SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-KSB





(Mark
One)





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





For
the Fiscal Year Ended June 30, 2008





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





For
the transition period from _______________ to ________________





Commission
File Number 0-30430





INTERMOST
CORPORATION


(Name
of Small Business Issuer in its charter)





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





Suite
5204, Central Plaza, 18 Harbour Road,


Wanchai, Hong
Kong


(Address
of principal executive offices)(Zip code)





Issuer’s
telephone number:  852 2827 6898





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





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





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





Common Stock, $0.001 par
value


(Title
of class)





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





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





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





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





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





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





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





Transition Small Business Disclosure
Format:  Yes o  No ý











TABLE
OF CONTENTS





PagePART
      IITEM
      1.
            DESCRIPTION
      OF BUSINESS
            
            3ITEM
      2.
            DESCRIPTION
      OF PROPERTY
            
            12ITEM
      3.
            LEGAL
      PROCEEDINGS
            
            12ITEM
      4.
            SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
            
            13PART
      IIITEM
      5.
            MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
      ISSUER PURCHASES OF EQUITY SECURITIES
            
            13ITEM
      6.
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
            
            15ITEM
      7.
            FINANCIAL
      STATEMENTS
            
            21ITEM
      8.
            CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
            
            21ITEM
      8A.
            CONTROLS
      AND PROCEDURES
            
            21ITEM
      8B.
            OTHER
      INFORMATION
            
            22PART
      IIIITEM
      9.
            DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE;
      COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
            
            22ITEM
      10.
            EXECUTIVE
      COMPENSATION
            
            25ITEM
      11.
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
            
            27ITEM
      12.
            CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE
            
            28ITEM
      13.
            EXHIBITS
            
            28ITEM
      14.
            PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
            
            30SIGNATURES
            
            
            30














Note
Regarding Forward Looking Statements





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





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





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





·
            government
      regulation of the Internet and Internet services in
  China,





·
            our
      ability to successfully compete in our markets and
    industries,





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





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





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





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





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








1





Information
on Currency Translation





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








2





PART
I





ITEM
1.         DESCRIPTION OF
BUSINESS





History
and Development of the Company





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





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





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





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





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





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








3





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





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





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





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





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





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





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





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








4





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





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





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





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





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





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





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








5





Products
and Services





Internet
Services





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





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





Digital
Imaging System





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





Equity
Exchange





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





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





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





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





6





Competition





Internet
Services





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





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





Equity
Exchange





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





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





Regulation





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





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





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





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








7





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





Employees





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





RISK
FACTORS





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





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





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





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





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





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








8





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





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





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





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





We must work
cooperatively with governmental authorities.





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





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





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





We compete with
large companies.





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








9





We will need to
continue our product development efforts.





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





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





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





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





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





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





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





We may face rapid
technological change.





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








10





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





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





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





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





Future
profitability is not guaranteed.





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





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





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





There is a
limited market for our common stock.





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








11





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


·
            economic
      conditions within our industry;


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


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


·
            domestic
      and international economic, business and political
    conditions.





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





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





ITEM
2.        DESCRIPTION OF
PROPERTY





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





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





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





ITEM
3.         LEGAL
PROCEEDINGS





We
are a party to the following legal proceedings:





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





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








12





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





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





(2)
Hainan Special Economic Zone Property Rights Exchange Centre





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





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





(3)
Shanghai Newray Photographic Equipment Co. Ltd





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





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





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








13





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





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





PART
II





ITEM
      5.
            MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
      ISSUER PURCHASES OF EQUITY
SECURITIES





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





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





High
            LowFiscal
      2007Quarter
      ended September 30, 2006
            0.16
            0.09Quarter
      ended December 31, 2006
            0.11
            0.08Quarter
      ended March 31, 2007
            0.50
            0.097Quarter
      ended June 30, 2007
            0.28
            0.145Fiscal
      2008Quarter
      ended September 30, 2007
            0.25
            0.15Quarter
      ended December 31, 2007
            0.255
            0.092Quarter
      ended March 31, 2008
            0.20
            0.12Quarter
      ended June 30, 2008
            0.15
            0.06





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





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





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





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








14





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





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





Equity
Compensation Plan





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





Equity
Compensation Plan Information (1)


Plan
      Category
            Number
      of securities to be
              issued
      upon exercise of
              outstanding
      options,
              warrants
      and rights
              
              
              (a)
            Weighted
      average exercise
              price
      of outstanding
              options
      warrants and
              rights
              
              
              (b)
            Number
      of securities
              remaining
      available for
              future
      issuance under the
              equity
      compensation plan
              (excluding
      securities
              reflected
      in column (a)
              (c)Shareholder
      Approved
            0
            N/A
            20,000,000Not
      Approved by Shareholders
            N/A
            N/A
            N/A




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





ITEM
      6.
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS





Critical
Accounting Policies and Estimates





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





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








15





Revenue
Recognition





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





Accounts
Receivable





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





Long-lived
assets and goodwill





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





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





Overview





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





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








16





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





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





Results
of Operations





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





Year
      Ended June 302007
            
            
            2008(Restated)Net
revenues
            
            $
            4,680,532
            
            
            $
            26,108Cost of
      revenues
            
            
            (4,608,566
            )
            
            
            (68,328
            )Gross
profit
            
            
            71,966
            
            
            
            (42,220
            )Selling, general and
      administrative expenses
            
            
            (1,016,653
            )
            
            
            (1,565,844
            )Exchange
      difference
            
            
            (6,413
            )
            
            
            8,734Amortization of intangible
      assets
            
            
            (5,459
            )
            
            
            (5,862
            )Impairment of
      goodwill
            
            
            (3,119,872
            )
            
            
            0Impairment of associated
      companies
            
            
            (3,454,693
            )
            
            
            0Impairment of deposit of
      investment
            
            
            (1,217,475
            )
            
            
            0Written off of loan
      receivables
            
            
            (49,818
            )
            
            
            0Interest
    income
            
            
            83,861
            
            
            
            81,123Investment
      income
            
            
            102,230
            
            
            
            277,755Loss from
      operations
            
            
            (8,612,326
            )
            
            
            (1,246,314
            )Share of loss of associated
      companies
            
            
            (3,398
            )
            
            
            0Loss on disposal of a
      subsidiary
            
            
            0
            
            
            
            (353,377
            )Other income,
      net
            
            
            458
            
            
            
            42,097Loss before
      taxation
            
            
            (8,615,266
            )
            
            
            (1,557,594
            )Taxation
            
            
            0
            
            
            
            0Loss before minority
      interest
            
            
            (8,615,266
            )
            
            
            (1,557,594
            )Minority
      interests
            
            
            17,209
            
            
            
            540Net loss
            
            
            (8,598,057
            )
            
            
            (1,557,054
            )





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





Net revenues.





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





1 As used
in this Annual Report on Form 10-KSB, the letter “K” appearing immediately after
a dollar amount denotes rounding to the nearest $1,000; as an example, $380,499
may be rounded to “$380K”
  17




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





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





Total
      Net Revenues
            
            Percentage
      of Total Net RevenuesYear
      Ended June 30
            
            Year
      Ended June 302007
            
            2008
            
            2007
            
            2008US$
            
            US$E-commerce
      solutions- Web site design and
      development
            80,285
            
            26,108
            
            1.72%
            
            100.00%Sales of photographic
      equipment
            1,628
            
            0
            
            0.03%
            
            0.00%VOIP
    services
            4,598,619
            
            0
            
            98.25%
            
            0.00%Total
            4,680,532
            
            26,108
            
            100.00%
            
            100.00%





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





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





Costs of
Revenues.





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








18








Total Cost of
      Revenues
            
            Percentage of Total
      Net RevenuesYear Ended June
      30
            
            Year Ended June
      302007
            
            2008
            
            2007
            
            2008US$
            
            US$Engineers/technician
      salaries
            116,879
            
            33,921
            
            2.50%
            
            49.64%Cost
      of photographic equipment
            1,798
            
            0
            
            0.04%
            
            0.00%VOIP
      services
            4,427,016
            
            166
            
            94.58%
            
            0.24%Depreciation
            17,835
            
            19,574
            
            0.38%
            
            28.65%Other
            45,038
            
            14,667
            
            0.96%
            
            21.47%Total
            4,608,566
            
            68,328
            
            98.46%
            
            100.00%





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





Selling,
General and Administrative Expense.





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





Total
      SG&A
            
            Percentage of Total
      Net RevenuesYear Ended June
      30
            
            Year Ended June
      302007
            
            2008
            
            2007
            
            2008US$
            
            US$Sales
      and marketing salaries andcommission
            55,887
            
            42,407
            
            1.19%
            
            22.28%Other
      sale and marketing
            52,510
            
            13,009
            
            1.12%
            
            6.83%Rent
      obligation
            75,856
            
            50,802
            
            1.62%
            
            26.69%Administrative
      salaries
            166,209
            
            274,587
            
            3.55%
            
            144.26%Corporate
      overhead
            666,191
            
            1,185,039
            
            14.23%
            
            622.58%Total
            1,016,653
            
            1,565,844
            
            21.72%
            
            822.65%





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





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








19





Minority
Interest.





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





Liquidity
and Capital Resources





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





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





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





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





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





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





We have implemented various cost
management measures to reduce our overhead.The Company will likely need to borrow
money or obtain additional
equity financing in order to sustain operations.  At present, we have
no commitments for funding and there is no assurance that funding will be
available to us, or that any such funding would be on acceptable
terms.  If we need financing and cannotobtain it, we may be required to
severely curtail, or even cease, our operations.





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





·
            Our
      ability to successfully implement our business
  plan;





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





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





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





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








20





·
            Continued
      growth in the use of the Internet in
China;





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





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





·
            Rescheduling
      or cancellation of orders by
customers;





·
            Competitive
      pressures on selling prices;





·
            Changes
      in product, service or customer
mix;





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





·
            Availability
      and cost of computer technicians;





·
            Loss
      of any strategic relationships;





·
            Loss
      of our largest customers;





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





·
            New
      product and service introductions by our
  competitors;





·
            Fluctuations
      in exchange rates, and





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











21








ITEM
      7.
            FINANCIAL
      STATEMENTS





REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To:  The
board of directors and stockholders of


Intermost
Corporation





Report of Independent
Registered Public Accounting Firm





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





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





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





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

















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








22





INTERMOST
CORPORATION





CONDENSED
CONSOLIDATED BALANCE SHEETS


AS
AT JUNE 30, 2008 AND 2007


(Stated
in US Dollars)





Note
            
            2008
            
            
            2007ASSETS
            
            
            
            
            
            
            (Restated)Current
      AssetsCash
      and cash equivalents
            2
            (e)
            
            $
            640,200
            
            
            $
            530,468Accounts
      receivable, net
            2
            (g)
            
            
            3,949,653
            
            
            
            4,085,123Inventories
            
            
            
            
            0
            
            
            
            195,946Deposits,
      prepayment and other receivable
            3
            
            
            
            1,318,880
            
            
            
            1,538,435Deposit
      of investment
            4
            
            
            
            0
            
            
            
            150,000Short-term
      loan
            6
            
            
            
            670,288
            
            
            
            670,763Short-term
      investment
            2
            (i)
            
            
            0
            
            
            
            368,083Total
      current assets
            
            
            
            $
            6,579,021
            
            
            $
            7,538,818Long
      term assetsRestricted
      cash
            2
            (f)
            
            
            313,732
            
            
            
            303,525Unlisted
      investment
            2
            (i)
            
            
            937,363
            
            
            
            893,526Plant
      and equipment, net
            7
            
            
            
            74,568
            
            
            
            51,414Intangible
      assets, net
            
            
            
            
            16,365
            
            
            
            20,354Investment
      in associated companies
            2
            (m)
            
            
            1,258,742
            
            
            
            1,134,433TOTAL
      ASSETS
            
            
            
            $
            9,179,791
            
            
            $
            9,942,070LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      LiabilitiesAccounts
      payable
            
            
            
            $
            3,353,240
            
            
            $
            3,927,964Accrued
      liabilities and other payable
            8
            
            
            
            759,353
            
            
            
            792,560Customer
      deposits
            
            
            
            
            83,999
            
            
            
            105,708Advance
      from a shareholder
            
            
            
            
            159,600
            
            
            
            160,000Advance
      from a related company
            9
            
            
            
            475,173
            
            
            
            0Business
      and other taxes payable
            
            
            
            
            1,047
            
            
            
            0Total
      Current Liabilities
            
            
            
            $
            4,832,412
            
            
            $
            4,986,232







The accompanying notes are an integral
part of the financial statements











23








INTERMOST
CORPORATION


CONDENSED CONSOLIDATED BALANCE
SHEETS


AS AT JUNE 30, 2008 AND
2007


(Stated in US
Dollars)





Note
            
            2008
            
            
            2007(Restated)Minority Interests
            
            
            
            
            $
            12,418
            
            
            $
            267,046STOCKHOLDERS’EQUITYPreferred Stock, $0.001 par
      value,5,000,000 shares
      authorized,0 share issued and
      outstandingat June 30, 2007 and
      2006Common Stock, $0.001 par
      value,500,000,000 shares
      authorized,213,281,873 shares issued and
      outstandingat June 30,
      2008;215,370,278 shares issued
      andoutstanding at June 30,
      2007
            
            10
            
            
            $
            213,282
            
            
            $
            215,371Treasury
    stock
            
            10
            
            
            
            0
            
            
            
            (8,970
            )Additional paid in capital
            
            10
            
            
            
            24,843,131
            
            
            
            24,216,705Accumulated
      deficit
            
            
            
