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, 2002

[ ]      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)

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

             10th Floor, B10-07 Guomao Building, Renmin Rd.(South),
                             Shenzhen, China 518014
             ----------------------------------------------------
               (Address of principal executive offices)(Zip code)

Issuer's telephone number, including area code:  86 755 822 10238

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

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

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

                         Common Stock, $0.001 par value
                                (Title of class)

     Check  whether  the issuer:  (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 X  No
-----  ----------

     Check  if  disclosure  of  delinquent  filers  in  response  to Item 405 of
Regulation S-B is not contained in this form, and will not 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. [ ]

     The  Issuer's  revenues  for the  fiscal  year  ended  June 30,  2002  were
$592,059.

     The number of shares of the registrant's  common stock, $.001 par value per
share,  outstanding  as of June 30, 2002 was  33,120,481.  The aggregate  market
value of the voting and non-voting  common equity held by  non-affiliates of the
registrant  on  September  11,  2002,  based on the last sales  price on the OTC
Bulletin Board as of such date, was approximately $993,614.

                       DOCUMENTS INCORPORATED BY REFERENCE

None

Transition Small Business Disclosure Format: Yes       No X
                                             --------- ----------
<PAGE>

                                TABLE OF CONTENTS

                                                                          Page

PART I

         ITEM 1.      BUSINESS.............................................5
         ITEM 2.      DESCRIPTION OF PROPERTY..............................7
         ITEM 3.      LEGAL PROCEEDINGS....................................7
         ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF
                       SECURITY HOLDERS....................................7

PART II

         ITEM 5.      MARKET FOR COMMON EQUITY AND
                      RELATED STOCKHOLDER MATTERS..........................7
         ITEM 6.      MANAGEMENT'S DISCUSSION AND ANALYSIS.................9
         ITEM 7.      FINANCIAL STATEMENTS.................................16
         ITEM 8.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                      ON ACCOUNTING AND FINANCIAL DISCLOSURE...............16

PART III

         ITEM 9.      DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
                      CONTROL PERSONS; COMPLIANCE WITH
                      SECTION 16(a) OF THE EXCHANGE ACT....................17
         ITEM 10.     EXECUTIVE COMPENSATION...............................19
         ITEM 11.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                      OWNERS AND MANAGEMENT................................20
         ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......21
         ITEM 13.     EXHIBITS AND REPORTS OF FORM 8-K.....................21

SIGNATURES



<PAGE>



                    NOTE REGARDING FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-KSB contains  "forward-looking  statements" within
the meaning of Section 27A of the  Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These  forward-looking  statements are based on
our current  expectations,  assumptions,  estimates  and  projections  about our
business and our  industry.  Words such as  "believe,"  "anticipate,"  "expect,"
"intend,"  "plan,"  "will,"  "may,"  and  other  similar  expressions   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:

     o    a   continuation   of  the   general   decline   in  the   market  for
          business-to-business Internet products,

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

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

     o    our ability to successfully compete in our market and industry,

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.

                       INFORMATION ON CURRENCY TRANSLATION

Unless otherwise indicated as Hong Kong dollars ("HK$") or Renminbi ("Rmb"), all
financial  information  contained  in this Annual  Report is presented in United
States  dollars ("$" or "US$").  Our sales are  principally in Hong Kong dollars
and Renminbi. The translation of Hong Kong dollars into United States dollars is
for  reference  purposes  only and has been made at the exchange rate of HK$7.80
for US$1.  The Hong Kong dollar has been "pegged" to the US dollar since October
1983. The so-called  "peg" is the Linked  Exchange Rate System.  Pursuant to the
Linked  Exchange  Rate  System,  banks that issue the  currency of Hong Kong are
required to hold  certificates of indebtedness  issued by the Hong Kong Exchange
Fund as backing  for the issue of Hong Kong dollar  notes.  The Hong Kong dollar
notes are  redeemed  against US dollars at a fixed  exchange  rate of HK$7.80 to
US$1. In practice,  therefore,  any increase in note circulation is matched by a
US dollar payment to the Exchange Fund, and any decrease in note  circulation is
matched by a US dollar payment from the Exchange  Fund. In the foreign  exchange
market,  the exchange rate of the Hong Kong dollar continues to be determined by
forces of supply and demand.  Against the fixed  exchange rate for the issue and
redemption  of  certificates  of  indebtedness,  the  market  exchange  rate has
generally  stayed  close  to the  rate  of  HK$7.80  to  US$1.  There  can be no
assurance,  however,  that the Hong Kong  government  will maintain the "peg" at
HK$7.80 to US$1 or at all, and the translation is not a representation that Hong
Kong dollar  amounts  could  actually be  converted  into United  States  dollar
amounts at that rate or at any other rate. The  translation of Renminbi  amounts
into US  dollars  are for  reference  purpose  only  and have  been  made at the
exchange rate of Rmb8.28 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.  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.



<PAGE>


                                     PART I

ITEM 1.  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," 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
share capital 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.

Our operations are conducted through our largest subsidiary, China e.com
Information Technology Ltd., which is the owner of 90% of Intermost Focus
Advertising Company Ltd. and 55.3% of Shenzhen Bank Union & Jiayin e-Commerce
Company Ltd. While we have two other subsidiaries, neither of them is currently
engaged in significant operations.

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, various 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 since mid-2000, resulting in a significant
economic slowdown experienced by many of the companies with whom we do business,
among other factors, has materially undermined the effectiveness of our efforts.
Currently, through China e.com Information Technology Ltd., we offer web design
and hosting services and system integration services to customers in China.
Management is also continuing efforts to identify and explore acquisition,
merger and development opportunities.

PRODUCTS AND SERVICES

Currently, we offer web design and hosting services and system integration
services exclusively in China. We operate within what is commonly referred to as
the "business-to-business" segment of the Internet market, in which products and
services are offered principally to businesses, as compared to the
"business-to-consumer" segment of the Internet services market, in which
products and services are offered principally to consumers. During the year
2001, we developed imSCM, an e-commerce supply chain management software, and
imPARTNER, an e-commerce customer relations management software. As of June 30,
2002, we installed this software in connection with the web design, web hosting
or system integration services we rendered. However, as of June 30, 2002, we had
not yet sold these programs as stand-alone products, although we are making
efforts to do so. We are also exploring the acquisition or development of other
products and services in viable markets.
                                       5
<PAGE>

We locate our customers and secure web design and hosting or system integration
projects primarily through the efforts of members of our sales team. We
currently employ 10 sales persons who are based in Shenzhen, but who travel
throughout China, as necessary. Our sales persons are paid a base salary, and
earn commissions on revenues we receive from the customers they procure. For the
2002 fiscal year, no single customer accounted for 10% or more of our sales.

COMPETITION

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

Many 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 pressures on us.

We compete through quality service, competitive pricing and excellent working
relationships with our customers. However, we have no patented technology to
preclude our competitors from entering our markets. At this time, we do not
represent a significant competitive presence in the marketplace.

REGULATION

Since we operate principally through our subsidiary in China, we are subject to
and affected by Chinese laws, regulations, administrative determinations, court
decisions and similar constraints regarding operation in China, Internet usage
and e-commerce.

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.

We intend to work diligently to assure compliance with all applicable
regulations which impact our business, including cooperating with the MII and
the Ministry of Public Security. There can be no assurance, however, that we
will be successful in our efforts to assure full compliance with Chinese
regulations affecting our operations or that additional regulations will not be
enacted which might adversely impact our operations.

EMPLOYEES

As of June 30, 2002, we employed 33 full-time employees, 2 of whom were
management executives, 16 of whom were engineering/technical staff, 5 of whom
were administrative and clerical, and 10 of whom were sales personnel. 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.

                                       6
<PAGE>

ITEM 2.  DESCRIPTION OF PROPERTY

Our principal office consists of approximately 4,000 square feet of office space
that is located at 10th Floor, B10-07 Guomao Building, Renmin Rd.(South),
Shenzhen, China 518014. The premises are leased from an unrelated third party
with rental payments and management fees of approximately $29,000 per year. The
lease will expire in September 2004. As part of our efforts to reduce our
operating costs, we moved to the above address in August 2002.

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

We also own office space consisting of approximately 5,000 square feet in Guomao
Building, which we lease to an unrelated third party for approximately $24,000
per year. The lease term is 3 years. The lease will expire in September 2003.

ITEM 3.  LEGAL PROCEEDINGS

In June 2001, we filed a lawsuit in the Court of First Instance of High Court of
Hong Kong (the "Court") against J.R. Hi-Tech Investment Corporation ("J.R.
Hi-Tech") and its controlling shareholders, Mr. Xin Lei Wang and Mr. Yong Jiang,
(collectively, the "Defendants"). On October 24, 2000, we entered into a
Subscription Agreement with the Defendants, which provided among other things
for our subscription of 70,000 ordinary shares, par value $1 per share,
representing 58.3% of the post-closing issued and outstanding shares of J.R.
Hi-Tech in consideration of our payment of $176,470 in cash and our issuance of
510,300 shares of our common stock. J.R. Hi-Tech's principal asset is an
indirect 90% interest in Shenzhen China Websecurity.com, a Chinese-foreign
equity joint venture, which engages in the provision of Internet security
services, systems integration and software development services. Despite the
Defendants' failure to deliver J.R. Hi-Tech ordinary shares to us as provided in
the Subscription Agreement, we delivered in January 2001 Rmb 1,500,000 in cash
to J.R. Hi-Tech (but not our shares). In this lawsuit, we seek rescission of the
Subscription Agreement, recovery of the Rmb 1,500,000, and additional damages
and injunctive relief. On June 22, 2001, the Court issued an order to freeze
certain bank accounts in the names of the Defendants. On July 3, 2001, following
a hearing, the Court extended this order until further order from the Court. We
intend to vigorously pursue our rights against the Defendants. However, due to
uncertainty of any recovery from J.R. Hi-Tech or the other two Defendants, in
fiscal 2001, we have written off the entire Rmb 1,500,000 we delivered to J.R.
Hi-Tech.

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

None.

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock is quoted on the National Association of Securities Dealers,
Inc. Electronic Bulletin Board (the "OTC Bulletin Board"), and is traded under
the symbol "IMOT". Historically, however, the market for our securities has been
extremely limited and sporadic.

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.
                                       7
<PAGE>

                                                HIGH                    LOW

FISCAL 2001

     Quarter ended September 30, 2000           3.03                    0.97
     Quarter ended December 31, 2000            1.38                    0.31
     Quarter ended March 31, 2001               0.53                    0.31
     Quarter ended June 30, 2001                0.34                    0.03


FISCAL 2002

     Quarter ended September 30, 2001           0.09                    0.04
     Quarter ended December 31, 2001            0.08                    0.03
     Quarter ended March 31, 2002               0.07                    0.03
     Quarter ended June 30, 2002                0.05                    0.03

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 11, 2002, there were approximately 560 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.

We do not currently have an equity compensation plan.

RECENT SALES OF UNREGISTERED SECURITIES

In September 1999, the Company reserved to issue 800,000 shares of common stock,
par value US$0.001 each, for cash at US$1.25 per share, amounting to
approximately Rmb8,280,000 (equivalent of US$1,000,000), of which approximately
Rmb621,000 was yet to be received as of June 30, 2000. These shares were issued
in January 2001. In 2001, Rmb331,200 of issuance costs initially recorded as
subscription receivable were appropriately reclassified to additional paid-in
capital.

On January 26, 2000, the Company issued 75,712 shares of common stock, par value
US$0.001 each, valued at approximately Rmb3,126,000, as part of the
consideration for the acquisition of a phone payment system of the Group.

On January 26, 2000, the Company issued 41,110 shares of common stock, par value
US$0.001 each, valued at approximately Rmb1,702,000, to certain employees as
rewards for their contribution to the Group. The cost for these shares has been
recorded as part of employee compensation.

In January and February 2000, the Company issued an aggregate of 953,334 shares
of common stock, par value US$0.001 each, for cash at US$3.00 to US$3.23 per
share. The net proceeds amounted to approximately Rmb23,615,000 (equivalent of
US$2,852,000).

                                       8
<PAGE>

On March 22, 2000, the Company issued 77,200 shares of common stock, par value
US$0.001 each valued at approximately Rmb2,637,000, as part of the consideration
for the acquisition of a building in the PRC.

In August 2000, the Company issued 15,000 shares of common stock to the vice
president in charge of business development, par value US$0.001 each in lieu of
employee salary, at US$4.37 per share.

In October 2000, the Company issued 150,000 shares of common stock, par value
US$0.001 each for marketing services performed by an unrelated third party, at
US$3.02 per share.

In February 2001, the Company issued 1,152,000 shares of common stock, par value
US$0.001 each, for cash at US$0.3125 per share. The net proceeds amounted to
approximately Rmb2,742,000 (equivalent of US$331,200). In connection with the
issuance, the Company paid a commission of Rmb 238,464 to Sanway Consulting
Limited, a company owned by Mr. Yang Shim, a director of the Company.

