UNITED STATES


SECURITIES AND EXCHANGE
COMMISSION


Washington,D.C.20549


_____________________




FORM 10-QSB


(Mark One)





x
            QUARTERLY REPORT UNDER SECTION 13
      OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
  1934





For the quarterly period
ended:March 31,
2008





o
            TRANSITION REPORT UNDER SECTION 13
      OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
  1934





For the transition period from
_________________ to ________________





Commission file
number:  000-30430


________________




INTERMOST
CORPORATION


(Exact name of registrant as specified in its
charter)





Wyoming
            87-0418721(State or other jurisdiction
      of
            (IRS Employer Identification
      Number)Incorporation or
      Organization)31stFloor, 3B31-23GuomaoBuilding,005 Renmin Rd.(South), Shenzhen,
      People’s Republic ofChina
            518014(Address of principal executive
      offices)
            (Zip
  Code)





011-86-755-8221-0238


(Registrant’s Telephone Number, including area
code)





Check whether the issuer(1) filed all reports required to be
filed by section 13 or 15(d) of the Exchange Act duringthe 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.YesýNoo





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act.):  YesoNoý





State thenumber of shares outstanding of each of
the issuer’s classes of commonequity, as of the latest practicable
date:206,399,923sharesof common stock as ofMay7, 2008.





Transitional
Small Business Disclosure Format (check one).  Yes o  No ý












TABLE OF
CONTENTS











PART I.  Financial
      InformationItem 1.
            Financial
      StatementsCondensed Consolidated Balance
      sheetsas ofJune 30, 2007 and
      March 31, 2008(Unaudited)
            2Condensed ConsolidatedStatements of
      Operations for the three months ended March 31, 2007 and March 31, 2008
      (Unaudited)
            3Condensed ConsolidatedStatements of Operations for the nine months ended March 31, 2007
      and March 31, 2008 (Unaudited)
            4Condensed ConsolidatedStatements of Cash
      Flowsforthe ninemonthsendedMarch 31, 2007andMarch 31, 2008(Unaudited)
            5Notes to CondensedConsolidatedFinancial Statementsforthe ninemonthsendedMarch 31, 2007andMarch 31,
    2008
            6Item 2.
            Management’s Discussion and Analysisor Plan of
      Operation
            12Risk
Factors
            20Item3A(T).
            Controls and Procedures
            24PART II.Other
      InformationItem 1.
            Legal
      Proceedings
            24Item 2.
            Unregistered Sales of Equity
      Securities and Use of
      Proceeds
            25Item 3.
            Defaults Upon Senior
      Securities
            25Item 4.
            Submission of Matters to a Vote of
      Security
      Holders
            25Item 5.
            OtherInformation
            25Item 6.
            Exhibits
            26Signatures
            26








-1-





INTERMOST
CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS





Mar 31,
2008(unaudited)
            
            
            June 30, 2007USD
            
            
            USDASSETSCurrent
    AssetsCash and cash
      equivalents
            
            
            1,395,035
            
            
            
            833,993Accounts receivable,
      net
            
            
            3,841,911
            
            
            
            4,085,123Inventories
            
            
            213,082
            
            
            
            195,946Security bond
      deposit
            
            
            -
            
            
            
            -Stock in
      custodian
            
            
            -
            
            
            
            -Short-term
      Loan
            
            
            672,861
            
            
            
            670,763Deposits, prepayments
      and other receivables
            
            
            2,221,181
            
            
            
            2,269,083Short-term
      investment
            
            
            400,274
            
            
            
            368,083Total current
      assets
            
            
            8,744,344
            
            
            
            8,422,991Other
AssetsUnlisted
      investment
            
            
            971,670
            
            
            
            893,526Property and
      equipment,
      net
            
            
            36,178
            
            
            
            51,414Investment in an
      associated company
            
            
            7,073,003
            
            
            
            6,497,267Intangible assets,
      net
            
            
            17,562
            
            
            
            20,354TOTAL
ASSETS
            
            
            16,842,757
            
            
            
            15,885,552LIABILITIES AND SHAREHOLDERS'
      EQUITYCurrent
      LiabilitiesAccounts
      payable
            
            
            3,696,654
            
            
            
            3,927,964Accrued liabilities
      and other payable
            
            
            1,246,925
            
            
            
            792,560Customer
      deposits
            
            
            94,952
            
            
            
            105,708Due from
      shareholder
            
            
            270,949
            
            
            
            160,000Business taxes and
      government surcharges payable
            
            
            -
            
            
            
            -Total Current
      Liabilities
            
            
            5,309,480
            
            
            
            4,986,232Minority
      Interests
            
            
            796,840
            
            
            
            732,762STOCKHOLDERS’EQUITYPreferred stock, par value
      US$0.001 per shareAuthorized - 5,000,000
      sharesIssued and outstanding
      - None
            
            
            -
            
            
            
            -Common stock, par value US$0.001
      per shareAuthorized - 500,000,000
      sharesIssued and outstanding ---
      206,399,923 & 215,370,278shares
      at Dec 31, 2007 & June 30, 2007 respectively
            
            
            206,400
            
            
            
            215,371Additional paid-in
      capital
            
            
            23,235,237
            
            
            
            23,235,236Treasury
    stock
            
            
            -
            
            
            
            -8,970Accumulateddeficit
            
            
            -14,683,831
            
            
            
            -13,391,999Accumulated other comprehensive
      loss
            
            
            1,978,631
            
            
            
            116,92010,736,437
            
            
            
            10,166,558TOTAL LIABLITIES, MINORITY
      INTERESTS AND STOCKHOLDERS’EQUITY
            
            
            16,842,757
            
            
            
            15,885,552








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


-2-


INTERMOST
CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)





Three months ended Mar
      31,2008
            
            
            2007USD
            
            
            USDNet revenue
            
            
            11,973
            
            
            
            729,919Cost of
      revenues
            
            
            (7,914
            )
            
            
            (702,793
            )Gross
profit
            
            
            4,059
            
            
            
            27,126Costs and
      expenses:Selling, general and
      administrative expenses
            
            
            (119,963
            )
            
            
            (223,836
            )Exchange
      differences
            
            
            475
            
            
            
            (312
            )Amortization of intangible
      assets
            
            
            (1,490
            )
            
            
            (8,354
            )Total costs and
      expenses
            
            
            (120,978
            )
            
            
            (232,502
            )Income (loss) from
      operations
            
            
            (116,919
            )
            
            
            (205,376
            )Interest
    income
            
            
            (12,720
            )
            
            
            1,644Loan interest
      income
            
            
            20,633
            
            
            
            18,000Investment
      income
            
            
            274,210
            
            
            
            106,252Other income,
      net
            
            
            28,936
            
            
            
            90Income before income
      taxes,minority interests and
      equity inearnings of associated
      companies
            
            
            194,140
            
            
            
            (79,390
            )Income
taxes
            
            
            -
            
            
            
            (3,714
            )Income before minority interests
      and equity inearnings of an
      associated companies
            
            
            194,140
            
            
            
            (83,104
            )Minority interests
            
            
            1
            
            
            
            1,135Income (loss) before equity in
      earnings ofassociated
      companies
            
            
            194,141
            
            
            
            (81,969
            )Equity in earnings of associated
      companies
            
            
            472
            
            
            
            -Profit / (Loss) before
      extra-ordinary items
            
            
            194,613
            
            
            
            (81,969
            )Loss on closing a
      subsidiary
      company
            
            
            0
            
            
            
            -Net income
      (loss)
            
            
            194,613
            
            
            
            (81,969
            )Net income (loss) per common
      share-basic and diluted
            
            
            0.0009
            
            
            
            (0.0004
            )Weighted average number of common
      sharesoutstanding-basic and
      diluted
            
            
            206,399,923
            
            
            
            193,370,278





-3-





INTERMOST
CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)








Nine months ended Mar
      31,2008
            
            
            2007USD
            
            
            USDNet revenue
            
            
            24,016
            
            
            
            1,721,882Cost of
      revenues
            
            
            (61,927
            )
            
            
            (1,658,591
            )Gross profit
            
            
            (37,911
            )
            
            
            63,291Costs and
      expenses:Selling, general and
      administrative expenses
            
            
            (469,482
            )
            
            
            (816,191
            )Impairment of
      goodwill
            
            
            
            
            
