================================================================================

                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, 2002.
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)

                             3177 South Parker Road
                             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 [ ]   No [X]

<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.
Yes [X]   No [ ]

Issuer's revenues for its most recent fiscal year: $264,226.

As of October 1, 2002, the aggregate market value of the voting stock held by
non-affiliates of the issuer was approximately $2,507,750. 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 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 October 1, 2002 was 50,155,000.

================================================================================



<PAGE>


                       COL China Online International Inc.
                     10-KSB for the Year Ended June 30, 2002

                                Table of Contents

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

Item 1.   Business.............................................................2

Item 2.   Properties..........................................................22

Item 3.   Legal Proceedings...................................................23

Item 4.   Submission of Matters to a Vote of Security Holders.................23

PART II.......................................................................23

Item 5.   Market for Registrant's Common Equity and Related Stockholder
          Matters.............................................................23

Item 6.   Management's Discussion and Analysis of Results of Operations
          and Financial Condition.............................................23

Item 7.   Financial Statements................................................27

Item 8.   Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosure............................................28

PART III......................................................................28

Item 9.   Directors, Executive Officers, Promoters and Control Persons:
          Compliance with Section 16(a) of the Exchange Act...................28

Item 10.  Executive Compensation..............................................29

Item 11.  Security Ownership of Certain Beneficial Owners and Management......32

Item 12.  Certain Relationships and Related Transactions......................33

Item 13.  Exhibits and Reports on Form 8-K....................................35

Signatures....................................................................38



                                       i
<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 Developments Limited, a British Virgin
Islands company. On September 24, 2001, we completed the acquisition of
Migration through the exchange of shares of COL International for all the
outstanding shares of Migration. In this transaction, we acquired all the
outstanding common shares of Migration in exchange for 40.2 million shares of
our common stock. As a result of the acquisition, Migration became a wholly
owned subsidiary of COL International.

     Prior to the acquisition of Migration on September 24, 2001, COL
International was considered to be in the development state, 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 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 - COL International was formed for the purpose of acquiring and
conducting the engineering services and the internet related business of
Migration. In September 2001, the acquisition of Migration by the Company
through the exchange of the Company's shares was completed. In this transaction,
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 a
reverse acquisition, whereby Migration is considered as an acquirer. No goodwill
is recorded in the merger. The condensed consolidated financial statements of
the Company reflected the operations of Migration prior to the merger and the
combined entity after the merger.

     Migration is a British Virgin Islands (BVI) corporation incorporated on May
18, 1998. Migration has been providing marketing and technical services for an
Internet Service Provider (ISP) and value added services generally related to
the installation of computer network system (i.e. Local Area Networks LANs) in
the PRC. Migration is also developing proprietary websites in which it markets
services and products of other companies and receives subscriber and/or
transactional fees for its services. Migration designs websites and provides
hosting services to other companies.

     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 (US$90,502). The sale
includes 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 (US$45,304) and will be recognized in the
fiscal year ending June 30, 2003. The decision to sell the business of Wuhan
branch was made after consideration of the past operating results of the branch.

                                       2
<PAGE>

     Plan of operations - In order to strengthen our management team, Mr. Justin
Jencks was appointed as the Chief Operating Officer of COL International in May,
2002. COL International also determined to re-focus the Company's operations in
Shanghai and, as a result, divested the Company's operations in Wuhan in July
2002. COL International intends to pursue the following in Shanghai:

     o    Attempting to increase the competitiveness of the Company's products
          by actively seeking alternative suppliers for various services the
          Company is offering.

     o    Commencing an operation to provide internet services to Sino Foreign
          Joint Ventures and Foreign Owned Companies in the area of Shanghai.

     o    Launching a calling card service in Shanghai in August 2002.

     o    Seeking a strategic alliance with traditional media to promote the
          Company's name and products.

     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 Rmb7,200,000 (or approximately
US$870,000) in financing during the next 12 months to satisfy its cash
requirements. COL International, through its Migration subsidiary, currently
employs approximately 70 employees in China. As COL International pursues its
plan of operations, it anticipates hiring up to 30 additional employees in the
next 12 months.

     We anticipate making no purchases or sales of plant and significant
equipment in the coming year, apart from the possible addition of more servers
to keep pace with future growth. We do not expect the costs of additional
servers to be material.

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 quoted by the Bank
of China on June 30, 2002 of US$1.00 = Rmb 8.287.

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

                                       3
<PAGE>

                                       Noon Buying Rate (1)
                                       --------------------
       Calendar Year    Period End     Average (2)     High           Low
       -------------    ----------     -----------     ----           ---
                                           (Rmb per US$)
           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
           2000           8.2774         8.2784       8.2799         8.2768
           2001           8.2766         8.2772       8.2783         8.2766
   2002 (through June)    8.2771         8.2769       8.2774         8.2765

----------
(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.

Corporate Structure

     Our operations consist primarily of internet related services, including
business-to-business e-commerce, online distance learning, network engineering
services, website hosting and internet service provider consulting. Most of our
operations are conducted through Shenzhen Rayes Electronic Network System Co.,
Ltd., a Sino-foreign joint venture, and our interest in the joint venture is as
follows: we own 100 percent of the outstanding equity interests of Migration,
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.




                                       4
<PAGE>
<TABLE>
<CAPTION>
<S>                  <C>                    <C>                  <C>

                                    Corporate Structure of COL China Online International Inc.

                                        -----------------------------------
                                        COL China Online International Inc.
                                                    Delaware
                                        -----------------------------------
                                                       |
                                                      100%
                                                       |
  ------------------------------                ------------------------------
  Shenzhen Rayes Group Co., Ltd.                Migration Developments Limited
            China                                  British Virgin Islands
  ------------------------------                ------------------------------
               |                                               |         |
              10%                                             90%        |     -----------------------------------------------------
               |                                               |         |     Shanghai Dongyi Scientific Technology Engineering Co.
 ------------------------------------------------------------------      |                          China
       Shenzhen Rayes Electronic Network System Co., Ltd.                |     -----------------------------------------------------
         Sino-foreign joint venture registered in China                 70%                           |
 ------------------------------------------------------------------      |                            |
           |                   |                                         |                           30%
 -------------------    ----------------                                 |                            |
 Shanghai COL Branch    Wuhan COL Branch                                 |                            |
 -------------------    ----------------                                 |                            |
                               |                                -------------------------------------------------------------------
                               |                                Shanghai Shangyi Science and Trade Information Consulting Co., Ltd.
                               |                                                  Business-to-Business e-commerce
                               |                                -------------------------------------------------------------------
                               |
                -----------------------
                      Education Net
                Online Learning Systems
                -----------------------
</TABLE>

Business Of The Joint Venture

     The joint venture offers internet and related engineering services in two
sectors: small and medium sized enterprises, or SMEs, and online distance
learning. The joint venture is an internet infrastructure provider to the
growing number of SMEs in China, most of which are just beginning to use the
internet. It offers network engineering services, website hosting, and
connections to an internet service provider service, and it intends to offer
business-to-business e-commerce. Migration holds a 70 percent equity interest in
a leading business-to-business site for selling construction materials, and
other vertical portals are under development. The joint venture has developed
one of the leading online education sites in China at a time when online
education is just beginning to take hold. It is the only education website in
China where the Education Commission is an official partner.

     The Education Commission is a branch of the Chinese government. Under the
agreement between the Education Commission and the joint venture, the Education
Commission will cooperate with the joint venture in developing a website for
online distance education, including the providing of public school teachers to
develop content. Pursuant to the agreement, the Commission has not been granted
any rights concerning operating policies and procedures, selection and
termination of operation and financial officers or approval of budgets, capital
expenditures and borrowing of the education website.

     The joint venture and Rayes Group agreed under a Cooperation Agreement
Regarding China Online's Internet Connection Services Commercial Business that
the joint venture will provide technical and marketing services in Shanghai and
Wuhan for an internet service provider in exchange for a 50 percent share of the
profits. The joint venture also has a right of first refusal to purchase this
internet service provider's business in Shanghai and Wuhan should the Rayes
Group desire to sell it and the Chinese government policy on foreign investment
in the internet industry change in a manner that would allow the joint venture
to own it. At this time, however, foreign entities cannot own internet service
provider, or ISP, operations in China.

                                       5
<PAGE>

     In addition, the joint venture and Rayes Group agreed under the Cooperation
Agreement Regarding China Online's Internet Content Service Commercial Business
that Rayes Group will support the efforts of the joint venture to develop
value-added internet services. These value-added services include websites that
offer contents such as e-commerce or online education. The Internet Connection
Agreement and the Internet Content Agreement expire on July 1, 2004 and are
renewable upon mutual agreement of the parties.

