**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**







**FORM 10-Q**








x
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE
                ACT
                OF 1934****For
                the quarter ended June 30,
                2008**





**-OR-**





o
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE
                ACT
                OF 1934****For
                the transition period
                from          
                to**




**Commission
      File Number 0** - **50164**








**INNOCOM
      TECHNOLOGY HOLDINGS, INC.**


(Exact
      Name of small business issuer as specified in Its charter)




**NEVADA**
            
            **87-0618756**(State
                or other jurisdiction of
            
            (I.R.S.
                Employer Identification No.)incorporation
                or organization)




**Suite
                1501, Bank of East Asia Harbour View Centre, 56**
              **Gloucester
                Road, Wanchai, Hong Kong, PRC**
              (Address
                of principal executive offices)
            
            (Zip
                code)





Issuer’s
      telephone number, including area code: **(852)
      3102 1602**





(Former
      name, former address or former fiscal year, if changed since last
      report)





Indicate
      by check mark whether the registrant: (1) filed all reports required to be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the 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 þ No o





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





Large
      accelerated filer o Accelerated
      filer o Non-accelerated filer o
      Smaller reporting company þ





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


Yes
o   No
      þ





The
      number of shares outstanding of each of the Registrant’s classes of common
      stock, as of August 10, 2008 was 37,900,536 shares, all of one class of $0.001
      par value Common Stock.










**INNOCOM
      TECHNOLOGY HOLDINGS, INC.**


**FORM
      10-Q**


**Quarter
      Ended June 30, 2008**


**TABLE
      OF CONTENTS**





**Page****PART
                I— FINANCIAL INFORMATION**Item
                1
            Financial
                StatementsCondensed
                Consolidated Balance Sheets as of June 30, 2008 (unaudited)and
                December 31, 2007 (audited)
            F-2Condensed
                Consolidated Statements of Operations and Comprehensive(Loss) Income
                for
                the Three Months and Six Months Ended June 30, 2008 and 2007
                (unaudited)
            F-3Condensed
                Consolidated Statements of Cash Flows for theSix
                Months Ended June 30, 2008 and 2007 (unaudited)
            F-4Condensed
                Consolidated Statements of Stockholders’ Equity for theSix
                Months Ended June 30, 2008 (unaudited)
            F-5Notes
                to Condensed Consolidated Financial Statements for theSix
                Months Ended June 30, 2008 (unaudited)
            F-6
                to F-17Item
                2
            Managements
                Discussion and Analysis of Financial Condition andResults
                of Operation
            4Item
                3
            Quantitative
                and Qualitative Disclosures About Market Risk
            7Item
                4T
            Controls
                and Procedures
            8**PART
                II—OTHER INFORMATION**Item
                1
            Legal
                Proceedings
            8Item
                1A
            Risk
                Factors
            8Item
                2
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            18Item
                3
            Defaults
                Upon Senior Securities
            18Item
                4
            Submission
                of Matters to a Vote of Security Holders
            19Item
                5
            Other
                Information
            19Item
                6
            Exhibits
            19**SIGNATURES**
            **19**




2




**SPECIAL
      NOTE ON FORWARD LOOKING STATEMENTS**




This
      Quarterly Report on Form 10-Q, including "Management's Discussion and Analysis
      of Financial Condition and Results of Operations" in Item 2 of Part I of this
      report include forward-looking statements. These statements involve known and
      unknown risks, uncertainties and other factors that may cause our actual
      results, levels of activity, performance or achievements to be materially
      different from any future results, levels of activity, performance, or
      achievements expressed or implied by forward-looking statements.




In
      some
      cases, you can identify forward-looking statements by terminology such as "may,"
      "should," "expects," "plans," "anticipates," "believes," "estimates,"
      "predicts," "potential," "proposed," "intended," or "continue" or the negative
      of these terms or other comparable terminology. You should read statements
      that
      contain these words carefully, because they discuss our expectations about
      our
      future operating results or our future financial condition or state other
      "forward-looking" information. There may be events in the future that we are
      not
      able to accurately predict or control. Before you invest in our securities,
      you
      should be aware that the occurrence of any of the events described in this
      Annual Report could substantially harm our business, results of operations
      and
      financial condition, and that upon the occurrence of any of these events, the
      trading price of our securities could decline and you could lose all or part
      of
      your investment. Although we believe that the expectations reflected in the
      forward-looking statements are reasonable, we cannot guarantee future results,
      growth rates, levels of activity, performance or achievements. We are under
      no
      duty to update any of the forward-looking statements after the date of this
      Quarterly Report to conform these statements to actual results.





3


**PART
      I.**  **FINANCIAL
      INFORMATION**





**ITEM
       1.  Financial Statements**




**INNOCOM
      TECHNOLOGY HOLDINGS, INC.**





**INDEX
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**





**(UNAUDITED)**




**Page**Condensed
                      Consolidated Balance Sheets as of June 30, 2008 and December
                      31,
                      2007
                  F-2Condensed
                      Consolidated Statements of Operations And Comprehensive Income
                      for the
                      three and six months ended June 30, 2008 and 2007
                  F-3Condensed
                      Consolidated Statements of Cash Flows for the six months ended
                      June 30,
                      2008 and 2007
                  F-4Condensed
                      Consolidated Statement of Stockholders’ Equity for the six months ended
                      June 30, 2008
                  F-5Notes
                      to Condensed Consolidated Financial Statements
                  F-6
                      to F-17





F-1


**INNOCOM
      TECHNOLOGY HOLDINGS, INC.**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**AS
      OF JUNE 30, 2008 AND DECEMBER 31, 2007**


**(Currency
      expressed in United States Dollars (“US$”), except for number of
      shares)**


**(Unaudited)**


June 30, 2008
              
              December 31, 2007(Unaudited)
              
              (Audited)**ASSETS**Current
                  assets:Cash
                  and cash equivalents
              
              $
              543,064
              
              $
              3,597Inventories
              
              
              106,241
              
              
              -Prepayments
                  and other receivables
              
              
              338,298
              
              
              26,636Total
                  current assets
              
              
              987,603
              
              
              30,233Non-current
                  assets:Investment
                  in an unconsolidated affiliate
              
              
              -
              
              
              8,463,464Intangible
                  assets, net
              
              
              5,306,966
              
              
              5,603,129Land
                  use right, net
              
              
              2,973,184
              
              
              -Property,
                  plant and equipment, net
              
              
              7,090,323
              
              
              2,082**TOTAL
                  ASSETS**
              
              $
              16,358,076
              
              $
              14,098,908**LIABILITIES
                  AND STOCKHOLDERS’ EQUITY**Current
                  liabilities:Short-term
                  bank loans
              
              $
              1,700,686
              
              $
              -Bill
                  payable
              
              
              496,033
              
              
              -Accounts
                  payable
              
              
              74,846
              
              
              -Amount
                  due to a related party
              
              
              240,254
              
              
              128Deferred
                  revenue
              
              
              149,139
              
              
              400,290Income
                  tax payable
              
              
              -
              
              
              1,439,376Other
                  payables and accrued liabilities
              
              
              1,852,569
              
              
              197,697Total
                  current liabilities
              
              
              4,513,527
              
              
              2,037,491**TOTAL
                  LIABILITIES**
              
              $
              4,513,527
              
              $
              2,037,491Commitments
                  and contingenciesStockholders’
                  equity:Common
                  stock, $0.001 par value; 50,000,000 shares authorized; 37,898,251
                  shares
                  and 37,898,251 shares issued and outstanding as of June 30, 2008
                  and
                  December 31, 2007
              
              
              37,898
              
              
              37,898Additional
                  paid-in capital
              
              
              6,901,232
              
              
              6,901,232Accumulated
                  other comprehensive income
              
              
              601,187
              
              
              171,652Retained
                  earnings
              
              
              4,304,232
              
              
              4,950,635Total
                  stockholders’ equity
              
              
              11,844,549
              
              
              12,061,417**TOTAL
                  LIABILITIES AND STOCKHOLDERS’ EQUITY**
              
              $
              16,358,076
              
              $
              14,098,908







See accompanying
      notes to condensed consolidated financial statements.




F-2




**INNOCOM
      TECHNOLOGY HOLDINGS, INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


**AND
      COMPREHENSIVE (LOSS) INCOME**


**FOR
      THE THREE AND SIX MONTHS ENDED JUNE 30, 2008 AND 2007**


**(Currency
      expressed in United States Dollars (“US$”), except for number of
      shares)**


**(Unaudited)**





Three months ended June 30,
            
            Six months ended June 30,2008
            
            2007
            
            2008
            
            2007**REVENUE,
                NET**
            
            $
            129,384
            
            $
            358,975
            
            $
            251,412
            
            $
            653,846**OPERATING
                EXPENSES:**Sales
                and marketing
            
            
            -
            
            
            16,667
            
            
            -
            
            
            30,128General
                and administrative
            
            
            669,122
            
            
            614,031
            
            
            806,188
            
            
            1,168,978Total
                operating expenses
            
            
            669,122
            
            
            630,698
            
            
            806,188
            
            
            1,199,106**LOSS
                FROM OPERATIONS**
            
            
            (539,738
            )
            
            (271,723
            )
            
            (554,776
            )
            
            (545,260
            )**Other
                income (expenses):**Gain
                on disposal of subsidiaries
            
            
            -
            
            
            599,737
            
            
            -
            
            
            599,737Interest
                expenses
            
            
            (102,704
            )
            
            -
            
            
            (102,704
            )
            
            -Interest
                income
            
            
            11,077
            
            
            4
            
            
            11,077
            
            
            6**(LOSS)
                INCOME BEFORE INCOME TAXES**
            
            
            (631,365
            )
            
            328,018
            
            
            (646,403
            )
            
            54,483Income
                tax expenses
            
            
            -
            
            
            (46,055
            )
            
            -
            
            
            (83,431
            )**NET
                (LOSS) INCOME**
            
            $
            (631,365
            )
            $
            281,963
            
            $
            (646,403
            )
            $
            (28,948
            )Other
                comprehensive (loss) income:-
                Foreign currency translation (loss) gain
            
            
            395,077
            
            
            (217,104
            )
            
            429,535
            
            
            (266,193
            )**COMPREHENSIVE
                (LOSS) INCOME**
            
            $
            (236,288
            )
            $
            64,859
            
            $
            (216,868
            )
            $
            (295,141
            )Net
                (loss) income per share – Basic and diluted
            
            $
            (0.02
            )
            $
            0.01
            
            $
            (0.02
            )
            $
            (0.00
            )Weighted
                average shares outstanding – basic and diluted
            
            
            37,898,251
            
            
            37,898,251
            
            
            37,898,251
            
            
            37,898,251





See
      accompanying notes to condensed consolidated financial statements.




