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, 2000

[ ]  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)

                43 Floor, 3005 Renmin Rd.(South), Shenfang Plaza
                             Shenzhen, China 518005
               --------------------------------------------------
               (Address of principal executive offices)(Zip code)

Issuer's telephone number, including area code:  86 755 220 1941

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,  2000  were
$1,568,636

     The number of shares of the registrant's  common stock, $.001 par value per
share, outstanding as of September 1, 2000 was 10,971,268.  The aggregate market
value of the voting and non-voting  common equity held by  non-affiliates of the
registrant  on  September  1,  2000,  based on the last  sales  price on the OTC
Bulletin Board as of such date, was approximately $10,350,000.

                       DOCUMENTS INCORPORATED BY REFERENCE

None

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

                                TABLE OF CONTENTS

                                                                           Page
                                                                          ------

PART I

         ITEM 1.      DESCRIPTION OF BUSINESS                                 1
         ITEM 2.      DESCRIPTION OF PROPERTIES                              10
         ITEM 3.      LEGAL PROCEEDINGS                                      10
         ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF
                      SECURITY HOLDERS                                       10

PART II

         ITEM 5.      MARKET FOR COMMON EQUITY AND
                      RELATED STOCKHOLDER MATTERS                            11
         ITEM 6.      MANAGEMENT'S DISCUSSION AND ANALYSIS                   12
         ITEM 7.      FINANCIAL STATEMENTS                                   20
         ITEM 8.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                      ON ACCOUNTING AND FINANCIAL DISCLOSURE                 20
PART III

         ITEM 9.      DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
                      CONTROL PERSONS; COMPLIANCE WITH
                      SECTION 16(a) OF THE EXCHANGE ACT                      21
         ITEM 10.     EXECUTIVE COMPENSATION                                 23
         ITEM 11.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                      OWNERS AND MANAGEMENT                                  24
         ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS         25
         ITEM 13.     EXHIBITS AND REPORTS OF FORM 8-K                       25

SIGNATURES

<PAGE>


                                     PART I

     This 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. The Company's actual results could differ  materially from
those set forth in the  forward-looking  statements.  Certain factors that might
cause such a difference are discussed in the section  entitled  "Certain Factors
Affecting Future Operating Results" and elsewhere in this report.

     The Company  operates  through its various  subsidiaries,  all of which are
located outside of the United States.  Unless otherwise indicated or the context
otherwise   requires,   the  term  Company  refers   collectively  to  Intermost
Corporation and its subsidiaries.  All references to China or the PRC are to the
People's Republic of China. The Company's financial  statements are presented in
United States Dollars ("US$").  The Company's sales are principally in Hong Kong
Dollars ("HK$") and Renminbi ("Rmb").  At June 30, 2000, the prevailing exchange
rate of US$ into HK$ and Rmb was US$1.00 = HK$7.738 and US$1.00 = Rmb 8.28.

ITEM 1.  BUSINESS

General

     Intermost  Corporation (the  "Company"),  a Utah  corporation,  through its
subsidiaries,  is an  enterprise  e-commerce  solutions  provider  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  in  which  products  and  services  are  offered  principally  to
consumers.  It is our objective to become a top provider of e-commerce solutions
in our selected  market  segment,  namely  Chinese  enterprises.  Here we define
'enterprise'  as  those  firms  or  organizations   operating   outside  of  the
telecommunications,  government, and financial services (insurance,  securities,
banking)  industries.  Our chosen products and services  include the development
and delivery of:


*    E-commerce   solutions  that  address  the  need  for  enterprise  resource
     management,   including  web-based  supply  chain  management  ("SCM")  and
     customer relations management ("CRM") systems.


*    E-commerce  solutions that center on web design,  and target smaller firms.
     In additional to web design and hosting,  products  include software system
     integration and web-based security products,  including firewalls and virus
     protection.


*    Electronic  payment  system  services.  Via our Jiayin joint  venture,  the
     Company   can   deliver  a  variety   of  options   for   making   payments
     electronically, including telephone, wireless application protocol ("WAP"),
     and online.

     Our operations are located entirely in China and Hong Kong.

History and Development of the Company

     The Company 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 during 1987, to Lord & Lazarus,  Inc. during 1988 and to
Utility Communication International, Inc. during 1996.

     From  inception  through  October of 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 and  outstanding
shares of Intermost  Limited  ("IML"),  a British  Virgin  Islands  Company,  in
exchange (the  "Exchange") for the issuance of 4,970,000 shares of the Company's
common  stock,  representing  58.7% of the  outstanding  shares  of the  Company
following  the  Exchange.  IML was  formed  in  January  of 1998  to  develop  a
Chinese-language  internet business portal and provide state-of-the-art internet
services  with a view to becoming a leading  provider of such services in China.
Following the Exchange,  the Company changed its name to Intermost  Corporation,
terminated  all of its prior  activities,  adopted the business  plan of IML and
appointed the officers and directors of IML to replace previous management.  The
Company was a publicly  traded  "shell  company"  prior to acquiring its Chinese
operations  and  continues to be  organized  under the laws of the State of Utah
following the acquisition.
<PAGE>

     Our current  principal  offices  are located at 43 Floor,  3005 Renmin Road
South, Shenfang Plaza, Shenzhen, China 518005.

Developments During Fiscal Year 2000

-- Refinement of Business Strategy

     In June 2000,  the Company  refined its business  strategy based on company
strengths and market opportunities.

     Recent   statistical   evidence   obtained  from  China  Internet   Network
Information Center ("CNNIC")  indicates that Chinese firms that become connected
to the Internet are expected to experience  growth rates exceeding 100% annually
for the next  three  years,  and over 50% in years  2004 and 2005.  The  Chinese
government  has also  indicated its intention to support growth of the industry.
As such,  Intermost  management  believes the Internet industry in Greater China
will continue to grow in both size and importance.  The Company's strategy is to
capitalize on the delivery of enterprise  e-commerce solutions in Greater China.
Management will analyze technologies  selected for development or implementation
to ensure that they complement our existing technology  knowledge base such that
each  successive  technology  builds core knowledge and expertise.  Our business
strategy  positions  us to  exploit  and  profit  from  industry  growth at this
fundamental level. Stated another way, the Intermost position does not depend on
the success of a  particular  industry or  technology.  Instead,  success of the
strategy  depends in large part on the growth of the  overall  Chinese  Internet
market.

     Our ability to successfully  develop and profitably  implement our strategy
depends on several  factors,  some of which are now in place,  and some of which
have yet to be realized. These factors include:

*    Maintaining  our chosen  strategy and product  focus.  During  fiscal 1999,
     Intermost  learned,  re-evaluated,  and grew within an environment  unknown
     previously to the world, that being the mainland Chinese Internet industry.
     We have now  evolved  into a market  niche that favors our  strengths,  and
     leverages the value of our resources and current  market  position.  As the
     Internet industry in China continues to experience growing pains, Intermost
     will maintain focus on its chosen niche,  which we believe will also evolve
     and  grow.  In  this  way,  Intermost  can  build  long  term  core  value,
     credibility, reputation and niche expertise.

*    Maintaining  a talented  executive  staff.  We now have in place a talented
     core  executive  staff that covers areas of strategy,  general  management,
     technology,  finance, business development and accounting. We are currently
     seeking  to  round  out the  executive  staff by  securing  a  director  of
     marketing.  In the interim,  professional  marketing  duties are managed by
     qualified members of the executive staff.

*    Maintaining a talented sales and technical  staff.  Critical to our goal of
     becoming a large industry player is the ability to locate, hire, and retain
     experienced and talented sales and technical  staff. We believe we offer an
     attractive  compensation  package,  and strive to  maintain  and nurture an
     attractive work environment.

--  Yiwen Book Store

     Our initial efforts in establishing  e-commerce joint ventures  produced an
agreement  in April 1999 with Yiwen Book Import and Export  Company to establish
an  online  bookstore  of  Chinese  titles.  Yiwen  is  a  state-owned  business
affiliated  with New China Book Stores with over  120,000  titles in  inventory.
Preliminary feedback indicated potential in the development of such a system. In
June,  2000, in connection  with the  refinement  of our business  strategy,  we
determined  that  continued  efforts  and  investments  in the online  bookstore
venture did not fit within our strategy  going  forward.  Accordingly,  in June,
2000, we discontinued our online bookstore venture.


                                       2
<PAGE>

--  The ChinaE.com Portal

     At the  inception  of this  year,  many in both  Asian and other  developed
Internet markets shared the belief that  significant  revenue would be generated
from banner advertisements and subscription sales. During the course of the past
twelve  months,  Internet  markets  worldwide  have, in general,  been unable to
substantiate  such  beliefs.   The  flagship  B2B  portal  owned  by  Intermost,
ChinaE.com,  has yielded  significant  value for the Company,  but the value has
come in the form of sales  support  and  marketing  as opposed to direct  sales.
Although some revenue resulted directly from the portal in the form of banner ad
revenue,  our selected  strategy no longer  includes a focus on such an Internet
niche,  and no longer  depends on  exacting  revenue  directly  from the portal.
Instead,  we will treat the portal as a marketing device by building brand name,
demonstrating design and feature possibilities, generating sales leads and sales
inquiries for web design and software systems integration.

Products and Services

     Intermost has selected products and services that are complementary to each
other.  The Company fully  utilizes its  technological  resources to support the
products  it  develops.  This  allows  the  Company to limit its  technical  and
administrative  costs while  allowing  the  Company to limit its  administrative
staff.  Of greater  importance is the positive  effect this strategy can have on
our core  competency,  knowledge  base, and revenue.  As clients and other firms
mature in their  need for more  sophisticated  levels of  enterprise  e-commerce
solutions,  it is our  intention to provide a clear set of "next step"  software
application  choices,  designed to  facilitate  client  growth.  These steps are
designed to address the following  series of six stages in enterprise  web-based
software system needs:


*    Marketing tools:  (Stage one)  Implementation of solutions to meet basic IT
     needs such as web page presence, internet and intranet functions.

*    Communications:  (Stage two) Implementation of solutions to allow fluid and
     open  communications  with  customers,  distributors,  and suppliers.  This
     satisfies  needs for email,  web-based  information  exchange,  and virtual
     private networks ("VNP"). Technology needs that are satisfied at this stage
     include small enterprise resource planning ("ERP") applications, GroupWare,
     enterprise data base functions, and security needs.

*    Online transactions:  (Stage three)  Implementation of solutions to satisfy
     web-access  e-commerce,   online  payments  (for  both  cash  and  material
     transfer),  online  stores,  and direct  sales.  Technology  needs that are
     satisfied here include  full-blown ERP,  e-commerce  platforms,  enterprise
     certificates of authority ("CA"), and security at the encryption level.

*    One-to-one customer solutions:  (Stage four) Implementation of solutions to
     address   needs  for   multi-media   and  reverse   auction   features  and
     functionality.

*    Complete web-based  enterprise  operations:  (Stage five) Implementation of
     solutions to deliver  just-in-time  features,  complete online  interaction
     among buyers and sellers, and a fully developed enterprise operation.

*    Community  vertical  network:  (Stage six)  Implementation  of solutions to
     allow each allied  partner to benefit  from the value chain  created by the
     existence of the community.  Here, the community  shares a common  purpose,
     trade, or industry.

     The Chinese market for such products  presently  resides almost entirely in
stages one and two, with a lesser portion of the market entering stage three. As
the e-commerce  market develops and matures in China, we believe we can continue
to expand our  presence,  and form  strategic  relationships  in order to better
capitalize on opportunities in the delivery of enterprise  e-commerce solutions.
Our  intention  is to  market  and  sell to the  largest  active  stages,  while
directing research and development efforts towards those stages that have yet to
emerge.  Our  strategy  for creating and  maintaining  a  competitive  advantage
includes the allocation of resources toward research and development,  such that
the Company develops, to a significant degree, its own technology and products.


                                       3
<PAGE>

     Management  believes Intermost can generate additional revenue by acting as
a subcontractor in the design,  deployment, and maintenance of these systems for
third parties  located in  technologically  developed  markets outside of China.
Such third parties include network and systems integrators.  As a subcontractor,
the Company can provide the entire  solution from its own  resources:  technical
and managerial  staff and software.  On the occasion that an  implementation  is
complex   enough  to  warrant  or  require  the   acquisition  of  certain  core
technologies,  the Company will seek a strategic  relationship with a well-known
provider of the required  technology  including but not limited to Oracle,  IBM,
Ariba, and NEU Alpine.

--  Electronic Payment System

     A  feature  often  necessary  to the  success  of  electronic  commerce  is
electronic payment  capability.  Intermost  addresses this critical need via its
joint venture subsidiary, Jiayin. Jiayin is a technology developer,  maintainer,
and supplier of an electronic  banking payment system. The Company has developed
Shenzhen's first electronic payment systems,  one that includes WAP, online, and
telephone  transaction  capability.  The  Company  has an  exclusive  five  year
contract with the Shenzhen Electronic Financial Settlement Center (an arm of the
Central  Bank of China that  coordinates  the  actions  of all member  banks) to
implement  and further  develop the system in  Shenzhen.  At the moment,  Jiayin
faces no competitors in Shenzhen for members of Bank Union.

--  Web Design

     E-commerce  solutions centered on web design target smaller firms.  Support
products  include  software  system  integration,  and  a  broad  collection  of
web-based security products,  including  encryption products,  firewalls,  virus
protection, and secured transmission of email and sensitive documents.

     We provide our clients  with a wide range of  Internet  solutions  that are
tailored to their individual  needs. We provide our clients with Web site design
services in order to create  visually  appealing and easily  navigable Web sites
based on the  strategic  objectives,  targeted  audience  and  marketing  of our
clients.  We also  provide  our  clients  with  complete  web site  hosting  and
maintenance  services utilizing our network facilities and dedicated leased line
connections  supported  by  our  technical  staff.  We  provide  turnkey  access
solutions which are scalable to every customer's size, applications, utilization
rates and growth plans.  While web design and hosting  continues to be a rapidly
growing market segment in China, it is characterized by significant competition.
We believe that our  comprehensive  offering of web design and hosting products,
services and  solutions,  including  advanced  security  products and  services,
allows us to differentiate our offerings from our competitors.

