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                UNITED STATES 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, 2004.

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 FOR THE

                   TRANSITION PERIOD FROM         TO
                                          -------    -------.

                       COL China Online International Inc.
         ---------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

                                    Delaware
                  --------------------------------------------
                 (State or other jurisdiction of incorporation)

        333-39208                                        52-2224845
 ----------------------                      ----------------------------------
(Commission File Number)                    (IRS Employer Identification Number)

                       3176 South Peoria Court, Suite 100
                             Aurora, Colorado 80014
            ---------------------------------------------------------
           (Address of principal executive offices including zip code)

                                 (303) 695-8530
           -----------------------------------------------------------
          (Small Business Issuer telephone number, including area code)

      Securities registered pursuant to Section 12(b) of the Exchange Act:
                                     (None)

      Securities registered pursuant to Section 12(g) of the Exchange Act:
                          $.001 par value common stock

Check whether the issuer (1) has 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
    -----    -----

<PAGE>


Check here if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.
[X]

Issuer's revenues for its most recent fiscal year:  $41,430.

As of September 30, 2004, the aggregate market value of the voting stock held by
non-affiliates of the issuer was approximately $197,750. Because there is no
public trading market for the issuer's common stock, this calculation is based
upon the sale price of $.05 per share of common stock sold in the Registrant's
initial public offering pursuant to a Registration Statement on Form SB-2/A
declared effective by the U.S. Securities and Exchange Commission on February 8,
2001 (Registration No. 333-32908). Without asserting that any director or
executive officer of the issuer, or the beneficial owner of more than five
percent of the issuer's common stock, is an affiliate, the shares of which they
are the beneficial owners have been deemed to be owned by affiliates solely for
this calculation.

The number of shares of the Registrant's $.001 par value common stock
outstanding as of September 30, 2004 was 50,155,000.


<PAGE>




                       COL China Online International Inc.
                     10-KSB for the Year Ended June 30, 2004

                                Table of Contents

PART I........................................................................2

ITEM 1.      BUSINESS.........................................................2

ITEM 2.      PROPERTIES......................................................16

ITEM 3.      LEGAL PROCEEDINGS...............................................17

ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............17

PART II......................................................................17

ITEM 5.      MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
             STOCKHOLDER MATTERS.............................................17

ITEM 6.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
             OF OPERATIONS AND FINANCIAL CONDITION...........................17

ITEM 7.      FINANCIAL STATEMENTS............................................21

ITEM 8.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
             ACCOUNTING AND FINANCIAL DISCLOSURE.............................21

ITEM 8A.     CONTROLS AND PROCEDURES.........................................22

PART III.....................................................................22

ITEM 9.      DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
             CONTROL PERSONS:  COMPLIANCE WITH SECTION 16(A)
             OF THE EXCHANGE ACT.............................................22

ITEM 10.     EXECUTIVE COMPENSATION..........................................24

ITEM 11.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
             AND MANAGEMENT..................................................26

ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................27

ITEM 13.     EXHIBITS AND REPORTS ON FORM 8-K................................29

ITEM 14.     PRINCIPAL ACCOUNTANT FEES AND SERVICES..........................32

                                       -1-

<PAGE>


                                     PART I

Item 1.  Business

Overview Of COL International

     COL China Online International Inc. ("COL International") was formed for
the purpose of acquiring and conducting the engineering services and the
internet related business of Migration Development Limited, a British Virgin
Islands company ("Migration") and raising equity capital to be utilized in the
business of Migration. Beginning in approximately January 2004, the Company
focused its business on internet and telecommunication convergence solutions and
customer-specific solutions for the retail industry.

     Initial Public Offering - In July 2001, the Company completed its initial
public offering of common stock. The Company issued 1,655,000 shares of common
stock in this offering at US$0.05 per share (approximately US$83,000). All net
proceeds from this offering were used to pay costs associated with the offering.

     Going concern - The ability of COL International to continue operations as
a going concern is dependent upon continued support from Honview International
Limited ("Honview"), a former shareholder of Migration, which is now a major
stockholder of COL International, until such time as, when or if, the combined
entity of COL International and Migration achieve profitable operations and/or
additional funds are raised in future private and public offerings.

     Acquisition - In September 2001, the Company acquired all the outstanding
shares of common stock of Migration in exchange for 40.2 million shares of the
Company's common stock. As a result of the acquisition, Migration became a
wholly owned subsidiary of COL International. However, for accounting purposes,
this transaction is treated as a reverse acquisition, whereby Migration is
considered as an acquirer.

     Migration was formed on May 18, 1998 and has two subsidiaries, Shenzhen
Knowledge & Communications Co., Ltd. (formerly Shenzhen Rayes Electronic Systems
Co., Ltd.) ("Joint Venture") and Shanghai Shangyi Science and Trade Information
Consulting Co., Ltd. ("Shangyi"), in which it has 90% and 70% equity interests,
respectively. The Joint Venture and Shangyi are Sino-foreign equity joint
ventures in the People's Republic of China (the "PRC"). Most of the operations
of Migration are through the Joint Venture, which did not commence substantive
operations until the Spring of 1999.

     Migration initially provided marketing and technical services for Internet
Service Providers ("ISP") and value-added services generally related to the
installation of computer network systems (i.e., Local Area Networks or LANs) in
the PRC.

     Sale of Wuhan Operations - On July 5, 2002, COL International entered into
a sales and purchase agreement with a third party to sell the Company's Wuhan
operations for an aggregate sales price of Rmb750,000. The sale included the
entire ownership of the Wuhan Education Net and accounts receivables of Wuhan
branch of the Joint Venture. The transaction resulted in a net gain of
approximately Rmb375,439, which was recognized in the fiscal year ended June 30,
2003. The decision to sell the business of Wuhan branch was made after
consideration of the past operating results of the branch.

     Plan of Operations - Because the Company's past business model was not
successful, the Company has developed a new business model. The Company is
developing two IT businesses ("COL Convergence" and "COL Interactive"). COL
Convergence will focus on the provision of internet and telecommunication
convergence solutions and COL Interactive will focus on providing
customer-specific solutions for the retail industry.

                                      -2-

<PAGE>
<TABLE>
<CAPTION>


     As of January 1, 2004, all assets and operations unrelated to the business
of COL Convergence and COL Interactive have been disposed of.

     The Company has a negative cash flow from operating activities and is
seeking additional financing in order to satisfy its cash requirements. The
Company anticipates that it will require Rmb6,000,000 (or approximately
US$724,000) in financing during the next 12 months to satisfy its cash
requirements. COL International, through its Migration subsidiary, currently
employs approximately 30 employees in China. The Company may recruit more staff
should its plan of operations prove successful, of which there is no assurance.

     We anticipate purchases of equipment amounting up to approximately
Rmb500,000 (or approximately US$61,000) in the coming year in order to implement
the Company's new business plan.

Exchange Rate

     In this report, references to "U.S. dollars," "US$" or "$" are to U.S.
currency and references to "Renminbi," "RMB" or "Rmb" are to China's currency.
Solely for the convenience of the reader, this report contains translations of
certain Renminbi amounts into U.S. dollars at specified rates. These
translations should not be construed as representations that the Renminbi
amounts actually represent such U.S. dollar amounts or could be converted into
U.S. dollars at the rate indicated. The Rmb is not a freely convertible
security. See "Risk Factors--A change in currency exchange and devaluation could
substantially affect the joint venture's operations." Unless otherwise stated,
conversion of amounts from Renminbi into United States dollars for the
convenience of the reader has been made at the exchange rate of US$1.00 = Rmb
8.2874, which was close to the exchange rate on June 30, 2004 and is not
expected to have a material effect on the Company's financial statement.

     The following table sets forth certain information concerning exchange
rates between Renminbi and U.S. dollars for the periods indicated:


                                              Noon Buying Rate (1)
                           -------------------------------------------------------
      Calendar Year        Period End     Average (2)             High       Low
      -------------        ----------     -----------             ----       ---
                                                  (Rmb per US$)
                           -------------------------------------------------------
           <S>               <C>             <C>                 <C>        <C>
           1996              8.3284          8.3387              8.5000     8.3267
           1997              8.3099          8.3193              8.3260     8.3099
           1998              8.2789          8.2969              8.3100     8.2778
           1999              8.2795          8.2785              8.2800     8.2770
           2000              8.2774          8.2784              8.2799     8.2768
           2001              8.2766          8.2772              8.2783     8.2766
           2002              8.2771          8.2769              8.2774     8.2765
           2003              8.2776          8.2774              8.2800     8.2767
   2004 (through June)       8.2766          8.2729              8.2774     8.2766

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

(1)  The noon buying rate in New York for cable transfers payable in foreign
     currencies as certified for customs purposes by the Federal Reserve Bank of
     New York.

(2)  Determined by averaging the rates on the last business day of each month
     during the relevant period.

                                      -3-
</TABLE>

<PAGE>


Corporate Structure

     Prior to January 1, 2004, our operations consisted primarily of internet
related services, including business-to-business e-commerce, online distance
learning, network engineering services, website hosting and internet service
provider consulting. Because this past business model was not successful, the
Company has developed a new business model.

     The Company is developing two IT businesses through two divisions. COL
Convergence will focus on the provision of internet and telecommunication
convergence solutions and COL Interactive will focus on providing
customer-specific solutions for the retail industry. As of January 1, 2004, all
assets and operations unrelated to the business of COL Convergence and COL
Interactive had been disposed of.

     Most of our operations are conducted through Shenzhen Knowledge &
Communications Co., Ltd. (formerly Shenzhen Rayes Electronic Systems Co., Ltd.),
a Sino-foreign joint venture, and Migration owns 90 percent of the equity
interests in the Joint Venture.

     Shenzhen Rayes Group Co., Ltd., a privately owned limited liability company
incorporated in China, owns the other ten percent of the equity interests in the
Joint Venture. Migration also owns 70 percent of the outstanding equity
interests of Shanghai Shangyi Science and Trade Information Consulting Co., Ltd,
which owns a Chinese website for trading construction materials.

     The following chart shows the corporate structure of COL International
(inactive entities have been omitted):


                               [GRAPHIC OMITTED]

Business of the Joint Venture

     Prior to January 1, 2004, the Joint Venture conducted business in five
principal areas, including: network engineering, web hosting, integrated
solutions for small and medium sized enterprises, online services for export
companies and business to business e-commerce. A more detailed account of those
areas of business is set forth in the Company's previous filings.

                                      -4-

<PAGE>


     Because the Company's past business model was not successful, the Company
has developed a new business model. The Company is developing two IT businesses
through two divisions. COL Convergence will focus on the provision providing of
internet and telecommunication convergence solutions and COL Interactive will
focus on providing customer-specific solutions for the retail industry.

     COL Convergence Business Overview

     COL Convergence ("COLc") intends to develop as a leading provider of
communication services offering tailored solutions to multinational companies in
China.

     The mission of COLc is to help its customers obtain the communication
environments they need to be able to compete on the highest levels. After a
custom-made plan is developed for each client, COLc plans to deploy and manage
the technology with its experienced staff of engineers and managers.

     COLc is currently discussing possible business engagements with a number of
telecommunication network providers.

     COL Interactive Business Overview

     The aim of COL Interactive ("COLi") is to increase sales for retail groups
and leading Famous Multinational Conglomerates ("FMCG") operating in the greater
China area by implementing and integrating various technologies "In-Store".

     COLi's philosophy is based around "Customer Specific Services". By linking
consumers and their purchasing history and habits with in-store point of
purchasing advertising devices, COLi believes it can market FMCG's products in
the most effective way and increase sales in all areas.

     In-store advertising has the strongest influence over the in-store purchase
decision and impulse buy. COLi plans to take traditional in-store advertisement
to the next level by implementing and integrating its multimedia and interactive
technologies.

     COLi intends to partner with leading retail groups in the region and is
currently negotiating with one of China's largest retail chain stores and a
convenience store chain.

Term And Scope Of Licenses

     On October 30, 1998, Rayes Group was granted a license to operate an ISP in
80 cities, including Shanghai and Wuhan, by the Ministry of Information Industry
and the Telecom Department of China. The business license is valid for five
years and may be renewed thereafter upon approval of that Ministry (or its
designated approval authority). The business license defines the Rayes Group
business scope as "computer, information networks and internet business."

     On September 15, 1999, the State Administration of Industry and Commerce
granted the Joint Venture a certificate of approval to establish its enterprise
and a business license with a business scope for "computer software, hardware
and network systems, and the development of telecommunications hardware." The
term of the business license is for ten years beginning on September 11, 1996,
the date in which the Joint Venture, under the name Neihi Electronic Systems Co.
Ltd., was granted another business license, now expired.

                                      -5-

<PAGE>


Research & Development

     In the year ended June 30, 2004, the Company incurred research and
development costs of Rmb 133,658 (US$16,128). The Company did not incur any
research and development costs during the years ended June 30, 2003 and 2002.
Migration has spent Rmb 154,564 (or approximately US$18,671) on research and
development during fiscal 1999, Rmb 299,153 (or approximately US$36,139) for
fiscal 2000, and Rmb 174,511 (or approximately US$21,081) for fiscal 2001.

Employees

     The Joint Venture is subject to the Sino-foreign Equity Joint Venture
Enterprise Labour Management Regulations. In compliance with those regulations,
the Joint Venture's management may hire and discharge employees and make other
determinations with respect to wages, welfare, insurance and discipline of
employees. The Joint Venture will, as required by law, establish special funds
for enterprise development, employee welfare and incentives, as well as a
general reserve. In addition, the Joint Venture is required to provide its
employees with facilities sufficient to enable the employees to carry out trade
union activities.

     The Joint Venture currently has 30 employees, all of whom are employed full
time.

Taxation

     A Sino-foreign joint venture with a minimum term of ten years that is
engaged in internet services is exempt from state income tax for the first year
after becoming profitable. For two years thereafter, it is eligible for a 50
percent reduction in applicable state income tax. The Joint Venture has not yet
become profitable, and there is no assurance that in the future it will be
eligible for income tax exemption.

Distribution Of Profits

     After provision for social welfare funds for employees and provision for
taxation, the profits, if any, of the Joint Venture will be available for
distribution to the parties in proportion to their respective capital
contributions. Any such distributions must be authorized by the Joint Venture's
board.

Assignment Of Interest

     Any assignment of an interest in the Joint Venture must be approved by the
Chinese government. The Chinese joint venture laws also provide for preemptive
rights and the consent of the other joint venture party for any proposed
assignments by one party to a third party.

Liquidation

     Under the Chinese joint venture laws, the Joint Venture may be liquidated
in certain limited circumstances, including expiration of the ten-year term or
any term of extension, the inability to continue operations due to severe
losses, force majeure, or the failure of a party to honor its obligations under
the joint venture agreement or the Articles Of Association in such a manner as
to impair the operations of the joint venture. The Chinese joint venture laws
provide that, upon liquidation, the net asset value (based on the prevailing
market value of the assets) of a joint venture shall be distributed to the
parties in proportion to their respective registered capital in the joint
venture.

                                      -6-

<PAGE>


Resolution Of Disputes

     In the event of a dispute between the parties, attempts will be made to
resolve the dispute through friendly consultation or mediation. In the absence
of a friendly resolution, the parties have agreed that the matter will first be
referred to the Shenzhen Committee of the International Economic and Trade
Arbitration Commission, whose decisions are final and enforceable in Chinese
courts. The losing party will be liable for the arbitration fees.

Expropriation

     The Chinese joint venture laws provide that China will not nationalize or
requisition enterprises in which foreign funds have been invested. However,
under special circumstances, when public interest requires, enterprises with
foreign capital may be legally requisitioned and appropriate compensation will
be made.

Disclosure Regarding Forward-Looking Statements And Cautionary Statements


     Forward-Looking Statements

     This Annual Report on Form 10-KSB includes "forward-looking statements."
All statements other than statements of historical fact included in this Annual
Report, including without limitation under Item 1: "Business" and Item 6:
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," regarding our financial position, business strategy, plans and
objectives of our management for future operations and capital expenditures, and
other matters, other than historical facts, are forward-looking statements.
Although we believe that the expectations reflected in such forward-looking
statements and the assumptions upon which the forward-looking statements are
based are reasonable, we can give no assurance that such expectations will prove
to have been correct.