            
            (932,364
            )Exchange
      differences
            
            
            699
            
            
            
            552,963Amortization of intangible
      assets
            
            
            (4,340
            )
            
            
            (25,061
            )Total costs and
    expenses
            
            
            (473,123
            )
            
            
            (1,220,653
            )Income (loss) from
      operations
            
            
            (511,034
            )
            
            
            (1,157,362
            )Interest
    income
            
            
            23,420
            
            
            
            5,752Loan interest
      income
            
            
            36,882
            
            
            
            36,740Investment
      income
            
            
            274,210
            
            
            
            102,603Other income,
      net
            
            
            32,226
            
            
            
            126Incomebefore income
      taxes,minority interests and
      equity inearnings of associated
      companies
            
            
            (144,296
            )
            
            
            (1,012,141
            )Income
taxes
            
            
            -
            
            
            
            (12,229
            )Income before minority interests
      and equity inearnings of an
      associated companies
            
            
            (144,296
            )
            
            
            (1,024,370
            )Minority
      interests
            
            
            5
            
            
            
            (5,167
            )Income (loss) before equity in
      earnings ofassociated
      companies
            
            
            (144,291
            )
            
            
            (1,029,537
            )Equity in earnings of associated
      companies
            
            
            7,137
            
            
            
            (3,410
            )Profit / (Loss) before
      extra-ordinary items
            
            
            (137,154
            )
            
            
            (1,032,947
            )Loss on closing a subsidiary
      company
            
            
            (1,154,678
            )
            
            
            -Net income
      (loss)
            
            
            (1,291,832
            )
            
            
            (1,032,947
            )Net income (loss) per common
      share-basic and diluted
            
            
            (0.006
            )
            
            
            (0.006
            )Weighted average number of common
      sharesoutstanding-basic and
      diluted
            
            
            209,400,914
            
            
            
            173,382,861








-4-


INTERMOST
CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)





Nine months ended Mar
      31,2008
            
            
            2007USD
            
            
            USDCash flows from operating
      activities:Net income
      (loss)
            
            
            (137,154
            )
            
            
            (1,032,947
            )Impairment of
      goodwill
            
            
            -
            
            
            
            932,364Amortization of intangible
      assets
            
            
            4,571
            
            
            
            25,061Equity in earnings of associated
      companies
            
            
            (7,517
            )
            
            
            3,410Loss on disposal of a
      subsidiary
            
            
            (1,154,678
            )
            
            
            -Depreciation
            
            
            19,733
            
            
            
            21,328Minority
      interests
            
            
            (5
            )
            
            
            4,835(Increase) decrease in operating
      assets -Accounts
      receivable
            
            
            600,476
            
            
            
            2,183,910Inventories
            
            
            0
            
            
            
            (227,034
            )Deposits, prepayments and other
      receivables
            
            
            123,908
            
            
            
            (2,977,073
            )Increase (decrease) in operating
      liabilities -Accounts
      payable
            
            
            (574,830
            )
            
            
            277,225Accrued
      liabilities
            
            
            382,128
            
            
            
            87,102Customer
      deposits
            
            
            (8,400
            )
            
            
            192,707Deferred
      revenue
            
            
            (9,277
            )
            
            
            (17,597
            )Business taxes and government
      surcharges payable
            
            
            601
            
            
            
            (7,514
            )Net cash used in operating
      activities
            
            
            (760,444
            )
            
            
            (534,223
            )Cash flows from investing
      activities:Acquisition of plant and
      equipment
            
            
            -
            
            
            
            (24,896
            )Increase (decrease) in short-term
      loan
            
            
            -
            
            
            
            152,205Net cash provided by investing
      activities
            
            
            0
            
            
            
            127,309Cash flows from financing
      activities:Loan from a related
      company
            
            
            110,949
            
            
            
            160,000Increase in security
      bond
            
            
            -
            
            
            
            (1,500,000
            )Net proceeds from issuance
      of common stock
            
            
            -
            
            
            
            2,237,929Net cash provided by financing
      activities
            
            
            110,949
            
            
            
            897,929Cash and cash
      equivalents:Net increase
      (decrease)
            
            
            (649,495
            )
            
            
            491,015Accumulated other comprehensive
      loss
            
            
            1,210,537
            
            
            
            (494,446
            )Balance at beginning of
      period
            
            
            833,993
            
            
            
            720,152Balance at end of
      period
            
            
            1,395,035
            
            
            
            716,721Supplemental cash flow
      information:Cash
      paid for interest
            
            
            -
            
            
            
            -Cash
      paid for income taxes
            
            
            -
            
            
            
            -Non-cash investing and financing
      activities:Receivable
      from issuance of common stock
            
            
            -
            
            
            
            -Issuance
      of reserved common
      stock
            
            
            -
            
            
            
            22,000Issuance
      of common stock for service
            
            
            -
            
            
            
            -Acquisition of
      associated companiesAcquisition of
      subsidiaries:Non-cash
      assets acquired
            
            
            -
            
            
            
            -Liabilities
      assumed in acquisition
            
            
            -
            
            
            
            -Issuance of common
      stock
            
            
            -
            
            
            
            -





The
accompanying notes are an integral part of these condensed consolidated
financial statements





-5-


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


NINE
MONTHS ENDED MAR 31, 2008 and 2007





1.  ORGANIZATION
AND BASIS OF PRESENTATION





The
condensed consolidated financial statements include the accounts of the
Intermost Corporation (the “Company”) and its majority-owned subsidiaries, of
which the Company has the ability to exercise control and direct operations and
the minority interests do not possess participatory rights. All material
intercompany balances and transactions have been eliminated on
consolidation.





The
condensed consolidated financial statements have been prepared in accordance
with generally accepted accounting principles in the United States of
America.





The
condensed consolidated financial statements are unaudited, but in the opinion of
management of the Company, contain all adjustments, which include normal
recurring adjustments, necessary to present fairly the financial position at
March 31, 2008, the results of operations for the nine months ended March 31,
2008 and 2007, and the cash flows for the nine months ended March 31, 2008 and
2007. The balance sheet as of June 30, 2007 is derived from the Company’s
audited financial statements included in the Company’s Annual Report on Form
10-KSB for the fiscal year ended June 30, 2007.





Certain
information and footnote disclosures normally included in financial statements
that have been prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission, although management of the Company
believes that the disclosures contained in these financial statements are
adequate to make the information presented therein not misleading. For further
information, refer to the financial statements and the notes thereto included in
the Company’s Annual Report on Form 10-KSB for the fiscal year ended June 30,
2007, as filed with the Securities and Exchange Commission.





The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, 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. Actual results
could differ from those estimates.





The
results of operations for the nine months ended March 31, 2008 are not
necessarily indicative of the results of operations to be expected for the full
fiscal year ending June 30, 2008.





2.  NET
INCOME (LOSS) PER COMMON SHARE





Statement
of Financial Accounting Standards No. 128, “Earnings Per Share,” requires
presentation of basic earnings per share (“Basic EPS”) and diluted earnings per
share (“Diluted EPS”). Basic earnings (loss) per share is computed by dividing
earnings (loss) available to common stockholders by the weighted average number
of common shares outstanding (including shares reserved for issuance) during the
period. Diluted earnings per share gives effect to all dilutive potential common
shares outstanding during the period. The Company did not have any potentially
dilutive securities outstanding during the nine months ended March 31, 2008 and
2007. Accordingly, basic and diluted earnings per share are the same for all
periods presented.





3.  FOREIGN
CURRENCY TRANSLATION





The
Company maintains its books and records in Renminbi (“Rmb”), the currency of the
People’s Republic of China (the “PRC”). The Rmb is the Company's functional
currency, as the Company's business activities are located in the PRC and
denominated in Rmb. Translation of amounts into United States dollars (“US$”)
has been made at the rate of Rmb7.0116 to US$1.00. The translation of the
financial statements of subsidiaries whose functional currencies are other than
Rmb into Rmb is performed for balance sheet accounts using closing exchange
rates in effect at the balance sheet date and for revenue and expense accounts
using an average exchange rate during each reporting period. The gains or losses
resulting from translation are included in stockholders' equity separately as
accumulated other comprehensive loss.