--  System Integration

     We provide our clients with complete system integration consulting services
designed to meet our client's web-related enterprise computing needs. We develop
a complete  needs  assessment  and  requirements  definition  for each  client's
project. We quickly create a model that shows exactly how the finished site will
look and work.  We work closely with each client in  selecting,  installing  and
integrating  software,  testing the system and training  the  client's  staff to
ensure that the system meets the client's needs.

     In order to facilitate our entry into and growth in the systems integration
market, in December 1999, we acquired certain system integration  contracts from
Labtam, and began providing  services on those contracts.  The contracts include
services on network design, installation, integration and maintenance.

     The staff  brought  in via the  Labtam  purchase  serves  as the  Company's
department of systems integration,  originally focusing on hardware integration.
As of the year's end,  the system  integration  group will be shifting its focus
away from hardware integration, and towards software integration,  such that the
group is included in the  Company's  overall  strategy.  The group will begin to
build a  knowledge  base  relating  to the  implementation  of various  software
packages  currently  demanded  by our  target  market.  As of year's  end,  such
technology related to enterprise  resource planning systems,  and other software
technologies directly relating to use of the Internet.

                                       4
<PAGE>

Technology Infrastructure

     Our technology  infrastructure  consists of multiple UNIX, Sun, and Windows
NT servers and backup server systems located in our Shenzhen office. Our servers
are  connected  to  the  primary  government  owned  Internet  Service  Provider
("ISP")in China, ChinaNet, through multiple T3 connections.  Each of our servers
is designed for ease of capacity expansion and replication.

     We also lease  servers  and  equipment  in the United  States and Hong Kong
which mirror our Web site and are used to improve  access to our Web site in the
United  States.  This  mirroring  operation  is provided  by  n-vision  from its
facilities  in  Allentown,   Pennsylvania.   N-vision   provides   multiple  DS3
connections to the Internet and regularly provides mirroring operations.

     Our  technology  infrastructure  is  administered  and  maintained  by  our
in-house  technology  staff with all facilities  and servers being  monitored 24
hours per day, 7 days per week. All facilities and technologies are protected by
security measures and by multiple uninterruptible power supplies.

     Our technology  infrastructure  has been designed,  and is built, to ensure
quality of service,  as  measured  by  performance,  reliability,  security  and
availability,  quality of  information,  as measured by data storage and backup,
scalability, bandwidth administration,  statistical monitoring and analysis, and
operations.

     Operation  of our  technology  infrastructure  in  China  is  substantially
dependent   upon   the   Chinese    telecommunications    infrastructure.    The
telecommunications  infrastructure  in China is not well developed in comparison
to the United  States.  In addition to reliance on the basic  telecommunications
infrastructure  in  China,  our  ability  to  access  the  internet  in China is
dependent upon the "backbone",  or series of interconnecting networks, owned and
operated by the Chinese  government.  This network  connects with  international
gateways to the internet  and,  under Chinese  regulations,  is the only channel
through  which  Chinese  internet  networks  can  connect  to the  international
internet.  (See "Regulation")  While we have experienced no difficulties to date
as a result of our reliance on the Chinese telecommunications infrastructure and
backbone,  there is no assurance that such  infrastructure  and backbone will be
adequate to support  our  operations  as the number of  internet  users in China
grows. If the necessary  infrastructure  standards or protocols or complementary
products,  services or facilities  are not adopted,  developed,  implemented  or
upgraded by the  Chinese  government  to meet the  demands of internet  users in
China, our business could be materially adversely effected.

     A Chinese  firm does not  benefit  simply  because the  Internet  exists in
China. All firms must still create and install their own Intranet  capability in
order to benefit from the Internet.  Currently in Greater China,  the process of
widespread  creation of Intranet systems  continues.  Intermost can benefit from
the expanding prevalence of Chinese Intranet systems in the following regards:

*    Intermost can better  utilize its technical and human  resources so that it
     can more easily  serve a greater  number of clients in a greater  number of
     ways once more firms achieve Intranet capability.

*    As more firms acquire Intranet capability, the demand for more products and
     services designed to enhance and expand Intranet  capability is expected to
     increase. Many such products and services are created, marketed and sold by
     Intermost in anticipation of the business needs for such products.

     The  Chinese  government  currently  imposes  certain  restrictions.  These
include  issues  relating to  pornographic  material and related web site links,
news, and links to politically sensitive issues.  Markets served by Intermost do
not involve any of the above, as Intermost focuses on the needs of businesses.

     Except for regulations  prohibiting certain content, the Chinese government
has not established any web page requirements. See "Regulation."


                                       5
<PAGE>

Strategic Alliances and Acquisitions

     We have entered into selected  strategic  alliances and  acquisitions,  and
expect to be  continually  involved  in  negotiations  to enter  into  strategic
alliances and  acquisitions in the future.  These alliances and acquisitions are
intended to attract new users and service clients,  provide  additional  revenue
streams.

--   E-Commerce  Alliances and  Acquisitions

     - Jiayin Electronic Payment Joint Venture. In June of 1999, we entered into
a joint  venture to develop an Internet  payment  system and  telephone  payment
system to address the  relative  lack of credit  card usage in China.  Under the
terms of the joint venture agreement,  we agreed with Shenzhen Jiayin Investment
Development  Co., Ltd.  ("Shenzhen  Jiayin") to form Shenzhen Jiayin  Electronic
Commerce Technology Co., Ltd. ("Jiayin Joint Venture").  We agreed to contribute
approximately  $423,000 to Jiayin Joint  Venture for a 70% interest in the joint
venture and  Shenzhen  Jiayin  agreed to  contribute  approximately  $181,000 to
Jiayin  Joint  Venture for a 30%  interest in the joint  venture.  Jiayin  Joint
Venture, in turn, agreed to acquire certain  technological  know-how of Shenzhen
Jiayin for approximately  $544,000.  Shenzhen Jiayin was, in turn,  obligated to
utilize approximately $266,000 to purchase stock of Intermost.

     Shenzhen Jiayin is a privately-owned  company formed in China to develop an
electronic payment system for the Bank Union affiliate banks in Shenzhen.  Prior
to forming Jiayin Joint Venture,  Shenzhen Jiayin was working with Bank Union, a
government  agency  under  China's  Central  Banking  System,  in its efforts to
develop an electronic  payment system. The system being created will allow banks
and  e-commerce  companies to bypass the current  limited access to credit cards
with a national debit system that works within government mandates. Jiayin Joint
Venture has an exclusive agreement with Bank Union, a branch of People's Bank of
China (the Central Bank of China),  to provide  electronic  payment  services in
Shenzhen.

     The  joint  venture  was  officially  formed  and  registered  and  initial
development and testing of the Internet  Electronic  payment system was complete
and the system was capable of accepting  debit card payments on Chinese banks in
December 1999.

     In March 2000, Jiayin  restructured its equity  structure.  Pursuant to the
revised equity structure,  the Company  contributed an additional  US$245,169 to
Jiayin,  Shenzhen Jiayin Investment Development Co., Ltd. transferred 98% of its
existing interest in Jiayin to ZLX Computer Technology Co., an entity controlled
by the principal  shareholders of Shenzhen Jiayin  Investment  Development  Co.,
Ltd., and Yinlian (Bank Union) Computer Technology Co. acquired shares of Jiayin
and the  remaining  2% interest  in Jiayin  previously  held by Shenzhen  Jiayin
Investment  Development  Co.,  Ltd.,  for  US$3,623.  Yinlian  (Bank Union) also
contributed an additional  US$358,696 of capital into Jiayin. As a result of the
restructuring,  the name of Jiayin was changed to Shenzhen  Jiayin Yinlian (Bank
Union)  E-Commerce  Co. Ltd.  and  ownership of Jiayin was held by the Company -
55.3%, Yinlian (Bank Union) - 30% and ZLX Computer Technology - 14.7%.

     Other than our initial  contributions to capital, we have no commitments or
obligations to provide additional funding to Jiayin Joint Venture.  However,  if
Jiayin Joint Venture  undertakes future  development with respect to its payment
systems to maintain the competitiveness of its technology or to meet the demands
of its customers, for which the joint venture lacks adequate financial resources
to carry out,  we may be  required  to provide  additional  funding to the joint
venture.  Given the fact that the telephone  payment system is fully  developed,
while the online payment system has passed the testing and development stage, we
anticipate  that the capital  contribution to the joint venture will be adequate
to fund future development activities. We define "future development activities"
as the creation of payment system  technologies,  and the costs  associated with
those  creations.  Should the joint venture require  additional  capital to fund
development  in the future,  we will be required to provide such funding or risk
the possibility of our payment systems becoming  obsolete or failing to meet the
needs of our  customers.  If we are  unwilling or unable to provide  funding for
future  development  activities of the joint  venture,  our business,  financial
position and future operating results may be materially adversely effected.

     Online payment systems have not yet officially been approved by the Chinese
Central Banking Authority.  Further, as a foreign-owned  entity, we must partner
with one or more Chinese  banks or financial  institutions.  We will continue to
market our telephone payment system.

                                       6
<PAGE>

     The Central Banking Authority  operates similar to most other  governmental
bodies in that policy follows business development. Chinese governmental banking
policy  comes  from the  Central  Banking  Authority  office in  Beijing.  As of
September  2000,  Central  Banking  Authority-Beijing  has yet to set a  policy,
preferring  to  take a  wait-and-see  approach.  In  the  opinion  of  Intermost
management,  China  will  eventually  see full  governmental  support  of online
payments  systems,  since the  Chinese  government  has been quite  vocal in its
public  support  of  the  Internet.  This  open  support,  in  combination  with
Intermost's  current   contractual   alliance  with  a  key  department  of  the
government,  builds  confidence  in our view that online  payment  systems  will
receive approval. The speed at which the Chinese government will move to approve
such  systems  depends  on the  speed of the  growth  of the  Internet  commerce
industry  in China.  Based on similar  circumstances  in the  telecommunications
industry, this process can take between 6 and 18 months.

     Even if  government  approval  of online  payment  systems is  granted  and
Chinese partners are secured,  our ability to successfully  offer these services
will be subject to the satisfactory  performance of our Chinese partners and our
ability  to  maintain  satisfactory  technology.   Maintaining  state-of-the-art
technology may require significant financial investments which may be beyond our
resources  in the future.

     -- SinoE.com.  In June 2000, the Company formed Shenzhen Sino-E  E-commerce
Company Limited ("Sino-E"),  a joint-venture company with Midea Group to develop
an  exchange  platform  system for  procurement  among  Chinese  home  appliance
manufacturers.  Midea Group is a leading home appliance  manufacturer  in China,
and is publicly traded on China's Shenzhen Stock Exchange. Intermost contributed
$724,637 (RMB6,000,00) to hold 40% of Sino-E, while Midea contributed $1,086,956
(RMB9,000,000)  to hold 60% of  Sino-E.  Intermost's  interest  in Sino-E may be
further  transferred to a third party when appropriate.  In August and September
2000,  NEU-Alpine  Software  Corporation,  one of the largest publicly traded IT
companies in China,  contributed $120,772 (RMB1,000,000) to Sino-E. Intermost is
now engaged in developing Sino-E's exchange platform.

--  Internet and Intranet Solutions Alliances and Acquisitions

     Our  initial  efforts  in  establishing   strategic  alliances  and  making
acquisitions  to enhance  our  Internet  and  Intranet  solutions  business  and
revenues  has  resulted  in  the  acquisition  of  Labtam  Corporation   systems
integration  contracts.  In June 1999, we entered into an agreement  with Labtam
Corporation Limited to acquire selected system integration contracts,  including
certain  contracts  acquired by Labtam  pursuant to a joint  venture  with Sundy
Computer  Network Ltd. The purchase price for those contracts was  approximately
$145,000  payable by the  issuance  of shares of our  common  stock at an agreed
value equal to the average  market price over the five trading days prior to the
agreement and converted to Renminbi  based on 50% of the exchange rate announced
by the State Foreign Exchange Bureau of China.

     Acquisition of the system  integration  contracts from Labtam was completed
in December 1999.

Marketing

     Our focus on enterprise  e-commerce  solutions  allows us to find marketing
success  on  a  limited  budget.  Unlike  many  business-to-consumer  e-commerce
companies  who face a  requirement  of reaching  mass  audiences  via  expensive
marketing campaigns,  Intermost can target its efforts on its selected niche. At
the year's  beginning,  our marketing efforts centered around our ChinaE.com and
Intermost.com  web sites.  At year's  end, we had shifted our efforts to include
additional  press releases,  participation in technology  conferences,  speaking
seminars  and  tradeshows,  and a program of client  training.  The  delivery of
training to our clients  allows us to better learn of there future product needs
while providing us the opportunity to educate them on possible future e-commerce
software solutions.

     Our  marketing  efforts were  conducted  under the  direction of our senior
management  personnel  during the year.  It is our intention to hire a qualified
director of marketing during the first half of the fiscal year 2001.

Competition

     Our market share and that of our competitors may be materially  effected by
regulatory,  technological  and financial  developments in the future.  With the
pending  admission of China to the World Trade  Organization,  certain trade and
regulatory  barriers which have limited foreign  competition within China may be
removed  resulting  in a  potential  shift in  market  share  to  large  foreign
competitors  which may enter the Internet market in China.  Management  believes
that such a shift,  should it occur,  would involve a phase-in period of between
three and five years.  Likewise,  rapid changes in technology  may allow certain
competitors to offer better service at a lower cost, and access to financing may
allow certain competitors to grow their businesses rapidly through acquisitions,
increased marketing and investments in personnel and advanced technologies.  Any
of these factors could adversely effect our potential market share.

                                       7
<PAGE>

     We have no patented  technology to preclude  competitors  from entering our
markets;  instead as a  professional  service  firm, we rely on the skill of our
personnel and the core  competencies  we build through  learning over time.  Our
services will be compared based upon performance,  price, and reliability.  Some
of our  competitors  offer more  comprehensive  technology  solutions,  and have
longer   operating   histories,   larger   installed   customer  bases,   longer
relationships with clients, and significantly  greater financial,  technical and
public  relations  resources  than we do. There can be no assurance  that we can
successfully compete with existing competitors or with new competitors which may
enter one or more of our markets.

