**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**




**Washington,
      D.C. 20549**









**AMENDMENT
          NO. 2 TO**
  **FORM
          10 - KSB/A**







(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,
                2006.**





OR





o
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934 FOR THE TRANSITION PERIOD FROM _______ TO
                _______.





**COL
      China Online International Inc.**


*(Exact
      name of small business issuer as specified in its charter)*





**Delaware**


*(State
      or other jurisdiction of incorporation)*




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




**3176
      South Peoria Court, Suite 100**


**Aurora,
      Colorado 80014** ****


*(Address
      of principal executive offices including zip code)*




**(303)
      695-8530**


*(Small
      Business Issuer telephone number, including area code)*




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


(None)





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


$.001
      par
      value common stock





Check
      whether the issuer (1) has filed all reports required to be filed by Section
      13
      or 15(d) of the Exchange Act during the past 12 months (or for such shorter
      period that the registrant was required to file such reports), and (2) has
      been
      subject to such filing requirements for the past 90 days.


Yes
x No
o





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




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





Issuer’s
      revenues for its most recent fiscal year: $660,622.





As
      of
      September 30, 2006, the aggregate market value of the voting stock held by
      non-affiliates of the issuer was approximately $197,750. Because there is no
      public trading market for the issuer’s common stock, this calculation is based
      upon the sale price of $.05 per share of common stock sold in the Registrant’s
      initial public offering pursuant to a Registration Statement on Form SB-2/A
      declared effective by the U.S. Securities and Exchange Commission on February
      8,
      2001 (Registration No. 333-32908). Without asserting that any director or
      executive officer of the issuer, or the beneficial owner of more than five
      percent of the issuer’s common stock, is an affiliate, the shares of which they
      are the beneficial owners have been deemed to be owned by affiliates solely
      for
      this calculation.





The
        number of shares of the registrant’s common stock, par value $.001 per share,
        outstanding as of March 12, 2007 was 50,155,000.

















**COL
      China Online International Inc.**


**10-KSB
      for the Year Ended June 30, 2006**





**Table
      of Contents**





PART
                  I
              
              2Item
                  1.
              Business
              2Item
                  2.
              Properties
              14Item
                  3.
              Legal
                  Proceedings
              15Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              15PART
                  II
              
              15Item
                  5.
              Market
                  for Common Equity and Related Stockholder Matters
              15Item
                  6.
              Management’s
                  Discussion and Analysis or Plan of Operation
              15Item
                  7.
              Financial
                  Statements
              18Item
                  8.
              Changes
                  in and Disagreements with Accountants on Accounting and Financial
                  Disclosure
              18Item
                  8A.
              Controls
                  and Procedures
              19ITEM
                  8B.
              OTHER
                  INFORMATION
              19PART
                  III
              
              19Item
                  9.
              Directors,
                  Executive Officers, Promoters and Control Persons: Compliance with
                  Section
                  16(a) of the Exchange Act
              19Item
                  10.
              Executive
                  Compensation
              21Item
                  11.
              Security
                  Ownership of Certain Beneficial Owners and Management
              22Item
                  12.
              Certain
                  Relationships and Related Transactions
              24Item
                  13.
              Exhibits
                  and Reports on Form 8-K
              26Item
                  14.
              Principal
                  Accountant Fees and Services
              27








-1-





**PART
      I**





**Item
      1.**  **Business**




**Overview
      of COL International**




COL
      China
      Online International Inc. (COL International) was formed on February 18,
      2000 for the purpose of acquiring and conducting the engineering services and
      the internet related business of Migration Development Limited, a British Virgin
      Islands company (Migration), and raising equity capital to be utilized in the
      business of Migration. Beginning in approximately January 2004, the Company
      focused its business on internet and telecommunication convergence solutions
      and
      customer-specific solutions for the retail industry.





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





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





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





Migration
      was formed on May 18, 1998 and has two subsidiaries, Shenzhen Knowledge &
Communications Co., Ltd. (formerly Shenzhen Rayes Electronic Systems Co., Ltd.),
      referred to as Joint Venture, and Shanghai Shangyi Science and Trade Information
      Consulting Co., Ltd., referred to as 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, or the PRC. Most of the
      operations of Migration are through the Joint Venture, which did not commence
      substantive operations until the Spring of 1999.





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





*Sale
      of Wuhan Operations -* On
      July
      5, 2002, COL International entered into a sales and purchase agreement with
      a
      third party to sell the Company’s Wuhan operations for an aggregate sales price
      of Rmb750,000 (approximately US$90,614). The sale included the entire ownership
      of the Wuhan Education Net and accounts receivables of Wuhan branch of the
      Joint
      Venture. The transaction resulted in a net gain of approximately Rmb375,439
      (approximately US$45,360), which was recognized in the fiscal year ended June
      30, 2003. The decision to sell the business of Wuhan branch was made after
      consideration of the past operating results of the branch.





*Plan
      of Operations* -
      Because the Company’s past business model was not successful, the Company
      developed a new business model in late 2003. Since this time, the Company has
      focused on the business of providing internet and telecommunication convergence
      solutions to its customers.





1


COL|Convergence,
      or COLc, is developing as a provider of communication services offering tailored
      solutions to multinational companies in China.





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





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





As
      of
      June 30, 2005, all assets and operations unrelated to the business of COL
      Convergence and COL Interactive had been disposed of. Thus, all financial
      statements for fiscal year ending June 30, 2006 do not include any assets
      or operations other than those of co-convergence and COL
      Interactive.





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 Rmb2,000,000 (or approximately US$249,000)
      in
      financing during the next 12 months to satisfy its cash requirements. COL
      International, through its Migration subsidiary, currently employs approximately
      35 employees in China. The Company may recruit more staff should its plan of
      operations prove successful, of which there is no assurance.




We
      anticipate that there will be no significant purchases of equipment necessary
      in
      order to implement the Company’s new business plan.





**Exchange
      Rate**




In
      this
      report, references to “U.S. dollars,” “US$” or “$” are to U.S. currency and
      references to “Renminbi,” “RMB” or “Rmb” are to China’s currency. Solely for the
      convenience of the reader, this report contains translations of certain Renminbi
      amounts into U.S. dollars at specified rates. These translations should not
      be
      construed as representations that the Renminbi amounts actually represent such
      U.S. dollar amounts or could be converted into U.S. dollars at the rate
      indicated. The Rmb is not a freely convertible security. See “Risk Factors—A
      change in currency exchange and devaluation could substantially affect the
      Joint
      Venture’s operations.” Unless otherwise stated, conversion of amounts from
      Renminbi into United States dollars for the convenience of the reader has been
      made at the exchange rate of US$1.00 = Rmb8.03525, which was close to the
      exchange rate on June 30, 2006 and is not expected to have a material effect
      on
      the Company’s financial statement.


2


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




**Noon
                Buying Rate (1)****Calendar
                Year**
            
            **Period
                End**
            
            **Average
                (2)**
            
            **High**
            
            **Low****(Rmb
                per US$)**1996
            
            8.3284
            
            8.3387
            
            8.5000
            
            8.32671997
            
            8.3099
            
            8.3193
            
            8.3260
            
            8.30991998
            
            8.2789
            
            8.2969
            
            8.3100
            
            8.27781999
            
            8.2795
            
            8.2785
            
            8.2800
            
            8.27702000
            
            8.2774
            
            8.2784
            
            8.2799
            
            8.27682001
            
            8.2766
            
            8.2772
            
            8.2783
            
            8.27662002
            
            8.2771
            
            8.2769
            
            8.2774
            
            8.27652003
            
            8.2776
            
            8.2774
            
            8.2800
            
            8.27672004
            
            8.2866
            
            8.2871
            
            8.2870
            
            8.24682005
            
            8.2865
            
            8.2869
            
            8.2868
            
            8.23652006
                (through June)
            
            8.0353
            
            8.0807
            
            8.2666
            
            7.9665





(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**




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





The
      Company is developing two IT businesses through two divisions. COL Convergence
      will focus on the provision of internet and telecommunication convergence
      solutions and COL Interactive will focus on providing customer-specific
      solutions for the retail industry. As of June 30, 2005, all assets and
      operations unrelated to the business of COL Convergence and COL Interactive
      had
      been disposed of. Thus, the financial statements for the period ending
      June 30, 2006, include only operations of COL Convergence and COL
      Interactive.