     Additional statements concerning important factors that could cause actual
results to differ materially from our expectations are disclosed in the
following "Cautionary Statements" section and elsewhere in this Annual Report.
All written and oral forward-looking statements attributable to us or persons
acting on our behalf subsequent to the date of this Annual Report are expressly
qualified in their entirety by the following Cautionary Statements.


     Cautionary Statements

     In addition to the other information contained in this Annual Report, the
following Cautionary Statements should be considered when evaluating the
forward-looking statements contained in this Annual Report:

Risks Concerning COL International

     Our limited financial resources raise substantial doubt regarding our
ability to continue our operations.

     We cannot assure that we will achieve or sustain profitability or positive
cash flows from our operating activities. COL International's and Migration's
independent auditors have included an explanatory paragraph in their audit
opinions indicating substantial doubt concerning COL International's and
Migration's abilities to continue operations as a going concern.

                                      -7-

<PAGE>


     We may not be able to raise additional capital necessary to operate our
business.

     In order to implement our business plan fully, we will significant amounts
of additional funding. However, we cannot predict that any funds will be
invested in COL International. Similarly, we have no source of revenue to
provide funding. We cannot predict that we will be able to obtain any capital or
any source of revenue.

     Our new business plan is untested and may not be successful.

     Our new business plan is untested. We have not obtained independent market
research to attempt to verify assumptions that serve as the bases for our new
business plans. As a result, our new business plans may not be successful and
may not lead to profitable operations.

     We face strong competition.

     We compete with larger companies that operate in the internet industry. The
internet industry is relatively new and subject to continuing definition.
Therefore, our competitors may be significantly better positioned to compete in
this market. Many of our potential new competitors have longer operating
histories, larger customer bases and databases, greater name recognition, and
have significantly greater financial, technical, and marketing resources than we
do.

     In addition, the Chinese internet market is characterized by an increasing
number of entrants because the start-up costs are low. The presence of these
competitors may have a significant impact on our ability to operate our proposed
business profitably.

     Rapid technology changes may place us at a competitive disadvantage.

     The internet related business in which we intend to operate is
characterized by rapid and significant technological advancements and
introductions of new products and services using new technologies. As new
technologies develop, we may be placed at a competitive disadvantage, and
competitive pressures may force us to implement those new technologies at a
substantial cost. If other companies implement new technologies before us, those
companies may be able to provide enhanced capabilities and superior quality
compared with what we are able to provide. We are at a special disadvantage
vis-a-vis other companies that have been in the industry longer and/or were able
to obtain substantial funding to further develop new technologies. We cannot
ascertain that we will be able to respond to these competitive pressures and
implement new technologies on a timely basis or at an acceptable cost. One or
more of the technologies that we may implement in the future may become
obsolete. If this occurs, our business, financial condition and results of
operations could be materially adversely affected. If we are unable to utilize
the most advanced commercially available technology, our business, financial
condition and results of operations could be materially and adversely affected.

     Threatened trademark infringement case may cause us to change our corporate
name.

     On July 27, 2000, ChinaOnline Inc., a provider of business news and
information regarding China in the United States, sent us a letter claiming that
our use of the CHINAONLINE mark constitutes an infringement and dilution of the
trademark rights of ChinaOnline Inc. in its CHINAONLINE trademark, which they
claimed had been registered in the United States. ChinaOnline Inc. demanded that
we cease and desist all use of the CHINAONLINE mark, including as a company
name. On August 21, 2000, ChinaOnline Inc. sent a second letter stating that it
will take appropriate action in the event that we fail to cease and desist all
use of the CHINAONLINE mark. We have responded to these claims by stating that,

                                      -8-

<PAGE>


under relevant legal principles, the use of our name "COL China Online
International Inc." does not infringe on, dilute or otherwise injure any
trademark rights of the claimant. If ChinaOnline Inc. files a lawsuit and
prevails, we would have to change our corporate name. If ChinaOnline Inc. does
not prevail, we would still incur litigation costs and expenses in connection
with our defense.

     Our computer network is vulnerable to hacking, viruses and other
disruptions causing delays or cessations in our services.

     Inappropriate use of our internet services could jeopardize the security of
confidential information stored in our computer system. Inappropriate use of the
internet includes attempting to gain unauthorized access to information or
systems--commonly known as "cracking" or "hacking." Although we intend to
implement security measures to protect our facilities, such measures could be
circumvented. Alleviating problems caused by computer viruses or other
inappropriate uses or security breaches may require interruptions, delays or
cessation in our services. We do not carry "errors and omissions" or other
insurance covering losses or liabilities caused by computer viruses or security
breaches.

     Failure by third-party suppliers to provide software and hardware
components will affect our ability to operate our portals.

     We depend on third-party suppliers of software and hardware components. We
rely on components that are sourced from only a few suppliers including computer
servers and routers manufactured. The failure of our suppliers to adjust to meet
increasing demand may prevent them from supplying us with components and
products as and when we require them.

     We rely on computer systems that are susceptible to failure and may disrupt
our operations.

     Any system failure or inadequacy that causes interruptions in the
availability of our services, or increases the response time of our services, as
a result of increased traffic or otherwise, could reduce user satisfaction,
future traffic and our attractiveness to advertisers and consumers. We also are
dependent upon website operators in China, all of which have experienced
significant system failures and electrical outages in the past.

     We have limited backup systems and redundancy and we may experience system
failures and electrical outages from time to time. This may disrupt our
operations. We do not presently have a disaster recovery plan in the event of
damage from fire, floods, typhoons, earthquakes, power loss, telecommunications
failures, break-ins and similar events. If any of these occurs, we may
experience a complete system shutdown. To improve performance and to prevent
disruption of our services, we may have to make substantial investments to
deploy additional servers or one or more copies of our websites to mirror our
online resources. Although we carry property insurance with low coverage limits,
our coverage may not be adequate to compensate us for all losses that may occur.
To the extent we do not address the capacity restraints and redundancy described
above, such constraints could have a material adverse effect on our business,
results of operations and financial condition.

     Privacy concerns may prevent us from selling demographically targeted
advertising in the future, thus limiting our business plans.

     To the extent we collect data, we cannot be certain that any trade secret,
copyright or other protection will be available for such data or that others
will not claim rights to such data.

     Ad serving technology enables the use of "cookies," in addition to other
mechanisms, to deliver targeted advertising, to help compile demographic
information, and to limit the frequency with which an advertisement is shown to

                                      -9-

<PAGE>


the user. Cookies are bits of information keyed to a specific server, file
pathway, or directory location that are stored on a user's hard drive and passed
to a website's server through the user's browser software. Cookies are placed on
the user's hard drive without the user's knowledge or consent, but can be
removed by the user at any time. Due to privacy concerns, some internet
commentators, advocates and governmental bodies have suggested that the use of
cookies be limited or eliminated. Any limitation on our ability to use cookies
could impair our future targeting capabilities and adversely affect our
business.

     We may be unable to identify, acquire or commercialize additional
technologies which would limit our ability to expand our operations.

     From time to time, if our resources allow, we intend to explore the
acquisition and subsequent development and commercialization of additional
technologies. We cannot predict whether we will be able to identify any
additional technologies and, even if suitable technologies are identified, we
cannot predict whether we will have sufficient funds to commercialize any such
technologies or whether any such technologies will ultimately be viable.

     Our operations are highly dependent on our majority stockholder.

     Our existence is largely dependent upon the support of Honview
International Limited until such time, if any, that we achieve positive cash
flows from operations or additional funds are raised in private or public
offerings. Honview owns approximately 45.7 percent of our outstanding shares of
common stock.

     Management has controlling ownership of COL International which creates
conflicts of interest.

     Kam Che Chan, our Chairman of the board, and Paul Wong and Qi Yu Zhang, two
of our directors, are considered beneficial owners of 45.7 percent, 45.7 percent
and 34.7 percent, respectively, of our outstanding shares of common stock.
Controlling ownership of our business by our directors could create conflicts of
interest. Although management's duties are directed to the best interests of COL
International, we cannot guarantee that conflicts of interests will not arise.

     We depend on some key employees, including our Chief Executive Officer and
Chief Financial Officer.

     Our success depends on the active participation of Chi Keung Wong, our
Chief Executive Officer and Chief Financial Officer among other key employees.
The loss of the services of any of this individual or any of our other key
employees could have a material adverse effect on us. We currently do not carry,
and do not intend to carry in the future, "key man" insurance for any of our
employees.

Risks Of Doing Business In China

     Our business operations take place primarily in China. Because Chinese
laws, regulations and policies are continually changing, our Chinese operations
will face several risks summarized below.

     Limitations on Chinese economic market reforms may discourage foreign
investment in Chinese businesses.

     The value of investments in Chinese businesses could be adversely affected
by political, economic and social uncertainties in China. The economic reforms
in China in recent years are regarded by China's central government as a way to
introduce economic market forces into China. Given the overriding desire of the

                                      -10-

<PAGE>


central government leadership to maintain stability in China amid rapid social
and economic changes in the country, the economic market reforms of recent years
could be slowed, or even reversed.

     Any change in policy by the Chinese government could adversely affect
investments in Chinese businesses. Changes in policy could result in imposition
of restrictions on currency conversion, imports or the source of suppliers, as
well as new laws affecting joint ventures and foreign-owned enterprises doing
business in China. Although China has been pursuing economic reforms for the
past two decades, events such as a change in leadership or social disruptions
that may occur upon the proposed privatization of certain state-owned industries
could significantly affect the government's ability to continue with its reform.

     We face economic risks in doing business in China.

     As a developing nation, China's economy is more volatile than that of
developed Western industrial economies. It differs significantly from that of
the U.S. or a Western European Country in such respects as structure, level of
development, capital reinvestment, resource allocation and self-sufficiency.

     Only in recent years has the Chinese economy moved from what had been a
command economy through the 1970s to one that during the 1990s encouraged
substantial private economic activity. In 1993, the Constitution of China was
amended to reinforce such economic reforms.

     The trends of the 1990s indicate that future policies of the Chinese
government will emphasize greater utilization of market forces. For example, in
1999 the Government announced plans to amend the Chinese Constitution to
recognize private property, although private business will officially remain
subordinated to the state-owned companies which are the mainstay of the Chinese
economy.

     However, there can be no assurance that, under some circumstances, the
government's pursuit of economic reforms will not be restrained or curtailed.
Actions by the central government of China could have a significant adverse
effect on economic conditions in the country as a whole and on the economic
prospects for our Chinese operations.

     Regulation of the information industry in China may adversely affect our
business.

     China has enacted regulations governing internet access and the
distribution of news and other information. The Propaganda Department of the
Communist Party has been given the responsibility to censor news published in
China to ensure, supervise and control political correctness. The Ministry of
Information Industry has published implementing regulations that subject online
information providers to potential liability for content included on their
portals and the actions of subscribers and others using their systems, including
liability for violation of Chinese laws prohibiting the distribution of content
deemed to be socially destabilizing. Because many Chinese laws, regulations and
legal requirements with regard to the internet are relatively new and untested,
their interpretation and enforcement of what is deemed to be socially
destabilizing by Chinese authorities may involve significant uncertainty.
Moreover, the Chinese legal system is a civil law system in which decided legal
cases have little precedential value. As a result, in many situations it is
difficult to determine the type of content that may result in liability. We
cannot predict the effect of further developments in the Chinese legal system,
particularly with regard to the internet, including the promulgation of new
laws, changes to existing laws or the interpretation or enforcement thereof, or
the preemption of local regulations by national laws.

     Periodically, the Ministry of Public Security has stopped the distribution
of information over the internet which it believes to be socially destabilizing.
The Ministry of Public Security has the authority to cause any local ISP to

                                      -11-

<PAGE>


block any website(s) maintained outside of China at its sole discretion.
Websites that are blocked in China include many major news-related websites such
as www.cnn.com, www.latimes.com, www.nytimes.com and www.appledaily.com.hk. The
Chinese government has also expressed its intention to closely control possible
new areas of business presented by the internet, such as internet telephony.

     The Ministry of Information Industry also regulates access to the internet
by imposing strict licensing requirements and requiring ISPs in China to use the
international inbound and outbound internet backbones. The government has
granted Rayes Group a license to operate an ISP nationwide which expires on
October 30, 2003 and which is subject to renewal if all governmental filing
requirements are met. We cannot provide assurance that future changes in Chinese
government policies affecting the provision of information services, including
the provision of online services and internet access, will not impose additional
regulatory requirements on us or our service providers, intensify competition in
the Chinese information industry or otherwise have a material adverse effect on
our business, financial condition and results of operations. However, in view of
the Company's planned change in business plans, there should be no material
impact on the Company's future business. For more information regarding term and
scope of license, see "COL International--Terms And Scopes Of Licenses" above.

     The Chinese legal and judicial system may negatively impact foreign
investors.

     In 1982, the National People's Congress amended the Constitution of China
to authorize foreign investment and guarantee the "lawful rights and interests"
of foreign investors in China. However, China's system of laws is not yet
comprehensive.

     The legal and judicial systems in China are still rudimentary, and
enforcement of existing laws is inconsistent. Many judges in China lack the
depth of legal training and experience that would be expected of a judge in a
more developed country. Because the Chinese judiciary is relatively
inexperienced in enforcing the laws that do exist, anticipation of judicial
decision-making is more uncertain than would be expected in a more developed
country.

     It may be impossible to obtain swift and equitable enforcement of laws that
do exist, or to obtain enforcement of the judgment of one court by a court of
another jurisdiction. China's legal system is based on written statutes; a
decision by one judge does not set a legal precedent that is required to be
followed by judges in other cases. In addition, the interpretation of Chinese
laws may be varied to reflect domestic political changes.

     The promulgation of new laws, changes to existing laws and the pre-emption
of local regulations by national laws may adversely affect foreign investors.
However, the trend of legislation over the last 20 years has significantly
enhanced the protection of foreign investment and allowed for more control by
foreign parties of their investments in Chinese enterprises. There can be no
assurance that a change in leadership, social or political disruption, or
unforeseen circumstances affecting China's political, economic or social life,
will not affect the Chinese government's ability to continue to support and
pursue these reforms. Such a shift could have a material adverse effect on our
business and prospects.

     China's recent entry into the WTO is not yet fully integrated; China
maintains strict restrictions on foreign investment in internet services.

     In late 1999, China and the United States reached a bilateral agreement on
China's admission to the World Trade Organization, which regulates trading among
its members. China became a member in 2001. China's decision to become a member
of the WTO is an indication of further changes in favor of foreign investment

                                      -12-

<PAGE>


and trade. However, these changes are likely to be phased in over a period of
several years. At the present time, China has not yet agreed to all aspects of
WTO membership.

     China has made commitments to the WTO in all major service categories,
including internet services, agreeing to accede to the Basic Telecommunications
And Financial Services Agreement. Under this agreement, China has agreed to
implement competitive regulatory principles, including cost-based pricing,
interconnection rights, and independent regulatory authority, as well as
allowing foreign suppliers to use any technology they choose to provide. Under
its WTO agreement concerning internet services, China currently allows no
foreign investment in internet services, but will allow up to 50 percent foreign
ownership in domestic services within two years. Although China's current
commitments will allow further foreign investment and growth of our business in
Shanghai, we cannot predict that China will comply with these commitments.

     The Chinese internet industry is a developing market and has not been
proven as an effective commercial medium.

     The market for internet services in China has begun to develop only
recently. Since the internet is an unproven medium for advertising and other
commercial services, our future operating results from online advertising and
web solutions services will depend substantially upon the increased use of the
internet for information, publication, distribution and commerce and the
emergence of the internet as an effective advertising medium in China. Many of
our customers will have limited experience with the internet as an advertising
medium or as a sales and distribution channel, will not have devoted a
significant portion of their advertising expenditures or other available funds
to web-based advertising or websites development, and may not find the internet
to be effective for promoting their products and services relative to
traditional print and broadcast media.

     Critical issues concerning the commercial use of the internet in China,
such as security, reliability, cost, ease of deployment, administration and
quality of service may affect the extent of utilization of the internet to solve
business needs. For example, the cost of access may prevent many potential users
in China from using the internet. Moreover, the use of credit cards in sales
transactions is not a common practice in parts of China. Until the use of credit
cards, or another alternative viable means of electronic payment becomes more
prevalent, the development of e-commerce through our portal network will be
seriously impeded. In addition, even when credit cards or another means of
electronic payment becomes prevalent throughout China, consumers will have to be
confident that adequate security measures protect electronic sale transactions
conducted over the internet and prevent fraud.