Intellectual Property and Proprietary Rights

     While we do not presently hold any copyrights, service marks or trademarks,
we expect to rely on trademark and copyright  law,  trade secret  protection and
confidentiality  and/or license agreements with employees,  customers,  partners
and others to  protect  intellectual  property  rights.  There is no  assurance,
however,  that such applications will be approved.  We are implementing a policy
requiring all key technical and  managerial  personnel to enter into  employment
agreements and/or  non-disclosure,  non-compete agreements containing provisions
preventing  the  unauthorized  use or disclosure of  intellectual  property.  We
intend to review our intellectual property protection policies with intellectual
property  counsel  on a  periodic  basis in the  future  to  assure  appropriate
protective measures continue to be in place.

     Many  parties  are  actively  developing  homepage,  search and related Web
technologies.  Developers of such  technologies can be expected to take steps to
protect these  technologies,  including seeking patent protection.  There may be
patents  issued or pending  that are held by others  and that cover  significant
parts of our technology,  business methods or services.  Disputes over rights to
these  technologies  may arise in the  future.  We cannot  be  certain  that our
products and services do not or will not infringe upon valid patents, copyrights
or other intellectual  property rights held by third parties.  We may be subject
to legal  proceedings and claims from time to time relating to the  intellectual
property of others in the  ordinary  course of our  business.  We may also incur
substantial  expenses in  defending  against  third-party  infringement  claims,
regardless of the merit of these claims.  Successful infringement claims against
us may  result  in  substantial  monetary  liability  or  may  prevent  us  from
conducting all or a part of our business.

     We also  intend to  continue  to license  technology  from  third  parties,
including  Web-server,  encryption,  exchange platform,  and enterprise resource
management  technology.  The  market  is  evolving  and we may  need to  license
additional  technologies to remain  competitive.  In the event that we determine
that licensing this intellectual property is appropriate,  we may not be able to
obtain a license on reasonable terms or at all. In addition, it is possible that
licensed technologies may not be successfully  integrated into our services. The
inability  to obtain any of these  licenses  could  delay  product  and  service
development  until  alternative  technologies  can be  identified,  licensed and
integrated.

Regulation

     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.

     Investment and operation in China are governed by various rules  regulating
permissible forms of foreign investment. We have obtained government approval to
operate in China,  and do operate,  as a wholly foreign owned enterprise and, as
such, are not required to maintain  Chinese  government or private  ownership in
our company.

     China has enacted other 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  Post  and
Telecommunications  ("MPT") and obtain various  licenses and approvals.  We have
secured the necessary  licenses and  approvals  and access the Internet  through
ChinaNet, an approved channel of the MPT.

                                       8
<PAGE>

     We  intend to work  diligently  to assure  compliance  with all  applicable
regulations  which may impact our business,  including  cooperating with the MPT
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.

     With regard to the  development  and deployment of our  electronic  payment
system,  Chinese law does not presently address online banking  services.  It is
presently anticipated that the government of Shenzhen will adopt laws regulating
online banking. However, there can be no assurance that online banking will ever
be addressed under Chinese law or that, if addressed,  the regulations governing
online banking operations will be conducive to profitable operations.

Employees

     As of June 30, 2000, we employed 136 full-time  employees,  13 of whom were
management executives, 38 of whom were  engineering/technical  staff, 30 of whom
were  administrative  and clerical,  20 of whom were Internet  content  research
writing and editing staff,  and 35 of whom were sales  personnel.  We anticipate
the need to hire additional computer  programmer/systems  specialists to support
our expansion plans.  None of our employees are a member 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.

Subsequent and Pending Events

--  Implementation of the Capability Maturity Model

     In September 2000, the Company began intensive  training and implementation
program  used  worldwide  by most  major  software  development  companies.  The
process, called the Capability Maturity Model (commonly called CMM), is designed
to correct and eliminate such problems as budget overruns,  exceeded  deadlines,
and poor product quality.  The process was developed by the Software Engineering
Institute at Carnegie  Mellon  University.  It is an ongoing  process that seeks
continual improvement in the development of software,  and typically changes the
culture of the  affected  company to one of total  product  quality  and stellar
customer service.  Implemented  correctly, a company can expect vastly shortened
project turn around time,  vastly  reduced  costs to develop  projects,  greatly
improved  customer  satisfaction  and product quality.  Intermost  considers the
decision to  implement  the CMM to be a strategic  one,  and believes use of the
program will provide the company with a firm competitive advantage.

--  Huifeng Web Security

     In May 2000,  the  Company  signed a Letter of  Intent to  purchase  51% of
Huifeng Web Security,  an Internet  security and technology  products  developer
headquartered in Shenzhen.  Intermost will buy 51% of Huifeng for  approximately
$1.33  million  USD,  using a  combination  of 10% cash and 90% equity.  Huifeng
specializes  in the  development  and  sale of  Internet  and  financial  system
security solutions.  Huifeng focuses its sales on financial,  banking,  telecom,
and  government  markets in southern  China.  The company has been in  operation
since August 1999. As of September 2000, due diligence was ongoing.

-- Dunwell Computer

     The Company  signed an  agreement in principal to acquire a 70% interest in
Dunwell Computer (H.K.) Limited, a developer and provider of Internet technology
and e-commerce  solutions.  Pursuant to the terms of the agreement,  the Company
will pay  approximately  $362,000,  50% in cash and 50% in  equity.  At June 30,
2000,  the Company had deposited the cash portion of the purchase  price and had
advanced additional funds to Dunwell.  Closing of the acquisition was pending at
September 2000.

                                       9
<PAGE>

ITEM 2.  PROPERTIES

     Our principal office has been recently moved to the  newly-rented  Shenfang
Plaza, 3005 Renmin South Road,  Shenzhen,  China 518005,  covering 30,000 square
feet of office space.  Our previous  office at 38th floor of Guomao Building was
acquired from an unrelated third party for 77,200 shares of the company's common
stock in November 1999.  The office space had an appraised  value of $463,000 at
the time of the  transfer.  The Guomao  Office is now rented out to an unrelated
third party at market value of $2,000 per month.  We also  currently have office
space in Beijing, Hong Kong and the Southern Chinese city of Guangzhou.

     Management  believes that the Company's  facilities are adequate to support
operations for the foreseeable future.

ITEM 3. LEGAL PROCEEDINGS

     The  Company  is from time to time a party to  lawsuits  incidental  to its
business. We are not aware of any current,  pending, or threatened litigation or
proceedings  that  could  have a  material  adverse  effect  on our  results  of
operations, cash flows or financial condition.

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

     None.

                                       10
<PAGE>
                                     PART II

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

     Our common stock trades on the OTC Bulletin Board under the symbol "IMOT".

     The following  table  presents the range of high and low closing bid prices
for our common stock on the OTC Bulletin Board for each  quarterly  period since
the   commencement  of  trading  in  December  1998.  Such  quotations   reflect
inter-dealer prices without retail mark-up,  mark-down or commission and may not
represent actual transactions.

                                                     High              Low
                                                    ------            ------
Fiscal 1999

Quarter ended September 30, 1998                     N/A                N/A
Quarter ended December 31, 1998                      N/A                N/A
Quarter ended March 31, 1999                         9.50              1.468
Quarter ended June 30, 1999                          9.031             3.562

Fiscal 2000

Quarter ended September 30, 1999                     7.652             3.00
Quarter ended December 31, 1999                      7.875             2.375
Quarter ended March 31, 2000                         6.5               3.75
Quarter ended June 30, 2000                          4.062             1.875

     As of  September 8, 2000,  the last sales price per share of the  Company's
common stock as reported by the OTC Bulletin Board was $1.47.

     As of June 30, 2000, there were  approximately 575 holders of record of the
Company's common stock.

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

                                       11
<PAGE>

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

     The following  discussion and analysis  should be read in conjunction  with
the Company's financial  statements and notes thereto included elsewhere in this
Form  10-KSB.  Except  for the  historical  information  contained  herein,  the
discussion in this Form 10-KSB contains certain forward looking  statements that
involve risks and  uncertainties,  such as  statements  of the Company's  plans,
objectives,  expectations and intentions. The cautionary statements made in this
Form 10-KSB should be read as being applicable to all related forward statements
wherever  they appear in this Form 10-KSB.  The Company's  actual  results could
differ materially from those discussed here.

General

     The following  discussion  should be read in conjunction with the financial
statements appearing elsewhere herein.

     Prior to October of 1998, we were engaged in limited operations relating to
efforts  to  identify  and  acquire,  or  merge  with,  one  or  more  operating
businesses.  In October  1998,  we  acquired  Intermost  Limited and adopted the
business plan of IML. The  acquisition  of IML has been  accounted for using the
purchase  method of accounting  with the  transaction  being  accounted for as a
"reverse   acquisition."  We  do  not  consider  the  operations  prior  to  the
acquisition  of  IML  to  be  material  to  an  understanding  of  our  company.
Accordingly,  this  discussion  relates to the operations of IML for all periods
presented, excluding our former operations prior to the acquisition of IML.

     IML was  formed in  January of 1998 to  establish  a position  as a leading
provider of Internet  technologies and services,  business information services,
value-added  network consulting services and other related products and services
in China.  Revenues are generated  through a combination  of consulting  service
fees,  advertising  fees,  web site  design,  hosting and  maintenance  fees and
information fees. We expect that future revenues will include E-commerce fees.

     Following the Exchange,  we changed our year end to June 30 to conform with
the fiscal year of IML. From inception  (January 1998) to June 30, 1998, we were
involved in limited organizational  activities and had no operating revenues. We
began  revenue  producing  activities in the first quarter of fiscal 1999 (ended
September 30, 1998).

Plan of Operation

-- Refinement of Business Plan

     During fiscal year 2000, we refined our business plan,  narrowing our focus
to target selected areas of the Chinese Internet market.  In connection with the
refinement of our business  plan, we determined to abandon our online book store
venture.  We also determined to shift the focus of our ChinaE.com portal from an
advertising driven revenue source to a marketing tool to promote the sale of our
suite of software and services.

     Under  our  refined  business  plan,  it is our  objective  to become a top
provider of e-commerce solutions in our selected market segment,  namely Chinese
enterprises.  Here we  define  'enterprise'  as  those  firms  or  organizations
operating outside of the telecommunications,  government, and financial services
(insurance,  securities,  banking) industries.  Our chosen products and services
include the development and delivery of:

*    E-commerce   solutions  that  address  the  need  for  enterprise  resource
     management,   including  web-based  supply  chain  management  ("SCM")  and
     customer relations management ("CRM") systems.

*    E-commerce  solutions that center on web design,  and target smaller firms.
     In additional to web design and hosting,  products  include software system
     integration and web-based security products,  including firewalls and virus
     protection.

*    Electronic  payment  system  services.  Via our Jiayin joint  venture,  the
     Company   can   deliver  a  variety   of  options   for   making   payments
     electronically, including telephone, wireless application protocol ("WAP"),
     and online.

                                       12
<PAGE>

-- Goals

     Our  intention  is to become  the single  largest  provider  of  enterprise
e-commerce solutions in Greater China. To achieve this goal, we have established
a series of short (1 - 12 month),  intermediate  (12 - 36 month),  and long term
(36 - 60 month) goals:

     Our short term goals are to continue to  establish  Intermost  as a leading
and respected  provider of  enterprise  e-commerce  solutions in Greater  China;
begin  relationships  with a minimum of five  potential US  strategic  partners,
secure a significant financial commitment from at least one partner; implement a
business development program that secures sales in non-mainland markets, such as
the US, Europe,  and the developed markets of the Pacific Rim; and establish its
presence  and  reputation  in the  markets  of  enterprise  resource  management
systems.

     Our  intermediate  goals  are to  secure a  minimum  of two  additional  US
strategic  partners;   grow  the  revenue  mix  such  that  enterprise  resource
management  systems  represent a combined  minimum of 70% of our  revenues;  and
secure a NASDAQ national market listing in the US.

     Our  long-term  strategy  is to  become a  leading  (as  measured  by total
revenue) enterprise e-commerce solutions provider in Greater China.

--  Cash Requirements

     Our cash  requirements  for the twelve month period beginning June 30, 2000
are  expected to relate  primarily  to the  following:  (1) support for existing
operations including additional staffing,  business  development,  and marketing
expenses; (2) strategic acquisitions and specific large implementation projects,
software and hardware  investment  necessary to the completion of projects;  (3)
software and hardware  expenses  necessary  for the  completion  of projects and
general  business  growth;  (4) continued  funding of the Jiayin Joint  Venture,
should additional funding be required;  and (5) funding for the establishment of
sales and operational offices in other Chinese cities.

     In  the  event  that  we are  able  to  locate  acquisition  candidates  of
complementary  businesses, we may be required to raise additional capital or, in
the  alternative,  may issue stock to pay for such  acquisitions  similar to our
acquisition of certain  systems  integration  contracts from Labtam  Corporation
during fiscal 1999.

     We  plan  to  evaluate  and,  where  appropriate,   acquire   complementary
businesses or assets from time to time in the future.  Future  acquisitions  are
expected to focus on one or more of the following,  (1)  significant  technology
relating to online or telephone payment systems,  (2) addition of highly skilled
technical  personnel  that  may  assist  in  our  development  and  delivery  of
enterprise   e-commerce  solutions  systems,  and  (3)  complementary   regional
business-to-business  Internet  companies in China. Our future acquisition plans
and objectives may vary from time to time in the future in light of developments
in the market.  As of June 30, 2000, we were actively engaged in the acquisition
of two such firms,  Dunwell  Computer and Huifeng Web Security.  There can be no
assurance  that we will be  successful  in  identifying  additional  acquisition
candidates in the future or completing acquisitions where opportunities arise.

     Cash   requirements   to  support   completion  of  the   development   and
implementation of the electronic  payment system by the Jiayin Joint Venture are
expected to relate primarily to our capital contribution under the joint venture
agreement.  The  telephone  portion  of the  electronic  payment  system  is now
operational.

     As part of our intention to grow the Company into a national  presence,  we
will  seek  funding  that will  allow our  operations  to spread  more  quickly.
Establishing  a presence in another city creates needs for office space, a sales
and marketing team, hardware and transportation, overhead, and supply.