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





Shenzhen
      Rayes Group Co., Ltd., or Rayes Group, 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. It was sold during 2003.





3


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




Corporate
        Structure of COL China Online International Inc.




**Business
      of the Joint Venture**




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





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





**COL
      Convergence Business Overview**




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





**Term
      and Scope of Licenses**




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 December 11, 1997 to
      December 10, 2007, the date in which the Joint Venture, under the name Neihi
      Electronic Systems Co. Ltd.





4


**Research
      and Development**




In
      the
      year ended June 30, 2006, the Company did not incur any research and development
      costs as compared to Rmb 658,172 (US$79,427) during the year ended June 30,
      2005, and Rmb 133,658 (US$16,128) during the year ended June 30, 2004. The
      Company did not incur any research and development costs during the years ended
      June 30, 2003 and 2002.





**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 35 employees, all of whom are employed full time.





**Taxation**




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





**Distribution
      of Profits**




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





**Assignment
      of Interest**




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





**Liquidation**




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





5


**Resolution
      of Disputes**




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





**Expropriation**




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





**Disclosure
      Regarding Forward-Looking Statements and Cautionary
      Statements**




**Forward-Looking
      Statements**




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





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




**Cautionary
      Statements**




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





**Risks
      Concerning COL International**




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




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





6


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




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




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




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





*We
      face strong competition.*




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





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





*Rapid
      technology changes may place us at a competitive disadvantage.*




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





*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.





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





7


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




We
      have
      limited backup systems and redundancy and we may experience system failures
      and
      electrical outages from time to time, which 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 occur, we may experience a
      complete system shutdown. To improve performance and to prevent disruption
      of
      our services, we may have to make substantial investments to deploy additional
      servers or one or more copies of our websites to mirror our online resources.
      Although we carry property insurance with low coverage limits, our coverage
      may
      not be adequate to compensate us for all losses that may occur. To the extent
      we
      do not address the capacity restraints and redundancy described above, such
      constraints could have a material adverse effect on our business, results of
      operations and financial condition.





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





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





Ad
      serving technology enables the use of “cookies,” in addition to other
      mechanisms, to deliver targeted advertising, to help compile demographic
      information, and to limit the frequency with which an advertisement is shown
      to
      the user. Cookies are bits of information keyed to a specific server, file
      pathway, or directory location that are stored on a user’s hard drive and passed
      to a website’s server through the user’s browser software. Cookies are placed on
      the user’s hard drive without the user’s knowledge or consent, but can be
      removed by the user at any time. Due to privacy concerns, some internet
      commentators, advocates and governmental bodies have suggested that the use
      of
      cookies be limited or eliminated. Any limitation on our ability to use cookies
      could impair our future targeting capabilities and adversely affect our
      business.





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





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





*Our
      operations are highly dependent on our majority stockholder.*





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





*Management
      has controlling ownership of COL International that 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.





8




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





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





**Risks
      of Doing Business in China**




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





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





The
      value
      of investments in Chinese businesses could be adversely affected by political,
      economic and social uncertainties in China. The economic reforms in China in
      recent years are regarded by China’s central government as a way to introduce
      economic market forces into China. Given the overriding desire of the central
      government leadership to maintain stability in China amid rapid social and
      economic changes in the country, the economic market reforms of recent years
      could be slowed, or even reversed.





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





*We
      face economic risks in doing business in China.*





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





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





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





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




9


*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.





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





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





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





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





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





10


*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 starting from 2003. Although China’s current commitments will allow
      further foreign investment and growth of our business in Shanghai, we cannot
      predict that China will comply with these commitments.





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





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





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





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





11


*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. 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, which expires on
      December 10, 2007, and may be extended by the mutual consent of the parties
      to
      the Joint Venture agreement, subject to the approval of the relevant Chinese
      authorities. In the event the term of the Joint Venture is not extended, it
      will
      be dissolved and liquidated subject to the provisions of the applicable law
      and
      the Joint Venture agreement. In addition, the Joint Venture may be liquidated
      prior to the expiration of its designated term of ten years upon the occurrence
      of certain other events. These events include a *force
      majeure* ,
      as a
      result of which performance of the obligations of the parties under the Joint
      Venture agreement has become impossible, or due to losses suffered in successive
      years. If the Joint Venture is unable to continue operation and the members
      of
      the board of directors of the Joint Venture unanimously agree, it may be
      liquidated ahead of the expiration date of its initial term.





*The
      Joint Venture has not yet achieved operating profitability.*





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





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





*The
      Joint Venture may be expropriated by the Chinese government.*





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





*A* c *hange
      in currency exchange and devaluation could substantially affect the Joint
      Venture’s operations.*





12


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.





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





**Risks
      Related to our Common Stock**




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





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





*No
      cash dividends paid with respect to our shares.*





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





*We
      may have dilution problems resulting from subsequent
      financings.*





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





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





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





13




*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 a stockholder 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.





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





**Item
      2.**  **Properties**




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





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





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





14


All
      properties are in good condition.





**Item
      3.**  **Legal
      Proceedings**




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 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. As of September 30, 2006, the Company had
      approximately 331 shareholders of record.





**Recent
      Sales of Unregistered Securities**




Not
      applicable.





**Equity
      Compensation Plan Information**




Securities
      authorized for issuance under our equity compensation plans as of June 30,
      2006
      are as follows:





**Equity
      Compensation Plan Table**





Number
                of securities to be issued upon exercise of outstanding option, warrants
                and rights
            
            Weighted
                average exercise price of outstanding options, warrants and
                rights
            
            Number
                of securities remaining available for future issuanceEquity
                compensation plans approved by security holders
            
            0
            
            0
            
            4,000,000Equity
                compensation plans not approved by security holders
            
            n/a
            
            n/a
            
            n/aTotal:
            
            0
            
            0
            
            4,000,000





**Item
      6.**  **Management’s
      Discussion and Analysis or Plan of Operation**




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, 2006 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.





15


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.





**Overview**




COL
      China
      Online International, Inc. was formed for the purpose of acquiring and
      conducting the engineering services and the internet related business of
      Migration Development Limited, a British Virgin Islands Company (Migration)
      and
      raising equity capital to be utilized in the business of Migration. Prior to
      the
      acquisition of Migration on September 24, 2001, the Company was considered
      to be
      in the development stage, due to its limited operations and lack of
      revenues.





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





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





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





Migration
      was formed on May 18, 1998 and has two subsidiaries, Shenzhen Knowledge &
Communications Co., Ltd. (formerly Shenzhen Rayes Electronic Systems Co., Ltd.),
      referred to as Joint Venture, and Shanghai Shangyi Science and Trade Information
      Consulting Co., Ltd., referred to as 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, or the PRC. Most of the
      operations of Migration are through the Joint Venture, which did not commence
      substantive operations until the Spring of 1999.





*Plan
      of Operations* -
      Because the Company’s past business model of attempting to be the IT department
      for small and medium-sized business by offering a broad range of IT services
      and
      providing electronic commerce services has not been successful, the Company
      developed a new business model in late 2003. Since this time, the Company has
      focused on the business of internet and telecommunication convergence solutions
      to its customers.





As
      of
      June 30, 2005, all assets and operations unrelated to the business of COL
      Convergence and COL Interactive had been disposed of, and the financial results
      for fiscal year ending June 30, 2006 contain only operations and assets of
      COL Convergence and COL Interactive.





16


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





The
      Company has a negative cash flow from operating activities and is seeking
      additional financing in order to satisfy its cash requirements. The Company
      anticipates that it will require approximately Rmb2,000,000 (or approximately
      US$249,000) in financing during the next 12 months to satisfy its cash
      requirements for the development of the Company’s new business plan. The
      Company, through its Migration subsidiary, currently employs approximately
      35
      employees in China. The Company may recruit more staff should its plan of
      operations prove successful, of which there is no assurance.