F-3




**INNOCOM
      TECHNOLOGY HOLDINGS, INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**FOR
      THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007**


**(Currency
      expressed in United States Dollars (“US$”))**


**(Unaudited)**


Six
                      months ended June 30,2008
                  
                  2007**Cash
                      flows from operating activities:**Net
                      loss
                  
                  $
                  (646,403
                  )
                  $
                  (28,949
                  )Adjustments
                      to reconcile net loss to net cash used in operating
                      activities:Depreciation
                  
                  
                  1,246
                  
                  
                  500Amortization
                      of long-term deferred charges
                  
                  
                  -
                  
                  
                  979,646Amortization
                      of intangible assets
                  
                  
                  297,259
                  
                  
                  -Gain
                      on disposal of subsidiaries
                  
                  
                  -
                  
                  
                  (599,737
                  )Loss
                      on disposal of plant and equipment
                  
                  
                  1,667Change
                      in operating assets and liabilities:Inventories
                  
                  
                  (106,241
                  )
                  
                  -Accounts
                      receivable, trade
                  
                  
                  -
                  
                  
                  (623,718
                  )Prepaid
                      expenses and other receivables
                  
                  
                  (311,661
                  )
                  
                  (3,020,236
                  )Accounts
                      payable, trade
                  
                  
                  74,846
                  
                  
                  -Deferred
                      revenue
                  
                  
                  (251,151
                  )
                  
                  -Other
                      payables and accrued liabilities
                  
                  
                  (78,031
                  )
                  
                  39,480Income
                      tax payable
                  
                  
                  (1,439,376
                  )
                  
                  83,432Amount
                      due to a related party
                  
                  
                  99,937
                  
                  
                  3,301,260Net
                      cash (used in) provided by operating activities
                  
                  
                  (2,357,908
                  )
                  
                  131,678**Cash
                      flows from investing activities:**Proceeds
                      from disposal of subsidiaries (net of cash balance)
                  
                  
                  5,617,101
                  
                  
                  5,811,904Acquisition
                      of deferred expenditure
                  
                  
                  -
                  
                  
                  (5,964,519
                  )Payment
                      for property, plant and equipment
                  
                  
                  (11,315
                  )
                  
                  -Payment
                      for land use right
                  
                  
                  (129,462
                  )
                  
                  -Net
                      cash provided by (used in) investing activities
                  
                  
                  5,476,324
                  
                  
                  (152,615
                  )**Cash
                      flows from financing activities:**Repayment
                      of amount due to a related party
                  
                  
                  (5,204,104
                  )
                  
                  -Proceeds
                      fromshort-term
                      bank loans
                  
                  
                  1,700,686
                  
                  
                  -Proceeds
                      from bill payables
                  
                  
                  496,033
                  
                  
                  -Net
                      cash used in financing activities
                  
                  
                  (3,007,385
                  )
                  
                  -Effect
                      of exchange rate changes on cash and cash equivalents
                  
                  
                  428,436
                  
                  
                  -**NET
                      CHANGE IN CASH AND CASH EQUIVALENTS**
                  
                  
                  539,467
                  
                  
                  (20,937
                  )**CASH
                      AND CASH EQUIVALENTS, BEGINNING OF PERIOD**
                  
                  
                  3,597
                  
                  
                  101,288**CASH
                      AND CASH EQUIVALENTS, END OF PERIOD**
                  
                  $
                  543,064
                  
                  $
                  80,351**SUPPLEMENTAL
                      DISCLOSURE OF CASH FLOW INFORMATION:**Cash
                      paid for income taxes
                  
                  $
                  -
                  
                  $
                  -Cash
                      paid for interest expenses
                  
                  $
                  102,704
                  
                  $
                  -





See
      accompanying notes to condensed consolidated financial statements.




F-4


**INNOCOM
      TECHNOLOGY HOLDINGS, INC.**


**CONDENSED
      CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY**


**FOR
      THE SIX MONTHS ENDED JUNE 30, 2008**


**(Currency
      expressed in United States Dollars (“US$”), except for number of
      shares)**


**(Unaudited)**




Common
                  stock
              
              
              
              AccumulatedNo. of shares
              
              Amount
              
              Additional
                paid-in capital
              
              other
                comprehensive
                income
              
              Retained
                earnings
              
              Total stockholders’
                equityBalance as of January 1, 2008
              
              
              37,898,251
              
              $
              37,898
              
              $
              6,901,232
              
              $
              171,652
              
              $
              4,950,635
              
              $
              12,061,417Foreign
                  currency translation adjustment
              
              
              -
              
              
              -
              
              
              -
              
              
              429,535
              
              
              -
              
              
              429,535Net
                  loss for the period
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (646,403
              )
              
              (646,403
              )Balance
                  as of June 30, 2008
              
              
              37,898,251
              
              $
              37,898
              
              $
              6,901,232
              
              $
              601,187
              
              $
              4,304,232
              
              $
              11,844,549





See
      accompanying notes to condensed consolidated financial statements.




F-5


**INNOCOM
      TECHNOLOGY HOLDINGS, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE SIX MONTHS ENDED JUNE 30, 2008**


**(Currency
      expressed in United States Dollars (“US$”))**


**(Unaudited)**





**NOTE
      -** **1**  **BASIS
      OF PRESENTATION**





The
      accompanying unaudited condensed consolidated financial statements have been
      prepared by management in accordance with both accounting principles generally
      accepted in the United States (“GAAP”), and the instructions to Form 10-Q and
      Rule 10-01 of Regulation S-X. Certain information and note disclosures normally
      included in audited financial statements prepared in accordance with generally
      accepted accounting principles have been condensed or omitted pursuant to those
      rules and regulations, although the Company believes that the disclosures made
      are adequate to make the information not misleading.





In
      the
      opinion of management, the consolidated balance sheet as of December 31, 2007
      which has been derived from audited financial statements and these unaudited
      condensed consolidated financial statements reflect all normal and recurring
      adjustments considered necessary to state fairly the results for the periods
      presented. The results for the period ended June 30, 2008 are not necessarily
      indicative of the results to be expected for the entire fiscal year ending
      December 31, 2008 or for any future period.





These
      unaudited condensed consolidated financial statements and notes thereto should
      be read in conjunction with the Management’s Discussion and the audited
      financial statements and notes thereto included in the Annual Report on Form
      10-K for the year ended December 31, 2007.





**NOTE
      -** **2**  **ORGANIZATION
      AND BUSINESS BACKGROUND**





Innocom
      Technology Holdings, Inc. (the “Company” or “INCM”) was incorporated in the
      State of Nevada on June 26, 1998. On June 20, 2006, the Company changed its
      name
      from “Dolphin Productions, Inc.” to “Innocom Technology Holdings,
      Inc.”





For
      the
      six months ended June 30, 2008, the Company, through its subsidiaries is engaged
      in trading of mobile phone handsets and components.





On
      April
      28, 2008, the Company disposed of a subsidiary, Chinarise Capital
      (International) Ltd. at a purchase price of $5,617,101.





On
      May 8,
      2008, the Company completed the establishment of a new subsidiary, Changzhou
      Innocom Communication Technology Limited in the People’s Republic of China (“the
      PRC”) upon the approval of its local government.





As
      of
      June 30, 2008, details of the Company’s subsidiaries are described
      below:


Name
                  of company
              
              Place
                  and date of
                incorporation
              
              Issued
                  and fully
                paid
                  capital
              
              Principal
                  activitiesInnocom
                  Technology Holdings Limited (“ITHL”)
                (Formerly
                  Wisechamp Group Limited)
              
              British
                  Virgin Islands
                July
                  12, 2005
              
              US$1
                  ordinary
              
              Investment
                  holdingSky
                  Talent Development Limited (“STDL”)
              
              British
                  Virgin Islands
                September
                  8, 2005
              
              US$1
                  ordinary
              
              Investment
                  holdingInnocom
                  Mobile Technology Limited (“IMTL”)
              
              Hong
                  Kong
                June
                  21, 2006
              
              HK$2,000,000
                  ordinary
              
              InactivePender
                  Holdings Ltd. (“Pender”)
              
              British
                  Virgin Islands
                August
                  15, 2003
              
              US$1
                  ordinary
              
              Trading
                  of mobile phone handsets and componentsFavor
                  Will International Ltd. (“FWIL”)
              
              British
                  Virgin Islands
                July
                  11, 2007
              
              US$1
                  ordinary
              
              Investment
                  holdingChangzhou
                  Innocom Communication Technology Limited (“CICTL”)
              
              The
                  PRC
                January
                  19, 2007
              
              RMB50,000,000
              
              Manufacture
                  of mobile phone handsets and
                  components




INCM
      and its subsidiaries are hereinafter referred to
      as (the “Company”).





F-6





**NOTE –
      3**  **GOING
      CONCERN UNCERTAINTIES**





These
      condensed consolidated financial statements have been prepared assuming that
      Company will continue as a going concern, which contemplates the realization
      of
      assets and the discharge of liabilities in the normal course of business for
      the
      foreseeable future.





As
      of
      June 30, 2008, the Company had incurred a net loss of $646,403 and a negative
      operating cash flow of $2,357,908. The continuation of the Company is dependent
      upon the continuing financial support of shareholders and obtaining short-term
      and long-term financing, generating significant revenue and achieving
      profitability. The actions involve certain cost-saving initiatives and growing
      strategies, including the commencement of assembly lines in the production
      of
      mobile handsets in China. As a result, the consolidated financial statements
      do
      not include any adjustments to reflect the possible future effects on the
      recoverability and classification of assets or the amounts and classification
      of
      liabilities that may result from the outcome of the Company’s ability to
      continue as a going concern.





**NOTE** **-** **4**  **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**





l
            Use
                of estimates





In
      preparing these condensed consolidated financial statements, management makes
      estimates and assumptions that affect the reported amounts of assets and
      liabilities in the balance sheets and revenues and expenses during the years
      reported. Actual results may differ from these estimates.





l
            Basis
                of consolidation





The
      condensed consolidated financial statements include the financial statements
      of
      INCM and its subsidiaries.





All
      significant inter-company balances and transactions within the Company have
      been
      eliminated upon consolidation.





F-7




l Cash
          and
          cash equivalents





Cash
      and
      cash equivalents are carried at cost and represent cash on hand, demand deposits
      placed with banks or other financial institutions and all highly liquid
      investments with an original maturity of three months or less as of the purchase
      date of such investments.





l  Inventories





Inventories
      are stated at the lower of cost or market (net realizable value), cost being
      determined on a weighted average method. Costs include purchase of raw
      materials.





l Intangible
          assets





Intangible
      assets include trademarks of mobile phone handsets purchased from a third party.
      In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 142, *“Goodwill
      and Other Intangible Assets”* (“SFAS
      No. 142”), intangible assets with finite useful lives related to developed
      technology, customer lists, trade names and other intangibles are being
      amortized on a straight-line basis over the estimated useful life of the related
      asset.





These
      assets are carried at cost less accumulated amortization and are amortized
      on a
      straight-line basis over their estimated useful lives of 10 years beginning
      at
      the time the related trademarks are granted.





l  Land
      use
      right





All
      lands
      in the People’s Republic of China (the “PRC”) are owned by the PRC government.
      The government in the PRC, according to the relevant PRC law, may sell the
      right
      to use the land for a specified period of time. Thus, all of the Company’s land
      purchases in the PRC are considered to be leasehold land and are stated at
      cost
      less accumulated amortization and any recognized impairment loss. Amortization
      is provided over the term of the land use right agreements on a straight-line
      basis, which is 45 years and they will expire in 2054.





No
      provision for amortization is made until such time as the relevant assets are
      put into operational use.





l Plant
          and
          equipment, net





Plant
      and
      equipment are stated at cost less accumulated depreciation and accumulated
      impairment losses, if any. Depreciation is calculated on the straight-line
      basis
      over the following expected useful lives from the date on which they become
      fully operational:





Depreciable life
            
            Residual valuePlant
                and machinery
            
            
            5-10
                years
            
            
            5
            %Furniture,
                fixtures and office equipment
            
            
            5
                years
            
            
            5
            %





Expenditure
      for repairs and maintenance is expensed as incurred. When assets have retired
      or
      sold, the cost and related accumulated depreciation are removed from the
      accounts and any resulting gain or loss is recognized in the results of
      operations.