In the fiscal year ended June 30, 2002, the Company issued to various investors,
employees and other parties, pursuant to Section 4(2) and Rule 506 of the
Securities Act of 1933, a total of 20,000,000 shares of its common stock, which
constitutes 60.4% of the Company's total issued and outstanding shares after
such issuance, at $0.02 per share. In relation to this offering, the Company has
entered into an agreement with a placement agent, Yorkshire Capital Ltd, for the
issuance of 2,000,000 shares of common stock in payment for its fee in placing
the securities. As at June 30, 2002, these shares have not been issued and
delivered to the placement agent.

In the fiscal year ended June 30, 2002, the Company issued to various investors,
employees and other parties, pursuant to Section 4(2) and Rule 506 of the
Securities Act of 1933, a total of 20,000,000 shares of its common stock, which
constitutes 60.4% of the Company's total issued and outstanding shares after
such issuance, at $0.02 per share. In relation to this offering, the Company has
entered into an agreement with a placement agent, Yorkshire Capital Ltd, for the
issuance of 2,000,000 shares of common stock in payment for its fee in placing
the securities. As at June 30, 2002, these shares have not been issued and
delivered to the placement agent.

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 accounting principles generally
accepted in the United States of America. These principles require management to
make certain estimates, judgments and assumptions that affect the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. On an on-going basis, we evaluate our
estimates based on historical experience and various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.

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

REVENUE RECOGNITION

Revenues are recognized (i) with respect to services, at the time a project (or
a milestone thereof) is completed and accepted by the customer, and (ii) with
respect to products, at the time products are delivered to customers and
collectibility for such sales is reasonably assured. We have adopted Staff
Accounting Bulletin No.101, Revenue Recognition ("SAB101") 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
                                       9
<PAGE>

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 based on
aging, historical experience, the customer's financial condition and general
economic conditions.

LONG-LIVED ASSETS

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.

OVERVIEW

From the fourth quarter of fiscal 2000 through the present day, the global
market for Internet services and products experienced a sharp decline in growth
that was accompanied by a general reduction in technology spending. This
reduction in spending has adversely impacted both our liquidity and our
revenues. Because of a decline in our revenues and in the market price of our
common stock, we decided not to consummate certain acquisitions, as described
more fully herein. These decisions resulted in the provision of doubtful debt,
in the 2001 fiscal year, of a loan in the amount of $284,300, which is
subsequently written off in fiscal 2002; and the write-off, in the 2002 fiscal
year, of a non-refundable deposit in the amount of $60,000.

In response to the decline in our revenues, management has taken measures to
both raise and conserve cash. We placed 20,000,000 shares of common stock at a
price of $0.02 per share, we relocated our principal office to smaller and less
expensive premises, we reduced our staff from 62 full time employees to 33 full
time employees. In fiscal 2001, we elected not to proceed with a proposed
acquisition of a 70% interest in Dunwell Computer (H.K.) Limited and with a
proposed acquisition of equity interest in projects owned by Internet.com Ltd in
fiscal 2002.

We do not currently have any material commitments for capital expenditures.

We intend to continue operating our core business and to continue to look for
potential alliances, such as joint ventures or acquisitions, which will enhance
our business. While we believe that cash flow provided by our current operations
will be adequate to fund our working capital requirements in the ordinary course
of business for the 2003 fiscal year, we cannot assure you that future events
will not cause us to seek additional capital sooner. Furthermore, we expect that
we will need financing in order to sustain our operations after the 2003 fiscal
year. To the extent that we need more money either during or after the 2003
fiscal year, we cannot assure you that funds will be available to us on
favorable terms, or at all. The unavailability of funds could have a material
adverse effect on our ability to continue our operations.

RESULTS OF OPERATIONS

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

                                                          YEAR ENDED JUNE 30,
                                                        2001              2002
                                                        ----              ----

                                       10
<PAGE>

Net revenues .................................     $   984,179      $   592,059
Cost of revenues .............................         844,215          401,089
Gross profit .................................         139,964          190,970
Selling, general and administrative ..........       3,493,575        1,026,258
Loss from operations .........................      (3,353,611)        (835,288)
Loss on abandonment of fixed assets ..........         (39,184)         (98,731)
Loss on disposal of fixed assets .............            --            (37,952)
Loss on abandonment of phone
   payment system ............................        (813,370)            --
Share of loss in an associated company .......        (275,035)            --
Impairment of investment in an
  associated company .........................        (143,622)            --
Gain on liquidation of an associated
  company ....................................            --             67,735
Other income, net ............................          17,088           64,766
Loss before minority interest ................      (4,607,734)        (839,470)
Minority interests ...........................         403,510             (357)
Net loss .....................................     $(4,204,224)     $  (839,827)


YEAR ENDED JUNE 30, 2002 COMPARED TO YEAR ENDED JUNE 30, 2001

NET REVENUES.

Net revenues for the year ended June 30, 2002 decreased by $392K1, or 40%, to
$592K from $984K for the year ended June 30, 2001.

Net revenues during fiscal 2002 and 2001 were derived principally from
e-commerce solutions and advertisement sales. The term "e-commerce solutions"
includes web site design and development, web hosting, and system sales and
integration.
--------------------------------------------------------------------------------
1    As used in this 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"

                                       11
<PAGE>

The following table reflects the total net sales and percentage of net sales
represented by the sale of e-commerce solutions and advertisements for the
periods indicated:

<TABLE>
<CAPTION>

                                                TOTAL NET SALES            PERCENT OF TOTAL NET SALES
                                            ----------------------         --------------------------
                                              YEAR ENDED JUNE 30,              YEAR ENDED JUNE 30,
                                             -------------------              -------------------
                                              2001          2002              2001           2002
                                              ----          ----              ----           ----
                                               US$           US$
<S>                                          <C>           <C>                <C>          <C>
E-commerce solutions
     - Web site design and development       469,096       246,450            47.66%       41.63%
     - Conference services                         0       132,633              N/A%      22.40 %
                                             -------       -------            ------      -------
                                             469,096       379,083            47.66%       64.03%
System sales and integration                 345,669       112,003            35.13%       18.92%
Phone payment system                          76,077             0             7.73%          0 %
Advertisement                                 93,337       100,973             9.48%       17.05%
                                             -------       -------            ------      -------
     Total                                   984,179       592,059            100.0%       100.0%
                                             =======       =======            ======       ======
</TABLE>

                                       12
<PAGE>

Total revenues derived from e-commerce solutions decreased by $90K, or 19 %, to
$379K in fiscal 2002 as compared to $469K in fiscal 2001. System sales and
integration revenues decreased by $234K, or 68%, to $112K in fiscal 2002 as
compared to $346K in fiscal 2001. Web advertisement revenues increased by 8K, or
8%, to $101K in fiscal 2002 as compared to $93K in fiscal 2001. Web
advertisement revenues and conference service revenues are not considered to be
core revenues under the Company's business plan. The increases in revenues from
those sources during the year are considered to be non-recurring.

The decline 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.
This market was adversely impacted during the 2001 fiscal year by a sharp
decline in worldwide investment in Internet initiatives and by weak economic
conditions and slowing economic growth globally, particularly following the
terrorist attacks of September 11, 2001 in the United States. We continue to
believe that the Chinese Internet market will continue to develop, outpacing the
growth of other more mature Internet markets, and that our presence in the
market, including development of our software products, will allow us to
capitalize on opportunities to sell our software products and services in China.
However, it is our intention to become less dependent on this market.

COSTS OF REVENUES.

Costs of revenues consist principally of salaries for computer network
technicians, sub-contract fees, costs of systems sales and integration,
depreciation, and other costs including travel, employee benefits, office
expenses and related expenses allocated to the engineering and technician staff.
Additionally, other costs of revenues during the 2001 fiscal year included
certain costs associated with the offering of special promotional packages,
which included participation in a seminar, lodging and advertisement. These
costs were not incurred during the 2002 fiscal year.

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

                                            TOTAL COST OF REVENUES         PERCENT OF TOTAL NET SALES
                                          --------------------------     -------------------------------
                                              YEAR ENDED JUNE 30,               YEAR ENDED JUNE 30,
                                             ---------------------             --------------------
                                             2001           2002              2001         2002
                                           ---------      --------          --------     --------
                                              US$           US$
<S>                                          <C>            <C>               <C>           <C>
Engineers/technician salaries                132,355        49,518            13.45%        8.36%
Subcontract fees                             143,550       177,015            14.59%       29.90%
Cost of system sales and integration         325,309        97,485            33.05%       16.47%
Depreciation                                  17,965        15,394             1.83%        2.60%
Other                                        225,036        61,677            22.87%       10.41%
                                             -------       -------           -------       ------
     Total                                   844,215       401,089            85.79%       67.74%
                                             =======       =======           =======        ======
</TABLE>

Compared to the 2001 fiscal year, the total costs of revenues for the 2002
fiscal year decreased by$443K, or 52%, to $401K. The decline in costs of
revenues was due to cost containment efforts implemented by management and a
decline in sales. The principal components of costs of revenues during the 2002
fiscal year were costs of hardware and subcontracting fees, other costs
associated with support of the engineering and technician staff, engineer and
technician salaries, and depreciation of equipment utilized in connection with
services. In order to decrease operating costs, we substantially reduced the
number of employees in the 2002 fiscal year and subcontracted most of the
technical work to unrelated third parties. As a result, the salaries of
engineers and technicians decreased by 63%, fees for subcontracting increased

                                       13
<PAGE>

by 23%, and other service-related  costs, such as support of the engineering and
technician staff, decreased by 73%.

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 debt. The following
table reflects the principal components of SG&A and the percentage of net sales
represented by each component for the periods indicated:
<TABLE>
<CAPTION>

                                               TOTAL SG&A                  PERCENT OF TOTAL NET SALES
                                             ----------------             -----------------------------
                                            YEAR ENDED JUNE 30,                YEAR ENDED JUNE 30,
                                           ---------------------              --------------------
                                           2001           2002                2001         2002
                                         --------       --------            --------     --------
                                            US$            US$
<S>                                       <C>            <C>                  <C>          <C>
Sales and marketing salaries and
     commissions                          175,374        114,172              17.82%       19.28%
Other sales and marketing                 224,699        105,000              22.83%       17.73%
Rentals                                   134,875         55,130              13.70%        9.31%
Administrative salaries                   554,695        168,858              56.36%       28.52%
Other corporate                         1,630,963        529,806             165.72%       89.49%
Amortization of intangibles               144,927              -              14.72%           -%
Bad and doubtful debt for
   accounts receivables                    17,608          5,006               1.79%        0.84%
Bad and doubtful debt for
   other receivables                      465,459         48,286              47.30%        8.16%
Research and development                  144,975              -              14.73%           -%
                                        ---------      ---------             -------      -------
     Total                              3,493,575      1,026,258             354.97%      173.33%
                                        =========      =========             =======      =======
</TABLE>

The principal components of SG&A during the 2002 year were sales and marketing
salaries and commissions, other marketing expenditures, administrative salaries
and benefits, other corporate expenses, which includes legal and professional
fees, general office expenses, traveling expenses, general employee benefit
expense, depreciation and consultancy fees.

For the 2002 fiscal year, SG&A decreased by $2,468K, or 71%, to $1,026K as
compared to $3,494K for the 2001 fiscal year. Sales and marketing salaries and
commissions decreased 35% during the 2002 fiscal year, to $114K, as compared to
$175K for the 2001 fiscal year. During the 2002 fiscal year, rentals decreased
by 80K or 59% to $55K, as compared to $135K in the 2001 fiscal year.
Administrative salaries decreased by $386K or 70% to $169K during the 2002
fiscal year, as compared to $555K in the 2001 fiscal year. The decrease in SG&A
has been principally attributable to cost containment efforts undertaken during
the 2002 fiscal year, including relocation of the Company's office to a less
expensive office and a reduction in employees. Additionally, certain intangibles
were fully amortized during the 2001 fiscal year, resulting in no amortization
expense for the current year.

Other corporate decreased substantially during the 2002 fiscal year, by $1,101K
or 68% to $530K, as compared to $1,631K in the 2001 fiscal year. The decrease in
other corporate was mainly attributable to cost control efforts, the
non-recurring expenses of the bad debt relating to the acquisition of JR Hi Tech
and the amortization of option compensation expenses recorded in fiscal 2001.
Also included in SG&A during the 2002 fiscal year was the non-recurring non-cash
expense of bad and doubtful debt expenses of

                                       14
<PAGE>

$53K, representing the write down of unrecoverable receivable, and the write-off
of a non-refundable deposit in the amount of $60K to Internet.com Ltd

Research and development expense, totaling $145K for the 2001 fiscal year, was
principally attributable to salaries for the technology team that worked on the
development of the SCM and CRM products. No research and development cost was
recorded in the 2002 fiscal year.

GAIN ON LIQUIDATION OF AN ASSOCIATED COMPANY.

During the 2000 fiscal year, the Company acquired a 40% interest in Shenzhen
Sino-E E-commerce Company Ltd. ("Sino-E"), a venture engaged in the development
of an exchange platform system serving Chinese manufacturers. Under the equity
method of accounting, the Company reports its allocable share of the loss of
Sino-E, which share totaled $275K during the 2001 fiscal year. During the 2001
fiscal year, operations of Sino-E were suspended as a result of the downturn in
Internet related markets. Sino-E is now being liquidated. As a result, during
the 2002 fiscal year, the Company received $121K cash and computer equipment
with a total value of $23K. The Company expects to recover the balance, $63K, by
December 2002.