     Currently, there are a limited number of websites on the internet that
provide content for Chinese browsers in their own languages. We can provide no
assurances that content provided through the internet will increase and become
an attractive source of information for the Chinese market that will generate
advertising on our advertising affiliates.

     Our entry into the Chinese internet market depends on the establishment of
an adequate telecommunications infrastructure in China by the Chinese
government.

     The telecommunications infrastructure in China is not fully developed. In
addition, access to the internet is accomplished primarily by means of the
government's backbone of separate national interconnecting networks that connect
with the international gateway to the internet, which is owned and operated by
the Chinese government and is the only channel through which the domestic
Chinese internet network can connect to the international internet network.
Although private sector ISPs exist in China, almost all access to the internet
is accomplished through ChinaNet, China's primary commercial network, which is
owned and operated by the Chinese government. Indeed, the Rayes Group has the

                                      -13-

<PAGE>


right to provide access to the internet through ChinaNet. As a result, we are
required to depend on the Chinese government to establish and maintain a
reliable internet infrastructure to reach a broad base of internet users in
China. We will have no means of getting access to alternative networks and
services, on a timely basis or at all, in the event of any disruption or
failure. We cannot predict that the internet infrastructure in China will
support the demands associated with continued growth. If the necessary
infrastructure standards or protocols or complementary products, services or
facilities are not developed by the Chinese government, our business could be
materially and adversely affected.

Risks Relating To Our Operations

     The Joint Venture may be liquidated which may negatively impact our
operations.

     The Joint Venture was established for an initial term of ten years and may
be extended by the mutual consent of the parties to the Joint Venture agreement,
subject to the approval of the relevant Chinese authorities. In the event the
term of the Joint Venture is not extended, it will be dissolved and liquidated
subject to the provisions of the applicable law and the Joint Venture agreement.
In addition, the Joint Venture may be liquidated prior to the expiration of its
designated term of ten years upon the occurrence of certain other events. These
events include a force majeure, as a result of which performance of the
obligations of the parties under the Joint Venture agreement has become
impossible, or due to losses suffered in successive years. If the Joint Venture
is unable to continue operation and the members of the board of directors of the
Joint Venture unanimously agree, it may be liquidated ahead of the expiration
date of its initial term.

     The Joint Venture has not yet achieved operating profitability.

     The Joint Venture is attempting to achieve operating profitability. Its
ability to sustain long-term profitability has not yet been tested. The Joint
Venture also faces the risk of increased competition from other large internet
service and content providers.

     Any adverse changes to China's internet industry and future changes to
government relations regarding the internet industry and market in China could
restrict our growth or profitability.


     The Joint Venture may be expropriated by the Chinese government.

     When public interest requires, the Chinese government may legally
requisition part or all of enterprises in which foreign funds have been invested
and pay appropriate compensation in return. The Joint Venture, which by
definition was formed partially with foreign capital funds, may be subject to
expropriation by the Chinese government.

     A change in currency exchange and devaluation could substantially affect
the Joint Venture's operations.

     The Chinese government imposes controls on foreign exchange and China's
currency, the Renminbi, is not yet freely convertible into foreign currency. We
believe that it may be another decade before the Chinese government permits the
Renminbi to be freely convertible.

     In 1993, the People's Bank of China promulgated the Circular Concerning
Extension of the Reform of the Foreign Exchange Control to launch measures for
the adoption of a controlled floating exchange rate system based on market
supply and demand. It also established an integrated and standardized inter-bank
exchange market in order to enable the Renminbi to become freely convertible on

                                      -14-

<PAGE>


a gradual basis. If certain prescribed conditions are met, an approved foreign
invested enterprise may purchase foreign currencies from banks at the rate
published by the Bank of China.

     We conduct substantially all of our operations in China through the Joint
Venture whose financial performance and condition is measured in terms of
Renminbi. Any devaluation of the Renminbi against the U.S. dollar will have an
adverse effect on our financial performance and asset value, when measured in
U.S. dollars.

     Our services are currently being provided, through the Joint Venture, in
Renminbi denominated transactions. We are not able to hedge Renminbi against the
U.S. dollar exchange rate exposure in China because neither the Bank of China
nor other financial institutions authorized to engage in foreign exchange
transactions offer forward exchange contracts.

Risks Related To Our Common Stock

     We cannot guarantee that our attempt to form industry alliances will be
successful.

     We will attempt to limit financial exposure by forming industry alliances
in situations in which our access to inexpensive labor and the Chinese market
can be complemented with the financial resources and operating expertise of
established companies. If we are not able to form these alliances, our ability
to fully implement our business plans could be limited. This would have a
material, negative effect on our business, financial condition and results of
operations.

     No cash dividends paid with respect to our shares.

     We have not paid cash dividends on our shares and, at the present time, do
not anticipate paying any cash dividends in the foreseeable future. If our
contemplated future operations are profitable, of which there can be no
assurance, any income received would be applied to our business rather than to
the payment of dividends. Any decision of whether to pay cash dividends on our
shares will depend upon our earnings, if any, at the time, as well as our
financial requirements and other factors. It is unlikely that we will pay cash
dividends in the near future.

     We may have dilution problems resulting from subsequent financings.

     We have no book value for our shares. In addition, we anticipate we will
need to raise capital through one or more future private placements and/or
public offerings. As a result of these financings, ownership interests in COL
International may be greatly diluted.

     There is no trading market or other liquidity for our shares.

     There currently is not a market for our shares, and there is no assurance
that a trading market will develop. Because of this current and possible future
lack of a market, stockholders may be unable to sell their shares when they wish
to do so. There is no assurance that any stockholder will be able to use our
shares as collateral for a loan or other matter.

     Even if a trading market develops, stock prices may be volatile.

         It is currently anticipated that, even if a market does develop, the
price of the common stock will be low and also may be volatile. Many brokerage
firms may not effect transactions and may not deal with low priced securities as
it may not be economical for them to do so. This could have an adverse effect on
developing and sustaining a market for our securities. In addition, there is no
assurance that an stockholder will be able to use our securities as collateral.

                                      -15-

<PAGE>


     If a market does develop, trading in the common stock, if any, will occur
in the over-the-counter market.

     Even if a market develops, our common stock may be subject to penny stock
regulation.

     The SEC has adopted rules that regulate broker-dealer practices in
connection with transactions in "penny stocks." Generally, penny stocks are
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on the Nasdaq
system). Even if a market for the common stock develops, if our shares are
traded for less than $5 per share, the shares will be subject to the SEC's penny
stock rules unless (1) our net tangible assets exceed $5,000,000 during the
first three years of continuous operations or $2,000,000 after our first three
years of continuous operations; or (2) we have had average revenue of at least
$6,000,000 for the last three years. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document prescribed by the
SEC that provides information about penny stocks and the nature and level of
risks in the penny stock market. The broker-dealer also must provide the
customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer's account. In addition, the penny stock rules require that prior to
a transaction in a penny stock not otherwise exempt from those rules, the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction. These requirements may have the effect of reducing
the level of trading activity in the secondary market for a stock that becomes
subject to the penny stock rules. Even if a market our shares develops, our
shares may be subject to the penny stock rules and holders of the shares may
find it difficult to sell them.

Item 2.  Properties

     COL maintains an office in the United States at 3176 South Peoria Court,
Suite 100, Aurora, Colorado 80014 through COL's North American representative.
The cost is included in the $1,000 per month paid to the representative and this
arrangement may be cancelled at any time.

     In February 2000, the Joint Venture purchased its offices in Wuhan,
consisting of approximately 501.3 square meters, for Rmb2,026,255 (US$244,766)
and has a related obligation for Rmb1,500,000 (US$181,200). In December 2000,
the Joint Venture entered into a supplemental agreement with the seller of this
property requiring a further down payment of Rmb110,000 that was paid in early
January 2001. This agreement also requires that the remaining balance of
Rmb1,390,000, plus accrued interest at the rate of 5.31% per annum, be repaid by
monthly installments of Rmb26,428 for five years during the period from January
2001 to December 2005. This property was not included in the divestiture of the
Wuhan operations in July 2002. The Joint Venture disposed of its Wuhan property
in November 2003 for a total consideration of Rmb1,911,486 (US$230,650) and
resulted in loss on disposal of Rmb230,750 (US$27,843).

     The Joint Venture also has an eight-year lease that expires on April 24,
2008 on an approximately 7,000 square foot office in Shanghai at a cost of
approximately $2,300 per month for the first three years, approximately $2,600
for the following three years, and approximately $2,900 per month for the
remainder of the lease. The lease is renewable upon mutual consent of the
parties on the expiration date. Our headquarters for our Chinese operations are
located at the Shanghai property.

                                      -16-


<PAGE>


     All properties are in good condition.

Item 3.  Legal Proceedings

     On July 27, 2000, ChinaOnline Inc., a provider of business news and
information regarding China in the United States, sent us a letter claiming that
our use of the CHINAONLINE mark constitutes an infringement and dilution of the
trademark rights of ChinaOnline Inc. in its CHINAONLINE trademark, which they
claimed had been registered in the United States. ChinaOnline Inc. demanded that
we cease and desist all use of the CHINAONLINE mark, including as a company
name. On August 21, 2000, ChinaOnline Inc. sent a second letter stating that it
will take appropriate action in the event that we fail to cease and desist all
use of the CHINAONLINE mark. We have responded to these claims by stating that,
under relevant legal principles, the use of our name "COL China Online
International Inc." does not infringe on, dilute or otherwise injure any
trademark rights of the claimant.

     Except as described above, we know of no litigation pending, threatened, or
contemplated, or unsatisfied judgments against COL International, or any
proceedings of which the Joint Venture is a party. We know of no legal actions
pending or threatened, or judgment entered against any of our officers or
directors in their capacities as such.

Item 4.  Submission of Matters to a Vote of Security Holders

     Not applicable.

                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

     There is no established public trading market for any of COL
International's securities, and there is no assurance that a trading market will
develop. To the extent that a trading market in the common stock develops, of
which there is no assurance, it currently is anticipated that the common stock
will be quoted on the Electronic Bulletin Board. It should be assumed that even
if the common stock is eventually quoted on the Electronic Bulletin Board, of
which there is no assurance, there will be an extremely limited trading market -
and very little liquidity - for the common stock.

Recent Sales Of Unregistered Securities

     Not applicable.

Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations

     This document contains certain forward-looking statements that involve
risks and uncertainties, such as statements of the Company's plans, objectives,
expectations and intentions. When used in this document, the words "expects",
"anticipates", "intends" and "plans" and similar expressions are intended to
identify certain of these forward-looking statements. The cautionary statements
made in this document should be read as being applicable to all related
forward-looking statements wherever they appear in this document. Our actual
results could differ materially from those discussed in this document. Factors
that could cause or contribute to such difference include those discussed below.

     The following is COL International's plan of operation and a discussion and
comparison of the financial condition and results of operations of COL
International as of June 30, 2004 and the periods then ended. These discussions

                                      -17-

<PAGE>


should be read in conjunction with our financial statements, the notes to the
financial statements, and the other financial data included elsewhere in this
report.

History

     COL International was incorporated for the purpose of acquiring Migration
and raising equity capital. Prior to the acquisition of Migration on September
24, 2001, COL International was considered to be in the development stage, due
to its limited operations and lack of revenues.

     Initial Public Offering - In July 2001, the Company completed its initial
public offering of common stock. The Company issued 1,655,000 shares of common
stock in this offering at US$0.05 per share (approximately US$83,000). All net
proceeds from this offering were used to pay costs associated with the offering.

     Going concern - The ability of COL International to continue operations as
a going concern is dependent upon the continuing support from Honview
International Limited ("Honview"), a former shareholder of Migration, which is
now a major stockholder of COL International, until such time as, when or if,
the combined entity of COL International and Migration achieve profitable
operations and/or additional funds are raised in future private and public
offerings.

     Acquisition - In September 2001, the Company acquired all the outstanding
shares of common stock of Migration in exchange for 40.2 million shares of the
Company's common stock. As a result of the acquisition, Migration became a
wholly owned subsidiary of COL International. However, for accounting purposes,
this transaction is treated as a reverse acquisition, whereby Migration is
considered as an acquirer.

     Migration was formed on May 18, 1998 and has two subsidiaries, Shenzhen
Knowledge & Communications Co., Ltd. (formerly Shenzhen Rayes Electronic Systems
Co., Ltd.) ("Joint Venture") and Shanghai Shangyi Science and Trade Information
Consulting Co., Ltd. ("Shangyi"), in which it has 90% and 70% equity interests,
respectively. The Joint Venture and Shangyi are Sino-foreign equity joint
ventures in the People's Republic of China (the "PRC"). Most of the operations
of Migration are through the Joint Venture, which did not commence substantive
operations until the Spring of 1999.

     Migration initially provided marketing and technical services for Internet
Service Providers ("ISP") and value-added services generally related to the
installation of computer network systems (i.e., Local Area Networks or LANs) in
the PRC.

     Disposal - COL International terminated the Education Net business in Wuhan
by disposal of its entire interest in and assets of Education Net for a total
consideration of Rmb750,000 (US$90,502) in July 2002 and since then the
operation of Education Net in Wuhan was ceased. Prior to the disposal of the
Wuhan operations, the Wuhan business, including Education Net, recorded an
operating loss of Rmb450,666 (US$54,380) from ordinary activities during the
year ended June 30, 2003, while the operating loss of the year ended June 30,
2001 and 2002 was Rmb3,284,835 and Rmb3,292,697, respectively. The non-recurring
transaction related to the disposal of Education Net resulted in gain on
disposal of equipment of Rmb385,690 (US$46,539) as well as a reduction of staff
welfare liabilities of Rmb436,479 (US$52,668), totaling Rmb822,169 (US$99,207),
which was included in the statement of operations, for the year ended June 30,
2003. The Company also disposed of the two properties in Wuhan in November 2003
for a total consideration of Rmb1,911,486 (US$230,650) and resulted in loss on
disposal of Rmb 230,750 (US$27,843).

                                      -18-

<PAGE>


Overview of Operations

     Plan of Operations - Because the Company's past business model was not
successful, the Company has developed a new business model. The Company is
developing two IT businesses through two divisions of the Company's Migration
subsidiary. COL Convergence ("COLc") will focus on the provision of internet and
telecommunication convergence solutions and COL Interactive ("COLi") will focus
on providing customer-specific solutions for the retail industry.

     As of January 1, 2004, all assets and operations unrelated to the business
of COL Convergence and COL Interactive have been disposed of.

     The Company has a negative cash flow from operating activities and is
seeking additional financing in order to satisfy its cash requirements. The
Company anticipates that it will require approximately Rmb6,000,000 (or
approximately US$724,000) in financing during the next 12 months to satisfy its
cash requirements for the development of the Company's new business plan. The
Company, through its Migration subsidiary, currently employs approximately 30
employees in China. The Company may recruit more staff should the above plan of
operations are in place.

     We anticipate purchases of equipment amounting up to approximately
Rmb500,000 (or approximately US$61,000) the coming year in order to implement
the Company's new business plan.

     COL Convergence - COL Convergence ("COLc") intends to develop as a leading
provider of communication services offering tailored solutions to multinational
companies in China.

     The mission of COLc is to help its customers obtain the communication
environments they need to be able to compete on the highest levels. After a
custom-made plan is developed for each client, COLc plans to deploy and manage
the technology with its experienced staff of engineers and managers.

     COLc is currently discussing possible business engagements with a number of
telecommunication network providers.

     COL Interactive - The aim of COLi is to increase sales for retail groups
and leading Famous Multinational Conglomerates ("FMCG") operating in the greater
China area by implementing and integrating various technologies "In-Store".

     COLi's philosophy is based around "Customer Specific Services". By linking
consumers and their purchasing history and habits with in-store point of
purchasing advertising devices, COLi believes it can market FMCG's products in
the most effective way and increase sales in all areas.

     In-store advertising has the strongest influence over the in-store purchase
decision and impulse buy. COLi plans to take traditional in-store advertisement
to the next level by implementing and integrating its multimedia and interactive
technologies.

     COLi intends to partner with leading retail groups in the region and is
currently negotiating with one of China's largest retail chain stores and a
convenience store chain.