-6-


Transactions
in currencies other than functional currencies during the period are translated
into the respective functional currencies at the applicable rates of exchange
prevailing at the time of the transactions. Monetary assets and liabilities
denominated in currencies other than functional currencies are translated into
the respective functional currencies at the applicable rates of exchange in
effect at the balance sheet date. Exchange gains and losses are included in the
statement of operations. On July 21, 2005, Rmb was revalued from Rmb 8.28 to
Rmb8.11 for US$1 following the removal of the peg to the US dollar and pressure
for the United States. With the strong Rmb continuously appreciated to Rmb
7.6248 for US$1 at June 30, 2007. And the Rmb was further appreciated to Rmb
7.0116 for US$ 1 at this quarter ended March 31, 2008.





The Rmb
is not readily convertible into US$ or other foreign currencies. Translation of
amounts from Rmb into US$ is for the convenience of readers. No representation
is made that the Rmb amounts could have been, or could be, converted into US$ at
that rate or at any other rate.





For the
purposes of financial statements presentation, the United States dollars
equivalents of the all numbers are translated at the rate of USD 1 to Rmb
7.0116.





4.  STOCK-BASED
COMPENSATION





The
Company may periodically issue shares of common stock for services rendered or
for financing costs. The Company may also periodically issue shares of common
stock in conjunction with the acquisition of an, all or a portion of the equity
interest in a business. The shares of common stock vest immediately on issuance
and are not subject to any redemption rights.





The value
of the shares of common stock issued for accounting purposes is based on the
market price of the shares at the date of the transaction or on the fair value
of the services rendered or net assets acquired, whichever is more determinable,
based on the specific facts and circumstances of each transaction. The Company
did not issue any stock during the six-month period ended March 31, 2008 for any
services rendered or assets acquired.





The
Company may periodically issue stock options to employees and stock options or
warrants to non-employees in non-capital raising transactions for services and
for financing costs.





The
Company has adopted Statement of Financial Accounting Standards No. 123,
“Accounting for Stock-Based Compensation” (“SFAS No. 123”), which establishes a
fair value method of accounting for stock-based compensation plans.





The
provisions of SFAS No. 123 allow companies to either record an expense in the
financial statements to reflect the estimated fair value of stock options to
employees, or to continue to follow the intrinsic value method set forth in
Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to
Employees”, but to disclose on an annual basis the pro forma effect on net
income (loss) and net income (loss) per share had the fair value of the stock
options been recorded in the financial statements. SFAS No. 123 was amended by
SFAS No. 148, which now requires companies to disclose in interim financial
statements the pro forma effect on net income (loss) and net income (loss) per
common share of the estimated fair market value of stock options issued to
employees. The Company has elected to continue to account for stock-based
compensation plans utilizing the intrinsic value method. Accordingly,
compensation cost for stock options will be measured as the excess, if any, of
the fair market price of the Company's common stock at the date of grant above
the amount an employee must pay to acquire the common stock.





In
accordance with SFAS No. 123, the cost of stock options and warrants issued to
non-employees is measured at the grant date based on the fair value of the
award. The fair value of the stock-based award is determined using the
Black-Scholes option-pricing model. The resulting amount is charged to expense
on the straight-line basis over the period in which the Company expects to
receive benefit, which is generally the vesting period.





In
accordance with SFAS No. 123, the Company will provide footnote disclosure with
respect to stock-based employee compensation. The value of a stock-based award
will be determined using the Black-Scholes option-pricing model, whereby
compensation cost is the fair value of the award as determined by the pricing
model at the grant date or other measurement date. The resulting amount will be
charged to expense on the straight-line basis over the period in which the
Company expects to receive benefit, which is generally the vesting period. Stock
options issued to non-employee directors at fair market value will be accounted
for under the intrinsic value method.





-7-


The
Company did not have any stock options outstanding during the period ended March
31, 2008. Accordingly, no pro forma financial disclosure is provided
herein.





5.  RECENT
ACCOUNTING PRONOUNCEMENTS





In June
2006, the Financial Accounting Standards Board (“FASB”) issued FASB
Interpretation No. 48, “Accounting for Uncertainty in Income Taxes an
interpretation of FASB Statement No. 109 - Accounting for Income Taxes” (“FIN
48”), to create a single model to address accounting for tax positions.
Interpretation No. 48 requires the use of 1 two-step approach for recognizing
and measuring tax benefits taken or expected to be taken in a tax return and
disclosures regarding uncertainties in income tax positions including a
roll-forward of tax benefits taken that do not qualify for financial statement
recognition. The provisions of FIN 48 becomes effective for the Company on July
1, 2007, with the cumulative effect of the change in accounting principle, if
any, recorded as an adjustment to opening retained earnings. The Company is
currently evaluating the impact of adopting FIN 48 and its impact on its
financial position, cash flows, and results of operations.





In
September 2006, the Securities and Exchange Commission (“SEC”) released Staff
Accounting Bulletin No. 108, “Considering the Effects of Prior Year
Misstatements when Qualifying Misstatements in Current Year Financial
Statements”. Bulletin No. 108 expresses the SEC staff’s views regarding the
process of quantifying financial statement misstatements. Bulletin No. 108
requires that, in addition, to considering the amount of the error originating
in the current year statement of operations, the misstatements existing at each
balance sheet date should be considered, irrespective of the period of origin of
the error (rollover approach versus iron curtain approach). The Company adopted
Bulletin No. 108 during the quarter ended March 31, 2008. The adoption did not
have a material impact on its financial position, cash flows, and results of
operations.





In
September 2006, the FASB issued Statement No. 157, “Fair Value Measurements”.
Statement No. 157 defines fair value, establishes a framework for measuring fair
value in accordance with U.S. GAAP, and expands disclosures about fair value
measurements. Statement No. 157 does not require any new fair value
measurements; rather, it applies to other accounting pronouncements that require
or permit fair value measurements. We are required to apply the provision of
Statement No. 157 prospectively as of July 1, 2008, and recognize any transition
adjustment as a cumulative-effect adjustment to the opening balance of retained
earnings. The Company is currently evaluating the impact of adopting FIN 48 and
its impact on its financial position, cash flows, and results of
operations.





In
February 2007, the FASB issued Statement No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities” which permits entities to choose to
measure any financial instruments and certain other items at fair value that are
not currently required to be measured at fair value. Statement No. 159 will be
effective for the Company on July 1, 2008. The Company is currently evaluating
the impact of adopting FIN 48 and its impact on its financial position, cash
flows, and results of operations.





6.  CERTAIN
SIGNIFICANT RISKS AND UNCERTAINTIES





Country
Risk - The Company is subject to the consideration and risks of operating in the
People's Republic of China (the "PRC"). These include risks associated with the
political and economic environment, foreign currency exchange and the legal
system in the PRC. The economy of PRC differs significantly from the economies
of the "western" industrialized nations in such respects as structure, level of
development, gross national product, growth rate, capital reinvestment, resource
allocation, self-sufficiency, rate of inflation and balance of payments
position, among others. Only recently has the PRC government encouraged
substantial private economic activities. The Chinese economy has experienced
significant growth in the past several years, but such growth has been uneven
among various sectors of the economy and geographic regions. Actions by the PRC
government to control inflation have significantly restrained economic expansion
in the recent past. Similar actions by the PRC government in the future could
have a significant adverse effect on economic conditions in PRC.





Many laws
and regulations dealing with economic matters in general and foreign investment
in particular have been enacted in the PRC. However, the PRC still does not have
a comprehensive system of laws, and enforcement of existing laws may be
uncertain and sporadic.





The
Company’s primary sources of revenues and cash flows are derived from its
business operations in the PRC. The Company’s business activity is with
customers in the PRC. The PRC economy has, for many years, been a
centrally-planned economy, operating on the basis of annual, five-year and
ten-year state plans adopted by central


-8-


PRC
governmental authorities, which set out national production and development
targets. The PRC government has been pursuing economic reforms since it first
adopted its “open-door” policy in 1978. There is no assurance that the PRC
government will continue to pursue economic reforms or that there will not be
any significant change in its economic or other policies, particularly in the
event of any change in the political leadership of, or the political, economic
or social conditions in, the PRC. There is also no assurance that the Company
will not be adversely affected by any such change in governmental policies or
any unfavorable change in the political, economic or social conditions, the laws
or regulations, or the rate or method of taxation in the PRC.