     The joint venture has a web hosting business and designs proprietary
websites, including sites that are e-commerce enabled. The joint venture
expanded its bandwidth in early 2001 to meet the needs of its Shanghai Data
Centre for Web Hosting and its ISP-related business.

     The joint venture is also designing and building business-to-business
e-commerce products. The first product, Construction Net, has already been
launched. It is the first business-to-business website in China for promoting
and selling building materials.

     The joint venture has entered into an agreement with Rayes Group under
which Rayes Group provides services to the joint venture for a monthly
management fee of Rmb 15,000 (or US$1,812) until October 30, 2004. Rayes Group
previously provided office space under this arrangement, but the joint venture
is no longer utilizing those facilities. The parties also agreed that the joint
venture will bear telecommunication costs, including the initial
telecommunications capital costs, related to the ISP operations provided that
Rayes Group will pay all capital costs related to expansion of the
telecommunications facilities related to the ISP operations.

     The joint venture's business is conducted in the following six principal
areas:

     1.   Network Engineering

     The joint venture's primary source of revenue to date has been the
installation of network systems (i.e., local area networks) and the development
and installation of the related software. The joint venture has an engineering
and software team for providing network application services to major
enterprises and government organizations.

     The joint venture has the background to rapidly expand this business. The
joint venture's Chinese partner, the Rayes Group, is particularly well grounded
in network engineering and has designed and developed a number of major network
engineering projects across China, including control systems for airports and
hospitals. For example, it has installed major control and security systems at
the Daya Bay Nuclear Power station in the Guangdong province.

     The joint venture is able to develop and install complex application
systems for major corporate and government users. The technical department,
which consists of information technology professionals, can design specialized
software for large users such as banks or government departments, or design
personnel and financial administration systems for enterprises. The joint
venture also can design, install and maintain major wiring systems in offices in
order to create the network structures. For example, the joint venture developed
and installed a complex software system for the Wuhan Tax Bureau in July 1999.
This involved writing customized software for an internal management system,
setting up a remote access system for various outlying offices and building both
intranet and internet systems. It has built a network to connect the 40 separate
offices that are part of the Wuhan Science Institute. In February 2000, the
joint venture also designed and installed the network system for the new
headquarters of the Wuhan Education Commission.

                                       6
<PAGE>

     The joint venture started with an engineering team working from Wuhan and
has established a similar team in Shanghai. The Shanghai team started working on
its first network-engineering contract in late 2000. It has since planned and
built networks in Shanghai for companies that include China Telecom, the
national telephone carrier, the Shanghai Institute of Machine Building and Tokyo
Seimitsu Ltd.

     The joint venture is entering this network engineering business at a time
when China is expecting an increase in related information technology business.
China's level of information technology, or "information capacity", is one of
the lowest in the world, and only 8.6 percent of the US level, according to a
report released in 2000 by China's State Statistical Bureau.

     In response, China has mapped ambitious plans to rapidly upgrade and expand
its networks. In Shanghai, the city government plans that by 2002 every major
building in the city center will be linked with fiber-optic cable. By the same
year, about one-half of all residential communities plan to be connected with
their own local-area networks. Shanghai also aims to raise the number of
internet users four-fold to 30 percent of the population, or four million
people, by 2002, according to a five-year plan released in 2000 by the Shanghai
government.

     The joint venture is currently in discussions with one major property
developer to provide value-added network services to a large number of
commercial and residential buildings in Shanghai.

     2.   Web Hosting

     The joint venture expanded its bandwidth in Shanghai in 2001 to gear up for
an expansion of its web hosting business, which will focus on serving SEMs.

     The joint venture has built a web hosting department that offers secure
server storage with technical staff on duty 24 hours a day, seven days a week.
The joint venture hosting service offers both "virtual hosting," where many
companies share a single web server in the joint venture's office, as well as
"dedicated hosting", in which a single client will use one server. In addition,
the joint venture is a "server farm" as some major enterprises, including the
Shanghai Fire Protection Bureau and the University of Finance and Economy in
Shanghai, house their servers at the joint venture's office for custody and
ongoing technical support. The joint venture also offers domain name
registrations and has web page design staff for building individual web pages.
The joint venture believes that it is able to build high quality websites with
e-commerce at highly competitive prices.

     At the same time, local governments, such as Shanghai, are actively
promoting a rapid expansion of bandwidth across their cities. The Chinese
government has started active programs to encourage businesses to set up
websites and try to conduct business over the internet, especially in the face
of the country's pending entry into the World Trade Organization.

     The joint venture is developing the web hosting business amid a rapid
increase in the number of websites in China. The number of Chinese domain names,
ending in "cn", jumped to nearly 100,000 by July 2000 compared to 29,000 in July
1999, according to the China Internet Network Information Center in Beijing. At
the same time, Chinese institutions had acquired about 480,000 international
domain names during the second quarter of 2000, double the rate of the first
quarter, reported the China Data Network Service, a domain name service
provider.

                                       7
<PAGE>

     Despite the significant increase in Chinese domain names, the total number
of Chinese companies that have set up websites remains relatively low. According
to a 2000 China Data Network Service report, only 5.08 percent of commercial
businesses in China have acquired internationally registered internet domain
names. That number is relatively low by international standards, giving
significant opportunities for growth among those companies seeking an online
presence.

     Enterprises use the joint venture's web hosting service because they
usually lack the professional talent to manage applications and platforms on
their own. Most of these companies do not have the budget and the bandwidth to
deliver a system on their own that can expand a simple web operation to a
complex business application such as an e-commerce transaction site. The joint
venture's plan is to function like an in-house information technology
department, allowing companies that do not have their own technical staff to
outsource their networking and web hosting requirements to the joint venture.
While computer and internet penetration in China is well behind that of western
countries, the joint venture expects the web hosting business will rapidly
evolve into management of more complex applications, including the hosting of
business software as an application service provider in 2001.

     In early 2001, the joint venture installed new software that allows it to
create web pages that are e-commerce enabled for conditions in China. The new
software has a unique set of payment systems as China's credit system lags more
developed countries. The system also allows users to build their own websites
using pre-formatted templates, a service that was rolled out in 2001.

     The joint venture's development of e-commerce for web hosting comes as 70
percent of China's export companies are exploring or are expected to explore in
the near future e-commerce in trade with foreign countries, according to a
survey conducted by the Beijing Internet Development Center. The Center found
that less than 5 percent of export companies surveyed claimed that they were
already developing e-commerce while 31 percent had taken the first steps.
Another 29 percent are getting ready to take the first steps and 12 percent are
considering these actions.

     3.   Integrated Solutions for Small and Medium Sized Enterprises (SMEs)

     The joint venture's China operations are developing a value-added service
to small and medium sized enterprises, or SMEs. The joint venture will bundle a
broadband internet connection with other services such as web hosting, building
a corporate website, installing the physical corporate network, adding
e-commerce and providing business information - making the joint venture an
integrated business solutions provider.

     The joint venture has begun to offer bundled packages of individual
information technology services at various pricing levels. The number of
packages will continue to expand as the joint venture offers new software
applications for tasks such as accounting, Customer Relationship Management
(CRM) and Enterprise Resource Planning (ERP).

     The bundled services will be sold in the form of memberships. The members
will be offered packages that allow them, for example, to set up their corporate
website. Members will also have access to restricted information on the COL
International website (www.col-chinaonline.com) that caters to SMEs, especially
those export-oriented enterprises. The site shows updated business opportunities
and other content for export-oriented companies. The website will also include a
business-to-business marketplace, as well as an extensive list of services and
business tools designed to help entrepreneurs run their businesses.

                                       8
<PAGE>

     The joint venture's approach has received the endorsement of the Small and
Medium Size Business Control Office, which sets policies for small and medium
size enterprises for the Central Government of China. As part of this
endorsement, this office will lend its name to represent to people that the
website is jointly run so that the joint venture will be able to solicit
customers. This office will also allow the joint venture to introduce the
website and recruit members in their many seminars held throughout China.

     4.   Online Services for Export Companies

     In February 2001, the joint venture concluded an agreement to operate a
website jointly with the China Council for Promotion of International Trade. The
website (www.colexports.com) helps export-related companies perform the
following activities:

     o    Apply for overseas product standards approvals. The Council also is
          authorized by overseas agencies such as the United States Food & Drug
          Administration and Underwriters Laboratory, along with related
          organizations in other countries, to perform product-testing
          procedures. Companies will be able to apply for the testing online
          through the website.

     o    Buy Certificates of Origin online. The Council is one of the two
          authorities authorized to issue these certificates, which are
          mandatory for export companies when they cash their letters of credit.
          Users are able to apply for these certificates online and the joint
          venture is able to arrange for them to be issued.

