**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 March 31, 2008**





**-OR-**







 ̈
            **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
              incorporation
                or organization)
            
            (I.R.S.
                Employer Identification No.)**Unit
                3506, Bank of America Tower**
              **12
                Harcourt Road**
              **Central,
                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 √ No
 ̈





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 ̈
            Accelerated
                filer ̈
            Non-accelerated
                filer ̈
            Smaller
                reporting company√





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


Yes  ̈  No √





The
      number of shares outstanding of each of the Registrant’s classes of common
      stock, as of April 30, 2008 was 37,900536 shares, all of one class of $0.001
      par
      value Common Stock.





**INNOCOM
      TECHNOLOGY HOLDINGS, INC.**


**FORM
      10-Q**


**Quarter
      Ended March 31, 2008**


**TABLE
      OF CONTENTS**





**Page****PART
                I— FINANCIAL INFORMATION**Item
                1
            Financial
                StatementsCondensed
                Consolidated Balance Sheets as of March 31, 2008 (unaudited) and
                December
                31, 2007 (audited)
            F-2Condensed
                Consolidated Statements of Operations for the Three Months Ended
                March 31,
                2008 and 2007 (unaudited)
            F-3Condensed
                Consolidated Statements of Stockholders’ Equity for the Three Months Ended
                March 31, 2008 (unaudited)
            F-4Condensed
                Consolidated Statements of Cash Flows for the Three Months Ended
                March 31,
                2008 and 2007 (unaudited)
            F-5Notes
                to Condensed Consolidated Financial Statements for the Three Months
                Ended
                March 31, 2008 (unaudited)
            F-6
                – F-15Item
                2
            Managements
                Discussion and Analysis of Financial Condition and Results of
                Operation
            16Item
                3
            Quantitative
                and Qualitative Disclosures About Market Risk
            19Item
                4T
            Controls
                and Procedures
            19**PART
                II—OTHER INFORMATION**Item
                1
            Legal
                Proceedings
            20Item
                1A
            Risk
                Factors
            20Item
                2
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            30Item
                3
            Defaults
                Upon Senior Securities
            30Item
                4
            Submission
                of Matters to a Vote of Security Holders
            30Item
                5
            Other
                Information
            30Item
                6
            Exhibits
            30**SIGNATURES**
            **31**




Page
          2 of
          31


**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.


Page
          3 of
          31


**ITEM
       1.  Financial Statements**





**INNOCOM
      TECHNOLOGY HOLDINGS, INC.**





**INDEX
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**(UNAUDITED)**


**Page**Condensed
                  Consolidated Balance Sheets as of March 31, 2008 and December 31,
                  2007
              F-2Condensed
                  Consolidated Statements of Operations And Comprehensive Income
                  for the
                  three months ended March 31, 2008 and 2007
              F-3Condensed
                  Consolidated Statements of Cash Flows for the three months ended
                  March 31,
                  2008 and 2007
              F-4Condensed
                  Consolidated Statement of Stockholders’ Equity for the three months ended
                  March 31, 2008
              F-5Notes
                  to Condensed Consolidated Financial Statements
              F-6
                  to F-15


F-1


**INNOCOM
      TECHNOLOGY HOLDINGS, INC.**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**AS
      OF MARCH 31, 2008 AND DECEMBER 31, 2007**


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





March 31, 2008
            
            December 31, 2007(unaudited)
            
            (audited)**ASSETS**Current
                assets:Cash
                and cash equivalents
            
            $
            9,055
            
            $
            3,597Prepaid
                expenses and other receivables
            
            
            26,712
            
            
            26,636Total
                current assets
            
            
            35,767
            
            
            30,233Non-current
                assets:Investment
                in an unconsolidated affiliate
            
            
            8,487,661
            
            
            8,463,464Intangible
                assets, net
            
            
            5,470,233
            
            
            5,603,129Plant
                and equipment, net
            
            
            1,671
            
            
            2,082**TOTAL
                ASSETS**
            
            $
            13,995,332
            
            $
            14,098,908**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Current
                liabilities:Amount
                due to a related party
            