                                       13
<PAGE>

Results of Operations

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

                                                        Year Ended June 30,
                                                --------------------------------
                                                    1999              2000
                                                -------------  -----------------
                       Net sales                $    388,080    $     1,568,636
                       Cost of services              185,385          1,392,248
                                                -------------  -----------------
                       Gross profit                  202,695            176,388
                       Selling, general and
                       administrative                436,120          1,942,447
                                                -------------  -----------------
                       Operating loss               (233,425)        (1,766,059)
                       Other income, net               3,969             24,539
                       Share of loss of an
                       associate                           -          (166,718)
                                                -------------  -----------------
                       Loss before minority
                       interest                     (229,456)        (1,908,248)
                       Minority interest                   -            137,839
                                                -------------  -----------------
                       Net income (loss)        $   (229,456)    $   (1,770,399)
                                                =============  =================

Year Ended June 30, 2000 Compared to Year Ended June 30, 1999

     Net  Sales.  Net  sales  for the year  ended  June 30,  2000  increased  to
$1,568,636, or 304.2%, from $388,080 for the year ended June 30, 1999.

     Net sales for the year have been derived principally from systems sales and
integration, web site design and development, web advertisement, web hosting and
telephone  payment  systems,  referred to as  "business  portals and  e-commerce
solutions",  and from software  development and general  internet  solutions and
business  consulting  services,   referred  to  as  "software   development  and
consulting commission income".

                                       14
<PAGE>

     The  following  table  reflects the total net sales and  percentage  of net
sales  represented by business portals and e-commerce  solutions and by software
development  and  consulting  services,  and  percent  change  in each of  those
categories, for the periods indicated:

<TABLE>

                                     Total Net Sales                 Percent of Total Net Sales          Percent Change
                              ---------------------------------    ---------------------------------    from year ended
                                    Year Ended June 30,                  Year Ended June 30,            June 30, 1999 to
                              ---------------------------------    ---------------------------------    year ended June
                                  1999              2000                1999              2000              30, 2000
                              --------------   ----------------    ---------------   ---------------   -----------------
<S>                          <C>               <C>                 <C>               <C>               <C>

Business portals and
e-commerce solutions
- Systems sales and
  integration                     $5,176       $    826,613               1.3%             52.7%              15,870.1%
- Web site design and
   development                   131,629            470,177              33.9%             30.0%                 257.2%
- Web advertisement              132,897             87,777              34.3%              5.6%                (34.0)%
- Web hosting                      5,727             64,378               1.5%              4.1%               1,024.1%
- Telephone payment
   systems                             -                901                 -%              0.1%                   n.m.
                           --------------   ----------------    ---------------   ---------------      -----------------
                                 275,429          1,449,846              71.0%             92.4%                 426.4%
Software development
and consulting
- Software development            58,651            118,790              15.1%              7.6%                 102.5%
- Consulting                      54,000                  -              13.9%              0.0%                   n.m.
                           --------------   ----------------    ---------------   ---------------      -----------------
                                 112,651            118,790              29.0%              7.6%                   5.4%
                           --------------   ----------------    ---------------   ---------------      -----------------
Total                          $ 388,080        $ 1,568,636             100.0%            100.0%                 304.2%
                           ==============   ================    ===============   ===============      =================
</TABLE>


     We began earning revenues in July of 1998 and had an  engineering/technical
staff of 7 persons at  September  30,  1998,  which  staff had  increased  to 38
persons at June 30, 2000.

     Within  our  business  portals  and  e-commerce  solutions  offerings,  the
increase in systems sales and  integration,  web site design and development and
web  hosting  revenues  was  primarily  attributable  to  acquisition  of system
integration contracts from Labtam, improved customer relationship and aggressive
marketing  strategy.  The increase in  telephone  payment  systems  revenues was
attributable  to the  commencement  of those  services by Jiayin  Joint  Venture
during  the  current  period.  The  decrease  in web  advertising  revenues  was
attributable to a strategic determination during the current period to shift the
focus of our  www.ChinaE.com  portal  site from an  advertising  revenue  driven
portal to a marketing tool to support the sale of our services and solutions.

     Within  our  software  development  and  consulting   offerings,   software
development  revenues  increased  as a result  of a  contract  with a  Singapore
company.  The decrease in consulting  commissions was  attributable to the shift
the focus of our service to software development.

                                       15
<PAGE>

     Cost of  Services.  Cost of  services  consist  principally  of salary  for
computer   network   technicians,   costs  of  systems  sales  and  integration,
subcontract fees, depreciation and amortization, and other costs associated with
the same,  including travel,  welfare,  office and related expenses allocable to
the  engineering  and  technician  staff.  Additionally,  other cost of services
includes certain other costs associated with the offering of special promotional
packages,  which  package  included  participation  in a  seminar,  lodging  and
advertisement.

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

                            Total Cost of Services              Percent of Total Net Sales            Percent Change
                      -----------------------------------    ---------------------------------       from year ended
                             Year Ended June 30,                   Year Ended June 30,               June 30, 1999 to
                      -----------------------------------    ---------------------------------       year ended June
                           1999               2000                1999              2000                 30, 2000
                      ---------------   -----------------    ---------------   ---------------     -------------------
<S>                  <C>                 <C>                  <C>               <C>                 <C>

Engineer/
Technician salaries
                      $     77,001         $   210,885              19.8%             13.4%                  173.9%
Subcontract fees            45,000             153,622              11.6%              9.8%                  241.4%
Cost of system
sales and
integration                      0             745,059               0.0%             47.5%                    n.m.
Depreciation                 2,106              25,230               0.5%              1.6%                1,098.0%
Other                       61,278             257,452              15.9%             16.4%                  320.1%
                    ---------------   -----------------    ---------------   ---------------     -------------------
Total                  $   185,385         $ 1,392,248              47.8%             88.8%                  651.0%
                    ===============   =================    ===============   ===============     ===================
</TABLE>

     For the year ended June 30,  2000,  costs of services  increased  651%,  to
$1,392,248,  or 88.8% of net sales, compared to $185,385, or 47.8% of net sales,
for the year ended June 30, 1999.

     The principal components of cost of services during the year ended June 30,
2000 were  engineer/technician  salaries;  subcontract  fees;  cost of hardware;
other costs  associated with support on the  engineering/technician  staff;  and
depreciation of equipment utilized in connection with services.

     The increase in costs of services was principally  attributable to costs of
hardware sales and expenditures to support the increase in net sales,  including
an increase in engineering/technician  headcount from 7 at September 30, 1998 to
38 at June 30,  2000.  The  increase  in costs of services  as a  percentage  of
revenues was primarily  attributable  to the sale of hardware  which has a lower
profit margin than service revenues.

     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) salary for administrative and sales staff, (3) corporate  overhead,  and (4)
amortization of intangibles.

                                       16
<PAGE>


     The  following  table  reflects  the  principal   components  of  SG&A  and
percentage of net sales represented by each component for the periods indicated:

<TABLE>
                                   Total SG&A                       Percent of Total Net Sales         Percent Change
                        -----------------------------------    ---------------------------------      from year ended
                               Year Ended June 30,                   Year Ended June 30,             June 30, 1999 to
                        -----------------------------------    ---------------------------------      year ended June
                             1999               2000               1999               2000               30, 2000
                        ---------------    ----------------    --------------    ---------------    --------------------
<S>                     <C>                 <C>                <C>               <C>                 <C>

Sales and marketing
salaries and
commissions             $     56,390        $    107,859             14.5%               6.9%                   91.3%
Other sales and
marketing expenses            89,455             306,088             23.1%              19.5%                  242.2%
Administrative
salaries                      62,886             199,834             16.2%              12.7%                  217.8%
Amortization of
intangibles                        0             144,928              0.0%               9.2%                    n.m.
Other corporate              227,389           1,183,738             58.6%              75.5%                  420.6%
                      ---------------    ----------------    --------------    ---------------    --------------------
Total                    $   436,120        $  1,942,447            112.4%             123.8%                  345.4%
                      ===============    ================    ==============    ===============    ====================
</TABLE>


     For the year ended June 30, 2000, SG&A increased 353.9%, to $1,942,447,  or
123.8% of net sales,  compared to $436,120, or 112.4% of net sales, for the year
ended June 30, 1999.

     The increase in SG&A has been principally  attributable to a combination of
(1) aggressive  marketing efforts associated with the commencement and growth of
revenue producing operations, including costs associated with sales commissions,
attendance at international trade conferences,  industry journal advertising and
other  related  expenses,  (2) an increase in  administrative  support staff and
corporate overhead to support anticipated growth in revenues, including non-cash
charges  totaling  $136,948  associated  with the  agreement to issue shares and
options to an officer, and (3) amortization of intangibles.

     The  principal  components of SG&A during the year ended June 30, 2000 were
(1)  sales  and  marketing   salaries  and  commissions;   (2)  other  marketing
expenditures;  (3)  administrative  salaries and benefits;  (4)  amortization of
intangibles;  and (5) other corporate expense, which includes occupancy expense,
general office  expenses  travel,  general staff welfare  expense and consulting
fees etc.

     Amortization  expense was recorded  for the  acquisition  of eighty  system
integration  contracts from Labtam Corporation in July 1999 for 69,700 shares of
common stock of the Company.

     The intangible assets are being amortized over a 24 month period for system
integregation contracts representing the life of the contracts.  During the year
ended June 30, 2000, we recorded a charge for  amortization  of the contracts of
$144,928.

                                       17
<PAGE>


     Other Income. Other income consists principally of interest income and gain
from the  reduction in our interest in the Jiayin  Joint  Venture.  For the year
ended June 30, 2000 other  income  totaled  $24,539  compared to $3,326 of other
income  for the year ended  June 30,  1999.  The  increase  in other  income was
attributable to increased  balances of cash held in interest bearing accounts of
$1,637,317.

     Share of Loss of  Associate.  Share of loss of an associate of $166,718 was
reported  during  the year ended June 30,  2000.  Share of loss of an  associate
represents our proportionate interest in the loss of Shenzhen SinoE-commerce Co.
Ltd., an equity joint venture  formed during the year ended June 2000 to provide
business portals and e-commerce solutions.

     Minority  Interest.  Minority  interest of $137,839 was reported during the
year ended June 30, 2000.  No minority  interest  was  reported  during the year
ended June 30, 1999.  Minority interest  reflects the proportionate  interest in
the earnings (loss) of Jiayin Joint Venture not attributable to Intermost.

Liquidity and Capital Resources

     At June 30, 2000 we had cash and cash equivalents of $1,637,317 and working
capital of $2,087,982 as compared to $528,612 of cash and cash  equivalents  and
$476,912 of working capital at June 30, 1999.

     Our  primary  sources  of  financing  has been cash from the sale of common
stock and, to a lesser degree, cash provided by operating activities and various
loans from shareholders and directors.

     Operations  used  $1,572,810 of cash during the year ended June 30, 2000 as
compared to $167,786 of cash during the year ended June 30, 1999.  Funds used in
operations primarily relate to the losses incurred during the period,  increases
in trade and other  receivables  and increases in other current and  non-current
assets,  all  relating  to the  start-up  and growth of  operations,  which were
partially  offset  by an  increase  in  trade  payables,  non-cash  compensation
charges,   amortization  of  intangibles  and  impairment  charges  relating  to
intangibles and losses from non-consolidated affiliated companies.

     Investing  activities used  $1,681,437  during the year ended June 30, 2000
and  $140,087  during  the year  ended June 30,  1999.  Funds used in  investing
activities  consist of  purchases of plant and  equipment to support  operations
($930,144) and investments in SinoE.com ($726,959).

     Financing activities provided $4,367,619 of cash during the year ended June
30, 2000 and $835,549  during the year ended June 30, 1999. The cash provided by
financing  activities  was  attributable  to the  receipt of  $3,821,269  of net
proceeds  from the sale of common  stock and the  receipt of $551,932 of capital
contributions  by joint  venture  partners  during  the  current  period and the
receipt of proceeds from the sale of common stock during the prior year.

     We had no long term debt at June 30, 2000 or June 30, 1999.

     In January 2000, we signed a Letter of Intent to purchase  Dunwell Computer
(Hong Kong) Ltd.  Dunwell is a Hong Kong licensed  Internet Service Provider and
e-commerce solutions provider. Pursuant to the terms of the Letter of Intent, we
will  pay  HK$2.8  million,  approximately  US$361,757  for 70% of the  stock of
Dunwell.  The purchase  price is payable 50% in cash and 50% in stock at US$3.50
per share. As of June 30, 2000, the purchase of Dunwell had not closed.  At that
date we had  advanced  funds to Dunwell  and  placed a deposit  in an  aggregate
amount of US$219,695.

     In May,  2000,  we signed a Letter of Intent to acquire  51% of Huifeng Web
Security,  an Internet security and technology products  developer,  for US$1.33
million  payable 10% in cash and 90% in stock. At June 30, 2000, the purchase of
Huifeng had not been completed.

                                       18
<PAGE>
     During the year ended June 30, 2000, we agreed to acquire from an unrelated
third party the premises in which our executive  offices are located.  Under the
terms of the  agreement,  we issued  77,200 shares of common stock as payment in
full for the  property  rights  with  respect to Rooms 3805 - 3809 of the Guamao
Building in Shenzhen, China.

     Depending upon the rate of growth and the growth initiatives undertaken, we
may seek additional capital in the future to support expansion of operations and
acquisitions.

Certain Factors Affecting Future Operating Results

     Our operating  results have been,  and will  continue to be,  affected by a
wide  variety of factors that could have a material  adverse  effect on revenues
and profitability during any particular period,  including the level and rate of
acceptance of our products and services by the Chinese people,  continued growth
in use of the Internet in China, entry of new competition (including established
companies  from  outside  of China  and  companies  with  substantially  greater
resources),  fluctuations in the level of orders for services which are received
and can be delivered in a quarter,  rescheduling  or  cancellation  of orders by
customers,  competitive pressures on selling prices, changes in product, service
or customer  mix,  rapid  changes in  technology,  dependence  upon  certain key
employees,  availability and cost of computer technicians, loss of any strategic
relationships,  our ability to  introduce  new products and services on a timely
basis, new product and service  introductions  by our competitors,  requirements
for additional  capital to support future growth and acquisitions,  fluctuations
in exchange rates, and general economic conditions, among others.

     Future  revenues  and  operating  results  may  also  be  effected  by  the
operations  of Dunwell  Computer  (Hong Kong ) Ltd. and Huifeng Web Security are
expected to be acquired subsequent to June 30, 2000. Additionally,  we expect to
realize  recurring  revenues  from an interest in the proposed  SinoE.com  joint
venture. There is no assurance that the acquisitions of Dunwell and Huifeng will
be completed,  or the joint  venture with  SinoE.com  consummated,  on the terms
proposed,  or at  all.  The  amount  of  revenues  to  be  realized  from  those
acquisitions  and  joint  ventures,  and the  operating  results  therefrom,  is
uncertain.