F-8





l Valuation
          of long-lived assets





Long-lived
      assets primarily include plant and equipment, land use right and intangible
      assets. In accordance with SFAS No. 144, “ *Accounting
      for the Impairment or Disposal of Long-Lived Assets* ”,
      the
      Company periodically reviews long-lived assets for impairment whenever events
      or
      changes in business circumstances indicate that the carrying amount of the
      assets may not be fully recoverable or that the useful lives are no longer
      appropriate. Each impairment test is based on a comparison of the undiscounted
      cash flows to the recorded value of the asset. If an impairment is indicated,
      the asset is written down to its estimated fair value based on a discounted
      cash
      flow analysis. Determining the fair value of long-lived assets includes
      significant judgment by management, and different judgments could yield
      different results. There has been no impairment as of June 30,
      2008.





l Revenue
          recognition





In
      accordance with the SEC’s Staff Accounting Bulletin No. 104, *Revenue
      Recognition* ,
      the
      Company records revenue when services are received by the customers and realized
      the amounts net of provisions for discounts, allowance and taxes which are
      recognized at the time of services performed.





Starting
      from 2007, the Company has changed its role from a principal to an agent in
      trading activities of mobile phone handsets & related components. The
      Company recognizes its revenue on a net basis in compliance with EITF 99-19, *“Reporting
      Revenues Gross as a Principal versus Net as an Agent”* (“EITF
      99-19”), because the Company:





(1)  determined
      that it no longer operates as the primary obligor in the trading activities,


(2)  typically
      is not responsible for damages to goods,


(3)  bears
      no
      credit and inventory risk,


(4)  earns
      commission income at a fixed rate of the gross amount billed to the
      customer.





For
      the
      period ended June 30, 2008, the Company recognizes $251,412 as net revenues,
      at
      a rate of 6.02% based on the gross amount of $4,173,207 billed to the
      customers.





For
      the
      period ended June 30, 2007, the Company recognizes $653,846 as net revenues,
      at
      a rate of 5.43% based on the gross amount of $12,051,282 billed to the
      customers.





l Comprehensive
          (loss) income





SFAS
      No.
      130 *,
      “Reporting Comprehensive Income”* ,
      establishes standards for reporting and display of comprehensive income, its
      components and accumulated balances. Comprehensive income as defined includes
      all changes in equity during a period from non-owner sources. Accumulated
      comprehensive income, as presented in the accompanying consolidated statements
      of stockholders’ equity consists of changes in unrealized gains and losses on
      foreign currency translation. This comprehensive income is not included in
      the
      computation of income tax expense or benefit.





F-9





l Income
          taxes





The
      Company accounts for income tax using SFAS No. 109 *“Accounting
      for Income Taxes”* ,
      which
      requires the asset and liability approach for financial accounting and reporting
      for income taxes. Under this approach, deferred income taxes are provided for
      the estimated future tax effects attributable to temporary differences between
      financial statement carrying amounts of assets and liabilities and their
      respective tax bases, and for the expected future tax benefits from loss
      carry-forwards and provisions, if any. Deferred tax assets and liabilities
      are
      measured using the enacted tax rates expected in the years of recovery or
      reversal and the effect from a change in tax rates is recognized in the
      consolidated statement of operations and comprehensive income in the period
      of
      enactment. A valuation allowance is provided to reduce the amount of deferred
      tax assets if it is considered more likely than not that some portion of, or
      all
      of the deferred tax assets will not be realized.





The
      Company also adopts Financial Accounting Standards Board ("FASB") Interpretation
      No. (FIN) 48, *"Accounting
      for Uncertainty in Income Taxes"* and FSP
      FIN 48-1, which amended certain provisions of FIN 48. FIN 48 clarifies the
      accounting for uncertainty in income taxes recognized in financial statements
      in
      accordance with SFAS No. 109, *"Accounting
      for Income Taxes."* FIN
      48
      prescribes a recognition threshold and measurement attribute for the financial
      statement recognition and measurement of a tax position taken or expected to
      be
      taken in a tax return. FIN 48 requires that the Company determine whether the
      benefits of the Company's tax positions are more likely than not of being
      sustained upon audit based on the technical merits of the tax position. The
      provisions of FIN 48 also provide guidance on de-recognition, classification,
      interest and penalties, accounting in interim periods and disclosure.





In
      connection with the adoption of FIN 48, the Company analyzed the filing
      positions in all of the federal, state and foreign jurisdictions where the
      Company and its subsidiaries are required to file income tax returns, as well
      as
      all open tax years in these jurisdictions. The Company adopted the policy of
      recognizing interest and penalties, if any, related to unrecognized tax
      positions as income tax expense. The Company did not have any unrecognized
      tax
      positions or benefits and there was no effect on the financial condition or
      results of operations for the period ended June 30, 2008. The Company’s tax
      returns remain open subject to examination by major tax
      jurisdictions.





l Net
          (loss) income per share





The
      Company calculates net (loss) income per share in accordance with SFAS No.
      128, *“Earnings
      per Share”* .
      Basic
      (loss) income per share is computed by dividing the net (loss) income by the
      weighted-average number of common shares outstanding during the period. Diluted
      (loss) income per share is computed similar to basic (loss) income per share
      except that the denominator is increased to include the number of additional
      common shares that would have been outstanding if the potential common stock
      equivalents had been issued and if the additional common shares were
      dilutive.





l Foreign
          currencies translation





Transactions
      denominated in currencies other than the functional currency are translated
      into
      the functional currency at the exchange rates prevailing at the dates of the
      transaction. Monetary assets and liabilities denominated in currencies other
      than the functional currency are translated into the functional currency using
      the applicable exchange rates at the balance sheet dates. The resulting exchange
      differences are recorded in the statement of operations.





The
      reporting currency of the Company is the United States dollar ("US$"). The
      Company’s subsidiaries operating in Hong Kong maintained their books and records
      in its local currency, Hong Kong Dollars ("HK$"), which are functional
      currencies as being the primary currency of the economic environment in which
      these entities operate.





In
      general, assets and liabilities are translated into US$, in accordance with
      SFAS
      No. 52, “ *Foreign
      Currency Translation”* ,
      using
      the exchange rate on the balance sheet date. Revenues and expenses are
      translated at average rates prevailing during the period. The gains and losses
      resulting from translation of financial statements of foreign subsidiaries
      are
      recorded as a separate component of accumulated other comprehensive income
      within the statement of stockholders’ equity.




F-10




Translation
      of amounts from HK$ into US$ has been made at the following exchange rates
      for
      the respective period:




2008
            
            2007Period
                end RMB:US$ exchange rate
            
            
            6.8520
            
            
            -Average
                monthly RMB:US$ exchange rate
            
            
            7.0504
            
            
            -Period
                end HK$:US$ exchange rate
            
            
            7.8037
            
            
            7.8000Average
                monthly HK$:US$ exchange rate
            
            
            7.7975
            
            
            7.8000





l Stock-based
          compensation





The
      Company adopts SFAS No. 123 (revised 2004), " *Share-Based
      Payment* "
      ("SFAS
      No. 123(R)") using the fair value method. Under SFAS No. 123(R), the stock-based
      compensation is measured using the Black-Scholes Option-Pricing model on the
      date of grant under the modified prospective method. The fair value of
      stock-based compensation that are expected to vest are recognized using the
      straight-line method over the requisite service period.





l Related
          parties





Parties,
      which can be a corporation or individual, are considered to be related if the
      Company has the ability, directly or indirectly, to control the other party
      or
      exercise significant influence over the other party in making financial and
      operating decisions. Companies are also considered to be related if they are
      subject to common control or common significant influence.





l Segment
          reporting





SFAS
      No.
      131 *“Disclosures
      about Segments of an Enterprise and Related Information”* establishes standards for reporting information about operating segments on
      a
      basis consistent with the Company’s internal organization structure as well as
      information about geographical areas, business segments and major customers
      in
      the financial statements. For the period ended June 30, 2008 and 2007, the
      Company operates in one reportable segment in trading of mobile phone handsets
      & related components in Hong Kong.





l Fair
          value of financial instruments





The
      Company values its financial instruments as required by SFAS No. 107, *“Disclosures
      about Fair Value of Financial Instruments”* .
      The
      estimated fair value amounts have been determined by the Company, using
      available market information and appropriate valuation methodologies. The
      estimates presented herein are not necessarily indicative of amounts that the
      Company could realize in a current market exchange.




The
      Company’s financial instruments primarily consist of cash and cash equivalents,
      prepaid expenses and other receivable, amount due to a related party, income
      tax
      payable, other payables and accrued liabilities.





As
      of the
      balance sheet dates, the estimated fair values of the financial instruments
      were
      not materially different from their carrying values as presented due to the
      short term maturities of these instruments and that the interest rates on the
      borrowings approximate those that would have been available for loans of similar
      remaining maturity and risk profile at respective period ends.





F-11





l Recent
          accounting pronouncements





The
      Company has reviewed all recently issued, but not yet effective, accounting
      pronouncements and do not believe the future adoption of any such pronouncements
      may be expected to cause a material impact on its financial condition or the
      results of its operations.





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 should 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 should not have a material
      impact on the consolidated financial position or results of
      operations.





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 No. 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.





F-12




**NOTE** **-** **5**  **BUSINESS
      COMBINATION**





On
      April
      28, 2008, the Company entered into a Share Purchase Agreement with Xie Guo
      Qiang
      (“Qiang”) to sell the Company’s interest in Chinarise Capital (International)
      Ltd. for a consideration of $5,617,101 (equivalent to HK$43,813,385). For the
      six month ended June 30, 2008, no gain or loss was recognized from the disposal
      of a subsidiary.





On
      May 8,
      2008, the Company completed the establishment of a new subsidiary upon the
      approval from the PRC local government. The subsidiary is registered as a
      limited liability company on January 19, 2007 in Chang Zhou City, Jiang Su
      Province, the PRC with the registered and paid-in capital of $4,943,997
      (equivalent to RMB37,960,812). As of June 30, 2008, the total investment in
      a
      subsidiary is approximated as $8,487,661 including the acquisition of land
      use
      rights and plant and equipment. Its operation is currently considered as the
      start up phase and principally engaged in manufacturing and trading of mobile
      communication products and components. The production from its assembly line
      will be commenced in the third quarter of 2008.





**NOTE** **-** **6**  **INTANGIBLE
      ASSETS**





June 30, 2008
            
            December 31, 2007Trademarks
            
            $
            5,960,775
            
            $
            5,960,775Foreign
                translation difference
            
            
            916
            
            
            -5,961,691
            
            
            5,960,775Less:
                accumulated amortization
            
            
            (654,905
            )
            
            (357,754
            )Less:
                foreign translation difference
            
            
            180
            
            
            108Net
                book value
            
            $
            5,306,966
            
            $
            5,603,129





Amortization
      expense for the three and six months ended June 30, 2008 were $148,588and
      $297,259.





Trademarks
      will be used in the planned assembly line for mobile phone communication
      products and components in the PRC.





**NOTE** **-** **7**  **PROPERTY,
      PLANT AND EQUIPMENT, NET**





Property,
      plant and equipment, net, consisted of the following:





June 30, 2008
            
            December 31, 2007Plant
                and machinery
            
            $
            7,085,542
            
            $
            3,331Furniture,
                fixtures and office equipment
            
            
            4,950
            
            
            -Leasehold
                improvement
            
            
            6,263
            
            
            -Foreign
                translation difference
            
            
            (5,603
            )
            
            -7,091,152
            
            
            3,331Less:
                accumulated depreciation
            
            
            (828
            )
            
            (1,249
            )Less:
                foreign translation difference
            
            
            (1
            )
            
            -Property,
                plant and equipment, net
            
            $
            7,090,323
            
            $
            2,082




F-13





Depreciation
      expense for the three and six months ended June 30, 2008 were $829 and $1,246.





For
      the
      six months ended June 30, 2008, the Company tested for impairment in accordance
      with the SFAS 142 and no impairment charge was required.