            $
            87,427
            
            $
            128Deferred
                revenue
            
            
            279,207
            
            
            400,290Income
                tax payable
            
            
            1,443,491
            
            
            1,439,376Other
                payables and accrued liabilities
            
            
            104,370
            
            
            197,697Total
                current liabilities
            
            
            1,914,495
            
            
            2,037,491**TOTAL
                LIABILITIES**
            
            $
            1,914,495
            
            $
            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 March 31, 2008
                and
                December 31, 2007
            
            
            37,898
            
            
            37,898Additional
                paid-in capital
            
            
            6,901,232
            
            
            6,901,232Accumulated
                other comprehensive income
            
            
            206,110
            
            
            171,652Retained
                earnings
            
            
            4,935,597
            
            
            4,950,635Total
                stockholders’ equity
            
            
            12,080,837
            
            
            12,061,417**TOTAL
                LIABILITIES AND STOCKHOLDERS’ EQUITY**
            
            $
            13,995,332
            
            $
            14,098,908





See
      accompanying notes to condensed consolidated financial
      statements.


F-2


**INNOCOM
      TECHNOLOGY HOLDINGS, INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


**AND
      COMPREHENSIVE INCOME (LOSS)**


**FOR
      THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**


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


**(Unaudited)**





Three months ended March 31,2008
            
            2007**REVENUES,
                NET**
            
            $
            122,028
            
            $
            294,872Operating
                expenses:Sales
                and marketing
            
            
            -
            
            
            13,461General
                and administrative
            
            
            137,066
            
            
            554,947Total
                operating expenses
            
            
            137,066
            
            
            568,408**LOSS
                FROM OPERATIONS**
            
            
            (15,038
            )
            
            (273,536
            )Other
                income (expense):Interest
                income
            
            
            -
            
            
            2**LOSS
                BEFORE INCOME TAX**
            
            
            (15,038
            )
            
            (273,534
            )Income
                tax expenses
            
            
            -
            
            
            (37,377
            )**NET
                LOSS**
            
            $
            (15,038
            )
            $
            (310,911
            )Other
                comprehensive income (loss):-
                Foreign currency translation gain (loss)
            
            
            34,458
            
            
            (49,089
            )**COMPREHENSIVE
                INCOME (LOSS)**
            
            $
            19,420
            
            $
            (360,000
            )Net
                loss per share – Basic and diluted
            
            $
            (0.00
            )
            $
            (0.01
            )Weighted
                average number of shares outstanding during the period – Basic and
                diluted
            
            
            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 THREE MONTHS ENDED MARCH 31, 2008 AND 2007**


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


**(Unaudited)**





Three months ended March 31,2008
            
            2007**Cash
                flows from operating activities:**Net
                loss
            
            $
            (15,038
            )
            $
            (310,911
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
            
            
            417
            
            
            1,708Amortization
                of long-term deferred charges
            
            
            -
            
            
            487,117Amortization
                of intangible assets
            
            
            148,671
            
            
            -Income
                tax
            
            
            -
            
            
            37,377Change
                in operating assets and liabilities:Accounts
                receivable, trade
            
            
            -
            
            
            (281,410
            )Prepaid
                expenses and other receivables
            
            
            (93,739
            )
            
            (15,070
            )Accounts
                payable, trade
            
            
            -
            
            
            45,000Deferred
                revenue
            
            
            278,752
            
            
            -Other
                payables and accrued liabilities
            
            
            (400,780
            )
            
            (38,987
            )Net
                cash used in operating activities
            
            
            (81,717
            )
            
            (75,176
            )**Cash
                flows from financing activities:**Advances
                from a related party
            
            
            87,156
            
            
            67,982Net
                cash provided by financing activities
            
            
            87,156
            
            
            67,982Effect
                of exchange rate changes on cash and cash equivalents
            
            
            19
            
            
            -**NET
                CHANGE IN CASH AND CASH EQUIVALENTS**
            
            
            5,458
            
            
            (7,194
            )**CASH
                AND CASH EQUIVALENTS, BEGINNING OF PERIOD**
            
            
            3,597
            
            
            101,288**CASH
                AND CASH EQUIVALENTS, END OF PERIOD**
            
            $
            9,055
            
            $
            94,094**SUPPLEMENTAL
                DISCLOSURE OF CASH FLOW INFORMATION:**Cash
                paid for income taxes
            
            $
            -
            
            $
            -Cash
                paid for interest expenses
            
            $
            -
            
            $
            -





See
      accompanying notes to condensed consolidated financial
      statements.