MINORITY INTEREST.

We reported a minority interest with a value of $0.4K for the 2002 fiscal year,
reflecting our proportionate interest in the profits of Intermost Focus
Advertising, as compared to a minority interest with a value $404K for the 2001
fiscal year, reflecting our proportionate interest in the profits of Jiayin
Joint Venture.

LIQUIDITY AND CAPITAL RESOURCES

To date, we have used in our operations with cash from our operating activities,
sales of our securities and by using our common stock to make acquisitions and
purchases. Between October 1998 and June 30, 2001, the Company issued a total of
4,664,775 shares of its common stock. In the fiscal year ended June 30, 2002,
the Company issued to various investors, employees and other parties, a total of
20,000,000 shares of its common stock, which constitutes 60.4% of the Company's
total issued and outstanding shares after such issuance, at $0.02 per share. In
relation to this offering, the Company has entered into an agreement with a
placement agent, Yorkshire Capital Ltd, for the issuance of 2,000,000 shares of
common stock in payment for its fee in placing the securities. As at June 30,
2002, these shares have not been issued and delivered to the placement agent.

At June 30, 2002 we had cash and cash equivalents of $54K and working capital of
$98K as compared to $498K of cash and cash equivalents and $128K of working
capital at June 30, 2001.

Operations used $579K of cash during the 2002 fiscal year as compared to $1,487K
of cash used during the 2001 fiscal year. Funds used in operations primarily
relate to losses of $840K incurred during the year, decreases in deposits,
prepayments of $14K and increases in various liabilities which were partially
offset by non-cash charges, including depreciation expense of $105K and loss on
the disposal of fixed assets of $137K.

Net cash provided by investing activities was $114K for the 2002 fiscal year
while net cash used in investing activities was $272K for the 2001 fiscal year.
Funds provided by investing activities consisted of net sales of equipment and
repayment from directors for the year.

                                       15
<PAGE>

Net cash provided by financing activities was $21K for the 2002 fiscal year
while net cash provided by financing activities was $621K for the 2001 fiscal
year. Funds provided by financing activities consisted of proceeds received
during the current year from the subscription for 4,760,000 shares of common
stock from a private placement of 20,000,000 shares at $0.02 per share. The
proceeds for the balance of the shares of common stock sold in this private
offering were in an escrow account at June 30, 2002.

We had no long term debt at June 30, 2002 or June 30, 2001.

We have implemented various cost management measures to reduce our overhead in
response to our declining revenues. We are also evaluating various opportunities
to accelerate the path to, and attain, profitability. However, there can be no
assurance that the cash provided by our current operations will be sufficient to
meet our cash needs in the 2003 fiscal year, and in such instance the Company
will likely need debt or additional equity financing in order to sustain
operations during or after fiscal 2003. There are no commitments to provide any
such funding, if needed, or any assurance that such funding be available.

ITEM 7.  FINANCIAL STATEMENTS

The financial statements, together with the independent auditors' report thereon
of Blackman Kallick Bartelstein LLP and Moores Rowland, appear beginning on page
F-1 of this report.

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

In July 1999, the Company's Board of Directors dismissed Andersen, Andersen &
Strong, L.C. as the independent auditors for the Company and selected Arthur
Andersen & Co. to serve as its new independent auditors.

In October 2000, Arthur Andersen & Co. resigned as the independent auditors for
the Company and, in February 2001, the Company's Board of Directors selected
PricewaterhouseCoopers to serve as its new independent auditors.

In September 2001, the Company's Board of Directors dismissed
PricewaterhouseCoopers as the independent auditors for the Company and selected
Blackman Kallick Bartelstein LLP to serve as its new independent auditors.

In January 2002, the Company's Board of Directors dismissed Blackman Kallick
Bartelstein LLP as the independent auditors for the Company and selected Moores
Rowland to serve as its new independent auditors.

                                       16
<PAGE>

Andersen, Andersen & Strong's reports on the financial statements of the Company
for the fiscal years ended December 31, 1995, 1996 and 1997 contain no adverse
opinion or disclaimer of opinion and were not qualified or modified as to
uncertainty (other than uncertainty as to the Company's continuing as a going
concern), audit scope, or accounting principles. In connection with its audits
for fiscal years 1995, 1996 and 1997, and through the date of their dismissal,
there were no disagreements with Andersen, Andersen & Strong, L.C. on any matter
of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements if not resolved to the
satisfaction of Andersen, Andersen & Strong, L.C. would have caused them to make
reference thereto in its reports on the financial statements for such years.

Arthur Andersen & Co.'s audit report on the financial statements of the Company
as of June 30, 2000 and for the three years ended June 30, 1998, 1999 and 2000
contained no adverse opinion or disclaimer of opinion and was not qualified or
modified as to uncertainty, audit scope, or accounting principles. During the
Company's two most recent fiscal years and any subsequent interim period
preceding the resignation of Arthur Andersen & Co., there were no disagreements
with Arthur Andersen & Co. on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements if not resolved to the satisfaction of Arthur Andersen & Co.,
would have caused Arthur Andersen & Co. to make reference to the subject matter
of the disagreements in connection with its report.

PricewaterhouseCoopers did not render any audit reports on the financial
statements of the Company. During the Company's two quarterly interim period
preceding the dismissal of PricewaterhouseCoopers, there were no disagreements
with PricewaterhouseCoopers on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements if not resolved to the satisfaction of PricewaterhouseCoopers,
would have caused PricewaterhouseCoopers to make reference to the subject matter
of the disagreements in connection with its report. During the Company's two
quarterly interim period preceding the dismissal of PricewaterhouseCoopers,
there have been no reportable events of the type required to be disclosed by
Item 304(a)(1)(v) of Regulation S-K.

Blackman Kallick Bartelstein LLP's audit report on the financial statements of
the Company as of June 30, 2001 contained no adverse opinion or disclaimer of
opinion and was not qualified or modified as to uncertainty, audit scope, or
accounting principles. During the subsequent interim period preceding the
resignation of Blackman Kallick Bartelstein LLP, there were no disagreements
with Blackman Kallick Bartelstein LLP on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements if not resolved to the satisfaction of Blackman Kallick
Bartelstein LLP, would have caused Blackman Kallick Bartelstein LLP to make
reference to the subject matter of the disagreements in connection with its
report.

                                    PART III

ITEM 9.  DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS  AND CONTROL  PERSONS;
         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               POSITION
         Andy Lin          56                President, Chief Executive Officer,
                                             Chief Financial Controller and
                                             Director
         Francis Tsui               41       Director
         Sai Keung Chan    46                Secretary and Director
         Jun Liang                  41       Director
         Shim Yang                  44       Director
         Sonny Hung                 40       Director
         Catalina Chan              51       Director

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

                                       17
<PAGE>

BUSINESS EXPERIENCE

ANDY LIN has served as President, Chief Executive Officer and Chief Financial
Controller of the Company since June 2001 and as a director of the Company since
October 1998. Mr. Lin co-founded the Company's predecessor, IML, in January 1998
and previously served as Vice President of the Company from the Merger, in
October 1998. Prior to forming IML, he was the vice president of China Business
Resources from 1994 to 1998. Mr. Lin graduated from Tsinghua University in 1970
with a Bachelor degree and from the Chinese Academy of Sciences in 1981 with a
Master of Science degree in computer science.

FRANCIS TSUI has served as a Director of the Company since June 2001. Mr. Tsui
has served as Managing Director of Ebiz Incubation, an information technology
investment holding firm, since 2000. Previously, Mr. Tsui served as Assistant
Director of John Hancock Financial Services, a private equities company, from
1995 to 1998. From 1998 to 1999, Mr Tsui was the Director of Business
Development in Eastgate (HK) Limited. Mr. Tsui received a Ph.D. in Chinese
Culture and History and an MBA from the University of Hawaii.

JUN LIANG co-founded the Company's predecessor, IML, in January 1998 and served
as its President and a director from inception until the Merger in October 1998
and as President of the Company from the date of the Merger until June 2001 and
as a director of the Company since the Merger. Prior to forming IML, from 1994
to 1998, Mr. Liang was the president of China Business Resources, a
privately-owned Hong Kong company specializing in providing company directories,
business directory services and other business information in print, CD-ROM and
electronic format. Mr. Liang graduated from Beijing Shijou University in 1982
with a Bachelor of Science degree in Chemical Engineering and from Stanford
University in 1986 with a Master of Science degree in Chemical Engineering.

SAI KEUNG CHAN joined the Company's predecessor, IML, as Secretary and a
director in January 1998 and assumed the same positions with the Company
following the Merger in October 1998. Mr. Chan received a law degree from the
University of Southampton, U.K. and since 1986 has been a partner in the law
firm of Liau, Ho & Chan in Hong Kong.

SHIM YANG joined the Company's predecessor, IML, as a director in January 1998
and was appointed a director of the Company following the Merger in October
1998. Since December 1997, Mr. Yang has been a Managing Director of Corporate
Finance International Ltd., a privately-held investment consulting and business
brokerage company in Hong Kong specializing in corporate finance and business
restructuring consulting, where he is responsible for corporate development and
strategic management. From January 1997 to December 1997, Mr. Yang served as
Managing Director of CEC (HK) Ltd., a privately-held company in Hong Kong
specializing in securing financing for start-up Internet companies in Hong Kong
and China. From 1993 to 1996, Mr. Yang served as Managing Director of Eagle Gain
Ltd., a privately-held company in Hong Kong specializing in securing financing
for real estate development in China. Mr. Yang received a Bachelors degree in
Economics from the University of Foreign Trade in China in 1982.

SONNY HUNG has served as a director of the Company since August 2001. Mr. Hung
has served as Vice President of Yorkshire Capital, a Hong Kong-based investment
banking firm, since June 2000. Previously, Mr. Hung served as Director of
Corporate Development of Man Sang International from November 1996 to March
2000. From 1991 to 1997 he was in various senior positions with Dah Sing Bank,
Hong Kong Bank. Mr. Hung received Bachelors degrees in Finance and Banking from
San Francisco State Universety and an MBA from Baptist University in Hong Kong.

                                       18
<PAGE>

CATALINA CHAN has served as a director of the Company since April 2002. Ms.
Chan. first established Multi M Company Limited in 1984 and it was one of the
first companies to introduce Casio Products into China and is responsible for
the trading and logistic management of these products in China. She has over 18
years of experience in China trade for digital products including cameras,
watches, personal computers and printers, software and accessories.

TERM OF OFFICE

The directors named above will serve until the next annual meeting of the
Company's shareholders. Officers will hold their positions at the pleasure of
the Board of Directors, absent any employment agreement.

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 to us copies of all Section 16(a) forms they file.

To our knowledge, based solely upon review of the copies of such reports
received or written representations from the reporting persons, we believe that
during our 2002 fiscal year our directors, executive officers and persons who
own more than 10% of our common stock complied with all Section 16(a) filing
requirements with the exception of the following: A Form 4 for transactions that
took place in March 28, 2002 by Grand Grade International Limited, an entity
owned by Catalina Chan, a director, was not filed as required. The Form 4 will
be filed by November 8, 2002.

ITEM 10. EXECUTIVE COMPENSATION

For the 2002 fiscal year, all executive officers received their salaries from
the Company and no bonus was paid to any executive officer.

During the 2002 fiscal year, the Company did not have any executive officer
receiving compensation of at least $100,000 per year. The following table sets
forth information as to the compensation paid or accrued to the Chief Executive
Officer for the three years ended June 30, 2002:
<TABLE>
<CAPTION>

                                                                       ANNUAL COMPENSATION
                                                                                       OTHER ANNUAL         ALL
OTHER
         NAME AND PRINCIPAL POSITION             YEAR             SALARY                 BONUS          COMPENSATION
COMPENSATION

<S>                                              <C>      <C>       <C>             <C>           <C>
Andy Lin...................................      2002     $ 76,923  $    -          $        -    $           0
   Chief Executive Officer.................      2001       76,923       -               5,640                0
   and President (1).......................      2000       76,923       -               7,692                0

Jun Liang..................................      2002      $ 5,769  $    -                   -    $           0
  Chief Executive Officer,.................      2001       92,307       -               5,640                0
  Chairman and President (2)...............      2000       92,307       -               7,692                0
</TABLE>


(1)  Mr. Lin was appointed as Chief Executive Officer and President of the

                                       19
<PAGE>

     Company in June 2001. Previously, Mr. Lin served as Vice President of the
     Company. (2) Mr. Liang served as Chief Executive Officer of the Company
     from October 1998 until June 2001.

During fiscal 2002, the Company did not make option grants to any of its
directors or executive officers.


DIRECTOR'S COMPENSATION

Neither employee nor non-employee directors received any compensation for his or
her service as a director in the 2002 fiscal year.

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

OTHER COMPENSATION AND EMPLOYMENT ARRANGEMENTS

No executive officer, at June 30, 2002, had an employment agreement.