     With the entry of new competitors in our markets,  we expect prices for our
e-commerce  services  to come under mild price  pressure.  We expect  this price
pressure to be  moderated by growth in demand for those  services.  If we do not
realize the anticipated  growth in demand for Internet services in China, we may
experience more substantial  pricing  pressure.  To date, we have experienced no
substantial price pressure.

     Our cost of services are expected to benefit from  continuing  advancements
in  technology  which is expected  to allow us to deliver our  services at lower
cost.

     Additionally,  our operations may be impacted by various factors associated
with  doing  business  in China,  including,  but not  limited  to,  uncertainty
regarding the  application  or enforcement  of various  regulations  relating to
business generally, and the Internet specifically, and potential changes in such
regulations,  political or economic  conditions,  methods and rates of taxation,
and other  factors.  We may be impacted by the ongoing Asian  financial  crisis.
Countries in the Asia Pacific  region have  recently  experienced  weaknesses in
their currency,  banking and equity markets.  These  weaknesses  could adversely
affect,  among other  things,  consumer  demand for  discretionary  goods in the
region  (perhaps  including  our products and services  which may be  considered
expenditures by consumers),  and the U.S.  dollar value of our foreign  currency
denominated sales (e.g., to the extent sales are denominated in Renminbi or Hong
Kong dollars). In addition,  our interest income and expense may be sensitive to
fluctuations  in the  general  level of Hong Kong and  Chinese  interest  rates.
However,  as  we  conduct   substantially  all  of  our  operations,   including
substantially  all of our sales and expenses,  in Renminbi or Hong Kong dollars,
management  does  not  believe  we  are  exposed  to  undue  risk  arising  from
fluctuations of the exchange rates between those currencies and the U.S. dollar.
Except as noted above, we are not aware of any trends,  events or  uncertainties
which have had,  or are  reasonably  likely to have,  a  material  impact on our
operations or our short-term or long-term liquidity.

                                       19
<PAGE>

Currency Presentation and Foreign Currency Translation

     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 June 30, 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.

Inflation

     Inflation has  historically  not had a material  effect on our  operations.
When the price of products  and services  increases,  we believe that we will be
able to pass those higher  prices on to the  customer.  Accordingly,  we believe
inflation will not have a material effect on our future operations.

ITEM 7. FINANCIAL STATEMENTS

     The financial  statements,  together with the independent  auditors' report
thereon of Arthur Andersen, appears on pages F-1 to F-25 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.

     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.

                                       20
<PAGE>

                                    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
    ------               -----                     ----------
Jun LIANG                  39             President and Director
Andy LIN                   54             Executive Vice President and Director
Mark Williamson            38             Vice President, Business Development
Roland WANG                29             Chief Technology Officer
Oliver LI                  42             Controller
Sai Keung CHAN             45             Secretary and Director
Wai Ho LI                  44             Director
Shim YANG                  43             Director

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

Business Experience

     Jun LIANG  co-founded the Company's  predecessor,  IML, in January 1998 and
has served as its President and a Director since  inception and as President and
a Director of the Company since the Exchange in October  1998.  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  companies
directories,  business  directory  services and other  business  information  in
print,  CD-ROM and electronic  format.  During the period of Mr. Liang's service
with China Business Resources,  annual revenues averaged approximately $500,000.
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.

     Andy LIN co-founded the Company's predecessor, IML, in January 1998 and has
served  as its  Vice  President  and a  Director  since  inception  and as  Vice
President  and a Director of the  Company  since the  Exchange 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.

     Mark  Williamson  joined the  Company in November  1999 as Vice  President,
Business Development.  Prior to joining the Company, Mr. Williamson was a Senior
Business  Analyst with  Electronic  Data Systems in Houston,  Texas from October
1998 to October  1999,  and was a  marketing  analyst for Compaq  Computer  from
February to September 1998. Previously,  from 1994 to 1998, Mr. Williamson was a
founder  and  Managing   Director  of   Williamson,   Fournier  &  Company,   an
import-export  company based in Budapest,  Hungary. Mr. Williamson has an MBA in
Marketing (Rice University) and degrees in both engineering (University of Texas
at Austin) and finance (University of Oklahoma).

     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 Exchange 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.

     Oliver LI joined the Company in July 2000 as Financial Controller. Prior to
joining the Company,  Mr. Li was Senior  Accounting  Manager of China Everbright
Group, a major Chinese conglomerate,  from April 1998 to June 2000.  Previously,
from October 1996 to March 1998, Mr. Li served as accounting  department manager
in the New Jersey office at Daystone  International,  a Taiwanese  manufacturer.
Mr. Li received his MBA from Canisius College in Buffalo.

                                       21
<PAGE>

     Roland  WANG joined the  Company in July 2000 as Chief  Technology  Officer
pursuant to the Company's proposed acquisition of Huifeng Web Security. Mr. Wang
joined  Huifeng Web  Security,  an Internet  security  and  technology  products
developer,  in November 1998. Previously,  from 1995 to 1998, Mr. Wang worked in
senior positions of software systems development relating to risk management and
financial clearing  procedures with Nortel Networks,  Algorithmics,  and Merrill
Lynch.

     Wai Ho LI joined the Company's  predecessor,  IML, as a Director in January
1998 and assumed the same positions  with the Company  following the Exchange in
October 1998.  Since 1983, Mr. Li has been a director of Pado  Contracting  Co.,
Ltd., a privately-held  company in Hong Kong specializing in interior design and
decoration work, where he is responsible for business  development and strategic
planning.

     Shim YANG joined the Company's  predecessor,  IML, as a Director in January
1998 and was  appointed  a Director  of the Company  following  the  Exchange 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.

Term of Office

     The directors  named above will serve until the first annual meeting of the
Company's shareholders. Thereafter, directors will be elected for one-year terms
at the annual shareholders'  meeting.  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

     Under the securities  laws of the United States,  the Company's  directors,
its  executive  officers,  and any person  holding  more than ten percent of the
Company's  Common Stock are required to report  their  initial  ownership of the
Company's  Common  Stock and any  subsequent  changes in that  ownership  to the
Securities  and Exchange  Commission.  Specific due dates for these reports have
been  established and the Company is required to disclose any failure to file by
these dates during  fiscal year 2000.  To the  Company's  knowledge,  all of the
filing requirements were satisfied on a timely basis in fiscal year 2000, except
for the following:  (1) Sai Keung Chan, an outside director,  failed to file one
Form 4 reporting one sale of shares; (2) Wai Ho Li, an outside director,  failed
to file one Form 4 reporting  one sale of shares;  and (3) Shim Yang, an outside
director,  failed to file one Form 4  reporting  one sale of  shares.  In making
these  disclosures,  the Company has relied solely on written  statements of its
directors,  executive  officers and  shareholders and copies of the reports that
they filed with the Commission.

                                       22
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

Executive Compensation Table

     The following table sets forth  information as to the compensation  paid or
accrued to each executive  officer  receiving  compensation of at least $100,000
per year and the Chief  Executive  Officer  for the three  years  ended June 30,
2000:

<TABLE>

                                                     Annual Compensation
                                         ---------------------------------------------
                                                                    Other Annual     All Other
         Name and Principal Position      Year   Salary     Bonus   Compensation    Compensation
        -----------------------------    ------ --------   -------  ------------   --------------
   <S>                                   <C>    <C>        <C>      <C>            <C>


Jun Liang.............................    2000   $11,630    $   0      (1)                $0
  Chief Executive Officer,............    1999    25,200        0      (1)                 0
  Chairman and President (2)..........    1998    11,630        0       -                  -
</TABLE>

--------------
(1)  Although  the  officers  receive  certain  perquisites,  the  value of such
     perquisites  did not exceed  the lesser of $50,000 or 10% of the  officer's
     salary and bonus.
(2)  Mr. Liang became Chief Executive Officer of the Company in October 1998.

Director's Compensation

     The Company currently pays its non-employee  directors  approximately  $650
per meeting attended with compensation  limited to $650 in a month regardless of
the number of  meetings  attended.  The Company  reimburses  its  directors  for
out-of-pocket expenses incurred on behalf of the Company.

Employment Agreements

     In  November  1999,  the Company  hired,  and  entered  into an  employment
agreement  with Mark  Williamson.  Pursuant  to the  employment  agreement,  Mr.
Williamson  serves as Vice President of Business  Development  for a term of two
years ending  November 14, 2001.  Mr.  Williamson  receives an annual  salary of
$45,000  plus  reimbursement  of  Chinese  taxes.  Mr.  Williamson's  employment
agreement  also  provides for (1) the issuance of 15,000  shares of common stock
after each six months of  employment,  (2) options to acquire  250,000 shares of
common stock at $3.50 per share exercisable  commencing on the first anniversary
of his  employment,  (3) options to acquire  250,000  shares of common  stock at
$4.00  per  share  exercisable  commencing  on  the  second  anniversary  of his
employment,  (4)  participation  in any  retirement or employment  benefit plans
adopted by the Company, (5) reimbursement of $5,000 of expenses of relocation to
China, (6) fifteen days paid vacation  annually and (7) round-trip  airfare once
annually to the United States.  All options granted under the employment  become
immediately exercisable in the event of a change in control of the Company.

     In May,  2000,  the  Company  renegotiated  the  employment  terms with Mr.
Williamson,  and entered a new employment  agreement that supercedes the earlier
one dated November 15, 1999. The Company has honored Mr. Williamson's employment
agreement from November 15, 1999 to May 14, 2000 by issuing him 15,000 shares of
Intermost  common stocks and issuing a board  resolution  granting him option to
purchase  125,000  shares  of  Intermost  common  stock at $3.50 per share if he
continue  to serve the  Company  for  another 12 months.  Under the new 18 month
employment agreement, Mr. Williamson will continue to serve as Vice President of
Business  Development  for  a 18  month  term  ending  November  14,  2001.  Mr.
Williamson  receives an annual salary of $45,000 plus  reimbursement  of Chinese
taxes. Mr.  Williamson's  employment  agreement also provides for (1) options to
acquire 125,000 shares of common stock at $3.00 per share exercisable commencing
on November 15, 2000,  (3) options to acquire  250,000 shares of common stock at
$4.00 per share  exercisable  commencing on November 15, 2001, (4) participation
in any  retirement  or  employment  benefit  plans  adopted by the Company,  (5)
reimbursement of $5,000 of expenses of relocation to China, (6) twenty days paid
vacation annually and (7) round-trip airfare once annually to the United States.
All options granted under the employment become  immediately  exercisable in the
event of a change in control of the Company.

                                       23
<PAGE>


     In July 2000, the Company hired,  and entered into an employment  agreement
with Roland Wang. Pursuant to the employment agreement, Mr. Wang serves as Chief
Technology  Officer  for a term of two  years  ending  May 31,  2002.  Mr.  Wang
receives an annual salary of HK$455,000.  Mr. Wang's  employment  agreement also
provides for (1) the payment of an annual bonus in the amount of  HK$100,000  if
the Company's revenues exceed  US$5,000,000  during the first year of employment
and  US$6,000,000  during the second year of employment,  (2) options to acquire
150,000 shares of common stock at $3.00 per share exercisable  commencing on the
first  anniversary of his  employment,  (3) options to acquire 230,000 shares of
common stock at $4.00 per share exercisable commencing on the second anniversary
of his employment,  (4)  participation  in any retirement or employment  benefit
plans adopted by the Company,  (5) fifteen days paid  vacation  annually and (6)
round-trip  airfare once  annually to the United  States or Canada.  All options
granted under the employment  become  immediately  exercisable in the event of a
change in control of the Company.

Other Compensation Arrangements

     Beginning in January 1999,  until the Company attains  sufficient  revenues
through  operations,  the Company pays to each of its executive  officers  other
than Mark Williamson,  approximately $2,600 per month. 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 at the  discretion  of the Board of Directors to attract and
retain officers and key employees.  The Board plans to adopt a stock option plan
under which  2,000,000  shares of common  stock would be reserved  for  issuance
pursuant to options to be granted to key employees.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Common Stock

     The  following  table is furnished  as of  September  1, 2000,  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.

Name and Address of                                 Number of Shares
Beneficial Owner (1)                               Beneficially Owned   Percent
--------------------                               ------------------   -------

Allied Point Limited (3)                              3,218,653   (2)    29.3%
Jun LIANG (3)                                         3,218,653   (2)    29.3%
Andy LIN (3)                                          3,218,653   (2)    29.3%
Wai Ho LI                                               400,000           3.6%
Shim YANG                                               250,000           2.3%
Sai Keung CHAN                                          200,000           1.8%
All officers and directors as a group (5 persons).    4,068,653          37.1%


-----------------
(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 38th Floor, Guomao Building, Renmin South Road, Shenzhen, China.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          None

                                       24
<PAGE>


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      Joint Venture Agreement re: Tech 2020 (1)
     10.2      Supply Agreement for Online Bookstore (1)
     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)
     10.6**    Employment Agreement, dated May 15, 2000, with Mark Williamson
     10.7**    Employment Agreement, dated June 1, 2000, Roland Wang
     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.
     27.1*     Financial Data Schedule

---------------

*    Filed herewith.

*    Compensatory plan or management agreement.

(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.

(b)  Reports on Form 8-K

No   reports on Form 8-K were filed during the quarter ended June 30, 2000.