**NOTE** **-** **8**  **SHORT-TERM
      BANK LOANS**





As
      of
      June 30, 2008, short-term bank loans were as fol lows:





June 30, 2008
            
            December 31, 2007Short-term bank loans:The
                Company’s wholly-owned subsidiary, CICTL has short-term bank loans, which
                are unsecured, payable to a financial institution in the PRC. The
                loans
                are subject to a renewal provision, as follows:Equivalent
                to RMB7,000,000 with interest rate at 8.541% per annum payable monthly,
                repayable by July 25, 2008
            
            $
            992,067
            
            $
            -Equivalent
                to RMB5,000,000 with interest rate at 8.856% per annum payable monthly,
                repayable by August 25, 2008
            
            
            708,619
            
            
            -Total
                short-term bank loans
            
            $
            1,700,686
            
            $
            -




**NOTE** **-** **9**  **AMOUNT
      DUE TO A RELATED PARTY**





As
      of
      June 30, 2008, a balance of $240,254 due to a director and a major shareholder
      of the Company, Mr. William Hui, represented temporary advance to the Company
      which was unsecured, interest-free and has no fixed repayment term. The imputed
      interest on the amount due to a stockholder was not significant.





**NOTE** **-** **10**  **OTHER
      PAYABLES AND ACCRUED LIABILITIES**





Other
      payables and accrued liabilities consisted of the followings:





June 30, 2008
            
            December 31, 2007(Unaudited)
            
            (Audited)Salaries
                and welfare payable
            
            $
            67,409
            
            $
            -Temporary
                advances
            
            
            23,527
            
            
            -Accrued
                expenses
            
            
            44,979
            
            
            197,697Purchase
                payable to equipment vendors
            
            
            1,716,654
            
            
            -$
            1,852,569
            
            $
            197,697




F-14




**NOTE** **-** **11**  **INCOME
      TAXES**





For
      the
      period ended June 30, 2008 and 2007, the local (“the United States”) and foreign
      components of income (loss) before income taxes were comprised of the
      following:





Six months ended June 30,2008
            
            2007Local
            
            $
            (18,895
            )
            $
            (1,020,198
            )Foreign
            
            
            (627,508
            )
            
            1,074,681(Loss)
                incomebefore income taxes
            
            $
            (646,403
            )
            $
            54,483





The
      provision for income taxes consisted of the following:





Six months ended June 30,2008
            
            2007Current:Local
            
            $
            -
            
            $
            -Foreign
            
            
            -
            
            
            83,431Deferred:Local
            
            
            -
            
            
            -Foreign
            
            
            -
            
            
            -Provision
                for income taxes
            
            $
            -
            
            $
            83,431





The
      effective tax rate in the periods presented is the result of the mix of income
      earned in various tax jurisdictions that apply a broad range of income tax
      rates. The Company has subsidiaries that operate in various countries: United
      States, British Virgin Island and Hong Kong that are subject to tax in the
      jurisdictions in which they operate, as follows:





*United
      States of America*





The
      Company is registered in the State of Neveda and is subject to United States
      current tax law.





As
      of
      June 30, 2008, the United States operation incurred $6,140,777 of net operating
      losses available for federal tax purposes, which are available to offset future
      taxable income. The net operating loss carry forwards begin to expire in 2029.
      The Company has provided for a full valuation allowance for any future tax
      benefits from the net operating loss carryforwards as the management believes
      it
      is more likely than not that these assets will not be realized in the
      future.





*British
      Virgin Island*





Under
      the
      current BVI law, the Company is not subject to tax on income.





*Hong
      Kong*





For
      the
      six months ended June 30, 2008, no income tax expense for Hong Kong Profits
      Tax
      is provided for as the Company’s income neither arises in, nor is derived form
      Hong Kong under its tax law.


F-15





**NOTE** **-** **12**  **SHARE-BASED
      COMPENSATION**





In
      2006,
      the Company issued 3,000,000 shares of common stock upon exercise of rights
      under the share options. The fair value of the stock-based compensation services
      for the grant is calculated at $5,932,000 based on Black-Scholes Pricing Model
      and recorded as long-term deferred charges. For the six months ended June 30,
      2007, the Company recognized the stock-based compensation expense of $979,646
      and amortized to the statement of operation over the requisite service
      period.





On
      November 19, 2007, the Board of Directors approved the termination of certain
      service agreements because no services were rendered to the Company during
      2007.
      Consistent with SFAS No. 123(R), *“Share-Based
      Payment”* using
      the fair value method, the Company immediately recognized as expense, over
      the
      requisite service period.





**NOTE** **-** **13**  **CONCENTRATION
      AND RISK**





The
      Company is exposed to the followings concentrations of risk:





(a)  Major
      customers





For
      the
      six months ended June 30, 2008 and 2007, 100% of the Company’s assets were
      located in the PRC and Hong Kong and 100% of the Company’s revenues were
      generated from customers located in the PRC.





For
      the
      three and six months ended June 30, 2008, one customer represented more than
      10%
      of the Company’s revenue and accounts receivable, respectively. This customer
      accounts for 100% of revenue amounting to $129,384 and 100% of revenue amounting
      to $251,412 for the three and six months ended respectively, with $0 of accounts
      receivable as of June 30, 2008.





For
      the
      three and six months ended June 30, 2007, one customer represented more than
      10%
      of the Company’s revenue and accounts receivable, respectively. This customer
      accounts for 100% of revenue amounting to $358,975 and 100% of revenue amounting
      to $653,846 for the three and six months ended respectively, with $0 of accounts
      receivable as of June 30, 2007.





(b)  Credit
      risk





Financial
      instruments that potentially subject the Company to significant concentrations
      of credit risk consist principally of cash and trade accounts receivable. The
      Company performs ongoing credit evaluations of its customers’ financial
      condition, but does not require collateral to support such
      receivables.





(c)   Exchange
      rate risk





The
      Company cannot guarantee that the current exchange rate will remain steady;
      therefore there is a possibility that the Company could post the same amount
      of
      net income for two comparable periods and because of the fluctuating exchange
      rate actually post higher or lower profit depending on exchange rate of RMB
      converted to US$ on that date. The exchange rate could fluctuate depending
      on
      changes in political and economic environments without notice.


F-16





**NOTE** **-** **14**  **COMMITMENT
      AND CONTINGENCIES**





(a)  Operating
      lease commitment





The
      Company leases an office premise under a non-cancelable operating lease for
      a
      term of 2 years due June 15, 2010. Costs incurred under this operating lease
      are
      recorded as rent expense and totaled approximately $52,515 and $52,324 for
      the
      six months ended June 30, 2008 and 2007.





Period
                ending June 30,2009
            
            $
            130,9902010
            
            
            125,532Total
            
            $
            256,522





(b)  Capital
      commitment





As
      of
      June 30, 2008, the Company has the following capital commitments:





Planned
      establishment of a joint venture





The
      Company has entered into a Memorandum of Understanding (“MOU”) dated February
      27, 2007 with a Korean listed company. Pursuant to this MOU, both parties are
      willing to set up a joint venture in PRC to promote a 3-D mobile contents
      platform. There is no definitive joint venture agreement entered up to the
      date
      of this report.





Planned
      acquisition of a company





The
      wholly-owned subsidiary of the Company, ITHL, has entered into a Letter of
      Intent (“LOI”) dated February 12, 2007 with a third party. Pursuant to this LOI,
      ITHL intends to acquire 100% interest of Shanghai BODA Electronic Co., Ltd.
      There is no definitive equity transfer agreement entered up to the date of
      this
      report.


F-17





**ITEM
                2.**
              **MANAGEMENTS
                  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
                  OPERATION**





The
      following review concerns the three months ended June 30, 2008 and June 30,
      2007, and six months ended June 30, 2008 and June 30, 2007, which should be
      read
      in conjunction with the financial statements and notes thereto presented in
      the
      Form 10-K.





**Forward
      Looking Statements**





*The
      information in this discussion contains forward-looking statements within the
      meaning of Section 27A of the Securities Act of 1933, as amended, and Section
      21E of the Securities Exchange Act of 1934, as amended. These forward-looking
      statements involve risks and uncertainties, including statements regarding
      our
      capital needs, business strategy and expectations. Any statements contained
      herein that are not statements of historical facts may be deemed to be
      forward-looking statements. In some cases, you can identify forward-looking
      statements by terminology such as "may", "will", "should", "expect", "plan",
      "intend", "anticipate", "believe", "estimate", "predict", "potential" or
      "continue", the negative of such terms or other comparable terminology. Actual
      events or results may differ materially. We disclaim any obligation to publicly
      update these statements, or disclose any difference between its actual results
      and those reflected in these* *statements.
      The information constitutes forward-looking statements within the meaning of
      the
      Private Securities Litigation Reform Act of 1995.*





**Overview
      and Future Plan of Operations**





In
      the
      two quarters of 2008, our revenues dropped by 45% from $653,846 in 2007 to
      $358,975 in 2008 primarily resulting from longer low season period in respect
      of
      trading of mobile phone and related components..





In
      2008,
      the Company will strengthen our trading of mobile phones and related components.
      On May 8, 2008, we have completed the establishment of a new subsidiary,
      Changzhou Innocom Communication Technology Limited in Changzhou, Jiangsu
      Province, China upon the approval of its local government. We will put this
      assembling production factory in commercial production to assemble mobile phones
      under the purchased trade mark namely “Tsinghua Unisplendour” and other mobile
      phone components on OEM basis. We expect meaningful revenue from this segment
      in
      the fourth quarter.





**Results
      of Operations for the Three Months ended June 30, 2008 and June 30, 2007 and
      Six
      Months Ended June 30, 2008 and June 30, 2007**





During
      the three months ended June 30, 2008, we experienced a net loss of $631,365
      compared to a net income of $281,963 for the three months ended June 30, 2007.
      During the six months ended June 30, 2008, we experienced a net loss of $646,403
      compared to a net loss of $28,948 for the six months ended June 30, 2007. The
      loss is attributable to fierce competition of mobile phone industry and increase
      of staff cost upon establishment of assembling plant.





*Revenue*





During
      the three months ended June 30, 2008, we derived $129,384 revenue from our
      Trading of Mobile Phone and Related Component operations, representing a
      decrease in revenue of $122,028 or 49% decrease from the comparable three months
      ended June 30, 2007 in which revenue to $251,412.





During
      the six months ended June 30, 2008, we derived $358,975 revenue from our Trading
      of Mobile Phone and Related Component operations, representing a decrease in
      revenue of $294,871 or 45% decrease from the comparable six months ended June
      30, 2007 in which revenue to $653,846.




As
      a
      result of fierce competition, we sustain a drop in revenue in both reported
      periods.


4





*Cost
      of Sales*





As
      our
      trading cost is netted with billed value as revenue, the Company does not have
      any cost of sales.




*Administrative
      Expenses*





Below
      table sets out the analysis of general and administrative expenses:





Three Months ended June 30,
            
            Six Months ended June 30,2008
            
            2007
            
            2008
            
            2007Total general and administrative
                expenses before recovery from over-provided audit fee of $110,000
                during
                three months March 31, 2008
            
            $
            669,122
            
            $
            614,031
            
            $
            916,188
            
            $
            1,168,978Less:
                Non-cash items
            
            
            149,417
            
            
            491,321
            
            
            298,505
            
            
            980,146$
            519,705
            
            $
            122,710
            
            $
            617,683
            
            $
            188,832





The
      increase in general and administrative expenses was primarily attributable
      to
      increase in full time employees from 2 to 130 upon completion of establishment
      of a new subsidiary in Changzhou.




Below
      table sets out the components of non-cash items:





Three Months ended June 30,
            
            Six Months ended June 30,2008
            
            2007
            
            2008
            
            2007Depreciation
            
            $
            829
            
            $
            (1,208
            )
            $
            1,246
            
            $
            500Amortization
                of intangible assets
            
            
            148,588
            
            
            -
            
            
            297,259
            
            
            -Amortization
                of long-term deferred consultancy fee
            
            
            -
            
            
            492,529
            
            
            -
            
            
            979,646$
            149,417
            
            $
            491,321
            
            $
            298,505
            
            $
            980,146





The
      depreciation policy adopted in for the fiscal year 2008 was consistent with
      that
      adopted in 2007.