F-4


**INNOCOM
      TECHNOLOGY HOLDINGS, INC.**


**CONDENSED
      CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY**


**FOR
      THE THREE MONTHS ENDED MARCH 31, 2008**


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


**(Unaudited)**





Common stock
            
            
            
            Accumulated
              other
            
            
            
            TotalNo. of shares
            
            Amount
            
            Additional
              paid-in capital
            
            comprehensive
              income
            
            Retained
              earnings
            
            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
            
            
            -
            
            
            -
            
            
            -
            
            
            34,458
            
            
            -
            
            
            34,458Net
                loss for the period
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (15,038
            )
            
            (15,038
            )Balance
                as of March 31, 2008
            
            
            37,898,251
            
            $
            37,898
            
            $
            6,901,232
            
            $
            206,110
            
            $
            4,935,597
            
            $
            12,080,837





See
      accompanying notes to condensed consolidated financial
      statements.


F-5


**INNOCOM
      TECHNOLOGY HOLDINGS, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE THREE MONTHS ENDED MARCH 31, 2008**


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


**(Unaudited)**





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





The
      accompanying unaudited condensed consolidated financial statements have been
      prepared in accordance with both generally accepted accounting principles for
      interim financial information, and the instructions to Form 10-Q and Rule 10-01
      of Regulation S-X. Accordingly, they do not include all of the information
      and
      footnotes required by generally accepted accounting principles for complete
      financial statements. The accompanying unaudited condensed consolidated
      financial statements reflect all adjustments (consisting of normal recurring
      accruals) that are, in the opinion of management, considered necessary for
      a
      fair presentation of the results for the interim periods presented. Interim
      results are not necessarily indicative of results for a full year.





The
      condensed consolidated financial statements and related disclosures have been
      prepared with the presumption that users of the interim financial information
      have read or have access to our annual audited consolidated financial statements
      for the preceding fiscal year. Accordingly, these condensed consolidated
      financial statements should be read in conjunction with the consolidated
      financial statements and the related notes thereto contained 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
      three months ended March 31, 2008, the Company, through its subsidiaries is
      engaged in trading of mobile phone handsets and components.





As
      of
      March 31, 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
                  holdingChinarise
                  Capital (International) Ltd. (“CCIL”)
              
              British
                  Virgin Islands
                January
                  28, 2003
              
              US$1
                  ordinary
              
              Trading
                  of mobile phone handsets and componentsSky
                  Talent Development Limited (“STDL”)
              
              British
                  Virgin Islands
                September
                  8, 2005
              
              US$1
                  ordinary
              
              Investment
                  holding





F-6


Innocom
                  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
                  holding





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





**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
      March 31, 2008, the Company had incurred a net loss of $ 15,038
      and a negative operating cash flow of $81,717 . 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
            Basis
                of presentation





These
      accompanying condensed consolidated financial statements have been prepared
      in
      accordance with generally accepted accounting principles in the United States
      of
      America.





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





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.


F-7


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
            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 lifeBuilding improvement
            
            2
                yearsFurniture,
                fixtures and office equipment
            
            5
                yearsComputer
                hardware and software
            
            5
                yearsMachinery
                and equipment
            
            5
                yearsMotor
                vehicles
            
            5
                years





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.





Depreciation
      expense for the three months ended March 31, 2008 and 2007 were $417 and $1,708,
      respectively.





l
            Valuation
                of long-lived assets





Long-lived
      assets primarily include plant and equipment 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 March 31,
      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.




F-8


For
      the
      period ended March 31, 2008, the Company recognizes $122,048 as net revenues,
      at
      a rate of 6% based on the gross amount of $2,034,133 billed to the
      customers.





For
      the
      period ended March 31, 2007, the Company recognizes $294,872 as net revenues,
      at
      a rate of 6% based on the gross amount of $4,914,533 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.