Results of Operations

     Revenues for the year ended June 30, 2004 include services commission
revenue of Rmb128,008 (US$15,446), in-store advertising revenue Rmb171,600
(US$20,706) and marketing fees received from Shenzhen Rayes Group Co., Ltd.
("Rayes Group") of Rmb43,741 (US$5,278) compared to services commission revenues
of Rmb0 and Rmb0, in-store advertising revenues Rmb0 and Rmb0 and marketing fees
received from Shenzhen Rays Group Co., Ltd. of Rmb484,941 and Rmb431,405 for the
years ended June 30, 2003 and 2002 respectively. The Company contracted with a

                                      -19-

<PAGE>


telecommunication services company selling IDD (IP phone) to end-users and
receives telecommunication services commission income from the agent, which is a
percentage of monthly usage end-users.

     The Company contracted with a supermarket, which allowed COL International
to install projectors in its shops. In-store advertising income will eventually
be derived from projecting advertising programs from the projectors installed in
supermarkets. The real operation has not been commenced, however there were
tests run during the year so income was derived.

     The ISP services business was terminated and transferred to a third party
in September 2003. The termination led to the significant decrease in marketing
fees. In the past, marketing fees were related to the Joint Venture's share of
50 percent of the revenues generated from ISP services owned by a minority
shareholder, Rayes Group, and computer hosting of web sites for customers.

     In connection with these services, the Company has an agreement with Rayes
Group to reimburse Rayes Group for its actual transmission (i.e., telephone
line) costs, provided that Rayes Group will pay all incremental costs related to
expansion of the telecommunications facilities related to the ISP operations.
These amounts totaled Rmb120,000 (US$14,480), Rmb1,100,882 and Rmb1,021,096 for
the years ended June 30, 2004, 2003 and 2002, respectively. The Joint Venture
has no long-term commitments in connection with its telecommunication costs
other than management fees payable to the Rayes Group for providing services.
The decrease in telecommunication costs is primarily due to the ceasing of the
Company's related ISP business.

     For the year ended June 30, 2004, the Company had other income of Rmb3,213
(US$388) as compared to Rmb147,271 and Rmb124,306 for the years ended June 30,
2003 and 2002. "Other income" primarily represents interest income and
miscellaneous income. The net decrease in other income is primarily due to a
decrease in miscellaneous income.

     During the year, the Company purchased and leased out a system of computer
network and software for generating lease income, the cost of the system is
approximately Rmb1,976,000 (US$238,456) and has been recorded in net investment
in the lease including in the Company's consolidated balance sheet with a
current portion of Rmb988,293 (US$119,252) as of June 30, 2004. The relevant
lease income for the years ended June 30, 2004 and 2003 was Rmb138,594
(US$16,723) and Rmb0, respectively.

     General and administrative costs include salaries, rent, travel and other
overhead costs. For the years ended June 30, 2004, 2003 and 2002, general and
administrative costs totaled Rmb8,110,339 (US$978,635), Rmb9,543,490 and
Rmb11,918,576, respectively. The decrease in general and administrative costs in
2004 was mainly a result of the closing of the Wuhan Branch and of the Company's
related business Rmb657,659 and Rmb4,410,725 ceased to operate the construction
net of the Company's related business.

     Amortization and depreciation expense for the years ended June 30, 2004,
2003 and 2002 was Rmb597,968 (US$72,154), Rmb657,659 and Rmb4,410,725
respectively. The decrease is due to some fixed assets fully depreciated in
2003.

     The Company has not recognized any future tax benefits resulting from its
operating losses due to the uncertainty of future realization. No share of loss
has been absorbed by minority shareholder for the years ended June 30, 2004 and
2003 as its initial capital contribution was fully absorbed.

     The above has resulted in net losses of Rmb8,756,885 (US$1,056,650),
Rmb9,712,749 and Rmb17,946,607 for the years ended June 30, 2004, 2003 and 2002
respectively. The Company expects to continue to incur losses until its services
are more fully developed and accepted in China.

                                      -20-

<PAGE>


Liquidity and Capital Resources

     COL's ability to continue operations is currently dependent upon continuing
financial support from its majority stockholder. As of June 30, 2004 and 2003,
the Company had a negative working capital of Rmb287,792 (US$34,726) and
negative working capital of Rmb990,466, respectively. As of June 30, 2004,
advances from the majority stockholder totaled Rmb71,059,244 (US$8,574,371). The
Company's management believes the majority stockholder will continue to provide
financial support to the Company, although the majority stockholder's agreement
with the Company to provide financial support up to US$8 million expired January
1, 2004.

     Included in liabilities as of June 30, 2003 were mortgage loans payable of
Rmb860,612, which were incurred in connection with the purchase of office space
and staff quarters in Wuhan, China. The Company has no mortgage loans payable as
of June 30, 2004 because the properties were wholly disposed of during the year.

     Cash used in operating activities for the year ended June 30, 2004 was
Rmb9,225,399 (US$1,113,184) as compared with Rmb10,623,731 for the year ended
June 30, 2003. The cash used in operations was to fund operating losses of
Rmb8,756,885 (US$1,056,650) and Rmb9,712,749, generally offset by non-cash
expenses related to amortization and depreciation of Rmb607,189 (US$73,266) and
Rmb657,569 for the years ended June 30, 2004 and 2003, respectively.

     Cash provided for investing activities of Rmb1,692,434 (US$204,218) for the
year ended June 30, 2004 was due to proceeds generated from disposal of
properties during the year compared to cash used in investing activities for the
year ended June 30, 2003 was Rmb166,606.

     Cash flows from financing activities have generally come from advances by
the majority stockholder of the Company. During the years ended June 30, 2004
and 2003, the majority stockholder has advanced Rmb7,981,379 (US$963,074) and
Rmb11,293,434, respectively.

Critical Accounting Policies

     The Company's significant accounting policies are described in note 2 to
the financial statements for the years ended June 30, 2004, 2003 and 2002
included in the Company's Form 10 KSB in the accompanying financial statements
and notes to consolidated financial statements. The Company believes its most
critical accounting policies include accounting for provision for doubtful debts
and impairment loss provision.

     No provision for impairment loss on net investment in the lease for the
year ended June 30, 2004, because the recoverable amount of net investment in
the lease is estimated to be higher than its carrying value at the year-end date
by the management. Provision for impairment loss on fixed assets for the year
ended June 30, 2004 was Rmb9,221 (US$1,113).


Item 7.  Financial Statements

     The financial statements and schedules that constitute Item 7 of this
Annual Report on Form 10-KSB are included in Item 13 below.

Item 8.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

     Not applicable.

                                      -21-

<PAGE>


Item 8A. Controls and Procedures

     As of the end of the period covered by this report, the Company conducted
an evaluation under the supervision and with the participation of the principal
executive officer and principal financial officer, of the Company's disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (the "Exchange Act")). Based on this evaluation,
the principal executive officer and principal financial officer concluded that
the Company's disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms. There was no change in the Company's internal control over financial
reporting during the Company's most recently completed fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.

                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons: Compliance
with Section 16(a) of the Exchange Act

Directors And Officers

     Our directors and executive officers are listed below, including their
respective names, ages and positions with COL International.

   NAME              Age           Position with COL International
   ----              ---           -------------------------------
Kam Che Chan         55     Chairman of the Board
Chi Keung Wong       64     Chief Executive Officer and Chief Financial Officer
                            Chief Operating Officer
Anthony Ng           55     Director and Secretary
Paul Wong            54     Director
Qi Yu Zhang          46     Director


     Kam Che Chan has been the General Manager and a director of Hogan
Industries Limited since 1989, which has operations in China, Vietnam, the U.S.
and Mexico and nearly 5,000 staff members. In these capacities, Mr. Chan has
been working in project management and marketing for Hogan Industries. After
majoring in accounting at what is now Hong Kong Baptist University in Hong Kong,
he spent 18 years working in several major certified public accounting firms in
Hong Kong before moving into marketing and management.

     Chi Keung Wong has been a director of the Joint Venture since 1999 and the
Chief Financial Officer of the Joint Venture since 1999. Mr. Wong also has been
a director and Chief Financial Officer of Migration since July 1998. Mr. Wong
was appointed as Chief Executive Officer of the Company effective September 1,
2004. Mr. Wong has 40 years of experience as a financial controller and an
auditor both in Australia and Hong Kong. He started his career in the audit
department of Lowe Bingham & Mathews (now PricewaterhouseCoopers LLP) in 1960
after having graduated in Hong Kong in accounting. He was the Financial
Controller for the YMCA of Darwin, Australia from 1984 through July 1998. Chi
Keung Wong is the brother of Paul Wong, one of the directors of the Company.

                                      -22-

<PAGE>


     Anthony Ng became the Secretary, and also was elected as a director, of COL
International effective March 31, 2002. From March 31, 2002 to September 1, 2004
he served as the Chief Executive Officer of COL International. From 1996 to
1999, Mr. Ng was the Chief Executive Officer of Pan Pacific Strategy
Corporation, a listed company in Canada, which is an investment company with
investments mainly in the Asian region and the People's Republic of China. From
1999 to 2001, Mr. Ng was the Chief Executive Officer of Zuespac Capital Partners
Limited, which is a financial consulting company.

     Paul Wong is the founder, Chief Executive Officer, and Chairman of the
board of directors of Hogan Industries Limited since 1982. Mr. Wong's factories
are suppliers of molded baby bottles to leading U.S. and European brand names as
well as precision scale models to major airlines worldwide. His responsibilities
include new product concepts regarding investments in high tech companies in
Asia.

     Qi Yu Zhang became Chief Executive Officer of the Rayes Group in April
1997. Mr. Zhang was one of the founders and directors of the Rayes Group since
1995. In these capacities, he has been responsible for the ISP and ICP
development and operations of the Rayes Group in more than ten Chinese cities.
Mr. Zhang also became the Chief Executive Officer and a director of Migration in
July 1998. Mr. Zhang is a member of the Computer Engineering Application
Association in China and has obtained advanced degrees after studying Computer
Telecommunications at Xian Electronic Technology University.

Following are biographies of the directors and certain key employees of the
Joint Venture:

Directors And Other Key Employees Of The Joint Venture

     Kam Che Chan has been the Deputy Chairman of the board of the Joint Venture
since 1999. Refer to his business experience above under the caption, "Directors
And Officers."

     Xiang Yang Chang, 53, has been the General Manager of the Joint Venture's
Wuhan Office since 1999. Prior to this position, Mr. Chang was General Manager
of Rayes Group from 1993. Mr. Chang has published several books and periodicals
on computer communications. He was a Director of Research at Harbin University
after graduating with advanced degrees in computer science in 1968. He has
extensive administrative experience.

     Liang Qiao, 30, has been a director and Deputy Chief Financial Officer of
the Joint Venture since 1999. Mr. Qiao is a graduate of the Shanghai Finance
University, where he studied investment finance management. He worked as an
accountant during the early 1990s before joining the Rayes Group in 1996, where
he ran the investment management department.

     Chi Keung Wong, 65, has been a director of the Joint Venture since 1999 and
the Chief Financial Officer of the Joint Venture since 1999. Refer to his
business experience above under the caption, "Directors and Officers."

     Paul Wong has been a director of the Joint Venture since 1999. Refer to his
business experience above under the caption, "Directors And Officers."

     Qi Yu Zhang has been the Chairman of the board of the Joint Venture since
1999. Refer to his business experience above under the caption, "Directors And
Officers."

                                      -23-

<PAGE>
<TABLE>
<CAPTION>


Audit Committee

     The Company has not yet established an audit committee and, as such, does
not currently have an audit committee financial expert.

Code of Ethics

     The Company has not yet adopted a code of ethics for its executive
officers.

Item 10. Executive Compensation

Summary Compensation Table

     The following table sets forth in summary form the compensation received by
Anthony Ng, our former Chief Executive Officer, and Qi Yu Zhang, Chairman of the
board of the Joint Venture during the last fiscal year. Except for Mr. Ng, who
resigned as Chief Executive Officer effective September 1, 2004, none of our
employees and no employees of the Joint Venture received total salary and bonus
in excess of $100,000 during the last fiscal year.

                                                   Summary Compensation Table
                                                   --------------------------
........................ ................................................. ......................................................
                                                                                         Long-Term Compensation
........................ ................................................. ......................................................
                                      Annual Compensation                        Awards                     Payouts
........................ ................................................. ..................... ................................
                                                                           Restricted              All other
  Name and Principal                                         Other           Stock                  Payouts
       Position         Fiscal     Salary     Bonus         Annual         Awards ($)    Options    ($) (3)     Compensation
                         Year     ($) (1)    ($) (2)     Compensation                      (#)                     ($)(4)
........................ ........ ........... ......... .................. ............. .......... .......... ..................
<S>                     <C>      <C>         <C>       <C>                <C>           <C>        <C>        <C>
Anthony Ng              2004     $119,740    0         0                  0             0          0          0
    Chief Executive
    Officer             2003     $120,000    0         0                  0             0          0          0

                        2002      $90,000    0         0                  0             0          0          0
........................ ........ ........... ......... .................. ............. .......... .......... ..................
Qi Yu Zhang
    Chairman            2004     $0          0         0                  0             0          0          0
    Joint Venture
                        2003     $15,384     0         0                  0             0          0          0

                        2002     $23,077     0         0                  0             0          0          0
........................ ........ ........... ......... .................. ............. .......... .......... ..................

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

(1)  The dollar value of base salary (cash and non-cash) estimated to be
     received.

(2)  The dollar value of bonus (cash and non-cash) to be received during the
     year indicated.

(3)  COL International does not have in effect any plan that is intended to
     serve as incentive for performance to occur over a period longer than one
     fiscal year except for our Stock Option Plan.

(4)  All other compensation received that COL International could not properly
     report in any other column of the Summary Compensation Table including
     annual contributions or other allocations to vested and unvested defined

                                      -24-
</TABLE>

<PAGE>


     contribution plans, and the dollar value of any insurance premiums paid by,
     or on behalf of, COL International with respect to term life insurance for
     the benefit of the named executive officer, and, the full dollar value of
     the remainder of the premiums paid by, or on behalf of, COL International.

Employment Contracts And Termination Of Employment And Change-In-Control
Arrangements

     We do not have and currently are not planning to have any written
employment contracts with respect to any of our directors, officers or other
employees. We have no compensatory plan or arrangement that results or will
result from the resignation, retirement, or any other termination of an
executive officer's employment or from a change-in-control of COL International
or a change in an executive officer's responsibilities following a
change-in-control.

Employee Retirement Plans, Long-Term Incentive Plans, and Pension Plans

     Other than our stock option plan that is described below under "2000 Stock
Option Plan," we have no employee retirement plan, pension plan, or long-term
incentive plan to serve as incentive for performance to occur over a period
longer than one fiscal year.

     2000 Stock Option Plan

     Pursuant to our 2000 Stock Option Plan, we may grant options to purchase an
aggregate of 4,000,000 shares of common stock to key employees and other persons
who have or are contributing to our success. The options granted pursuant to the
2000 Plan may be either incentive options qualifying for beneficial tax
treatment for the recipient, or non-qualified options. The terms of the 2000
Plan concerning incentive options and non-qualified options are substantially
the same except that only our employees or employees of our subsidiaries are
eligible for incentive options and employees and other individuals who have
contributed or are contributing to our success are eligible for non-qualified
options. With respect to options granted to persons other than outside
directors, the 2000 Plan also is administered by an option committee that
determines the terms of the options subject to the requirements of the 2000
Plan.

     All options granted under the 2000 Plan will become fully exercisable on
the date that the options are granted or other dates that the Option Committee
determines and will continue for a period up to a maximum of ten years. Options
granted pursuant to the 2000 Plan are not transferable during the optionee's
lifetime. Subject to the other terms of the 2000 Plan, the option committee has
discretion to provide vesting requirements and specific expiration provisions
with respect to the incentive options and non-qualified options granted. As of
October 10, 2003, no options had been granted under the 2000 Plan.

Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Securities Act of 1934, as amended (the "Exchange
Act") requires our directors, executive officers and holders of more than 10% of
our common stock to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in ownership of common stock and
other equity securities of ours. We believe that during the fiscal year ended
June 30, 20041, our officers, directors and holders of more than 10% of our
common stock complied with all Section 16(a) filing requirements, other than Mr.
Wong, who failed to timely file a Form 3. In making these statements, we have
relied upon the written representation of our directors and officers and our
review of the monthly statements of changes filed with us by our officers and
directors.