As many
of the economic reforms that have been or are being implemented by the PRC
government are unprecedented or experimental, they may be subject to adjustment
or refinement, which may have adverse effects on the Company. Further, through
state plans and other economic and fiscal measures such as the leverage of
exchange rate, it remains possible for the PRC government to exert significant
influence on the PRC economy.





The
Company's financial instruments that are exposed to concentration of credit risk
consist primarily of cash and cash equivalents. Cash and cash equivalents are
maintained with government-owned banks in the PRC with high credit
ratings.  Accordingly, the Company believes that no significant credit
risk exists.





On
January 1, 1994, the PRC government introduced a single rate of exchange of
Renminbi (“Rmb”) against United States Dollar (“US$”) as quoted daily by the
People’s Bank of China (the “Unified Exchange Rate”). On July 21, 2006, Rmb was
revalued from Rmb 8.28 to Rmb8.11 for US$1 following the removal of the peg to
the US dollar and pressure for the United States. The Peoples Bank of China also
announced that the Renminbi would be pegged to a basket of foreign currencies,
rather then being strictly tied to the US dollar and would trade within a narrow
0.3% band against this basket of currencies, which is dominated by the US
dollar, Euro, Japanese Yen and South Korean Won, with a smaller proportion made
up of the British pound, Thai Baht and Russian Ruble. No representation is made
that the Rmb amounts have been, or could be, converted into US$ at that rate.
This quotation of exchange rates does not imply free convertibility of Rmb to
other foreign currencies. All foreign exchange transactions continue to take
place either through the Bank of China or other banks authorized to buy and sell
foreign currencies at the exchange rate quoted by the People's Bank of China.
Approval of foreign currency payments by the People’s Bank of China or other
institutions requires submitting a payment application form together with
suppliers’ invoices, shipping documents and signed contracts.





Restrictions
on the Payment of Dividends - PRC law requires net profits after taxes to be
used to set-off any losses carried forward before any distribution of profits
may be made. Furthermore, PRC law imposes a Mandatory Provident Reserve on all
businesses. Under this law, a business must set aside 10% of its distributable
profits as a mandatory reserve before a distribution of profits may occur. Once
the business accumulates a mandatory reserve equal to 50% of its capitalization,
no further accumulation of the reserve is required.





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





7.  INCOME
TAXES





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





The
Company is subject to the United States federal tax at a rate of
35%.





Intermost
Limited, and Leader Palace International limited, the Company's subsidiaries
incorporated under the International Business Companies Act of the British
Virgin Islands, is exempted from payment of the British Virgin Islands income
taxes.





Intermost
(H.K.) Limited, the Company's subsidiary incorporated in Hong Kong, is subject
to Hong Kong profits tax at a rate of 17.5%.





The Company’s
key consolidated subsidiaries organized in the PRC (ChinaE.com Information
Technology Ltd., IMOT Information Technology (Shenzhen)
Ltd., ChinaE.com Technology (Shenzhen) Ltd., Intermost Focus
Advertising Company Ltd., Shenzhen Golden Anke Technology Ltd., and ChinaE.com
Investment Consultant (Shenzhen) Limited) are subject to PRC enterprise income
taxes at a rate of 15%.


-9-


8.  CONCENTRATION





On August
10, 2004, we closed the purchase of 51% of the issued and outstanding shares of
Golden Anke Technology Ltd. (“Golden Anke”) from two of its shareholders, Tu
Guoshen and Li Zhiquan, through our subsidiary IMOT
Technology.  Pursuant to the Share Transfer Agreement signed on March
31, 2004 among IMOT Technology, Intermost, Golden Anke, Tu Guoshen and Li
Zhiquan, the purchase price paid for the stock was $3.24 million.  At
the closing we issued to the selling shareholders 12 million shares of our
common stock, in full payment of the purchase price.  The value of our
common stock was determined by applying a 20% discount to the average closing
price during the period from January 20 to March 19, 2004.





Golden
Anke is a leading digital security imaging system provider operating in
China.  Golden Anke offers a variety of solutions in video
surveillance, digital image processing and compression, Internet image transfer
and imaging security systems.  We recently sold a number of shares
representing approximately two percent (2%) of the outstanding shares in Golden
Anke thus reducing our ownership from approximately 51% to approximately 49%
(the “Divestiture”).





9.  SEGMENT
INFORMATION





The
Company adopted SFAS No. 131, “Disclosures About Segments of an Enterprise and
Related Information,” in respect of its operating segments.  The
Company currently operates in four principle business segments which are:
E-Commerce solutions, Digital security imaging system, Consulting, and
Photographic business. E-Commerce Solutions comprises revenue from web-site
development contracts and maintenance contracts. The Digital security imaging
system segment consists of sales of surveillance system and maintenance
services.  The Consulting segment comprises services rendered for
provision of information on property exchange matters, and the Photographic
Business consists of sales of photographic equipment.





Each
segment is managed separately because each business requires different
technology and marketing strategies. The Company evaluates performance based on
operating earnings of the respective business units. The accounting policies of
the segments are the same as those described in the summary of significant
accounting policies. The corporate assets include primarily cash and cash
equivalents and deposits and other receivables. There were no significant
intercompany transactions during any of the reported periods. In determining
operating income (loss) by reportable segment, general corporate expenses and
other income and expense items of a non-operating nature are not considered; as
such items are not allocated to the Company's segments. Management believes that
the following table presents the useful information to the chief operation
decision makers for measuring business performance and financing needs etc.
Except for the customers of VOIP call minutes, all of the other customers are
located in the PRC. As such, no geographical Segment information is presented.
Segment information for the nine months period ended March 31, 2008 is as
follows:





(a)     
Net revenues:





Nine
      Months Ended March 31, 2008Rmb’000
            
            
            US$’000E-commerce
      solutions
            
            
            174
            
            
            
            24VOIP call
      minutes
            
            
            3
            
            
            
            -Photographic
      business
            
            
            -
            
            
            
            -Digital security imaging
      system
            
            
            -
            
            
            
            -177
            
            
            
            24





-10-





(b)     
Net income (loss):





Nine
      Months Ended March 31, 2008Rmb’000
            
            
            US$’000E-commerce
      solutions
            
            
            (1,229
            )
            
            
            (166
            )Consulting
            
            
            -
            
            
            
            -Photographic
      business
            
            
            -
            
            
            
            -VOIP call
      minutes
            
            
            231
            
            
            
            31Digital security imaging
      system
            
            
            -
            
            
            
            -Corporate
            
            
            (8,671
            )
            
            
            (1,157
            )(9,669
            )
            
            
            (1,292
            )





(c)
            Assets:





As at
      March 31, 2008Rmb’000
            
            
            US$’000E-commerce
      solutions
            
            
            3,684
            
            
            
            526Consulting
            
            
            3,375
            
            
            
            481Digital security imaging
      system
            
            
            -
            
            
            
            -Photographic
      business
            
            
            1,984
            
            
            
            283VOIP call
      minutes
            
            
            33,346
            
            
            
            4,756Corporate
            
            
            75,706
            
            
            
            10,797118,095
            
            
            
            16,843





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





(d)    
 Other items:





Nine
      Months Ended March
      31, 2008Rmb’000
            
            
            US$’000Depreciation:E-commerce
      solutions
            
            
            131
            
            
            
            19Consulting
            
            
            0
            
            
            
            0Corporate
      expenses
            
            
            7
            
            
            
            1138
            
            
            
            20








There
was no fixed expenditure for fixed assets during the nine months ended March 31,
2008.