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 our adoption of FIN No. 48, we analyzed the filing positions
      in
      all of the federal and state jurisdictions where we 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 March 31, 2008. The
      Company’s tax returns remain 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.


F-9


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.





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
            
            
            7.0222
            
            
            7.7697Average
                rates RMB:US$ exchange rate
            
            
            7.18
            
            
            7.8635Period
                end HK$:US$ exchange rate
            
            
            7.7827
            
            
            7.8049Average
                rates HK$:US$ exchange rate
            
            
            7.7954
            
            
            7.8026





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 March 31, 2008 and 2007, the
      Company operates in one reportable segment in trading of mobile phone handsets
      & related components in Hong Kong.


F-10


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.





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.


F-11


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.





**NOTE** **-** **5**  **INVESTMENT
      IN AN UNCONSOLIDATED AFFILIATE**





The
      Company has established a new company in the PRC, which was incorporated as
      a
      limited liability company on January 19, 2007, under the laws of the PRC having
      registered capital of RMB156,006,000 (equivalent to US$20,000,000). Upon
      completion of its start up phase, the new subsidiary’s principal activity will
      be the manufacturing and trading of mobile communication products and
      components





As
      of
      March 31, 2008, the establishment of a new company was not effectively completed
      in the PRC by the local government. Approximately $8,487,661 was incurred in
      the
      establishment of the subsidiary, principally expenditures for plant and
      equipment to the assembly line for mobile phone components and was recorded
      as
      an initial investment in the subsidiary. These amounts will be considered in
      conjunction with the consolidation of a new subsidiary in a business combination
      under SFAS No. 141 upon its completion in the second quarter of
      2008.





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





March 31, 2008
            
            December 31, 2007Trademarks
            
            $
            5,960,775
            
            $
            5,960,775Less:
                accumulated amortization
            
            
            (506,425
            )
            
            (357,754
            )Less:
                foreign translation difference
            
            
            15,883
            
            
            108Net
                book value
            
            $
            5,470,233
            
            $
            5,603,129





Amortization
      expense for the three months ended December 31, 2008 and 2007 was $148,671
      and
      $0.





Trademarks
      will be used in the planned assembly line for mobile phone communication
      products and components (see Note 5).





**NOTE** **-** **7**  **AMOUNT
      TO A RELATED PARTY**





As
      of
      March 31, 2008, a balance of $87,427 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.


F-12


**NOTE** **-** **8**  **INCOME
      TAXES**





The
      Company is registered in the United States of America and has operations in
      three tax jurisdictions: United States of America, British Virgin Island and
      Hong Kong. The components of loss before income taxes are as
      follows:





Three months ended March 31,2008
            
            2007Operations
                in tax jurisdictions from:Hong
                Kong
            
            $
            10,474
            
            $
            213,582British
                Virgin Islands
            
            
            (26,643
            )
            
            -United
                States of America
            
            
            1,131
            
            
            (487,116
            )Loss
                before income taxes
            
            $
            (15,038
            )
            $
            (273,534
            )





*United
      States of America*





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





As
      of
      March 31, 2008, the U.S. operation incurred $6,137,282 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 2028. 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
      three months ended March 31, 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.





**NOTE** **-** **9**  **CONCENTRATION
      AND RISK**





(a)  Major
      customers





For
      both
      three months ended March 31, 2008 and 2007, 100% of the Company’s assets were
      located in Hong Kong and 100% of the Company’s revenues were generated from
      customers located in the PRC and Hong Kong.





For
      the
      three months ended March 31, 2008 and 2007, one single customer represented
      more
      than 10% of the Company’s revenue and accounts receivable, respectively. As of
      March 31, 2008, this customer accounts for both 100% of revenues amounting
      to
      $122,028 and $0 of accounts receivable, respectively.





(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.


F-13


(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 HK$
      converted to US$ on that date. The exchange rate could fluctuate depending
      on
      changes in political and economic environments without notice.





**NOTE** **-** **10**  **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 three months ended March
      31,
      2007, the Company recognized the stock-based compensation expense of $487,117
      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** **-** **11**  **COMMITMENT
      AND CONTINGENCIES**





(a)  Operating
      lease commitment





The
      Company leases an office premise under a non-cancelable operating lease for
      a
      period of 1 year due June 30, 2008. Costs incurred under this operating lease
      are recorded as rent expense and totaled approximately $26,169 and $26,154
      for
      the three months ended March 31, 2008 and 2007.