                                      -25-

<PAGE>
<TABLE>
<CAPTION>


Item 11. Security Ownership of Certain Beneficial Owners and Management

Beneficial Ownership

     As of September 30, 2004, there were 50,155,000 shares of common stock
outstanding. The following table sets forth certain information as of September
30, 2004, by all executive officers and directors as a group, and by each other
person known by us to be the beneficial owner of more than five percent of the
common stock:


                                            No. of Shares               Percentage of
Name and Address of Beneficial Owner    Beneficially Owned (1)        Shares Outstanding
------------------------------------    ----------------------        ------------------
<S>                                          <C>                             <C>
Kam Che Chan (2)
Flat D3, 5/F
36 Broadcast Drive
Kowloon, Hong Kong                           22,849,680                      45.7%

Paul Wong (3)
32-2A Clovelly Court
12 May Road
Hong Kong                                    22,849,680                      45.7%

Qi Yu Zhang (4)
2811 City E. Station
Lai Zhen Mansion
40 Fu Min Road, Fu Tian Area
Shenzhen, PRC  518033                        17,350,320                      34.6%

First Strike Securities Limited (5)
18/F, Kam Sang Building
255-257 Des Voeux Road Central
Hong Kong                                    17,350,320                      34.7%

Honview International Limited (6)
Room 1408, Lippo Sun Plaza
28 Canton Road
Kowloon, Hong Kong                           22,849,680                      45.7%

Anthony Ng
Apt. 305, 9015 Leslie Street
Richmond Hill, Ontario
Canada  L4B 4J8                               6,000,000                      12.0%

All Executive Officers and Directors
as a group (five persons) (2)(3)(4)          46,200,000                      92.1%

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

(1)  "Beneficial ownership" is defined in the regulations promulgated by the SEC
     as having or sharing, directly or indirectly (A) voting power, which
     includes the power to vote or to direct the voting, or (B) investment
     power, which includes the power to dispose or to direct the disposition, of
     shares of the common stock of an issuer. Unless otherwise indicated, the
     beneficial owner has sole voting and investment power.

                                      -26-
</TABLE>

<PAGE>


(2)  Kam Che Chan may be considered a beneficial owner of the 22,849,680 shares
     of which Honview International Limited is the record owner. Mr. Chan is a
     director of Honview International Limited and he also is the beneficial
     owner of 15.20 percent of the outstanding equity interests of Honview. The
     shares to be issued to Honview are included three times in the table. They
     are listed as being held beneficially by each of Kam Che Chan, Honview
     International Limited and Paul Wong. Mr. Chan is the Chairman of our board
     of directors. See also footnotes 3 and 6, below.

(3)  Paul Wong may be considered a beneficial owner of the 22,849,680 shares of
     which Honview International Limited is the record owner. Mr. Wong is a
     beneficial owner of 39.21 percent of the outstanding equity interests in
     Honview. The shares to be issued to Honview are included three times in the
     table. They are listed as being held beneficially by each of Paul Wong, Kam
     Che Chan and Honview International Limited. Mr. Wong is a director of COL
     International. See also footnotes 2 and 6.

(4)  Qi Yu Zhang may be considered a beneficial owner of the 17,350,320 shares
     of which First Strike Securities Limited is the record owner. Mr. Zhang is
     the beneficial owner of 20 percent of the outstanding equity interests of
     First Strike. The shares to be issued to First Strike are included twice in
     the table. They are listed as being held beneficially by both Qi Yu Zhang
     and First Strike. Mr. Zhang is a director of COL International. See also
     footnote 5, below.

(5)  First Strike Securities Limited owns 17,350,320 shares of our common stock.
     These shares are included twice in the table. They are listed as being held
     beneficially by both First Strike Securities Limited and Qi Yu Zhang. See
     also footnote 4, above.

(6)  Honview International Limited owns 22,849,680 shares of our common stock.
     These shares are included three times in the table. They are listed as
     being held beneficially by each of Honview International Limited, Paul Wong
     and Kam Che Chan. See also footnotes 2 and 3, above.

Item 12. Certain Relationships and Related Transactions

     Honview International Limited owns 22,849,680 shares of our common stock,
and First Strike Securities Limited owns 17,350,320 shares of our common stock.
Paul Wong is a director of Honview and he also is a beneficial owner of 39.21
percent of the outstanding equity interests in Honview. Mr. Wong also is a
director of COL International.

     Kam Che Chan is a director of Honview and he also is the beneficial owner
of 15.20 percent of the outstanding equity interests of Honview. Mr. Chan also
is the Chairman of our board of directors.

     Qi Yu Zang is a director of First Strike and he also is the beneficial
owner of 20 percent of the outstanding equity interests of First Strike. Mr.
Zhang also is a director of COL International.

     During the periods ended July 31, 1999 and July 31, 2000, Honview paid Rmb
4.6 million (or US$555,690) and Rmb 10 million (or US$556,000), respectively, on
behalf of Migration for the Joint Venture to purchase certain equipment. Also
during the period ended July 31, 1999, Honview paid Rmb 10 million (or
US$1,208,000) on behalf of Migration for the Joint Venture's capital
contribution required to purchase intangibles from Rayes Group. Honview loaned
Migration these amounts and other advances summing up to approximately US$3
million in the beginning of 2000 without interest or collateral. At that time,
Honview agreed not to call its advances earlier than March 1, 2001. On October
10, 2000, the parties agreed to revise the terms to provide for the loan to be
repayable only out of 20 percent of Migration's pre-tax profits, if any, for
each fiscal year of Migration that begins on or after July 1, 2001 with no other
right of Honview for repayment. As a result of Migration becoming a wholly owned
subsidiary of COL International, the pre-tax profits and fiscal year described
in the preceding sentence shall be those of COL International, with the pre-tax
profits of COL International to be determined on a fully consolidated basis in
accordance with U.S. generally accepted accounting principles.

                                      -27-

<PAGE>


     Pursuant to the Loan Agreement, Honview agreed to lend Migration its cash
needs, from time to time, at any time until January 1, 2004 up to an aggregate
principal amount of US$8 million. As of June 30, 2004, advances from Honview
totaled Rmb71,059,244 (US$8,574,371). As a result of Migration becoming a wholly
owned subsidiary of COL International, any amounts loaned from Honview prior to
February 8, 2001, the effective date of the registration statement related to
COL International's initial public offering, may be paid at the option of
Honview, by converting, at any time after October 10, 2001, part or all the
unpaid principal amount of the loan into shares of COL International's common
stock, at a price equal to the greater of $1.20 per share or 90 percent of the
average weighted trading price of the common stock for the 20 trading days
preceding the date of notice of exercise of conversion. Any amounts loaned from
Honview after the effective date of this registration statement may be paid, at
the option of Honview, by converting, at any time after October 10, 2001, part
or all the unpaid principal amount of the loan into shares of COL
International's common stock, at a price equal to the greater of $1.20 per share
or 110 percent of weighted average trading price of common stock for the 20
trading days preceding the date of the loan.

     In February 2000, we sold an aggregate of 7,050,000 shares of our common
stock at a purchase price of $.001 per share in connection with the formation of
COL International. Six million of these shares were sold to Anthony Ng, a
promoter of COL International and currently the Chief Executive Officer,
Secretary and a director of COL International. Mr. Ng also had paid cash
expenses to professional service firms in the amount of approximately $89,000 on
behalf of COL International prior to its incorporation. These amounts were
recorded in the financial statements as "capital contribution by major
stockholder." Except for Mr. Ng being an advisor of Migration, he is not
affiliated with any other company with which COL International has direct or
indirect relationships.

     During the period ended September 30, 2000, Honview paid US$70,000 on
behalf of COL International in professional services and costs related to COL
International's initial public offering. Honview loaned COL International this
amount without interest or collateral. On December 21, 2000, COL International
and Honview agreed for the loan to be repayable only out of 20 percent of COL
International's pre-tax profits, if any, for each fiscal year of COL
International that begins on or after July 1, 2001 with no other right of
Honview for repayment. Pursuant to the loan agreement, Honview agreed to lend
COL International its cash needs, from time to time, at any time until October
10, 2001 up to an aggregate principal amount of US$8 million. Any amounts loaned
to COL International prior to February 8, 2001, the effective date of the
registration statement related to COL International's initial public offering,
may be paid at the option of Honview, by converting, at any time after October
10, 2001, part or all the unpaid principal amount of the loan into shares of COL
International's common stock, at a price equal to the greater of $1.20 per share
or 90 percent of the average weighted trading price of the common stock for the
20 trading days preceding the date of notice of exercise of conversion. Any
amounts loaned to COL International after February 8, 2001 may be paid, at the
option of Honview, by converting, at any time after October 10, 2001, part or
all the unpaid principal amount of the loan into shares of COL International's
common stock, at a price equal to the greater of $1.20 per share or 110 percent
of weighted average trading price of common stock for the 20 trading days
preceding the date of the loan. As of June 30, 2001, Honview had made additional
advances to COL International totaling US$247,000, and has made an additional
advance of $30,000 after that date.

     The Joint Venture entered into various agreements with its minority
stockholder, Shenzhen Rayes Group Co., Ltd., whereby the Joint Venture provides
marketing and value added services in the operation of the minority
stockholder's internet business in Shanghai, PRC through July 2004, subject to
renewal at terms to be agreed between the minority stockholder and Migration.
Migration has the right of first refusal to purchase the minority stockholder's
ownership interest in the ISP in Shanghai. Currently, however, foreign entities
cannot own ISP operations in the PRC. One agreement stipulates that the Joint

                                      -28-

<PAGE>
<TABLE>
<CAPTION>


Venture will provide marketing and technical services to the minority
stockholder's ISP operations in Shanghai and Wuhan, PRC, and will share the
related ISP revenues with the minority stockholder on a 50/50 basis. The Joint
Venture paid its minority stockholder Rmb3,000,000 for these rights. As of Jan
1, 2004, the Company had disposed of all its interests in ISP operations.

     A second agreement with the minority stockholder grants the Joint Venture
access to the "COL China Online" brand name and network to allow the Joint
Venture to provide enhanced and value added services related to the Internet.
Under this agreement, the Joint Venture is not required to share revenues from
these services with the minority stockholder. The Joint Venture paid the
minority stockholder Rmb7,000,000 for these rights.

     Under another agreement between the Joint Venture and its minority
shareholder, the Joint Venture bears telecommunication costs relating to ISP
operations up to a stipulated capacity and the minority interest stockholder
pays for the costs of transmission capacity in excess of this amount. Amounts
received from/paid to the minority stockholder are as follows:

                                          FOR THE YEAR         FOR THE YEAR
                                        ENDED JULY 31,       ENDED JULY 31,               FOR THE YEAR ENDED
                                                  2002                 2003                 JUNE 30, 2004
                                      -----------------    -----------------      -----------------------------------
                                           (Rmb)
                                                                                                     (Rmb)
                                                                                                     (Rmb)
                                                                                                     (US$)
                                                                                                     (Illustrative
Received from:                                                                                           Only)
<S>                                        <C>                  <C>                  <C>                 <C>
Marketing and value added
  service fee income                           432,405              484,942               43,741               5,278
                                           ============         ============         ============        ============

Paid to:
Management fee expense                          45,000                    -                    -                   -
Telecommunication expense                    1,021,096            1,100,882              120,000              14,480
                                           ------------         ------------         ------------        ------------

                                             1,066,096            1,100,882              120,000              14,480
                                           ============         ============         ============        ============


     During the years ended June 30, 2003 and June 30, 2004, respectively, the
Company advanced Rmb558,265 (US$67,363) and Rmb0 (US$0) to a company controlled
by Mr. Justin Jencks, the former Chief Operating Officer ("COO") of the Company.
Prior to Mr. Jencks' becoming the Company's COO, COL intended to acquire his
company, which was engaged in provision of technical support for the internet
marketing business. However, due to adverse market conditions, COL International
abandoned its plan of acquisition and, instead, hired Mr. Jencks as its COO.
These advances were then written off. Mr. Jencks resigned as COO in August 2004

     Except as discussed above, since COL International's inception on February
22, 2000, there were no transactions between COL International and its
directors, executive officers or known holders of more than five percent of the
common stock, or transactions by COL International in which any of the foregoing
persons had a direct or indirect material interest, in which the amount involved
exceeded $60,000.

Item 13. Exhibits and Reports on Form 8-K

     The following is a complete list of Exhibits filed as part of this
registration statement, which Exhibits are incorporated herein.

                                      -29-
</TABLE>

<PAGE>


(a)      Financial Statements

         Report of Independent Registered Public Accounting Firm.............F-1

         Consolidated Balance Sheets at June 30, 2004 and 2003...............F-2

         Consolidated Statements of Operations for the Years Ended
                June 30, 2004, 2003 and 2002.................................F-3

         Consolidated Statements of Changes in Stockholders'
                Deficiency for the period from June 30, 2001
                through June 30, 2004........................................F-4

         Consolidated Statements of Cash Flows for the Years Ended
                June 30, 2004, 2003 and 2002.................................F-5

         Notes to Financial Statements.......................................F-6

Number              Description
------              -----------

2.1                 Stock Exchange Agreement between and among Migration
                    Developments Limited, COL International and the stockholders
                    of Migration Developments Limited dated June 8, 2000 (2)

3.1                 Certificate Of Incorporation filed with the Delaware
                    Secretary Of State effective as of February 22, 2000 (2)

3.2                 Certificate Of Amendment To The Certificate Of Incorporation
                    filed with the Delaware Secretary Of State effective as of
                    April 3, 2000 (2)

3.3                 Amended And Restated Bylaws (4)

3.4                 Sino-Foreign Joint Venture Contract (1) (2)

3.5                 Articles Of Association of the Sino-Foreign Joint Venture
                    (1) (2)

4.1                 Specimen Common Stock Certificate (2)

10.1                Joint Venture Business License (1) (2)

10.2                Cooperation Agreement Regarding China Online's Internet
                    Connection Service Commercial Business dated July 15, 1998
                    between Neihi Electronic Systems Co., Ltd. (now known as the
                    Joint Venture) and Rayes Group (1) (2)

10.3                Cooperation Agreement Regarding China Online's Internet
                    Content Service Commercial Business dated July 15, 1998
                    between Neihi Electronic Systems Co., Ltd. (now known as the
                    Joint Venture) and Rayes Group (1) (2)

10.4                Cooperation Agreement for Dissemination of Educational
                    Resources dated January 7, 2000 between the Joint Venture
                    and Wuhan City No. 2 Secondary School to establish Education
                    Net (1) (2)

                                      -30-

<PAGE>


10.5                Cooperation Agreement for Transmission of Education
                    Materials dated March 10, 2000 between the Joint Venture and
                    Wuhan Cable TV to provide Education Net infrastructure (1)
                    (2)

10.6                Purchase Agreement dated October 22, 1999 among the Joint
                    Venture, Shanghai Construction Materials Technology Sales
                    Service Co., Ltd. and other parties specified thereby (1)
                    (2)

10.7                2000 Stock Option Plan (2)

10.8                Form of Subscription Agreement (3)

10.9

                    Form of Escrow Agreement between COL International and Wells
                    Fargo Bank West, National Association (4)

10.10               Form of Migration's Convertible Promissory Note (3)

10.11               Migration's Loan Agreement dated October 10, 2000 (3)

10.12               Sino-Foreign Joint Venture Agreement dated July 7, 2000
                    between Migration and Shanghai Dongyi Scientific Technology
                    Engineering Co. (1) (3)

10.13               Share Purchase Agreement dated July 17, 2000 between
                    Shanghai Shangyi Science and Trade Information Consulting
                    Co., Ltd. and Shanghai Tongji Construction Materials Sales
                    and Services Co., Ltd. (1) (3)

10.14               Lease Agreement for Rental of Office Premises dated April
                    25, 2000 (1) (2)

10.15               COL International's Loan Agreement dated December 21, 2000
                    (4)

21                  Subsidiaries of the Registrant (5)

31                  Rule 13a-14(a)/15a-14(a) Certifications of Chief Executive
                    Officer and Chief Financial Officer

32                  Certification of Chief Executive Officer and Chief Financial
                    Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
                    Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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

(1)  Translated into English from Chinese.

(2)  Incorporated by reference from the Company's Registration Statement on Form
     SB-2 on June 13, 2000 (Registration No. 333-39208).

(3)  Incorporated by reference from Amendment No. 2 to the Company's
     Registration Statement on Form SB-2 on October 19, 2000 (Registration No.
     333-39208).

