
      Refund Protection Scheme, retailers who intend to arrange for mainland China's
      Inbound group visitors must register with the Travel Industry Council and one
      of
      the conditions of registration is that registered retailers shall offer a
      six-month, full refund protection to mainland China's inbound group visitors.
      As
      a part of the conditions of the Refund Protection Scheme, registered retailers
      must assist tour operators and inbound visitors seeking refunds. Registered
      retailers who fail to comply may be subject to penalties imposed by the Travel
      Industry Council. We have registered with the Travel Industry Council under
      the
      new rules and offer a 180-day refund policy to our customers.





Our
      operations may be negatively impacted by these heightened standards and
      implementation of the new rules.





**Fluctuation
      in the value of RMB and the Hong Kong Dollar relative to other currencies may
      have a material adverse effect on our business and/or an investment in our
      shares.**





The
      value
      of RMB and the Hong Kong Dollar against the U.S. Dollar and other currencies
      may
      fluctuate and is affected by, among other things, changes in political and
      economic conditions. Although the exchange rate between RMB and the U.S. dollar
      has been effectively pegged by the People’s Bank of China since 1994, and the
      rate between the Hong Kong Dollar has been pegged to the U.S. dollar since
      1983,
      there are no assurances that these currencies will remain pegged to the U.S.
      Dollar, especially in light of the significant international pressure on the
      Chinese government to permit the free floatation of the RMB, which would result
      in fluctuations in the exchange rate between the RMB and the U.S. Dollar, and
      other geopolitical factors if the RMB were to increase in value against the
      dollar, for example, mainland Chinese consumers would experience a reduction
      in
      the relative prices of goods and services, which may translate into a positive
      increase in sales. On the other hand, a decrease in the value of the RMB against
      the dollar would have the opposite effect. In addition, a strengthening of
      the
      U.S. Dollar against the Hong Kong Dollar, if it occurred, would adversely affect
      the value of your investment.




**We
      face risks related to health epidemics and other
      outbreaks.**





Our
      business could be adversely affected by the effects of SARS and other epidemics
      or outbreaks. China reported a number of cases of SARS in the spring of 2003,
      which severely impacted the tourism industry for many months. Any prolonged
      reoccurrence of SARS or other adverse public health developments in China could
      negatively impact tourism in Hong Kong, which would have a material adverse
      effect on our business operations. For instance, health or other government
      regulations adopted in response may require temporary travel restrictions,
      or
      even closure of our facilities or offices. Such closures would severely disrupt
      our customer flow and business operations, and adversely affect our results
      of
      operations. We have not adopted any written preventive measures or contingency
      plans to combat any future outbreak of SARS or any other epidemic.





16


**We
      face risks related to earthquakes and other natural
      disasters.**





Our
      business could be adversely affected by the effects of earthquakes and other
      natural disasters. In May 2008, China reported an earthquake measuring 7.9
      on
      the Richter scale in Sichuan Province, a mountainous region in Western China.
      Earthquakes and other natural disasters are especially catastrophic in China
      due
      to the poor infrastructure system. Any reoccurrence of earthquakes or other
      natural disasters in China could negatively impact tourism in Hong Kong, which
      would provide some challenges on our business. Earthquakes and natural disasters
      cause ripples in the economy, and discourage tourism and traveling in general,
      which could reduce the number of tourists visiting Hong Kong and our customer
      flow. We have not adopted any written preventive measures or contingency plans
      to combat any future earthquakes or any other natural disasters.





**Risks
      Related to an Investment in Our Securities**





**We
      will need additional capital, which may not be accessible on attractive terms
      or
      at all.**





We
      anticipate that we will need to raise additional funds in the future through
      public or private financing. Our ability to obtain additional financing will
      be
      subject to a number of factors, including market conditions, our operating
      performance and the terms of our existing indebtedness. The terms of our senior
      convertible debentures limit our ability to incur additional debt because any
      such additional debt we incur, other than a limited senior credit facility,
      must
      be contractually subordinated, as to payment and liquidation, to the payment
      in
      full of the debentures. We cannot assure you that we will be able to raise
      additional funds on terms favorable to us or at all. If we raise additional
      funds through the sale of equity or convertible debt securities, your ownership
      percentage of our common stock will be reduced. In addition, any such
      transactions may dilute the value of our common stock. We may have to issue
      securities that have rights, preferences and privileges senior to our common
      stock. The terms of any additional indebtedness may include restrictive
      financial and operating covenants that would limit our ability to compete and
      expand. Our failure to obtain any required future financing could materially
      and
      adversely affect our financial condition.