The
      increase in amortization of intangible assets is due to acquisition of trade
      mark for our mobile phones at the end of the second quarter period of 2007.
      The
      amortization is made over purchase period of 10 years.





The
      amortization of long-term deferred consultancy fee during the three months
      ended
      March 31, 2008 and six months ended June 30, 2008 decrease as the deferred
      charges have been written off during the last quarter of 2007.





*Other
      Income*





Total
      other income for both periods presented was immaterial and consisted of the
      following:




Three Months
              ended
              June 30, 2008
            
            Three Months
              ended
              June 30, 2007
            
            Six Months
              ended
              June 30, 2008
            
            Six Months
              ended
              June 30, 2007Interest income
            
            $
            11,077
            
            $
            4
            
            $
            11,077
            
            $
            6Interest
                expense
            
            $
            102,704
            
            $
            -
            
            $
            102,704
            
            $
            -




5


*Net
      Loss*





Net
      loss
      for the six months ended June 30, 2008 was $646,403 compared to net loss of
      $28,948 for the six months ended June 30, 2007. Loss of both periods is
      primarily attributed to seasonal effect of low season period. The increase
      of
      loss for the six months ended June 30, 2008 is attributable to fierce
      competition of mobile phone industry and increase of staff cost upon
      establishment of assembling plant.





*Trends,
      Events, and Uncertainties*





On
      May 8,
      2008, we have completed the establishment of a new subsidiary, Changzhou Innocom
      Communication Technology Limited in Changzhou, Jiangsu Province, China upon
      the
      approval of its local government. Trial assembling of mobile phones has been
      completed. We will assemble mobile phones under the purchased trade mark namely
      “Tsinghua Unisplendour” and other mobile phone components on OEM basis.





**Liquidity
      and Capital Resources for the Six Months Ended June 30, 2008 and
      2007**





*Cash
      flows from operating activities*





We
      experienced negative cash flows used in operations in the amount of $2,357,908
      for the six months ended June 30, 2008 as compared with positive cash flow
      provided by the operations in the amount of $131,678 for the six months ended
      June 30, 2007.





*Cash
      flows from investing activities*





During
      six months ended June 30, 2008, we had positive cash flow provided by investment
      activities in the amount of $5,476,324. We received proceed from disposal of
      subsidiaries of $5,617,101. We used $11,315 to purchase property, plant and
      equipment and made a capital payment of $129,462 in acquisition of land use
      right.





During
      six months ended June 20, 2007, we experienced negative cash flow used in
      investment activities in the amount of $152,615. We received proceed from
      disposal of subsidiaries of $5,811,904 and incurred a capital payment of
      $5,964,519 in acquisition of deferred expenditure





*Cash
      flows from financing activities*





During
      six months ended June 30, 2008, we experienced negative cash flows in financing
      activities in the amount of $3,007,385. We repay advance from a related party
      in
      the amount of $5,204,104. On the other hand, we obtained short-term bank loans
      and note payable of $1,700,686 and $496,033 respectively.





During
      six months ended June 30, 2007, there are no financing activities.





*Liquidity*





On
      a
      long-term basis, our liquidity will be dependent on establishing profitable
      operations, receipt of revenues, additional infusions of capital and additional
      financing. If necessary, we may raise capital through an equity or debt
      offering. The funds raised from this offering will be used to develop and
      execute our business plan. However, there can be no assurance that we will
      be
      able to obtain additional equity or debt financing in the future, if at all.
      If
      we are unable to raise additional capital, our growth potential will be
      adversely affected. Additionally, we will have to significantly modify our
      plans.





**Critical
      Accounting Policies**





The
      financial statements are prepared in accordance with accounting principles
      generally accepted in the U.S., which requires us to make estimates and
      assumptions in certain circumstances that affect amounts reported in the
      accompanying financial statements and related footnotes. In preparing these
      financial statements, management has made its best estimates and judgments
      of
      certain amounts included in the financial statements, giving due consideration
      to materiality. We do not believe there is a great likelihood that materially
      different amounts would be reported related to the accounting policies described
      below. However, application of these accounting policies involves the exercise
      of judgment and use of assumptions as to future uncertainties and, as a result,
      actual results could differ from these estimates.


6


Details
      of critical accounting policies are set out in notes to the financial statements
      included in Item 1.





**Employees**





As
      of
      June 30, 2008, we had approximately 130 full-time employees employed in Greater
      China. From time to time we employ independent contractors to support our
      production, engineering, marketing, and sales departments.





**Website
      Access to our SEC Reports**




Our
      Internet website address is www.innocomtechnology.com. Through our Internet
      website, we will make available, free of charge, the following reports as soon
      as reasonably practicable after electronically filing them with, or furnishing
      them to, the SEC: our Annual Reports on Form 10-K; our Quarterly Reports on
      Form
      10-Q; our Current Reports on Form 8-K; and amendments to those reports filed
      or
      furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934,
      as
      amended (the "Exchange Act"). Our Proxy Statements for our Annual Stockholder
      Meetings are also available through our Internet website. Our Internet website
      and the information contained therein or connected thereto are not intended
      to
      be incorporated into this Annual Report on Form 10-K.




You
      may
      also obtain copies of our reports without charge by writing to:





Attn:
      Investor Relations


Suite
      1501, Bank of East Asia Harbour View Centre


56
      Gloucester Road


Wanchai,
      Hong Kong, PRC





The
      public may also read and copy any materials filed with the SEC at the SEC's
      Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, or through
      the SEC website at www.sec.gov. The Public Reference Room may be contact at
      (800) SEC-0330. You may also access our other
      reports via that link to the SEC website.





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





***Foreign
      Exchange Risk***





While
      our
      reporting currency is the U.S. Dollar, all of our consolidated revenues and
      consolidated costs and expenses are denominated in Renminbi. All of our assets
      are denominated in RMB except for cash. As a result, we are exposed to foreign
      exchange risk as our revenues and results of operations may be affected by
      fluctuations in the exchange rate between U.S. Dollars and RMB. If the RMB
      depreciates against the U.S. Dollar, the value of our RMB revenues, earnings
      and
      assets as expressed in our U.S. Dollar fina ncial
      stat em ents
      will
      decline. We have not entered into any hedging transactions in an effort to
      reduce our exposure to foreign exchange risk.





***Inflation***




Inflationary
      factors such as increases in the cost of our product and overhead costs may
      adversely affect our operating results. Although we do not believe that
      inflation has had a material impact on our financial position or results of
      operations to date, a high rate of inflation in the future may have an adverse
      effect on our ability to maintain current levels of gross margin and selling,
      general and administrative expenses as a percentage of net revenues if the
      selling prices of our products do not increase with these increased
      costs.


7


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





Evaluation
      of Disclosure Controls and Procedures .





Based
      on
      an evaluation under the supervision and with the participation of management,
      our Chief Executive Officer and Chief Financial Officer have concluded that
      our
      disclosure controls and procedures as defined in Section 13a-15(e) and 15d-15(e)
      under the Securities Exchange Act of 1934, as amended ("Exchange Act") were
      effective as of March 31, 2008 to ensure that information required to be
      disclosed by us in reports that we file or submit under the Exchange Act is
      (i)
      recorded, processed, summarized and reported within the time periods specified
      in the Securities and Exchange Commission rules and forms and (ii) accumulated
      and communicated to our management, including our Chief Executive Officer and
      Chief Financial Officer, as appropriate to allow timely decisions regarding
      required disclosure.





Changes
      in Internal Control over Financial Reporting





There
      were no changes in our internal control over financial reporting during the
      quarter ended June 30, 2008, which were identified in connection with
      management's evaluation required by paragraph (d) of rules 13a-15 and 15d-15
      under the Exchange Act, that have materially affected, or are reasonably likely
      to materially affect, our internal control over financial
      reporting.





**PART
      II - OTHER INFORMATION**





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





We
      are
      not involved in any material pending legal proceedings at this time, and
      management is not aware of any contemplated proceeding by any governmental
      authority.





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





***Our
      sales and profitability depend on the continued growth of the mobile
      communications industry as well as the growth of the new market segments within
      that industry in which we have recently invested. If the mobile communications
      industry does not grow as we expect, or if the new market segments on which
      we
      have chosen to focus and in which we have recently invested grow less than
      expected, or if new faster-growing market segments emerge in which we have
      not
      invested, our sales and profitability may be adversely
      affected.***





Our
      business depends on continued growth in mobile communications in terms of the
      number of existing mobile subscribers who upgrade or simply replace their
      existing mobile devices, the number of new subscribers and increased usage.
      As
      well, our sales and profitability are affected by the extent to which there
      is
      increasing demand for, and development of, value-added services, leading to
      opportunities for us to successfully market mobile devices that feature these
      services. These developments in our industry are to a certain extent outside
      of
      our control. For example, we are dependent on operators in highly penetrated
      markets to successfully introduce services that cause a substantial increase
      in
      usage of voice and data. Further, in order to support a continued increase
      in
      mobile subscribers in certain low-penetration markets, we are dependent on
      operators to increase their sales volumes of lower-cost mobile devices and
      to
      offer affordable tariffs. If operators are not successful in their attempts
      to
      increase subscrib er
      numbers, stimulate increased usage or drive replacement sales, our business
      and
      results of operations could be materially adversely affected.





Our
      industry continues to undergo significant changes. First, the mobile
      communications, information technology, media and consumer electronics
      industries are converging in some areas into one broader industry leading to
      the
      creation of new mobile devices, services and ways to use mobile devices. Second,
      while participants in the mobile communications industry once provided complete
      products and solutions, industry players are increasingly providing specific
      hardware and software layers for products and solutions. As a result of these
      changes, new market segments within our industry have begun to emerge and we
      have made significant investments in new business opportunities in certain
      of
      these market segments, such as smart-phones, imaging, games, music and
      enterprise mobility infrastructure. However, a number of the new market segments
      in the mobile communications industry are still in early states of their
      development, and it may be difficult for us to accurately predict which new
      market segments are the most advantageous for us to focus on. As a result,
      if
      the segments on which we have chosen to focus grow less than expected, we may
      not receive a return on our investment as soon as we expect, or at all. We
      may
      also forego growth opportunities in new market segments of the mobile
      communications industry on which we do not focus.


8


***Our
      results of operations, particularly our profitability, may be adversely affected
      if we do not successfully manage price erosion related to our
      products.***





In
      the
      future, if, for competitive reasons, we need to lower the selling prices of
      certain of our products and if we cannot lower our costs at the same rate or
      faster, this may have a material adverse effect on our business and results
      of
      operations, particularly our profitability. To mitigate the impact of mix shifts
      on our profitability, we implement product segmentation with the aim of
      designing appropriate features with an appropriate cost basis for each customer
      segment. Likewise, we endeavor to mitigate the impact on our profitability
      of
      price erosion of certain features and functionalities by seeking to correctly
      time the introduction of new products, in order to align such introductions
      with
      declines in the prices of relevant components. We cannot predict with any
      certainty whether or to what extent we may need to lower prices for competitive
      reasons again and how successful we will be in aligning our cost basis to the
      pricing at any given point in time. Price erosion is a normal characteristic
      of
      the mobile devices industry, and the products and solutions offered by us are
      also subject to natural price erosion over time. If we cannot reduce our costs
      at the same rate, our business may be materially adversely affected. Although
      we
      may take actions to mitigate price erosion, such as strengthening the Company
      brand in order to support a price premium over certain of our competitors,
      there
      can be no assurance that we will be successful in this regard.