            
            
            (20,846,563
            )
            
            
            (19,289,509
            )Accumulated other comprehensive
      income
            
            2
            (t)
            
            
            125,111
            
            
            
            (444,805
            )$
            4,334,961
            
            
            $
            4,688,792TOTAL LIABILITIES, MINORITY
      INTERESTSAND
      STOCKHOLDERS’EQUITY
            
            
            
            
            $
            9,179,791
            
            
            $
            9,942,070







The accompanying notes are an integral
part of the financial statements





24








INTERMOST
CORPORATION





CONDENSED CONSOLIDATED STATEMENTS OF
INCOME


FOR THE YEARS ENDED JUNE 30, 2008 AND
2007


(Stated in US
Dollars)





Note
            
            2008
            
            
            2007(Restated)Net
revenues
            
            2
            (n)
            
            $
            26,108
            
            
            $
            4,680,532Cost of net
      revenues
            
            
            
            
            
            (68,328
            )
            
            
            (4,608,566
            )Gross
profit
            
            
            
            
            $
            (42,220
            )
            
            $
            71,966Selling, general and administrative
      expenses
            
            
            
            
            
            (1,562,972
            )
            
            
            (1,028,525
            )Loss from
      operations
            
            
            
            
            $
            (1,605,192
            )
            
            $
            (956,559
            )Investment
      income
            
            
            
            
            
            277,755
            
            
            
            102,230Interest
    income
            
            
            
            
            
            81,123
            
            
            
            83,861Other
income
            
            
            
            
            
            42,097
            
            
            
            458Written off of loan
      receivables
            
            
            
            
            
            0
            
            
            
            (49,818
            )Equity in earnings of associated
      companies
            
            
            
            
            
            0
            
            
            
            (3,398
            )$
            (1,204,217
            )
            
            $
            (823,226
            )Unusual
    itemsImpairment of
      goodwill
            
            5
            
            
            
            0
            
            
            
            (3,119,872
            )Impairment of associated
      company
            
            14
            
            
            
            0
            
            
            
            (3,454,693
            )Impairment of deposit of
      investment
            
            4
            
            
            
            0
            
            
            
            (1,217,475
            )Loss on disposal of a
      subsidiary
            
            
            
            
            
            (353,377
            )
            
            
            0Loss before income taxes and
      minority
      interests
            
            
            
            
            
            (1,557,594
            )
            
            
            (8,615,266
            )Income tax
            
            10
            
            
            
            0
            
            
            
            0Net loss before minority
      interests
            
            
            
            
            $
            (1,557,594
            )
            
            $
            (8,615,266
            )Minority
      interests
            
            
            
            
            
            540
            
            
            
            17,209Net loss
            
            
            
            
            $
            (1,557,054
            )
            
            $
            (8,598,057
            )Net loss pershare:- Basic and
      diluted
            
            
            
            
            $
            (0.0074
            )
            
            $
            (0.0469
            )Weighted average number of common
      stock- Basic and
      diluted
            
            
            
            
            
            211,069,111
            
            
            
            183,458,168








The accompanying notes are an integral
part of the financial statements





25





INTERMOST
CORPORATION





CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007


(Stated
in US Dollars)





AccumulatedTotal
            
            
            
            
            
            
            
            
            Additional
            
            
            othernumber
      of
            
            
            Common
            
            
            Treasury
            
            
            paid
      in
            
            
            comprehensive
            
            
            Retainedshares
            
            
            stock
            
            
            stock
            
            
            capital
            
            
            income/(loss)
            
            
            deficit
            
            
            TotalBalance,
      July 1, 2006
            
            
            153,290,278
            
            
            $
            153,291
            
            
            $
            
            
            
            $
            21,715,793
            
            
            $
            152,369
            
            
            $
            (10,691,452
            )
            
            $
            11,330,001Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (8,598,057
            )
            
            
            (8,598,057
            )Issuance
      of common stocks
            
            
            62,080,000
            
            
            
            62,080
            
            
            
            
            
            
            
            2,500,912
            
            
            
            
            
            
            
            
            
            
            
            2,562,992Redemption
      of common stocks
            
            
            0
            
            
            
            
            
            
            
            (2,470
            )
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (2,470
            )Cancellation
      of common stocks
            
            
            
            
            
            
            
            
            
            
            (6,500
            )
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (6,500
            )Foreign
      currency translation adjustment
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (597,174
            )
            
            
            
            
            
            
            (597,174
            )Restated
      Balance, June 30, 2007
            
            
            215,370,278
            
            
            $
            215,371
            
            
            $
            (8,970
            )
            
            $
            24,216,705
            
            
            $
            (444,805
            )
            
            $
            (19,289,509
            )
            
            $
            4,688,792Balance,
      July 1, 2007
            
            
            215,370,278
            
            
            $
            215,371
            
            
            $
            (8,970
            )
            
            $
            24,216,705
            
            
            $
            (444,805
            )
            
            $
            (19,289,509
            )
            
            $
            4,688,792Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (1,557,054
            )
            
            
            (1,557,054
            )Prior
      year adjustment
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            0Redemption
      of common stocks
            
            
            (8,970,355
            )
            
            
            (8,970
            )
            
            
            8,970
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            0Issuance
      of common stocks
            
            
            6,881,950
            
            
            
            6,881
            
            
            
            
            
            
            
            626,426
            
            
            
            
            
            
            
            
            
            
            
            633,307Foreign
      currency translation adjustment
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            415,116
            
            
            
            
            
            
            
            415,116Adjustment
      on shares paid for compensation
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            154,800
            
            
            
            
            
            
            
            154,800Balance,
      June 30, 2008
            
            
            213,281,873
            
            
            $
            213,282
            
            
            $
            0
            
            
            $
            24,843,131
            
            
            $
            125,111
            
            
            $
            (20,846,563
            )
            
            $
            4,334,961







The accompanying notes are an integral
part of the financial statements





26








INTERMOST
CORPORATION





CONSOLIDATED STATEMENTS OF CASH
FLOWS


FOR THE YEARS ENDED JUNE 30, 2008 AND
2007


(Stated in US Dollars)





Note
            
            
            2008
            
            
            2007Cash flows from operating
      activities
            
            
            
            
            
            
            
            (Restated)Net income
            
            
            
            
            $
            (1,557,054
            )
            
            $
            (8,598,057
            )Amortization of intangible
      assets
            
            5
            
            
            
            5,862
            
            
            
            5,459Impairment of
      goodwill
            
            14
            
            
            
            0
            
            
            
            3,119,872Impairment of associated
      company
            
            4
            
            
            
            0
            
            
            
            3,454,693Impairment of deposit of
      investment
            
            
            
            
            
            0
            
            
            
            1,217,475Depreciation
            
            
            
            
            
            30,587
            
            
            
            27,414Loss on disposal of fixed
      assets
            
            
            
            
            
            0
            
            
            
            1,820Loss on disposal of a
      subsidiary
            
            
            
            
            
            353,377
            
            
            
            0Written off of loan
      receivables
            
            
            
            
            
            0
            
            
            
            49,818Equity in loss of associated
      companies
            
            
            
            
            
            0
            
            
            
            3,398Minority
      interests
            
            
            
            
            
            (540
            )
            
            
            (17,209
            )Adjustments to reconcile net loss
      to net cashprovided by operating
      activities:Accounts receivable,
      net
            
            
            
            
            
            549,614
            
            
            
            (3,916,275
            )Inventories
            
            
            
            
            
            0
            
            
            
            (150,290
            )Deposits, prepayment and other
      receivable
            
            
            
            
            
            278,181
            
            
            
            (1,403,102
            )Short-term
    loan
            
            
            
            
            
            69,726
            
            
            
            (31,581
            )Accounts
      payables
            
            
            
            
            
            (947,404
            )
            
            
            3,825,757Accrued liabilities and other
      payable
            
            
            
            
            
            (64,306
            )
            
            
            613,485Customers
      deposits
            
            
            
            
            
            (8,079
            )
            
            
            (11,622
            )Deferred
      revenue
            
            
            
            
            
            (10,710
            )
            
            
            (14,556
            )Business and other taxes
      payable
            
            
            
            
            
            667
            
            
            
            (24,471
            )Net cash used in operating
      activities
            
            
            
            
            $
            (1,300,079
            )
            
            $
            (1,847,972
            )Cash flows from investing
      activitiesAcquisition of plant and
      equipment
            
            
            
            
            $
            (50,862
            )
            
            $
            (26,601
            )Increase in short-term
      investment
            
            
            
            
            
            27,651
            
            
            
            0Deposit of
      investment
            
            
            
            
            
            156,876
            
            
            
            (1,363,572
            )Net cash provided by (used in)
      investing activities
            
            
            
            
            $
            133,665
            
            
            $
            (1,390,173
            )Cash flows from financing
      activitiesAdvance from related
      parties
            
            
            
            
            $
            447,878
            
            
            $
            0Advance from a
      shareholder
            
            
            
            
            
            (16,903
            )
            
            
            155,837Redemption of common
      stocks
            
            
            
            
            
            (8,970
            )
            
            
            (790,594
            )Proceeds from issuance and
      redemption of common stocks, net
            
            
            
            
            
            110,949
            
            
            
            3,104,000Restricted
    cash
            
            
            
            
            
            21,729
            
            
            
            (295,627
            )Net cash provided by (used in)
      financing activities
            
            
            
            
            $
            554,683
            
            
            $
            2,173,616





The accompanying notes are an integral
part of the financial statements








27








INTERMOST
CORPORATION




CONSOLIDATED
STATEMENTS OF CASH FLOWS


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007


(Stated
in US Dollars)





Note
            
            2008
            
            
            2007(Restated)Net
      (decrease)/increase in cash and cash equivalents
            
            
            $
            (611,731
            )
            
            $
            (1,064,529
            )Effect
      of foreign currency translation on cash and cash
            
            
            
            721,463
            
            
            
            902,373Cash
      and cash equivalents - beginning of year
            
            
            
            530,468
            
            
            
            692,624Cash
      and cash equivalents - end of year
            
            
            $
            640,200
            
            
            $
            530,468Other
      supplementary informationIncome
      received
            
            
            $
            30,280
            
            
            $
            0




The accompanying notes are an integral
part of the financial statements





28








ITEM
      8.
            CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE





After
receiving certain queries from SEC on April 21, 2008 regarding the financial
statements for the year ended June 30, 2007 and being unable to contact Samuel
H. Wong & Co., LLC, CPA, PC, the Company dismissed Samuel H. Wong & Co.,
LLC, CPA, PC on May 23, 2008 and engaged Albert Wong & Co., CPA to serve as
its registered independent auditor and to restate the financial statements of
Company for the year ended June 30, 2007 and audit future financial
statements.





ITEM
      8A.
            CONTROLS
      AND PROCEDURES





Disclosure
Controls and Procedures





We
maintain controls and procedures designed to ensure that we are able to collect
the information we are required to disclose in the reports we file with the SEC,
and to record, process, summarize and disclose this information within the time
periods specified by the SEC.  Based on an evaluation of our
disclosure controls and procedures as of the end of the period covered by this
report conducted by management, the Chief Executive Officer and Chief Financial
Officer have concluded that these controls and procedures are effective to
ensure that we are able to record, process, summarize and report the information
we are required to disclosure in the reports we file with the SEC within the
required time periods.





Management
is responsible for establishing and maintaining adequate internal control over
financing reporting as such term is defined in Rules 13a-15(f) or 15d-15(f)
under the Securities Exchange Act of 1934, as amended.  Under the
supervision and with the participation of management, including the Chief
Executive Officer and Chief Financial Officer, we assessed the effectiveness of
our internal control over financial reporting as of June 30, 2008.  We
concluded that our internal control over financial reporting was effective as of
June 30, 2008.





Change
in Internal Controls Over Financing Reporting





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





Except
as set forth above, during the year ended June 30, 2008 there has been no change
in our internal control over financial reporting that has materially affected,
or is reasonably likely to materially affect, our internal control over
financial reporting.





ITEM
      8B
            OTHER
      INFORMATION





None.





29








PART
III





ITEM
      9.
            DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS, AND CORPORATE GOVERNANCE;
      COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE
    ACT





Identification
of Directors, Executive Officers and Certain Significant Employees





The
following table sets forth certain information regarding the directors and
executive officers of the Company.








Name
            Age
            PositionFred
      Peck
            49
            DirectorChia
      Hsun Wu
            47
            DirectorHiroshi
      Shinohara
            52
            DirectorRocky
      Wulianghai
            49
            President,
      Chief Executive Officer and DirectorThomas
      Lee
            58
            Chief
      Financial Officer








There
are no family relationships among any of the directors or officers of the
Company.





None
of our directors or executive officers has, during the past five
years,





·
            had
      any bankruptcy petition filed by or against any business of which such
      person was a general partner or executive officer, either at the time of
      the bankruptcy or within two years prior to that
  time,





·
            been
      convicted in a criminal proceeding and none of our directors or executive
      officers is subject to a pending criminal
  proceeding,





·
            been
      subject to any order, judgment, or decree not subsequently reversed,
      suspended or vacated of any court of competent jurisdiction, permanently
      or temporarily enjoining, barring, suspending or otherwise limiting his
      involvement in any type of business, securities, futures, commodities or
      banking activities, or





·
            been
      found by a court of competent jurisdiction (in a civil action), the
      Securities and Exchange Commission or the Commodity Futures Trading
      Commission to have violated a federal or state securities or commodities
      law, and the judgment has not been reversed, suspended, or
      vacated.