**Conversion
      of the debentures into shares of our common stock will dilute the ownership
      interests of existing stockholders, including holders who will have already
      converted their debentures.**





The
      conversion of some or all of the debentures into our shares of our common stock
      will dilute the ownership interests of existing stockholders. Any sales in
      the
      public market of the shares of common stock issuable upon such conversion could
      adversely affect prevailing market prices of our shares of common stock. In
      addition, the existence of the debentures may encourage short selling by market
      participants because the conversion of the debentures could depress the price
      of
      our shares of common stock.





**To
      date, we have not paid any cash dividends and no cash dividends will be paid
      in
      the foreseeable future.**





We
      do not
      anticipate paying cash dividends on our common stock in the foreseeable future
      and we may not have sufficient funds legally available to pay dividends. Even
      if
      the funds are legally available for distribution, we may nevertheless decide
      not
      to pay any dividends. We intend to retain all earnings for our
      operations.





**The
      application of the “penny stock” rules could adversely affect the market price
      of our common stock and increase your transaction costs to sell those
      shares.**





If
      our
      stock becomes quoted on an exchange, as long as the trading price of our common
      shares is below $5 per share, the open-market trading of our common shares
      will
      be subject to the “penny stock” rules. The “penny stock” rules impose additional
      sales practice requirements on broker-dealers who sell securities to persons
      other than established customers and accredited investors (generally those
      with
      assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000
      together with their spouse). For transactions covered by these rules, the
      broker-dealer must make a special suitability determination for the purchase
      of
      securities and have received the purchaser’s written consent to the transaction
      before the purchase. Additionally, for any transaction involving a penny stock,
      unless exempt, the broker-dealer must deliver, before the transaction, a
      disclosure schedule prescribed by the Securities and Exchange Commission
      relating to the penny stock market. The broker-dealer also must disclose the
      commissions payable to both the broker-dealer and the registered representative
      and current quotations for the securities. Finally, monthly statements must
      be
      sent disclosing recent price information on the limited market in penny stocks.
      These additional burdens imposed on broker-dealers may restrict the ability
      or
      decrease the willingness of broker-dealers to sell our common shares, and may
      result in decreased liquidity for our common shares and increased transaction
      costs for sales and purchases of our common shares as compared to other
      securities.


17





**Our
      common shares are not currently traded at high volume, and you may be unable
      to
      sell at or near ask prices or at all if you need to sell or liquidate a
      substantial number of shares at one time.**





We
      cannot
      predict the extent to which an active public market for its common stock will
      develop or be sustained. However, the Company does not rule out the possibility
      of applying for listing on the Nasdaq Capital Market or other
      markets.





Our
      common shares are currently traded, but currently with low volume, based on
      quotations on the “Over-the-Counter Bulletin Board”, meaning that the number of
      persons interested in purchasing our common shares at or near
      bid prices at any given time may be relatively small or non-existent. This
      situation is attributable to a number of factors, including the fact that we
      are
      a small company which is still relatively unknown to stock analysts, stock
      brokers, institutional investors and others in the investment community that
      generate or influence sales volume, and that even if we came to the attention
      of
      such persons, they tend to be risk-averse and would be reluctant to follow
      an
      unproven company such as ours or purchase or recommend the purchase of our
      shares until such time as we became more seasoned and viable. As a consequence,
      there may be periods of several days or more when trading activity in our shares
      is minimal or non-existent, as compared to a seasoned issuer which has a large
      and steady volume of trading activity that will generally support continuous
      sales without an adverse effect on share price. We cannot give you any assurance
      that a broader or more active public trading market for our common stock will
      develop or be sustained, or that trading levels will be
      sustained.





Stockholders
      should be aware that, according to SEC Release No. 34-29093, the market for
“penny stocks” has suffered in recent years from patterns of fraud and abuse.
      Such patterns include (1) control of the market for the security by one or
      a few broker-dealers that are often related to the promoter or issuer;
      (2) manipulation of prices through prearranged matching of purchases and
      sales and false and misleading press releases; (3) boiler room practices
      involving high-pressure sales tactics and unrealistic price projections by
      inexperienced sales persons; (4) excessive and undisclosed bid-ask
      differential and markups by selling broker-dealers; and (5) the wholesale
      dumping of the same securities by promoters and broker-dealers after prices
      have
      been manipulated to a desired level, along with the resulting inevitable
      collapse of those prices and with consequent investor losses. Our management
      is
      aware of the abuses that have occurred historically in the penny stock market.
      Although we do not expect to be in a position to dictate the behavior of the
      market or of broker-dealers who participate in the market, management will
      strive within the confines of practical limitations to prevent the described
      patterns from being established with respect to our securities. The occurrence
      of these patterns or practices could increase the future volatility of our
      share
      price.