                                       25
<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/ Jun Liang
                                           -------------------------------------
                                           Jun Liang
                                           President and Chief Executive Officer

Dated: October 10, 2000

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


    Signature              Title                                      Date
  -------------          ----------                                 --------

 /s/ Jun Liang            President, Chief Executive Officer  October 10, 2000
---------------------
Jun Liang

/s/ Andy Lin
---------------------     Vice President and Director         October 10, 2000
Andy Lin


/s/ Oliver Li             Financial Controller (Principal     October 10, 2000
---------------------     Accounting and Financial Officer)
Oliver Li


                          Director                            October __, 2000
---------------------
Sai Keung Chan


/s/ Wai Ho Li
---------------------     Director                            October 10, 2000
Wai Ho Li


                          Director                            October __, 2000
---------------------
Shim Yang

<PAGE>

EPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


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


We have  audited  the  accompanying  consolidated  balance  sheets of  Intermost
Corporation  (a  company  incorporated  in the State of Utah,  United  States of
America;  formerly  known as  Utility  Communications  International,  Inc.;  he
Company  and  Subsidiaries  ( he  Group as of June 30,  1999 and  2000,  and the
related  consolidated  statements  of  operations,  cash  flows and  changes  in
shareholders equity for the period from January 2, 1998 to June 30, 1998 and the
years ended June 30, 1999 and 2000. These financial  statements give retroactive
effect to the  acquisition  of  Intermost  Limited as a reverse  acquisition  as
described in Note 2 to the accompanying  financial  statements.  These financial
statements are the responsibility of the Company management.  Our responsibility
is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards
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 financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our  opinion,  based on our audits,  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, 1999 and 2000
and the  results of their  operations  and their cash flows for the period  from
January 2, 1998 to June 30,  1998 and the years  ended  June 30,  1999 and 2000,
after giving  retroactive  effect to the  acquisition of Intermost  Limited as a
reverse  acquisition  as  described  in  Note  2 to the  accompanying  financial
statements,  in conformity with generally accepted accounting  principles in the
United States of America.




                                                    /s/ Arthur Andersen & Co.
                                                    Certified Public Accountants
                                                    Hong Kong



Hong Kong,
October 9, 2000.

                                      F-1
<PAGE>

                     INTERMOST CORPORATION AND SUBSIDIARIES


                           CONSOLIDATED BALANCE SHEETS

                          AS OF JUNE 30, 1999 AND 2000
<TABLE>

                                             Note      1 9 9 9               2 0 0 0
                                            -------- ------------    -------------------------
                                                         Rmb            Rmb             US$
<S>                                         <C>       <C>             <C>               <C>

ASSETS

Current assets:
   Cash and bank deposits                            4,376,906       13,556,982      1,637,317
   Accounts receivable, net                    5        63,997        1,438,235        173,700
   Deposits, prepayments and other             6     1,204,070        5,438,095        656,775
     receivables
   Inventories                                               -           57,058          6,891
   Due from a director                        18             -          284,265         34,332
   Due from related companies                 18       155,122           72,345          8,737
                                                    ------------     -----------    -----------

         Total current assets                        5,800,095       20,846,980      2,517,752

Investment in an associated company            7             -        4,638,796        560,241
Plant and equipment, net                       8       820,731       13,291,366      1,605,237
Intangible assets                              9     2,400,000        1,199,996        144,927
Deferred compensation costs, net              10             -        1,744,878        210,734
                                                    ------------     -----------    -----------

         Total assets                                9,020,826       41,722,016      5,038,891
                                                    ============     ===========    ===========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Accruals and other payables                11     1,168,472       2,442,236         294,956
   Deposits from customers                             158,900         856,549         103,448
   Business tax and government                          26,177          51,508           6,221
     surcharges payable
   Due to directors                           18       254,420         208,197          25,145
                                                    ------------     -----------    -----------

         Total current liabilities                   1,607,969       3,558,490         429,770
                                                    ------------     -----------    -----------

Minority interests                                           -       3,428,693         414,093
                                                    ------------     -----------    -----------

Shareholders' equity:
   Common stock, par value US$0.001:          14
    - authorized - 100,000,000 shares as
       of June 30, 1999 and 2000
    - outstanding and fully paid -                      80,742         90,840           10,971
       9,754,412 and 10,971,268 shares
       as of June 30, 1999 and 2000,
       respectively
    - reserved and to be issued - 69,700                   576          6,624              800
       and 800,000 as of June 30, 1999
       and 2000, respectively
   Preferred stock, par value of              14
     US$0.001:
    - authorized - 5,000,000 shares as
       of June 30, 1999 and 2000
    - outstanding and fully paid - Nil                      -               -               -
       as of June 30, 1999 and 2000
   Additional paid-in capital                 14    9,278,166      52,233,737       6,308,422
   Less - Subscription receivable             14            -        (952,200)       (115,000)
                                                    -----------    -------------    -----------
                                                     9,359,484    51,281,537       6,193,422
   Accumulated deficit                              (1,954,380)  (16,613,282)     (2,006,435)
   Cumulative translation adjustments                    7,753       (30,886)         (3,730)
                                                    -----------    -------------    -----------

         Total shareholders' equity                  7,412,857    34,734,833       4,195,028
                                                    -----------    -------------    -----------

         Total liabilities and                       9,020,826    41,722,016       5,038,891
           shareholders' equity
                                                    ===========    =============    ===========
</TABLE>

The  accompanying  notes are an  integral  part of these  financial  statements.
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 June 30, 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 - 2
<PAGE>



                     INTERMOST CORPORATION AND SUBSIDIARIES

      CONSOLIDATED STATEMENTS OF OPERATIONSFOR THE PERIOD FROM JANUARY 2,
                            1998 TO JUNE 30, 1998 AND

                     THE YEARS ENDED JUNE 30, 1999 AND 2000


<TABLE>

                                    Note      1 9 9 8       1 9 9 9            2 0 0 0
                                   -------  -----------    -----------   ------------------------------
                                               Rmb            Rmb            Rmb              US$
<S>                                <C>       <C>            <C>           <C>                 <C>


Net sales                            19             -      3,213,299       12,988,310       1,568,636
Cost of services                                    -     (1,534,985)     (11,527,817)     (1,392,248)
                                            ------------  -------------- --------------   -------------

       Gross profit                                 -      1,678,314        1,460,493         176,388

Selling, general and                          (54,479)    (3,611,074)     (16,083,455)     (1,942,447)
    administrative expenses
                                            ------------  --------------  --------------   ------------

       Loss from operations                   (54,479)    (1,932,760)     (14,622,962)     (1,766,059)

Interest income                                     -         33,006           97,756          11,806
Other income (loss), net                            -           (147)         105,426          12,733
Share of loss of an                                 -              -       (1,380,429)       (166,718)
    associated company                      ------------  --------------   --------------   -----------

       Loss before income            19       (54,479)    (1,899,901)     (15,800,209)     (1,908,238)
          taxes

Provision for income taxes           12             -              -                -               -
                                            ------------  --------------  --------------   ------------

       Loss before minority                   (54,479)    (1,899,901)     (15,800,209)     (1,908,238)
             interests

Minority interests                                  -              -        1,141,307         137,839
                                            ------------  --------------   --------------   -----------

       Net loss                               (54,479)    (1,899,901)     (14,658,902)     (1,770,399)
                                            ============  ==============   ==============   ===========

Loss per common share - Basic                   (0.01)         (0.21)          (1.43)           (0.17)
                                            ============  ==============   ==============   ===========

</TABLE>

   The accompanying notes are an integral part of these financial statements.


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 June 30, 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-3
<PAGE>

                     INTERMOST CORPORATION AND SUBSIDIARIES


                      CONSOLIDATED STATEMENTS OF CASH FLOWS

            FOR THE PERIOD FROM JANUARY 2, 1998 TO JUNE 30, 1998 AND

                     THE YEARS ENDED JUNE 30, 1999 AND 2000


<TABLE>

                                                 1 9 9 8         1 9 9 9                  2 0 0 0
                                              --------------  --------------   -----------------------------
                                                   Rmb             Rmb             Rmb              US$
<S>                                           <C>             <C>              <C>                 <C>


Cash flows from operating activities:
Net loss                                      (54,479)        (1,899,901)      (14,658,902)     (1,770,399)
Adjustments to reconcile net loss to net
   cash used in operating activities -
   Depreciation of plant and equipment              -             95,899           993,921         120,039
   Amortization of intangible assets                -                  -         1,200,004         144,928
   Share of loss of an associated company           -                  -         1,380,429         166,718
   Minority interests                               -                  -        (1,141,307)       (137,839)
   Stock-based compensation costs                   -                  -         3,569,052         431,045
(Increase) Decrease in operating assets -
   Accounts receivable, net                         -            (63,997)       (1,374,238)       (165,970)
   Deposits, prepayments and other                  -         (1,204,070)       (4,234,025)       (511,356)
     receivables
   Inventories                                      -                  -           (57,058)         (6,891)
Increase (Decrease) in operating
   liabilities -
   Accruals and other payables                 13,359          1,155,113           576,281          69,599
   Deposits from customers                          -            158,900           697,649          84,257
   Business tax and government surcharge            -             26,177            25,331           3,059
     payable
                                              --------------  --------------   --------------   ------------

         Net cash used in operating           (41,120)        (1,731,879)     (13,022,863)     (1,572,810)
           activities
                                              --------------  --------------   --------------   ------------

Cash flows from investing activities:
Investment in an associated company                 -                  -       (6,019,225)       (726,959)
Additions of plant and equipment                    -           (916,630)      (7,701,594)       (930,144)
Due from a director                               (17)                17         (284,265)        (34,331)
Due from related companies                          -           (155,122)          82,777           9,997
                                              --------------  --------------   --------------   ------------
         Net cash used in investing               (17)        (1,071,735)     (13,922,307)     (1,681,437)
           activities                         --------------  --------------   --------------   ------------
</TABLE>


                                                               (To be continued)
                                      F-4
<PAGE>


                     INTERMOST CORPORATION AND SUBSIDIARIES


                 CONSOLIDATED STATEMENTS OF CASH FLOWS (Cont'd)

            FOR THE PERIOD FROM JANUARY 2, 1998 TO JUNE 30, 1998 AND

                     THE YEARS ENDED JUNE 30, 1999 AND 2000

<TABLE>

                                                 1 9 9 8         1 9 9 9                  2 0 0 0
                                              --------------  --------------   ------------------------------
                                                   Rmb             Rmb              Rmb              US$
<S>                                            <C>            <C>              <C>                   <C>


Cash flows from financing activities:
Net proceeds from issuance of common stock            -         6,918,347        31,640,108       3,821,269
Capital contribution by minority                      -                 -         4,570,000         551,932
   shareholders of subsidiaries
Due to directors                                      -           254,420           (46,223)         (5,582)
Effect of exchange reorganization                41,137                 -                 -               -
                                              --------------  --------------   --------------   -------------

         Net cash provided by financing          41,137         7,172,767        36,163,885       4,367,619
           activities
                                              --------------  --------------   --------------   -------------

Effect of exchange rate changes on cash               -             7,753           (38,639)         (4,667)
   and bank deposits
                                              --------------  --------------   --------------   -------------

Net increase in cash and bank deposits                -         4,376,906         9,180,076       1,108,705

Cash and bank deposits, beginning of                  -                 -         4,376,906         528,612
   period/year
                                              --------------  --------------   --------------   -------------

Cash and bank deposits, end of period/year            -         4,376,906        13,556,982       1,637,317
                                              ==============  ==============   ==============   =============

</TABLE>


   The accompanying notes are an integral part of these financial statements.


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 June 30, 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-5
<PAGE>

                     INTERMOST CORPORATION AND SUBSIDIARIES


                       CONSOLIDATED STATEMENTS OF CHANGES
                             IN SHAREHOLDERS' EQUITY

            FOR THE PERIOD FROM JANUARY 2, 1998 TO JUNE 30, 1998 AND

                     THE YEARS ENDED JUNE 30, 1999 AND 2000
<TABLE>


                                  Common stock                                                      Accumulated
                                                                                                    other
                                                                                                    comprehensive
                                                                                                    income -
                         Issued           Reserved and to be                                        cumulative
                                                issued
                  ---------------------- ----------------------
                  Number of   Amount      Number of    Amount   Additional Subscription Accumulated translation
                    shares                 shares                paid-in    receivable   deficit    adjustments
                                                                 capital
                  ----------- ---------- ----------  ----------- ---------- ----------- ---------- -----------
                                Rmb                      Rmb       Rmb        Rmb         Rmb          Rmb
<S>              <C>          <C>         <C>         <C>        <C>         <C>        <C>        <C>


Balance as of     4,970,000     41,137           -          -           -          -           -          -
   January 2,
   1998

Net loss                  -          -           -          -           -          -      (54,479)        -
                  ----------- ---------- ----------- ----------- ---------- ----------- ---------- -----------

Balance as of     4,970,000     41,137           -          -           -          -      (54,479)        -
   June 30, 1998

Effect of         3,485,706     28,853           -          -     (28,853)         -            -         -
   exchange
   reorganization

Proceeds on       1,298,706     10,752           -          -   8,266,281          -            -         -
   issuance of
   common stock

Common stock              -          -           -          -  (1,358,686)         -            -         -
   issuance
   costs

Acquisition of            -          -      69,700        576   2,399,424          -            -         -
   contracts
   and  a
   customer list
   (Note 9)

Net loss                 -           -           -          -           -          -   (1,899,901)        -

Translation              -           -           -          -           -          -            -     7,753
   adjustments
                  ----------- ---------- ------------ ---------- ---------- ----------- ----------  ----------

Balance as of    9,754,412      80,742      69,700        576   9,278,166          -   (1,954,380)    7,753
   June 30, 1999

Issuance of        69,700          576     (69,700)      (576)          -          -            -         -
   common stock

Proceeds on             -            -     800,000      6,624   8,273,376   (952,200)           -         -
   issuance of
   common stock
   of which
   shares have
   not been
   issued

Granting of             -           -           -          -    3,611,968          -            -         -
   stock-based
   compensation
   to an
   employee
   (Note 15)

Acquisition of    75,512          629           -          -    3,125,567          -            -         -
   phone
   payment
   system
   (Note 8)

Granting of       41,110         339            -          -    1,701,623          -            -         -
   common stock
   to employees

Proceeds on      953,334       7,961            -          -    5,594,109          -            -         -
   issuance of
   common stock

Common stock           -           -            -          -   (1,987,200)         -            -         -
   issuance
   costs

Acquisition of    77,200         638            -          -    2,636,128          -            -         -
   a building
   (Note 8)

Net loss              -            -            -          -            -          -  (14,658,902         -

Translation           -            -            -          -            -          -            -   (38,639)
   adjustments
                ----------- ---------- -------------  -------- ---------- ----------- -----------   ----------

Balance as of 10,971,268      90,840      800,000      6,624   52,233,737   (952,200) (16,613,282)  (30,886)
June 30, 2000
                =========== ========== ============= ========= ========== =========== ===========   ==========

</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                      F-6
<PAGE>

                     INTERMOST CORPORATION AND SUBSIDIARIES


                   NOTES TO CONSOLIDATED 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.  With effect from  October 23, 1998,
the Company changed its name from Utility Communications International,  Inc. to
Intermost Corporation, the present one.