Business
Experience





Fred Peck has served as a
director of the Company since December 6, 2005. Mr. Peck is a funds manager,
transaction superintendent and vice president of Boston Bank Taiwan Branch. Over
15 years experience in portfolio investment, risk investment, capital
management, fundraising, acquisition and merger, project fund raising
privatization.








30





Chia Hsun Wu has served as a
director of the Company since November 3, 2006.  Mr. Wu has extensive
management and industrial experience and is a graduate from Oriental Institute
of Technology. Mr. Wu has conducted scientific research at the National Taiwan
University of Science and Technology. Mr. Wu is currently the Managing Director
of FFBC Holdings Group.





Hiroshi Shinohara has served
as a director of the Company since February 18, 2008.  Mr. Shinohara
graduated from Osaka University, with extensive experience in corporate
financial analysis, business in merging and acquisition.  Mr.
Shinohara is currently the Managing Director of FFBC Management Co., Ltd.,
Japan.





Rocky Wulianghai has served as
a director of the Company since December 6, 2005. Mr. Wulianghai was appointed
as President and Chief Executive Officer on June 13, 2007.  Mr.
Wulianghai graduated from Michigan University with a Masters Degree in
electronic engineering.  Mr. Wulianghai is an experienced manager in
capital management, a well-known writer in finance and was once a journalist,
specifically editor-in-chief and a general editor in Taiwan
Television.  Mr. Wulianghai served as General Manager of Asia Capital
Management Inc. (1998) and as director of FFBC Holdings Group
(2001).





Thomas Lee was appointed as
Chief Financial Officer of the Company on June 13, 2007.  Mr. Lee was
Chief Financial Officer of Management Recruiters International from June to
September 2002.  Mr. Lee simultaneously worked on a project for
Superstore International Ltd. which began in September 2002 and ended in August
2003.  From September 2003 to August 2004, Mr. Lee established a
public relations company and reviewed a China architecture and re-design
project.  In 2004, Mr. Lee rejoined Management Recruiters
International as Chief Financial Officer.  In the same year, he joined
the Ladies Recreations Club (Hong Kong) as Financial Consultant and Bund 18 Real
Estate Management, Ltd (Shanghai) where he continues to serve as the Group
Financial Officer.





Term
of Office





All
directors named above will serve until the next annual meeting of the Company’s
shareholders and until their successors are elected and
qualified.  Officers will hold their positions at the pleasure of the
Board of Directors.





Compliance
With Section 16(a) of Exchange Act





Section
16(a) of the Securities Exchange Act requires our directors, executive officers
and persons who own more than 10% of our common stock to file reports of
ownership and changes in ownership of our common stock with the Securities and
Exchange Commission.  Directors, executive officers and persons who
own more than 10% of our common stock are required by Securities and Exchange
Commission regulations to furnish us with copies of all Section 16(a) forms they
file.





The
Company believes that, with respect to its fiscal year ended June 30, 2008, none
of the Company’s directors and officers and none of the persons known to the
Company to own more than 10% of the Company’s common stock, were required to
file beneficial ownership reports with the Securities and Exchange Commission
and no such reports were filed.





ITEM
10.            EXECUTIVE
COMPENSATION





For
the 2008 fiscal year, all executive officers received their salaries from the
Company and Mr. Rocky Wulianghai received 6,000,000 restricted shares in IMOT as
a one-time bonus for services already rendered to IMOT.  Executive
officers include our current Chief Executive Officer and President, Rocky
Wulianghai, and Chief Financial Officer, Thomas Lee.








31





The
following table sets forth information concerning cash and non-cash compensation
paid or accrued to our executive officers during the past fiscal
year:





Summary
Compensation Table


The
amounts in the table below are calculated as of June 30, 2008





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


(1)
Mr. Rocky Wulianghai was appointed as Director of the Company on December 6,
2005 and Chief Executive Officer and President of the Company on June 13,
2007.





(2)
Mr. Thomas Lee was appointed as Chief Financial Officer of the Company on June
13, 2007.





Director
Compensation Table


The
amounts in the table below are calculated as of June 30, 2008.





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








Director’s
Compensation





The
Company reimburses its directors for out-of-pocket expenses incurred on behalf
of the Company.





Other
Compensation and Employment Arrangements





The
Company has adopted and the stockholders have approved the Intermost Corporation
2003 Equity Incentive Plan.  The following discussion is qualified in
its entirety by the terms and provisions of the Plan.





The
Plan authorizes awards of options, awards of stock (“Stock Award”) and the
granting of bonus stock (“Stock Bonus”).  Persons eligible to receive
awards under the Plan include the Company's employees, officers and directors
and its consultants, independent contractors and advisors.  As of June
30, 2005, all of the Company’s employees, officers and directors were eligible
to receive awards under the Plan.  The number of persons covered by
the Plan may increase if we add additional employees (including officers) and
directors.  As of the date of this Annual Report, no awards have been
granted from the Plan.








32





The
Company’s Board of Directors administers the Plan.  For purposes of
this discussion, the body administering the Plan will be referred to as the
Administrator.  The Administrator has the authority to determine, at
its discretion, the number and type of awards that will be granted, the
recipients of the awards, any exercise or purchase price required to be paid,
when options may be exercised and the term of option grants.  Awards
under the Plan are not defined as to any group.  The term of the Plan
is 10 years from the date the Plan was adopted by the Board of
Directors.  We have reserved 20,000,000 shares of our common stock for
awards to be made under the Plan.





The
exercise price for stock options granted to officers and directors must be the
fair market value of the common stock on the date of grant.  The
exercise price for stock options granted to eligible persons other than officers
and directors may not be less than 85% of the fair market value of the common
stock on the date of grant.  The term of an option may not exceed 10
years.





A
Stock Award is an offer by the Company to sell to an eligible person shares of
common stock that may or may not be subject to restrictions.  Stock
Awards granted to officers and directors must be granted at the fair market
value of the common stock on the date of the award.  Stock Awards
granted to eligible persons who are not officers or directors may not be granted
at less than 85% of the fair market value of the common stock on the date of the
award.  Stock Awards may be subject to vesting conditions, as
determined by the Administrator.





A
Stock Bonus is a grant of shares that may be awarded to an eligible
person.  A Stock Bonus may be subject to vesting conditions, as
determined by the Administrator.  A Stock Bonus may be awarded for any
reason determined by the Administrator, including, but not limited to,
extraordinary services rendered to the Company by an eligible person, as an
award for performance achieved by the Company or upon satisfaction of
performance goals by the eligible person.





In
the United States, a recipient will not recognize any taxable income at the time
an option is granted.  However, upon exercise of an option, the
recipient will include in income as compensation an amount equal to the
difference between the fair market value of the shares on the date of exercise
and the recipient's exercise price.  The included amount will be
treated as ordinary income by the recipient and may be subject to
withholding.  Upon resale of the shares by the recipient, any
subsequent appreciation or depreciation in the value of the shares will be
treated as capital gain or loss.  There is no tax consequence to the
Company as a result of either the grant or the vesting of stock
options.





ITEM 11.
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS





Common
Stock





The following table is furnished as of
June 30, 2008, to indicate beneficial ownership of
shares of the Company’s common stock by (1) each shareholder
of the Company who is known by the Company to be a beneficial owner of more than
5% of the Company’s common stock, (2) each director and
named officer of the Company, individually, and (3) all officers and directors
of the Company as a group.





Class of
    Stock
            Name and Address
      of
              Beneficial Owner1
            Number of
      Shares
              Beneficially
      Owned
            Percent of
              ClassCommon
            Alfredo Properties
      Limited2
            20,881,950
            9.79%Common
            First Core Capital Finance
      Limited2
            22,000,000
            10.31%Common
            First Federal Holdings
      Limited2
            40,000,000
            18.75%Common
            Magnate Trading Services
      Limited2
            6,666,000
            3.13%Common
            Piaster Assets Inc.2
            6,666,000
            3.13%Common
            Original Group Holdings
      Limited2
            6,668,000
            3.13%Common
            RockyWulianghai3
            6,000,000
            2.81%








33





(1)
            Unless otherwise noted, each
      person or group identified possesses sole voting and investment power with
      respect to the shares shownopposite the name of each person
      or group.


(2)
            Fred
      Peck is director and shareholder of Alfredo Properties Limited and may be
      deemed to be the beneficial owner of the share held by Alfredo Properties
      Limited.  During 2008, Mr. Peck purchased 881,950 restricted
      shares in IMOT, which shares are held in name of Alfredo Properties
      Limited.


(3)
            Rocky Wulianghai is the CEO and
      president of the Company.  During 2008,Mr.Wulianghai received 6,000,000
      restricted shares in IMOTas a one-time bonus for services
      already rendered to
      IMOT.








Equity
Compensation Plan Information





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








ITEM
      12.
            CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE





No
directors, executive officers or immediate family members of such individuals
were engaged in transactions with us or any of our subsidiaries during the
fiscal years ended June 30, 2006, June 30, 2007 and June 30,
2008.  Furthermore, we have no “interlocking” relationships in which
any of our executive officers are a member of the board of directors of another
entity whose executive officers are a member of our Board of
directors.











34





ITEM
      13.
            EXHIBITS
      AND REPORTS ON FORMS 8-K





(a)
            ExhibitsExhibitNumber
            Description
      of Exhibit2.1
            Articles
      of Merger (1)3.1
            Articles
      of Incorporation (1)3.2
            Bylaws
      (1)10.1
            Cooperative
      Agreement re: formation of Jiayin E-Commerce joint venture
    (2)10.2
            Agreement
      Regarding Transfer of Properties on 38th Floor, Guomao Building
      (3)10.3
            Shareholding
      Transfer Agreement dated May 23, 2003 between IMOT Information Technology
      (Shenzhen) Ltd. and Shanghai Newray Business Development Co., Ltd.
      (4)10.4
            Share
      Transfer Agreement among IMOT Information Technology (Shenzhen) Ltd.,
      Shenzhen Golden Anke Technology Co. Ltd., Intermost Corporation, Tu
      Guoshen and Li Zhiquan (5)10.5
            Sale
      and Purchase Agreement among IMOT Information Technology (Shenzhen) Ltd.,
      Shanghai Fortune Venture Limited, North Shanghai Branch of Shanghai
      Technology Property Right Exchange Center and Intermost Corporation
      (6)10.6
            Distributorship
      Agreement dated November 28, 2002 between KanHan Technologies Limited and
      ChinaE.com Information Technology Ltd. (7)10.7
            Intermost
      Corporation 2003 Equity Incentive Plan (8)10.8
            Joint
      Venture Agreement among Intermost Corporation and Entities and/or
      Individuals Collectively Referred to as “Investors.”*14
            Code
      of Ethics (9)16
            Letter
      on Change in Certifying Accountant (10)21
            Significant
      Subsidiaries *31.1
            Certification
      of Chief Executive Officer Pursuant to Rule 13a-14(a) and
      15d-14(a)*31.2
            Certification
      of Chief Financial Officer Pursuant to Rule 13a-14(a) and
      15d-14(a)*32.1
            Certification
      Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002*32.2
            Certification
      Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002*





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





35








(5)
            Incorporated
      by reference to the exhibit filed with the Registrant’s Current Report on
      Form 8-K filed with the SEC on August 17, 2004.(6)
            Incorporated
      by reference to the exhibit filed with the Registrant’s Current Report on
      Form 8-K filed with the SEC on April 26, 2004.(7)
            Incorporated
      by reference to the exhibit filed with the Registrant’s Current Report on
      Form 8-K filed with the SEC on February 14, 2003.(8)
            Incorporated
      by reference to the exhibit filed with the Registrant’s Proxy Statement
      filed with the SEC on January 6, 2004.(9)
            Incorporated
      by reference to the exhibit filed with the Registrant’s 10-KSB Amendment
      filed with the SEC on October 25, 2004.(10)
            Incorporated
      by reference to the exhibit filed with the Registrant’s Current Report on
      Form 8-K filed with the SEC on March 8, 2004.*
            Filed
      herewith.








(b)           Reports
on Form 8-K





On
October 30, 2007 the Registrant filed a Current Report disclosing the
resignation of Mr. Shim Yang from the board as director, effective as of October
25, 2007.





On
February 21, 2008 the Registrant filed a Current Report disclosing pursuant to a
Special Shareholders Meeting, the amendments of Bylaws to reduce the number of
directors, within an authorized range of directors of three to seven, from four
to seven, effective as of February 18, 2008, and also, disclosing the departure
of Wilbert Kam, Catalina Chan and Deng Xiang Xiong from the board of directors
and election of Hiroshi Shinohara as director, effective as of February 21,
2008.





On
May 23, 2008 the Registrant filed a Current Report disclosing the dismissal of
Samuel H. Wong & Company, LLP and the engagement of Albert Wong &
Company, LLP as the Company’s independent accountant, effective as of May 23,
2008.





On
August 15, 2008 the Registrant filed a Current Report disclosing that the
Registrant approved a settlement agreement (the “Settlement Agreement”) by and
among the Company, IMOT Information Technology (Shenzhen) Co., Ltd., Shenzhen
Inter-Anke Digital Technology Co., Ltd. (“Anke”), and ChinaE.com Equity Platform
Holding (Group) Co., Ltd., effective on August 11, 2008.  The
Settlement Agreement provides for (i) Anke to pay to the Company the sum of
USD$1,000,000, (ii) the Company to transfer to Anke all of the shares of stock
representing the Company’s 49% ownership interest in Anke, and (iii) a
termination of the Share Transfer Agreement by among the Company and Anke
executed March 31, 2004, pursuant to which the Company initially acquired the
Anke shares.