(4)  Incorporated by reference from Amendment No. 3 to the Company's
     Registration Statement on Form SB-2 on January 17, 2001 (Registration No.
     333-39208).

(5)  Incorporated by reference from Exhibit 21 to the Company's Annual Report on
     Form 10-KSB for the year ended June 30, 2001.

                                      -31-

<PAGE>


Item 14. Principal Accountant Fees and Services

Audit Fees

     Moores Rowland Mazars, the Company's principal accountants, billed the
Company $70,500 for the year ended June 30, 2004 and $70,500 for the year ended
June 30, 2003 for professional services rendered by Moores Rowland Mazars for
the audit of the Company's annual financial statements and review of financial
statements included in the Company's Forms 10-QSB and services normally provided
by Moores Rowland Mazars in connection with statutory and regulatory filings or
engagements for those fiscal years.

Audit-Related Fees

     For the years ended June 30, 2004 and June 30, 2003, Moores Rowland Mazars
did not provide the Company with any services for assurance and related services
provided by Moores Rowland Mazars that are reasonably related to the performance
of the audit or review of the Company's financial statements and are not
reported above under "--Audit Fees."

Tax Fees

     For the years ended June 30, 2004 and June 30, 2003, Moores Rowland Mazars
did not provide the Company with professional services for tax compliance, tax
advice, and tax planning.

All Other Fees

     For the years ended June 30, 2004 and June 30, 2003, Moores Rowland Mazars
did not bill the Company for products and services other than those described
above.

Audit Committee Pre-Approval Policies

     The Board of Directors, which is performing the equivalent functions of an
audit committee, currently does not have any pre-approval policies or procedures
concerning services performed by Moores Rowland Mazars. All the services
performed by Moores Rowland Mazars that are described above were pre-approved by
the Board of Directors. Less than 50% of the hours expended on Moores Rowland
Mazars' engagement to audit the Company's financial statements for the fiscal
years ended June 30, 2004 and 2003 were attributed to work performed by persons
other than Moores Rowland Mazar's full-time, permanent employees.

                                      -32-

<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.

                                            COL CHINA ONLINE INTERNATIONAL INC.


Date:  October 12,  2004                    By:  /s/  Chi Keung Wong
                                               --------------------------------
                                                      Chi Keung Wong,
                                                      Chief Executive Officer
                                                      and Chief Financial
                                                      Officer

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

Date                                        Signatures
----                                        ----------

October 12, 2004                            /s/  Kam Che Chan
                                            -----------------------------------
                                                 Kam Che Chan, Director



                                            -----------------------------------
                                            Anthony Ng, Director



October 12, 2004                            /s/  Paul Wong
                                            -----------------------------------
                                                 Paul Wong, Director



October 12, 2004                            /s/  Qi Yu Zhang
                                            -----------------------------------
                                                 Qi Yu Zhang, Director

                                      -33-

<PAGE>


           Supplemental Information To Be Supplied With Reports Filed
     Pursuant To Section 15(d) Of The Exchange Act By Non-Reporting Issuers

(1) No annual report to security holders covering the Registrant's last fiscal
year was sent to security holders, and (2) no proxy statement, form of proxy or
other proxy soliciting material was sent to more than ten of the registrant's
security holders with respect to any annual or other meeting of security
holders.





<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



The Stockholders and Directors
COL China Online International Inc.




We have audited the accompanying consolidated balance sheets of COL China Online
International Inc. (a Delaware Corporation) and its subsidiaries as of June 30,
2004 and 2003, and the related consolidated statements of operations,
stockholders' deficiency and cash flows for each of the three years ended June
30, 2004, 2003 and 2002. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of COL China Online
International Inc. and subsidiaries as of June 30, 2004 and 2003, and the
results of their operations and their cash flows for each of the three years
ended June 30, 2004, 2003 and 2002, in conformity with U.S. generally accepted
accounting principles .

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 3 to the
consolidated financial statements, the Company's ability to continue as a going
concern is dependent upon several factors, including, but not limited to,
continued financial support by the major stockholder, raising additional
capital, increasing revenue, and achieving and maintaining profitable
operations. These factors raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 3. The consolidated financial statements do not include
any adjustments that might result from the outcome of these uncertainties.






/s/  Moores Rowland Mazars
Chartered Accountants
Certified Public Accountants
Hong Kong
October 12, 2004

                                      F-1

<PAGE>
<TABLE>
<CAPTION>

                                         COL CHINA ONLINE INTERNATIONAL INC.
                                              CONSOLIDATED BALANCE SHEETS

                                                                                JUNE 30, 2004                 JUNE 30, 2003
                                                                       ------------------------------        --------------
                                                                             (US$)              (Rmb)                   Rmb
                                                                    (Illustrative
Assets                                                                      only)
------

<S>                                                                    <C>               <C>                 <C>
CURRENT ASSETS:
    Cash                                                                    12,251            101,532            548,405
    Accounts receivable, net of an allowance for doubtful
         accounts                                                            3,077             25,500             46,520
    Inventories                                                               --                 --                 --
     Prepaid expense and other receivables                                  47,820            396,307            299,952
     Prepayment                                                               --                 --            1,504,354
     Net investment in the lease                                           119,252            988,293               --
                                                                       -----------        -----------        -----------

             Total current assets                                          182,400          1,511,632          2,399,231

PROPERTY, OFFICE SPACE AND EQUIPMENT, net of accumulated
    depreciation and impairment of Rmb9,815,875 (US$1,184,434)
    and Rmb1,574,810 (US$190,025), respectively                            208,556          1,728,383          3,718,632
                                                                       -----------        -----------        -----------

TOTAL ASSETS                                                               390,956          3,240,015          6,117,863
                                                                       ===========        ===========        ===========

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
----------------------------------------

CURRENT LIABILITIES:
    Current portion of mortgage loans payable                                 --                 --              348,543
    Accounts payable and accrued expenses                                  145,077          1,202,312          1,985,795
    Advance deposit received                                                38,369            317,980            642,987
    Due to a minority stockholder                                           22,583            187,155            221,830
    Taxes payable                                                           11,098             91,977            190,542
                                                                       -----------        -----------        -----------

             Total current liabilities                                     217,127          1,799,424          3,389,697

NOTES PAYABLE:
    Majority Stockholder                                                 8,574,371         71,059,244         63,077,865
    Mortgage loans payable - net of current portion                           --                 --              512,069
                                                                       -----------        -----------        -----------

             Total notes payable                                         8,574,371         71,059,244         63,589,934

Commitments and contingencies (Notes 3 & 11)

STOCKHOLDERS' DEFICIENCY:
    Preferred stock, US$0.001 par value, 5,000,000 shares
         authorized, none outstanding                                         --                 --                 --
    Common stock, US$0.001 par value, 100,000,000 shares
         authorized and 50,155,000 shares issued, outstanding               50,155            408,864            408,864
    Additional paid-in capital                                             146,507          1,214,118          1,214,118
    Accumulated deficit                                                 (8,593,026)       (71,207,705)       (62,450,820)
    Other comprehensive loss                                                (4,178)           (33,930)           (33,930)
                                                                       -----------        -----------        -----------

             Total stockholders' deficiency                             (8,400,542)       (69,618,653)       (60,861,768)
                                                                       -----------        -----------        -----------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                             390,956          3,240,015          6,117,863
                                                                       ===========        ===========        ===========

                                   See accompanying notes to these consolidated financial statements

                                                                   F-2
<PAGE>


                                           COL CHINA ONLINE INTERNATIONAL INC.
                                         CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                    FOR THE YEAR        FOR THE YEAR
                                                      FOR THE YEAR ENDED                ENDED               ENDED
                                                        JUNE 30, 2004               JUNE 30, 2003       JUNE 30, 2002
                                               -----------------------------        -------------       -------------
                                                       (US$)            (Rmb)              (Rmb)          (Rmb)
                                             (Illustrative
                                                     only)
NET REVENUES:
    Computer network installations                    --                 --               69,014          1,678,706
    Kiosk solutions installations                     --                 --              484,500               --
    Transaction fee                                   --                 --                 --               72,457
    Business services revenue                         --                 --                  898              7,102
    Marketing fees, minority stockholder             5,278             43,741            484,941            431,405
    Service commission income                       15,446            128,008               --                 --
    In-store advertising                            20,706            171,600               --                 --
                                               -----------        -----------        -----------        -----------

         Total revenues                             41,430            343,349          1,039,353          2,189,670

COST OF SALES:
    Computer network installations                    --                 --               56,800          1,292,089
    Kiosk solutions installations                     --                 --              434,409               --
    Transaction costs                                 --                 --                 --               48,336
    Business services costs                           --                 --                  392              4,172
    Telecommunication                               34,397            285,065          1,100,882          1,021,096
    Services cost                                   42,171            349,490               --                 --
    In-store advertising                            13,509            111,958               --                 --
                                               -----------        -----------        -----------        -----------

                                                    90,077            746,513          1,592,483          2,365,693
                                               -----------        -----------        -----------        -----------

    Gross Margin                                   (48,647)          (403,164)          (553,130)          (176,023)

OPERATING EXPENSES:
    Impairment                                       1,113              9,221               --            1,565,589
    General and administrative                     978,635          8,110,339          9,543,490         11,918,576
    Amortization and depreciation                   72,154            597,968            657,569          4,410,725
                                               -----------        -----------        -----------        -----------

         Total operating expenses                1,051,902          8,717,528         10,201,059         17,894,890
                                               -----------        -----------        -----------        -----------

OPERATING LOSS                                  (1,100,549)        (9,120,692)       (10,754,189)       (18,070,913)

    Lease income                                    16,723            138,594               --                 --
    Rental income                                   26,788            222,000             72,000               --
    Gain on disposal of Wuhan operations              --                 --              822,169               --
    Other income                                       388              3,213            147,271            124,306
                                               -----------        -----------        -----------        -----------

LOSS BEFORE MINORITY INTEREST                   (1,056,650)        (8,756,885)        (9,712,749)       (17,946,607)

    Minority interest                                 --                 --                 --                 --
                                               -----------        -----------        -----------        -----------

NET LOSS                                        (1,056,650)        (8,756,885)        (9,712,749)       (17,946,607)

OTHER COMPREHENSIVE LOSS                              --                 --                 (163)           (40,017)
                                               -----------        -----------        -----------        -----------

COMPREHENSIVE LOSSES                            (1,056,650)        (8,756,885)        (9,712,912)       (17,986,624)
                                               ===========        ===========        ===========        ===========

BASIC AND FULLY DILUTED NET LOSS
 PER SHARE                                           (0.02)             (0.18)              (0.2)             (0.37)
                                               ===========        ===========        ===========        ===========

WEIGHTED AVERAGE COMMON SHARES                  48,148,849         48,148,849         48,148,849         48,148,849
                                               ===========        ===========        ===========        ===========


                           See accompanying notes to these consolidated financial statemetns

                                                        F-3

<PAGE>


                                          COL CHINA ONLINE INTERNATIONAL INC.
                                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
                                  FOR THE YEARS ENDED JUNE 30, 2004, 2003 AND 2002

                                                                                                         OTHER
                                                                       ADDITIONAL                COMPREHENSIVE
                                                                          PAID-IN   ACCUMULATED        INCOME/
                                              COMMON STOCK                CAPITAL       DEFICIT          (LOSS)             TOTAL
                                        ------------------------      ----------    -----------     ----------      -------------
                                            Number          (Rmb)          (Rmb)           (Rmb)          (Rmb)            (Rmb)

Balances, June 30, 2001                 40,200,000        327,710         79,890    (31,161,454)          6,250     (30,747,604)

Sales of common stock in
  initial public offering in
  July 2001 at US$0.05 per
  share                                       --             --             --             --              --              --

Effect of share exchange                 9,955,000         81,154      1,134,228     (3,630,010)           --        (2,414,628)

Net loss                                      --             --             --      (17,946,607)           --       (17,946,607)
Other comprehensive loss                      --             --             --             --           (40,017)        (40,017)
                                       -----------    -----------    -----------    -----------     -----------     -----------

Balances, June 30, 2002                 50,155,000        408,864      1,214,118    (52,738,071)        (33,767)    (51,148,856)

Net loss                                      --             --             --       (9,712,749)           --        (9,712,749)

Other comprehensive loss                      --             --             --             --              (163)           (163)
                                       -----------    -----------    -----------    -----------     -----------     -----------

Balances, June 30, 2003                 50,155,000        408,864      1,214,118    (62,450,820)        (33,930)    (60,861,768)

Net loss                                      --             --             --       (8,756,885)           --        (8,756,885)

Other comprehensive loss                      --             --             --             --              --              --
                                       -----------    -----------    -----------    -----------     -----------     -----------

Balances, June 30, 2004                 50,155,000        408,864      1,214,118    (71,207,705)        (33,930)    (69,618,653)
                                       ===========    ===========    ===========    ===========     ===========     ===========

                            See accompanying notes to these consolidated financial statements

                                                      F-4
<PAGE>


                                           COL CHINA ONLINE INTERNATIONAL INC.
                                          CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                          FOR THE YEAR        FOR THE YEAR
                                                             FOR THE YEAR ENDED               ENDED               ENDED
                                                               JUNE 30, 2004              JUNE 30, 2003       JUNE 30, 2002
                                                    --------------------------------      -------------       -------------
                                                            (US$)               (Rmb)              (Rmb)              (Rmb)
                                                    (Illustrative
                                                            only)
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                             (1,056,650)        (8,756,885)        (9,712,749)       (17,946,607)
  Adjustments to reconcile net loss to net
   cash used in operating activities:
     Gain on disposal of Wuhan operations                    --                 --             (822,169)              --
     Loss (Gain) on disposal of equipment                  24,940            206,687            (10,300)           860,201
     Minority interest                                       --                 --                 --                 --
     Amortization and depreciation                         73,266            607,189            657,569          4,410,725
     Impairment                                              --                 --                 --            1,565,589
     Provision for doubtful accounts of other
      receivables                                            --                 --              558,265               --
     Change in operating assets and
      liabilities:
       Decrease (increase) in:
       Accounts receivables                                 2,536             21,020            (60,412)          (108,628)
       Other assets                                       (11,627)           (96,355)        (2,045,579)           116,860
       Inventories                                           --                 --               19,840             25,160
       Increase (decrease) in:
       Accounts payable and accrued                                                                                      )
        expenses, and advance deposit received           (133,756)        (1,108,490)           862,156           (159,883
       Taxes payable                                      (11,893)           (98,565)           (70,352)            85,201
       Billings in excess of costs and                                                                                   )
        estimated earnings on
        uncompleted contracts                                --                 --                 --              (86,265
                                                      -----------        -----------        -----------        -----------

     Net cash used in operating activities             (1,113,184)        (9,225,399)       (10,623,731)       (11,237,647)

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of equipment                                  (102,579)          (850,113)          (916,606)          (499,027)
  Sales of equipment and properties                       244,526          2,026,486               --                 --
  Sales of Wuhan operations                                  --                 --              750,000               --
  Net cash acquired in acquisition of COL
  International under reverse acquisition                    --                 --                 --               63,308
  Expenditure on net investment in the lease              (56,982)          (472,232)              --                 --
  Lease payment received                                  119,253            988,293               --                 --
                                                      -----------        -----------        -----------        -----------

     Net cash used in investing activities                204,218          1,692,434           (166,606)          (435,719)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Mortgage loans repayments                              (103,846)          (860,612)          (330,528)          (313,272)
  Advances from Majority Stockholder                      963,074          7,981,379         11,293,424         10,185,433
  Net cash flow from minority stockholders                 (4,184)           (34,675)             7,170            351,627
                                                      -----------        -----------        -----------        -----------

     Net cash provided by financing
      activities                                          855,044          7,086,092         10,970,066         10,223,788
                                                      -----------        -----------        -----------        -----------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                      --                 --                 (163)           (40,017)
                                                      -----------        -----------        -----------        -----------

NET INCREASE (DECREASE) INCREASE IN CASH                  (53,922)          (446,873)           179,566         (1,489,595)

CASH, beginning of period                                  66,173            548,405            368,839          1,858,434
                                                      -----------        -----------        -----------        -----------

CASH, end of period                                        12,251            101,532            548,405            368,839
                                                      ===========        ===========        ===========        ===========

NON-CASH INVESTING AND FINANCING
ACTIVITIES:
  Issuance of common stock for acquisition
   of subsidiaries                                           --                 --                 --               67,662
                                                      ===========        ===========        ===========        ===========

CASH PAID FOR INTEREST                                      1,787             14,808             55,379             72,326
                                                      ===========        ===========        ===========        ===========

                             See accompanying notes to these consolidated financial statements

                                                            F-5
</TABLE>

<PAGE>


                       COL CHINA ONLINE INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Company Organization and Operations
   -----------------------------------

   Nature of Operations - COL China Online International Inc. ("COL
   International" or the "Company") was incorporated as a Delaware corporation
   on February 22, 2000, for the purpose of acquiring and conducting the
   engineering services and the internet related business of Migration
   Developments Limited, a British Virgin Islands company ("Migration") and
   raising equity capital to be utilized in the business of Migration. Prior to
   the acquisition of Migration, the Company was considered to be in the
   development stage, due to its limited operations and lack of revenues.