Period
                ending March 31,2009
            
            $
            52,275





(b)  Capital
      commitment





As
      of
      March 31, 2008, the Company has the following capital commitments:





Planned
      acquisition of land and building





The
      Company has entered into a Provisional agreement dated September 29, 2006 to
      purchase land and building in PRC to establish an assembly line of mobile phone
      handset. There is a definitive sale and purchase agreement entered up to the
      date of this report. As of March 31, 2008, the Company has contracted for plant
      and equipment amounting to $7,541,212 (RMB52,955,898), of which $3,663,802
      (RMB25,727,949) was paid to the vendors.





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.


F-14


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.





**NOTE** **-** **12**  **SUBSEQUENT
      EVENTS**





On
      April
      28, 2008, the Company entered into a Share Purchase Agreement (the “Agreement”)
      with Xie Guo Qiang (“Qiang”) to purchase the Company’s interest in Chinarise
      Capital (International) Ltd. (“CCI”) for a purchase price of HK$43,813,384.67
      (“Purchase Price”).





The
      Purchase Price will be deliverable to the Company within thirty (30) days from
      the date of signing a sold note and a bought note. The Company will deliver
      to
      Qiang upon completion the following: (a) a duly executive instrument of
      transfer; (b) resignation of the existing directors and officers of CCI; (c)
      the
      statutory books of CCI; (d) written confirmation from the Company that there
      are
      no subsisting guarantees or other forms of securities given by CCI; (e) share
      certificate and minute books of CCI, including all other items listed in Section
      5(e) of the Agreement; (f) accounts of CCI prepared by for the period ending
      immediately prior to completion and duly signed by the directors of CCI; (g)
      a
      board resolution of CCI duly passed validly approving the transfer of the share
      from the Company to Qiang or persons nominated by Qiang and appointing the
      persons nominated by Qiang as the new directors and officers of CCI; and (h)
      all
      such other deeds, documents and instruments Qiang may require in order to
      perfect the right, title and interest of Qiang.


F-15


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





The
      following review concerns the three months ended March 31, 2008 and March 31,
      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
      first quarter of 2008, our revenues dropped by 59% from $294,872 in 2007
      to $122,028 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.
      We will also put the assembling production factory situated in Changzhou,
      Jiangsu Province, China in commercial production. This factory will assemble
      mobile phones under the purchased trade mark namely “Tsinghua Unisplendour” and
      other mobile phone components on OEM basis.





**Results
      of Operations for the Three Months Ended March 31, 2008 and March 31,
      2007**





During
      the three months ended March 31, 2008, we experienced a net loss of
      $15,038 compared
      to a net loss of $310,911 for the three months ended March 31, 2007 .
      The
      loss is attributable to seasonal effect of low season period,





*Revenue*





During
      the three months ended March 31, 2008, we derived $122,028 revenue from our
      Trading of Mobile Phone and Related Component operations, representing a
      decrease in revenue of $172,844 or 59% decrease from the comparable three months
      ended March 31, 2007 in which revenue to $294,872.





Low
      season period starts from long holiday period of Chinese New Year which falls
      either in January or February of each year. For the three months ended March
      31,
      2008, we have longer low season period as compared with comparable period.
      As a
      result, we sustain a drop in revenue.





*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*





During
      the three months ended March 31, 2008, we incurred administrative expenses
      (excluding depreciation, amortization of long-term deferred charges and
      amortization of intangible assets) of $97,978 (before write back of $110,000
      over-accrued expenses of previous years) as compared with $66,122 administrative
      expenses for the three months ended March 31, 2007.


Page
          16 of
          31


The
      increase in expenses was primarily attributable to increase in full time
      employees from 2 to 5.