     5.   Business to Business E-commerce

     The joint venture is currently developing a number of business-to-business
trading platforms that will cover certain major industrial sectors in China. The
first trading site for business, Construction Net, has already been launched for
trading construction materials. The website is www.col173.com. This business was
acquired on July 17, 2000 when Shanghai Shangyi Science -------------- and Trade
Information Consulting Co., Ltd. purchased all the equity interests of Shanghai
Tongji Construction Materials Technology Sales and Services Co., Ltd., including
Construction Net, at an aggregate price of Rmb 1,457,140 (or approximately
US$176,026). Migration owns 70 percent of the outstanding equity interests of
Shanghai Shangyi.

     The Construction Net site contains the largest database of building
materials pricing data in China, with 80,000 individual prices listed. In June
2000, Construction Net began to offer individual items for sale on the site, as
well as building materials such as flooring or paint for sale to individual
wholesalers. Shanghai Shangyi will also act to facilitate broker transactions.

     In mid-2001, the joint venture entered into an agreement with the owners of
major construction materials trading centers. This agreement will expand the
Construction Net site into a "Clicks and Bricks" system that will integrate the
site and its contents with 10 major building materials centers in cities around
China. These centers are the major outlets for selling and distributing building
materials in their respective cities and the surrounding regions.

     The building materials centers will provide space for showing samples of
products offered for sale on the website. Because business-to-business payment
systems are still in their infancy in China, it can also be used for collecting
payment for construction materials.

                                       9
<PAGE>

     In addition, Construction Net will be developed into a more comprehensive
portal that will encompass project planning for major construction projects and
will reach out to related industries such as architecture. The joint venture is
in discussions with a US software company that has offered to provide
project-planning software in simplified Chinese.

     The Chinese building materials industry is well suited for e-commerce
because it is highly fragmented. Most building materials are sold in hundreds of
thousands of small shops that typically offer a limited selection of goods in
small quantities, while specializing in only a few items. In just three major
cities, Beijing, Tianjin and Shanghai, there are more than 17,000 building
materials retail shops. The distribution network is also highly fragmented and
closed to foreign companies, which are barred by Chinese commercial laws from
directly holding wholesale distribution companies.

     Individual wholesalers and retailers are often clustered in larger building
materials trading centers, which have sprung up on the outskirts of every large
city in recent years. The centers are typically formed by one or more huge
exhibition halls that contain several floors of retail storefronts and display
centers. They form the Chinese equivalent of a US superstore such as Home Depot.
But while a US superstore has one management structure and uniform pricing,
China's trading centers hold an average of 500 individual wholesalers and
retailers. Each has a storefront display that typically occupies 100 square
meters and can display hardwood flooring, door fittings, kitchen cabinets or
paint. The turnover of individual building materials centers is substantial. For
example, the trading center in Shi Jia Zhong, in Hebei province, recorded a
turnover equivalent to US$843 million in 1999.

Governance And Operations Of The Joint Venture

     As a Sino-foreign joint venture, the joint venture is an equity joint
venture governed by the Chinese joint venture laws. The parties to the joint
venture participate in the profits and losses of the joint venture in proportion
to their contributions to capital. The operations of the joint venture are
subject to the contract between the joint venture partners, the joint venture's
Articles Of Association, and an extensive body of law governing such matters as
formation, registration, capital contribution, capital distributions,
accounting, taxation, foreign exchange, labor and liquidation.

     A board of directors consisting of five directors governs the joint
venture. Migration is entitled to appoint three directors, including the Vice
Chairman of the joint venture board, and Rayes Group is entitled to appoint two
directors and the Chairman of the joint venture board.

     The day-to-day operations and the execution of the decisions of the joint
venture board is the responsibility of the General Manager and the joint
venture's executives. Pursuant to applicable Chinese laws and the contract
between the parties of the joint venture, certain major actions require
unanimous approval by all of the directors of the joint venture called to decide
on such actions. These actions include amendments to the Sino-foreign joint
venture Contract and to the joint venture's Articles Of Association; increases
in, or assignments of, the registered capital of the joint venture; a merger of
the joint venture with another entity; or the termination and dissolution of the
enterprise. All other actions by the joint venture board require approval by
two-thirds of the directors, including the appointment of officers, strategic
planning and budgeting, employee compensation and welfare, and distribution of
after-tax profits.

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".

                                       10
<PAGE>

     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.

Research & Development

     The Company did not incur any research and development costs during the
year ended June 30, 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 75 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
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.

                                       11
<PAGE>

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.

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:

                                       12
<PAGE>

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.

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

     In order to implement our business plan fully, we will need additional
funding significantly in excess of the amount raised in our initial public
offering. 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.

     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 China 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 fundings 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

                                       13
<PAGE>

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. 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. In addition,
as the number of web pages and the amount of traffic increases, there can be no
assurance that we will be able to scale our systems proportionately. We also are
dependent upon web browsers, ISPs, and other website operators in China, all of
which have experienced significant system failures and electrical outages in the
past, and our users have experienced difficulties due to system failures
unrelated to our systems and services.

     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.

                                       14
<PAGE>

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

     To the extent we collect data derived from user activity on our advertising
network and from other sources, 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. In addition, the contracts we have with web
publishers require that we keep information regarding those web publishers
confidential.

     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
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 held liable for information retrieved from our portal network and
therefore bear high costs.

     Because our services can be used to download and distribute information to
others, there is a risk that claims may be made against us for defamation,
negligence, copyright or trademark infringement or other claims based on the
nature and content of such material, such as violation of censorship laws in
China. Although we carry general liability insurance, our insurance may not
cover potential claims of this type, or may not be adequate to indemnify us for
all liability that may be imposed. Any imposition of liability that is not
covered by our insurance or is in excess of our insurance coverage could have a
material adverse effect on our business, results of operations and financial
condition.

     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 in the internet field. 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.

                                       15
<PAGE>

     We will depend on some key employees.

     Our success depends on the active participation of Anthony Ng, our Chief
Executive Officer, Justin Jencks, our Chief Operating Officer, Kam Che Chan, our
Chairman, and Paul Wong, our director. The loss of the services of any of these
individuals 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
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.

                                       16
<PAGE>

     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
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. If
the Chinese government were to take any action to limit or eliminate the
distribution of information through our portal network or to limit or regulate
any current or future applications available to users on our portal network,
such action could have a material adverse effect on our business, financial
condition and results of operations.

     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. For more
information regarding term and scope of license, see "COL International--Terms
And Scopes Of Licenses" below.

     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.

                                       17
<PAGE>

     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
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 and Wuhan, 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.

                                       18
<PAGE>

     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 or on our portal network.

     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
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.

                                       19
<PAGE>

     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 lose revenues if the Cooperation Agreements are not
renewed.

     The joint venture and Rayes Group agreed that the joint venture participate
in the development of value added services related to internet and for
consulting business of ISP in Shanghai and Wuhan. The joint venture will receive
a 50 percent consulting fee for its services under the Cooperation Agreement
Regarding Internet Connection. The joint venture will also receive 100 percent
revenues from customers under the Cooperation Agreement Regarding Internet
Content for the services given by the joint venture. If the parties do not
mutually agree to renew the Cooperation Agreements upon their expiration on July
1, 2004, the joint venture will lose a significant source of revenues, although
it will not affect parts of the business such as network engineering, web
hosting and websites not developed through the joint venture. This includes
Shanghai Shangyi Science and Trade Information Consulting Co., Ltd., owner of
Construction Net, which is held by Migration rather than the joint venture.

     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
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.

                                       20
<PAGE>

     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 subsequent to this offering. Because of this
current and possible future lack of a market, investors in this offering may be
unable to sell their shares when they wish to do so. There is no assurance that
any investor 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 investor will be able to use our securities as collateral.

     If a market does develop, trading in the common stock, if any, will occur
in the over-the-counter market and we will attempt to have the common stock
qualify for listing on the Nasdaq Stock market. There is no assurance that our
common stock can be made to meet the criteria necessary to qualify for listing
on the Nasdaq. Even if it does meet that criteria, there is no assurance that
our stock would be accepted for listing on Nasdaq.

                                       21
<PAGE>

     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 3177 South Parker Road,
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, although the joint venture intends to dispose of
this property in the future.

     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.

     All properties are in good condition.

                                       22
<PAGE>

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 Results of Operations and
        Financial Condition
-------------------------------------------------------------------------

     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, 2002 and the periods then ended. These discussions
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.

                                       23
<PAGE>

Overview

     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 state, 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 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 - COL International was formed for the purpose of acquiring and
conducting the engineering services and the internet related business of
Migration. In September 2001, the acquisition of Migration by the Company
through the exchange of the Company's shares was completed. In this transaction,
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 a
reverse acquisition, whereby Migration is considered as an acquirer. No goodwill
is recorded in the merger. The consolidated financial statements of the Company
reflect the operations of Migration prior to the merger and the combined entity
after the merger.