On
August 15, 2008 the Registrant filed a Current Report disclosing certain
material impairments of certain investment and long-lived assets and the
non-reliance on its audit report for the year ended June 30, 2007.





On
August 13, 2008 the Registrant filed a Current Report disclosing the dismissal
of Gruber & Company, LLC as the Company’s independent accountant, effective
on May 15, 2007.





On
October 14, 2008 the Registrant filed a Current Report therein disclosing that
it had concluded that, in the same context and for the same reasons as the prior
nonreliance and restatements, the Company would amend its quarterly reports for
the periods ended September 30, 2007 and March 31, 2008, and also disclosing
that the Registrant had moved its principal executive offices
to:  Suite 5204, Central Plaza, 18 Harbour Road, Wanchai, Hong
Kong.








36





ITEM
      14.
            PRINCIPAL
      ACCOUNTANT FEES AND SERVICES





The
following table sets forth fees billed to us by our auditors during the fiscal
years ended June 30, 2007 and June 30, 2006 for: (i) services rendered for the
audit of our annual financial statements and the review of our quarterly
financial statements, (ii) services by our auditor that are reasonably related
to the performance of the audit or review of our financial statements and that
are not reported as Audit Fees, (iii) services rendered in connection with tax
compliance, tax advice and tax planning, and (iv) all other fees for services
rendered.





June 30,
      2008
            
            
            June 30,
      2007(i)
            Audit
      Fees
            
            $
            45,000
            *
            
            $
            159,500(ii)
            Audit
      Related Fees
            
            $
            --
            
            
            $
            --(iii)
            Tax
      Fees
            
            $
            --
            
            
            $
            --(iv)
            All
      Other Fees
            
            $
            --
            
            
            $
            --





*  Audit
      fee for fiscal years ended June 30, 2008 and June 30, 2007 were accrued to
      the auditors, Albert Wong & Co.,
CPA.








37





Documents
filed as part of this report:








PAGEREPORT
      OF INDEPENDENT REGISTERED PUBLICACCOUNTING FIRM
            39CONSOLIDATED
      BALANCE SHEET
            40CONSOLIDATED
      STATEMENT OF INCOME
            42CONSOLIDATED
      STATEMENT OF STOCKHOLDERS’ EQUITY
            43CONSOLIDATED
      STATEMENT OF CASH FLOWS
            44NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
            46SIGNATURES
      AND EXHIBITS
            68








38





ALBERT
      WONG & CO.
              CERTIFIED
      PUBILC ACCOUNTANTS
              7th
      Floor, Nan Dao Commercial Building
              359-361
      Queen’s Road Central
              Hong
      Kong
              Tel
      : 2851 7954
              Fax:
      2545 4086
              
              ALBERT
      WONG
              B
      Soc., Sc., LL.B., P.C.LL., Barrister-at-law,
      C.P.A.(Practising).








To:
            The
      board of directors and stockholders
of


Intermost
      Corporation





Report of Independent
Registered Public Accounting Firm





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





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





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





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














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





39





INTERMOST
CORPORATION





CONSOLIDATED
BALANCE SHEETS


AS
AT JUNE 30, 2008 AND 2007


(Stated
in US Dollars)





Notes
            
            2008
            
            
            2007ASSETS
            
            
            
            
            
            
            
            (Restated)Current
      assetsCash
      and cash equivalents
            
            2
            (e)
            
            $
            640,200
            
            
            $
            530,468Accounts
      receivable, net
            
            2
            (g)
            
            
            3,949,653
            
            
            
            4,085,123Inventories
            
            
            
            
            
            -
            
            
            
            195,946Deposits,
      prepayment and other receivables
            
            3
            
            
            
            1,318,880
            
            
            
            1,538,435Deposit
      of investment
            
            4
            
            
            
            -
            
            
            
            150,000Short-term
      loan
            
            6
            
            
            
            670,288
            
            
            
            670,763Short-term
      investment
            
            2
            (i)
            
            
            -
            
            
            
            368,083Total
      current assets
            
            
            
            
            $
            6,579,021
            
            
            $
            7,538,818Restricted
      cash
            
            2
            (f)
            
            
            313,732
            
            
            
            303,525Unlisted
      investment
            
            2
            (i)
            
            
            937,363
            
            
            
            893,526Plant
      and equipment, net
            
            7
            
            
            
            74,568
            
            
            
            51,414Intangible
      assets, net
            
            
            
            
            
            16,365
            
            
            
            20,354Investment
      in associated companies
            
            2
            (m)
            
            
            1,258,742
            
            
            
            1,134,433TOTAL
      ASSETS
            
            
            
            
            $
            9,179,791
            
            
            $
            9,942,070LIABILITIES
      ANDSTOCKHOLDERS’
      EQUITYCurrent
      liabilitiesAccounts
      payable
            
            
            
            
            $
            3,353,240
            
            
            $
            3,927,964Accrued
      liabilities and other payable
            
            8
            
            
            
            759,353
            
            
            
            792,560Customers
      deposits
            
            
            
            
            
            83,999
            
            
            
            105,708Advance
      from a shareholder
            
            
            
            
            
            159,600
            
            
            
            160,000Advance
      from a related company
            
            10
            
            
            
            475,173
            
            
            
            -Business
      and other taxes payable
            
            
            
            
            
            1,047
            
            
            
            -Total
      current liabilities
            
            
            
            
            $
            4,832,412
            
            
            $
            4,986,232TOTAL
      LIABILITIES
            
            
            
            
            $
            4,832,412
            
            
            $
            4,986,232





See
accompanying notes to consolidated financial statements





40




INTERMOST
CORPORATION





CONSOLIDATED
BALANCE SHEETS (Continued)


AS
AT JUNE 30, 2008 AND 2007


(Stated
in US Dollars)





Notes
            
            2008
            
            
            2007(Restated)Minority
      interests
            
            
            
            
            $
            12,418
            
            
            $
            267,046STOCKHOLDERS’
      EQUITYCommon
      stock at $0.001 par value,500,000,000
      shares authorized, 213,281,873and
      215,370,278 shares issued andoutstanding
      at June 30, 2008 and 2007;
            
            11
            
            
            
            213,282
            
            
            
            215,371Treasury
      stock
            
            11
            
            
            
            -
            
            
            
            (8,970
            )Additional
      paid-in capital
            
            11
            
            
            
            24,843,131
            
            
            
            24,216,705Accumulated
      deficit
            
            
            
            
            
            (20,846,563
            )
            
            
            (19,289,509
            )Accumulated
      other comprehensive income
            
            2
            (t),11
            
            
            125111
            
            
            
            (444,805
            )$
            4,334,961
            
            
            $
            4,688,792TOTAL
      LIABILITIES ANDSTOCKHOLDERS’
      EQUITY
            
            
            
            
            $
            9,179,791
            
            
            $
            9,942,070








See
accompanying notes to consolidated financial statements




41




INTERMOST
CORPORATION





CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007


(Stated
in US Dollars)





Notes
            
            2008
            
            
            2007(Restated)Net
      revenues
            
            2
            (n)
            
            $
            26,108
            
            
            $
            4,680,532Cost
      of net revenues
            
            
            
            
            
            (68,328
            )
            
            
            (4,608,566
            )Gross
      (loss)/profit
            
            
            
            
            $
            (42,220
            )
            
            $
            71,966Selling,
      general and administrative expenses
            
            
            
            
            
            (1,562,972
            )
            
            
            (1,028,525
            )(Loss)/profit
      from operations
            
            
            
            
            $
            (1,605,192
            )
            
            $
            (956,559
            )Investment
      income
            
            
            
            
            
            277,755
            
            
            
            102,230Interest
      income
            
            
            
            
            
            81,123
            
            
            
            83,861Other
      income
            
            
            
            
            
            42,097
            
            
            
            458Written
      off of loan receivables
            
            
            
            
            
            -
            
            
            
            (49,818
            )Equity
      in earnings of associated companies
            
            
            
            
            
            -
            
            
            
            (3,398
            )$
            (1,204,217
            )
            
            $
            (823,226
            )Unusual
      itemsImpairment
      of goodwill
            
            5
            
            
            
            -
            
            
            
            (3,119,872
            )Impairment
      of associated company
            
            14
            
            
            
            -
            
            
            
            (3,454,693
            )Impairment
      of deposit of investment
            
            4
            
            
            
            -
            
            
            
            (1,217,475
            )Loss
      on disposal of a subsidiary
            
            
            
            
            
            (353,377
            )
            
            
            -Loss
      before income taxes and minority interests
            
            
            
            
            $
            (1,557,594
            )
            
            $
            (8,615,266
            )Income
      taxes
            
            9
            
            
            
            -
            
            
            
            -Net
      loss before minority interests
            
            
            
            
            $
            (1,557,594
            )
            
            $
            (8,615,266
            )Minority
      interests
            
            
            
            
            
            540
            
            
            
            17,209Net
      loss
            
            
            
            
            $
            (1,557,054
            )
            
            $
            (8,598,057
            )Net
      loss per share:-Basic
      and diluted
            
            
            
            
            $
            (0.0074
            )
            
            $
            (0.0469
            )Weighted
      average number of common stock-Basic
      and diluted
            
            
            
            
            $
            211,069,111
            
            
            $
            183,458,168








See
accompanying notes to consolidated financial statements





42








INTERMOST
CORPORATION





CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007


(Stated
in US Dollars)





Additional
            
            
            AccumulatedNo.
            
            
            
            
            
            
            
            
            paid
            
            
            Othershares
            
            
            Common
            
            
            Treasury
            
            
            In
            
            
            comprehensive
            
            
            Accumulatedoutstanding
            
            
            stock
            
            
            stock
            
            
            capital
            
            
            Income/(loss)
            
            
            deficit
            
            
            TotalBalance,July1, 2006
            
            
            153,290,278
            
            
            $
            153,291
            
            
            $
            -
            
            
            $
            21,715,793
            
            
            $
            152,369
            
            
            $
            (10,691,452
            )
            
            $
            11,330,001Netloss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (8,598,057
            )
            
            
            (8,598,057
            )Issuance of common
      stocks
            
            
            62,080,000
            
            
            
            62,080
            
            
            
            -
            
            
            
            2,500,912
            
            
            
            -
            
            
            
            -
            
            
            
            2,562,992Redemption of common
      stocks
            
            
            -
            
            
            
            -
            
            
            
            (2,470
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (2,470
            )Cancellation of common
      stocks
            
            
            -
            
            
            
            -
            
            
            
            (6,500
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (6,500
            )Foreign currency translationadjustment
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (597,174
            )
            
            
            -
            
            
            
            (597,174
            )RestatedBalance,June30,2007
            
            
            215,370,278
            
            
            $
            215,371
            
            
            $
            (8,970
            )
            
            $
            24,216,705
            
            
            $
            (444,805
            )
            
            $
            (19,289,509
            )
            
            $
            4,688,792Balance, July1, 2007
            
            
            215,370,278
            
            
            $
            215,371
            
            
            $
            (8,970
            )
            
            $
            24,216,705
            
            
            $
            (444,805
            )
            
            $
            (19,289,509
            )
            
            $
            4,688,792Netloss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (1,
      557,054
            )
            
            
            (1,557,054
            )Redemption of common
      stocks
            
            
            (8,970,355
            )
            
            
            (8,970
            )
            
            
            8,970
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Issuance of common
      stocks
            
            
            6,881,950
            
            
            
            6,881
            
            
            
            -
            
            
            
            626,426
            
            
            
            -
            
            
            
            -
            
            
            
            633,307Foreign currency translationadjustment
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            415,116
            
            
            
            -
            
            
            
            415,116Adjustment on shares paid forompensation
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            154,800
            
            
            
            
            
            154,800Balance,June30,2008
            
            
            213,281,873
            
            
            $
            213,282
            
            
            $
            -
            
            
            $
            24,843,131
            
            
            $
            125,111
            
            
            $
            (20,846,563
            )
            
            $
            4,334,961





See
accompanying notes to consolidated financial statements





43








INTERMOST
CORPORATION





CONSOLIDATED
STATEMENTS OF CASH FLOWS


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007


(Stated
in US Dollars)





Note
            
            
            2008
            
            
            2007(Restated)Cash
      flows from operating activitiesNet
      loss
            
            
            
            
            $
            (1,557,054
            )
            
            $
            (8,598,057
            )Amortization
      of intangible assets
            
            
            
            
            
            5,862
            
            
            
            5,459Impairment
      of goodwill
            
            5
            
            
            
            -
            
            
            
            3,119,872Impairment
      of associated company
            
            14
            
            
            
            -
            
            
            
            3,454,693Impairment
      of deposit of investment
            
            4
            
            
            
            -
            
            
            
            1,217,475Depreciation
            
            
            
            
            
            30,587
            
            
            
            27,414Loss
      on disposal of fixed assets
            
            
            
            
            
            -
            
            
            
            1,820Loss
      on disposal of a subsidiary
            
            
            
            
            
            353,377
            
            
            
            -Written
      off of loan receivables
            
            
            
            
            
            -
            
            
            
            49,818Equity
      in loss of associated companies
            
            
            
            
            
            -
            
            
            
            3,398Minority
      interests
            
            
            
            
            
            (540
            )
            
            
            (17,209
            )Adjustments
      to reconcile net loss to net cashprovided
      by operating activities:Accounts
      receivable, net
            
            
            
            
            
            549,614
            
            
            
            (3,916,275
            )Inventories
            
            
            
            
            
            -
            
            
            
            (150,290
            )Deposits,
      prepayment and other receivable
            
            
            
            
            
            278,181
            
            
            