***We
      must develop or otherwise acquire complex, evolving technologies to use in
      our
      business. If we fail to develop these technologies or to successfully
      commercialize them as new advanced products and solutions that meet customer
      demand, or fail to do so on a timely basis, it may have a material adverse
      effect on our business, our ability to meet our targets and our results of
      operations.***





In
      order
      to succeed in our markets, we believe that we must develop or otherwise acquire
      complex, evolving technologies to use in our business. However, the development
      and use of new technologies, applications and technology platforms for our
      mobile devices involves time, substantial costs and risks both within and
      outside of our control. This is true whether we develop these technologies
      internally, by acquiring or investing in other companies or through
      collaboration with third parties.





The
      technologies, functionalities and features on which we choose to focus may
      not
      achieve as broad or timely customer acceptance as we expect. This may result
      from numerous factors including the availability of more attractive alternatives
      or a lack of sufficient compatibility with other existing technologies, products
      and solutions. Additionally, even if we do select the technologies,
      functionalities and features that customers ultimately want, we or the companies
      that work with us may not be able to bring them to the market at the right
      time.





Furthermore,
      as a result of ongoing technological developments, our products and solutions
      are increasingly used together with components or layers that have been
      developed by third parties, whether or not the Company has authorized their
      use
      with our products and solutions. However, such components, such as batteries,
      or
      layers, such as software applications, may not be compatible with our products
      and solutions and may not meet our and our customers' quality, safety or other
      standards. As well, certain components or layers that may be used with our
      products may enable our products and solutions to be used for objectionable
      purposes, such as to transfer content that might be hateful or derogatory.
      The
      use of our products and solutions with incompatible or otherwise substandard
      components or layers, or for purposes that are inappropriate, is largely outside
      of our control and could harm the Company brand.


9


***We
      need to understand the different markets in which we operate and meet the needs
      of our customers, which include mobile network operators, distributors,
      independent retailers and enterprise customers. We need to have a competitive
      product portfolio, and to work together with our operator customers to address
      their needs. Our failure to identify key market trends and to respond timely
      and
      successfully to the needs of our customers may have a material adverse impact
      on
      our market share, business and results of operations.***





We
      serve
      a diverse range of customers, ranging from mobile network operators,
      distributors, independent retailers to enterprise customers, across a variety
      of
      markets. In many of these markets, the mobile communications industry is at
      different stages of development, and many of these markets have different
      characteristics and dynamics, for example, in terms of mobile penetration rates
      and technology, feature and pricing preferences. Establishing and maintaining
      good relationships with our customers and understanding trends and needs in
      their markets require us to constantly obtain and evaluate a complex array
      of
      feedback and other data. We must do this efficiently in order to be able to
      identify key market trends and address our customers' needs proactively and
      in a
      timely manner. If we fail to analyze correctly and respond timely and
      appropriately to customer feedback and other data, our business may be
      materially adversely affected.





Certain
      mobile network operators require mobile devices to be customized to their
      specifications, by requesting certain preferred features, functionalities or
      design, together with co-branding with the network operator's brand. We believe
      that customization is an important element in gaining increased operator
      customer satisfaction and we are working together with operators on product
      planning as well as accelerating product hardware and software customization
      programs. These developments may result in new challenges as we provide
      customized products, such as the need for us to produce mobile devices in
      smaller lot sizes, which can impede our economies of scale, or the potential
      for
      the erosion of the Company brand, which we consider to be one of our key
      competitive advantages.





In
      order
      to meet our customers' needs, we need to introduce new devices on a timely
      basis
      and maintain a competitive product portfolio. For the Company, a competitive
      product portfolio means a broad and balanced offering of commercially appealing
      mobile devices with attractive features, functionality and design for all major
      user segments and price points. If we do not achieve a competitive portfolio,
      we
      believe that we will be at a competitive disadvantage, which may lead to lower
      revenue and lower profits.




The
      competitiveness of our portfolio is also influenced by the value of the Company
      brand. A number of factors, including actual or even alleged defects in our
      products and solutions, may have a negative effect on our reputation and erode
      the value of the Company brand.





***Competition
      in our industry is intense. Our failure to respond successfully to changes
      in
      the competitive landscape may have a material adverse impact on our business
      and
      results of operations.***





The
      markets for our products and solutions are intensely competitive. Industry
      participants compete with each other mainly on the basis of the breadth and
      depth of their product portfolios, price, operational and manufacturing
      efficiency, technical performance, product features, quality, customer support
      and brand recognition. We are facing increased competition from both our
      traditional competitors in the mobile communications industry as well as a
      number of new competitors, particularly from countries where production costs
      tend to be lower. Some of these competitors have used, and we expect will
      continue to use, more aggressive pricing strategies, different design approaches
      and alternative technologies than ours. In addition, some competitors have
      chosen a strategy of focusing on productization based on commercially available
      technologies and components, which may enable them to introduce products faster
      and with lower levels of research and development spending than the
      Company.




As
      a
      result of developments in our industry, we also expect to face new competition
      from companies in related industries, such as consumer electronics manufacturers
      and business device and solution providers, including but not limited to Dell,
      HP, Microsoft, Nintendo, Palm, Research in Motion and Sony. Additionally,
      because mobile network operators are increasingly offering mobile devices under
      their own brand, we face increasing competition from non-branded mobile device
      manufacturers. If we cannot respond successfully to these competitive
      developments, our business and results of operations may be materially adversely
      affected.


10


***Reaching
      our sales, profitability, volume and market share targets depends on numerous
      factors. These include our ability to offer products and solutions that meet
      the
      demands of the market and to manage the prices and costs of our products and
      solutions, our operational efficiency, the pace of development and acceptance
      of
      new technologies, our success in the business areas that we have recently
      entered, and general economic conditions. Depending on those factors, some
      of
      which we may influence and others of which are beyond our control, we may fail
      to reach our targets and we may fail to provide accurate forecasts of our sales
      and results of operations*** *.*





A
      variety
      of factors discussed throughout these Risk Factors could affect our ability
      to
      reach our targets and give accurate forecasts. Although, we can influence some
      of these factors, some of them depend on external factors that are beyond our
      control.  In our mobile device businesses, we seek to maintain healthy
      levels of sales and profitability through offering a competitive portfolio
      o f
      mobile
      devices, growing faster than the market, working to improve our operational
      efficiency, controlling our costs, and targeting timely and successful product
      introductions and shipments. The quarterly and annual sales and operating
      results in our mobile device businesses also depend on a number of other factors
      that are not within our control. Such factors include the global growth in
      mobile device volumes, which is influenced by, among other factors, regional
      economic factors, competitive pressures, regulatory environment, the timing
      and
      success of product and service introductions by various market participants,
      including network operators, the commercial acceptance of new mobile devices,
      technologies and services, and operators' and distributors' financial
      situations. Our sales and operating results are also impacted by fluctuations
      in
      exchange rates and at the quarterly level by seasonality. In developing markets,
      the availability and cost, through affordable tariffs, of mobile phone service
      compared with the availability and cost of fixed line networks may also impact
      volume growth.





In
      our
      mobile networks business, we also seek to maintain healthy levels of sales
      and
      profitability and try to grow faster than the market. Our networks business's
      quarterly and annual net sales and operating results can be affected by a number
      of factors, some of which we can influence, such as our operational efficiency,
      the level of our research and development investments and the deployment
      progress and technical success we achieve under network contracts. Other
      relevant factors include operator investment behavior, which can vary
      significantly from quarter to quarter, competitive pressures and general
      economic conditions although these are not within our control.





The
      new
      business areas that we have entered may be less profitable than we currently
      foresee, or they may generate more variable operating results than we currently
      foresee. We expect to incur short-term operating losses in certain of these
      new
      business areas given our early stage investments in research and development
      and
      marketing in particular. Also our efforts in managing prices and costs in the
      long-term, especially balancing prices and volumes with research and development
      costs, may prove to be inadequate.





Although
      we may announce forecasts of our results of operations, uncertainties affecting
      any of these factors, particularly during difficult economic conditions, render
      our forecasts difficult to make, and may cause us not to reach the targets
      that
      we have forecasted, or to revise our estimates.





***Our
      sales and results of operations could be adversely affected if we fail to
      efficiently manage our manufacturing and logistics without interruption, or
      fail
      to ensure that our products and solutions meet our and our customers' quality,
      safety and other requirements and are delivered in
      time.***





Our
      manufacturing and logistics are complex, require advanced and costly equipment
      and include outsourcing to third parties. These operations are continuously
      modified in an effort to improve manufacturing efficiency and flexibility.
      We
      may experience difficulties in adapting our supply to the demand for our
      products, ramping up or down production at our facilities, adopting new
      manufacturing processes, finding the most timely way to develop the best
      technical solutions for new products, or achieving manufacturing efficiency
      and
      flexibility, whether we manufacture our products and solutions ourselves or
      outsource to third parties. Such difficulties may have a material adverse effect
      on our sales and results of operations and may result from, among other things:
      delays in adjusting or upgrading production at our facilities, delays in
      expanding production capacity, failure in our manufacturing and logistics
      processes, failures in the activities we have outsourced, and interruptions
      in
      the data communication systems that run our operations. Also, a failure or
      an
      interruption could occur at any stage of our product creation, manufacturing
      and
      delivery processes, resulting in our products and solutions not meeting our
      and
      our customers' quality, safety and other requirements, or being deliv ered
      late, which could have a material adverse effect on our sales, our results
      of
      operations and reputation and the value of the Company
      brand.


11


***We
      depend on our suppliers for the timely delivery of components and for their
      compliance with our supplier requirements, such as, most notably, our and our
      customers' product quality, safety and other standards. Their failure to do
      so
      could adversely affect our ability to deliver our products and solutions
      successfully and on time.***





Our
      manufacturing operations depend to a certain extent on obtaining adequate
      supplies of fully functional components on a timely basis. Our principal supply
      requirements are for electronic components, mechanical components and software,
      which all have a wide range of applications in our products. Electronic
      components include integrated circuits, microprocessors, standard components,
      memory devices, cameras, displays, batteries and chargers while mechanical
      components include covers, connectors, key mats and antennas. In addition,
      a
      particular component may be available only from a limited number of suppliers.
      Suppliers may from time to time extend lead times, limit supplies or increase
      prices due to capacity constraints or other factors, which could adversely
      affect our ability to deliver our products and solutions on a timely basis.
      Moreover, even if we attempt to select our suppliers and manage our supplier
      relationships with scrutiny, a component supplier may fail to meet our supplier
      requirements, such as, most notably, our and our customers' product quality,
      safety and other standards, and consequently some of our products are
      unacceptable to us and our customers, or we may fail in our own quality
      controls. Moreover, a component supplier may experience delays or disruption
      to
      its manufacturing, or financial difficulties. Any of these events could delay
      our successful delivery of products and solutions, which meet our and our
      customers' quality, safety and other requirements, or otherwise adversely affect
      our sales and our results of operations. Also, our reputation and brand value
      may be affected due to real or merely alleged failures in our products and
      solutions.





***We
      are developing a number of our new products and solutions together with other
      companies. If any of these companies were to fail to perform, we may not be
      able
      to bring our products and solutions to market successfully or in a timely way
      and this could have a material adverse impact on our sales and
      profitability.***





We
      continue to invite the providers of technology, components or software to work
      with us to develop technologies or new products and solutions. These
      arrangements involve the commitment by each company of various resources,
      including technology, research and development efforts, and personnel. Although
      the target of these arrangements is a mutually beneficial outcome for each
      party, our ability to introduce new products and solutions that meet our and
      our
      customers' quality, safety and other standards successfully and on schedule
      could be hampered if, for example, any of the following risks were to
      materialize: the arrangements with the companies that work with us do not
      develop as expected, the technologies provided by the companies that work with
      us are not sufficiently protected or infringe third parties' intellectual
      property rights in a way that we cannot foresee or prevent, the technologies,
      products or solutions supplied by the companies that work with us do not meet
      the required quality, safety and other standards or customer needs, our own
      quality controls fail, or the financial standing of the companies that work
      with
      us deteriorates.