**Results
      of Operations**




Revenues
      for the year ended June 30, 2006 was the services commission revenues from
      telecommunication of Rmb4,344,744 (US$540,711) compared to services commission
      revenues from telecommunication of Rmb977,791 (US$117,998) for the year ended
      June 30, 2005 and marketing fee derived from sales of trade data products on
      revenue sharing basis of Rmb963,516 (US$119,911) for the year ended June 30,
      2006. There was no marketing fee income recognized for the year ended June
      30,
      2005. The increase in services commission revenues from telecommunication was
      mainly due to the expansion in current business.





The
      ISP
      services business was terminated and transferred to a third party in September
      2003 and lead to the significant decrease in the amount of marketing fee income.
      Current marketing fee income is 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.





For
      the
      year ended June 30, 2006, the Company had other income of Rmb2,634 (US$327)
      as
      compared to Rmb2,944 (US$355) for the year ended June 30, 2005. "Other income"
      primarily represents interest income and miscellaneous income. The net increase
      in other income is primarily due to an increase in miscellaneous
      income.





For
      the
      year ended June 30, 2005, the Company leased out a system of computer network
      and software for generating lease income, the cost of the system is
      approximately Rmb1,976,000 (US$238,456) and had been recorded in net investment
      in the lease including in the Company's consolidated balance sheet. The relevant
      lease income for the year ended June 30, 2005 was Rmb138,594 (US$16,723). There
      was no such income recognized for the year ended June 30,
      2006.





Also
      during the year, because of the reduction in the Company’s need for office
      space, the Company has subleased more of its surplus area to related companies,
      which resulted in the increase in rental income from Rmb480,000 (US$57,926)
      for
      the fiscal year ended June 30, 2005 to Rmb912,500 (US$113, 562) for the year
      ended June 30, 2006. The sub-lease arrangement expired in November 2005 and
      we
      renewed it until December 2006.




General
      and administrative costs include salaries, rent, travel and other overhead
      costs. For the year ended June 30, 2006, general and administrative costs
      totaled Rmb6,466,905 (US$ 804,817) and totaled 6,405,373 (US$772,989) for the
      year ended June 30, 2005.




17


Amortization
      and depreciation expense for the year ended June 30, 2006 was Rmb417,365 (US$
      51,942) and was Rmb489,781 (US$59,106) for the year ended June 30, 2005. The
      decrease is due to some fixed assets that were already fully depreciated in
      2006.





The
      Company has not recognized any future tax benefits resulting from its operating
      losses due to the uncertainty of future realization. No share of loss has been
      absorbed by minority shareholder for the year ended June 30, 2006 and 2005
      as
      its initial capital contribution was fully absorbed.





The
      above
      has resulted in net losses of Rmb3,949,385 (US$491,508) for the year ended
      June
      30, 2006 and Rmb5,974,160 (US$720,951) for the year ended June 30, 2005. 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, 2006, the Company had a negative working capital of Rmb453,274 (US$
      56,411) and a negative working capital of Rmb244,494 (US$29,505) as of June
      30,
      2005. As of June 30, 2006, advances from the majority stockholder totaled
      Rmb78,678,141 (US$9,791,623). The Company’s management believes the majority
      stockholder will continue to provide financial support to the Company, and
      the
      majority stockholder signed a note agreement to provide financial support up
      to
      US$8 million until January 1, 2005. During
      fiscal year 2006, Honview has undertaken to make available to COL International
      adequate funds as and when required to maintain COL International as a going
      concern. COL’s
      ability to continue operations is currently dependent upon continuing financial
      support from its majority stockholder.





Cash
      used
      in operating activities for the year ended June 30, 2006 was Rmb3,104,678
      (US$386,381) as compared with 6,018,848 (US$726,343) for the year ended June
      30,
      2005. The cash used in operations was to fund operating losses of Rmb3,949,385
      (US$491,508) for the year ended June 30, 2006, and Rmb5,974,160
      (US$720,951) for the year ended June 30, 2005, generally offset by non-cash
      expenses related to amortization and depreciation of Rmb417,365 (US$51,942)
      for
      the year ended June 30, 2006, and Rmb489,781 (US$59,106) for the year ended
      June 30, 2005.





Cash
      flows from financing activities have generally come from advances by the
      majority stockholder of the Company. During the year ended June 30, 2006, the
      majority stockholder advanced Rmb2,748,169 (US$342,014) compared to his advance
      of Rmb5,558,328 (US$670,769) during the year ended June 30, 2005.





**Critical
      Accounting Policies**




The
      Company’s significant accounting policies are described in note 2 to the
      financial statements for the years ended June
      30 ,
      2006
      and 2005 included in the Company’s Form 10-KSB in the accompanying financial
      statements and notes to consolidated financial statements. **** The
      Company believes its most critical accounting policies include accounting for
      provision for doubtful debts and impairment loss provision.




The
          provision for doubtful debts bears the risk of change because, while the
          PRC’s
          financial markets are evolving, information available for evaluating the
          creditworthiness of the Company’s customers is not as sophisticated as in
          nations with mature financial markets. The Company has implemented its
          own
          procedures to evaluate customer creditworthiness, and the Company’s past loss
          experience from uncollected accounts has been immaterial.
  In
          2006,
          as in previous years, the Company impaired certain long-lived assets, namely
          furniture and equipment. In 2006, furniture and equipment represented
          approximately 25% of the Company’s long-lived assets. While the Company does not
          anticipate further impairment of these assets beyond 2006, in the future
          the
          Company may make other material investments in long-lived assets, which
          may
          require impairment. The impairment loss provision bears the risk of change
          because the PRC’s economy still is a developing economy, and as such, future
          opportunities to invest in long-lived assets may bear greater risk than
          the
          Company currently is experiencing.


**Item
      7.**  **Financial
      Statements**




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





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




Not
      applicable.





18


**Item
      8A.**  **Controls
      and Procedures**




Within
      the 90-day period prior to the filing of this report, an evaluation was carried
      out under the supervision and with participation of the Company's management,
      including our Chief Executive Officer and Principal Financial Officer, of the
      effectiveness of our disclosure controls and procedures (as defined in Rule
      13a-14 (c) under the Securities Exchange Act of 1934). Based on their
      evaluation, as of June 30, 2006, our Chief Executive Officer and Principal
      Financial Officer have concluded that disclosure controls and procedures are,
      to
      the best of their knowledge, effective to ensure that information required
      to be
      disclosed by the Company in reports that it files or submits under the Exchange
      Act is recorded, processed, summarized and reported within the time periods
      specified in Securities and Exchange Commission rules and forms. Subsequent
      to
      the date of their evaluation, there were no significant changes in the Company's
      internal controls or in other factors that could significantly affect these
      controls, including any corrective actions with regard to significant
      deficiencies and material weaknesses.





**Item
      8B.**  **Other
      Information**




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. Each director, unless such
      director resigns or is removed, shall serve on the Company’s board until the
      next annual meeting or until his successor is duly elected and qualified. Each
      officer, unless officer resigns or is terminated, shall serve in his respective
      position until his successor is duly appointed and qualified.





**Name**
            
            **Age**
            
            **Position
                with COL International**Kam
                Che Chan
            
            57
            
            Chairman
                of the BoardChi
                Keung Wong
            
            68
            
            Chief
                Executive Officer, Chief Financial Officer
              and
                Chief Operating OfficerAnthony
                Ng
            
            57
            
            Director
                and SecretaryPaul
                Wong
            
            56
            
            DirectorQi
                Yu Zhang
            
            48
            
            Director





***Kam
      Che Chan*** has
      served as a director and Chairman of the Company’s board since our formation in
      2000. He has been the General Manager and a director of Hogan Industries Limited
      since 1989, which has operations in China, Vietnam, the U.S. and Mexico and
      nearly 5,000 staff members. In these capacities, Mr. Chan has been working
      in
      project management and marketing for Hogan Industries. After majoring in
      accounting at what is now Hong Kong Baptist University in Hong Kong, he spent
      18
      years working in several major certified public accounting firms in Hong Kong
      before moving into marketing and management.





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





19


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





***Paul
      Wong*** **** has
      been
      a director of the Company since our formation in 2000. He is the founder and
      has
      served as the 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. Paul Wong is the brother of Chi
      Keung Wong, the Company’s Chief Executive Officer, Chief Financial Officer, and
      Chief Operating Officer.