            (1,403,102
            )Short-term
      loan
            
            
            
            
            
            69,726
            
            
            
            (31,581
            )Accounts
      payables
            
            
            
            
            
            (947,404
            )
            
            
            3,825,757Accrued
      liabilities and other payable
            
            
            
            
            
            (64,306
            )
            
            
            613,485Customers
      deposits
            
            
            
            
            
            (8,079
            )
            
            
            (11,622
            )Deferred
      revenue
            
            
            
            
            
            (10,710
            )
            
            
            (14,556
            )Business
      and other taxes payable
            
            
            
            
            
            667
            
            
            
            (24,471
            )Net
      cash used in operating activities
            
            
            
            
            $
            (1,300,079
            )
            
            $
            (1,847,972
            )Cash
      flows from investing activitiesAcquisition
      of plant and equipment
            
            
            
            
            $
            (50,862
            )
            
            $
            (26,601
            )Increase
      in short-term investment
            
            
            
            
            
            27,651
            
            
            
            -Deposit
      of investment
            
            
            
            
            
            156,876
            
            
            
            (1,363,572
            )Net
      cash provided by/(used in) investing activities
            
            
            
            
            $
            133,665
            
            
            $
            (1,390,173
            )Cash
      flows from financing activitiesAdvance
      from a related party
            
            
            
            
            $
            447,878
            
            
            $
            -Advance
      from a shareholder
            
            
            
            
            
            (16,903
            )
            
            
            155,837Redemption
      of common stocks
            
            
            
            
            
            (8,970
            )
            
            
            (790,594
            )Proceeds
      from issuance of common stocks, net
            
            
            
            
            
            110,949
            
            
            
            3,104,000Restricted
      cash
            
            
            
            
            
            21,729
            
            
            
            (295,627
            )Net
      cash provided by financing activities
            
            
            
            
            $
            554,683
            
            
            $
            2,173,616





44








INTERMOST
CORPORATION





CONSOLIDATED
STATEMENTS OF CASH FLOWS (Continued)


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007


(Stated
in US Dollars)





2008
            
            
            2007(Restated)Net
      decrease in cash and cash equivalents
            
            $
            (611,731
            )
            
            $
            (1,064,529
            )Effect
      of foreign currency translation oncash and cash
      equivalents
            
            
            721,463
            
            
            
            902,373Cash
      and cash equivalents–beginning of year
            
            
            530,468
            
            
            
            692,624Cash
      and cash equivalents–end of year
            
            $
            640,200
            
            
            $
            530,4682008
            
            
            2007Supplementary
      cash flow information:Interest
      received
            
            $
            30,280
            
            
            $
            -








See
accompanying notes to consolidated financial statements





45








INTERMOST
CORPORATION


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED JUNE 30, 2007 AND 2006


(Stated
in US Dollars)





1.
            ORGANIZATION
      AND PRINCIPAL ACTIVITIES





Intermost
Corporation (hereinafter referred to as the “Company”, including its
subsidiaries and associated companies when the context so requires) was
originally incorporated in the State of Utah on March 6, 1985 under the name
Utility Communications International, Inc. The Company changed its name from
Utility Communications International, Inc. to Intermost Corporation on October
23, 1998. In February 2003, the Company re-domiciled from the State of Utah to
the State of Wyoming.





On
October 23, 1998, the Company acquired a 100% interest in Intermost Limited
("IL"), a company incorporated in the British Virgin Islands, by issuing
4,970,000 shares of its common stock with a par value of US$0.001 per share
(after the redenomination of par value and a stock split) to the shareholders of
IL.





The
acquisition of IL by the Company was treated as a reverse acquisition since IL
was the continuing entity as a result of the exchange
reorganization.





The
Company is engaged in providing, directly and through its subsidiaries and
associated companies, business portal and e-commerce solutions in the People’s
Republic of China (the "PRC" or "China").   The Company's fiscal
year-end is June 30.








2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES





(a)
            Method
      of Accounting





The
Group maintains its general ledger and journals with the accrual method
accounting for financial reporting purposes. The consolidated financial
statements and notes are representations of management.  Accounting
policies adopted by the Group conform to generally accepted accounting
principles in the United States of America and have been consistently applied in
the presentation of consolidated financial statements, which are compiled on the
accrual basis of accounting.





(b)
            Principles
      of Consolidation





The
consolidated financial statements include the accounts of Intermost Corporation
(the Company) and itselevensubsidiaries (of which three were
totally impaired), two
associate companies (of
which one was totally impaired) and one affiliated company, constituting
the group. Significant inter-company transactions have been eliminated in
consolidation. The consolidated financial statements include 100% of the assets
and liabilities of these majority-owned subsidiaries, and the ownership
interests of minority investors are recorded as minority interests.








46





INTERMOST
CORPORATION


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED JUNE 30, 2007 AND 2006


(Stated
in US Dollars)





2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





(b)
            Principles
      of Consolidation (Continued)





The
Company’s subsidiaries and affiliated companies and their principal activities
as of June 30, 2008 are summarized as follows:





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








47





INTERMOST
CORPORATION


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED JUNE 30, 2007 AND 2006


(Stated
in US Dollars)





2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





(b)
            Principles
      of Consolidation (Continued)





*    CECITL,
IITSL and CECTSL are wholly foreign owned enterprises established in the PRC to
be operated for a period of 10 years until 2008.  CECITL has changed
its name into Chinae.com E-Commerce Co. Ltd. and extended the operating period
until 2018.





**     SBUJE,
IFACL, SNPE, HCFPDCL and CECICSL are equity joint ventures established in the
PRC to be operated for a period of 10 years until 2009, 2010, 2013, 2015 and
2026 respectively. They are subsidiaries of the Company and their operations are
consolidated into the Company's financial statements. The investment of SBUJE
was totally impaired at Sept 30, 2007 and the investments in SNPE and HCFPDCL
were totally impaired at June 30, 2008.





***  
PREC is equity joint venture established in the PRC to operate for a period of
years until   2033. PREC is associated companies of the Company
and is accounted for under the equity method of accounting. SIHTPREC is an
affiliated company and is accounted for under the cost method. On the restated
June 30, 2007 financial statements, the investment of GATL was totally
impaired.





The
Company owns certain of its subsidiaries through trusts that were created by a
Declaration of Trust executed by Huang Liqiong and Jun Liang in February 2000.
The trusts were created by, and therefore are revocable by, IL. Accordingly, IL
consolidates the operations of CECITL since it is the beneficial owner of a
majority of the outstanding interests and, through its ability to revoke the
trusts, retains control of these interests.





(c)
            Use
      of estimates





The
preparation of the consolidated financial statements in conformity with
generally accepted accounting principles in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting
periods.  Management makes these estimates using the best information
available at the time the estimates are made; however actual results could
differ materially from those estimates.





(d)
            Economic
      and political risks





The
Company’s operations are mainly conducted in the PRC and Taiwan (ROC).
Accordingly, the Company’s business, financial condition and results of
operations in the PRC and Taiwan may be influenced by the political, economic
and legal environment in the PRC and Taiwan, and by the general state of the PRC
and Taiwan economy.





The
Company’s major operations in the PRC and Taiwan are subject to special
considerations and significant risks not typically associated with companies in
North America. These include risks associated with, among others, the political,
economic and legal environment and foreign currency exchange. The Company’s
results may be adversely affected by changes in the political and social
conditions in the PRC and Taiwan, and by changes in government administration,
governmental policies with respect to laws and regulations, anti-inflationary
measures, currency conversion, remittances abroad, and rates and methods of
taxation, among other things.





48





INTERMOST
CORPORATION


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED JUNE 30, 2007 AND 2006


(Stated
in US Dollars)





2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





(e)
            Cash
      and cash equivalents





The
Company considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents.  The
Company maintains bank accounts only in the PRC, Taiwan and Hong Kong. The
Company does not maintain any bank accounts in the United States of
America.





(f)
            Restricted
      cash





Restricted
cash represents time deposit accounts in Mega International Commercial Bank
under one year Performance Guarantee Contract between Innocom Telecom Holdings
and Leader Palace International Limited to secure the performance of Innocom as
a service provider to Chunghwa Telecom Co. Ltd. The contract was ended at April
9, 2008 and renewed another year to April 9, 2009.





(g)
            Account
      receivable





Accounts
receivable is carried at the net invoiced value charged to
customer.  The Company records an allowance for doubtful accounts to
cover estimated credit losses. Management reviews and adjusts this allowance
periodically based on historical experience and its evaluation of the
collectability of outstanding accounts receivable. The Company evaluates the
credit risk of its customers utilizing historical data and estimates of future
performance.





(h)
            Inventories





Inventories
are raw materials which are stated at the lower of weighted average cost or
market value. As of June 30, 2008, no inventory was recorded.





(i)  Investments





The
non-marketable equity security investments are presented at historical cost
because the Company does not have significant influence over the underlying
investments. These investments are subject to a periodic impairment review. To
the extent any impairment is considered other-than-temporary, the investment is
written down to its fair value and the loss is recorded as interest income and
other, net. See Note 14 for impairment of investment.





(j)
            Property
      and equipment





Plant
and equipment are carried at cost less accumulated
depreciation.  Depreciation is provided over their estimated useful
lives, using the straight-line method. Estimated useful lives of the plant and
equipment are as follows:





Computer
      equipment
            3
      yearsMotor
      vehicles
            5
      yearsFurniture
      and office equipment
            5
      years





49





INTERMOST
CORPORATION


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED JUNE 30, 2007 AND 2006


(Stated
in US Dollars)





2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





(j) Property
and equipment (Continued)





The
cost and related accumulated depreciation of assets sold or otherwise retired
are eliminated from the accounts and any gain or loss is included in the
statement of income. The cost of maintenance and repairs is charged to income as
incurred, whereas significant renewals and betterments are
capitalized.





(k)
            Goodwill





Goodwill
represents the excess of the purchase price over the fair value of the net
tangible and identifiable intangible assets acquired in a business combination.
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 142,
"Goodwill and Other Intangible Assets", goodwill is no longer subject to
amortization. Rather, goodwill is subject to at least an annual assessment for
impairment, applying a fair-value based test. Fair value is generally determined
using a discounted cash flow analysis. See Note 5 for goodwill impairment
details.





(l)
            Accounting
      for the impairment of long-lived
assets





Impairment
of Long-Lived Assets is evaluated for impairment at a minimum on an annual basis
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable in accordance with SFAS No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets". An asset is considered
impaired if its carrying amount exceeds the future net cash flow the asset is
expected to generate. If an asset is considered to be impaired, the impairment
to be recognized is measured by the amount by which the carrying amount of the
asset exceeds its fair market value. The recoverability of long-lived assets is
assessed by determining whether the unamortized balances can be recovered
through undiscounted future net cash flows of the related assets. The amount of
impairment, if any, is measured based on projected discounted future net cash
flows using a discount rate reflecting the Company's average cost of
capital.





See
Note 4 for impairment of deposit of investment and Note 14 for impairment of
investment in associated company.





(m)
            Associated
      Company





An
associated company is a business enterprise in which the Company owns between
20% and 50% of the equity capital, and does not have direct or indirect or joint
control, and therefore, has only limited ability to participate in financial and
operating policy decisions.





The
Company's investment in associated companies is accounted for under
the  equity method of accounting, whereby the investment is initially
recorded at cost and the carrying amount is adjusted thereafter for the post
acquisition change in the Company's share of the associated company's results of
operations. See Note 14 for investment in associated company impairment
details.








50





INTERMOST
CORPORATION


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007


(Stated
in US Dollars)





2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





(n)
            Revenue
      recognition





The
Company recognizes revenue in accordance with SEC Staff Accounting Bulletin No.
101, “Revenue Recognition in Financial Statements”. The Company recognizes
revenue when the significant risks and rewards of ownership have been
transferred to the customer pursuant to PRC law, including factors such as when
persuasive evidence of an arrangement exists, delivery has occurred, the sales
price is fixed or determinable, sales and value-added tax laws have been
complied with, and collectability is probable.





Revenues
from the sale of photographic equipment and digital security imaging system are
recognized from the invoiced value of the goods supplied to customers. Revenues
are recognized upon delivery of goods and passage of title to
customers.





Revenues
from the sale of VOIP services are recognized upon the services provided and
invoices sent out to customers.





Revenue
from web-site development contracts is recognized based on the terms of the
contract. The Company uses either the percentage of completion when the contract
is long-term or the completed contract method when the contract is short-term to
recognize such revenue. Contracts are short-term in nature and require
acceptance by the customer pursuant to the respective contracts are accounted
for under the completed contract method. Revenues are allocated to the elements
of the contract based on the fair values of the elements. Provisions for
estimated contract losses are recognized in the year the loss becomes probable
and can be reasonably estimated.





Revenue
from maintenance contracts is recognized on a straight-line basis over the term
of the maintenance contract, generally twelve months. The unearned portion of
maintenance revenue is classified as deferred revenue and amortized over the
life of the contract.





(o)
            Stock
      compensation





The
Company may periodically issue shares of common stock for services rendered or
for financing costs. Such shares are valued based on the market price of the
shares on the transaction date.





The
Company may periodically issue stock options to employees and stock options or
warrants to non-employees in non-capital raising transactions for services and
for financing costs.





The
Company has adopted Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS No. 123"), which establishes a
fair value method of accounting for stock-based compensation plans.