     Migration is a British Virgin Islands (BVI) corporation incorporated on May
18, 1998. Migration has been providing marketing and technical services for an
Internet Service Provider (ISP) and value added services generally related to
the installation of computer network system (i.e. Local Area Networks or "LANs")
in the PRC. Migration is also developing proprietary websites in which it
markets services and products of other companies and receives subscriber and/or
transactional fees for its services. Migration designs websites and provides
hosting services to other companies.

Plan of operations:

     In order to strengthen our management team, Mr. Justin Jencks was appointed
as the Chief Operating Officer of COL International in May, 2002. COL
International also determined to re-focus the Company's operations in Shanghai
and, as a result, divested the Company's operations in Wuhan in July 2002. COL
International intends to pursue the following in Shanghai:

     o    Attempting to increase the competitiveness of the Company's products
          by actively seeking alternative suppliers for various services the
          Company is offering.

     o    Commencing an operation to provide internet services to Sino Foreign
          Joint Ventures and Foreign Owned Companies in the area of Shanghai.

     o    Launching a calling card service in Shanghai in August 2002.

                                       24
<PAGE>

     o    Seeking a strategic alliance with traditional media to promote the
          Company's name and products.

     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 Rmb7,200,000 (or approximately
US$870,000) in financing during the next 12 months to satisfy its cash
requirements. COL International, through its Migration subsidiary, currently
employs approximately 70 employees in China. As COL International pursues its
plan of operations, it anticipates hiring up to 30 additional employees in the
next 12 months.

     We anticipate making no purchases or sales of plant and significant
equipment in the coming year, apart from the possible addition of more servers
to keep pace with future growth. We do not expect the costs of additional
servers to be material.

Results of Operations

     Revenues for the year ended June 30, 2002 include installation revenue of
Rmb1,678,706 (US$202,569) and marketing fees received from Shenzhen Rayes Group
Co., Ltd. ("Rayes Group") of Rmb431,405 (US$52,057) compared to installation
revenues of Rmb784,598 and Rmb1,204,804, and marketing fees received from
Shenzhen Rays Group Co., Ltd. of Rmb290,100 and Rmb353,923 for the year ended
June 30, 2001 and eleven months ended June 30, 2000, respectively. The Company
has entered into only a limited number of installation contracts, and revenue is
recognized as project phases are completed and accepted by the customers.
However, because there have been only a limited number of contracts, the
Company's gross margin on installation revenue, which can vary between contracts
based on negotiated price and materials installed (where lower margins are
received), is not consistent between periods. For the year ended June 30, 2002,
the Company had a gross margin of approximately 23 percent based on costs of
Rmb1,292,088 (US$155,196), compared to the year ended June 30, 2001 when the
Company had a loss on gross margin of approximately 2 percent based on costs of
Rmb801,812. For the eleven months ended June 30, 2000, the Company had a gross
margin of approximately 67 percent based on costs of Rmb402,325. In addition,
Construction Net and Education Net have contributed transaction fees of
Rmb72,457 (US$8,743) and business services revenue of Rmb7,102 (US$857),
respectively, to the year ended June 30, 2002, compared to Rmb 43,072 and Rmb
1,303 for the year ended June 30, 2001. Both Construction Net and Education Net
were launched during the year ended June 30, 2001, however, no significant
revenues have been generated to date. The Company began to derive revenue from
sales of design software amounted to Rmb33,197 (US$4,006) with a gross profit of
50 percent for the year ended June 30, 2002.

     Marketing fees are 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. The Company has not yet
generated significant revenues from these lines of business, but is devoting
substantial resources to developing this business. To date, most ISP services
are paid by a limited number of individual dial-up customers and internet games
centers in Shanghai, as well as a limited number of companies whose web sites
are hosted by the Company. The Company also designs web sites for companies,
however, insignificant revenue has been generated from this activity to date. To
the extent that the Company designs and hosts a customer's web sites, the
related revenue from the design will generally be deferred and recognized over
the hosting term of the contract or expected life of the customer, if longer.

                                       25
<PAGE>

     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 Rmb1,021,096 (US$123,215), Rmb579,724 and Rmb499,834 for
the years ended June 30, 2002 and 2001 and the eleven months ended June 30,
2000, 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.

     During the year ended June 30, 2002, the Company did not incur any research
and development costs. During the year ended June 30, 2001, the Company incurred
Rmb299,153 of research and development costs. The Company incurred Rmb299,153 of
research and development costs for the eleven months ended June 30, 2000. These
costs represent software development costs associated with the Company's
development of its Education Net and Small and Medium Sized Enterprises web
sites. The web sites are currently functioning and can be accessed, but no
significant revenues have been generated to date.

     General and administrative costs include salaries, rent, travel and other
overhead costs. For the years ended June 30, 2002 and 2001 and the eleven months
ended June 30, 2000, general and administrative costs totaled Rmb11,918,576
(US$1,439,026), Rmb5,779,030 and Rmb4,226,600, respectively. These costs are
increasing as the Company continues to expand its business services.

     Amortization and depreciation expense for the years ended June 30, 2002 and
2001 and the eleven months ended June 30, 2000 was Rmb4,410,725 (US$532,240),
Rmb6,880,460 and Rmb5,770,301, respectively. The decrease was as a result of the
full impairment loss provision of intangibles which had been made in the fiscal
year ended June 30, 2001.

     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 interest holder for the year
ended June 30, 2002 as its initial capital contribution was fully absorbed.

     The above has resulted in net losses of Rmb17,946,607 (US$2,166,426),
Rmb19,438,427 and Rmb8,893,253 for the years ended June 30, 2002 and 2001 and
the eleven months ended June 30, 2000, respectively. The Company expects to
continue to incur losses until its services are more fully developed and
accepted in China.

Liquidity and Capital Resources

     As of June 30, 2002 and 2001, the Company had a negative and positive
working capital of Rmb2,013,399 (US$242,957) and Rmb181,916, respectively. As of
June 30, 2002, advances from the majority stockholder totaled Rmb51,784,441
(US$6,248,801). The Company's management believes the majority stockholder will
continue to provide financial support to the Company, and the majority
stockholder has signed a note agreement to provide up to US$8,000,000.
Migration's ability to continue operations is currently dependent upon continued
financial support from its majority stockholder. Also included in liabilities at
March 31, 2002 and June 30, 2001 is Rmb1,911,141 (US$143,734) and Rmb1,504,412,
respectively, incurred in connection with the purchase of office space and staff
quarter in Wuhan, China.

     Cash used in operating activities for the year ended June 30, 2002 was
Rmb10,704,633 (US$1,292,540) as compared with Rmb5,803,218 for the year ended
June 30, 2001. The cash used in operations was to fund operating losses of

                                       26
<PAGE>

Rmb15,789,634 (US$1,906,145) and Rmb19,438,427 (US$11,219,635), generally offset
by non-cash expenses related to amortization and depreciation of Rmb4,410,725
(US$532,240) and Rmb6,880,460 for the year ended June 30, 2002 and 2001,
respectively.

     Cash used in investing activities for the year ended June 30, 2002 and 2001
was Rmb435,709 (US$52,578) and Rmb1,585,438, respectively. For the year ended
June 30, 2001, after receiving regulatory approval, the purchase of a company
developing a website (Construction Net), in which the Company has 70 percent
interest, was completed. The total purchase price for this entity was
Rmb1,457,140 (or approximately US$179,000). A purchase deposit of Rmb1,020,000
(or approximately US$125,000) was advanced during the period ended June 30, 2000
and an additional net amount of Rmb 281,964 (or approximately US$35,000) was
paid in July 2000. The predecessor entity was a development stage company and
has not recognized any significant revenues from its web site development.

     Cash flows from financing activities have generally come from advances by
the majority stockholder of the Company. During the years ended June 30, 2002
and 2001, the majority stockholder has advanced Rmb10,185,433 (US$1,229,071) and
Rmb8,473,790, respectively.

Critical Accounting Policies

     The Company's significant accounting policies are described in note 2 to
the financial statements for the eleven months ended June 30, 2000 and for the
years ended June 30, 2001 and 2002 included 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.

     The Rmb826,680 (US$99,755) provision for doubtful debts included in the
consolidated balance sheet at June 30, 2002 are debts for which recoverability
is considered doubtful after due consideration and careful assessment by the
management of the Company. The provision included Rmb129,122 (US$15,581) that
was made in relation to accounts receivables of Rmb379,122 (US$45,748) that
subsequently were sold to an acquirer of Education Net at a consideration of
Rmb250,000(US$30,167) in Wuhan branch of the Joint Venture in a subsequent year.

     The provision also consists of amounts due from the minority stockholder of
the Joint Venture in the amount of Rmb533,014 (US$64,319) and Rmb164,544
(US$19,855) that related to a sundry debtor in the Shanghai branch.