The Company does not have any pension, profit-sharing, stock bonus, or other
benefit plans. The Company expects to enter into employment agreements with key
employees, to implement comprehensive compensation arrangements with its
officers and to adopt benefit plans in the future to attract and retain officers
and key employees.

In January 2001, the Board of Directors adopted, subject to shareholder approval
within 12 months, a stock option plan under which 3,000,000 shares of common
stock were to be reserved for issuance pursuant to options to be granted to key
employees. However, no shareholder approval was obtained, and in a Board of
Director meeting in September 2001, the stock option plan was revoked. No
options have been granted under the plan.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

COMMON STOCK

         The following table is furnished as of September 11, 2002, 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.
<TABLE>
<CAPTION>

         Name and Address of                                  Number of Shares
         BENEFICIAL OWNER (1)                                 BENEFICIALLY OWNED      PERCENT

<S>                       <C>                                    <C>         <C>      <C>
     Allied Point Limited (3)...........................         3,218,653   (2)      9.71%
     Jun Liang (3)......................................         3,218,653   (2)      9.71%
     Andy Lin (3).......................................         3,218,653   (2)      9.71%
     eBiz Incubation Co. Ltd. (4).......................         1,152,000   (5)      3.47%
     Francis Tsui (4)...................................         1,152,000   (5)      3.47%
     Shim Yang..........................................           350,000            1.05%
     Catalina Chan (6)..................................         1,000,000            3.01%
     Grand Grade International Ltd (6)..................         1,000,000            3.01%
     Sai Keung Chan.....................................           700,000            2.11%
     Sonny Hung.........................................                 0               0%

                                       20
<PAGE>

     E-World Investment Holding Ltd.....................         5,340,000           16.12%
     Mass United Investment Ltd.........................         2,500,000            7.55%
     All officers and directors as a group (7 persons)..         6,420,653            19.4%
</TABLE>

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

(2)  Allied Point Limited is a corporation organized under the laws of the
     British Virgin Islands and is owned 50% by Jun Liang and 50% by Andy Lin.
     Therefore, Mr. Liang and Mr. Lin are deemed to be the beneficial owners of
     those shares.

(3)  Address is 10th Floor, B10-07 Guomao Building, Renmin Rd.(South), Shenzhen,
     China 518014.

(4)  Address is Rm 3106, China Merchants Tower, Shun Tak Centre, 200 Connaught
     Road, Central, Hong Kong.

(5)  Francis Tsui is Managing Director of eBiz Incubation Co. Ltd. and may be
     deemed to be the beneficial owner of the shares held by eBiz Incubation Co.
     Ltd.

(6)  Catalina Chan is director and shareholder of Grand Grade International Ltd.
     and may be deemed to be the beneficial owner of the share held by Grand
     Grade International Ltd.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During the years ended June 30, 2001 and 2002, Jun Liang and Andy Lin, officers,
directors and principal shareholders of the Company, advanced funds to, and were
advanced funds by, the Company on an unsecured, non-interest bearing basis
without pre-determined repayment terms. At June 30, 2001, the net balances owed
to Mr. Liang and Mr. Lin were $124,340 and $111,853, respectively. At June 30,
2002, the net balances owed to Mr. Liang and Mr. Lin were $80,891 and $143,496,
respectively.

During the 2002 fiscal year, the Company issued to various investors, employees
and other parties, a total of 20,000,000 shares of its common stock, which
constitutes 60.4% of the Company's total issued and outstanding shares after
such issuance, at $0.02 per share. In relation to this offering, the Company
entered into an agreement with a placement agent, Yorkshire Capital Ltd., for
the issuance of 2,000,000 shares of common stock in payment for its fee in
placing the securities. Mr. Sonny Hung, a director of the Company, is the
Vice-President of Yorkshire Capital Ltd.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         Exhibit
         NUMBER                     DESCRIPTION OF EXHIBIT

2.1      Exchange Agreement with Shareholders of Intermost Limited (1)
3.1      Articles of Incorporation (1)
3.2      Bylaws (1)
10.1     Employment Agreement, dated March 25, 2002, with Zacky Sun (5)
10.3     Cooperative Agreement re:formation of Jiayin E-Commerce joint venture
         (1)
10.4     Agreement re: acquisition of customer accounts from Labtam Corporation
         (1)
10.5     Subscription Agreement re: sale of common stock (1)
10.8     Agreement Regarding Transfer of Properties on 38th Floor, Guomao
         Building (2)
10.9     Joint Venture Agreement, dated June 1, 2000, re: Shenzhen SinoE
         E-commerce Co. Ltd.(3)
10.10    Subscription Agreement dated October 24, 2000, by and among Intermost
         Corporation, J.R. Hi-Tech Investment Corporation, Xinlei Wang and Yong
         Jiang (4)
21.0     Significant Subsidiaries(6)
23.0     Consent of Independent Accountants (6)
99.1     Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
         to Section 906 of the Sarbanes-Oxley Act of 2002 (6)

                                       21
<PAGE>


(1)  Incorporated by reference to the respective exhibits filed with
     Registrant's Registration Statement on Form 10-SB (Commission File No.
     0-30430).

(2)  Incorporated by reference to the respective exhibits filed with
     Registrant's Quarterly Report on Form 10-QSB for the quarter ended March
     31, 2000.

(3)  Incorporated by reference to the respective exhibits filed with
     Registrant's Annual Report on Form 10-KSB for the year ended June 30, 2000.

(4)  Incorporated by reference to the respective exhibits filed with
     Registrant's Current Report on Form 8-K dated January 20, 2001.

(5)  Incorporated by reference to the respective exhibits filed with
     Registrant's Quarterly Report on Form 10-QSB for the quarter ended March
     31, 2002.

(6)  Filed herewith.


(b)      Reports on Form 8-K

     No reports on Form 8-K were filed during the quarter ended June 30, 2002.



                                       22
<PAGE>



                                   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/ Andy Lin
                                              ANDY LIN
                                              PRESIDENT, CHIEF EXECUTIVE OFFICER
                                              AND CHIEF FINANCIAL OFFICER
Dated:   October 31, 2002

     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.
<TABLE>
    SIGNATURE                                        TITLE                                            DATE



                                     <c>                                          <c>
/s/ Andy Lin                             President, Chief Executive Officer,         October 31, 2002
----------------------------------       Chief Financial Officer and Director
Andy Lin


/s/ Francis Tsui                         Director                                    October 31, 2002
----------------------------------
Francis Tsui


/s/ Sai Keung Chan                       Director                                    October 31, 2002
----------------------------------
Sai Keung Chan


/s/Shim Yang                             Director                                    October 31, 2002
----------------------------------
Shim Yang


/s/ Sonny Hung                           Director                                    October 31, 2002
----------------------------------
Sonny Hung


/s/ Catalina Chan                        Director                                    October 31, 2002
----------------------------------
Catalina Chan

</TABLE>


                                       23
<PAGE>


                  CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
                       PURSUANT TO RULES 13A-14 AND 15D-14
                     OF THE SECURITIES EXCHANGE ACT OF 1934

     I, Andy Lin, Chief Executive Officer and Chief Financial Officer of
Intermost Corporation, certify that:

(1)  I have reviewed this Annual Report on Form 10-KSB of Intermost Corporation.

(2)  Based on my knowledge, this Annual Report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this annual report.

(3)  Based on my knowledge, the financial statements, and other financial
     information included in the report, fairly present in all material respects
     the financial condition, results of operations and cash flows of the issuer
     as of, and for, the periods presented in the report.

Dated:  October 31, 2002


                                          /s/ Andy Lin
                                          --------------------------------------
                                          Andy Lin, Chief Executive Officer and
                                          Chief Financial Officer







<PAGE>


EXHIBIT 21

                      LIST OF SIGNIFICANT SUBSIDIARIES


NAME OF SUBSIDIARY                               JURISDICTION OF ORGANIZATION

China e.com Information Technology Ltd.           People's Republic of China

Intermost Limited                                 British Virgin Islands

Intermost Focus Advertising Company Ltd.          People's Republic of China


<PAGE>


                                                                      EXHIBIT 99
                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Intermost Corporation (the "Company") on
Form 10-KSB for the period ending June 30, 2002, as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Andy Lin, Chief
Executive Officer and Chief Financial Officer of the Company, certify, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

(1)  The Report fully complies with the requirements of section 3(a) or 15(d) of
     the Securities and Exchange Act of 1934; and

(2)  The information contained in the Report fairly presents, in all material
     respects, the financial condition and results of operations of the Company.


                          /s/ Andy Lin
                          ---------------------------------
                          Andy Lin
                          Chief Executive Officer and Chief Financial Officer
                          October 31, 2002





<PAGE>



                              INTERMOST CORPORATION

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>


                                                                                       <c>
Report of Independent Public Accountants                                                        F-1

Report of Independent Auditors                                                                  F-2

Consolidated Balance Sheets as of June 30, 2002                                                 F-3

Consolidated Statements of Operations for the year ended June 30, 2001 and 2002                 F-4

Consolidated Statements of changes in Stockholders' Equity for the years ended
   June 30, 2001 and 2002                                                                       F-5

Consolidated Statements of Cash Flows for the year ended June 30, 2001 and 2002                 F-6

Notes to and forming part of the Consolidated Financial Statements                        F-7 - F25
</TABLE>



<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------

To the Stockholders and the Board of Directors of Intermost Corporation:

We have audited the accompanying consolidated balance sheet of Intermost
Corporation and Subsidiaries ("the Group") as of June 30, 2001 and the related
consolidated statements of operations, cash flows and changes in stockholders'
equity for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit. The
financial statements for the Company as of and for the year ended June 30, 2000
were audited by other auditors whose report dated October 9, 2000 expressed an
unqualified opinion on those financial statements.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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
the 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 audit provides a
reasonable basis for our opinion.

In our opinion, based on our audit, the consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of Intermost Corporation and Subsidiaries as of June 30, 2001 and the
results of their operations and their cash flows for the year ended June 30,
2001, in conformity with accounting principles generally accepted in the United
States of America.


/ s / Blacjman Kallick Bartelstein, LLP

Chicago, Illinois
October 22, 2001





                                      F-1
<PAGE>


REPORT OF INDEPENDENT AUDITORS
------------------------------



To the Stockholders and the Board of Directors of

INTERMOST CORPORATION

We have audited the accompanying consolidated balance sheet of Intermost
Corporation (the "Company") and its subsidiaries (the "Group") as of June 30,
2002, and the related consolidated statements of operations, cash flows and
change in stockholders' equity 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 consolidated financial
statements based on our audit. The consolidated financial statements of the
Group as of and for the year ended June 30, 2001 were audited by other auditors
whose report dated October 22, 2001, expressed an unqualified opinion on those
financial statements.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 consolidated
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 audit provides a
reasonable basis for our opinion.

In our opinion, based on our audit, the 2002 consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of the Group as of June 30, 2002 and the results of their operations
and their cash flows for the year then ended, in conformity with accounting
principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Group
will continue as a going concern. As discussed in Note 2(b) to the financial
statements, the Group has suffered recurring losses from operations and
continues to experience negative cash flow from operations that raise
substantial doubt its ability to continue as a going concern. Management's plans
in regard to these matters are also described in Note 2(b). The financial
statements do not include any adjustments that might result from the outcome of
this uncertianty.