**Our
      corporate actions are substantially controlled by our principal stockholders
      and
      affiliated entities.**





Our
      principal stockholders and their affiliated entities own approximately 80%
      of
      our outstanding ordinary shares, representing approximately 80% of our voting
      power. These stockholders, acting individually or as a group, could exert
      substantial influence over matters such as electing directors and approving
      mergers or other business combination transactions. In addition, because of
      the
      percentage of ownership and voting concentration in these principal stockholders
      and their affiliated entities, elections of our board of directors will
      generally be within the control of these stockholders and their affiliated
      entities. While all of our stockholders are entitled to vote on matters
      submitted to our stockholders for approval, the concentration of shares and
      voting control presently lies with these principal stockholders and their
      affiliated entities. As such, it would be difficult for stockholders to propose
      and have approved proposals not supported by management. There can be no
      assurances that matters voted upon by our officers and directors in their
      capacity as stockholders will be viewed favorably by all of our
      stockholders.


18





**The
      elimination of monetary liability against our directors, officers and employees
      under Delaware law and the existence of indemnification rights to our directors,
      officers and employees may result in substantial expenditures by our company
      and
      may discourage lawsuits against our directors, officers and
      employees.**





Our
      certificate of incorporation does not contain any specific provisions that
      eliminate the liability of our directors for monetary damages to our company
      and
      stockholders, but we are prepared to give such indemnification to our directors
      and officers to the extent provided by Delaware law. We may also have
      contractual indemnification obligations under our employment agreements with
      our
      officers. The foregoing indemnification obligations could result in our company
      incurring substantial expenditures to cover the cost of settlement or damage
      awards against directors and officers, which we may be unable to recoup. These
      provisions and resultant costs may also discourage our company from bringing
      a
      lawsuit against directors and officers for breaches of their fiduciary duties,
      and may similarly discourage the filing of derivative litigation by our
      stockholders against our directors and officers even though such actions, if
      successful, might otherwise benefit our company and stockholders.




**Legislative
      actions, higher insurance costs and potential new accounting pronouncements
      may
      impact our future financial position and results of
      operations.**





There
      have been regulatory changes, including the Sarbanes-Oxley Act of 2002, and
      there may potentially be new accounting pronouncements or additional regulatory
      rulings that will have an impact on our future financial position and results
      of
      operations. The Sarbanes-Oxley Act of 2002 and other rule changes as well as
      proposed legislative initiatives following the Enron bankruptcy are likely
      to increase general and administrative costs and expenses. In addition, insurers
      are likely to increase premiums as a result of high claims rates over the past
      several years, which we expect will increase our premiums for insurance
      policies. Further, there could be changes in certain accounting rules. These
      and
      other potential changes could materially increase the expenses we report under
      generally accepted accounting principles, and adversely affect our operating
      results.





**Past
      activities of the company and our affiliates may lead to future liability for
      us.**





Prior
      to
      our entry into the Agreement and Plan of Share Exchange (“Share Exchange
      Agreement”) on June 22, 2006, the Horizon Group was engaged in the
      Company’s operations. Although for a period of two years after the Closing Date
      the major shareholders of the Horizon Group will indemnify the Company against
      any loss, liability, claim, damage, or expense arising out of or based on any
      breach of or inaccuracy in any of their representations and warranties made
      in
      the Share Exchange Agreement, any liabilities relating to such prior business
      against which the Company is not completely indemnified may have a material
      adverse effect on the Company.





**We
      may need additional capital, and the sale of additional shares or other equity
      securities could result in additional dilution to our
      shareholders.**





We
      believe that our current cash and cash equivalents, anticipated cash flow from
      operations and the net proceeds from this offering will be sufficient to meet
      our anticipated cash needs for the near future. We may, however, require
      additional cash resources due to changed business conditions or other future
      developments, including any investments or acquisitions we may decide to pursue.
      If our resources are insufficient to satisfy our cash requirements, we may
      seek
      to sell additional equity or debt securities or obtain a credit facility. The
      sale of additional equity securities could result in additional dilution to
      our
      shareholders. The incurrence of indebtedness would result in increased debt
      service obligations and could result in operating and financing covenants that
      would restrict our operations. We cannot assure you that financing will be
      available in amounts or on terms acceptable to us, if at all.





**You
      may face difficulties in protecting your interests, and your ability to protect
      your rights through the U.S. federal courts may be limited because our
      subsidiaries are incorporated in non-U.S. jurisdictions, we conduct
      substantially all of our operations in Hong Kong, and all of our officers reside
      outside the United States.**





Although
      we are incorporated in Delaware, we conduct substantially all of our operations
      in China through our wholly owned subsidiaries in Hong Kong. All of our officers
      reside outside the United States and some or all of the assets of those persons
      are located outside of the United States. As a result, it may be difficult
      or
      impossible for you to bring an action against us or against these individuals
      in
      Hong Kong in the event that you believe that your rights have been violated
      under U.S. securities laws or otherwise. Even if you are successful in bringing
      an action of this kind, the laws of Hong Kong may render you unable to enforce
      a
      judgment against our assets or the assets of our directors and
      officers.