***Qi
      Yu Zhang*** has been
      a director of the Company since our formation in 2000. He became Chief Executive
      Officer of the Rayes Group in April 1997. Mr. Zhang was one of the founders
      and
      has served as a director 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*** ,
      57, has
      been the Deputy Chairman of the board of the Joint Venture since 1999. Refer
      to
      his business experience above under the caption, “Directors and
      Officers.”





***Xiang
      Yang Chang*** ,
      55, has
      been the General Manager of the Joint Venture’s Wuhan Office since 1999. Prior
      to this position, Mr. Chang was General Manager of the Rayes Group from 1993
      to
      1999. 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*** ,
      32, 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*** *,* 68,
      has
      been a director of the Joint Venture since 1999 and the Chief Financial Officer
      of the Joint Venture since 1999. Refer to his business experience above under
      the caption, “Directors and Officers”.





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




20


***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”.





**Audit
      Committee**




The
      Company has not yet established an audit committee and, as such, does not
      currently have an audit committee financial expert. Although the Company
      believes it would be desirable to have an audit committee financial expert,
      the
      Company currently believes that the costs associated with retaining such an
      expert would be prohibitive.





**Code
      of Ethics**




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





**Item
      10.**  **Executive
      Compensation**




**Summary
      Compensation Table**




The
      following table sets forth in summary form the compensation received by Chi
      Keung Wong, our Chief Executive Officer, Chief Financial Officer, and Chief
      Operating Officer. None of our employees and no employees of the Joint Venture
      received total salary and bonus in excess of $100,000 during the last fiscal
      year.








**Summary
      Compensation Table**


**Long-Term
                  Compensation****Annual
                  Compensation**
              
              **Awards**
              
              **Payouts****Name
                  and Principal**
                **Position**
              **Fiscal**
                **Year**
              
              **Salary**
                **($)
                  (1)**
              
              **Bonus**
                **($)**
              
              **Other**
                **Annual**
                **Compensation**
              
              **Restricted**
                **Stock**
                **Awards
                  ($)**
              
              **Securities
                  Underlying Options/SARs**
                **(#)**
              
              **LTIP**
                **Payouts**
                **($)**
              
              **All
                  Other**
                **Compensation**
                **($)**Chi
                  Keung Wong
                Chief
                  Executive Officer, Chief Financial Officer, and Chief Operating
                  Officer
              2006
                2005
                2004
              
              $53,846
                $53,846
                $53,846
              
              0
                0
                0
              
              0
                0
                0
              
              0
                0
                0
              
              0
                0
                0
              
              0
                0
                0
              
              0
                0
                0


(1)
            The
                dollar value of base salary (cash and non-cash) estimated to be received.
                Mr. Wong became the Chief Executive officer effective
                September.




**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.




21


**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 11,
      2006, no options had been granted under the 2000 Plan.





**Section
      16(a) Beneficial Ownership Reporting Compliance**




Section
      16(a) of the Securities Act of 1934, as amended (the Exchange Act) requires
      our
      directors, executive officers and holders of more than 10% of our common stock
      to file with the Securities and Exchange Commission initial reports of ownership
      and reports of changes in ownership of common stock and other equity securities
      of ours. We believe that during the fiscal year ended June 30, 2006, 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
      September 30, 2006, there were 50,155,000 shares of common stock
      outstanding. The following table sets forth certain information as of
      September 30, 2006, 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:





22


**Name
                and Address of Beneficial Owner**
            
            **No.
                of Shares**
              **Beneficially
                Owned (1)**
            
            **Percentage
                of**
              **Shares
                Outstanding**Kam
                Che Chan (2)
              Flat
                D3, 5/F
              36
                Broadcast Drive
              Kowloon,
                Hong Kong
            
            22,849,680
            
            45.7%Paul
                Wong (3)
              32-2A
                Clovelly Court
              12
                May Road
              Hong
                Kong
            
            22,849,680
            
            45.7%Qi
                Yu Zhang (4)
              2811
                City E. Station
              Lai
                Zhen Mansion
              40
                Fu Min Road, Fu Tian Area
              Shenzhen,
                PRC 518033
            
            17,350,320
            
            34.6%First
                Strike Securities Limited (5)
              18/F,
                Kam Sang Building
              255-257
                Des Voeux Road Central
              Hong
                Kong
            
            17,350,320
            
            34.7%Honview
                International Limited (6)
              Room
                1408, Lippo Sun Plaza
              28
                Canton Road
              Kowloon,
                Hong Kong
            
            22,849,680
            
            45.7%Anthony
                Ng
              Apt.
                305, 9015 Leslie Street
              Richmond
                Hill, Ontario
              Canada
                L4B 4J8
            
            6,000,000
            
            12.0%All
                Executive Officers and Directors as a group (five persons)
                (2)(3)(4)
            
            46,200,000
            
            92.1%







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




(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.




23


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




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





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





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





During
      the periods ended July 31, 1999 and July 31, 2000, Honview paid Rmb 4.6 million
      (or US $555,690 )
      and Rmb
      10 million (or US$1,208,000), 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, 2004, advances from Honview totaled
      Rmb71,059,244 (US$8,574,371). As a result of Migration becoming a wholly-owned
      subsidiary of COL International, any amounts loaned from Honview prior to
      February 8, 2001, the effective date of the registration statement related
      to
      COL International’s initial public offering, may be paid at the option of
      Honview, by converting, at any time after October 10, 2001, part or all the
      unpaid principal amount of the loan into shares of COL International’s common
      stock, at a price equal to the greater of $1.20 per share or 90 percent of
      the
      average weighted trading price of the common stock for the 20 trading days
      preceding the date of notice of exercise of conversion. Any amounts loaned
      from
      Honview after the effective date of that 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. Since 2001, there were additional
      advances from Honview to COL. As of June 30, 2006, advances from Honview totaled
      Rmb78,678,141 (US$9,791,623) and no conversion regards to the
      advances.





24


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 Secretary and a director of COL
      International. Mr. Ng also had paid cash expenses to professional service firms
      in the amount of approximately $89,000 on behalf of COL International prior
      to
      its incorporation. These amounts were recorded in the financial statements
      as
“capital contribution by major stockholder.” Except for Mr. Ng being an advisor
      of Migration, he is not affiliated with any other company with which COL
      International has direct or indirect relationships.





During
      the period ended September 30, 2000, Honview paid US$70,000 on behalf of COL
      International in professional services and costs related to COL International’s
      initial public offering. Honview loaned COL International this amount without
      interest or collateral. On December 21, 2000, COL International and Honview
      agreed for the loan to be repayable only out of 20 percent of COL
      International’s pre-tax profits, if any, for each fiscal year of COL
      International that begins on or after July 1, 2001 with no other right of
      Honview for repayment. Pursuant to the loan agreement, Honview agreed to lend
      COL International its cash needs, from time to time, at any time until October
      10, 2001 up to an aggregate principal amount of US$8 million. Any amounts loaned
      to COL International prior to February 8, 2001, the effective date of the
      registration statement related to COL International’s initial public offering,
      may be paid at the option of Honview, by converting, at any time after October
      10, 2001, part or all the unpaid principal amount of the loan into shares of
      COL
      International’s common stock, at a price equal to the greater of $1.20 per share
      or 90 percent of the average weighted trading price of the common stock for
      the
      20 trading days preceding the date of notice of exercise of conversion. Any
      amounts loaned to COL International after February 8, 2001 may be paid, at
      the
      option of Honview, by converting, at any time after October 10, 2001, part
      or
      all the unpaid principal amount of the loan into shares of COL International’s
      common stock, at a price equal to the greater of $1.20 per share or 110 percent
      of weighted average trading price of common stock for the 20 trading days
      preceding the date of the loan. As of June 30, 2001, Honview had made additional
      advances to COL International totaling US$ 247,000, ** and
      has
      made an additional advance of $30,000 after that date. Since
      2001, there were additional advances from Honview to COL. As of June 30, 2006,
      advances from Honview totaled Rmb78,678,141 (US$9,791,623).