MOORES ROWLAND
CHARTERED ACCOUNTANTS
CERTIFIED PUBLIC ACCOUNTANTS,
HONG KONG, OCTOBER 31, 2002





                                      F-2
<PAGE>


INTERMOST CORPORATION

CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>


                                                                                     AS OF JUNE 30,
                                                                                 -----------------------
                                                                                  2002            2002
ASSETS                                                                             RMB             US$

CURRENT ASSETS
<S>                                                                              <C>             <C>
Cash and cash equivalents ................................................       443,607         53,576
Accounts receivable, net of allowance for doubtful accounts of Rmb41,450 .       658,641         79,546
Costs and estimated earnings in excess of billings .......................       150,170         18,136
Deposits, prepayments and other receivables, net of allowance for doubtful
    accounts of Rmb399,810 (Note 3) ......................................     1,530,962        184,899
Amount due from custodian ................................................     2,523,743        304,800
Due from related companies ...............................................        72,345          8,737
                                                                             -----------    -----------

TOTAL CURRENT ASSETS .....................................................     5,379,468        649,694

Plant and equipment, net (Note 4) ........................................     3,248,326        392,310
                                                                             -----------    -----------

TOTAL ASSETS .............................................................     8,627,794      1,042,004
                                                                             ===========    ===========

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
Accruals and other payables (Note 5) .....................................     2,257,604        272,657
Deferred revenue .........................................................       432,534         52,238
Business tax and government surcharges payable ...........................        21,963          2,653
Due to directors (Note 11) ...............................................     1,857,930        224,388
                                                                             -----------    -----------

TOTAL CURRENT LIABILITIES ................................................     4,570,031        551,936
                                                                             -----------    -----------

COMMITMENTS AND CONTINGENCIES (Note 9)

MINORITY INTERESTS .......................................................        90,584         10,940
                                                                             -----------    -----------

STOCKHOLDERS' EQUITY
Preferred stock, par value of US$0.001 (Note 7):
- Authorized - 5,000,000 shares
- None outstanding .......................................................          --             --
Common stock, par value US$0.001:
- Authorized - 100,000,000 shares
- Outstanding and fully paid - 33,120,481 shares .........................       274,279         33,125
- Reserved and to be issued - 2,000,000 shares ...........................        16,560          2,000
Additional paid-in capital ...............................................    62,085,259      7,498,220
                                                                             -----------    -----------

                                                                              62,376,098      7,533,345

Accumulated deficit ......................................................   (58,378,023)    (7,050,486)
Accumulated other comprehensive loss .....................................       (30,896)        (3,731)
                                                                             -----------    -----------

TOTAL STOCKHOLDERS' EQUITY ...............................................     3,967,179        479,128
                                                                             -----------    -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ...............................     8,627,794      1,042,004
                                                                             ===========    ===========
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                      F-3
<PAGE>


INTERMOST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>


                                                                YEARS ENDED JUNE 30,
                                                   ----------------------------------------------
                                                        2001            2002           2002
                                                        RMB             RMB            US$

<S>                                                  <C>            <C>            <C>
Net revenues (Note 2(g)) ........................     8,149,002      4,902,248        592,059
Cost of revenues (Note 2(i)) ....................    (6,990,102)    (3,321,014)      (401,089)
                                                    -----------    -----------    -----------

Gross profit ....................................     1,158,900      1,581,234        190,970

Selling, general and administrative expenses ....   (28,926,800)    (8,497,414)    (1,026,258)
                                                    -----------    -----------    -----------

LOSS FROM OPERATIONS ............................   (27,767,900)    (6,916,180)      (835,288)

Other income (expense):
Loss on disposal of fixed assets ................      (324,441)      (314,242)       (37,952)
Loss on abandonment of phone payment system .....    (6,734,706)          --             --
Loss on abandonment of fixed assets .............          --         (817,496)       (98,731)
Share of loss in an associated company ..........    (2,277,286)          --             --
Impairment of investment in an associated company    (1,189,192)          --             --
Gain on liquidation of an associated company ....          --          560,847         67,735
Interest income (Note 2(j)) .....................       101,259         14,169          1,711
Other net income ................................        40,226        522,092         63,055
                                                    -----------    -----------    -----------

TOTAL OTHER EXPENSE, NET ........................   (10,384,140)       (34,630)        (4,182)
                                                    -----------    -----------    -----------

LOSS BEFORE MINORITY INTERESTS ..................   (38,152,040)    (6,950,810)      (839,470)

Minority interests ..............................     3,341,063         (2,954)          (357)
                                                    -----------    -----------    -----------

NET LOSS ........................................   (34,810,977)    (6,953,764)      (839,827)

Other comprehensive loss:
    Currency translation adjustments ............           (10)          --             --
                                                    -----------    -----------    -----------

COMPREHENSIVE LOSS ..............................   (34,810,987)    (6,953,764)      (839,827)
                                                    ===========    ===========    ===========

Net loss per share (Note 2(o))
Weighted average number of shares outstanding
    - basic                                          11,899,202     14,189,163     14,189,163
                                                     ==========     ==========     ==========

Loss per common share
    Basic                                                 (2.93)         (0.49)         (0.06)
                                                     ==========     ==========     ==========
                                                          (2.93)         (0.49)         (0.06)
    Diluted
                                                     ==========     ==========     ===========
</TABLE>







THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                      F-4
<PAGE>


INTERMOST CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                               COMMON STOCK



                                                                                      RESERVED AND TO BE
                                                                 ISSUED                    ISSUED
                                                         ---------------------    --------------------------       ADDITIONAL
                                                         Number of                Number of                          PAID-IN
                                                            shares     AMOUNT        shares          AMOUNT          CAPITAL
                                                                          RMB                           RMB              RMB

<S>                                                    <C>               <C>          <C>              <C>       <C>
Balance as of June 30, 2000 .......................    10,971,468        90,840       800,000          6,624     51,902,537

Common stock issued ...............................     1,984,013        16,473      (800,000)        (6,624)     2,761,151
Issuance of common stock for marketing services ...
   received .......................................       150,000         1,242          --             --        3,749,598
Issuance of common stock to employee in Lieu of ...
   salary .........................................        15,000           124          --             --          542,133
Currency translation adjustments ..................          --            --            --             --             --
Net loss ..........................................          --            --            --             --             --

Balance as of June 30, 2001 .......................    13,120,481       108,679          --             --       58,955,419

Proceeds on issuance of common stock, net of
   issuance cost of Rmb331,200, of which the shares
   for issuance cost have not been issued .........    20,000,000       165,600     2,000,000         16,560      3,129,840
Net loss ..........................................          --            --            --             --             --

Balance as of June 30, 2002 .......................    33,120,481       274,279     2,000,000         16,560     62,085,259
</TABLE>







THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

<PAGE>

                                      F-5
<PAGE>

(Continued from table above, first column repeated)


<TABLE>
<CAPTION>


                                                                                      ACCUMULATED
                                                                                            OTHER
                                                      SUBSCRIPTION    ACCUMULATED   COMPREHENSIVE
                                                        RECEIVABLE        DEFICIT            LOSS      TOTAL           TOTAL
                                                               RMB            RMB             RMB        RMB             US$

<S>                                                      <C>         <C>                <C>         <C>             <C>
Balance as of June 30, 2000 .......................      (621,000)   (16,613,282)       (30,886)    34,734,833      4,195,028

Common stock issued ...............................       621,000           --             --        3,392,000        409,662
Issuance of common stock for marketing services ...
   received .......................................          --             --             --        3,750,840        453,800
Issuance of common stock to employee in Lieu of ...
   salary .........................................          --             --             --          542,257         65,490
Currency translation adjustments ..................          --             --              (10)           (10)            (1)
Net loss ..........................................          --      (34,810,977)          --      (34,810,977)    (4,204,224)

Balance as of June 30, 2001 .......................          --      (51,424,259)       (30,896)     7,608,943        918,955

Proceeds on issuance of common stock, net of
   issuance cost of Rmb331,200, of which the shares
   for issuance cost have not been issued .........          --             --             --        3,312,000        400,000
Net loss ..........................................          --       (6,953,764)          --       (6,953,764)      (839,827)

Balance as of June 30, 2002 .......................          --      (58,378,023)       (30,896)     3,967,179        479,128
</TABLE>









THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>


INTERMOST CORPORATION
================================================================================

CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                        YEARS ENDED JUNE 30,
                                                                             --------------------------------------------
                                                                                 2001            2002          2002
                                                                                  RMB             RMB           US$
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                          <C>             <C>              <C>
Net loss .................................................................   (34,810,977)    (6,953,764)      (839,827)
Adjustments to reconcile net loss to net cash used in operating activities
    Bad debt written off: - Accounts receivable ..........................       145,793           --             --
                          - Deposit on investment in JRHIC ...............     1,500,000           --             --
    Provision for doubtful debt:- Accounts receivable ....................          --           41,450          5,006
                                - Other receivables ......................          --          399,810         48,286
                                - Due from a related party ...............     2,354,000           --             --
    Deposits for acquisition of projects owned by Internet.com written off          --          496,800         60,000
    Marketing expenses and employee compensation paid through issuance of
       common stock ......................................................     4,293,097           --             --
    Loss on disposal of fixed assets .....................................       324,441        314,242         37,952
    Loss on abandonment of phone payment system ..........................     6,734,706           --             --
    Loss on abandonment of fixed assets ..................................          --          817,496         98,731
    Depreciation and amortization of plant and equipment and phone payment
       system ............................................................     2,759,488        865,337        104,509
    Amortization of intangible assets ....................................     1,199,996           --             --
    Share of loss of an associated company ...............................     2,277,286           --             --
    Impairment of investment in an associated company ....................     1,189,192           --             --
    Minority interests ...................................................    (3,341,063)         2,954            357
    Stock-based compensation costs .......................................     1,744,878           --             --
    Gain on liquidation of an associated company .........................          --         (560,847)       (67,735)
Changes in operating assets and liabilities:
    Accounts receivable, net .............................................       328,486       (240,812)       (29,084)
    Costs and estimated earnings in excess billings ......................       290,990        203,040         24,522
    Deposits, prepayments and other receivables ..........................       208,467       (117,094)       (14,142)
    Inventories ..........................................................        41,240         15,818          1,910
    Accruals and other payables ..........................................      (573,275)       388,643         46,938
    Deposit on liquidation of investment in an associated company ........     1,000,000           --             --
    Deferred revenue .....................................................      (181,546)        20,431          2,468
    Deferred rent ........................................................       362,638       (362,638)       (43,797)
    Deposits from customers ..............................................      (201,500)       (61,400)        (7,415)
    Business tax and government surcharge payable ........................        37,236        (66,781)        (8,065)

NET CASH USED IN OPERATING ACTIVITIES ....................................   (12,316,427)    (4,797,315)      (579,386)

CASH FLOWS FROM INVESTING ACTIVITIES
Additions of plant and equipment and phone payment system ................    (2,007,435)       (17,612)        (2,127)
Proceeds on disposal of plant and equipment ..............................          --          441,889         53,368
Repayments from (loans to) directors .....................................       284,265        520,133         62,818
Due from related companies ...............................................      (530,720)          --             --

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES ......................    (2,253,890)       944,410        114,059

CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from  issuance of common stock ..............................     3,392,000        788,257         95,200
Proceeds from (repayments to) directors ..................................     1,747,483       (617,883)       (74,623)

NET CASH PROVIDED BY FINANCING ACTIVITIES ................................     5,139,483        170,374         20,577

Effect of exchange rate changes on cash and bank deposits ................           (10)          --             --

Net decrease in cash and bank deposits ...................................    (9,430,844)    (3,682,531)      (444,750)
Cash and bank deposits, beginning of year ................................    13,556,982      4,126,138        498,326

CASH AND BANK DEPOSITS, END OF YEAR ......................................     4,126,138        443,607         53,576

NON-CASH TRANSACTION:
Receivable from issuance of common stock .................................          --        2,523,743        304,800
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                      F-6
<PAGE>


INTERMOST CORPORATION
================================================================================

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1.   ORGANIZATION AND PRINCIPAL ACTIVITIES

     Intermost  Corporation  (the  "Company") was  incorporated  in the State of
     Utah,  United States of America on March 6, 1985.  The Company  changed its
     name  from  Utility   Communications   International,   Inc.  to  Intermost
     Corporation on October 23, 1998.

     During the period from January 2, 1998 to October 22, 1998, the Company was
     inactive.  On October 23,  1998,  the  Company  acquired  100%  interest in
     Intermost  Limited  ("IL";  a company  incorporated  in the British  Virgin
     Islands)  by  issuing  4,970,000  shares  of  common  stock of par value of
     US$0.001 each (after the  redenomination of par value and a stock split) to
     the shareholders of IL.

     The  acquisition  of IL by the Company on October 23, 1998 has been treated
     as a reverse  acquisition  since IL is the continuing entity as a result of
     the exchange reorganization.

     IL and its  subsidiaries  (the "IL Group") are  principally  engaged in the
     provision of business portal and e-commerce  solutions,  the development of
     software  and  the  provision  of  consultation  services  in the  People's
     Republic of China ("the PRC") and Hong Kong.

     Details of the Company's  subsidiaries (which together with the Company are
     collectively  referred to as the "Group") and their principal activities as
     of June 30, 2002 were as follows:
<TABLE>
<CAPTION>

                                                             PLACE OF     PERCENTAGE OF
                                                       INCORPORATION/   EQUITY INTEREST
                                                    -----------------   ATTRIBUTABLE TO
        NAME                                             REGISTRATION         THE GROUP           PRINCIPAL ACTIVITIES
        <S>                                           <C>                         <C>      <C>
        Intermost Limited ("IL")                          The British              100%         Investment holding and
                                                       Virgin Islands                         development of software.
                                                                                                  Ceased operations of
                                                                                            development of software in
                                                                                                                  2001

        China E.com Information Technology Ltd.               The PRC              100%   Provision of business portal
          ("CECITL")*                                                                         and e-commerce solutions

        IMOT Information Technology (Shenzhen)                The PRC              100%                       Inactive
          Ltd. ("IITSL")*

        Intermost (Hong Kong) Limited ("IHKL")              Hong Kong              100%                       Inactive

        Shenzhen Bank Union & Jiayin E-commerce               The PRC             55.3%     Provision of phone payment
          Company Ltd. ("SBUJE")**                                                            system services.  Ceased
                                                                                                    operations in 2001

        Intermost Focus Advertising Company Ltd.              The PRC               90%       Provision of advertising
          ("IFACL")**                                                                          consultancy, and agency
                                                                                            services and production of
                                                                                                 advertising materials
</TABLE>

*    CECITL and IITSL are wholly owned foreign  enterprises  established  in the
     PRC to be operated for a period of 10 years until 2008.


**   SBUJE and IFACL are  equity  joint  ventures  established  in the PRC to be
     operated for a period of 10 years until 2009 and 2010, respectively.



                                      F-7
<PAGE>





2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (a)  Basis of accounting

          The consolidated financial statements have been prepared in accordance
          with generally accepted accounting  principles in the United States of
          America.  The  consolidated  financial  statements  are  presented  in
          Renminbi  which is the  Group's  functional  currency  as the  Group's
          operations are primarily located in the PRC.