     The Rmb1,565,589 (US$188,919) impairment loss provision comprises
Rmb107,556 (US$12,979) for Shangyi, Rmb1,399,443 (US$168,870) for Shanghai
branch and Rmb58,590(US$7,070) for Wuhan branch and was made by writing down the
carrying value of fixed assets to their estimated market value by the
management.

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.

                                       27
<PAGE>

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

     Not applicable.

                                    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             53       Chairman of the Board

     Anthony Ng               53       Director, Chief Executive Officer
                                       and Secretary

     Justin Jencks            30       Chief Operating Officer

     Paul Wong                52       Director

     Qi Yu Zhang              44       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.

     Anthony Ng became the Chief Executive Officer and Secretary, and also was
elected as a director, of COL International effective March 31, 2002. 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.

     Justin Jencks became the Chief Operating Officer of COL International in
May 2002. Before joining COL International, Mr. Jencks was the Chief Executive
Officer of Shanghai Technology Limited, a Sino-foreign joint venture company,
for five years. Shanghai Technology Limited is engaged in software development.

     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.

                                       28
<PAGE>

     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", above.

     Xiang Yang Chang, 51, 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, 28, 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, 63, 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, has 40 years of experience as a financial controller and an auditor both
in Australia and Hong Kong. He started in the audit department of Lowe, Bingham
& Mathews (now PricewaterhouseCoopers LLP) in 1960 after having graduated in
Hong Kong in accounting. He worked in China from its initial opening in the
mid-1960s until 1984. 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.

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

     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", above.

Item 10. Executive Compensation
-------------------------------

Summary Compensation Table

     The following table sets forth in summary form the compensation received by
Anthony Ng, our Chief Executive Officer, Mark Shaner, our former Chief Executive
Officer, Brian Power, also a former Chief Executive Officer, and Qi Yu Zhang,
Chairman of the board of the joint venture during the last fiscal year. 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.

                                       29
<PAGE>
<TABLE>
<CAPTION>
                                              Summary Compensation Table
                                              --------------------------

                                                                     Long Term Compensation
                                                                     ----------------------
                      Annual Compensation                            Awards               Payouts
                      -------------------                            ------               -------
                                                     Other           Restricted              All other
Name and Principal    Fiscal   Salary      Bonus     Annual          Stock        Options    Payouts    Compensation
Position              Year     ($) (1)     ($) (2)   Compensation    Awards ($)   (#)        ($) (3)    ($)(4)
--------------------------------------------------------------------------------------------------------------------
<S>                   <C>      <C>         <C>       <C>             <C>          <C>        <C>        <C>
Anthony Ng (5)        2002     $90,000     0         0               0            0          0          0
Chief Executive
  Officer             2001     0           0         0               0            0          0          0

                      2000     0           0         0               0            0          0          0
--------------------------------------------------------------------------------------------------------------------
Mark K. Shaner (6)    2002     0           0         0               0            0          0          0
Former Chief
  Executive Officer   2001     $12,000     0         0               0            0          0          0
  COL International
                      2000     $4,000      0         0               0            0          0          0
--------------------------------------------------------------------------------------------------------------------
Brian Power (7)       2002     $35,000     0         0               0            0          0          0
Former Chief
  Executive Officer   2001     $65,000     0         0               0            0          0          0
  COL International
                      2000     $150,000    0         0               0            0          0          0
--------------------------------------------------------------------------------------------------------------------
Qi Yu Zhang           2002     $23,077     0         0               0            0          0          0
Chairman
  Joint Venture       2001     $0          0         0               0            0          0          0

                      2000     $18,000     0         0               0            0          0          0
--------------------------------------------------------------------------------------------------------------------
</TABLE>

(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
     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.

                                       30
<PAGE>

(5)  Effective March 31, 2002, the Board of Directors elected Mr. Ng as a
     director of COL International and as Chief Executive Officer and Secretary
     to fill those vacancies which occurred due to Mr. Powers' resignation. See
     also footnote (7), below.

(6)  Mr. Shaner resigned as our Chief Executive Officer in September 2001.

(7)  Mr. Power became our Chief Executive Officer upon completion of the
     Migration acquisition in September 2001 and subsequently resigned from all
     positions with COL International effective March 31, 2002.

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. Currently, there is no employment contract with Mr. Justin
Jencks. COL International anticipates entering into an employment contract with
Mr. Jencks before the end of 2002.

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 12, 2001, 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

                                       31
<PAGE>

other equity securities of ours. We believe that during the fiscal year ended
June 30, 2001, our officers, directors and holders of more than 10% of our
common stock complied with all Section 16(a) filing requirements. 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.

Item 11. Security Ownership of Certain Beneficial Owners and Management
-----------------------------------------------------------------------

Beneficial Ownership

     As of October 1, 2002, there were 50,155,000 shares of common stock
outstanding. The following table sets forth certain information as of October 1,
2002, 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:

Name and Address of                      No. of Shares          Percentage of
Beneficial Owner                     Beneficially Owned (1)   Shares Outstanding
----------------                     ----------------------   ------------------

Kam Che Chan (2)
Flat D3, 5/F
36 Broadcast Drive                         22,849,680                45.7%
Kowloon, Hong Kong

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

Paul Wong (3)
32-2A Clovelly Court
12 May Road                                22,849,680                45.7%
Hong Kong
Qi Yu Zhang (4)
2811 City E. Station
Lai Zhen Mansion
40 Fu Min Road, Fu Tian Area               17,350,320                34.6%
Shenzhen, PRC  518033

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

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

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

----------

                                       32
<PAGE>

(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.

(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.

                                       33
<PAGE>

     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.

     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, 2002, advances from Honview
totaled Rmb51,784,441 (US$6,248,801). 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

                                       34
<PAGE>

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.

     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.

     (a) Financial Statements

         Independent Auditors Report.........................................F-1

         Consolidated Balance Sheets at June 30, 2002 and 2001...............F-2

         Consolidated Statements of Operations for the Years Ended
                June 30, 2002 and 2001.......................................F-3

         Consolidated Statements of Changes in Stockholders'
                Deficiency for the period from July 31, 1999
                (Inception) through June 30, 2002............................F-4

         Consolidated Statements of Cash Flows for the Years Ended
                June 30, 2002 and 2001.......................................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)

                                       35
<PAGE>

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

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)

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)

                                       36
<PAGE>

----------
(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.









                                       37
<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:  5 October, 2002                 By: /s/ Anthony Ng
                                       -----------------------------------
                                       Anthony Ng, Chief Executive 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
----                                   ----------



5 October, 2002                        /s/ Kam Che Chan
                                       -----------------------------------
                                       Kam Che Chan, Director



5 October, 2002                        /s/ Anthony Ng
                                       -----------------------------------
                                       Anthony Ng, Director



5 October, 2002                        /s/ Paul Wong
                                       -----------------------------------
                                       Paul Wong, Director



5 October, 2002                        /s/ Qi Yu Zhang
                                       -----------------------------------
                                       Qi Yu Zhang, Director



                                       38
<PAGE>

                                 CERTIFICATIONS

I, Anthony Ng, certify that:

1.   I have reviewed this annual report on Form 10-KSB of COL China Online
     International Inc.;

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

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

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a)   designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this annual report
          is being prepared;

     b)   evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c)   presented in this annual report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent functions):

     a)   all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

     b)   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

6.   The registrant's other certifying officers and I have indicated in this
     annual report whether there were significant changes in internal controls
     or in other factors that could significantly affect internal controls
     subsequent to the date of our most recent evaluation, including any
     corrective actions with regard to significant deficiencies and material
     weaknesses.


Date:  5 October, 2002                           /s/ Anthony Ng
                                                 -------------------------
                                                 Anthony Ng
                                                 Chief Executive Officer

<PAGE>

I, C.K. Wong, certify that:

1.   I have reviewed this annual report on Form 10-KSB of COL China Online
     International Inc.;

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

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

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a)   designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this annual report
          is being prepared;

     b)   evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c)   presented in this annual report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent functions):

     a)   all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

     b)   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

6.   The registrant's other certifying officers and I have indicated in this
     annual report whether there were significant changes in internal controls
     or in other factors that could significantly affect internal controls
     subsequent to the date of our most recent evaluation, including any
     corrective actions with regard to significant deficiencies and material
     weaknesses.