The
      Joint
      Venture entered into various agreements with its minority stockholder, Shenzhen
      Rayes Group Co., Ltd., whereby the Joint Venture provides marketing and value
      added services in the operation of the minority stockholder’s internet business
      in Shanghai, PRC through July 2004, subject to renewal at terms to be agreed
      between the minority stockholder and Migration. Migration has the right of
      first
      refusal to purchase the minority stockholder’s ownership interest in the ISP in
      Shanghai. Currently, however, foreign entities cannot own ISP operations in
      the
      PRC. One agreement stipulates that the Joint Venture will provide marketing
      and
      technical services to the minority stockholder’s ISP operations in Shanghai and
      Wuhan, PRC, and will share the related ISP revenues with the minority
      stockholder on a 50/50 basis. The Joint Venture paid its minority stockholder
      Rmb3,000,000 for these rights. As of June 30, 2005, the Company had disposed
      of
      all its interests in ISP operations.





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





During
      the year, the Company received rental income from a company subject to common
      significant influence for an amount of Rmb912,500 (US$113,562) for the year
      ended June 30, 2006, and Rmb382,800 (US$46,195) for the year ended
      June 30, 2005.




25


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.




Number
            Description  2.1
            Stock
                Exchange Agreement between and among Migration Developments Limited,
                the
                Company and the shareholders of Migration Developments Limited dated
                June
                8, 2000 (1)




3.1
            Certificate
                Of Incorporation filed with the Delaware Secretary Of State effective
                as
                of February 22, 2000 (1)




3.2
            Certificate
                of Amendment to the Certificate of Incorporation filed with the Delaware
                Secretary of State effective as of April 3, 2000
                (1)




3.3
            Amended
                and Restated Bylaws (4)




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




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




4.1
            Specimen
                Common Stock Certificate (1)




10.1
            Joint
                Venture Business License (2) (1)




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 JV) and Rayes Group (2)
                (1)




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 JV) and Rayes Group (2)
                (1)




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




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




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




10.7
            2000
                Stock Option Plan* (1)




10.8
            Form
                of Subscription Agreement (1)




10.9
            Form
                of Escrow Agreement between the Company and American Securities Transfer
                and Trust, Inc. (1)




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.
                (3)




26


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.
                (3)




10.14
            Lease
                Agreement for Rental of Office Premises dated April 25, 2000
                (3)




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




21
            Subsidiaries
                of the Registrant (5)




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




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







*
            Designates
                a management contract or compensatory plan required to be filed as
                an
                Exhibit to this Report on Form
                10-KSB




(1)
            Incorporated
                by reference from the Company’s Form SB-2 Registration Statement dated
                June 13, 2000 (File No. 333-39208)




(2)
            Translated
                into English from Chinese




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




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




(5)
            Incorporated
                by reference from the Company’s Form 10-KSB dated November 15, 2001 for
                the year ended June 30, 2001 (File No.
                333-39208)




**Item
      14.**  **Principal
      Accountant Fees and Services**




**Audit
      Fees**




Moores
      Rowland Mazars, the Company’s principal accountants, billed the Company $62,180
      for the year ended June 30, 2005 and $65,385 for the year ended June 30, 2006
      for professional services rendered by Moores Rowland Mazars for the audit of
      the
      Company’s annual financial statements and review of financial statements
      included in the Company’s Forms 10-QSB and services normally provided by Moores
      Rowland Mazars in connection with statutory and regulatory filings or
      engagements for those fiscal years.





**Audit-Related
      Fees**




For
      the
      years ended June 30, 2006 and June 30, 2005, Moores Rowland Mazars did not
      provide the Company with any services for assurance and related services
      provided by Moores Rowland Mazars that are reasonably related to the performance
      of the audit or review of the Company’s financial statements and are not
      reported above under “—Audit Fees.”





**Tax
      Fees**




For
      the
      years ended June 30, 2006 and June 30, 2005, Moores Rowland Mazars did not
      provide the Company with professional services for tax compliance, tax advice,
      and tax planning.





27


**All
      Other Fees**




For
      the
      years ended June 30, 2006 and June 30, 2005, Moores Rowland Mazars did not
      bill
      the Company for products and services other than those described above.





**Audit
      Committee Pre-Approval Policies**




The
      Board
      of Directors, which is performing the equivalent functions of an audit
      committee, currently does not have any pre-approval policies or procedures
      concerning services performed by Moores Rowland Mazars. All the services
      performed by Moores Rowland Mazars that are described above were pre-approved
      by
      the Board of Directors. Less than 50% of the hours expended on Moores Rowland
      Mazars’ engagement to audit the Company’s financial statements for the fiscal
      years ended June 30, 2006 and 2005 were attributed to work performed by persons
      other than Moores Rowland Mazar’ full-time, permanent employees.






28





**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:
                April 3, 2007
              By:
              /s/ Chi
                Keung
                WongChi
                  Keung Wong,
                Chief
                  Executive Officer and
                Chief
                  Financial Officer





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





Date
              Signatures/s/
                Kam Che ChanApril
                  3, 2007
              Kam
                  Che Chan, Director/s/
                Anthony NgApril
                  3, 2007
              Anthony
                  Ng, Director/s/
                Paul WongApril
                  3, 2007
              Paul
                  Wong, Director/s/
                Qi Yu ZhangApril
                  3, 2007
              Qi
                  Yu Zhang, Director




29











**Moores
                  Rowland Mazars**
                *Chartered
                  Accountants*
                *Certified
                  Public Accountants*
              34th
                  Floor, The Lee Gardens
                33
                  Hysan Avenue, Causeway Bay
                Hong
                  Kong
                People's
                  Republic of China





**REPORT
      OF INDEPENDENT REGISTERED**


**PUBLIC
      ACCOUNTING FIRM**




The
      Stockholders and Directors


**COL
      China Online International Inc.**




We
      have
      audited the accompanying consolidated balance sheets of COL China Online
      International Inc. (a Delaware Corporation) and its subsidiaries as of June
      30,
      2006 and 2005, and the related consolidated statements of operations,
      stockholders' deficiency and cash flows for each of the two years then ended.
      These consolidated financial statements are the responsibility of the Company's
      management. Our responsibility is to express an opinion on these consolidated
      financial statements based on our audits.





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





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of COL China Online
      International Inc. and subsidiaries as of June 30, 2006 and 2005, and the
      results of their operations and their cash flows for each of the two years
      then
      ended, in conformity with U.S. generally accepted accounting principles
      .





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





/s/
        Moores Rowland Mazars








*Chartered
      Accountants*


*Certified
      Public Accountants*


Hong
      Kong


*13
      October 2006*






30


**COL
        CHINA ONLINE INTERNATIONAL INC.**
 **CONSOLIDATED
        BALANCE SHEETS**


JUNE
                  30, 2006
              
              JUNE
                  30, 2005(US$)
              
              Rmb
              
              Rmb**ASSETS**
              
              (Illustrative
                  only)**CURRENT
                  ASSETS**:Cash
              
              
              24,920
              
              
              200,238
              
              
              598,654Accounts
                  receivable, net of an allowance for doubtful accounts
              
              
              2,129
              
              
              17,110
              
              
              68,055Deposits
                  and other receivables
              
              
              63,091
              
              
              506,948
              
              
              266,786Total
                  current assets
              
              
              90,140
              
              
              724,296
              
              
              933,495**PROPERTY,
                  OFFICE SPACE AND EQUIPMENT**,
                  net of accumulated depreciation and impairment of Rmb10,589,897
                  (US$1,317,930) and Rmb1,712,176 (US$213,083) respectively
                  (Note7)
              
              
              28,713
              
              
              230,716
              
              
              1,270,592**TOTAL
                  ASSETS**
              
              
              118,853
              
              
              955,012
              
              
              2,204,087**LIABILITIES
                  AND STOCKHOLDERS’ DEFICIENCY****Current
                  Liabilities**:Accounts
                  payable and accrued expenses
              
              
              117,381
              
              
              943,184
              
              
              790,945Due
                  to a minority stockholder
              
              
              —
              
              
              —
              
              
              187,155Tax
                  payable
              
              
              29,170
              
              
              234,386
              
              
              199,889Total
                  current liabilities
              
              
              146,551
              
              
              1,177,570
              
              
              1,177,989**NON-CURRENT
                  LIABILITIES**:Payable
                  to Majority Stockholder (Note 8a)
              