51





INTERMOST
CORPORATION


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007


(Stated
in US Dollars)





2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





(o)
            Stock
      compensation (Continued)





The
provisions of SFAS No. 123 allow companies to either record an expense in the
financial statements to reflect the estimated fair value of stock options to
employees, or to continue to follow the intrinsic value method set forth in
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees", but to disclose on an annual basis the pro forma effect on net
income (loss) and net income (loss) per share had the fair value of the stock
options been recorded in the financial statements. SFAS No. 123 was amended by
SFAS No. 148, which now requires companies to disclose in interim financial
statements the pro forma effect on net income (loss) and net income (loss) per
common share of the estimated fair market value of stock options issued to
employees. The Company has elected to continue to account for stock-based
compensation plans utilizing the intrinsic value method. Accordingly,
compensation cost for stock options will be measured as the excess, if any, of
the fair market price of the Company's common stock at the date of grant above
the amount an employee must pay to acquire the common stock.





In
accordance with SFAS No. 123, the cost of stock options and warrants issued to
non-employees is measured at the grant date based on the fair value of the
award. The fair value of the stock-based award is determined using the
Black-Scholes option-pricing model. The resulting amount is charged to expense
on the straight-line basis over the period in which the Company expects to
receive benefit, which is generally the vesting period.





Stock
options issued to non-employee directors at fair market value will be accounted
for under the intrinsic value method.





The
Company did not have any stock options outstanding during the year ended June
30, 2008. Accordingly, no pro forma financial disclosure is provided
herein.





(p)
            Advertising





The
Company expensed all advertising costs as incurred.  Advertising
expenses included in selling expenses were $1,220 and $3,125 for the years ended
June 30, 2008 and 2007 respectively.





(q)
            Income
      taxes





The
Company uses the accrual method of accounting to determine and report its
taxable income and tax credit in the year in which they are
available.  The Company has implemented Statement of Financial Accounting
Standards (SFAS) No. 109, Accounting for Income Taxes.





52





INTERMOST
CORPORATION


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007


(Stated
in US Dollars)





2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





(q)
            Income
      taxes (Continued)





Income
tax liabilities computed according to the United States, People’s Republic of
China (PRC), Taiwan (ROC) and Hong Kong SAR tax laws are provided for the tax
effects of transactions reported in the financial statements and consists of
taxes currently due plus deferred taxes related primarily to differences between
the basis of fixed assets and intangible assets for financial and tax
reporting.  The deferred tax assets and liabilities represent the
future tax return consequences of those differences, which will either be
taxable or deductible when the assets and liabilities are recovered or
settled.  Deferred taxes also are recognized for operating losses that
are available to offset future income taxes.  A valuation allowance is
created to evaluate deferred tax assets if it is more likely than not that these
items will either expire before the Company is able to realize that tax benefit,
or that future realization is uncertain.





In
respect of the Company’s subsidiaries domiciled and operated in China, Taiwan
and Hong Kong, the taxation of these entities can be summarized as
follows:





The
subsidiaries incorporated in PRC are subject to the corporation income tax rate
of 33% for 2007 and 25% for 2008. However, in accordance with the relevant tax
laws and regulations of PRC, the local corporation income tax rate is
15%.





The
subsidiary incorporated in BVI while operated in Taiwan will be considered a
non-resident for tax purposes to the profit-seeking enterprise income tax which
is from 0% to 25%. However, it will be subject to profit-seeking enterprise
income tax only for its income derived from Taiwan sources.





The
subsidiaries are subject to Hong Kong profits tax rate of 17%.





The
Company is subject to United States federal corporate income tax according to
Internal Revenue Code Sections 951 and 957.  Corporate income tax is
imposed on graduated rates in the range of:





Taxable
Income


Rate
            Over
            But
      not over
            Of
      Amount Over15%
            -
            50,000
            -25%
            50,000
            75,000
            50,00034%
            75,000
            100,000
            75,00039%
            100,000
            335,000
            100,00034%
            335,000
            10,000,000
            335,00035%
            10,000,000
            15,000,000
            10,000,00038%
            15,000,000
            18,333,333
            15,000,00035%
            18,333,333
            -
            -








53





INTERMOST
CORPORATION


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007


(Stated
in US Dollars)





2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





(r)
            Earnings
      per share





In
September 2004, the Emerging Issues Task Force (“EITF”) reached consensus on
EITF 04-8 “The effect of Contingently Convertible Debt on Diluted Earnings per
Share.” The new rule requires companies to include shares to be issued upon
conversion of contingently convertible debt in their diluted earnings per share
(“EPS”) calculations regardless of whether or not the debt is currently
convertible. Potential shares should be calculated using the if-converted method
or the net share settlement method. The change has no effect on net income, but
it does affect the related dilution per share amount. The new rule is effective
for reporting periods ending on or after December 31, 2004.





(s)
            Foreign
      currency translation





The
accompanying consolidated financial statements are presented in United States
dollars. The functional currencies of the Company are Hong Kong Dollar (HKD),
Taiwan Dollar (TWD) and Renminbi (RMB).  The consolidated financial
statements are translated into United States dollars from HKD, TWD and RMB at
year-end exchange rates as to assets and liabilities and average exchange rates
as to revenues and expenses. Capital accounts are translated at their historical
exchange rates when the capital transactions occurred.





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





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





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





The
RMB is not freely convertible into foreign currency and all foreign exchange
transactions must take place through authorized institutions.  No
representation is made that the RMB amounts could have been, or could be,
converted into US$ at the rates used in translation.





(t)
            Comprehensive
      income





Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners.  Among other
disclosures, all items that are required to be recognized under current
accounting standards as components of comprehensive income are required to be
reported in a financial statement that is presented with the same prominence as
other consolidated financial statements.  The Company’s current
components of other comprehensive income are the foreign currency translation
adjustment.








54





INTERMOST
CORPORATION


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007


(Stated
in US Dollars)





2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





(u)
            Reclassification





Certain
amounts in the prior year have been reclassified to conform to the current
year’s presentation.





(v)
            Recent
      accounting pronouncements





In
December 2007, the SEC issued Staff Accounting Bulletin No. 110(“SAB 110”). SAB
110 permits companies to continue to use the simplified method, under certain
circumstances, in estimating the expected term of “plain vanilla” options beyond
December 31, 2007. SAB 110 updates guidance provided in SAB 107 that previously
stated that the Staff would not expect a company to use the simplified method
for share grants after December 31, 2007. Adoption of SAB 110 is not expected to
have a material impact on the Group’s consolidated financial
statements.





In
December 2007, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard (“SFAS”) No. 160, "Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51”.  SFAS
160 establishes accounting and reporting standards for the noncontrolling
interest in a subsidiary and for the deconsolidation of a
subsidiary.  SFAS 160 is effective for fiscal years, and interim
periods within those fiscal years, beginning on or after December 15,
2008.  As such, the Group is required to adopt these provisions at the
beginning of the fiscal year ended December 31, 2009.  The Group is
currently evaluating the impact of SFAS 160 on its consolidated financial
statements but does not expect it to have a material effect.





In
December 2007, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard (“SFAS”) No. 141(R), "Business
Combinations”.  SFAS 141(R) establishes principles and requirements
for how the acquirer recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, an any noncontrolling
interest in the acquiree, recognizes and measures the goodwill acquired in the
business combination or a gain from a bargain purchase, and determines what
information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination.  SFAS
141(R) is effective for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2008.  As such, the Group is
required to adopt these provisions at the beginning of the fiscal year ended
December 31, 2009.  The Group is currently evaluating the impact of
SFAS 141(R) on its consolidated financial statements but does not expect it to
have a material effect.





In
      March 2008, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standard (“SFAS”) No. 161 “Disclosures about
      Derivative Instruments and Hedging Activities”. SFAS 161 is intended to
      improve financial reporting about derivative instruments and hedging
      activities by requiring enhanced disclosures to enable investors to better
      understand their effects on an entity’s financial position, financial
      performance, and cash flows. It is effective for financial statements
      issued for fiscal years and interim periods beginning after
      November 15, 2008, with early application encouraged. The Company is
      currently evaluating the impact of SFAS 161 on its consolidated financial
      statements but does not expect it to have a material
    effect.





55





INTERMOST
CORPORATION


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007


(Stated
in US Dollars)





3.
            DEPOSITS,
      PREPAYMENTS AND OTHER RECEIVABLES





Deposits,
prepayments and other receivables are summarized as follow:





2008
            
            
            2007Rental
      and utilities deposits
            
            $
            27,671
            
            
            $
            7,508Advance
      to employees
            
            
            6,785
            
            
            
            2,142Prepaid
      expenses
            
            
            2,428
            
            
            
            35,889Loan
      Interest receivable (a)
            
            
            68,350
            
            
            
            116,547Due
      from stockholders (b)
            
            
            -
            
            
            
            65,575Other
      Loan
            
            
            92,843
            
            
            
            -Advance
      to supplier (c)
            
            
            -
            
            
            
            298,931Trade
      deposit paid (d)
            
            
            -
            
            
            
            1,293Other
      receivables (e)
            
            
            1,000,000
            
            
            
            1,000,000Others
            
            
            120,803
            
            
            
            10,550$
            1,318,880
            
            
            $
            1,538,435





(a)
            Cash loan interest receivable from
      an un-related third party of US$250,000 and US$350,000 at 12% p.a.
      for periodsfromJuly 1, 2007 toJanuary 24, 2008andJuly 1, 2006to June 30, 2007respectively.





(b)
            The
      amount receivable from the minority stockholders of Shanghai Newray
      Photographic  Equipment Co., Ltd. of RMB245,000 is unsecured,
      non-interest bearing, and due and payable on
  demand.





(c)
            An
      advance to supplier of RMB 2,574,289 for the VOIP services. This advance
      is unsecured, non-interest bearing, and due on
  demand.





(d)
            Trade
      deposit of security systems and spare parts prepaid to the suppliers for
      the sales orders placed by the
customers.





(e)
            Other
      receivables are the amount that will be collected from an associated
      company, Golden Anke Technology, Ltd. It is unsecured, non-interest
      bearing, and, due and payable on demand.





56





INTERMOST
CORPORATION


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007


(Stated
in US Dollars)





4.
            DEPOSIT
      OF INVESTMENT





The
initial deposit $1,400,000 was paid to an unrelated company in Taiwan for a
pending acquisition. In June 2008, the company was no longer active in the
acquisition. The expected refund could be confirmed at $150,000. The remaining
part of the deposit $1,250,000 less $32,525 translation adjustment, at
$1,217,475, was unable to confirm. No other future cash flow value could be
calculated and so impairment should be provided in current year to reflect the
deposit loss.








5.
            GOODWILL





On
May 29, 2003, the Company completed the acquisition of a 51% interest in
Shanghai Newray Photographic Equipment Co., Ltd. ("SNPE"), a company
incorporated in Shanghai, PRC. SNPE had no operations prior to the acquisition
and had no assets and liabilities other than cash balances. Subsequent to the
acquisition, staff with expertise in the photographic business in Shanghai was
recruited and SNPE commenced business operations, including sales of
photographic equipment, and sales of LCD monitors to PRC Railway
Dept.





Consequently,
based on the results of the Company's discounted cash flows calculation, and the
discontinuance of the primary business activity of Shanghai Newray Photographic
Equipment Co., Ltd. it is management's conclusion that the Shanghai Newray
Photographic Equipment Co., Ltd. has no goodwill. The Company has recorded an
impairment charge of RMB 4,568,552 (US $563,323) in the fiscal year ended June
30, 2006.





On
August 10, 2004, the Company's wholly-owned subsidiary, IMOT Information
Technology (Shenzhen) Ltd. ("IMOT Technology"), received all necessary
government approval required to complete the transfer of 51% of the issued and
outstanding shares of Golden Anke Technology, Ltd. ("Golden Anke") from two of
its shareholders to IMOT Technology.





The
total purchase price of RMB27,542,592 consisted of 12,000,000 shares of the
Company's common stock valued at RMB26,827,200 (US$0.27 per share) and
commission expenses of RMB715,392 ($86,400) paid to an unrelated advisor. The
value of the common stock issued was based on the market value of the common
stock at the completion date of the acquisition.











57





INTERMOST
CORPORATION


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007


(Stated
in US Dollars)





5.
            GOODWILL
      (Continued)





Goodwill
of RMB17,152,456 represented the excess of the purchase price over the fair
value of the net tangible asset acquired. The goodwill has been included in the
digital security system segment.





RMB
            
            
            USDGoodwill
      acquired in GATL transaction on August 10, 2004
            
            $
            17,152,456
            
            
            $
            2,114,976Impairment
      for the year ended June 30, 2006
            
            
            -
            
            
            
            -Balance
      at June 30, 2006
            
            
            17,152,456
            
            
            $
            2,114,976Foreign
      currency translation adjustment
            
            
            -
            
            
            
            75,927Impairment
      for the year ended June 30, 2007
            
            
            (17,152,456
            )
            
            
            (2,190,903
            )Balance
      at June 30, 2007
            
            $
            -
            
            
            $
            -





Pursuant
to the Stock Exchange Agreement relating to Hainan Concord Financial Products
Development Co., Ltd. ("Development"), IITSL issued to the Development
Stockholders 5,000,000 shares of the Company's restricted common stock having a
value of RMB7,617,600 (US$920,000). The consideration for the transaction was
determined by arm's-length negotiations between the parties, none of whom is
related.





The
total purchase price of RMB8,213,760 consisted of 5,000,000 shares of the
Company’s common stock valued at RMB7,617,600 (US$0.184 per share) and
commission expenses of RMB596,160 (US$72,000) paid to unrelated advisor. The
value of the common stock issued was based on the market value of the common
issued was based on the market value of the common stock at the completion dated
of the acquisition.