     (b)  Going concern considerations

          As shown in the accompanying  consolidated  financial statements,  the
          Company  incurred a net loss of  Rmb6,953,764  for the year ended June
          30,  2002  and  continues  to  experience  negative  cash  flows  from
          operations.  Management will be required to raise  additional  capital
          through an offering of securities  to fund the  Company's  operations,
          and will attempt to continue raising capital resources until such time
          as the Company generates  revenues  sufficient to maintain itself as a
          viable   entity.   Additionally,   the  Company   and  its   principle
          shareholders  are exploring the  possibility  of obtaining  loans from
          other third party sources. Management believes that these actions will
          assist  the  Company  in  reaching  the  point of  profitability  from
          operations  and  enable  the  Company to raise  further  capital  from
          private placements or public offerings.  If successful,  these actions
          will serve to mitigate the factors which have raised substantial doubt
          about  the  Company's  ability  to  continue  as a going  concern  and
          increase the  availability  of resources  for funding of the Company's
          current operations and future market development.

     (c)  Principles of consolidation

          The  consolidated  financial  statements  include the  accounts of the
          Company and all of its subsidiaries. All material intra-group balances
          and transactions have been eliminated on consolidation.

     (d)  Cash and cash equivalents

          The Company considers all cash and highly liquid investments purchased
          with  an  original  maturity  of  three  months  or  less  to be  cash
          equivalents.

     (e)  Associated company

          An  associated  company  is an  enterprise  in  which  the  Group  has
          significant  influence,  but not control or joint control, and thereby
          have the  ability to  participate  in their  financial  and  operating
          policy decisions.

          In the consolidated financial statements,  investment in an associated
          company  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
          Group's share of the associate's net assets.



                                      F-8
<PAGE>
2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     (f)  Plant and equipment and depreciation

          Plant and  equipment is stated at cost less  accumulated  depreciation
          and accumulated  impairment loss. The cost of an asset consists of its
          purchase  price and any  directly  attributable  costs of bringing the
          asset to its present  working  condition and location for its intended
          use,  which include the estimated cost for  dismantling,  removing the
          asset and restoring the site.

          Expenditure  incurred  to replace a separate  component  of an item of
          plant  and  equipment,   including   major   inspection  and  overhaul
          expenditure,  is  capitalized  and accounted for as a component of the
          asset.  Other  subsequent  expenditure is capitalized as an additional
          cost of the asset  only when it can be clearly  demonstrated  that the
          expenditure  has  resulted  in an  increase  in  the  future  economic
          benefits expected to be obtained from the use of the asset.

          The gain or loss arising from the  retirement or disposal of plant and
          equipment is determined as the  difference  between the sales proceeds
          and the carrying  amount of the assets and is  recognized as an income
          or expense in the statement of operations.

          When assets are  transferred  between  plant and  equipment  and other
          classes of assets,  the cost of such an asset on transfer is deemed to
          be the  carrying  amount  of the asset as  stated  under its  original
          classification.  Any  previous  revaluation  reserve  on the  asset is
          frozen  upon the  transfer  until the  retirement  or  disposal of the
          asset. On retirement or disposal of the asset, the frozen  revaluation
          reserve is transferred directly to retained earnings.

          Depreciation  is  calculated  to  write  off  the  cost of  plant  and
          equipment  over their  estimated  useful  lives from the date on which
          they become fully  operational  and after taking into account of their
          estimated  residual  values,  using the straight  line method,  at the
          following annual rates:

           Buildings                                20 years
           Computer equipment                       3 years
           Motor vehicles                           5 years
           Furniture and office equipment           5 years
           Leasehold improvement                    shorter of 1 to 3 years or
                                                    the unexpired term of leases

          The Group  recognizes an impairment  loss on plant and equipment  when
          evidence,  such as the sum of expected future cash flows (undiscounted
          and without interest  charges)  indicates that future  operations will
          not  produce  sufficient  revenue to cover the related  future  costs,
          including depreciation. Measurement of the impairment loss is based on
          the fair value of the assets.



                                      F-9
<PAGE>
2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     (g)  Net revenues

          The  Company   recognizes  revenue  on  the  elements  when  there  is
          persuasive  evidence of an agreement with customers,  with a fixed fee
          that is collectible and when delivery has occurred or service has been
          rendered.

          Revenue  from website  development  contract is  recognized  under the
          percentage  of  completion  method  using  milestones  as a measure of
          progress towards completion. 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.  The  asset,  costs  and
          estimated earnings in excess of billings represents revenue recognized
          in excess of amounts billed.

          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.

     (h)  Research and development expenditures

          Research and  development  expenses are charged to expense as incurred
          and consist  primarily  of  salaries,  supplies  and  depreciation  of
          equipment  used in  research  and  development  activities.  The Group
          incurred costs totaling Rmb1,200,397 in the year ended June 30, 2001.

     (i)  Cost of revenues

          Cost of revenues  includes the cost of the direct  labour  force,  sub
          contract fee, costs of systems sales and integration, depreciation and
          amortization,  and other  costs  associated  with the same,  including
          travel,   welfare,  office  and  related  expenses  allocable  to  the
          engineering and technician staff.

     (j)  Other income

          Other  income  consists  mainly of rental  income and written  back of
          lease incentive for the year ended June 30, 2002.

     (k)  Income taxes

          Income  taxes  are  provided  under the  provisions  of  Statement  of
          Financial   Accounting  Standard  ("SFAS")  No.  109,  which  requires
          recognition of the estimated future tax  consequences  attributable to
          differences  between  the  financial  statement  carrying  amounts  of
          existing assets and liabilities and their respective tax bases and net
          operating loss carry forwards under the liability method. Deferred tax
          assets and liabilities are measured using expected tax rates in effect
          for the year in which those  temporary  differences are expected to be
          recovered  or  settled.  The  Group  has  recorded  a  full  valuation
          allowance  for its  deferred tax assets as of June 30, 2002 due to the
          uncertainty of the realizability of those assets.



                                      F-10
<PAGE>
2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     (l)  Operating leases

          Leases where  substantially  all the rewards and risks of ownership of
          assets remain with the leasing  company are accounted for as operating
          leases.  Rentals  payable and receivable  under  operating  leases are
          recorded in the statement of operations on a straight-line  basis over
          the lease  terms.  Lease  incentives  received are  recognized  in the
          statement of operations  as an integral part of the net  consideration
          agreed for the use of the leased asset.

     (m)  Comprehensive income (loss)

          The Group has adopted SFAS No. 130 "Reporting  Comprehensive  Income",
          which requires the disclosure of comprehensive  income, which includes
          net  income  (loss),   unrealized   gains  and  losses  on  marketable
          securities  classified  as  available-for-sale  and  foreign  currency
          translation adjustments.

     (n)  Foreign currency translation

          The  Group  considers  Renminbi  as  its  functional   currency  as  a
          substantial  portion of the Group's  business  activities are based in
          Renminbi.

          The  translation  of the financial  statements of  subsidiaries  whose
          functional  currencies  are other  than  Renminbi,  into  Renminbi  is
          performed for balance sheet accounts  using closing  exchange rates in
          effect at the balance sheet date and for revenue and expense  accounts
          using an average exchange rate during each reporting period. The gains
          or losses  resulting from  translation  are included in  stockholders'
          equity separately as accumulated other comprehensive loss.

          Transactions in currencies other than functional currencies during the
          year are translated into the respective  functional  currencies at the
          applicable   rates  of  exchange   prevailing   at  the  time  of  the
          transactions.   Monetary   assets  and   liabilities   denominated  in
          currencies  other  than  functional  currencies  are  translated  into
          respective  functional  currencies at the applicable rates of exchange
          in effect at the  balance  sheet date.  Exchange  gains and losses are
          dealt with in the statement of operations.

          Translation  of amounts  from  Renminbi  ("Rmb")  into  United  States
          dollars ("US$") is for the convenience of readers and has been made at
          the noon buying rate in New York City for cable  transfers  in foreign
          currencies  as certified for customs  purposes by the Federal  Reserve
          Bank of New  York on  December  31,  2000 of  US$1.00  =  Rmb8.28.  No
          representation  is made that the Renminbi  amounts could have been, or
          could be,  converted into United States dollars at that rate or at any
          other rate.



                                      F-11
<PAGE>
2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     (o)  Loss per common share

          Loss per common share is computed in accordance  with SFAS No. 128, by
          dividing  net loss for each period by the weighted  average  number of
          shares of common stock outstanding during the period, as if the common
          stock  issued  for  the  acquisition  of IL  (see  Note  1)  had  been
          consummated prior to the years presented.

          The  computation  of diluted loss per common share is similar to basic
          loss per common  share,  except that the  denominator  is increased to
          include the number of  additional  common  shares that would have been
          outstanding if all dilutive  securities  outstanding during the period
          were exercised.

          No diluted  loss per common share was  presented  in the  consolidated
          statements  of  operations  as the options  exercisable  contained  an
          exercise  price  greater  than the average  market price of the common
          shares as of June 30,  2001,  and there  were no  dilutive  securities
          available for exercise as of June 30, 2002.

     (p)  Stock-based compensation

          The Company  accounts for  stock-based  awards to employees  using the
          intrinsic value method in accordance with Accounting  Principles Board
          Opinion No. 25 ("APB25"),  "Accounting  for Stock Issued to Employees"
          and Financial Accounting Standards Board issued  Interpretation No. 44
          ("FIN44"),   "Accounting  for  Certain  Transactions  Involving  Stock
          Compensation (an  interpretation  of APB Opinion No. 25"). The Company
          has  adopted  the   disclosure-only   provisions   of  SFAS  No.  123,
          "Accounting for Stock-Based Compensation".

     (q)  Use of estimates

          The preparation of financial  statements in conformity with accounting
          principles generally accepted in the United States of America requires
          management to make estimates and assumptions  that affect the reported
          amounts of assets and  liabilities  and the  disclosure  of contingent
          assets and liabilities at the date of the financial statements and the
          reported amounts of revenues and expenses during the reporting period.
          Such estimates include provisions for doubtful accounts, sales returns
          and allowances,  long-lived  assets and deferred income taxes.  Actual
          results could differ from those estimates.

     (r)  Fair value of financial instruments

          The  estimated  fair values for financial  instruments  under SFAS No.
          107,  "Disclosures  about Fair Value of  Financial  Instruments",  are
          determined  at  discrete  points  in time  based  on  relevant  market
          information.  These  estimates  involve  uncertainties  and  cannot be
          determined with precision.  The estimated fair values of the Company's
          financial  instruments,  which includes cash,  accounts receivable and
          accounts payable,  approximates  their carrying value in the financial
          statements.



                                      F-12
<PAGE>
2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     (s)  Accounting pronouncements

          In June 2001,  Financial  Accounting  Standards  board ("FASB") issued
          SFAS No. 141,  "Business  Combination".  SFAS 141 addresses  financial
          accounting and reporting for business  combinations and supercedes APB
          No.  16,  "Business  Combination"  and SFAS No.  38,  "Accounting  for
          Preacquisition  Contingencies of Purchased Enterprises".  All business
          combination  initiated  after June 30,  2001 are to be  accounted  for
          under  the  purchase  method,   the  pooling  of  interest  method  of
          accounting is prohibited.  The adopted of SFAS No. 141 did not have an
          impact on the Company's financial  position,  results of operations or
          cash flows.

          In June 2001, FASB issued SFAS No. 142, "Goodwill and Other Intangible
          Assets". The SFAS No. 142 provides that goodwill and intangible assets
          which have  indefinite  useful lives will not be amortized  but rather
          will be tested at least annually for  impairment.  The Company adopted
          SFAS No. 142 effective on July 1, 2002, the first day of its financial
          year 2003.  The Company has no goodwill  and  intangible  assets as of
          June 30,  2002.  The Company does not believe that the adoption of the
          statement  will have a material  impact on its  financial  position or
          result of operations.

          In June  2001,  the FASB  issued  SFAS No. 143  "Accounting  for Asset
          Retirement  Obligations".  The SFAS No. 143 addresses  accounting  and
          reporting for  obligations  associated with the retirement of tangible
          long-lived  assets and the associated  asset  retirement  costs.  This
          statement is effective for financial  years  beginning  after June 15,
          2002.  The  impact  of the  adoption  of SFAS No.  143 on the  Group's
          financial statements is not expected to be material.

          In August  2001,  the FASB  issued  SFAS No. 144  "Accounting  for the
          Impairment  or Disposal of Long-Lived  Assets".  SFAS No. 144 replaces
          SFAS No. 121 "Accounting  for the impairment of Long-Lived  Assets and
          for  Long-Lived  Assets to Be  Disposed  Of".  SFAS No.  144  requires
          long-lived  assets be measured at the lower of selling  amount or fair
          value less cost to sell, whether reported in continuing  operations or
          discontinued  operations.  SFAS No. 144 also broadens the reporting of
          discontinued  operations  to include all  components of an entity with
          operations that can be  distinguished  from the rest of the entity and
          that will be eliminated from the ongoing operations of the entity in a
          disposal transaction. The provisions of SFAS No. 144 are effective for
          consolidated financial statements issued for financial years beginning
          after  December 15, 2001.  The Group does not expect that the adoption
          of SFAS No. 144 will have a material  impact on the Group's  financial
          statements.