              
              9,791,623
              
              
              78,678,141
              
              
              76,617,572Other
                  loan
              
              
              18,668
              
              
              150,000
              
              
              —Total
                  non-current liabilities
              
              
              9,810,291
              
              
              78,828,141
              
              
              76,617,572Commitments
                  and contingencies (Notes 3 & 9)**STOCKHOLDERS’
                  DEFICIENCY**:Common
                  stock, US$0.001 par value, 100,000,000 shares authorized and 50,155,000
                  shares issued, outstanding
              
              
              50,155
              
              
              408,864
              
              
              408,864Additional
                  paid-in capital
              
              
              146,507
              
              
              1,214,118
              
              
              1,214,118Accumulated
                  deficit
              
              
              (10,096,917
              )
              
              (81,131,250
              )
              
              (77,181,865
              )Other
                  comprehensive income (loss)
              
              
              62,266
              
              
              457,569
              
              
              (32,591
              )Total
                  stockholders’ deficiency
              
              
              (9,837,989
              )
              
              (79,050,699
              )
              
              (75,591,474
              )**TOTAL
                  LIABILITIES AND STOCKHOLDERS’ DEFICIENCY**
              
              
              118,853
              
              
              955,012
              
              
              2,204,087





***See
        accompanying notes to these consolidated financial
        statements***




31


**COL
          CHINA ONLINE INTERNATIONAL INC.**
 **CONSOLIDATED
          STATEMENTS OF OPERATIONS**
 FOR
                    THE YEAR ENDED
                  JUNE
                    30, 2006
                
                FOR
                    THE YEAR ENDED
                  JUNE
                    30, 2005(US$)
                
                (Rmb)
                
                (Rmb)(Illustrative
                    only)**NET
                    REVENUES:**Telecommunication
                
                
                540,711
                
                
                4,344,744
                
                
                977,791Marketing
                    fee - PIERS
                
                
                119,911
                
                
                963,516
                
                
                —Total
                    revenues
                
                
                660,622
                
                
                5,308,260
                
                
                977,791**COST
                    OF SALES:**Telecommunication
                
                
                376,710
                
                
                3,026,957
                
                
                678,335Marketing
                    fee - PIERS
                
                
                41,615
                
                
                334,388
                
                
                —418,325
                
                
                3,361,345
                
                
                678,335Gross
                    Margin
                
                
                242,297
                
                
                1,946,915
                
                
                299,456**OPERATING
                    EXPENSES:**General
                    and administrative
                
                
                804,817
                
                
                6,466,905
                
                
                6,405,373Amortization
                    and depreciation
                
                
                51,942
                
                
                417,365
                
                
                489,781Provision
                    for impairment loss on Property, Office Space and
                    Equipment
                
                
                30,481
                
                
                244,924
                
                
                —Total
                    operating expenses
                
                
                887,240
                
                
                7,129,194
                
                
                6,895,154**OPERATING
                    LOSS**
                
                
                (644,943
                )
                
                (5,182,279
                )
                
                (6,595,698
                )Lease
                    income
                
                
                —
                
                
                —
                
                
                138,594Rental
                    income
                
                
                113,562
                
                
                912,500
                
                
                480,000Waiver
                    of loans
                
                
                39,546
                
                
                317,760
                
                
                —Other
                    income
                
                
                327
                
                
                2,634
                
                
                2,944**LOSS
                    BEFORE MINORITY INTEREST**
                
                
                (491,508
                )
                
                (3,949,385
                )
                
                (5,974,160
                )Minority
                    interest
                
                
                —
                
                
                —
                
                
                —NET
                    LOSS
                
                
                (491,508
                )
                
                (3,949,385
                )
                
                (5,974,160
                )**OTHER
                    COMPREHENSIVE LOSS**
                
                
                —
                
                
                —
                
                
                —**COMPREHENSIVE
                    LOSS**
                
                
                (491,508
                )
                
                (3,949,385
                )
                
                (5,974,160
                )**BASIC
                    AND FULLY DILUTED NET LOSS PER SHARE**
                
                
                (0.01
                )
                
                (0.08
                )
                
                (0.12
                )**WEIGHTED
                    AVERAGE NUMBER OF COMMON STOCK**
                
                
                50,155,000
                
                
                50,155,000
                
                
                50,155,000
  ***See
            accompanying notes to these consolidated financial
            statements***
 32
 **COL
          CHINA ONLINE INTERNATIONAL INC.**
 **CONSOLIDATED
          STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIENCY**
 **FOR
          THE YEARS ENDED JUNE 30, 2005 AND 2006**
  COMMON
                  STOCK
              
              ADDITIONAL
                  PAID-IN CAPITAL
              
              ACCUMULATED
                  DEFICIT
              
              OTHER
                  COMPREHENSIVE INCOME/(LOSS)
              
              TOTALNumber
              
              (Rmb)
              
              (Rmb)
              
              (Rmb)
              
              (Rmb)
              
              (Rmb)Balances,
                  June 30, 2004
              
              
              50,155,000
              
              
              408,864
              
              
              1,214,118
              
              
              (71,207,705
              )
              
              (33,930
              )
              
              (69,618,653
              )Net
                  loss
              
              
              —
              
              
              —
              
              
              —
              
              
              (5,974,160
              )
              
              —
              
              
              (5,974,160
              )Other
                  comprehensive income
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              1,339
              
              
              1,339Balances,
                  June 30, 2005
              
              
              50,155,000
              
              
              408,864
              
              
              1,214,118
              
              
              (77,181,865
              )
              
              (32,591
              )
              
              (75,591,474
              )Net
                  loss
              
              
              —
              
              
              —
              
              
              —
              
              
              (3,949,385
              )
              
              —
              
              
              (3,949,385
              )Other
                  comprehensive income
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              490,160
              
              
              490,160Balances,
                  June 30, 2006
              
              
              50,155,000
              
              
              408,864
              
              
              1,214,118
              
              
              (81,131,250
              )
              
              457,569
              
              
              (79,050,699
              )
  ***See
          accompanying notes to these consolidated financial
          statements***
 33
 **COL
          CHINA ONLINE INTERNATIONAL INC.**
 **CONSOLIDATED
          STATEMENTS OF CASH FLOWS**
  FOR
                    THE YEAR ENDED
                  JUNE
                    30, 2006
                
                FOR
                    THE YEAR ENDED
                  JUNE
                    30, 2005(US$)
                
                (Rmb)
                
                (Rmb)(Illustrative
                    only)**CASH
                    FLOWS FROM OPERATING ACTIVITIES:**Net
                    loss
                
                
                (491,508
                )
                
                (3,949,385
                )
                
                (5,974,160
                )Adjustments
                    to reconcile net loss to net cash usedin
                    operating activities:Loss
                    on written off of Property, Office Space and Equipment
                
                
                51,968
                
                
                417,567
                
                
                —Amortization
                    and depreciation
                
                
                51,942
                
                
                417,365
                
                
                489,781Provision
                    for impairment loss on Property, Office Space and
                    Equipment
                
                
                30,481
                
                
                244,924
                
                
                —Waiver
                    of loans
                
                
                (39,546
                )
                
                (317,760
                )
                
                —Change
                    in operating assets and liabilities:Decrease
                    (increase) in:Accounts
                    receivables and other receivables
                
                
                (20,124
                )
                
                (161,712
                )
                
                86,966Increase
                    (decrease) in:Accounts
                    payable and accrued expenses
                
                
                23,688
                
                
                190,339
                
                
                (729,347
                )Taxes
                    payable
                
                
                4,293
                
                
                34,497
                
                
                107,912Exchange
                    difference
                
                
                2,425
                
                
                19,487
                
                
                —Net
                    cash used in operating activities
                
                
                (386,381
                )
                
                (3,104,678
                )
                
                (6,018,848
                )**CASH
                    FLOWS FROM INVESTING ACTIVITIES:**Purchase
                    of Property, Office Space and Equipment
                
                
                (4,976
                )
                
                (39,980
                )
                
                (34,990
                )Sales
                    of Property, Office Space and Equipment
                
                
                —
                
                
                —
                
                
                3,000Lease
                    payment received
                
                
                —
                
                
                —
                
                
                988,293Net
                    cash (used in) provided by investing activities
                
                
                (4,976
                )
                
                (39,980
                )
                
                956,303**CASH
                    FLOWS FROM FINANCING ACTIVITIES:**Other
                    loan raised
                