***Our
      operations rely on complex and highly centralized information technology systems
      and networks. If any system or network disruption occurs, this reliance could
      have a material adverse impact on our operations, sales and operating
      results.***





Our
      operations rely to a significant degree on the efficient and uninterrupted
      operation of complex and highly centralized information technology systems
      and
      networks, which are integrated with those of third parties. Any failure or
      disruption of our current or future systems or networks could have a material
      adverse effect on our operations, sales and operating results. Furthermore,
      any
      data leakages resulting from information technology security breaches could
      also
      adversely affect us.





All
      information technology systems are potentially vulnerable to damage or
      interruption from a variety of sources. We pursue various measures in order
      to
      manage our risks related to system and network disruptions, including the use
      of
      multiple suppliers and available information technology security. However,
      despite precautions taken by us, an outage in a telecommunications network
      utilized by any of our information technology systems, virus or other event
      that
      leads to an unanticipated interruption of our information technology systems
      or
      networks could have a material adverse effect on our operations, sales and
      operating results.


12


***Our
      products and solutions include increasingly complex technology involving
      numerous new patented and other proprietary technologies, as well as some
      developed or licensed to us by certain third parties. As a consequence,
      evaluating the protection of the technologies we intend to use is more and
      more
      challenging, and we expect increasingly to face claims that we have infringed
      third parties' intellectual property rights. The use of increasingly complex
      technology may also result in increased licensing costs for us, restrictions
      on
      our ability to use certain technologies in our products and solution offerings,
      and/or costly and time-consuming litigation. Third parties may also commence
      actions seeking to establish the invalidity of intellectual property rights
      on
      which we depend.***





Our
      products and solutions include increasingly complex technology involving
      numerous new Company patented and other proprietary technologies, as well as
      some developed or licensed to us by certain third parties. As the amount of
      such
      proprietary technologies needed for our products and solutions continues to
      increase, the number of parties claiming rights continues to increase and become
      more fragmented within individual products, and as the complexity of the
      technology and the overlap of product functionalities increases, the possibility
      of more infringement and related intellectual property claims against us also
      continues to increase. The holders of patents potentially relevant to our
      product and solution offerings may be unknown to us, or may otherwise make
      it
      difficult for us to acquire a license on commercially acceptable terms. There
      may also be technologies licensed to and relied on by us that are subject to
      infringement or other corresponding allegations or claims by others which could
      damage our ability to rely on such technologies.





In
      addition, although we endeavor to ensure that companies that work with us
      possess appropriate intellectual property rights or licenses, we cannot fully
      avoid risks of intellectual property rights infringement created by suppliers
      of
      components and various layers in our products and solutions or by companies
      with
      which we work in cooperative research and development activities. Similarly,
      we
      and our customers may face claims of infringement in connection with our
      customers' use of our products and solutions. Finally, as all technology
      standards, including those used and relied on by us, include some intellectual
      property rights, we cannot fully avoid risks of a claim for infringement of
      such
      rights due to our reliance on such standards. We believe that the number of
      third parties declaring their intellectual property to be relevant to these
      standards is increasing, which may increase the likelihood that we will be
      subject to such claims in the future.





Any
      restrictions on our ability to sell our products and solutions due to expected
      or alleged infringements of third party intellectual property rights and any
      intellectual property rights claims, regardless of merit, could result in
      material losses of profits, costly litigation, the payment of damages and other
      compensation, the diversion of the attention of our personnel, product shipment
      delays or the need for us to develop non-infringing technology or to enter
      into
      royalty or licensing agreements. If we were unable to develop non-infringing
      technology, or if royalty or licensing agreements were not available on
      commercially acceptable terms, we could be precluded from making and selling
      the
      affected products
      and solutions. As new features are added to our products and solutions, we
      may
      need to acquire further licenses, including from new and sometimes
      unidentified owners of intellectual property. The cumulative costs of obtaining
      any necessary licenses are difficult to predict and may over time have a
      negative effect on our operating results.





In
      addition, other companies may commence actions seeking to establish the
      invalidity of our intellectual property, for example, patent rights. In the
      event that one or more of our patents are challenged, a court may invalidate
      the
      patent or determine that the patent is not enforceable, which could harm our
      competitive position. If any of our key patents are invalidated, or if the
      scope
      of the claims in any of these patents is limited by a court decision, we could
      be prevented from licensing the invalidated or limited portion of our
      intellectual property rights. Even if such a patent challenge is not successful,
      it could be expensive and time consuming, divert management attention from
      our
      business and harm our reputation. Any diminution of the protection that our
      own
      intellectual property rights enjoy could cause us to lose some of the benefits
      of our investments in R&D, which may have a negative effect on our results
      of operations.





***If
      we are unable to recruit, retain and develop appropriately skilled employees,
      we
      may not be able to implement our strategies and, consequently, our results
      of
      operations may suffer.***





We
      must
      continue to recruit, retain and through constant competence training develop
      appropriately skilled employees with a comprehensive understanding of our
      businesses and technologies. As competition for skilled personnel remains keen,
      we seek to create a corporate culture that encourages creativity and continuous
      learning. We are also continuously developing our compensation and benefit
      policies and taking other measures to attract and motivate skilled personnel.
      Nevertheless, we have encountered in the past, and may encounter in the future,
      shortages of appropriately skilled personnel, which may hamper our ability
      to
      implement our strategies and harm our results of operations.


13


***The
      global networks business relies on a limited number of customers and large
      multi-year contracts. Unfavorable developments under such a contract or in
      relation to a major customer may affect our sales, our results of operations
      and
      cash flow adversely.***





Large
      multi-year contracts, which are typical in the networks industry, include a
      risk
      that the timing of sales and results of operations associated with these
      contracts will be different than expected. Moreover, they usually require the
      dedication of substantial amounts of working capital and other resources, which
      impacts our cash flow negatively. Any non-performance by us under these
      contracts may have significant adverse consequences for us because network
      operators have demanded and may continue to demand stringent contract
      undertakings such as penalties for contract violations.





***Our
      sales derived from, and assets located in, emerging market countries may be
      adversely affected by economic, regulatory and political developments in those
      countries. As sales from these countries represent an increasing portion of
      our
      total sales, economic or political turmoil in these countries could adversely
      affect our sales and results of operations. Our investments in emerging market
      countries may also be subject to other risks and
      uncertainties.***





We
      generate sales from and have invested in various emerging market countries.
      As
      sales from these countries represent an increasing portion of our total sales,
      economic or political turmoil in these countries could adversely affect our
      sales and results of operations. Our investments in emerging market countries
      may also be subject to risks and uncertainties, including unfavorable taxation
      treatment, exchange controls, challenges in protecting our intellectual property
      rights, nationalization, inflation, incidents of terrorist activity, currency
      fluctuations, or the absence of, or unexpected changes in, regulation as well
      as
      other unforeseeable operational risks.





***Allegations
      of health risks from the electromagnetic fields generated by base stations
      and
      mobile devices, and the lawsuits and publicity relating to them, regardless
      of
      merit, could affect our operations negatively by leading consumers to reduce
      their use of mobile devices or by causing us to allocate monetary and personnel
      resources to these issues.***





There
      has
      been public speculation about possible health risks to individuals from exposure
      to electromagnetic fields from base stations and from the use of mobile devices.
      While a substantial amount of scientific research conducted to date by various
      independent research bodies has indicated that these radio signals, at levels
      withi n
      the
      limits prescribed by public health authority safety standards and
      recommendations, present no adverse effect to human health, we cannot be
 certain that future studies, irrespective of their scientific basis, will
      not suggest a link between electromagnetic fields and adverse health effects
      that would adversely affect our sales and share price. Research into these
      issues is ongoing by government agencies, international health organizations
      and
      other scientific bodies in order to develop a better scientific and public
      understanding of these issues.




Although
      the Company products and solutions are designed to meet all relevant safety
      standards and recommendations globally, no more than a perceived risk of adverse
      health effects of mobile communications devices could adversely affect us
      through a reduction in sales of mobile devices or increased difficulty in
      obtaining sites for base stations, and could have a negative effect on our
      reputation and brand value as well as harm our share price.




***Changes
      in various types of regulation in countries around the world could affect our
      business adversely.***





Our
      business is subject to direct and indirect regulation in each of the countries
      in which we, the companies with which we work or our customers do business.
      As a
      result, changes in various types of regulations applicable to current or new
      technologies, products or services could affect our business adversely. For
      example, it is in our interest that the Federal Communications Commission
      maintains a regulatory environment that ensures the continued growth of the
      wireless sector in the United States. In addition, changes in regulation
      affecting the construction of base stations and other network infrastructure
      could adversely affect the timing and costs of new network construction or
      expansion and the commercial launch and ultimate commercial success of these
      networks.


14


Moreover,
      the implementation of new technological or legal requirements, such as the
      requirement in the United States that all handsets must be able to indicate
      their physical location, could impact our products and solutions, manufacturing
      or distribution processes, and could affect the timing of product and solution
      introductions, the cost of our production, products or solutions as well as
      their commercial success. Finally, export control, tariff, environmental, safety
      and other regulation that adversely affects the pricing or costs of our products
      and solutions as well as new services related to our products could affect
      our
      net sales and results of operations. The impact of these changes in regulation
      could affect our business adversely even though the specific regulations do
      not
      always directly apply to us or our products and solutions.




***Our
      future revenues and results of operations may be difficult to forecast and
      results in prior periods may no be indicative of future
      results.***




At
      times
      in the past and in certain segments, our revenues have fluctuated on a quarterly
      and annual basis as well as grown significantly and have decreased
      significantly. Accurate predictions of future revenues are difficult because
      of
      the rapid changes in the markets in which we operate.




Our
      results of operations have fluctuated and may continue to fluctuate
      significantly in the future as a result of a variety of factors, many of which
      are beyond our control. These factors include:




o
      the
      addition of new clients or the loss of existing clients;




o
      changes
      in fees paid by advertisers or other clients;




o
      the
      introduction of new mobile technology services by us or our
      competitors;




o
      variations in the levels of capital or operating expenditures and other costs
      relating to the maintenance or expansion of our operations, including personnel
      costs;




o
      seasonality;




o
      changes
      in results of operations brought about by newly acquired businesses or new
      joint
      ventures, which may be exceedingly difficult to predict due to management's
      lack
      of history with such businesses or joint ventures;




o
      changes
      in governmental regulation of mobile communications; and




o
      general
      economic conditions.




Our
      future revenues and results of operations may be difficult to forecast due
      to
      the above factors and the time we may need to adequately respond to any changes
      in them. Our profit margins may suffer if we are unable to pass some of the
      costs on to our customers. In addition, our expense levels are based in large
      part on our investment plans and estimates of future revenues. Any increased
      expenses may precede or may not be followed by increased revenues, as we may
      be
      unable to, or may elect not to, adjust spending in a timely manner to compensate
      for any unexpected revenue shortfall. As a result, we believe that
      period-to-period and year-to-year comparisons of our results of operations
      may
      not be meaningful.





***Acquisitions
      may harm our financial results.***





Acquisitions
      have been part of our growth and may continue to be part of our growth in the
      future. Our acquisitions may be of entire companies, certain assets of
      companies, controlling interests in companies or of minority interests in
      companies where we intend to invest as part of a strategic alliance. If we
      are
      not successful in integrating companies that we acquire or are not able to
      generate adequate sales from the acquired entities, our business could be
      materially and adversely affected.