          In  April  2002,  the FASB  issued  SFAS No.  145  Rescission  of FASB
          Statement  No. 4, 44 and 64,  Amendment of FASB  Statement No. 13, and
          Technical Corrections. This statement made revisions to the accounting
          for gains and losses from the  extinguishment of debt,  rescinded SFAS
          No. 44, and required  certain lease  modifications  that have economic
          effects similar to sale-leaseback transactions be accounted for in the
          same manner as sale-leaseback  transactions.  The Group is required to
          and will adopt SFAS No. 145 on July 1, 2002.  The adoption of SFAS No.
          145 is not expected to have a material impact on the Group's financial
          statements.

          In June  2002,  the FASB  issued  SFAS No. 146  "Accounting  for costs
          associated with Exit or Disposal Activities".  This statement requires
          that a  liability  for a cost  associated  with an  exit  or  disposal
          activity be  recognized  when the  liability is incurred.  An entity's
          commitment to plan, by itself, does not create a present obligation to
          others that meets the  definition  of a liability.  This  Statement is
          effective for exit or disposal  activities  that are  initiated  after
          December 31, 2002. The Group does not believe that the adoption of the
          Statement  will have  material  impact on its  financial  position  or
          result of operations.



                                      F-13
<PAGE>
3.   DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES

     Deposits, prepayments and other receivables consisted of:
<TABLE>
<CAPTION>

                                                                                            AS OF JUNE 30,
                                                                                  ------------------------------------
                                                                                           2002                  2002
                                                                                            RMB                   US$

<S>                                                                                     <C>                    <C>
        Rental and utilities deposits                                                   122,987                14,854
        Advance to employees                                                             11,416                 1,379
        Advance to Jiayin Investment Company Limited ("JICL") (Note 3(a))                56,803                 6,860
        Prepaid expenses                                                                 54,102                 6,534
        Advances to China Chance Technology & Electronics Co. Ltd. (Note 3(b))          197,950                23,907
        Receivable on liquidation of an associate company                               524,428                63,337
        Fortification for legal proceeding (Note 3(c))                                  535,000                64,613
        Others                                                                           28,276                 3,415
                                                                                  --------------        --------------

                                                                                      1,530,962               184,899
                                                                                  ==============        ==============
</TABLE>

Notes:-

(a)  JICL was a minority  shareholder of one of the Group's  subsidiaries  until
     February  2000 when it  disposed of all its  interest  in that  subsidiary.
     Thereafter, JICL was not classified as a related party.

(b)  This  advance  was for  future  fund  raising  activities  or support to be
     provided by that  company and is  collateralized  with an asset held in the
     PRC.

(c)  During  September of 2000,  the Group  entered into an agreement to acquire
     58.3% of the outstanding shares of JRHIC from its two stockholders. JRHIC's
     main investment via a holding  company,  is an ownership of 90% of Shenzhen
     China  Websecurity.com,  a Chinese-foreign equity joint venture established
     in the PRC, which engages in the provision of Internet  security  services,
     systems integration and software development  services.  Based on the terms
     of the agreement,  the  consideration  was to be  Rmb1,500,000  in cash and
     510,300  shares of common stock of the Company valued at  Rmb10,974,001  or
     US$2.60 per share. As of June 30, 2001, the Group had paid  Rmb1,500,000 in
     cash, but had not issued the 510,300  shares of common stock,  nor had they
     received the transfer of shares from the  stockholders of JRHIC.  The Group
     is in the process of commencing legal action to terminate the agreement and
     attempt  the  recovery  of  Rmb1,500,000.  Due  to the  uncertainty  of any
     recovery from the stockholders of JRHIC, the Group has provided a valuation
     allowance on the full amount of this  receivable,  and has accounted for it
     as a bad debt  expense in the fiscal year ended June 30,  2001.  During the
     fiscal year 2002, the Group paid  Rmb535,000 to the Court and an Injunction
     Order was granted  against the  Defendants  to freeze bank accounts held in
     the name of the  Defendants  until  conclusion  or  further  order from the
     Court. The management expects that the trial shall be in early 2003.



                                      F-14
<PAGE>
4.       PLANT AND EQUIPMENT, NET
         Plant and equipment consisted of:
<TABLE>
<CAPTION>

                                                     AS OF JUNE 30,
                                        ----------------------------------------
                                                2002                   2002
                                                 RMB                    US$

<S>                                               <C>                      <C>
  Building                                  2,790,204                336,982
  Computer equipment                          971,460                117,326
  Furniture and office equipment              420,180                 50,270
  Leasehold improvements                      148,416                 17,924
  Motor vehicles                              532,470                 64,308
                                      -----------------      -----------------

  Cost                                      4,862,730                586,810
  Less: Accumulated depreciation           (1,614,404)              (194,500)
                                      -----------------      -----------------

  Plant and equipment, net                  3,248,326                392,310
                                      =================      =================
</TABLE>

The title of the building with a net book value of approximately Rmb2,441,000 as
of June 30,  2002 has not been  transferred  to the  Group.  The Group is in the
process of applying  for the  respective  building  ownership  certificate.  The
director  of the Group is  confident  that there is no legal  impediment  to the
Group in obtaining the building ownership certificate.

Depreciation  expense amounted to Rmb1,517,998 and Rmb865,337 for the year ended
June 30, 2001 and 2002 respectively.


5.   ACCRUALS AND OTHER PAYABLES

   Accruals and other payables consisted of:
                                                  AS OF JUNE 30,
                                       --------------------------------------
                                                 2002                   2002
                                                  RMB                    US$
  Accrued operating expenses
      Wages and bonus                         845,610                102,126
      Rental deposit received                  55,789                  6,738
      Legal and professional fees           1,126,518                136,053
  Others                                      229,687                 27,740
                                        ----------------       ----------------

                                            2,257,604                272,657
                                        ================       ================




                                      F-15
<PAGE>
6.   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 tax at a
     rate of 35%. 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 and IFACL) and associated company (SECL) established
     in the PRC are  subject to PRC  enterprise  income  taxes at a rate of 15%.
     IHKL is subject to Hong Kong  profits  tax at a rate of 16%. As of June 30,
     2001 and 2002, all group companies were in a tax loss position.

     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:
<TABLE>
<CAPTION>

                                                                                YEARS ENDED JUNE 30,
                                                                    ---------------------------------------
                                                                               2001                   2002
                                                                                  %                      %

                                                                             <C>                    <C>
        United States federal income tax rate                                    35                      35
        Effect of different tax rates in foreign jurisdictions                   (8)                    (10)
        Valuation allowance for deferred tax assets                             (27)                    (25)
                                                                    ----------------       ----------------

                                                                                  -                       -
                                                                    ================       ================

         Deferred taxation consisted of:

                                                                                   AS OF JUNE 30,
                                                                    ---------------------------------------
                                                                               2002                   2002
                                                                                RMB                    US$
        Deferred tax assets, gross
            Net operating loss carry forwards                             3,084,156                372,483
        Valuation allowance                                              (3,084,156)              (372,483)
                                                                    ----------------       ----------------

        Deferred taxes, net                                                       -                      -
                                                                    ================       ================
</TABLE>

     The change in  valuation  allowance  from June 30, 2001 to June 30, 2002 is
     primarily  related to the tax effects of the increase in the net  operating
     loss in the current year. The Company has net operating loss carry forwards
     totaling approximately  Rmb20,452,000,  as of June 30, 2002,  respectively,
     which  begin  to  expire  in the year  2004,  primarily  relating  to their
     operations in the PRC.

     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 it is more likely than not
     that the benefit will not be realized.



                                      F-16
<PAGE>
7.   SHARE CAPITAL

     During the period from January 2, 1998 (the  earliest date covered by these
     financial statements) to October 22, 1998, the Company had authorized share
     capital of 100,000,000 shares of common stock, par value US$0.001 each, and
     5,000,000   shares  of  preferred  stock,  par  value  US$0.001  each;  and
     outstanding  share capital of 1,742,853  shares of common stock,  par value
     US$0.001 each. On October 23, 1998, the Company  effected a  redenomination
     of par value,  resulting in 50,000,000  shares of common  stock,  par value
     US$0.002 each, authorized,  and 1,742,853 shares of common stock, par value
     US$0.002  each,  outstanding.  On the same  day,  the  Company  effected  a
     two-for-one stock split,  resulting in 100,000,000  shares of common stock,
     par value US$0.001 each, authorized,  and 3,485,706 shares of common stock,
     par value  US$0.001  each,  outstanding.  Also,  on October 23,  1998,  the
     Company issued 4,970,000  shares of common stock (after the  redenomination
     of par value and stock split described above),  par value US$0.001 each, in
     connection  with its  acquisition of IL as described in Note 2. The effects
     of the  redenomination of par value and the stock split have been reflected
     retroactively   in  the  financial   statements  and  all  loss  per  share
     computations.

     On December 16, 1998,  the Company sold  1,298,706  shares of common stock,
     par value  US$0.001  each,  for cash at US$0.77 per share through a private
     placement.   The  net  proceeds  amounted  to  approximately   Rmb6,918,000
     (equivalent   of   US$836,000),   of   which   approximately   Rmb6,272,000
     (US$758,000)  was  received  during  the  year  ended  June  30,  1999  and
     approximately  Rmb646,000 (equivalent of US$78,000) was received during the
     year ended June 30, 2000.

     On June 8, 1999,  the  Company  reserved to issue  69,700  shares of common
     stock, par value US$0.001 each, valued at Rmb2,400,000,  in connection with
     its acquisition of system  integration  contracts and a customer list. Such
     shares were issued in December 1999.

     In September  1999, the Company  reserved to issue 800,000 shares of common
     stock, par value US$0.001 each, for cash at US$1.25 per share, amounting to
     approximately   Rmb8,280,000   (equivalent  of   US$1,000,000),   of  which
     approximately  Rmb621,000 was yet to be received as of June 30, 2000. These
     shares were issued in January 2001. In 2001,  Rmb331,200 of issuance  costs
     initially   recorded  as   subscription   receivable   were   appropriately
     reclassified to additional paid-in capital.

     On January 26, 2000, the Company issued 75,712 shares of common stock,  par
     value US$0.001 each, valued at approximately  Rmb3,126,000,  as part of the
     consideration for the acquisition of a phone payment system of the Group.

     On January 26, 2000, the Company issued 41,110 shares of common stock,  par
     value  US$0.001  each,  valued at  approximately  Rmb1,702,000,  to certain
     employees  as rewards  for their  contribution  to the Group.  The cost for
     these shares has been recorded as part of employee compensation.

     In January and February  2000,  the Company  issued an aggregate of 953,334
     shares of common stock,  par value  US$0.001  each,  for cash at US$3.00 to
     US$3.23 per share. The net proceeds amounted to approximately Rmb23,615,000
     (equivalent of US$2,852,000).




                                      F-17
<PAGE>
7.   SHARE CAPITAL (CONTINUED)

     On March 22, 2000,  the Company  issued 77,200 shares of common stock,  par
     value US$0.001 each valued at  approximately  Rmb2,637,000,  as part of the
     consideration for the acquisition of a building in the PRC.

     In August 2000,  the Company  issued  15,000  shares of common stock to the
     vice president in charge of business  development,  par value US$0.001 each
     in lieu of employee salary, at US$4.37 per share.

     In October 2000, the Company  issued  150,000  shares of common stock,  par
     value US$0.001 each for marketing  services performed by an unrelated third
     party, at US$3.02 per share.

     In February 2001, the Company issued  1,152,000 shares of common stock, par
     value  US$0.001  each,  for cash at US$0.3125  per share.  The net proceeds
     amounted to  approximately  Rmb2,742,000  (equivalent  of  US$331,200).  In
     connection with the issuance,  the Company paid a commission of Rmb 238,464
     to Sanway Consulting  Limited, a company owned by Mr. Yang Shim, a director
     of the Company.

     In May,  2002, the Company issued  20,000,000  shares of common stock,  par
     value  US$0.001  each,  for cash at US$0.02 per share.  The gross  proceeds
     amounted to  Rmb3,312,000  (equivalent to  US$400,000).  In connection with
     this  issuance,  the Company will pay an issuing cost by issuing  2,000,000
     shares  of  common  stock of  Rmb331,200  (equivalent  to  US$40,000)  to a
     placement agent. The subscription proceeds amounting to Rmb788,257 has been
     received and the balance of Rmb2,523,743  was held by the placement  agent.
     The money  will be  released  on demand as and when the board of  directors
     decides to use the money.


8.   STOCK-BASED COMPENSATION

     In November 1999, the Company entered into a two-year  employment  contract
     with the vice president in charge of business development.  Pursuant to the
     contract, the Company granted to the employee stock options to purchase (i)
     250,000  shares  of common  stock of the  Company  at  US$3.50  per  share,
     exercisable  from November 2000 to November  2006,  (ii) 250,000  shares of
     common stock of the Company at US$4.00 per share, exercisable from November
     2001 to November  2006.  In  addition,  the  employee  is also  entitled to
     receive  15,000 shares of common stock of the Company after each six months
     of employment.