19




As
      a
      result of all of the above, our public shareholders may have more difficulty
      in
      protecting their interests through actions against our management, directors
      or
      major stockholders than would shareholders of a corporation doing business
      entirely within the United States.




**If
      we fail to maintain an effective system of internal controls, we may not be
      able
      to accurately report our financial results or prevent
      fraud.**





We
      will
      be subject to reporting obligations under the U.S. securities laws. The
      Securities and Exchange Commission, as required by Section 404 of the
      Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”), adopted rules requiring every
      public company to include a management report on such company’s internal
      controls over financial reporting in its annual report, which contains
      management’s assessment of the effectiveness of the company’s internal controls
      over financial reporting. In addition, an independent registered public
      accounting firm must attest to and report on management’s assessment of the
      effectiveness of the company’s internal controls over financial reporting. These
      requirements will first apply to our annual report on Form 10-K for the fiscal
      year ending December 31, 2007. Our management may conclude that our
      internal controls over our financial reporting are not effective. Moreover,
      even
      if our management concludes that our internal controls over financial reporting
      are effective, our independent registered public accounting firm may still
      decline to attest to our management’s assessment or may issue a report that is
      qualified if it is not satisfied with our controls or the level at which our
      controls are documented, designed, operated, or reviewed, or if it interprets
      the relevant requirements differently from us. Our reporting obligations as
      a
      public company will place a significant strain on our management, operational,
      and financial resources and systems for the foreseeable future. Effective
      internal controls, particularly those related to revenue recognition, are
      necessary for us to produce reliable financial reports and are important to
      help
      prevent fraud. As a result, our failure to achieve and maintain effective
      internal controls over financial reporting could result in the loss of investor
      confidence in the reliability of our financial statements, which in turn could
      harm our business and negatively impact the trading price of our stock.
      Furthermore, we anticipate that we will incur considerable costs and use
      significant management time and other resources in an effort to comply with
      Section 404 and other requirements of the Sarbanes-Oxley Act.





**We
      will incur increased costs as a result of being a public
      company.**





As
      a
      public company, we will incur significant legal, accounting and other expenses
      that we did not incur as a private company. In addition, the Sarbanes-Oxley
      Act,
      as well as new rules subsequently implemented by the SEC, have required changes
      in corporate governance practices of public companies. We expect these new
      rules
      and regulations to increase our legal, accounting and financial compliance
      costs
      and to make certain corporate activities more time-consuming and costly. In
      addition, we will incur additional costs associated with our public company
      reporting requirements. We are currently evaluating and monitoring developments
      with respect to these new rules, and we cannot predict or estimate the amount
      of
      additional costs we may incur, or the timing of such costs.




**ITEM
      2.**  **UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**





None.




**ITEM
      3.****DEFAULTS
      UPON SENIOR SECURITIES******





None.




**ITEM
      4.****SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS**





None.





**ITEM
      5.****OTHER
      INFORMATION**





None.


20




**ITEM
      6.          EXHIBITS AND REPORTS ON
      FORM 8-K**





The
      following exhibits are included in this report or incorporated by reference
      into
      this report:





**Exhibit**
              **Number**
            
            **Description**31.1
            
            Rule 13a-14(a)
                / 15d-14(a)(4) Certification by the Company’s Chief Executive Officer.
                (Filed herewith.)31.2
            
            Rule
                13a-14(a) / 15d-14(a)(4) Certification by the Company’s Chief Financial
                Officer. (Filed herewith.)32.1
            
            Section
                1350 Certification by the Company’s Chief Executive Officer. (Filed
                herewith.)32.2
            
            Section
                1350 Certification by the Company’s Chief Financial Officer. (Filed
                herewith.)10.20
            
            Management
                Service Agreement dated October 28, 2008 by and between Allied Fine
                Development Limited and Best Paramount Industrial Limited
                (1).10.21
            
            Management
                Service Agreement dated October 28, 2008 by and between Manigood
                International Industry Limited and Best Paramount Industrial
                Limited (1).10.22
            
            Management
                Service Agreement dated October 28, 2008 by and between Profits
                Dreams Development Limited and Best Paramount Industrial
                Limited (1).




(1)
            Filed as an
              exhibit to
              the Company's Form 8-K, as filed with the Securities and Exchange
              Commission on November 3, 2008, and incorporated herein by
              reference.




21





**SIGNATURES**




Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.




**ASIAMART, INC.**Dated:  November
                19, 2008
            By:
            /s/ Alex YueAlex YuePresident and Chief Executive Officer(Principal Executive Officer)Dated:
                November 19, 2008
            By:
            /s/ Kwan Pui WongKwan Pui WongChief Financial Officer(Principal Financial and Accounting Officer)




22