During  the period  from  January 2, 1998 (the  earliest  date  covered by these
financial  statements) 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 the stock split as described in Note 14) to Mr. Jun Liang and Mr. Andy
Lin, directors and shareholders of IL. IL was equally owned by Mr. Jun Liang and
Mr. Andy Lin. 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.


2.   BASIS OF PRESENTATION AND
     CHANGE OF ACCOUNTING YEAR END
     ------------------------------
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.  On this basis,  the historical  financial  statements
prior to October 23, 1998 represented the consolidated  financial  statements of
IL, which was incorporated on January 2, 1998. The shareholders' equity accounts
of the Company as of January 2, 1998 have been retroactively restated to reflect
the  issuance  of  4,970,000  shares of common  stock  (after  the effect of the
redenomination of par value and the stock split as described in Note 14).

The Company  formerly had its accounting year end on December 31.  Subsequent to
the acquisition of IL, it changed its accounting year end to June 30 to coincide
with that of IL.

                                      F-7
<PAGE>


3.   Subsidiaries
     -------------
Details of the  Company's  subsidiaries  (which  together  with the  Company are
collectively referred to as "the Group") as of June 30, 2000 were as follows:
<TABLE>


             Name                Place of           Percentage of equity            Principal activities
                                 incorporation      interest attributable to the
                                                    Group
-------------------------------  ------------------ ------------------------------  --------------------------
                                                        1999        2000
                                                    --------------  --------------
<S>                              <C>                <C>             <C>              <C>


    Intermost Limited ( L            The British    100%                100%            Investment holding
                                     Virgin                                             and development of
                                     Islands                                            software

    China E. Com Information         The PRC        100%                100%            Provision of
    Technology Ltd. ( ECITL  *                                                          business portal and
                                                                                        e-commerce solutions

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

    Intermost (Hong Kong)            Hong Kong      100%                100%            Inactive
    Limited ( HKL

    Shenzhen Bank Union &            The PRC        -                     55.3%         Provision of phone
    Jiayin E-commerce Company                                                           payment system
    Ltd.**  ( BUJE                                                                      services

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



*    CECITL and IITSL are wholly  foreign owned  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.



4.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     ------------------------------------------
a.   Basis of consolidation
     ----------------------
     The consolidated  financial  statements include the accounts of the Company
     and its subsidiaries.  All material  intra-group  balances and transactions
     have been eliminated on consolidation.

                                      F-8
<PAGE>


4.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)

b.   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 to recognize the Group's share of the post acquisition  profits or
     losses of the associated company,  additional investments and contributions
     made to the associated company,  distributions received from the associated
     company  and  other  necessary  alterations  in the  Group's  proportionate
     interest in the  associated  company  arising from changes in the equity of
     the  associated  company  that have not been  included in the  statement of
     operations.

c.   Plant and equipment
     -------------------
     Plant and  equipment  are recorded at cost less  accumulated  depreciation.
     Gains  or  losses  on  disposals  are  reflected  in  current   operations.
     Depreciation  for  financial  reporting  purposes  is  provided  using  the
     straight-line  method  over the  estimated  useful  lives of the  assets as
     follows:  building - 20 years,  computer equipment - 3 years, phone payment
     system - 5 years,  furniture  and  office  equipment  - 5 years,  leasehold
     improvements  - 1 to 3 years (over the lease terms) and motor  vehicles - 5
     years. Major expenditures for betterments and renewals are capitalized. All
     ordinary repair and maintenance costs are expensed as incurred.

     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.

d.   Intangible assets
     -----------------
     Intangible assets consisted of system integration  contracts and a customer
     list  acquired  from an  independent  third party,  which is amortized on a
     straight-line basis over a period of 24 months. The Company's directors and
     management  review and  evaluate the carrying  value of  intangible  assets
     periodically,  taking into  consideration  of current  operating result and
     future prospects generated from the intangible assets.

                                      F-9
<PAGE>

4.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
     ------------------------------------------
e.   Net sales
     ---------
     Net sales  represent  (i) fees for the  provision  of  business  portal and
     e-commerce  solutions,  net of business tax, which are recognized  when the
     services are rendered,  (ii) fees for provision of software development and
     consulting  services,  which are recognized when the services are rendered,
     and (iii)  advertising fees, net of business tax, which are recognized when
     the services are rendered.

     Deposits or advance  payments from customers prior to provision of services
     are recorded as deposits from customers.

f.   Research and development expenditures
     -------------------------------------
     Research and development expenses are charged to expense as incurred.

g.   Income taxes
     ------------
     Income taxes are provided  under the  provisions  of Statement of Financial
     Accounting  Standards No. 109, which  requires  recognition of deferred tax
     assets and liabilities for expected future tax  consequences of events that
     have been included in the financial  statements.  Deferred income taxes are
     provided using the liability method.  Under the liability method,  deferred
     income taxes are recognized for all temporary  differences  between the tax
     and financial statement bases of assets and liabilities.

h.   Operating leases
     ----------------
     Operating leases represent those leases under which  substantially  all the
     risks and  rewards  of  ownership  of the  leased  assets  remain  with the
     lessors.  Rental payments under operating  leases are charged to expense on
     the straight-line basis over the period of the relevant leases.

i.   Comprehensive income (loss)
     --------------------
     The Group has adopted Statement of Financial  Accounting Standards No. 130,
     which  requires the Group to report all changes in equity  during a period,
     except for those resulting from investment by shareholders and distribution
     to shareholders,  in the financial  statements for the period in which they
     are recognized.  The Group has disclosed comprehensive income (loss), which
     encompasses net income (loss) and currency translation adjustments,  in the
     consolidated statements of changes in shareholders equity and Note 13.

                                      F-10
<PAGE>


4.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
     ------------------------------------------
j.   Foreign currency translation
     ----------------------------
     The Company 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  shareholders'  equity  separately  as
     cumulative translation adjustments.

     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.

     Aggregate  gains  from  foreign  currency   transactions  included  in  the
     consolidated  results of operations  for the period from January 2, 1998 to
     June 30, 1998 and the years ended June 30, 1999 and 2000 were approximately
     Nil, Rmb10,000 and Rmb113,000, respectively.

k.   Loss per common share
     ---------------------
     Loss per common share is computed in accordance with Statement of Financial
     Accounting  Standards  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.  During
     the years ended June 30, 1999 and 2000,  diluted  loss per common share was
     calculated to give effect to the outstanding stock options (see Note 15).

     In  arriving at the basic loss per common  share and the  diluted  loss per
     common share,  the denominator is based on the following  weighted  average
     number of common shares:

                                   1 9 9 8          1 9 9 9           2 0 0 0
                                 -------------   --------------   --------------

    Basic                         4,970,000        8,980,666        10,284,765
    Diluted                       4,970,000        8,984,867        11,009,864


     No  diluted  loss  per  common  share  was  presented  in the  consolidated
     statements of operations as the dilutive securities were anti-dilutive.

                                      F-11
<PAGE>


4.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
     ------------------------------------------
l.   Stock-based compensation
     ------------------------
     The  Company  accounts  for  employee  stock  options  in  accordance  with
     Accounting Principles Board Opinion ( PB No. 25. Pro forma disclosures were
     made  assuming  the  application  of fair  value  method as  prescribed  by
     Statement of Financial Accounting Standards No. 123.

m.   Use of estimates
     ----------------
     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles in the United  States of America  requires
     management to make estimates and assumptions  that affect certain  reported
     amounts and  disclosures.  Accordingly,  actual  results  could differ from
     those estimates.


n.   Fair value of financial instruments
     -----------------------------------
     All financial instruments are carried at cost, which approximate their fair
     values.


5.   ACCOUNTS RECEIVABLE, NET
     ------------------------
Accounts receivable consisted of:

                                          1 9 9 9                  2 0 0 0
                                       --------------   ------------------------
                                            Rmb          Rmb            US$

    Accounts receivable                    150,997      1,949,235     235,415
          Less: Allowance for doubtful     (87,000)      (511,000)    (61,715)
          accounts
                                       --------------  -------------  ----------

    Accounts receivable, net                63,997      1,438,235      173,700
                                       ==============  =============  ==========



                                      F-12
<PAGE>



6.   DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES
     -------------------------------------------
Deposits, prepayments and other receivables consisted of:
<TABLE>


                                                 1 9 9 9                   2 0 0 0
                                              -------------    -----------------------------------
                                                  Rmb               Rmb                   US$
   <S>                                         <C>              <C>                   <C>


    Prepaid legal fees (Note a)                 646,384               -                     -
    Deposit for leasing of advertising                -          800,000               96,618
    space (Note b)
    Rental and utilities deposits               121,450          527,310               63,685
    Deposits for purchase of leasehold                -        1,205,738              145,621
    improvements and office equipment
    Deposits for investment in Internet.com           -          500,760               60,478
    Limited (Note c)
    Deposits for acquisition of Dunwell               -        1,823,280              220,203
    Computer (H.K.) Limited ("DCL") and
    advance to DCL (Note d)
    Advance to employees                              -          182,793               22,076
    Advance to Jiayin Investment Company        257,122           56,803                6,860
    Limited ("JICL")
    (Note e)
    Prepaid expenses                            137,271          226,165               27,315
    Others                                       41,843          115,246               13,919
                                              --------------  ---------------    -----------------

                                              1,204,070       5,438,095               656,775
                                              ==============  ===============    =================
</TABLE>

Notes -

a.   Prepaid legal fees  represented the balance of the proceeds from selling of
     common stock in December 1998 (see Note 14),  which were held by the escrow
     agent.

b.   The Group has leased  certain  pages in a weekly  computer  magazine  for a
     period of 24 months for sub-lease  purpose and paid a deposit  amounting to
     Rmb800,000.  The Group bears the risk and rewards of leasing these pages in
     the computer magazine.

c.   The  Group  paid a  deposit  for an  intended  investment  in  Internet.com
     Limited, a company incorporated in the British Virgin Islands. Internet.com
     Limited plans to provide all kinds of visual image to its users through the
     Internet.  The Group is still negotiating with Internet.com Limited for the
     percentage of equity interest to be held by the Group.

d.   The Group paid a deposit for an intended  acquisition  of a 70% interest in
     DCL   amounting   to   approximately   Rmb1,502,000,    which   represented
     approximately 50% of the intended consideration, and advanced Rmb321,000 to
     DCL. As of June 30, 2000,  negotiation  was in process and the  acquisition
     was not completed.

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

                                      F-13
<PAGE>

7.   INVESTMENT IN AN ASSOCIATED COMPANY
     -----------------------------------
Details of investment in an associated company are:
<TABLE>

                                                1 9 9 9                   2 0 0 0
                                           -----------------   ------------------------------
                                                 Rmb               Rmb                 US$
    <S>                                     <C>                <C>                <C>


    Unlisted shares, at cost                         -          6,000,000           724,637
    Share of post-acquisition loss                   -         (1,380,429)         (166,718)
                                           -----------------   -------------    -------------

    Share of net assets                              -          4,619,571           557,919
    Amount due from an associated company            -             19,225             2,322
                                           -----------------   -------------    -------------

                                                     -          4,638,796           560,241
                                           =================   =============    =============
</TABLE>


The amount due from the associated  company is unsecured,  non-interest  bearing
and has no pre-determined payment terms.

During the year ended June 30, 2000, the Group has invested in a 40% interest in
Shenzhen  SinoE-commerce Co. Ltd. ( ECL , an equity joint venture established in
the PRC to be operated  for a period of 20 years until 2020.  SECL is engaged in
the  provision of  internet-based  platform for buyers and sellers of industrial
products. As of June 30, 2000, SECL has not yet launched the platform.

Under the joint venture  agreement for the  establishment of SECL, the Group has
an option to contribute to SECL additional capital of Rmb14,000,000  before July
15, 2000 in return for additional interests in SECL. The Group has not exercised
the option and no additional capital contribution was made.

                                      F-14
<PAGE>


8.   PLANT AND EQUIPMENT, NET
     ------------------------
Plant and equipment consisted of:
<TABLE>

                                           1 9 9 9                  2 0 0 0
                                       ---------------   --------------------------------
                                            Rmb               Rmb               US$
   <S>                                   <C>              <C>              <C>


    Building                                   -          2,790,204           336,981
    Computer equipment                   518,701          1,791,932           216,417
    Phone payment system                       -          8,426,196         1,017,657
    Furniture and office equipment       142,284            294,452            35,562
    Leasehold improvements               125,490            135,777            16,398
    Motor vehicles                       130,155            942,625           113,843
                                       ---------------   -------------    ---------------
    Cost                                 916,630         14,381,186         1,736,858
    Less:Accumulated depreciation        (95,899)        (1,089,820)         (131,621)
                                       ---------------   -------------    ---------------

    Plant and equipment, net             820,731         13,291,366         1,605,237
                                       ===============   =============    ===============
</TABLE>


During the year ended June 30,  2000,  the Group has  acquired a building in the
PRC by (i) issuance of 77,200  shares of common stock of the Company,  valued at
approximately  Rmb2,637,000  (see  Note  14),  and (ii)  cash  consideration  of
approximately  Rmb153,000.  The  building is situated  in  Shenzhen,  the PRC.In
January  2000,  the Group  acquired a phone  payment  system by (i)  issuance of
75,512  shares  of  common  stock  of  the  Company,   valued  at  approximately
Rmb3,126,000  (see Note 14), and (ii) cash  consideration  of  Rmb2,300,000.  In
addition, the Group incurred  approximately  Rmb3,000,000 for the upgrade of the
phone payment system.

9.   INTANGIBLE ASSETS
     -----------------
Intangible assets consisted of:
<TABLE>

                                            1 9 9 9                  2 0 0 0
                                          ------------    -------------------------------
                                              Rmb            Rmb               US$
    <S>                                   <C>              <C>              <C>


    System integration contracts and a     2,400,000         2,400,000        289,855
    customer list

    Less: Accumulated amortization                 -        (1,200,004)      (144,928)
                                          ------------    --------------    -------------

    Intangible assets, net                 2,400,000         1,199,996        144,927
                                          ============    ==============    =============
</TABLE>


In June 1999,  the Group  entered into an agreement  with an  independent  third
party to acquire certain system integration contracts and a customer list, to be
satisfied  by  69,700   shares  of  common  stock  of  the  Company   valued  at
Rmb2,400,000. These shares were issued in December 1999.