15


***We
      depend on proprietary rights and we face the risk of
      infringement.***




Our
      success and ability to compete are substantially dependent on our internally
      developed technologies and trademarks, which we protect through a combination
      of
      copyright, trade secret and trademark law. Patent applications and trademark
      applications we submit may not be approved. Even if they are approved, such
      patents or trademarks may be successfully challenged by others or invalidated.
      If our trademark registrations are not approved because third parties own such
      trademarks, our use of such trademarks will be restricted unless we enter into
      arrangements with such third parties that may be unavailable on commercially
      reasonable terms.




We
      generally enter into confidentiality or license agreements with our employees,
      consultants and corporate partners, and generally control access to and
      distribution of our technologies, documentation and other proprietary
      information. Despite our efforts to protect our proprietary rights from
      unauthorized use or disclosure, parties may attempt to disclose, obtain or
      use
      our solutions or technologies. The steps we have taken may not prevent
      misappropriation of our solutions or technologies, particularly in many foreign
      countries in which we operate, where laws or law enforcement practices may
      not
      protect our proprietary rights as fully as in the United States.




We
      have,
      from time to time, been, and may in the future be, subject to claims of alleged
      infringement of the trademarks and other intellectual property rights of third
      parties by us or by customers who employ our advertising solutions. We may
      be
      required, or may elect, to indemnify these parties against such claims. Such
      claims and any resultant litigation could subject us to significant liability
      for damages and could result in the invalidation of our proprietary rights.
      In
      addition, even if we prevail, such litigation could be time-consuming and
      expensive to defend, and could result in the diversion of our time and
      attention, any of which could materially and adversely affect our business,
      results of operations and financial condition. Any claims or litigation from
      third parties may also result in limitations on our ability to use the
      trademarks and other intellectual property subject to such claims or litigation
      unless we enter into arrangements with the third parties responsible for such
      claims or litigation, which may be unavailable on commercially reasonable terms,
      if at all.




***Future
      currency fluctuations and restrictions on currency exchange may adversely affect
      our business, including limiting our ability to convert Chinese renminbi into
      foreign currencies and, if Chinese renminbi were to decline in value, reducing
      our revenues in U.S. dollar terms.***




Our
      reporting currency is the U.S. dollar and our operations in China and Hong
      Kong
      use their respective local currencies as their functional currencies. The
      majority of our revenues derived and expenses incurred are in currencies other
      than the U.S. dollar. We are subject to the effects of exchange rate
      fluctuations with respect to any of these currencies. We can offer no assurance
      that these will be stable against the U.S. dollar or any other foreign
      currency.




The
      income statements of our international operations are translated into U.S.
      dollars at the average exchange rates in each applicable period. To the extent
      the U.S. dollar strengthens against foreign currencies, the translation of
      these
      foreign currencies denominated transactions results in reduced revenues,
      operating expenses and net income for our international operations. Similarly,
      to the extent the U.S. dollar weakens against foreign currencies, the
      translation of these foreign currency denominated transactions results in
      increased revenues, operating expenses and net income for our international
      operations. We are also exposed to foreign exchange rate fluctuations as we
      convert the financial statements of our foreign subsidiaries into U.S. dollars
      in consolidation. If there is a change in foreign currency exchange rates,
      the
      conversion of the foreign subsidiaries' financial statements into U.S. dollars
      will lead to a translation gain or loss which is recorded as a component of
      other comprehensive income. In addition, we have certain assets and liabilities
      that are denominated in currencies other than the relevant entity's functional
      currency. Changes in the functional currency value of these assets and
      liabilities create fluctuations that will lead to a transaction gain or loss.
      We
      have not entered into agreements or purchased instruments to hedge our exchange
      rate risks, although we may do so in the future. The availability and
      effectiveness of any hedging transactions may be limited and we may not be
      able
      to successfully hedge our exchange rate risks.


16




***Changes
      to existing accounting pronouncements, including SFAS 123R, or taxation rules
      or
      practices may adversely affect our reported results of operations or how we
      conduct our business.***




A
      change
      in accounting pronouncements or taxation rules or practices can have a
      significant effect on our reported results and may even affect our reporting
      of
      transactions completed before the change is effective. Pursuant to SEC rules,
      we
      are required to implement the Statement of Financial Accounting Standards No.
      123 (revised 2004), "Share-Based Payment" ("SFAS 123R") starting in the first
      quarter of 2006. SFAS 123R requires us to measure compensation costs for all
      share-based compensation (including stock options and our employee stock
      purchase plan, as currently constructed) at fair value and take compensation
      charges equal to that value. The method that we use to determine the fair value
      of stock options is based upon, among other things, the volatility of our
      ordinary shares. The price of our ordinary shares has historically been
      volatile. Therefore, the requirement to measure compensation costs for all
      share-based compensation under SFAS 123R could negatively affect our
      profitability and the trading price of our ordinary shares. SFAS 123R and the
      impact of expensing on our reported results could also limit our ability to
      continue to use stock options as an incentive and retention tool, which could,
      in turn, hurt our ability to recruit employees and retain existing employees.
      Other new accounting pronouncements or taxation rules and varying
      interpretations of accounting pronouncements or taxation practice have occurred
      and may occur in the future. This change to existing rules, future changes,
      if
      any, or the questioning of current practices may adversely affect our reported
      financial results or the way we conduct our business.




***While
      we believe that we currently have adequate internal control procedures in place,
      we are still exposed to potential risks from recent legislation requiring
      companies to evaluate controls under Section 404 of the Sarbanes-Oxley Act
      of
      2002.***




While
      we
      believe that we currently have adequate internal control procedures in place,
      we
      are still exposed to potential risks from recent legislation requiring companies
      to evaluate controls under Section 404 of the Sarbanes-Oxley Act of 2002. Under
      the supervision and with the participation of our management, we have evaluated
      our internal controls systems in order to allow management to report on our
      internal controls, as required by Section 404 of the Sarbanes-Oxley Act. We
      have
      performed the system and process evaluation and testing required in an effort
      to
      comply with the management certification requirements of Section 404. As a
      result, we have incurred additional expenses and a diversion of management's
      time. If we are not able to continue to meet the requirements of Section 404
      in
      a timely manner or with adequate compliance, we might be subject to sanctions
      or
      investigation by regulatory authorities, such as the SEC or the Nasdaq National
      Market. Any such action could adversely affect our financial results and the
      market price of our ordinary shares.




***Our
      stock price has been historically volatile and may continue to be volatile,
      which may make it more difficult for you to resell shares when you want at
      prices you find attractive.***




The
      trading price of our ordinary shares has been and may continue to be subject
      to
      considerable daily fluctuations. During the three months ended June 30, 2008,
      the closing sale prices of our ordinary shares on the Over-the-Counter Bulletin
      Board ranged from $0.15 to $0.30 per share and the closing sale price on August
      15, 2008 was $0.15 per share. Our stock price may fluctuate in response to
      a
      number of events and factors, such as quarterly variations in operating results,
      announcements of technological innovations or new products and media properties
      by us or our competitors, changes in financial estimates and recommendations
      by
      securities analysts, the operating and stock price performance of other
      companies that investors may deem comparable, new governmental restrictions
      or
      regulations and news reports relating to trends in our markets. In addition,
      the
      stock market in general, and the market prices for China-related and mobile
      phone-related companies in particular, have experienced extreme volatility
      that
      often has been unrelated to the operating performance of such companies. These
      broad market and industry fluctuations may adversely affect the price of our
      ordinary shares, regardless of our operating performance.




***We
      may be classified as a passive foreign investment company, which could result
      in
      adverse U.S. tax consequences to U.S. investors.***




Based
      upon the nature of our income and assets, we may be classified as a passive
      foreign investment company, or PFIC, by the United States Internal Revenue
      Service for U.S. federal income tax purposes. This characterization could result
      in adverse U.S. tax consequences to you. For example, if we are a PFIC, our
      U.S.
      investors will become subject to increased tax liabilities under U.S. tax laws
      and regulations and will become subject to more burdensome reporting
      requirements. The determination of whether or not we are a PFIC is made on
      an
      annual basis, and those determinations depend on the composition of our income
      and assets, including goodwill, from time to time. Although in the past we
      have
      operated our business and in the future we intend to operate our business so
      as
      to minimize the risk of PFIC treatment, you should be aware that certain factors
      that could affect our classification as PFIC are out of our control. For
      example, the calculation of assets for purposes of the PFIC rules depends in
      large part upon the amount of our goodwill, which in turn is based, in part,
      on
      the then market value of our shares, which is subject to change. Similarly,
      the
      composition of our income and assets is affected by the extent to which we
      spend
      the cash we have raised on acquisitions and capital expenditures. In addition,
      the relevant authorities in this area are not clear and so we operate with
      less
      than clear guidance in our effort to minimize the risk of PFIC treatment.
      Therefore, we cannot be sure whether we are not and will not be a PFIC for
      the
      current or any future taxable year. In the event we are determined to be a
      PFIC,
      our stock may become less attractive to U.S. investors, thus negatively
      impacting the price of our stock.


17




***We
      may be exposed to infringement claims by third parties, which, if successful,
      could cause us to pay significant damage awards.***




Third
      parties may initiate litigation against us alleging infringement of their
      proprietary rights. In the event of a successful claim of infringement and
      our
      failure or inability to develop non-infringing technology or license the
      infringed or similar technology on a timely basis, our business could be harmed.
      In addition, even if we are able to license the infringed or similar technology,
      license fees could be substantial and may adversely affect our results of
      operations.




***Our
      failure to compete successfully may hinder our
      growth.***




The
      markets for mobile technology and related products and services are intensely
      competitive and such competition is expected to increase. Our failure to compete
      successfully may hinder our growth. We believe that our ability to compete
      depends upon many factors both within and beyond our control,
      including:




o
      the
      development of new mobile technology;




o
      the
      timing and market acceptance of new products and enhancements of existing
      services developed by us and our competitors;




o
      the
      ability to attract and retain qualified personnel;




o
      changing demands regarding customer service and support;




o
      shifts
      in sales and marketing efforts by us and our competitors; and




o
      the
      ease of use, performance, price and reliability of our services and
      products.




Some
      of
      our competitors have longer operating histories, greater name recognition,
      larger customer bases and significantly greater financial, technical and
      marketing resources than ours. In addition, current and potential competitors
      have established or may establish cooperative relationships among themselves
      or
      with third parties to increase the ability of their products or services to
      address the needs of our prospective clients. In addition, most online
      advertising companies are seeking to broaden their business models, so that
      companies that do not currently compete directly wi th
      us may
      decide to compete more directly with us in the future. We may be unable to
      compete successfully against current or future competitors.





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





None.





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





None.


18


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





None.





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





None.





**ITEM
      6.**  **EXHIBITS**





**INDEX
      TO EXHIBITS**


**OF**


**INNOCOM
      TECHNOLOGY HOLDINGS, INC.**





31.1
            Rule
                13a-14 (a)/15d-14 (a) Certification of Chief Executive
                Officer31.2
            Rule
                13a-14 (a)/15d-14 (a) Certification of Chief Financial
                Officer32.1
            Section
                1350 Certification of Chief Executive Officer32.2
            Section
                1350 Certification of Chief Financial
                Officer




**SIGNATURES**




In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant has
      duly
      caused this report to be signed on its behalf by the undersigned, thereunto
      duly
      authorized.




**INNOCOM TECHNOLOGY HOLDINGS, INC.**/s/ William Yan Sui HuiDated: August 19, 2008
            William Yan Sui Hui, Chief Executive Officer
              (Principal executive officer)/s/ Cheung Wai Hung, EddieDated: August 19, 2008
            Cheung Wai Hung, Eddie, Chief Financial Officer
              (Principal financial officer)




19