   In July 2001, the Company completed its initial public offering of common
   stock. The Company issued 1,655,000 shares of common stock in this offering
   at US$0.05 per share (approximately US$83,000). All net proceeds from this
   offering were used to pay costs associated with the offering.

   On September 24, 2001, the Company acquired all the outstanding shares of
   common stock of Migration in exchange for 40.2 million shares of the
   Company's common stock. As a result of the acquisition, Migration became a
   wholly owned subsidiary of the Company.

   For financial reporting purposes, the acquisition of Migration by the Company
   on September 24, 2001 has been treated as a reverse acquisition. Migration is
   the continuing entity for financial reporting and the acquisition of the
   Company is considered a recapitalization and restructuring of Migration. On
   this basis, the historical financial statements prior to September 24, [2001]
   represent the financial statements of Migration. The historical shareholders'
   equity accounts of the Company have been retroactively restated to reflect
   the issuance of 40,200,000 shares of common stock since inception of
   Migration and the issuance of 9,955,000 shares of stock upon the merger with
   the Company.

   Migration was formed on May 18, 1998 and has two subsidiaries, Shenzhen
   Knowledge & Communications Co., Ltd. (formerly Shenzhen Rayes Electronic
   Systems Co., Ltd.) ("Joint Venture") and Shanghai Shangyi Science and Trade
   Information Consulting Co., Ltd. ("Shangyi"), in which it has 90% and 70%
   equity interests, respectively. The Joint Venture and Shangyi are
   Sino-foreign equity joint ventures in the People's Republic of China (PRC).
   Most of the operations of Migration are through the Joint Venture, which did
   not commence substantive operations until the Spring of 1999. The
   acquisitions of Joint Venture and Shangyi had been accounted for as purchases
   by Migration.

   Migration initially provided marketing and technical services for Internet
   Service Providers (ISP) and value -added services generally related to the
   installation of computer network systems (i.e., Local Area Networks or LANs)
   in the PRC.

   Because the Company's past business model of attempting to be the IT
   department for small and medium-sized business by offering a broad range of
   IT services and providing electronic commerce services has not been
   successful, the Company has developed a new business model. The Company is
   developing two IT businesses through two divisions. COLConvergence will focus
   on the providing of internet and telecommunication convergence solutions and
   COL Interactive will focus on providing customer-specific solutions for the
   retail industry.


                                      F-6
<PAGE>


                       COL CHINA ONLINE INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. Significant Accounting Policies
   -------------------------------

   Principles of Consolidation - The consolidated financial statements include
   the accounts of the Company and its subsidiaries. All significant
   intercompany accounts and transactions have been eliminated in consolidation.

   Basis of Accounting - The amounts included in the financial statements are
   presented in Renminbi ("Rmb") which is COL International's functional
   currency, unless otherwise indicated as US dollars, because the Company's
   major operations are primarily located in the PRC. For illustrative purposes,
   the consolidated balance sheet as of June 30, 2004, consolidated statement of
   operations, consolidated statement of stockholders' deficiency and
   consolidated statement of cash flows for the year then ended have been
   translated into US dollars at approximately 8.2874 Rmb to the dollar, which
   was the exchange rate at June 30, 2004.

   Concentration of Credit Risk - Credit risk represents the accounting loss
   that would be recognized at the reporting date if counterparties failed
   completely to perform as contracted. Concentrations of credit risk (whether
   on or off balance sheet) that arise from financial instruments exist for
   groups of customers or counterparties when they have similar economic
   characteristics that would cause their ability to meet contractual
   obligations to be similarly affected by changes in economic or other
   conditions. COL's International accounts receivable include a limited number
   of customers. Financial instruments that subject the Company to credit risk
   consist principally of accounts receivable. The Company generally does not
   require collateral from its customers. Accounts receivable totaled Rmb46,520
   and Rmb25,500 (US$3,077) as at June 30, 2003 and 2004, respectively and the
   Company has made no provision for doubtful accounts for the years ended June
   30, 2003 and 2004. The management of the Company performs periodic credit
   evaluations on its customers' financial condition and believes that an
   allowance for doubtful accounts is sufficient.

   Included in the other receivables was an amount of Rmb558,265 and Rmb0 (US$0)
   as of June 30, 2003 and 2004 respectively being advance to a company
   controlled by Mr. Justin Jencks, the chief operating officer (`COO") of the
   Company. Prior to Mr. Jencks becoming the Company's COO, COL intended to
   acquire his company which was engaged in provision of technical support for
   internet marketing business. Rmb558,265 and Rmb0 (US$0) was then advanced to
   Mr. Jenck's company in 2003 and 2004 respectively for its operation use.
   However, due to adverse market condition, COL abandoned its plan of
   acquisition and, instead, hired Mr. Jencks as the chief operating officer and
   consultant. These advances were then written off. Mr. Jencks resigned as COO
   in August 2004.

   As COL International's primary operations are in the PRC, the Company is
   exposed to certain foreign company risks not normally associated with
   entities operating solely in the United States. These risks include, among
   others, the political, economic and legal environments, and foreign currency
   exchange. The Company 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. COL International's management does not believe these
   risks to be significant. There can be no assurance, however, that changes in
   political, social, and other conditions will not result in any adverse
   impact.

   During the fiscal year 2004, most of COL International's operations were
   focused in Shanghai.

                                      F-7
<PAGE>


                       COL CHINA ONLINE INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

   Cash Equivalents - COL International considers all highly liquid debt
   instruments with original maturities of three months or less to be cash
   equivalents.

   Prepayment - Prepayments totaled Rmb1,504,354 and Rmb0 (US$0) as at June 30,
   2003 and 2004 represents a prepayment for the acquisition of computer
   equipment. The computer equipment is for rental purpose upon delivery from
   supplier. The Company received the computer equipment and disclosed in net
   investment in the lease in the consolidated balance sheet.

   Property, Office Space and Equipment - Property, office space and equipment
   are recorded at cost. Depreciation is computed using the straight-line method
   over the estimated useful life of the assets, generally twenty years for
   property, three years for computer equipment and five years for office space
   and other equipment. Repairs and maintenance are charged to expense as
   incurred. Material expenditures, which increase the life of an asset, are
   capitalized and depreciated over the estimated remaining useful life of the
   asset. The cost of equipment sold, or otherwise disposed of, and the related
   accumulated depreciation or amortization are removed from the accounts, and
   any gains or losses are reflected in current operations. Depreciation and
   impairment expense charged to operations was Rmb4,410,725, Rmb657,569 and
   Rmb607,189 (US$73,266) for the years ended June 30, 2002, 2003 and 2004
   respectively.

   Software Development - COL International is engaged in the development of
   software in the design and development of its current websites. In accordance
   with Emerging Issues Task Force (EITF) 00-2, Accounting for Web Site
   Development Costs, the Company expenses all preliminary stage costs
   associated with its website development as research and development expense,
   capitalizes application development costs (excluding training and data
   conversion) and will expense all operating costs after preliminary and
   development stages are complete.

   Research and Development - All cost of research and development activities
   are expensed as incurred.

   Income Taxes - COL International accounts for income taxes under the
   liability method of Statement of Financial Accounting Standard (SFAS) No.
   109, Accounting for Income Taxes, whereby current and deferred tax assets and
   liabilities are determined based on tax rates and laws enacted as of the
   balance sheet date. Deferred tax expense or benefit represents the change in
   the deferred tax asset/liability balance.

   Revenue Recognition - COL International recognizes revenue at the time the
   service is rendered or product is delivered and collection is reasonably
   assured, which generally approximates the time it is accepted by the
   customer.

   Revenues from computer network installation contracts are recognized on the
   percentage-of-completion method for individual contracts, commencing when
   progress reaches a point where experience is sufficient to estimate final
   results with reasonable accuracy. Management of the Company estimates
   percentage of completion based on units installed to date to total units to
   be installed for each contract. Units generally are computer network "jacks".
   Changes in job performance, estimated profitability, and final contract
   settlements may result in revisions to costs and income, and are recognized
   in the period in which the revisions are determined. The liability, "Billings
   in excess of costs and estimated earnings on uncompleted contracts",
   represents amounts billed in excess of revenues recognized.

                                      F-8
<PAGE>


                       COL CHINA ONLINE INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

   Contract costs relating to computer network installations include all direct
   materials, subcontracts, labor costs and those indirect costs related to
   contract performance. General and administrative costs are charged to expense
   as incurred.

   At the time a loss on a contract becomes known, the entire amount of the
   estimated ultimate loss on both short and long-term contracts is accrued.

   Revenue from kiosk solutions installations is recognized when the
   installations of kiosk machine has been completed.

   Services commission revenue is recognized in the period in which the
service is rendered.

   In-store advertising revenue is recognized in the period in which the
   advertising service is rendered.

   Business services revenue includes fees for subscription-based hosting
   services and membership programs. Revenues are recognized in the period in
   which the service is rendered.

   Transaction fee is generated from the sale of merchandise placed on the
   websites and is recognized when the service is rendered.

   Intangibles and Goodwill - Intangibles represent the amount paid for the
   rights to market certain internet provider services and the rights to use the
   name "COL China Online". This amount was amortized, using the straight-line
   method, over its estimated useful life of five years. Amortization expenses
   was Rmb1,833,337 and Rmb2,000,004 for the eleven months ended June 30, 2000
   and the year ended June 30, 2001 respectively. Impairment loss had been fully
   provided for the net book value of Rmb5,999,992 for the year ended June 30,
   2002.

   Goodwill recognized in acquisitions accounted for as purchases was amortized
   on a straight-line basis over a 5-year period. Amortization expense was
   Rmb212,652 for the year ended June 30, 2002. Impairment loss had been fully
   provided for the net book value of Rmb947,268 for the year ended June 30,
   2002.

   Therefore, there was no amortization expenses for intangibles and goodwill
   for the years ended June 30, 2003 and 2004.

   Impairment of Long-Lived Assets - COL International has adopted SFAS No. 121,
   Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
   to be Disposed Of. In the event that facts and circumstances indicate that
   the carrying value of long-lived assets may be impaired, an evaluation of
   recoverability would be performed. If an evaluation is required, the
   estimated future undiscounted cash flows associated with the asset would be
   compared to the asset's carrying amount to determine if a write-down to
   market value or discounted cash flow value is required.

   Inventories - Inventories are finished goods, which are stated at the lower
   of cost or market. Cost is determined by the use of weighted average cost
   method.

   Foreign Currency Transaction - Foreign currency transactions during the
   period are translated into Renminbi at approximately the market exchange
   rates ruling at the transaction dates. Monetary assets and liabilities
   denominated in foreign currencies are translated into Renminbi at
   approximately the market exchange rates ruling at the balance sheet date.
   Differences arising from foreign currency translation are included in the net
   profit or loss for the period.

                                      F-9
<PAGE>


                       COL CHINA ONLINE INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

   Fair Value of Financial Instruments - The estimated fair values for financial
   instruments under SFAS No.107, Disclosures about Fair Value of Financial
   Instruments, are determined at discrete points in time based on relevant
   market information. These estimates involve uncertainties and cannot be
   determined with precision. The estimated fair values of Migration's financial
   instruments, which includes cash, accounts receivable and accounts payable,
   approximates their carrying value in the financial statements. The fair value
   of advances from Migration's major stockholder, which are without interest,
   cannot be estimated due to the relationship between the entities.

   Comprehensive Income (Loss) - The Company accounts for comprehensive income
   in accordance with SFAS No. 130, Reporting Comprehensive Income. SFAS No. 130
   establishes standards for reporting comprehensive income and its components
   in financial statements. Comprehensive income, as defined therein, refers to
   revenues, expenses, gains and losses that are not included in net income but
   rather are recorded directly in stockholders' equity. Accumulated other
   comprehensive loss for the year ended June 30, 2003 represented foreign
   currency translation adjustments.

   Net Loss Per Share - Basic and diluted net loss per share is computed by
   dividing net loss by the weighted average number of common shares
   outstanding.

   Pursuant to the Company's 2000 Stock Option Plan, options may be granted to
   purchase an aggregate of 4,000,000 shares of common stock to key employees
   and other persons who have or are contributing to the Company's success. As
   of June 30, 2004, no options had been granted under the 2000 plan.

   Accumulated Deficit - The acquisition of Migration by COL International on
   September 24, 2001 had been treated as a reverse acquisition. As a result,
   accumulated deficit prior to the acquisition should reflect that of Migration
   only. However, no goodwill was recorded on this acquisition as COL
   International had limited operations and was formed for the sole purpose of
   merging with Migration and raising limited funding prior to the acquisition.
   Therefore, accumulated deficit of COL International of Rmb3,630,010
   (US$438,016) at the date of acquisition has also been recorded in the
   accumulated deficit of the Company.

   Capital leases - Leases are classified as capital lease whenever the terms of
   the lease transfer substantially all the risks and rewards of ownership to
   the leasee.

   Amounts due from leasees under capital leases are recorded as receivables at
   the amount of the Company's net investment in the leases. Capital lease
   income is allocated to accounting periods so as to reflect to a constant
   periodic rate of return on the Company's net investment outstanding in
   respect of the leases.

   Operating leases - Leases where substantially all the rewards and risks of
   ownership of assets remain with the leasing company are accounted for as
   operating leases. Rental receivables under operating leases are recognized as
   income on the straight-line basis over the lease terms.

                                      F-10
<PAGE>


                       COL CHINA ONLINE INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

   Recent Accounting Pronouncements - There are no new accounting pronouncements
   for which adoption is expected to have a material effect on the Company's
   financial statements.


3. Continued Operations
   --------------------

   The accompanying consolidated financial statements have been prepared
   assuming COL International will continue operating as a going concern, which
   contemplates the realization of assets and liquidation of liabilities in the
   normal course of business.

   COL International's ability to continue as a going concern is dependent upon
   several factors, including, but not limited to, continued financial support
   by the major stockholder, the Company's raising additional capital,
   increasing revenue, and achieving and maintaining profitable operations. The
   accompanying consolidated financial statements do not include any adjustments
   that might result from the outcome of these uncertainties.

   The Company is aggressively working to increase revenues and develop its
   e-commerce related services, which it believes will ultimately lead to
   profitable operations and enable the Company to continue operations.
   Furthermore, COL International believes its major stockholder will continue
   to provide funding during the forthcoming year.

                                      F-11
<PAGE>


                       COL CHINA ONLINE INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. Equity Joint Venture
   --------------------

   In July 1998, Migration purchased a 90% interest in the Joint Venture
   established in the PRC by contributing Rmb9,000,000 to the Joint Venture. The
   Joint Venture will terminate in December 31, 2007 unless all directors of the
   Joint Venture consent to an extension and application is approved by relevant
   PRC authorities. The minority interest stockholder (Shenzhen Rayes Group Co.,
   Limited) in the Joint Venture also contributed Rmb1,000,000 to the Joint
   Venture.

   The Joint Venture entered into various agreements with its minority
   stockholder whereby the Joint Venture provides marketing and value added
   services in the operation of the minority stockholder's internet business in
   Shanghai and Wuhan, PRC through July 2004, subject to renewal at terms to be
   agreed between the minority stockholder and Migration. Migration has the
   right of first refusal to purchase the minority stockholder's ownership
   interest in the ISP in Shanghai and Wuhan. Currently, however, foreign
   entities cannot own ISP operations in the PRC.

   One agreement stipulates that the Joint Venture will provide marketing and
   technical services to the minority stockholder ISP operations in Shanghai and
   Wuhan, PRC, and will share the related ISP revenues with the minority
   stockholder on a 50/50 basis. The Joint Venture paid its minority stockholder
   Rmb3,000,000 for these rights.