                                      F-15
<PAGE>

deferred compensation costs, netDeferred compensation costs consisted of:

<TABLE>

                                            1 9 9 9                    2 0 0 0
                                          -------------    ----------------------------
                                               Rmb            Rmb                US$
<S>                                        <C>              <C>              <C>


    Costs                                       -            4,970,401        600,290
          Less: Adjustment to costs             -           (1,358,433)      (164,062)
          attributable to change of stock
          options plan (Note 15)
    Less: Accumulated amortization              -           (1,867,090)      (225,494)
                                          -------------   -------------    -------------

    Deferred compensation costs, net            -            1,744,878        210,734
                                          =============   =============    =============
</TABLE>


Deferred  compensation  costs  are  associated  with  stock-based   compensation
described  in Note 15,  and are  determined  using the  intrinsic  value  method
prescribed by APB No. 25 and are amortized over the term of employment.



11.  ACCRUALS AND OTHER PAYABLES
     ---------------------------
Accruals and other payables consisted of:
<TABLE>

                                              1 9 9 9                   2 0 0 0
                                            ------------     ----------------------------
                                                Rmb             Rmb              US$
<S>                                         <C>               <C>               <C>

    Accrued operating expenses
       - wages and bonus                        141,891        438,953          53,014
       - sub-contracting fees                   374,412        -                     -
       - legal and professional fees            249,500        888,998         107,368
       - marketing expenses                     297,691        297,691         110,192
    Payable for common stock issuance costs           -        697,482          84,237
    Others                                      104,978        119,112          14,385
                                            ------------    -----------    -------------

                                              1,168,472      2,442,236         294,956
                                            ============    ===========    =============
</TABLE>


12.  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.

                                      F-16

<PAGE>


12.  INCOME TAXES (Cont.)
     ------------
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,  2000,  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>

                                               1 9 9 8        1 9 9 9          2 0 0 0
                                             -------------   ------------    ------------
    <S>                                      <C>              <C>            <C>


    United States federal income tax rate         35%            35%            35%
    Effect of different tax rates in               -            (14%)           (8%)
    foreign jurisdictions
    Valuation allowance for deferred tax                        (21%)           (27%)
    assets                                       (35%)
                                             -------------   ------------    ------------
                                                   -              -             -
                                             =============   ============    ============
</TABLE>


As of June  30,  2000,  the  Group  had  net  operating  loss  of  approximately
Rmb17,165,000,  which was  primarily  related to the Company  operations  in the
United  States of America,  which begin to expire at various  times  starting in
2018.

Deferred taxation consisted of:
<TABLE>

                                               1 9 9 9                2 0 0 0
                                           ----------------  ----------------------------
                                                 Rmb             Rmb            US$
                                           ----------------  ------------   -------------
<S>                                         <C>               <C>            <C>


    Temporary difference arising from:
          -       net operating loss           380,615        4,135,459          499,452
          carryforwards
          -       provision for doubtful        15,660           63,600            7,681
          accounts
                                            ---------------  ------------   -------------

    Deferred tax assets, gross                 396,275        4,199,059          507,133

    Valuation allowance                       (396,275)      (4,199,059)        (507,133)
                                            ---------------  ------------   -------------

    Deferred tax assets, net                         -                -                -
                                            ===============  ============   =============
</TABLE>


The  change  in  valuation  allowance  from  June 30,  1999 to June 30,  2000 is
primarily  related to the tax effects of the net operating loss of approximately
Rmb15,376,000.  The Company  directors and management  believe it is more likely
than not that the  results of future  operations  will not  generate  sufficient
taxable  income to realize the deferred  tax assets as reduced by the  valuation
allowance.

                                      F-17
<PAGE>

13.  COMPREHENSIVE LOSS
     ------------------
Comprehensive loss consisted of:
<TABLE>

                                         1 9 9 8          1 9 9 9               2 0 0 0
                                     ----------------   -------------    ------------------------
                                           Rmb              Rmb             Rmb            US$
                                     ----------------   -------------    -----------  ------------
<S>                                  <C>                <C>              <C>          <C>


    Net loss                              (54,479)       (1,899,901)    (14,658,902)   (1,770,399)

    Other comprehensive income (loss)           -             7,753         (38,639)       (4,667)
    - Translation adjustments
                                      ---------------   -------------    -----------   -----------

    Comprehensive loss                    (54,479)       (1,892,148)    (14,697,541)   (1,775,066)
                                      ===============   =============    ===========   ===========
</TABLE>

14.  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 (see Note 6).

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 (see Note 9).
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
Rmb952,000 was yet to be received as of June 30, 2000.

On January 26, 2000, the Company issued 75,512 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 (see
Note 8).

                                      F-18
<PAGE>

14.  SHARE CAPITAL (Cont )
     -------------
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$3.0 to US$3.23 per
share. The net proceeds amounted to approximately  Rmb23,615,000  (equivalent of
US$2,852,000).

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 (see Note 8).

15.  STOCK-BASED COMPENSATION
     ------------------------
In November 1999, the Company entered into a two-year  employment  contract with
an employee. 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 term of employment.

Changes in  outstanding  options  under the employee  stock options for the year
ended June 30,

                                                     2 0 0 0
                                   ---------------------------------------------
                                     Options     Weighted-average exercise price
                                   -----------   -------------------------------
                                                     US$            Rmb

    Outstanding, beginning of year       -              -               -
    Granted                        375,000           3.67           30.39
                                   -----------    ----------    ---------------

    Outstanding, end of year       375,000           3.67           30.39
                                   ===========    ==========    ===============

    Exercisable, end of year             -              -               -
                                   ===========    ==========    ===============

As of June 30,  2000,  all the  options  outstanding  were in the price range of
US$3.0 to US$4.0 with a weighted-average  unexpired option life of approximately
8.3 years.

                                      F-19
<PAGE>


5.   STOCK-BASED COMPENSATION (Cont'd)
     ------------------------
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 pro forma net loss and loss per common share would have been as
follows:

                                                             2 0 0 0
                                                --------------------------------
                                                      Rmb               US$

    Pro forma net loss                          (18,548,921)       (2,240,208)
                                                ===============   ==============

    Pro forma net loss per common share - Basic       (1.80)           (0.22)
                                                ===============   ==============

The pro forma  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 option granted during
the  year  ended  June  30,   2000  is   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 following assumptions:


                                                                 2 0 0 0
                                                             -----------------

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

16.  OPERATING LEASE COMMITMENTS
     ---------------------------
The Group has operating lease agreements for office premises, staff quarters and
advertising  space in a weekly  computer  magazine,  which extend  through 2003.
Rental  expenses  for the years ended June 30, 1999 and 2000 were  approximately
Rmb201,000 and  Rmb417,000,  respectively.  Future minimum rental payments as of
June  30,  2000,   under   agreements   classified  as  operating   leases  with
non-cancellable terms, are as follows:
<TABLE>


                                     1 9 9 8        1 9 9 9                 2 0 0 0
                                   -----------    ------------      -----------------------
                                       Rmb            Rmb             Rmb              US$
<S>                                <C>            <C>                <C>             <C>


   Payable during the following
   period
       - For the year ending June         -          277,003       2,080,461         251,263
       30, 2001
       - For the year ending June         -                -         388,464          46,916
       30, 2002
       - For the year ending June         -                -         213,220          25,751
       30, 2003
                                   ------------    ----------      -------------   ----------

       Total                              -          277,003       2,682,145         323,930
                                   ============    ==========      =============   ==========
</TABLE>

                                      F-20
<PAGE>

17.  RETIREMENT PLAND AND POST-EMPLOYMENT BENEFITS
     ---------------------------------------------

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

18.  RELATED PARTY TRANSACTIONS

Name and relationship of related parties:
<TABLE>


         Name of related parties                 Existing relationship with the Group
---------------------------------------------    ------------------------------------------
<S>                                              <C>


Chuangshengxin Corporate Conventions (Shenzhen)  Subsidiary of a company with common director
Company Limited
Corporate Conventions International Limited      Subsidiary of a company with common director
</TABLE>

<TABLE>

                                                1 9 9 9                   2 0 0 0
                                            ---------------    ----------------------------
                                                 Rmb               Rmb               US$
<S>                                          <C>                <C>               <C>

    Due from related companies
          -       Chuangshengxin Corporate      83,000                -                  -
          Conventions (Shenzhen) Company
          Limited
          -       Corporate Conventions         72,122           72,345              8,737
          International Limited
                                             -------------     --------------    -------------

                                               155,122           72,345              8,737
                                             =============     ==============    =============

    Due from a director
          -       Mr. Andy Lin                       -          284,265             34,332
                                             =============     ==============    =============

    Due to directors
       - Mr. Jun Liang                         156,023         208,197              25,145
       - Mr. Andy Lin                           98,397               -                   -
                                             -------------     --------------    -------------

                                               254,420         208,197              25,145
                                             =============     ==============    =============

</TABLE>


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

                                      F-21
<PAGE>


18.  RELATED PARTY TRANSACTIONS (Cont'd)
     --------------------------
Summary of related party transactions is as follows:
<TABLE>

                                        1 9 9 8         1 9 9 9                2 0 0 0
                                      ------------    ------------    ---------------------------
                                          Rmb            Rmb            Rmb                US$
<S>                                   <C>              <C>             <C>                <C>


    Commission income received from           -          483,640           -                  -
    Corporate Conventions
    International Limited
    Commission expense paid to                -          436,132           -                  -
    Corporate Conventions
    International Limited
    Management fees paid to                   -                -      75,950              9,173
    Chuangshenxin Corporate
    Conventions (Shenzhen) Company
    Limited
    Office rentals and utilities              -          116,156     102,000             12,319
    fees charged to Chuangshengxin
    Corporate Conventions
    (Shenzhen) Company Limited        ===========    ============== =========         ============
</TABLE>

<TABLE>

                              1 9 9 8        1 9 9 9                2 0 0 0
                             ---------    -----------       ------------------------
                               Rmb            Rmb             Rmb             US$
<S>                         <C>           <C>               <C>               <C>


    Business portal and           -          2,280,547      11,277,935     1,362,069
    e-commerce solutions

    Software development          -            932,752         983,580       118,790
    and consulting services

    Placement of                  -                  -         726,795        87,777
    advertisements
                           -----------    ------------    -------------    ------------

                                  -          3,213,299      12,988,310     1,568,636
                           ===========    ============    =============    ============
</TABLE>

<TABLE>


                             1 9 9 8        1 9 9 9                  2 0 0 0
                           -----------    ------------   ------------------------------
                              Rmb             Rmb           Rmb                US$
<S>                        <C>            <C>            <C>                  <C>


    The PRC                    -            2,280,547     12,004,730         1,449,846
    Hong Kong                  -              932,752        983,580           118,790
                          ------------    -----------    -----------       ------------
                               -            3,213,299     12,988,310         1,568,636
                          ============    ===========    ===========       ============
</TABLE>

                                      F-22

<PAGE>


19.  SEGMENTAL INFORMATION
     ---------------------

b.   Loss before income taxes:
     ------------------------
     Loss before income taxes is analyzed as:
<TABLE>

                                1 9 9 8          1 9 9 9                     2 0 0 0
                              -------------    ---------------   --------------------------------
                                  Rmb               Rmb             Rmb                US$
<S>                           <C>               <C>              <C>               <C>


    Business portal and               -          (404,803)      (14,098,511)       (1,702,719)
    e-commerce solutions

    Software development              -          (961,721)         (812,619)          (98,142)
    and consulting services

    Placement of                      -                -           (329,183)          (39,757)
    advertisements

    Loss of investment          (54,479)        (533,377)          (559,896)          (67,620)
    holding companies
                              ----------       ------------      -------------    --------------

                               (54,479)      (1,899,901)        (15,800,209)       (1,908,238)
                              ==========      =============      ==============   ==============
</TABLE>

c.   Assets
     ------

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

d.   Major customers
     ---------------
Details of individual customers accounting for more than 5% of the Group's sales
are as follows:

                                          1 9 9 8      1 9 9 9       2 0 0 0
                                        -----------   ----------   ------------

    Youlidian (Shenzhen) Company               -            -            10%
    Limited
    Duracell (China) Company Limited           -            -             5%
    Good Prominent Technology                  -            14%           8%
    Company Limited
    Corporate Conventions                      -            15%           -
    International Limited               ==========   ============  =============



                                      F-23
<PAGE>

19.  SEGMENTAL INFORMATION (Cont )
     ---------------------
e.   Major suppliers
     ---------------
Details  of  individual  suppliers  accounting  for more than 5% of the  Group's
purchases are as follows:

                                    1 9 9 8       1 9 9 9        2 0 0 0
                                  -----------   -----------   ------------

    Yitong Electronic Products          -             -             23%
    Company Limited
    China Unicom (Guangzhou)            -             -             6%
    Company Limited
    Chuangxingsiwei Computer            -             -             5%
    Technology Company Limited
    Megaway Development Limited         -             -             12%
    Sysway Networks                     -             39%           -
    Shenzhen Yiyuda Trade               -             11%           -
    Development Limited
    Shenzhen FirstNet System            -             10%           -
    Corporation
    Guangdong Xiaotong Computer         -             8%            -
    Network Technology Limited
    JOS (Guangzhou) Technology          -             6%            -
    Product Limited
    Shenzhen Delitai Industry           -             6%            -
    Limited
                                ===========   ===========   ===========

20.  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>

20.  OPERATING RISK (Cont'd)
     --------------
b.   Industry risk
     -------------
The Company  operates  in business  segments  which are  characterised  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 affect on the Company's  business and
operating results.

c.   Concentration of credit
     -----------------------

Concentration of accounts receivable as of June 30, 1999 and 2000 is as follows:

                                               1 9 9 9             2 0 0 0
                                            --------------    ----------------

    Five largest accounts receivable            90%                    41%
                                            ==============    ================

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.

21.  SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
     ------------------------------------------------
Cash paid for interest and income taxes:

                             1 9 9 8        1 9 9 9             2 0 0 0
                           -----------    -----------    ----------------------
                              Rmb             Rmb            Rmb          US$

    Interest                    -               -              -            -
    Income taxes                -               -              -            -
                           ===========    ===========    ==========  ==========

                                      F-25