Goodwill
of RMB7,272,437 represented the excess of the purchase price over the fair value
of the net tangible asset acquired. The goodwill has been included in the
unallocated segment.





RMB
            
            
            USDGoodwill
      acquired in HCFPDCL transaction on Jan 6, 2005
            
            $
            7,272,437
            
            
            $
            896,725Impairment
      for the year ended June 30, 2006
            
            
            -
            
            
            
            -Balance
      at June 30, 2006
            
            $
            7,272,437
            
            
            $
            896,725Foreign
      currency translation adjustment
            
            
            -
            
            
            
            32,244Impairment
      for the year ended June 30, 2007
            
            
            (7,272,437
            )
            
            
            (928,969
            )Balance
      at June 30, 2007
            
            $
            -
            
            
            $
            -








58





INTERMOST
CORPORATION


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007


(Stated
in US Dollars)





6.
            SHORT-TERM
      LOAN





The
Company loaned to an un-related third party of US$250,000 and US$350,000 on
November 28, 2005 and December 12, 2005, respectively with interest rate at 12%
p.a. and due and payable on September 28, 2006 and September 12, 2006
respectively. These loans are still outstanding and the Company is continuously
charging the loan interest accordingly.





7.
            PLANT
      AND EQUIPMENT, NET





Plant
and equipment comprise the followings:





2008
            
            
            2007At
      costComputer
      equipment
            
            $
            116,047
            
            
            $
            166,813Furniture
      and office equipment
            
            
            71,276
            
            
            
            51,562Motor
      vehicles
            
            
            -
            
            
            
            7,049$
            187,323
            
            
            $
            225,424Less:
      Accumulated depreciation
            
            
            (112,755
            )
            
            
            (174,010
            )$
            74,568
            
            
            $
            51,414





Depreciation expenses were $30,587and $ 28,146 for the years ended June
30, 2008and 2007respectively.





8.
            ACCRUED
      LIABILITIES AND OTHER PAYABLES





Accrued
liabilities and other payables are summarized as
follows:





2008
            
            
            2007Wages
      and bonus
            
            $
            27,202
            
            
            $
            23,031Consultancy
      fees
            
            
            100,097
            
            
            
            100,071Legal
      and professional fees
            
            
            23,637
            
            
            
            37,737Audit
      and review fees
            
            
            45,000
            
            
            
            43,000Loan
      interest payable
            
            
            59,106
            
            
            
            7,275Loan
      from shareholder
            
            
            500,000
            
            
            
            500,000Other
            
            
            4,311
            
            
            
            81,446$
            759,353
            
            
            $
            792,560








59





INTERMOST
CORPORATION


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007


(Stated
in US Dollars)





9.
            INCOME
      TAXES





The
Company and its subsidiaries are subject to income taxes on an entity basis on
income arising in, or derived from, the tax jurisdiction in which they
operate.





The
Company is subject to the United States federal corporate income tax at a rate
of 33%. IL was incorporated under the International Business Companies Act of
the British Virgin Islands and, accordingly, is exempted from payment of the
British Virgin Islands income taxes.  The subsidiaries (IITSL, CECITL,
SBUJE, IFACL, CECTSC and HCFPDCL) established in the PRC are subject to PRC
enterprise income taxes at a rate of 15%.  SNPE is subject to a
special PRC enterprise income tax at a rate 0.5% of turnover.  The
subsidiary (LP) established in British Virgin Islands while operated in Taiwan
is subject to Taiwan non-resident profit-seeking enterprise income tax, which is
from 0% to 25%, only for the income derived from Taiwan sources. Since the
company derived most of the income outside Taiwan, there will be no domestic
income tax effect for the operation of LP. IHKL is subject to Hong Kong profits
tax at a rate of 17.5%.





The
reconciliation of the United States federal income tax rate to the effective
income tax rate based on loss before income taxes stated in the consolidated
statements of operations is as follows:





Deferred
taxation consisted of:





2008
            
            
            2007Net
      operating loss carry forwards
            
            $
            1,557,054
            
            
            $
            8,598,057Valuation
      allowance
            
            
            (1,557,054
            )
            
            
            (8,598,057
            )Deferred
      tax assets, net
            
            $
            -
            
            
            $
            -





The change in valuation allowance from
June 30, 2007to June 30, 2008is primarily related to the tax effects
of the increase in the net operating loss in the current fiscal year. The
Company has net operating loss carry forwards totaling approximately
$1.6millionas of June 30 2008, primarily relating to operations in the PRCandTaiwan.A valuation allowance has been
established for the full amount of the deferred tax benefit related to those
loss carry forwards and other deferred tax assets as management believes that
their realization is uncertain.





10.
            ADVANCE FROM A RELATED
      PARTY





Advance from a related party, China
Equity Platform Holding Group Ltd. is unsecured, interest
free and with no fixed term of repayment.








60





INTERMOST
CORPORATION


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007


(Stated
in US Dollars)





11.
            STOCKHOLDERS’
      EQUITY





Year
ended June 30, 2008





On
June 16, 2008, we authorize the issuance of 881,950 and 6,000,000 shares of
common stock with a value of $0.001 per share to Alfredo Properties Ltd. and Mr.
Rocky Wulianghai for private placement and director’s compensation respectively.
The stock was issued in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933. There was no general solicitation or
advertising engaged in by the Company in making this offering and the offeree
and the parties they designated to receive the stock were accredited
investor.





On
June 12, 2008, the Company approved to issue 6,000,000 shares of common stock at
the price of $0.1258 per share to the chief executive officer of the Company,
Mr. Rocky Wulianghai, for the compensation of services $754,800 for the calendar
years of 2006 and 2007.  The shares were allotted on June 16,
2008.  On the date of allotment, the share market value of common
stock was $0.1 per share, the Company had recorded the common stock $6,000 and
additional paid-in capital $594,000 and recognized the difference as adjustment
to other comprehensive income $154,800.








Year
ended June 30, 2007





On
September 25, 2006, November 17, 2006 and May 21, 2007, we authorize the
issuance of 20,000,000, 20,000,000 and 22,000,000 shares respectively of common
stock with a value of $0.05 per share to First Federal Holding Ltd. for private
placement. The stock was issued in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act of 1933. There was no general
solicitation or advertising engaged in by the Company in making this offering
and the offeree and the parties they designated to receive the stock were
accredited investor.





On
November 17, 2006, we authorized the issuance of 80,000 shares of common stock
with a value of $0.05 per share to an individual. The stock was issued in
reliance on the exemption from registration provided by Section 4(2) of the
Securities Act of 1933. There was no general solicitation or advertising engaged
in by the Company in making this offering and the offeree and the parties they
designated to receive the stock were accredited investor.





The
Company redeemed 2,470,000 shares at $0.326 from Shenzhen International Hi-Tech
Property Right Exchange Centre in December 2006. This redemption represented the
reduction of the investment of $261,737.





The
Company invested 25% of SFVI in October 2003. The Company decided to withdraw
the investment in May 2006.





The
Company redeemed 6,500,000 shares at $0.18 and the loss was erroneously
overstated by $390,000. This accounting error had been corrected to the
accumulated deficit at June 30, 2007 as prior year adjustment.








61





INTERMOST
CORPORATION


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007


(Stated
in US Dollars)





12.
            COMMITMENTS





Operating
Leases - The Company has operating lease agreements for office premises, which
expiring through February 2011. Future minimum rental payments under agreements
classified as operating leases with non-cancelable terms for the next one year
and thereafter are as follows:





June
      30,2008
            
            $
            122,1872009
            
            
            112,7332010
      and thereafter
            
            
            72,136$
            307,056





Rental
expense paid for the years ended June 30, 2008 and 2007 were $54,864 and $60,238
respectively.





13.
            SEGMENT
      INFORMATION





The
Company adopted SFAS No. 131, "Disclosures About Segments of an Enterprise and
Related Information", in respect of its operating segments. The Company's
reportable segments are E-Commerce Solutions, System Sales Integration, Phone
Payment System, Web Advertisement, Sales of Computer Software, Photographic
Business and Digital Security System Business. E-Commerce Solutions comprises
revenue from web-site development contracts and maintenance contracts. The
Photographic Business consists of sales of photographic equipment and the
Digital Security System Business consists of sales of digital image security
surveillance system.





Each
segment is managed separately because each business requires different
technology and marketing strategies. The Company evaluates performance based on
operating earnings of the respective business units. The accounting policies of
the segments are the same as those described in the summary of significant
accounting policies. The corporate assets include primarily cash and cash
equivalents and deposits and other receivables. There were no significant
inter-company transactions during any of the reported periods. In determining
operating income (loss) by reportable segment, general corporate expenses and
other income and expense items of a non-operating nature are not consider, as
such items are not allocated to the Company's segments. Segment information for
the year ended June 30, 2008 and 2007 are as follows:





62





INTERMOST
CORPORATION


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007


(Stated
in US Dollars)





13.
            SEGMENT
      INFORMATION (Continued)





For
the year ended June 30, 2008, the Company is principally engaged in one
operating segment only. Accordingly, no segmental analysis is
presented.





(a)
            Net
      revenues


2008
            
            
            2007E-commerce
      solutions
            
            $
            -
            
            
            $
            80,285Photographic
      business
            
            
            -
            
            
            
            1,628VOIP
      services
            
            
            -
            
            
            
            4,598,619$
            -
            
            
            $
            4,680,532PRC
            
            
            -
            
            
            
            81,913Taiwan
            
            
            -
            
            
            
            4,598,619$
            -
            
            
            $
            4,680,532





(b)
            Net
      profit/(loss)


2008
            
            
            2007E-commerce
      solutions
            
            $
            -
            
            
            $
            (417,439
            )Photographic
      business
            
            
            -
            
            
            
            (27,110
            )VOIP
      services
            
            
            -
            
            
            
            (1,164,073
            )$
            -
            
            
            $
            (1,608,622
            )Reconciliation:Gain
      /(loss) for reportable segments
            
            $
            -
            
            
            $
            (1,608,622
            )Unallocated
      corporate expenses
            
            
            -
            
            
            
            10,206,679$
            -
            
            
            $
            (8,598,057
            )





(c)
            Assets


2008
            
            
            2007E-commerce
      solutions
            
            $
            -
            
            
            $
            477,168VOIP
      services
            
            
            -
            
            
            
            4,700,131Sales
      of digital security system
            
            
            -
            
            
            
            3,780,744$
            -
            
            
            $
            8,958,043Reconciliation:Total
      assets for reportable segments
            
            $
            -
            
            
            $
            8,958,043Other
      corporate assets
            
            
            -
            
            
            
            984,027$
            -
            
            
            $
            9,942,070








63





INTERMOST
CORPORATION


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007


(Stated
in US Dollars)





13.
            SEGMENT
      INFORMATION (Continued)





(d)        Other
items





2008
            
            
            2007E-commerce
      solutions
            
            $
            -
            
            
            $
            25,541Consultancy
      fee
            
            
            -
            
            
            
            1,051Photographic
      business
            
            
            -
            
            
            
            37Unallocated
      corporate assets
            
            
            -
            
            
            
            1,517$
            -
            
            
            $
            28,146Expenditures for fixed
      assets:E-commerce
      solutions
            
            $
            -
            
            
            $
            24,119Unallocated corporate
      assets
            
            
            -
            
            
            
            2,482$
            -
            
            
            $
            26,601





(e)  Major
customers and concentrations:





For
the year ended June 30, 2007, the three largest customers in the VOIP segment,
accounted for 86% and in VOIP segment, accounted for 85% of total revenues,
respectively.





14.
            IMPAIRMENT
      OF INVESTMENT IN ASSOCIATED COMPANY





An
investment in an associated company Golden Anke Technology, Ltd. with an equity balance of
$3,454,693 was found being impaired and written-off in last year statement of
income. No further impairment is made in the current year. See Note 3(e) for the
balance to be recovered.





15.
            GOING
      CONCERN





As
shown in the accompanying consolidated financial statements, the Company
incurred a net loss of $1,557,594for the year ended June 30, 2008 and has an
accumulated deficit of $20,846,563 as of June 30, 2008.  The Company
also continues to experience negative cash flows from operations. The Company
will be required to raise additional capital to fund its operations, and will
continue to attempt to raise capital resources from both related and unrelated
parties until such time as the Company is able to generate revenues sufficient
to maintain itself as a viable entity. These factors have raised substantial
doubt about the Company's ability to continue as a going concern. There can be
no assurances that the Company will be able to raise additional capital or
achieve profitability. These consolidated financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.





The
Company plans to strengthen its core business, control its overall expenditures,
improve the efficiency of its operations and continue its efforts to expand by
acquiring other business opportunities.





64





INTERMOST
CORPORATION


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007


(Stated
in US Dollars)





16.
            SUBSEQUENT
      EVENT





The
Company had entered into a joint venture agreement with other PRC investors on
February 19, 2008 to spin off the subsidiaries and investments in operating
equity exchange.  The PRC investors will form a new company to hold
these subsidiaries and investments and seek an independent listing of the new
company on a US exchange.  The name of the new company is China Equity
Platform Holding Group Limited. When the spin off process is completed, IMOT
will get 60% –common stock of the newly formed company. The spin off process is
still under processing and waiting for the approval from PRC Officials. The
subsidiary and associate companies will be spin off are listed as
following:





ChinaE.com
Technology (Shenzhen) Company Limited


ChinaE.com
Investment Consultant (Shenzhen) Company Limited


ChinaE.com
E-commerce Company Limited


Intermost
Focus Advertising Company Limited


Shenzhen
International Hi-Tech Property Right Exchange Centre


Hainan
Special Economic Zone Property Rights Exchange Centre





17.
            RESTATEMENTS





On
October 26, 2007, the Company filed the consolidated balance sheets as of June
30, 2007 and 2006, its consolidated statements of income, stockholders’ equity
and cash flow for the year ended June 30, 2007, in Form 10KSB Part III Item 14
Page 37-63 with the Securities and Exchange Commission (SEC). The Company
received a comment letter from the Office of the Chief Accountant of the
Division of Corporation Finance of SEC regarding certain disclosures in the
Company’s financial statements for the year ended June 30, 2007. The Company
could not reach the original auditor for assistance. Therefore, it determined to
re-do the 2007 audit and restate the financial statements. The restated
financial statements will be filed with SEC. The effects of the restatements are
shown in the following tables.