-11-


ITEM
2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION





Certain
statements contained in this Form 10-QSB constitute forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934, as amended.  Such
forward-looking statements herein are based on current expectations that involve
a number of risks and uncertainties. Such forward-looking statements are based
on assumptions that there will be no material adverse change in our operations
or business, that we will meet success in marketing and selling our products,
and that we will be able to continue to attract and retain skilled employees
necessary for our business, among other things.  The foregoing
assumptions are based on judgments with respect to, among other things,
information available to our, future economic, competitive and market conditions
and future business decisions.  All of these assumptions are difficult
or impossible to predict accurately and many are beyond our control.
Accordingly, although we believe that the assumptions underlying the
forward-looking statements are reasonable, any such assumption could prove to be
inaccurate and therefore there can be no assurance that the results contemplated
in the forward-looking statements will be realized. There are a number of risks
presented by our business and operations, which could cause our financial
performance to vary markedly from prior results, or results contemplated by the
forward-looking statements. Such risks include failure to acquire or establish a
profitable business, failure of the our technology or products to work as
anticipated, failure to develop commercially viable products or services from
our technology, delays or failure in financing efforts, delays in or lack of
market acceptance, failure to recruit adequate personnel, and problems with
protection of intellectual property, among others. The words “believe,”“estimate,”“expect,”“intend,”“anticipate”“should”, “could”,“may”, “plan”and similar expressions and variations
thereof identify some of these forward-looking statements.Management
decisions, including budgeting, are subjective in many respects and periodic
revisions must be made to reflect actual conditions and business developments,
the impact of which may cause us to alter our capital investment and other
expenditures, which may also adversely affect our results of operations. In
light of significant uncertainties inherent in forward-looking information
included in this Quarterly Report on Form 10-QSB, the inclusion of such
information should not be regarded as a representation by us that our objectives
or plans will be achieved. We undertake no obligation to revise or publicly
release the results of any revision to these forward-looking
statements.





Overview





We
believe that the People’s Republic of China represents an exciting emerging
world market whose role in the global economy is increasing
steadily.  China’s economic growth rate, measured by its gross
domestic product, has consistently been higher than 7% over the past 10
years.  This economic growth is attributable to many factors,
including investment in the country’s infrastructure, increased privatization of
businesses and an abundant source of labor.  Currently, we offer
products and services to businesses and consumers located primarily in
China.  Our plan is to take advantage of China’s economic growth to
expand our existing businesses and, possibly, in the future, to sell our
products and services outside of China.  We also have begun to acquire
diverse businesses that are not dependent on, or directly related to, each
other.  We believe that diversification is a good hedge against the
collapse of a single industry, such as the global collapse of the technology
industry that occurred in 2000.  We expect that any acquisitions we
make will improve our financial condition, although we cannot guarantee any such
result.





In
response to the economic recovery, we began to diversify our business, so that
we will no longer be dependent on one market for
revenue.   Generally, the issuance of our common stock represents
some or all of the purchase price we pay for an acquired business.  We
believe that the continued active trading of our common stock will be important
to the principals of target companies and future acquisitions may be dependent
on the active trading of our common stock.  However, our common stock
has not been actively traded and, if our common stock continues to trade with
limited volume and at current levels we may not be able to make acquisitions as
planned.





Risks
Associated with Doing Business in China





There are
significant risks in operating in the Peoples’ Republic of China (the “PRC”).
These include risks associated with the political and economic environment,
foreign currency exchange and the legal system in the PRC.  The
economy of PRC differs significantly from the economies of the industrialized
nations of the west in such respects as structure, level of development, gross
national product, growth rate, capital reinvestment, resource allocation,
self-sufficiency, rate of inflation and balance of payments position, among
others. Only recently has the PRC government encouraged substantial private
economic activities. The Chinese economy has experienced significant growth in
the past several years, but such growth has been uneven among various sectors of
the


-12-


economy
and geographic regions. Actions by the PRC government to control inflation have
significantly restrained economic expansion in the recent past. Similar actions
by the PRC government in the future could have a significant adverse effect on
economic conditions there.





Many laws
and regulations dealing with economic matters in general and foreign investment
in particular have been enacted in the PRC.  However, the PRC still
does not have a comprehensive system of laws, and enforcement of existing laws
may be uncertain and sporadic.  Our primary sources of revenues and
cash flows are derived from our business operations in the PRC.  The
PRC economy has, for many years, been a centrally-planned economy, operating on
the basis of annual, five-year and ten-year state plans adopted by central PRC
governmental authorities, which set out national production and development
targets. The PRC government has been pursuing economic reforms since it first
adopted its "open-door" policy in 1978. There is no assurance that the PRC
government will continue to pursue economic reforms or that there will not be
any significant change in its economic or other policies, particularly in the
event of any change in the political leadership of, or the political, economic
or social conditions in, the PRC. There is also no assurance that the Company
will not be adversely affected by any such change in governmental policies or
any unfavorable change in the political, economic or social conditions, the laws
or regulations, or the rate or method of taxation in the PRC.





As many
of the economic reforms that have been or are being implemented by the PRC
government are unprecedented or experimental, they may be subject to adjustment
or refinement, which may have adverse effects on the Company. Further, through
state plans and other economic and fiscal measures such as the leverage of
exchange rate, it remains possible for the PRC government to exert significant
influence on the PRC economy. The Company's financial instruments that are
exposed to concentration of credit risk consist primarily of cash and cash
equivalents. Cash and cash equivalents are maintained with government-owned
banks in the PRC with high credit ratings.





On
January 1, 1994, the PRC government introduced a single rate of exchange of
Renminbi (“Rmb”) against United States Dollar (“US$”) as quoted daily by the
People’s Bank of China (the “Unified Exchange Rate”).  On July 21,
2006, Rmb was revalued from Rmb 8.28 to Rmb8.11 for US$1 following the removal
of the peg to the US dollar.  The Peoples Bank of China also announced
that the Renminbi would be pegged to a basket of foreign currencies, rather then
being strictly tied to the US dollar and would trade within a narrow 0.3% band
against this basket of currencies, which is dominated by the US dollar, Euro,
Japanese Yen and South Korean Won, with a smaller proportion made up of the
British pound, Thai Baht and Russian Ruble.  No representation is made
that the Rmb amounts have been, or could be, converted into US$ at that
rate.  This quotation of exchange rates does not imply free
convertibility of Rmb to other foreign currencies.  All foreign
exchange transactions continue to take place either through the Bank of China or
other banks authorized to buy and sell foreign currencies at the exchange rate
quoted by the People's Bank of China.  Approval of foreign currency
payments by the People’s Bank of China or other institutions requires submitting
a payment application form together with suppliers’ invoices, shipping documents
and signed contracts.





Restriction
on the Payment of Dividends - PRC law requires net profits after taxes to be
used to set-off any losses carried forward before any distribution of profits
may be made. Furthermore, PRC law imposes a Mandatory Provident Reserve on all
businesses. Under this law, a business must set aside 10% of its distributable
profits as a mandatory reserve before a distribution of profits may occur. Once
the business accumulates a mandatory reserve equal to 50% of its capitalization,
no further accumulation of the reserve is required.





Certain
Factors Affecting Future Operating Results





The
Company’s operating results have been, and will continue to be, affected by a
wide variety of factors that could have a material adverse effect on revenues
and profitability during any particular period. Some of these factors
include:





·
            the
      Company’s ability to successfully implement its current business
      plans;





·
            whether
      the Company will be able to obtain additional capital, if necessary, to
      support its operations;





whether
the Company will be able to find joint venture prospects or acquisition
prospects with which to enhance its business;





·
            whether
      the Company can successfully integrate acquisitions that it makes into its
      business;





·
            the
      level and rate of acceptance of the Company's products and services by
      consumers in China;


-13-


·
            continued
      economic growth in China;





·
            entry
      of new competition (including established companies from outside China and
      companies with substantially
greater


·
            resources)
      into the Company's market;





·
            fluctuations
      in the level of demand for services or
products;





·
            rescheduling
      or cancellation of orders by
customers;





·
            competitive
      pressures on selling prices;





·
            rapid
      changes in technology, which could result in the Company's technology
      becoming obsolete;





·
            dependence
      upon key employees;





·
            availability
      and cost of computer technicians;





·
            loss
      of any of the Company's major
customers;





·
            the
      Company's ability to introduce new products and services on a timely
      basis;





·
            new
      product and service introductions by the Company's
      competitors;





·
            fluctuations
      in exchange rates; and





·
            adverse
      changes in the general economic, social or political conditions in the
      PRC.





Critical
Accounting Policies





The
Company prepares its consolidated financial statements in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these financial statements requires the use of 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 amount of revenues and expenses during the reporting
period. Management periodically evaluates the estimates and judgments made.
Management bases its estimates and judgments on historical experience and on
various factors that are believed to be reasonable under the circumstances.
Actual results may differ from these estimates as a result of different
assumptions or conditions.





The
following critical accounting policies affect the more significant judgments and
estimates used in the preparation of the Company's consolidated financial
statements.