   On July 5 2002, COL International entered into a sales and purchase agreement
   with a third party to sell the Company's Wuhan operations for an aggregate
   sales price of Rmb750,000. The sale includes the entire ownership of Wuhan
   Education Net and accounts receivables of Wuhan branch of the Joint Venture.
   The transaction resulted in a net gain of approximately Rmb385,690 and has
   been recognized in the fiscal year ended June 30, 2003. In addition, the
   Company has reversed the provision for staff welfare for Wuhan operations of
   Rmb436,479, resulting in a total gain of Rmb822,169. The decision to sell the
   business of Wuhan branch was made after consideration of the past
   unsatisfactory operating results of the branch.

   A second agreement with the minority stockholder grants the Joint Venture
   access to the "COL China Online" brand name and network to allow the Joint
   Venture to provide enhanced and value added services related to Internet.
   Under this agreement, the Joint Venture is not required to share revenues
   from these services with the minority stockholder. The Joint Venture paid the
   minority stockholder Rmb7,000,000 for these rights. Amortization and
   impairment loss has been fully provided for the amount since the year ended
   June 30, 2002.

                                      F-12
<PAGE>


                       COL CHINA ONLINE INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. Equity Joint Venture (cont'd)
   --------------------

   In addition, the Joint Venture entered into agreement with its minority
   stockholder, whereby the minority stockholder provides services to the Joint
   Venture at a monthly management charge of Rmb15,000 through the term of the
   Joint Venture. This agreement was mutually terminated at the end of September
   2002. Under another agreement, the Joint Venture bears telecommunication
   costs relating to ISP operations up to a stipulated capacity and the minority
   interest stockholder pays for the costs of transmission capacity in excess of
   this amount. This agreement was also mutually terminated at the end of
   December 2003. Amounts received from/paid to the minority stockholder are as
   follows:
<TABLE>
<CAPTION>

                                                                               FOR THE          FOR THE
                                           FOR THE YEAR ENDED                 YEAR ENDED        YEAR ENDED
                                              JUNE 30, 2004                  JUNE 30, 2003    JULY 31, 2002
                                      ----------------------------
                                           (US$)              (Rmb)               (Rmb)                (Rmb)
                                  (Illustrative
                                          Only)
<S>                                    <C>                <C>               <C>                  <C>
Received from:
Marketing and value added
  service fee income                      5,278              43,741             484,941             431,405
                                      =========           =========           =========           =========

Paid to:
Management fee expense                     --                  --                  --                45,000
Telecommunication expense                14,480             120,000           1,100,882           1,021,096
                                      ---------           ---------           ---------           ---------

                                         14,480             120,000           1,100,882           1,066,096
                                      =========           =========           =========           =========
</TABLE>


5. Acquisitions
   ------------

   As discussed in Note 1, Migration entered into an agreement to be acquired by
   COL International during the fiscal year of 2002. This acquisition was
   completed on September 24, 2002. COL International is an entity incorporated
   in Delaware, USA, with no substantive assets or operations. Therefore, for
   financial reporting purposes, Migration was considered the acquiring entity.
   The continuing financial statements are those of Migration's from its
   inception with COL International being included from the date of acquisition.
   Legally, however, COL International is the parent company of Migration. All
   costs associated with the transactions were expensed in operations.

   Migration entered into an agreement with certain independent third parties to
   acquire 70% equity interests of Shangyi, a company incorporated in the PRC
   during the fiscal year of 2000. Shangyi and its predecessor entity have
   developed a website ("Construction Net") to facilitate the sale of
   construction materials in the PRC. This acquisition was completed on July 31,
   2000. However, there is no active business activities carried out by Shangyi.

                                      F-13
<PAGE>


                      COL CHINA ONLINE INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

6. Accounts Receivable
   -------------------
   The following information summarizes accounts receivable at:

                                                     JUNE 30, 2004                     JUNE 30, 2003
                                         ---------------------------------             -------------
                                                  (US$)               (Rmb)                (Rmb)
                                        (Illustrative
                                                Only)

<S>                                             <C>                 <C>                  <C>
Trade receivables                               3,077               25,500               46,520
Less: Allowance for doubtful accounts            --                   --                   --
                                               ------               ------               ------

                                                3,077               25,500               46,520
                                               ======               ======               ======


7. Prepaid expenses and other receivables
   --------------------------------------

   The following information summarizes prepaid expenses and other receivables
   at:

                                                         JUNE 30, 2004                    JUNE 30, 2003
                                            -----------------------------------           -------------
                                                     (US$)                 (Rmb)                 (Rmb)
                                           (Illustrative
                                                   Only)

Rental deposit                                     32,373               268,292               225,932
Other receivables                                  15,447               128,015               796,910
                                               ----------            ----------            ----------

                                                   47,820               396,307             1,022,842

Less: Allowance for doubtful accounts                --                    --                (722,890)
                                               ----------            ----------            ----------

                                                   47,820               396,307               299,952
                                               ==========            ==========            ==========
</TABLE>

   Included in the other receivables was Rmb558,265 and Rmb0 (US$0) as of June
   30, 2003 and 2004 respectively represents advance to a Company controlled by
   Mr. Justin Jencks, the chief operating officer of the Company in connection
   with a plan of the Company to acquire that company. However, the Company
   abandoned the plan of acquisition and then the advance were written off.

                                      F-14
<PAGE>


                      COL CHINA ONLINE INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

8. Property, Office Space and Equipment
   ------------------------------------

   Property, office space and equipment consists of the following:

                                                        June 30, 2004                   June 30, 2003
                                           ------------------------------------         -------------
                                                    (US$)                 (Rmb)                 (Rmb)
                                           (Illustrative
                                                   Only)

<S>                                                                                         <C>
Properties                                           --                    --               2,548,699
Vehicles                                           40,478               335,458               228,000
Computer equipment                                730,361             6,052,790             5,751,535
Computer software                                 556,594             4,612,721             4,612,721
Office furniture                                   27,093               224,530               224,530
Other equipment                                   228,488             1,893,569             1,876,669
                                              -----------           -----------           -----------

                                                1,583,014            13,119,068            15,242,154
Less :  Accumulated depreciation and
          amortization                         (1,184,434)           (9,815,875)           (9,957,932)
Less :  Impairment loss                          (190,024)           (1,574,810)           (1,565,590)
                                              -----------           -----------           -----------

                                                  208,556             1,728,383             3,718,632
                                              ===========           ===========           ===========
</TABLE>

   All computer software was purchased from third parties.

   The major assets disposed during the year represent two properties in Wuhan,
   PRC and one motor vehicle and resulted in net loss on disposal of Rmb206,687
   (US$24,940).


9. Mortgage Loans Payable
   ----------------------

   During fiscal 2000, the Joint Venture purchased a staff quarter in Wuhan, PRC
   for Rmb522,444. In connection with this purchase, the Joint Venture entered
   into a mortgage agreement for Rmb300,000, which has an outstanding balance of
   Rmb180,205 as of June 30, 2003. The Joint Venture is required to make a
   monthly payment for 5 years starting from 2002 with interest at an annual
   rate of 5.5%. This debt is guaranteed by the general manager of the Wuhan
   branch. During the year, the staff quarter was sold and the connected
   mortgage loan was repaid.

                                      F-15
<PAGE>


                      COL CHINA ONLINE INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Mortgage Loans Payable (cont'd)
   ----------------------
   The Joint Venture also purchased its office in Wuhan, PRC for Rmb2,026,255
   and has a related obligation for Rmb1,500,000. In December 2000, the Joint
   Venture entered into a supplemental agreement with the seller of the property
   whereby a further down-payment of Rmb110,000 was paid in early January 2002
   and the remaining balance of Rmb1,390,000 plus the accrued interest at the
   rate of 5.31% per annum are to be repaid by a monthly installment of
   Rmb26,428 for 5 years during the period from January 2002 to December 2005.
   Therefore, as of June 30, 2002, the Rmb1,500,000 is reflected as a current
   liability, but as of June 30, 2003, this loan is classified as long-term.
   During the year, the office was sold and the remaining balance of related
   obligation was transferred and borne by the buyer.

<TABLE>
<CAPTION>

10. Payable To/(Received From) Related Parties
    ------------------------------------------
                                                                 June 30, 2004                June 30, 2003
                                                    ----------------------------------        -------------
                                                             (US$)                (Rmb)               (Rmb)
                                                    (Illustrative
                                                           Only)

<S>                                                        <C>                 <C>                    <C>
Minority stockholder of Joint Venture                      (3,319)             (27,505)               7,170
Minority stockholder of Shangyi                            25,902              214,660              214,660
Majority stockholder of COL International (Note a)      8,574,371           71,059,244           63,077,805
</TABLE>

   All payables with related parties are without interest or collateral.

   Note:

     a.   Pursuant to the Loan Agreement, Honview agreed to lend Migration its
          cash needs, from time to time, at any time until January 1, 2004 up to
          an aggregate principal amount of US$8 million. As a result of
          Migration becoming a wholly owned subsidiary of COL International, any
          amounts loaned from Honview prior to February 8, 2002, the effective
          date of the registration statement related to COL International's
          initial public offering, may be paid at the option of Honview, by
          converting, at any time after October 10, 2002, part or all the unpaid
          principal amount of the loan into shares of COL International's common
          stock, at a price equal to the greater of $1.20 per share or 90
          percent of the average weighted trading price of the common stock for
          the 20 trading days preceding the date of notice of exercise of
          conversion. Any amounts loaned from Honview after the effective date
          of this registration statement may be paid, at the option of Honview,
          by converting, at any time after October 10, 2002, part or all the
          unpaid principal amount of the loan into shares of COL International's
          common stock, at a price equal to the greater of $1.20 per share or
          110 percent of weighted average trading price of common stock for the
          20 trading days preceding the date of the loan.

          During the year, Honview has undertaken to make available adequate
          funds to COL International as and when required to maintain COL
          International as a going concern.

                                      F-16
<PAGE>


                      COL CHINA ONLINE INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. Commitments and Contingencies
    -----------------------------

     i)   Operating Leases Payable - As of June 30, 2004, COL International has
          the following non-cancelable lease commitments for the year ending
          June 30:

                                                          June 30, 2004
                                            ------------------------------------
                                                    (US$)                  (Rmb)
                                           (Illustrative
                                                   Only)

          2005                                   107,287                 889,128
          2006                                    44,875                 371,898
          2007                                     1,086                   9,000
                                               ---------               ---------

                                                 153,248               1,270,026
                                               =========               =========

          Rent expense charged to operations was Rmb962,599, Rmb1,051,361 and
          Rmb1,147,228 (US$138,430) for the years ended June 30, 2002, 2003 and
          2004 respectively.

     ii)  Capital expenditure commitments
          --------------------------------
                                                     As of June 30, 2004
                                           ------------------------------------
                                                   (US$)                   (Rmb)
                                          (Illustrative
                                                   Only)
          Contracted but not provided net
           of deposits paid in the
           financial statements                   52,267                433,160
                                               =========              ==========

          Authorized but not contracted for        --                       --
                                               =========              ==========

     iii) Capital lease
          -------------

          The following lists the components of the net investment in capital
          lease:

                                                   As of June 30, 2004
                                            ------------------------------------
                                                   (US$)                   (Rmb)
                                           (Illustrative
                                                   Only)

          Net minimum lease payments
           receivable within 1 year              135,976              1,126,888
          Less:    Unearned income                16,724                138,595
                                               ---------              ----------

          Net investment in the lease            119,252                988,293
                                               =========              ==========

                                      F-17
<PAGE>


                      COL CHINA ONLINE INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. Commitments and Contingencies (cont'd)
    ----------------------------

     iv)  Stock Option Plan - The Company has set up a stock option plan (the
          "Stock Option plan"), which the Company may grant options to key
          employees and other persons to purchase an aggregate of 4,000,000
          shares of common stock. The options granted pursuant to the Stock
          Option Plan may be either incentive options qualifying for beneficial
          tax treatment for the recipient, or non-qualified options. The terms
          of the Stock Option Plan concerning incentive options and
          non-qualified options are substantially the same except that only the
          Company's or its subsidiaries' employees are eligible for incentive
          options, and other individuals are eligible for non-qualified options.
          With respect to options granted to persons other than outside
          directors, the Stock Option Plan is administered by an Option
          Committee that determines the terms of the options subject to the
          requirements of the Stock Option Plan.

          All options granted under the Stock Option Plan will become fully
          exercisable on the date that the options are granted or other dates
          that the Option Committee determines and will continue for a period up
          to a maximum of ten years. Options granted pursuant to the Stock
          Option Plan are not transferable during the optionee's lifetime.
          Subject to the other terms of the Stock Option Plan, the Option
          Committee has discretion to provide vesting requirements and specific
          expiration provisions with respect to the incentive options and
          non-qualified options granted. No options had been granted under the
          Stock Option Plan since its establishment.


12. Taxes
    -----

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

   The Joint Venture and Shangyi, which were established in the PRC, are subject
   to the PRC income taxes at a rate of 33%. However, the Shenzhen headoffice of
   the Joint Venture is entitled to full exemption from income tax for one year
   starting from the first profit making year and 50% tax reduction in the
   subsequent two years. No provision for PRC income tax has been provided for
   in the financial statements as the Joint Venture and Shangyi in the PRC were
   operating at a loss for the periods presented.

   Migration operates in Hong Kong where the statutory tax rate is 17.5% (2003:
   16%) on assessable income arising in Hong Kong. Migration is exempt from any
   BVI income taxes under BVI International Business Act for its operations
   being located only in Hong Kong.

   As of June 30, 2004, COL International has a net operating loss (NOL)
   carryforward for tax reporting purposes in the PRC of approximately
   Rmb54,000,000 (US$6,515,916). Under PRC taxation laws, NOL of each year can
   only be carried forward for a maximum of 5 years.

   Deferred income taxes are provided for differences between the tax and book
   basis of assets and liabilities as a result of temporary differences in the
   recognition of revenues or expenses for tax and financial reporting purposes,
   which relates primarily to certain items not currently deductible for tax
   purposes until paid.

                                      F-18
<PAGE>


                      COL CHINA ONLINE INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. Taxes (cont'd)
    -----
   Deferred tax assets resulting from these differences, consist of the
   following:
<TABLE>
<CAPTION>

                                           Hong Kong                                         PRC
                                           ---------                                         ---
                                           June 30,                                       June 30,
                                 ----------------------------       -------------------------------------------------
                                      2004               2003               2004              2004                2003
                                      (Rmb)              (Rmb)              (US$)             (Rmb)               (Rmb)
                                                                   (Illustrative
                                                                           only)

<S>                              <C>                <C>               <C>               <C>               <C>
Net operating loss carry
  forwards                              --                --           2,014,116         16,691,786         13,050,627
Other                                   --                --             127,956          1,060,419          6,994,537
                                 -----------       -----------       -----------        -----------        -----------

Deferred tax assets                     --                --           2,142,072         17,752,205         20,045,164

Less: Valuation allowance               --                --          (2,142,072)       (17,752,205)       (20,045,164)
                                 -----------       -----------       -----------        -----------        -----------
                                        --                --                --                 --                 --
                                 ===========       ===========       ===========        ===========        ===========
</TABLE>

   The valuation allowances on COL International's ability to utilize its net
   operating loss has reduced the Company's expected tax benefit in PRC from
   16.5% (first profit making year) to 0%.

   In addition, the Joint Venture and Shangyi are subject to business taxes in
   the PRC and are required to pay 5% of revenues generated from marketing and
   value added services, computer software, and network development. Business
   taxes are netted against revenues.


13. Major Customers
    ---------------

   The following customers totaled more than 10% of sales:

                                                       Year ended June 30
                                                  -----------------------------
                                                   2004       2003         2002

 A                                                  0%         0%          12%
 B (minority stockholder in the Joint Venture)      13%       46%          22%
 C                                                  37%        0%           0%
 D                                                  0%        46%           0%
 E                                                  0%         0%          52%
 F                                                  38%        0%           0%
 G                                                  12%        0%           0%


14. Related Party Transactions
    --------------------------

   During the year, the Company received rental income from a company subject to
   common significant influence for an amount of Rmb90,000 and Rmb150,000
   (US$18,100) for the years ended June 2003 and 2004 respectively.


                                      F-19