Date: 5 October, 2002                             /s/ C.K. Wong
                                                  ------------------------
                                                  C.K. Wong
                                                  Principal Financial Officer

<PAGE>


                          INDEPENDENT AUDITORS' REPORT



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,
2002 and 2001, and the related consolidated statements of operations,
stockholders' deficiency and cash flows for the years ended June 30, 2002 and
2001 and the eleven months ended June 30, 2000. 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 auditing standards generally accepted
in the United States of America. 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, 2002 and 2001, and the
results of their operations and their cash flows for the years ended June 30,
2002 and 2001 and the eleven months ended June 30, 2000, in conformity with
accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 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

Moores Rowland
Chartered Accountants
Certified Public Accountants
Hong Kong
5 October, 2002

                                      F-1
<PAGE>
<TABLE>
<CAPTION>

                                 COL CHINA ONLINE INTERNATIONAL INC.
                                     CONSOLIDATED BALANCE SHEETS


                                                            JUNE 30, 2001         JUNE 30, 2002
                                                            -------------  --------------------------
                                                                (Rmb)         (Rmb)          (US$)
                            Assets                                                    (Illustrative only)
                            ------
CURRENT ASSETS:
<S>                                                           <C>              <C>             <C>
    Cash                                                      1,858,434        368,839         44,508
    Accounts receivable, net of an allowance for doubtful
         accounts                                               231,487        340,115         41,041
    Inventories                                                  45,000         19,840          2,394
    Prepaid expense and other receivables                       184,779        266,992         32,217
    Due from minority stockholders                              136,967           --             --
                                                            -----------    -----------    -----------

             Total current assets                             2,456,667        995,786        120,160

PROPERTY, OFFICE SPACE AND EQUIPMENT, net of accumulated
    depreciation and impairment of Rmb9,745,641 and
    Rmb11,658,621 (US$1,406,839), respectively                9,847,085      3,509,596        423,501
                                                            -----------    -----------    -----------

TOTAL ASSETS                                                 12,303,752      4,505,382        543,661
                                                            ===========    ===========    ===========

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

CURRENT LIABILITIES:
    Current portion of mortgage loans payable                   313,271        330,528         39,885
    Accounts payable and accrued expenses                     1,699,522      2,203,103        265,847
    Billings in excess of costs and estimated earnings on
         uncompleted contracts                                   86,265           --             --
    Due to a minority stockholder                                  --          214,660         25,903
    Taxes payable                                               175,693        260,894         31,482
                                                            -----------    -----------    -----------

             Total current liabilities                        2,274,751      3,009,185        363,117

NOTES PAYABLE:
    Majority Stockholder                                     39,585,464     51,784,441      6,248,801
    Mortgage loans payable - net of current portion           1,191,141        860,612        103,850
                                                            -----------    -----------    -----------

             Total notes payable                             40,776,605     52,645,053      6,352,651

Commitments and contingencies (Notes 10 and 13)

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, 40,200,000 and 50,155,000 shares
         issued and outstanding, respectively                   327,710        408,864         50,155
    Additional paid-in capital                                   79,890      1,214,118        146,507
    Accumulated deficit                                     (31,161,454)   (52,738,071)    (6,364,694)
    Other comprehensive income (loss)                             6,250        (33,767)        (4,075)
                                                            -----------    -----------    -----------

             Total stockholders' deficiency                 (30,747,604)   (51,148,856)    (6,172,107)
                                                            -----------    -----------    -----------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY               12,303,752      4,505,382        543,661
                                                            ===========    ===========    ===========


                  See accompanying notes to these consolidated financial statements

                                                 F-2
<PAGE>

                                COL CHINA ONLINE INTERNATIONAL INC.
                               CONSOLIDATED STATEMENTS OF OPERATIONS


                                          FOR THE ELEVEN  FOR THE YEAR
                                           MONTHS ENDED    ENDED JUNE        FOR THE YEAR ENDED
                                          JUNE 30, 2000     30, 2001           JUNE 30, 2002
                                          -------------   -----------   ---------------------------
                                              (Rmb)           (Rmb)         (Rmb)          (US$)
                                                                                     (illustrative only)
NET REVENUES:
    Computer network installations           1,204,804        784,598      1,678,706        202,569
    Transaction fee                               --           43,072         72,457          8,743
    Business services revenue                     --            1,303          7,102            857
    Marketing fees, minority stockholder       353,923        290,100        431,405         52,057
                                           -----------    -----------    -----------    -----------

         Total revenues                      1,558,727      1,119,073      2,189,670        264,226

COST OF SALES:
    Computer network installations             402,325        801,812      1,292,089        155,916
    Transaction costs                             --           29,800         48,336          5,833
    Business services costs                       --              540          4,172            503
    Communication costs                        499,834        579,724      1,021,096        123,215
                                           -----------    -----------    -----------    -----------

                                               902,159      1,411,876      2,365,693        285,467
                                           -----------    -----------    -----------    -----------

    Gross Margin                               656,568       (292,803)      (176,023)       (21,241)

OPERATING EXPENSES:
    Research and development                   299,153           --             --             --
    Impairment                                    --        6,947,260      1,565,589        188,919
    General and administrative               4,226,600      5,779,030     11,918,576      1,439,026
    Amortization and depreciation            5,770,301      6,880,460      4,410,725        532,240
                                           -----------    -----------    -----------    -----------

         Total operating expenses           10,296,054     19,606,750     17,894,890      2,160,185
                                           -----------    -----------    -----------    -----------

OPERATING LOSS                              (9,639,486)   (19,899,553)   (18,070,913)    (2,181,426)

    Other income                                  --           14,546        124,306         15,000
                                           -----------    -----------    -----------    -----------

LOSS BEFORE MINORITY INTEREST               (9,639,486)   (19,885,007)   (17,946,607)    (2,166,426)

    Minority interest                          746,233        446,580           --             --
                                           -----------    -----------    -----------    -----------

NET LOSS                                    (8,893,253)   (19,438,427)   (17,946,607)    (2,166,426)

OTHER COMPREHENSIVE LOSS                          --             --          (40,017)        (4,829)
                                           -----------    -----------    -----------    -----------

COMPREHENSIVE LOSSES                        (8,893,253)   (19,438,427)   (17,986,624)    (2,171,255)
                                           ===========    ===========    ===========    ===========

BASIC AND FULLY DILUTED NET LOSS
 PER SHARE                                       (0.22)         (0.48)         (0.37)         (0.04)
                                           ===========    ===========    ===========    ===========

WEIGHTED AVERAGE COMMON SHARES              40,200,000     40,200,000     48,148,849     48,148,849
                                           ===========    ===========    ===========    ===========


                 See accompanying notes to these consolidated financial statements

                                                F-3
<PAGE>

                                          COL CHINA ONLINE INTERNATIONAL INC.
                                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY


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


Balances, July 31, 1999         40,200,000        327,710         79,890    (2,829,773)         6,250     (2,415,923)

Net loss                              --             --             --      (8,893,253)          --       (8,893,253)
                               -----------    -----------    -----------   -----------    -----------    -----------

Balances, June 30, 2000         40,200,000        327,710         79,890   (11,723,026)         6,250    (11,309,176)

Net loss                                                                   (19,438,428)                  (19,438,428)
                               -----------    -----------    -----------   -----------    -----------    -----------

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)
                               ===========    ===========    ===========   ===========    ===========    ===========





                          See accompanying notes to these consolidated financial statements

                                                         F-4
<PAGE>

                                  COL CHINA ONLINE INTERNATIONAL INC.
                                 CONSOLIDATED STATEMENTS OF CASH FLOWS


                                             FOR THE ELEVEN  FOR THE YEAR
                                               MONTHS ENDED  ENDED JUNE 30,      FOR THE YEAR ENDED
                                              JUNE 30, 2000       2001              JUNE 30, 2002
                                              -------------  -------------   --------------------------
                                                  (Rmb)          (Rmb)          (Rmb)           (US$)

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                      (8,893,253)   (19,438,427)   (17,946,607)    (2,166,426)
  Adjustments to reconcile net loss to net
   cash used in operating activities:
     Loss on disposal of fixed assets              169,713           --          860,201        103,800
     Minority interest                            (746,233)      (446,580)          --             --
     Amortization and depreciation               5,770,301      6,880,460      4,410,725        532,240
     Impairment                                       --        6,947,260      1,565,589        188,919
     Change in operating assets and
      liabilities:
       Decrease (increase) in:
       Accounts receivables                      1,230,265        (54,747)      (108,628)       (13,108)
       Other assets                                (46,316)        (4,008)       116,860         14,101
       Inventories                                    --          (45,000)        25,160          3,036
       Increase (decrease) in:
       Accounts payable and accrued
        expenses                                   349,708        245,214       (159,883)       (19,293)
       Due to a director                           (63,000)          --             --             --
       Taxes payable                                63,150         26,345         85,201         10,282
       Billings in excess of costs and
        estimated earnings on
        uncompleted contracts                         --           86,265        (86,265)       (10,410)
                                               -----------    -----------    -----------    -----------

     Net cash used in operating activities      (2,165,665)    (5,803,218)   (11,237,647)    (1,356,859)