*Depreciation,
      Amortization of Long-term Deferred Charges and Amortization of Intangible
      Assets*





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





Three Months
              ended March
              31, 2008
            
            Three Months
              ended March
              31, 2007Depreciation
            
            $
            417
            
            $
            1,708Amortization
                of intangible assets
            
            
            148,671
            
            
            -Amortization
                of long-term deferred consultancy fee
            
            
            -
            
            
            487,117$
            149,088
            
            $
            488,825





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 during 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 decreases as the deferred charges has 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 March
              31, 2008
            
            Three Months
              ended March
              31, 2007Interest
                income
            
            $
            -
            
            $
            2Interest
                expense
            
            $
            -
            
            $
            -





*Net
      Loss*





Net
      loss
      for the three months ended March 31, 2008 was $15,038 compared to net loss
      of
      $310,911 for the three months ended March 31, 2007. Loss of both periods is
      primarily attributed to seasonal effect of low season period. The decrease
      of
      loss for the three months ended March 31, 2008 is attributable to write back
      over-accrued expenses of previous period and write-off of long-term deferred
      consultancy fee in the last quarter of 2007.





*Trends,
      Events, and Uncertainties*





During
      the three months ended March 31, 2008, we focus on establishing our assembling
      plant in Changzhou, Jiangsu Province, China. Deposits have been paid and trial
      production has been completed. We look forward to put the plant in commercial
      production in second quarter of 2008 upon receiving relevant licenses. We will
      assemble mobile phones under the purchased trade mark namely “Tsinghua
      Unisplendour” and other mobile phone components on OEM basis.


Page
          17 of
          31


**Liquidity
      and Capital Resources for the Three Months Ended March 31, 2008 and
      2007**





*Cash
      flows from operating activities*





We
      experienced negative cash flows used in operations in the amount of $81,717
      and
      $75,176 for the three months ended March 31, 2008 and 2007.





*Cash
      flows from investing activities*





During
      three months ended March 31, 2008, there are no investment activities.





*Cash
      flows from financing activities*





We
      experienced positive cash flows advanced from a related party in the amount
      of
      $87,156 and $67,982 for the three months ended March 31, 2008 and 2007.





*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.




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





**Employees**





As
      of
      March 31, 2008, we had approximately 5 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.


Page
          18 of
          31


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





Attn:
      Investor Relations


Unit
      3506, Bank of America Tower


12
      Harcourt Road


Central,
      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 financial statements 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.





**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 March 31, 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.


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**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 subscriber 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.




***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.


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***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.





***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.


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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.





***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
      of
      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.


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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 delivered late,
      which could have a material adverse effect on our sales, our results of
      operations and reputation and the value of the Company brand.





***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.


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***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.





***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.


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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.





***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.


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***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
      within 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.





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 has 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:




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




· changes
      in fees paid by advertisers or other clients;




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


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




· seasonality;




· 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;




· changes
      in governmental regulation of mobile communications; and




· 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.




***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.


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***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.




***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.


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***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 March 31, 2008,
      the closing sale prices of our ordinary shares on the Over-the-Counter Bulletin
      Board ranged from $0.17 to $0.35 per share and the closing sale price on May
      9,
      2008 was $0.25 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.




***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:




· the
      development of new mobile technology;


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




· the
      ability to attract and retain qualified personnel;




· changing
      demands regarding customer service and support;




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




· 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 with 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.





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





None.





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





On
      February 25, 2008, the Company filed with the Commission a Form 8-K stating
      that
      the Company’s independent auditor Dominic K.F. Chan & Co. resigned. The
      Company’s Board of Directors approved the engagement of Zhong Yi (Hong Kong )
      C.P.A. Company Limited as the Company’s new independent registered public
      accounting firm.





On
      March
      7, 2008, the Company filed with the Commission a Form 8-K/A amending the Form
      8-K filed on February 25, 2008 to state that the Company’s new independent
      registered public accounting firm Zhong Yi (Hong Kong) C.P.A. Company Limited
      was not engaged in the previous two fiscal years as the independent auditor
      nor
      a consultant to the Company.





**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




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**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:
                May 14, 2008
            William
                Yan Sui Hui, Chief Executive Officer
              (Principal
                executive officer)/s/
                Cheung Wai Hung, EddieDated:
                May 14, 2008
            Cheung
                Wai Hung, Eddie, Chief Financial Officer
              (Principal
                financial officer)


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