                
                18,668
                
                
                150,000
                
                
                —Advances
                    from Majority Stockholder
                
                
                323,346
                
                
                2,598,169
                
                
                5,558,328Net
                    cash provided by financing activities
                
                
                342,014
                
                
                2,748,169
                
                
                5,558,328**EFFECT
                    OF EXCHANGE RATE CHANGES ON CASH**
                
                
                (240
                )
                
                (1,927
                )
                
                1,339**NET
                    (DECREASE) INCREASE IN CASH**
                
                
                (49,583
                )
                
                (398,416
                )
                
                497,122**CASH****,**
                    beginning of year
                
                
                74,503
                
                
                598,654
                
                
                101,532**CASH****,**
                    end of year
                
                
                24,920
                
                
                200,238
                
                
                598,654


***See
        accompanying notes to these consolidated financial
        statements***




34


**COL
        CHINA ONLINE INTERNATIONAL INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**


**1.**  **Company
      Organization and Operations**





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





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





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





1.
            For
                financial reporting purposes, the acquisition of Migration by the
                Company
                on September 24, 2001 has been treated as a reverse acquisition.
                Migration
                is the continuing entity for financial reporting and the acquisition
                of
                the Company is considered a recapitalization and restructuring of
                Migration. On this basis, the historical financial statements prior
                to
                September 24, 2001 represent with par value of 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 with par value of US$0.001 each since inception
                of
                Migration and the issuance of 9,955,000 shares of common stock with
                par
                value of US$0.001 each upon the merger with the Company.





Migration
                was formed on May 18, 1998 and has two subsidiaries, Shenzhen Knowledge
                & Communications 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. Shangyi had ceased operation since 2003
                and
                subsequently de-registered in PRC on 3 December 2004. In view of
                insignificant operation incurred by Shangyi since incorporation to
                deregistration, the Company accounted for the written off of investment
                in
                Shangyi in current year. Waivers of loans recognized in consolidated
                statements of operations in current year represented extinguishment
                of
                debts due to minority stockholder of Shangyi of Rmb214,660 and other
                payables of Rmb103,100 upon completion of deregistration of
                Shangyi.





Migrationinitially
                providedmarketing and technical services forInternet
                ServiceProviders(ISP) and value-added
                services generally related to the installation of computer network
                systems
                (i.e., Local Area Networks or LANs) in the
                PRC.




Because
      the Company’s past business model of attempting to be the IT department for
      small and medium-sized business by offering a broad range of IT services and
      providing electronic commerce services had not been successful, the Company
      has
      developed a new business model and will focus on the provision of internet
      and
      telecommunication convergence solutions to its customers.




35


**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,
      2006, 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 8.03525 Rmb
      to
      the dollar, which was the exchange rate at June 30, 2006.





*Concentration
      of Credit Risk* - Credit risk represents the accounting loss that would
      be recognized at the reporting date if counterparties failed completely to
      perform as contracted. Concentrations of credit risk (whether on or off balance
      sheet) that arise from financial instruments exist for groups of customers
      or
      counterparties when they have similar economic characteristics that would cause
      their ability to meet contractual obligations to be similarly affected by
      changes in economic or other conditions. COL’s International accounts receivable
      include a limited number of customers. Financial instruments that subject the
      Company to credit risk consist principally of accounts receivable. The Company
      generally does not require collateral from its customers. Accounts receivable
      totaled Rmb68,055 and Rmb17,110 (US$2,129) as at June 30, 2005 and 2006,
      respectively and the Company has made no provision for doubtful accounts for
      the
      year ended June 30, 2005 and 2006. 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 2006, most of COL International’s operations were focused in
      Shanghai.





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





*Property,
      Office Space and Equipment* -
      Property, office space and equipment are recorded at cost less accumulated
      depreciation and amortization less any impairment loss. 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 is removed from the accounts,
      and any gains or losses are reflected in current operations. Amortization and
      depreciation expense charged to operations were Rmb417,365 (US$51,942) and
      Rmb489,781 and provision for impairment loss on property, office space and
      equipment was Rmb244,924 (US$30,481) and nil for the year ended June 30, 2006
      and 2005 respectively.







36


**COL
        CHINA ONLINE INTERNATIONAL INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**


*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.





Telecommunication
      income represents the services commission revenues from ISP service and selling
      IP phone. The Company contracted with telecommunication services companies
      selling IDD (IP phone) to end-users and receives telecommunication services
      commission income from the agents, which is a percentage of the fees paid by
      the
      end users for monthly usage of the phones. Services commission revenue is
      recognized in the period in which the service is rendered.





Marketing
      fee is derived from sales of trade data products from Commonwealth Business
      Media, Inc. (“CBM”). The Company contracted with CBM on revenue sharing basis to
      promote and market their trade data products to end users in the region of
      Eastern China. Marketing fee is recognized upon referring customers sales orders
      to CBM and is recognized on a net basis.





*Impairment
        of Long-Lived Assets* - COL
        International has adopted SFAS No. 144, *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.





*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 COL International’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
      COL
      International’s majority stockholder, which are without interest, cannot be
      estimated due to the relationship between the entities.




37


**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. Other
        comprehensive income for the year ended June 30, 2006 represented gain from
        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 stock 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, 2006, no
        options had been granted under the 2000 plan.
 
 *Accumulated
        Deficit* *-* The
        acquisition of Migration by COL International on September 24, 2001 had been
        treated as a reverse acquisition. As a result, accumulated deficit prior
        to the
        acquisition should reflect that of Migration only. However, no goodwill was
        recorded on this acquisition as COL International had limited operations
        and was
        formed for the sole purpose of merging with Migration and raising limited
        funding prior to the acquisition. Therefore, accumulated deficit of COL
        International of Rmb3,630,010 (US$438,016) at the date of acquisition has
        also
        been recorded in the accumulated deficit of the Company.
 
 *Capital
        leases* - Leases
        are classified as capital lease whenever the terms of the lease transfer
        substantially all the risks and rewards of ownership to the leasee.
 
 Amounts
        due from leasees under capital leases are recorded as receivables at the
        amount
        of the Company’s net investment in the leases. Capital lease income is allocated
        to accounting periods so as to reflect to a constant periodic rate of return
        on
        the Company’s net investment outstanding in respect of the leases.
 
 No
        capital lease exists as of June 30, 2006.
 
 *Operating
        leases* - Leases
        where substantially all the rewards and risks of ownership of assets remain
        with
        the leasing company are accounted for as operating leases. Rental receivables
        under operating leases are recognized as income on the straight-line basis
        over
        the lease terms.
 
 *Recent
        Accounting Pronouncements* - There
        are no new accounting pronouncements for which adoption is expected to have
        a
        material effect on the Company’s financial statements.


**3.**  **Continued
      Operations**





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





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




38


**COL
        CHINA ONLINE INTERNATIONAL INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**




The
      Company has changed its business model to mainly focus on the provision of
      internet and telecommunication convergence solutions to its customers, 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.





There
      was
      no transaction with minority stockholder for the year ended June 30, 2006 and
      2005.




**5.**  **Accounts
      Receivable**





The
      following information summarizes accounts receivable at:





June30, 2006
            
            June30, 2005(US$)
            
            (Rmb)
            
            (Rmb)(Illustrative
                Only)Trade
                receivables
            
            
            2,129
            
            
            17,110
            
            
            68,055Less:
                Allowance for doubtful accounts
            
            
            —
            
            
            —
            
            
            —2,129
            
            
            17,110
            
            
            68,055





**6.**  **Deposits
      and other receivables**





The
      following information summarizes deposits and other receivables at:





June30, 2006
            
            June30, 2005(US$)
            
            (Rmb)
            
            (Rmb)(Illustrative
                Only)Rental
                deposits
            
            
            53,419
            
            
            429,232
            
            
            208,932Other
                receivables
            
            
            33,790
            
            
            271,516
            
            
            251,65487,209
            
            
            700,748
            
            
            460,586Less:
                Allowance for doubtful accounts
            
            
            (24,118
            )
            
            (193,800
            )
            
            (193,800
            )63,091
            
            
            506,948
            
            
            266,786





39


**COL
        CHINA ONLINE INTERNATIONAL INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**


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





Property,
      office space and equipment consists of the following:




June
                30, 2006
            
            June
                30, 2005(US$)
            
            (Rmb)
            
            (Rmb)(Illustrative
                Only)Vehicles
            
            
            41,748
            
            
            335,458
            
            
            335,458Computer
                equipment
            
            
            686,817
            
            
            5,518,743
            
            
            6,084,780Computer
                softwares
            
            
            574,061
            
            
            4,612,721
            
            
            4,612,721Office
                furniture
            
            
            27,943
            
            
            224,530
            
            
            224,530Other
                equipment
            
            
            229,157
            
            
            1,841,337
            
            
            1,893,5691,559,726
            
            
            12,532,789
            
            
            13,151,058Less
                :Accumulated
                depreciation and
              amortization
            
            
            (1,317,930
            )
            
            (10,589,897
            )
            
            (10,305,656
            )Less
                :Impairment
                loss
            
            
            (213,083
            )
            
            (1,712,176
            )
            
            (1,574,810
            )28,713
            
            
            230,716
            
            
            1,270,592





All
      computer softwares were purchased from third parties.