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of equipment                         (3,792,451)    (1,303,474)      (499,027)       (60,217)
  Purchase of Construction Net                        --         (281,964)          --             --
  Other deposits                                (1,020,000)          --             --             --
  Net cash acquired in acquisition of COL
  International under reverse acquisition             --             --           63,308          7,639
                                               -----------    -----------    -----------    -----------

     Net cash used in investing activities      (4,812,451)    (1,585,438)      (435,719)       (52,578)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Mortgage loans repayments                      1,785,000       (280,588)      (313,272)       (37,802)
  Advances from Majority Stockholder            15,977,658      8,473,790     10,185,433      1,229,071
  Minority stockholders interest and advance   (10,171,912)       392,886        351,627         42,431
                                               -----------    -----------    -----------    -----------

     Net cash provided by financing
      activities                                 7,590,746      8,586,088     10,223,788      1,233,700
                                               -----------    -----------    -----------    -----------

EFFECT OF EXCHANGE RATE CHANGES ON CASH               --             --          (40,017)        (4,012)
                                               -----------    -----------    -----------    -----------

NET (DECREASE) INCREASE IN CASH                    612,630      1,197,432     (1,489,595)      (179,749)

CASH, beginning of period                           48,372        661,002      1,858,434        224,257
                                               -----------    -----------    -----------    -----------

CASH, end of period                                661,002      1,858,434        368,839         44,508
                                               ===========    ===========    ===========    ===========

NON-CASH INVESTING AND FINANCING
ACTIVITIES:
  ISSUANCE OF COMMON STOCK FOR ACQUISITION
   OF SUBSIDIARIES                                    --             --           67,662          8,165
                                               ===========    ===========    ===========    ===========

CASH PAID FOR INTEREST                                --           48,757         72,326          8,728
                                               ===========    ===========    ===========    ===========


                   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 Migration Developments
     Limited ("Migration") and raising equity capital. Prior to the acquisition
     of Migration, COL International 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.

     COL International was formed for the purpose of acquiring and conducting
     the engineering services and the internet related business of Migration. On
     September 24, 2001, the acquisition of Migration by the Company through the
     exchange of the Company's shares was completed. In this transaction, 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.

     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 COL International 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 COL International.

     Migration is a British Virgin Islands (BVI) corporation incorporated on May
     18, 1998. It 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 has been providing marketing and technical services for the
     Internet Service Provider (ISP) and value added services generally related
     to the installation of computer network systems (i.e., Local Area Networks
     or LANs) in the PRC.

     Migration is also developing proprietary websites in which it markets
     services and products of other companies and receives subscriber and/or
     transactional fees for its services. Migration designs websites and
     provides hosting services to other companies.

                                      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, 2002, 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 8.287 Rmb to the dollar, which
     was the exchange rate at June 30, 2002.

     Change of Year-End - In 2000, Migration changed its year-end for financial
     reporting purposes from July 31 to June 30. For regulatory purposes in the
     PRC, Migration is required to have a December 31 year-end. The June 30
     year-end will simplify Migration financial and regulatory reporting and
     conform to the year-end of COL International.

     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. Migration's 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
     Rmb231,487 and Rmb340,115 (US$41,041) as at June 30, 2001 and 2002,
     respectively, and the Company has made a provision for doubtful accounts of
     Rmb129,120 (US$15,581) for the year ended June 30, 2002. The management of
     the Company performs periodic credit evaluations on its customers'
     financial condition and believes that an allowance for doubtful accounts is
     sufficient.

     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 2002, most of COL International's operations were
     focused in Shanghai and Wuhan, PRC.

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

                                      F-7
<PAGE>

                       COL CHINA ONLINE INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     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 expense charged to operations was Rmb3,936,964, Rmb4,667,804
     and Rmb4,410,725 (US$532,240) for the eleven months ended June 30, 2000,
     and the years ended June 30, 2001 and 2002, 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.

     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. For website development and hosting, the Company follows EITF
     00-3, Application of AICPA Statement of Position 97-2, Software Revenue
     Recognition, to Arrangements That include the Right to Use Software Stored
     on Another Entity's Hardware, whereby revenues will be recognized over the
     life of contract or the expected life of the customer relationship,
     whichever is longer.

     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.

     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.

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

                                      F-8
<PAGE>

                       COL CHINA ONLINE INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     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, 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, 2001.

     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, 2001. Impairment loss
     had been fully provided for the net book value of RMB947,268 for the year
     ended June 30, 2001.

     Therefore, there was no amortization expenses for intangibles and goodwill
     for the year ended June 30, 2002.

     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.

     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.

                                      F-9
<PAGE>

                       COL CHINA ONLINE INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     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,
     2002 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, 2002, 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.

     Recent Accounting Pronouncements - In June 2001, the FASB issued SFAS 141,
     Business Combination. SFAS 141 addresses financial accounting and reporting
     for business combinations and supercedes APB No. 16, Business Combination
     and SFAS No. 38. Accounting for Preacquisition Contingencies of Purchased
     Enterprises. All business combinations in the scope of SFAS 141 are to be
     accounted for under the purchase method. SFAS 141 is effective June 30,
     2001. The adoption of SFAS 141 did not have an impact on the Company's
     financial position, results of operations or cash flows.

     In June 2001, the FASB also issued SFAS 142, Goodwill and Other Intangible
     Assets. SFAS 142 addresses financial accounting and reporting for
     intangible assets acquired individually or with a group of other assets
     (but not those acquired in a business combination) at acquisition. SFAS 142
     also addresses financial accounting and reporting for goodwill and other
     intangible assets subsequent to their acquisition. With the adoption of
     SFAS 142, goodwill is no longer subject to amortization. Rather, goodwill
     will be subject to at least an annual assessment for impairment by applying
     a fair value test. The impairment loss is the amount, if any, by which the
     implied fair value of goodwill is less than the carrying or book value.
     SFAS 142 is effective for fiscal years beginning after December 15, 2001.
     Impairment loss for goodwill arising from the initial application of SFAS
     142 is to be reported as resulting from a change in accounting principle.
     The Company does not expect there will be an impact to its financial
     position, results of operations or cash flows upon adoption of SFAS 142.

     In June 2001, the FASB also approved for issuance SFAS No. 143 Asset
     Retirement Obligations. SFAS No. 143 establishes accounting requirements
     for retirement obligations associated with tangible long-lived assets,
     including (1) the timing of the liability recognition, (2) initial

                                      F-10
<PAGE>

                       COL CHINA ONLINE INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     measurement of the liability, (3) allocation of asset retirement cost to
     expenses, (4) subsequent measurement of the liability and (5) financial
     statement disclosures. SFAS No. 143 required that an asset retirement cost
     should be capitalized as part of the cost of the related long-lived asset
     and subsequently allocated to expense using a systematic and rational
     method. The adoption of SFAS No. 143 is not expected to have a material
     effect on the Company's financial position, results of operations, or cash
     flows.

     In August 2001, the FASB also approved SFAS No. 144, Accounting for the
     Impairment or Disposal of Long-Lived Assets. SFAS No. 144 replaces SFAS No.
     121. The new accounting model for long-lived assets to be disposed of by
     sale applies to all long-lived assets, including discontinued operations,
     and replaces the provisions of Accounting Principles Board (APB) Opinion
     No. 30, Reporting Results of Operations - Reporting the Effects of Disposal
     of a Segment of a Business, for the disposal of segments of a business.
     SFAS No. 144 requires that those long-lived assets be measured at the lower
     of carrying amount or fair value less cost to sell, whether reported in
     continuing operations or in discontinued operations. Therefore,
     discontinued operations will no longer be measured at net realizable value
     or include amounts for operating losses that have not yet occurred. SFAS
     No. 144 also broadens the reporting of discontinued operations to include
     all components of an entity with operations that can be distinguished from
     the rest of the entity and that will be eliminated from the ongoing
     operations of the entity in a disposal transaction. The provisions of SFAS
     No. 144 are effective for financial statements issued for fiscal years
     beginning after December 15, 2001 and, generally, are to be applied
     prospectively. At this time, the Company cannot estimate the effect of this
     statement on its financial position, results of operations, or cash flows.

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

     In June 2002, the FASB issued SFAS No. 145 Accounting for costs associated
     with exit or Disposal Activities. This statement requires that a liability
     for a cost associated with an exit or disposal activity be recognized when
     the liability is incurred. An entity's commitment to plan, by itself, does
     not create a present obligation to others that meets the definition of a
     liability. This Statement is effective for exit or disposal activities that
     are initiated after December 31, 2002. The Company does not believe that
     the adoption of the Statement will have material impact on its financial
     position or result of operations.

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.

                                      F-11
<PAGE>

                       COL CHINA ONLINE INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     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.

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. 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 (USD90,502). 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 Rmb375,439 (USD45,304) and will be recognized in the fiscal
     year ending June 30, 2003. The decision to sell the business of Wuhan
     branch was made after consideration of the past operating results of the
     branch.