65










CONSOLIDATED
BALANCE SHEETS




Original
            
            
            RestatedJune
      30,ITEMS
            
            2007
            
            
            2007Current
      assetsCash
      and cash equivalents
            
            $
            833,993
            
            
            $
            530,468Accounts
      receivable, net
            
            
            4,085,123
            
            
            
            4,085,123Inventories
            
            
            195,946
            
            
            
            195,946Deposits,
      prepayment and other receivables
            
            
            2,269,083
            
            
            
            1,538,435Deposit
      of investment
            
            
            -
            
            
            
            150,000Short-term
      loan
            
            
            670,763
            
            
            
            670,763Short-term
      investment
            
            
            368,083
            
            
            
            368,083Stock
      in custodian
            
            
            -
            
            
            
            -Total
      current assets
            
            $
            8,422,991
            
            
            $
            7,538,818Restricted
      cash
            
            
            -
            
            
            
            303,525Unlisted
      investment
            
            
            893,526
            
            
            
            893,526Plant
      and equipment, net
            
            
            51,414
            
            
            
            51,414Intangible
      assets, net
            
            
            20,354
            
            
            
            20,354Investment
      in associated companies
            
            
            6,497,267
            
            
            
            1,134,433Goodwill
            
            
            -
            
            
            
            -TOTAL
      ASSETS
            
            $
            15,885,552
            
            
            $
            9,942,070LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilitiesAccounts
      payable
            
            $
            3,927,964
            
            
            $
            3,927,964Accrued
      liabilities and other payable
            
            
            792,560
            
            
            
            792,560Customers
      deposits
            
            
            105,708
            
            
            
            105,708Advance
      from shareholder
            
            
            160,000
            
            
            
            160,000Business
      and other taxes payable
            
            
            -
            
            
            
            -Total
      current liabilities
            
            $
            4,986,232
            
            
            $
            4,986,232TOTAL
      LIABILITIES
            
            $
            4,986,232
            
            
            $
            4,986,232








66





CONSOLIDATED BALANCE
SHEETS(Continued)




Original
            
            
            RestatedJune
      30,ITEMS
            
            2007
            
            
            2007Minority
      interests
            
            $
            732,762
            
            
            $
            267,046STOCKHOLDERS’
      EQUITYPreferred
      Stock $0.001 par value,5,000,000
      shares authorized,nil
      share issued and outstandingat
      June 30, 2007 and 2006
            
            $
            -
            
            
            $
            -Common
      stock at $0.001 par value,500,000,000
      shares authorized,215,370,278
      shares issued andoutstanding
      at June 30, 2007;153,290,278
      shares issued andoutstanding
      at June 30, 2006
            
            
            215,371
            
            
            
            215,371Treasury
      stock
            
            
            (8,970
            )
            
            
            (8,970
            )Additional
      paid-in capital
            
            
            23,235,236
            
            
            
            24,216,705Accumulated
      deficit
            
            
            (13,391,999
            )
            
            
            (19,289,509
            )Accumulated
      other comprehensive income
            
            
            116,920
            
            
            
            (444,805
            )$
            10,166,558
            
            
            $
            4,688,792TOTAL
      LIABILITIES ANDSTOCKHOLDERS’
      EQUITY
            
            $
            15,885,552
            
            
            $
            9,942,070





As
a result of restatement of the consolidated balance sheet as of June 30, 2007,
total assets decreased from $15,885,552 as originally reported, to $9,942,070, a
decrease of $5,943,482. The decrease of total assets was derived from decrease
$303,525 in cash and cash equivalents, decrease $730,648 in deposit, prepayment
and other receivable, increase $150,000 deposit in investment and decrease
$5,362,834 investment in associated companies and increase $303,525 in
restricted cash. There were no changes in liabilities. The minority interest was
decrease from $732,762 to $267,046, a $561,725 reduction. The corresponding
changes in Stockholders’ equity were increase of $981,469 in additional paid-in
capital, increase of accumulated deficit $5,897,510 and decrease of accumulated
other comprehensive income $561,725. The total stockholders’ equity was restated
from $10,166,558 as originally reported, to $4,688,792, a decrease of
$5,477,766. The total liabilities and stockholders’ equity were restated from
$15,885,552 as originally reported, to $9,942,070, a decrease of
$5,943,482.








67








CONSOLIDATED
      STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME





Original
            
            
            RestatedFor
      the year ended June 30,ITEMS
            
            2007
            
            
            2007Net
      revenues
            
            $
            4,680,532
            
            
            $
            4,680,532Cost
      of net revenues
            
            
            (4,608,566
            )
            
            
            (4,608,566
            )Gross
      profit
            
            $
            71,966
            
            
            $
            71,966Selling,
      general and administrative expenses
            
            
            (1,957,494
            )
            
            
            (1,028,525
            )(Loss)/profit
      from operations
            
            $
            (1,885,528
            )
            
            $
            (956,559
            )Investment
      income
            
            
            102,230
            
            
            
            102,230Interest
      income
            
            
            83,861
            
            
            
            83,861Other
      income
            
            
            458
            
            
            
            458Written
      off of loan receivables
            
            
            -
            
            
            
            (49,818
            )Equity
      in earnings of associated companies
            
            
            -
            
            
            
            (3,398
            )$
            (1,698,979
            )
            
            $
            (823,226
            )Unusual
      itemsImpairment
      of goodwill
            
            
            -
            
            
            
            (3,119,872
            )Impairment
      of associated company
            
            
            -
            
            
            
            (3,454,693
            )Impairment
      of deposit of investment
            
            
            -
            
            
            
            (1,217,475
            )Loss
      on disposal of an associated company
            
            
            -
            
            
            
            -Loss
      before income taxes and minority interests
            
            $
            (1,698,979
            )
            
            $
            (8,615,266
            )Income
      taxes
            
            
            -
            
            
            
            -Net
      loss before minority interests
            
            $
            (1,698,979
            )
            
            $
            (8,615,266
            )Minority
      interests
            
            
            17,209
            
            
            
            17,209Equity
      in earnings of associated companies
            
            
            (1,408,777
            )
            
            
            -Net
      loss
            
            $
            (3,090,547
            )
            
            $
            (8,598,057
            )Net
      loss per share:-Basic
            
            $
            (0.0242
            )
            
            $
            (0.0469
            )-Diluted
            
            $
            (0.0242
            )
            
            $
            (0.0469
            )Weighted
      average number of common stock-Basic
            
            $
            127,894,970
            
            
            $
            183,458,168-Diluted
            
            $
            127,894,970
            
            
            $
            183,458,168








68





As
a result of restatement of consolidated income and comprehensive income for the
year ended June 30, 2007, total net loss increased from $3,090,547 as originally
reported, to $8,598,057, an increase of $5,507,510. The increase loss was
composed of decrease $928,969 in selling, general and administrative expenses,
increase 49,818 in written-off loan receivables and 3,398 in other receivable,
increase $3,119,872 impairment of goodwill, $3,454,693 impairment of associated
company, $1,217,475 impairment of deposit of investment and decrease $1,408,777
equity in earnings of associated companies. The movement of shares provided from
stock transfer agent was applied to calculate the weighted average number of
common stock, and so, the net loss per share was changed from $0.0242 to
$0.0469, an increase of $0.0227. The basic and dilute weighted average number of
common stock was changed from 127,894,970 to 183,458,168, an increase of
55,563,192.








CONSOLIDATED
      STATEMENTS OF CASH FLOWS




Original
              
              
              RestatedFor
      the year ended June 30,ITEMS
              
              2007
              
              
              2007Cash
      flows from operating activitiesNet loss
              
              $
              (3,090,547
              )
              
              $
              (8,598,057
              )Amortization
      of intangible assets
              
              
              -
              
              
              
              5,459Impairment
      of goodwill
              
              
              -
              
              
              
              3,119,872Impairment
      of associated company
              
              
              -
              
              
              
              3,454,693Impairment
      of deposit of investment
              
              
              -
              
              
              
              1,217,475Depreciation
              
              
              28,146
              
              
              
              27,414Loss
      on disposal of fixed assets
              
              
              1,869
              
              
              
              1,820Loss
      on disposal of an associated company
              
              
              934,428
              
              
              
              -Written
      off of loan receivables
              
              
              -
              
              
              
              49,818Equity
      in loss (earnings) of associated companies
              
              
              1,408,777
              
              
              
              3,398Issuance
      of common stock in exchange for services
              
              
              -
              
              
              
              -Bad
      debts written off
              
              
              -
              
              
              
              -Minority
      interests
              
              
              (3,404,243
              )
              
              
              (17,209
              )Adjustments
      to reconcile net loss to net cashprovided
      by operating activities:Accounts
      receivable, net
              
              
              4,346,669
              
              
              
              (3,916,275
              )Inventories
              
              
              (69,426
              )
              
              
              (150,290
              )Deposits,
      prepayment and other receivable
              
              
              (1,434,841
              )
              
              
              (1,403,102
              )Short-term
      loan
              
              
              -
              
              
              
              (31,581
              )Accounts
      payables
              
              
              3,893,506
              
              
              
              3,825,757Accrued
      liabilities and other payable
              
              
              615,185
              
              
              
              613,485Customers
      deposits
              
              
              (66,562
              )
              
              
              (11,622
              )Deferred
      revenue
              
              
              -
              
              
              
              (14,556
              )Business
      and other taxes payable
              
              
              (1,185,060
              )
              
              
              (24,471
              )Net
      cash used in operating activities
              
              $
              1,977,901
              
              
              $
              (1,847,972
              )Cash
      flows from investing activitiesAcquisition
      of plant and equipment
              
              $
              (27,312
              )
              
              $
              (26,601
              )Acquisition
      of intangible asset
              
              
              -
              
              
              
              -Increase
      in short-term investment
              
              
              (3,666,248
              )
              
              
              -Increase
      in note receivables
              
              
              (70,615
              )Deposit
      of investment
              
              
              -
              
              
              
              (1,363,572
              )Net
      cash used in investing activities
              
              $
              (3,764,175
              )
              
              $
              (1,390,173
              )






69








CONSOLIDATED
      STATEMENTS OF CASH FLOWS
(Continued)





Original
            
            
            RestatedFor
      the year ended June 30,ITEMS
            
            2007
            
            
            2007Cash
      flows from financing activitiesAdvances
      from related parties
            
            $
            160,000
            
            
            $
            155,837Redemption
      of common stocks
            
            
            (805,215
            )
            
            
            (790,594
            )Proceeds
      from issuance and redemption of commonstocks,
      net
            
            
            3,104,000
            
            
            
            3,104,000Restricted
      cash
            
            
            -
            
            
            
            (295,627
            )Net
      cash provided by financing activities
            
            $
            2,458,785
            
            
            $
            2,173,616Net
      (decrease) increase in cash and cash equivalents
            
            $
            672,511
            
            
            $
            (1,064,529
            )Effect
      of foreign currency translation oncash and cash
      equivalents
            
            
            (531,142
            )
            
            
            902,373Cash
      and cash equivalents–beginning of year
            
            
            692,624
            
            
            
            692,624Cash
      and cash equivalents–end of year
            
            $
            833,993
            
            
            $
            530,468








Original
            
            
            RestatedFor
      the year ended June 30,2007
            
            
            2007Supplementary
      cash flow information:Tax
      paid
            
            $
            -
            
            
            $
            -Interest
      paid
            
            
            -
            
            
            
            -





As
a result of the restatement, the net cash provided by operating activities for
the year ended June 30, 2007 decreased by $3,825,873 from $1,977,901 as
originally reported, to ($1,847,972); net cash used in investing activities
decreased by $2,374,002 from ($3,764,175) as originally reported,, to
($1,390,173); net cash provided by financing activities decrease by $2,851,69
from $2,458,785 as originally reported, to $2,173,616; and the effect of foreign
currency translation on cash and cash equivalents was increased by $1,594,997
from ($531,142) as originally reported, to $902,373. The cash and cash
equivalents at end of year was decreased by $303,525 from $833,993 as originally
reported, to $530,468 owing to the reclassification of cash and cash equivalents
to restricted cash.








70








SIGNATURES





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





INTERMOST
CORPORATION








By:
/s/ Rocky
Wulianghai


Rocky
Wulianghai


President
and Chief Executive Officer








By:
/s/ Thomas
Lee


Thomas
Lee


Chief
Financial Officer





Dated:   November
6, 2008





In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.





Signature
            Title
            Date:  November
      6, 2008/s/ Fred
      Peck
            DirectorFred
      Peck/s/ Chia Hsun
      Wu
            DirectorChia
      Hsun Wu/s/Hiroshi
      Shinohara
            DirectorHiroshi
      Shinohara/s/Rocky
      Wulianghai
            Director,
      President and Chief Executive OfficerRocky
      Wulianghai











71