Revenue
Recognition





The
Company recognizes revenue in accordance with SEC Staff Accounting Bulletin No.
101, “Revenue Recognition in Financial Statements”. The Company recognizes
revenue when the significant risks and rewards of ownership have been
transferred to the customer pursuant to PRC law, including factors such as when
persuasive evidence of an arrangement exists, delivery has occurred, the sales
price is fixed or determinable, sales and value-added tax laws have been
complied with, and collectibility is probable.





Accounts
Receivable





The
Company typically extends credit to its customers. In order to determine the
value of the Company’s accounts receivable, the Company records a provision for
doubtful accounts to cover estimated credit losses. Management reviews and
adjusts this allowance periodically based on historical experience and its
evaluation of the collectibility of outstanding accounts receivable. The Company
evaluates the credit risk of its customers by analyzing its aged accounts
receivable, utilizing historical data, the customer's financial condition,
general economic conditions and estimates of future performance.





-14-


Long-Lived
Assets and Goodwill





The
Company periodically evaluates the carrying value of long-lived assets held or
used whenever events and circumstances indicate that the carrying value of the
asset may no longer be recoverable. An impairment loss, measured on the fair
value of the asset, is recognized if expected future undiscounted cash flows are
less than the carrying value of the assets.





The
Company evaluates the carrying value of investments in associated companies, at
a minimum, on an annual basis and whenever events and circumstances indicate
that the carrying value of the asset may no longer be recoverable. Impairment
loss, measured on the fair value of the asset, is recognized if expected future
undiscounted cash flows are less than the carrying value of the
assets.





The
Company evaluates goodwill, at a minimum, on an annual basis and whenever events
and changes in circumstances suggest that the carrying amount may not be
recoverable in accordance with SFAS No. 142 “Goodwill and Other Intangible
Assets.”  Impairment of goodwill is tested at the reporting unit level
by comparing the reporting unit's carrying amount, including goodwill, to the
fair value of the reporting unit. The fair values of the reporting units are
estimated using discounted cash flows approach. If the carrying amount of the
reporting unit exceeds its fair value, goodwill is considered impaired and a
second step is performed to measure the amount of impairment loss, if
any.





Income
Taxes





The
Company records a valuation allowance to reduce its deferred tax assets derived
from operating loss of certain subsidiaries in the PRC to the amount that is
more likely than not to be realized. In the event the Company was to determine
that it would be able to realize its deferred tax assets in the future in excess
of its recorded amount, an adjustment to the deferred tax assets would be
credited to operations in the period such determination was made. Likewise,
should the Company determine that it would not be able to realize all or part of
its deferred tax assets in the future, an adjustment to the deferred tax assets
would be charged to operations in the period such determination was made.
Currently, the Company is evaluating the impact of implementation of FIN 48
“Accounting for Uncertainty in Income Taxes – an Interpretation of FASB
Statement No. 109.”





Results
of Operations - Three Months Ended March 31, 2008 and 2007





All
amounts shown below are presented in US$. As used below, the letter “K”
appearing immediately after a dollar amount denotes that it has been rounded to
the nearest $1,000.





Net
Revenues





Net
revenues for the three months ended March 31, 2008 consisted primarily from
ChinaE.com Tech, which provide e-commerce solutions. The term “e-commerce
solutions” includes web-site design and development and
web-hosting.





The
following table reflects the total net revenues and percentage of net revenues
by major category for the periods indicated:





Net
      Revenue
            
            
            Net
      Revenue2008
            
            
            2008
            
            
            2007
            
            
            20073 months ended March
      31
            
            USD'000
            
            
            %
            
            
            USD'000
            
            
            %E-commerce
      solutions
            
            
            12
            
            
            
            100
            %
            
            
            23
            
            
            
            3
            %Sale of digital security imaging
      equipments
            
            
            0
            
            
            
            0
            %
            
            
            350
            
            
            
            48
            %VOIP
            
            
            0
            
            
            
            0
            %
            
            
            357
            
            
            
            49
            %Sale of photographic
      equipments
            
            
            -
            
            
            
            0
            %
            
            
            -
            
            
            
            0
            %Consulting
            
            
            -
            
            
            
            0
            %
            
            
            -
            
            
            
            0
            %12
            
            
            
            100
            %
            
            
            730
            
            
            
            100
            %





-15-


Total net
revenues decreased by 98% to $12K during the three months ended March 31, 2008,
as compared to $730K during the three months ended March 31,
2007.  The decrease in total net revenues was due to (i) the
Divestiture (see Note 8 “Concentration” under Notes to Consolidated Financial
Statements) and the fact that we are no longer consolidating our financial
statements with those of our former majority owned subsidiary Golden Anke, and
(ii) the termination of our contract to provide VOIP services in
Taiwan.





Cost of
Revenues





The
following table reflects the principal components of cost of revenues and the
percentage of net revenues represented by each component for the periods
indicated:





Cost
      of Revenue
            
            
            Cost
      of Revenue2008
            
            
            2008
            
            
            2007
            
            
            20073 months ended March
      31
            
            USD'000
            
            
            %
            
            
            USD'000
            
            
            %Salaries of technicians /
      engineers
            
            
            0
            
            
            
            0
            %
            
            
            30
            
            
            
            4
            %Sale of photographic
      equipments
            
            
            0
            
            
            
            0
            %
            
            
            0
            
            
            
            0
            %Sale of digital security imaging
      equipments
            
            
            0
            
            
            
            0
            %
            
            
            312
            
            
            
            43
            %Depreciation
            
            
            1
            
            
            
            8
            %
            
            
            4
            
            
            
            0
            %VOIP
            
            
            0
            
            
            
            0
            %
            
            
            340
            
            
            
            47
            %Others
            
            
            7
            
            
            
            58
            %
            
            
            17
            
            
            
            2
            %8
            
            
            
            67
            %
            
            
            703
            
            
            
            96
            %





Cost of
revenues decreased by 99% to $8K or 67% of net revenues for the three months
ended March 31, 2008, as compared to $703K during the three months ended March
31, 2007.





The
principal component of cost of revenues during the three months ended March 31,
2008 was depreciation of equipment utilized in connection with the Company's
operations.





The
decrease in costs of revenues in 2008 as compared to 2007 was principally
attributable to (i) the Divestiture (see Note 8 “Concentration” under Notes to
Consolidated Financial Statements) and the fact that we are no longer
consolidating our financial statements with those of our former majority owned
subsidiary Golden Anke, and (ii) the termination of our contract to provide VOIP
services in Taiwan.  There was also a decrease in sales volume of the
Company’s e-commerce solutions.





Selling,
General and Administrative Expense





Selling,
general and administrative (“SG&A”) expense consists principally of sales
commissions, advertising, other marketing expenses, rental expenses, salaries
for administrative and sales staff, and corporate overhead.





-16-


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





SG&A
      Expenses
            
            
            SG&A
      Expenses2008
            
            
            2008
            
            
            2007
            
            
            20073 months ended March 31
            
            USD'000
            
            
            %
            
            
            USD'000
            
            
            %Sales & Marketing salaries
      & commissions
            
            
            20
            
            
            
            167
            %
            
            
            10
            
            
            
            2
            %Advertising & other sales
      & marketing expenses
            
            
            4
            
            
            
            33
            %
            
            
            4
            
            
            
            1
            %Rentals
            
            
            7
            
            
            
            58
            %
            
            
            8
            
            
            
            3
            %Administrative
      salaries
            
            
            47
            
            
            
            392
            %
            
            
            5
            
            
            
            5
            %Corporate
      overhead
            
            
            42
            
            
            
            350
            %
            
            
            197
            
            
            
            36
            %120
            
            
            
            1000
            %
            
            
            224
            
            
            
            31
            %





For the
three months ended March 31, 2008, SG&A expense decreased by 46% to $120K,
as compared to $224K for the three months ended March 31, 2007.





The
decrease in SG&A expense in 2008 as compared to 2007 was principally
attributable to cost cutting measures implemented in the quarter ended March 31,
2008.  During the three months ended March 31, 2008, the Company
reduced its sales team as a result of management’s reassessment of the manpower
required to generate sales and service to the Company’s customers and the
implementation of other firm-wide cost-cutting measures.





Income
Taxes





Income
taxes for the three months ended March 31, 2008 were $0K and $4K for the three
months ended March 31, 2007.





Other
Items





Minority
interests reflect the minority shareholders’ proportionate interests in the net
income of the Company’s non-wholly-owned subsidiaries. The balance is mainly
derived from Shenzhen Golden Anke.