**8.**  **Payable
      To/(Receivable From) Related Parties**




June
                30, 2006
            
            June
                30, 2005(US$)
            
            (Rmb)
            
            (Rmb)(Illustrative
                Only)Minority
                stockholder of Joint Venture
            
            
            (3,423
            )
            
            (27,505
            )
            
            (27,505
            )Minority
                stockholder of Shangyi
            
            
            —
            
            
            —
            
            
            214,660Majority
                stockholder of COL International (Note a)
            
            
            9,791,623
            
            
            78,678,141
            
            
            76,617,572




All
      payables with related parties are without interest or collateral.





Note :





a.
            Pursuant
                to the Loan Agreement, Honview International Limited, the ultimate
                holding
                company of the Company, agreed to lend Migration its cash needs,
                from time
                to time, at any time until January 1, 2005 up to an aggregate principal
                amount of US$8 million. As a result of Migration becoming a wholly
                owned
                subsidiary of COL International, any amounts loaned from Honview
                prior to
                February 8, 2002, the effective date of the registration statement
                related
                to COL International’s initial public offering, may be paid at the option
                of Honview, by converting, at any time after October 10, 2002, part
                or all
                the unpaid principal amount of the loan into shares of COL International’s
                common stock, at a price equal to the greater of $1.20 per share
                or 90
                percent of the average weighted trading price of the common stock
                for the
                20 trading days preceding the date of notice of exercise of conversion.
                Any amounts loaned from Honview after the effective date of this
                registration statement may be paid, at the option of Honview, by
                converting, at any time after October 10, 2002, part or all the unpaid
                principal amount of the loan into shares of COL International’s common
                stock, at a price equal to the greater of $1.20 per share or 110
                percent
                of weighted average trading price of common stock for the 20 trading
                days
                preceding the date of the loan.





There
      has
      been no change to the above loan condition during the year to June 30, 2006.
      In
      addition, during the year, Honview has undertaken to make available adequate
      funds to COL International as and when required to maintain COL International
      as
      a going concern.








40


**COL
        CHINA ONLINE INTERNATIONAL INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**




**9.**  **Commitments
      and Contingencies**




i)
            *Operating
                Leases Payable***-
                As of June 30, 2006, COL International has the following non-cancellable
                lease commitments for the year ending June
                30:




June
                30, 2006(US$)
            
            (Rmb)(Illustrative
                Only)2007
            
            
            153,377
            
            
            1,232,4242008
            
            
            118,852
            
            
            955,008272,229
            
            
            2,187,432





Rent
      expense charged to operations was Rmb1,115,047 and Rmb1,175,261 *(US$146,263)* for the
      year ended June 30, 2005 and 2006 respectively.





ii)
            *Operating
                Leases Receivable*-
                As of June 30, 2006, COL International has the following non-cancellable
                lease commitment which will be recorded as rental income for the
                year
                ending June 30:




As
                of June 30, 2006(US$)
            
            (Rmb)(Illustrative
                Only)2007
            
            
            37,335
            
            
            300,000





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





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




41


**COL
        CHINA ONLINE INTERNATIONAL INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**


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





Migration
      operates in Hong Kong where the statutory tax rate is 17.5% (2005: 17.5%) on
      assessable income arising in Hong Kong. Migration is exempt from any BVI income
      taxes under BVI International Business Act for its operations being located
      only
      in Hong Kong.





As
      of
      June 30, 2006, COL International has a net operating loss (NOL) carryforward
      for
      tax reporting purposes in the PRC of approximately Rmb19,000,000 (US$2,364,581).
      NOL of COL International as of June 30 2005 was approximately Rmb17,000,000
      instead of Rmb52,000,000, certain comparative figures in respect of deferred
      tax
      assets had been restated accordingly.





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
            
            PRCJune
                30,
            
            June
                30,2006
            
            2005
            
            2006
            
            2006
            
            2005(Rmb)
            
            (Rmb)
            
            (US$)
            
            (Rmb)
            
            (Rmb)(Illustrative
                only)
            
            
            
            (restated)Net
                operating loss carry forwards
            
            
            —
            
            
            **—**
            
            
            702,313
            
            
            5,643,262
            
            
            5,058,368Other
            
            
            —
            
            
            **—**
            
            
            48,696
            
            
            391,283
            
            
            262,056Total
                deferred tax assets
            
            
            —
            
            
            **—**
            
            
            751,009
            
            
            6,034,545
            
            
            5,320,424Less:
                Valuation allowance
            
            
            —
            
            
            **—**
            
            
            (751,009
            )
            
            (6,034,545
            )
            
            (5,320,424
            )—
            
            
            **—**
            
            
            —
            
            
            —
            
            
            —





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 is 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.




42


**COL
        CHINA ONLINE INTERNATIONAL INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**


**11.**  **Major
      Customers**





The
      following customers totaled more than 10% of sales:





Year
                ended June 302006
            
            2005A
            
            
            48
            %
            
            0
            %B
            
            
            18
            %
            
            0
            %C
            
            
            10
            %
            
            25
            %D
            
            
            0
            %
            
            14
            %E
            
            
            0
            %
            
            13
            %F
            
            
            0
            %
            
            13
            %G
            
            
            0
            %
            
            10
            %




**12.**  **Rental
        Income**




During
      the year, the Company received rental income from three related companies
      subject to common significant influence for an amount of Rmb382,800 and
      Rmb912,500 (US$113,562) for the year ended June 30, 2005 and 2006
      respectively.




43





EXHIBIT
      INDEX




Number
            Description  2.1
            Stock
                Exchange Agreement between and among Migration Developments Limited,
                the
                Company and the shareholders of Migration Developments Limited dated
                June
                8, 2000 (1)




3.1
            Certificate
                Of Incorporation filed with the Delaware Secretary Of State effective
                as
                of February 22, 2000 (1)




3.2
            Certificate
                of Amendment to the Certificate of Incorporation filed with the Delaware
                Secretary of State effective as of April 3, 2000
                (1)




3.3
            Amended
                and Restated Bylaws (4)




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




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




4.1
            Specimen
                Common Stock Certificate (1)




10.1
            Joint
                Venture Business License (2) (1)




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 JV) and Rayes Group (2)
                (1)




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 JV) and Rayes Group (2)
                (1)




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




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




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




10.7
            2000
                Stock Option Plan* (1)




10.8
            Form
                of Subscription Agreement (1)




10.9
            Form
                of Escrow Agreement between the Company and American Securities Transfer
                and Trust, Inc. (1)




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.
                (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.
                (3)




10.14
            Lease
                Agreement for Rental of Office Premises dated April 25, 2000
                (3)




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







21
            Subsidiaries
                of the Registrant (5)




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




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







*
            Designates
                a management contract or compensatory plan required to be filed as
                an
                Exhibit to this Report on Form
                10-KSB




(1)
            Incorporated
                by reference from the Company’s Form SB-2 Registration Statement dated
                June 13, 2000 (File No. 333-39208)




(2)
            Translated
                into English from Chinese




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




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




(5)
            Incorporated
                by reference from the Company’s Form 10-KSB dated November 15, 2001 for
                the year ended June 30, 2001 (File No.
                333-39208)