     As at June 30, 2002, net liabilities and accumulated deficit of Wuhan
     Education Net was Rmb67,858 (USD8,188) and Rmb67,858 (USD8,188) with loss
     for the year of Rmb5,524 (USD667). The Education Net and accounts
     receivable was completely transferred to the buyer on August 16, 2002.

     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.

     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 (US$1,812)

                                      F-12
<PAGE>

                       COL CHINA ONLINE INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     through the term of the Joint Venture. This agreement was mutually
     terminated at the end of September 2001. 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. Amounts received
     from/paid to the minority stockholder are as follows:

<TABLE>
<CAPTION>
                               FOR THE ELEVEN   FOR THE YEAR
                                MONTHS ENDED    ENDED JULY 31,     FOR THE YEAR ENDED
                               JUNE, 30, 2000       2001              JUNE 30, 2002
                               --------------   -------------    -----------------------
                                    (Rmb)           (Rmb)          (Rmb)         (US$)
                                                                           (Illustrative Only)
     <S>                          <C>             <C>            <C>            <C>
     Received from:
     Marketing and value added
       service fee income           353,923         290,100        431,405        52,057
                                  =========       =========      =========     =========

     Paid to:
     Management fee expense         165,000         180,000         45,000         5,430
     Telecommunication expense      499,834         579,724      1,021,096       123,215
                                  ---------       ---------      ---------     ---------

                                    664,834         759,724      1,066,096       128,645
                                  =========       =========      =========     =========
</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, 2001. 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.


                                      F-13
<PAGE>

                       COL CHINA ONLINE INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6.   Accounts Receivable
     -------------------

     The following information summarizes accounts receivable at:

                                           June 30,
                                             2001         JUNE 30, 2002
                                          ---------   --------------------
                                             (Rmb)     (Rmb)       (US$)
                                                               (Illustrative
                                                                   Only)

     Contract receivables on
       completed contracts                  222,906    433,437      52,301
     Other trade receivables                  8,581     35,800       4,320
                                           --------   --------    --------

                                            231,487    469,237      56,621

     Less: Allowance for doubtful
       accounts                                --     (129,122)    (15,581)
                                           --------   --------    --------

                                            231,487    340,115      41,040
                                           ========   ========    ========


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

     Property, office space and equipment consists of the following:

<TABLE>
<CAPTION>
                                         June 30,
                                          2001               June 30, 2002
                                       -----------    --------------------------
                                          (Rmb)          (Rmb)          (US$)
                                                                 (Illustrative Only)
     <S>                                 <C>            <C>              <C>
     Properties                          2,548,699      2,548,699        307,550
     Vehicles                              308,000        228,000         27,513
     Computer equipment                  7,775,733      6,390,312        771,115
     Computer software                   6,731,615      4,419,621        533,313
     Office furniture                      290,898        209,830         25,320
     Other equipment                     1,937,781      1,371,755        165,529
                                       -----------    -----------    -----------

                                        19,592,726     15,168,217      1,830,340
     Less : Accumulated depreciation
              and amortization          (9,745,641)   (10,093,031)    (1,217,920)
     Less : Impairment loss                   --       (1,565,590)      (188,919)
                                       -----------    -----------    -----------

                                         9,847,085      3,509,596        423,501
                                       ===========    ===========    ===========

     All computer software was purchased from third parties.

8.   Mortgage Loans Payable
     ----------------------

     During fiscal 2000, the Joint Venture purchased a staff quarter in Wuhan,
     PRC for Rmb522,444 (US$63,112). In connection with this purchase, the Joint
     Venture entered into a mortgage agreement for Rmb300,000, which has an
     outstanding balance of Rmb237,434 and Rmb180,205 (US$21,745) as of June 30,
     2001 and 2002, respectively. The Joint Venture is required to make a

                                      F-14
<PAGE>

                       COL CHINA ONLINE INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     monthly payment for 5 years starting from 2001 with interest at an annual
     rate of 5.5%. This debt is guaranteed by the general manager of the Wuhan
     branch. Annual principal repayment obligation under this obligation is as
     follows:

                                         June 30, 2002
                                    -----------------------
                                     (Rmb)           (US$)
                                               (Illustrative Only)

                        2003         60,554           7,307
                        2004         63,879           7,708
                        2005         55,772           6,730
                                    -------         -------

                                    180,205          21,745
                                    =======         =======


     The Joint Venture also purchased its offices in Wuhan, PRC for Rmb2,026,255
     (US$244,766) and has a related obligation for Rmb1,500,000 (US$181,004). 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 2001 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
     2001 to December 2005. Therefore, as of June 30, 2001, the Rmb1,500,000 is
     reflected as a current liability, but as of June 30, 2002, this loan is
     classified as long-term based on the schedule below:


                                         June 30, 2002
                                  ---------------------------
                                    (Rmb)             (US$)
                                               (Illustrative Only)

                  2003              269,974            32,578
                  2004              284,664            34,351
                  2005              300,152            36,219
                  2006              156,145            18,842
                                  ---------         ---------
                                  1,010,935           121,990
                                  =========         =========

9.   Payable To/(Received From) Related Parties
     ------------------------------------------

                                                             June 30,
                                                               2001            June 30, 2002
                                                           ----------    -------------------------
                                                              (Rmb)         (Rmb)         (US$)
                                                                                    (Illustrative Only)

     COL International                                        202,149           --            --
     Minority stockholder of Joint Venture (Note a)          (351,627)          --            --
     Minority stockholder of Shangyi                          214,660        214,660        25,903
     Majority stockholder of COL International (Note b)    39,585,464     51,784,441     6,248,801

     All payables with related parties are without interest or collateral.

     Note:

a.   Net of an allowance for doubtful accounts of Rmb533,014 (US$64,319) as at
     June 30, 2002.

b.   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

                                      F-15
<PAGE>

                       COL CHINA ONLINE INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     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.

10.  Commitments and Contingencies
     -----------------------------

     Operating Leases - As of June 30, 2002, COL International has the following
     non-cancelable lease commitments for the year ending June 30:

                                           June 30, 2002
                                      ------------------------
                                        (Rmb)          (US$)
                                                 (Illustrative Only)

                2003                    671,072         80,978
                2004                    276,810         33,403
                2005                    263,690         31,819
                2006                    285,300         34,427
                Thereafter              523,050         63,116
                                      ---------      ---------

                                      2,019,922        243,743
                                      =========      =========


     Rent expense charged to operations was Rmb567,445, Rmb631,088 and
     Rmb962,599 (US$116,156) for the eleven months ended June 30, 2000, the year
     ended June 30, 2001 and the year ended June 30, 2002, respectively.

11.  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
     head office 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 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.

                                      F-16
<PAGE>

                       COL CHINA ONLINE INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     As of June 30, 2002, COL International has a net operating loss (NOL)
     carryforward for tax reporting purposes in the PRC of approximately
     Rmb31,000,000 (US$3,740,754). 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.

     Deferred tax assets resulting from these differences, consist of the
     following:

                                       Hong Kong                             PRC
                                       ---------                             ---
                                        June 30,                           June 30,
                                 -----------------------   -----------------------------------------
                                   2001          2002         2001           2002            2002
                                   (Rmb)        (Rmb)         (Rmb)          (Rmb)          (US$)
                                                                                     (Illustrative only)
     Net operating loss
         carryforwards                  --          --       5,236,971      9,504,125      1,146,858
     Other                              --          --       2,590,871      2,388,523        288,222
                                 -----------   ---------   -----------    -----------    -----------

     Deferred tax assets                --          --       7,827,842     11,892,648      1,435,080

     Less: Valuation allowance          --          --      (7,827,842)   (11,892,648)    (1,435,080)
                                 -----------   ---------   -----------    -----------    -----------

                                        --          --            --             --             --
                                 ===========   =========   ===========    ===========    ===========
</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.

12.  Major Customers
     ---------------

     The following customers totaled more than 10% of sales:

                                                       Year ended June 30
                                                    ------------------------
                                                    2000      2001      2002

     A                                               39%       48%       12%
     B (minority stockholder in the Joint Venture)   23%       25%       22%
     C                                               0%        16%        0%
     D                                               24%        0%        0%
     E                                               13%        0%        0%
     F                                               0%         0%       52%

13.  Legal Proceedings
     -----------------

     On July 27, 2000, ChinaOnline Inc., a provider of business news and
     information regarding China in the United States, sent the Company a letter
     claiming that our use of the CHINAONLINE mark constitutes and 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 the Company 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. The Company has responded to these claims by stating
     that, under relevant legal principles, the use of the name "COL China
     Online International Inc." does not infringe on, dilute or otherwise injure
     any trademark rights of the claimant.

                                      F-17