     In May 2000, the Company entered into a new one-and-a-half-year  employment
     contract with this  employee to replace the previous  one.  Pursuant to the
     new contract,  the Company granted to the employee  options to purchase (i)
     125,000  shares  of  common  stock of the  Company  at  US$3.00  per  share
     exercisable  from  November  2000 to May 2010 and (ii)  250,000  shares  of
     common stock of the Company at US$4.00 per share  exercisable from November
     2001 to May 2010.  Under the new contract,  the employee is not entitled to
     receive any  additional  shares of common  stock of the Company  during the
     remaining term of the employment contract.

     The board of  directors  resolved to cancel the Share  Option Plan 2000 and
     adopted the new Share Option Plan 2001  effective  on January 19, 2001.  In
     September 2001, the board of directors  resolved to revoke the Share Option
     Plan 2001.  None of option  under the Share Option Plan 2001 issued for the
     year ended June 30, 2002.



                                      F-18
<PAGE>
8.   STOCK-BASED COMPENSATION (CONTINUED)

     Changes in  outstanding  options  under the employee  stock options for the
     years ended June 30, 2001 and 2002 are presented below:
<TABLE>
<CAPTION>

                                                           2001                                    2002
                                             ----------------------------------     -----------------------------------
                                                   OPTIONS      WEIGHTED-AVERAGE           OPTIONS      WEIGHTED-AVERAGE
                                                                EXERCISE PRICE                          EXERCISE PRICE
                                                                           RMB                                     RMB

<S>                                                <C>                   <C>               <C>                   <C>
        Outstanding, beginning of year             375,000               30.39             375,000               30.39
        Granted                                          -                   -            (375,000)              (30.39)
                                             ---------------    ---------------     ---------------     ---------------

        Outstanding, end of year                   375,000               30.39                   -                   -
                                             ===============    ===============     ===============     ===============

        Exercisable, end of year                   125,000               24.84                   -                   -
                                             ===============    ===============     ===============     ===============

        Weight average remaining
            contractual life                      8.3 years                                      -
                                             ===============                        ===============
</TABLE>


     The Company accounts for stock-based compensation using the intrinsic value
     method  prescribed by APB No. 25. Had compensation  expense for the options
     been accounted for based on fair value on the grant date in accordance with
     SFAS No. 123, the Company proforma net loss and loss per common share would
     have been as follows:
<TABLE>
<CAPTION>

                                                                               YEARS ENDED JUNE 30,
                                                             ----------------------------------------------------------
                                                                         2001                 2002                2002
                                                                          RMB                  RMB                 US$

<S>                                                              <C>
        Proforma net loss                                        (41,043,347)                    -                   -
                                                             =================    =================    ================

        Proforma net loss per common share - basic                     (3.45)                    -                   -
                                                             =================    =================    ================
</TABLE>

     The proforma effects of applying SFAS No. 123 may not be  representative of
     actual results had the Company  accounted for stock option awards using the
     fair-value-based  method.  The  weighted-average  fair value of the options
     granted  in the fiscal  year 2000 was  estimated,  using the  Black-Scholes
     option-pricing model, to be US$4.63 to US$4.69. The fair value is estimated
     on the date of grant using the follow assumptions:

        Risk-free interest rate                       5.87%
        Expected dividend yield                         -
        Expected option life (years)                  8 - 9
        Expected stock price volatility              1.3756



                                      F-19
<PAGE>
9.   OPERATING LEASE COMMITMENTS

     The Group has  operating  lease  agreements  for office  premises and staff
     quarters,  which extend through 2003.  Rental  expenses for the years ended
     June 30,  2001 and 2002  were  approximately,  Rmb853,000  and  Rmb385,888,
     respectively.  Future  minimum rental  payments as of June 30, 2002,  under
     agreements classified as operating leases with non-cancelable terms, are as
     follows:

                                                   AS OF JUNE 30,
                                       ---------------------------------------
                                                  2002                   2002
                                                   RMB                    US$
        Fiscal year:
            2003                                28,060                   3,389
                                       ================       ================

         The Group leases out its building under operating leases with lease
         term of 3 years. The future aggregate minimum rental receivable under
         non-cancelable operating leases are as follows:

                                                      AS OF JUNE 30,
                                          --------------------------------------
                                                     2002                 2002
                                                      RMB                   US$
        Fiscal year:
            2003                                    199,950             24,149
            2004                                     33,325              4,025
                                           ----------------   ----------------

        Total                                      233,275              28,174
                                           ===============    ================


10.  RETIREMENT PLAN AND POST-EMPLOYMENT BENEFITS

     The  Group  has no  retirement  plan or  post-employment  benefits  for its
     employees.


                                      F-20
<PAGE>

11.  OTHER RELATED PARTY TRANSACTIONS

     Name and relationship of additional related parties:

        NAME OF RELATED PARTIES             EXISTING RELATIONSHIP WITH THE GROUP

        Chuangshengxin Corporate            Subsidiary of a company with common
          Conventions (Shenzhen) Company    director
          Limited

        Corporate Conventions               Subsidiary of a company with common
          International Limited             director

        Dunwell Computer (H.K.) Limited     During  September of 1999, the Group
          ("DCL")                           entered into an agreement to acquire
                                            70% of DCL, whose  principal
                                            business  activity  is web  hosting,
                                            for Rmb2,996,000. Based on the
                                            agreement, the consideration was to
                                            be the issuance of 51,282 shares of
                                            common stock of the Company, valued
                                            at Rmb 1,498,000 or US$3.53 per
                                            share, and the remainder in cash of
                                            Rmb1,498,000. DCL is a company
                                            substantially owned by Mr. Chan Sai
                                            Tak, brother of Mr. Chan Sai Keung,
                                            a director of the Company and 7%
                                            stockholder of DCL. During 2000, the
                                            Group paid the Rmb1,498,000 and
                                            advanced an additional Rmb321,000 to
                                            DCL. In 2001, the Group advanced an
                                            additional Rmb535,000 to DCL,
                                            bringing the total amount paid and
                                            advanced to Rmb2,354,000. As of
                                            October 22, 2001, the Company had
                                            not issued the 51,282 shares of
                                            common stock, nor had they received
                                            the transfer of shares from the
                                            stockholders of DCL. Due to DCL's
                                            current inability to repay, the
                                            Group has provided a full valuation
                                            allowance amounting to Rmb2,354,000
                                            on this receivable, and accounted
                                            for it as a provision for doubtful
                                            debt in the fiscal year 2001.

                                                      AS OF JUNE 30,
                                                  ----------------------
                                                      2002         2002
                                                       RMB          US$
Due from related company
    Corporate Conventions International Limited      72,345       8,737
                                                  =========   =========

Due to directors
    Mr. Jun Liang .............................     669,780      80,891
    Mr. Andy Lin ..............................   1,188,150     143,497
                                                  ---------   ---------

                                                  1,857,930     224,388
                                                  =========   =========

     The outstanding balances with related company and directors were unsecured,
     non-interest bearing and without pre-determined repayment terms.



                                      F-21
<PAGE>
11.      OTHER RELATED PARTY TRANSACTIONS (CONTINUED)
         Summary of related party transactions is as follows:

                                                 YEARS ENDED JUNE 30,
                                                 --------------------
                                                   2002     2002
                                                    RMB      US$

Office rentals and utilities fees charged to
Chuangshengxin

Corporate Conventions (Shenzhen) Company Limited   3,843     464
                                                   =====   =====


12.  SEGMENT INFORMATION

     The Group adopted SFAS No. 131 "Disclosures About Segments of an Enterprise
     and Related Information",  in respect of its operating segments.  The Group
     reportable   segments  are  E-Commerce   Solution  section,   System  Sales
     Integration  section,  Phone Payment System  section and Web  Advertisement
     section.  They  are  managed  separately  because  each  business  requires
     different  technology  and  marketing   strategies.   The  Group  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
     primarily include cash and cash equivalents, amount due from custodian, and
     deposit  and other  receivables.  There were no  significant  inter-segment
     transactions during any of the reported periods.  In determining  operating
     income/loss by reportable segment, general corporate expenses, other income
     and expense items of non-operating nature are not considered, as such items
     are not allocated to the Company's  segments.  Segment  information for the
     years ended June 30, 2001 and 2002 are as follows:

         (a)    Net revenues

                                      YEARS ENDED JUNE 30,
                               -----------------------------------
                                  2001        2002         2002
                                   RMB         RMB          US$

E-commerce solutions .......   3,884,118   3,138,809     379,083
System sales and integration   2,862,136     927,384     112,003
Phone payment system .......     629,915        --          --
Web advertisement ..........     772,833     836,055     100,973
                               ---------   ---------   ---------

                               8,149,002   4,902,248     592,059
                               =========   =========   =========

The PRC ....................   8,062,895   4,773,249     576,479
Hong Kong ..................      86,107     128,999      15,580
                               ---------   ---------   ---------

                               8,149,002   4,902,248     592,059
                               =========   =========   =========



                                      F-22
<PAGE>

12.      SEGMENT INFORMATION (CONTINUED)
         (b)    Net loss:

                                               YEARS ENDED JUNE 30,
                                    -------------------------------------------
                                        2001           2002            2002
                                         RMB            RMB             US$

E-commerce solutions ...........   (16,823,741)    (2,558,483)      (308,996)
System sales and integration ...    (1,759,592)      (273,252)       (33,001)
Phone payment system ...........    (5,959,517)      (557,870)       (67,376)
Web advertisement ..............       (68,327)        36,897          4,456
                                   -----------    -----------    -----------

                                   (24,611,177)    (3,352,708)      (404,917)

Reconciliation:
Net loss for reportable segments   (24,611,177)    (3,352,708)      (404,917)
Unallocated corporate expenses .   (10,199,800)    (3,601,056)      (434,910)
                                   -----------    -----------    -----------

                                   (34,810,977)    (6,953,764)      (839,827)
                                   ===========    ===========    ===========

         (c)    Assets:

                                               AS OF JUNE 30,
                                         -------------------------
                                            2002           2002
                                             RMB            US$

E-commerce solutions ...............    36,958,434      4,463,579
System sales and integration .......       681,784         82,341
Phone payment system ...............     2,056,255        248,340
Web advertisement ..................       907,738        109,630
                                       -----------    -----------

                                        40,604,211      4,903,890
                                       ===========    ===========

Reconciliation:
Total assets for reportable segments    40,604,211      4,903,890
Other corporate assets .............     3,547,313        428,419
Elimination of intra group balances    (35,523,730)    (4,290,305)
                                       -----------    -----------

                                         8,627,794      1,042,004
                                       ===========    ===========

     Substantially  all of the  Group's  identifiable  assets are located in the
     PRC.



                                      F-23
<PAGE>
12.      SEGMENT INFORMATION (CONTINUED)
         (d)    Other items:

                                            YEARS ENDED JUNE 30,
                                   ----------------------------------
                                      2001         2002        2002
                                       RMB          RMB         US$
               Depreciation:
    E-commerce solutions .......   1,283,326     723,318      87,356
    System sales and integration      62,057      15,812       1,910
    Phone payment system .......      95,316      37,326       4,508
    Web advertisement ..........       5,092      12,930       1,562
    Unallocated corporate assets      72,207      75,951       9,173
                                   ---------   ---------   ---------

                                   1,517,998     865,337     104,509
                                   =========   =========   =========

Expenditures for fixed assets:
    E-commerce solutions .......   1,776,976      16,500       1,993
    System sales and integration         900        --          --
    Phone payment system .......     148,209        --          --
    Unallocated corporate assets      26,857     195,402      23,599
                                   ---------   ---------   ---------

                                   1,952,942     211,902      25,592
                                   =========   =========   =========

     (e)  Major customers

     In the year ended June 30, 2001 and 2002, no single customer  accounted for
     more than 10% of total revenue.


13.  OPERATING RISK

     (a)  Country risk

     The Group's operations are conducted in the PRC and Hong Kong. Accordingly,
     the Group's business,  financial condition and results of operations may be
     influenced by the political, economic and legal environments in the PRC and
     Hong Kong, and by the general state of the PRC and Hong Kong economies.

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



                                      F-24
<PAGE>
13.  OPERATING RISK (CONTINUED)

     (b)  Industry risk

     The Company operates in business  segments which are characterized by rapid
     technological  advances,  changes in  customer  requirements  and  evolving
     regulatory requirements and industry standards.  Any failure by the Company
     to anticipate  or to respond  adequately  to  technological  changes in its
     industry  segments,   changes  in  customer   requirements  or  changes  in
     regulatory  requirements  or  industry  standards,  could  have a  material
     adverse effect on the Company's business and operating results.

     (c)  Concentration of credit

     As of June 30, 2002, five largest accounts receivable  accounted for 95% of
     the total accounts receivable.

     The Group performs ongoing credit  evaluation of each customer's  financial
     condition.  It maintains  reserves  for  potential  credit  losses and such
     losses in the aggregate have not exceeded management's projections.


                                      F-25
<PAGE>