Equity in
earnings of an associated company represents the Company’s proportionate share
of the profit of Shenzhen Golden Anke.





Investment
income is the dividend received from Shenzhen International Hi-Tech Property
right Exchange Centre for its financial year ended December 31,
2007.





Net
Income





The
Company had net income of $195K during the three months ended March 31, 2008, as
compared to a net loss of $82K during the three months ended March 31,
2007.





Results
of Operations - Nine months Ended March 31, 2008 and 2007





All
amounts shown below are presented in US$. As used below, the letter “K”
appearing immediately after a dollar amount denotes that it has been rounded to
the nearest $1,000.





Net
Revenues





Net
revenues for the nine months ended March 31, 2008 consisted primarily from
ChinaE.com Tech, which provide e-commerce solutions. The term "e-commerce
solutions" includes web-site design and development and
web-hosting.





-17-


The
following table reflects the total net revenues and percentage of net revenues
by major category for the periods indicated:





Net
      Revenue
            
            
            Net
      Revenue2008
            
            
            2008
            
            
            2007
            
            
            20079 months ended March
      31
            
            USD'000
            
            
            %
            
            
            USD'000
            
            
            %E-commerce
      solutions
            
            
            24
            
            
            
            100
            %
            
            
            69
            
            
            
            4
            %Sale of digital security imaging
      equipments
            
            
            0
            
            
            
            0
            %
            
            
            836
            
            
            
            49
            %VOIP
            
            
            0
            
            
            
            0
            %
            
            
            815
            
            
            
            47
            %Sale of photographic
      equipments
            
            
            0
            
            
            
            0
            %
            
            
            2
            
            
            
            0
            %Consulting
            
            
            0
            
            
            
            0
            %
            
            
            -
            
            
            
            0
            %24
            
            
            
            100
            %
            
            
            1,722
            
            
            
            100
            %





Total net
revenues decreased by 99% to $24K during the nine months ended March 31, 2008,
as compared to $1,722K during the nine months ended March 31,
2007.  The decrease in total net revenues was primarily due to (i) the
Divestiture (see Note 8 “Concentration” under Notes to Consolidated Financial
Statements) and the fact that we are no longer consolidating our financial
statements with those of our former majority owned subsidiary Golden Anke, and
(ii) the termination of our contract to provide VOIP services in
Taiwan.





Cost of
Revenues





The
following table reflects the principal components of cost of revenues and the
percentage of net revenues represented by each component for the periods
indicated:





Cost
      of Revenue
            
            
            Cost
      of
      Revenue2008
            
            
            2008
            
            
            2007
            
            
            20079 months ended March
      31
            
            USD'000
            
            
            %
            
            
            USD'000
            
            
            %Salaries of technicians /
      engineers
            
            
            32
            
            
            
            133
            %
            
            
            94
            
            
            
            5
            %Sale of photographic
      equipments
            
            
            0
            
            
            
            0
            %
            
            
            2
            
            
            
            0
            %Sale of digital security imaging
      equipments
            
            
            0
            
            
            
            0
            %
            
            
            724
            
            
            
            42
            %Depreciation
            
            
            11
            
            
            
            46
            %
            
            
            13
            
            
            
            1
            %VOIP
            
            
            19
            
            
            
            79
            %
            
            
            788
            
            
            
            46
            %Others
            
            
            0
            
            
            
            0
            %
            
            
            38
            
            
            
            2
            %62
            
            
            
            258
            %
            
            
            1,659
            
            
            
            96
            %





Cost of
revenues decreased by 96% to $62K or 258% of net revenues for the nine months
ended March 31, 2008, as compared to $1,659K during the nine months ended March
31, 2007.





The
principal components of cost of revenues during the nine months ended March 31,
2008 were engineer and technician salaries, other costs associated with
engineering and technical staff support and depreciation of equipment utilized
in connection with the Company's operations.





The
decrease in cost of revenues in 2008 as compared to 2007 was principally
attributable to the (i) the Divestiture (see Note 8 “Concentration” under Notes
to Consolidated Financial Statements) and the fact that we are no longer
consolidating our financial statements with those of our former majority owned
subsidiary Golden Anke, (ii) the termination of our contract to provide VOIP
services in Taiwan, and (iii) the decrease in sales volume of the Company’s
e-commerce solutions.





-18-


Selling,
General and Administrative Expense





Selling,
general and administrative (“SG&A”) expense consists principally of sales
commissions, advertising, other marketing expenses, rental expenses, salaries
for administrative and sales staff, and corporate overhead.





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





SG&A
      Expenses
            
            
            SG&A
      Expenses2008
            
            
            2008
            
            
            2007
            
            
            20079 months ended March
      31
            
            USD'000
            
            
            %
            
            
            USD'000
            
            
            %Sales & Marketing salaries
      & commissions
            
            
            68
            
            
            
            283
            %
            
            
            38
            
            
            
            2
            %Advertising & other sales
      & marketing expenses
            
            
            17
            
            
            
            71
            %
            
            
            15
            
            
            
            1
            %Rentals
            
            
            32
            
            
            
            133
            %
            
            
            51
            
            
            
            3
            %Administrative
      salaries
            
            
            172
            
            
            
            717
            %
            
            
            97
            
            
            
            5
            %Corporate
      overhead
            
            
            180
            
            
            
            750
            %
            
            
            615
            
            
            
            36
            %469
            
            
            1954%
            
            
            
            816
            
            
            
            47
            %





For the
nine months ended March 31, 2008, SG&A expense decreased by 43% to $469K, as
compared to $816K for the nine months ended March 31, 2007.





The
decrease in SG&A expense in 2008 as compared to 2007 was principally
attributable to cost- cutting measures implemented in the period ended March 31,
2008.  During the nine months ended March 31, 2008, the Company
reduced its sales team as a result of management's reassessment of the manpower
required to generate sales and service to the Company's customers and the
Company’s implementation of other firm-wide cost-cutting measures.





Income
Taxes





Income
taxes for the nine months ended March 31, 2008 were $0K and $12K for the nine
months ended March 31, 2007.





Other
Items





Minority
interests reflect the minority shareholders' proportionate interests in the net
income of the Company’s non-wholly-owned subsidiaries. The balance is mainly
derived from Shenzhen Golden Anke.





Equity in
earnings of an associated company represents the Company's proportionate share
of the profit of Shenzhen Golden Anke.





Investment
income is the dividend received from Shenzhen International Hi-Tech Property
right Exchange Centre for its financial year ended December 31,
2007.





Net
Loss





The
Company had net loss of $1,292K during the nine months ended March 31, 2008, as
compared to a net loss of $1,033K during the nine months ended March 31,
2007.





Liquidity
and Capital Resources – March 31, 2008





At March
31, 2008, the Company had cash and cash equivalents of $1,395K and working
capital of $3,435K, as compared to $717K of cash and cash equivalents and
$12,728K of working capital at March 31, 2007.





-19-


Net cash
used in operating activities was $778K for the nine months ended March 31, 2008,
as compared to net cash used in operating activities of $534K for the nine
months ended March 31, 2007.  The decrease in net cash provided by
operations in 2008 as compared to 2007 is the Divestiture (see Note 8
“Concentration” under Notes to Consolidated Financial Statements) and the fact
that we are no longer consolidating our financial statements with those of our
former majority owned subsidiary Golden Anke.





Net cash
used in investing activities was $0K for the nine months ended March 31, 2008.
Net cash used in investing activities was $1,373K for the nine months ended
March 31, 2007.





Net cash
provided by financing activities were $111K in cash advance from a related
company for the nine months ended March 31, 2008.  Net cash provided
by financing activities was $898K from the net proceeds from the issuance of new
common stock and a one-year loan from related company for the nine months ended
March 31, 2007.





The
Company continues to evaluate various opportunities to improve the operating
performance of the Company’s businesses and to invest in or acquire other types
of businesses.





Principal
Commitments





At March
31, 2008, the Company does not have any material commitments for operating
leases or capital expenditures, or have any transactions, obligations or
relationships that could be considered off-balance sheet
arrangements.





The
Company has no long-term debt at March 31, 2008.





Off-Balance
Sheet Arrangements





The
Company does not have any transactions, obligations or relationships that could
be considered off-balance sheet arrangements at March 31, 2008.





RISK
FACTORS





In
addition to other information in this Form 10-QSB, including many risks
presented in our Management’s Discussion and Analysis, the following risk
factors should be carefully considered in evaluating our business since it
operates in a highly changing and complex business environment that involves
numerous risks, some of which are beyond our control.  The following
discussion highlights a few of these risk factors, any one of which may have a
significant adverse impact on our business, operating results and financial
condition.  As a result of the risk factors set forth below and
elsewhere in this 10-QSB, the risks identified in our Annual Report on Form
10-KSB for the fiscal year ended June 30, 2007, and the risks discussed in our
other Securities and Exchange Commission filings, actual results could differ
materially from those projected in any forward-looking statements.





We face
significant risks, and the risks described below may not be the only risks we
face.  Additional risks that we do not know of or that we currently
consider immaterial may also impair our business operations.  If any
of the events or circumstances described in the following risks actually occurs,
our business, financial condition or results of operations could be harmed and
the trading price of our common stock could decline.





Our
success depends on identifying and closing acquisitions of emerging and growing
businesses in China.





Our
success is largely dependent on our identifying good acquisition targets,
negotiating and structuring transactions that are beneficial to us, closing
those transactions, finding suitable management to operate those businesses and
successfully operate and grow the businesses we acquire.





We must work
cooperatively with governmental authorities.





We are
engaged in business in a country with a planned economy heavily influenced by
government activities and we must work cooperatively with a variety of national,
federal, regional, state, provincial, and local government authorities and
entities.  The economy of China differs significantly from the
economies of the “western” industrialized nations in such respects as structure,
level of development, gross national product, growth rate, capital reinvestment,
resource allocation, self-sufficiency, rate of inflation and balance of payments
position,


-20-


among
others.  Only recently has the Chinese government encouraged
substantial private economic activities.  The Chinese economy has
experienced significant growth in the past several years, but such growth has
been uneven among various sectors of the economy and geographic
regions.  Actions by the Chinese government to control inflation have
significantly restrained economic expansion in the recent
past.  Similar actions by the Chinese government in the future could
have a significant adverse effect on economic conditions in China and the
results of operations of the Company.





If we deliver
products with defects, our credibility will be harmed and the sales and market
acceptance of our products will decrease.





Our
products and services are complex and may at times contained errors, defects and
bugs.  If we deliver products with errors, defects or bugs, our
credibility and the market acceptance and sales of our products would be
harmed.  Further, if our products contain errors, defects or bugs, we
may be required to expend significant capital and resources to alleviate such
problems.  We may agree to indemnify our customers in some
circumstances against liability arising from defects in our products. Defects
could also lead to product liability as a result of product liability lawsuits
against us or against our customers. We carry product and information liability
and errors and omissions insurance, but in the event that we are required to
defend more than a few such actions, or in the event that we are found liable in
connection with such an action, our business and operations may be severely and
materially adversely affected.





We compete with
large companies.





We
operate in a highly competitive industry.  Although we believe that
some of our technology is unique, can be protected, and, if adopted, will confer
benefits that will be otherwise unavailable for some time, we face very large
competitors with greater resources who may adopt various strategies to block or
slow our market penetration, thereby straining our more limited
resources.  We are aware of efforts by competitors to introduce doubt
about our financial stability as we compete to make sales and win customers and
business.  Large competitors may also seek to hinder our operations
through attempts to recruit key staff with exceptionally attractive terms of
employment, including signing bonuses, or by offer of highly competitive terms
to potential or newly acquired customers.





We will need to
continue our product development efforts.





We
believe that our market will be characterized by increasing technical
sophistication.  We also believe that our eventual success will depend
on our ability to continue to provide increased and specialized technical
expertise.  There is no assurance that we will not fall
technologically behind competitors with greater resources.  Although
we believe that we enjoy a lead in our product development, and are hopeful that
our patents provide some protection, we will likely need significant additional
capital in order to continue to enjoy such a technological lead over competitors
with more resources.





If we are unable
to protect our intellectual property, our competitive position would be
adversely affected.





We may
rely on patent protection, as well as trademark and copyright law, trade secret
protection and confidentiality agreements with our employees and others to
protect our intellectual property.  Despite our precaution,
unauthorized third parties may copy our products and services or reverse
engineer or obtain and use information that we regard as
proprietary.  We have filed eleven patent applications with the United
States Patent and Trademark Office and intend to file more.  Six
patents have been granted; however, we do not know if the remaining applications
will be granted or whether we will be successful in prosecuting any future
patents.  In addition, the laws of some foreign countries do not
protect proprietary rights to the same extent, as do the laws of the United
States.  Our means of protecting our proprietary rights may not be
adequate and third parties may infringe or misappropriate our patents,
copyrights, trademarks and similar proprietary rights.  If we fail to
protect our intellectual property and proprietary rights, our business,
financial condition and results of operations would suffer.  We
believe that we do not infringe upon the proprietary rights of any third party,
and no third party has asserted an infringement claim against us.  It
is possible, however, that such a claim might be asserted successfully against
us in the future.  We may be forced to suspend our operations to pay
significant amounts to defend our rights, and a substantial amount of the
attention of our management may be diverted from our ongoing business, all of
which would materially adversely affect our business.





-21-


We focus on the
research and development of our proprietary technologies and the marketing of
our first product.





We
believe that these technologies are the basis for marketable commercial
products.  However, there can be no assurance of this, and it is
possible that our proprietary technologies and products will have no commercial
benefit or potential.  In addition, from our inception to the present,
we have not recognized any substantial operating revenues.





We depend on our
key personnel and may have difficulty attracting and retaining the skilled staff
we need to execute our growth plans.





Our
success will be dependent largely upon the efforts of our management
team.  The loss of key staff could have a material adverse effect on
our business and prospects.  To execute our plans, we will have to
retain current employees. Competition for highly skilled employees with
technical, management, marketing, sales, product development and other
specialized training is intense.  We may not be successful in
retaining such qualified personnel. Specifically, we may experience increased
costs in order to retain skilled employees. If we are unable to retain
experienced employees as needed, we would be unable to execute our business
plan.





We may face rapid
technological change.





The
market for our products and services may be characterized by rapidly changing
technologies, extensive research and the introduction of new products and
services. We believe that our future success will depend in part upon our
ability to continue to enhance our existing products and to develop, manufacture
and market new products and services. As a result, we expect to continue to make
a significant investment in engineering, research and
development.  There can be no assurance that we will be able to
develop and introduce new products and services or enhance our initial products
in a timely manner to satisfy customer needs, achieve market acceptance or
address technological changes in our target markets. Failure to develop products
and services and introduce them successfully and in a timely manner could
adversely affect our competitive position, financial condition and results of
operations.





If we experience
rapid growth, we will need to manage such growth well.





We may
experience substantial growth in the size of our staff and the scope of our
operations, resulting in increased responsibilities for
management.  To manage this possible growth effectively, we will need
to continue to improve our operational, financial and management information
systems, will possibly need to create entire departments that do not now exist,
and hire, train, motivate and manage a growing number of staff.  Due
to a competitive employment environment for qualified technical, marketing and
sales personnel, we expect to experience difficulty in filling our needs for
qualified personnel.  There can be no assurance that we will be able
to effectively achieve or manage any future growth, and our failure to do so
could delay product development cycles and market penetration or otherwise have
a material adverse effect on our financial condition and results of
operations.





We could face
information and product liability risks and may not have adequate
insurance.





Our
products may be used in connection with critical business applications. We may
become the subject of litigation alleging that one or more of our products are
ineffective or disruptive in our treatment of data, or with regard to critical
business information.  Thus, we may become the target of lawsuits from
injured or disgruntled businesses or other users.  In the event that
we are required to defend more than a few such actions, or in the event that it
is found liable in connection with such an action, our business and operations
may be severely and materially adversely affected.





Future
profitability is not guaranteed.





We have
not recognized any substantial operating revenues to date.  Assuming
we can attract sufficient financing, and revenues increase, there is no
assurance that our plans will be realized or that we will achieve break-even
status or profitability in the future.





-22-


Changes to
financial accounting standards may affect our results of operations and cause us
to change business practices.





We
prepare financial statements in conformity with U.S. generally accepted
accounting principles.  These accounting principles are subject to
interpretation by the American Institute of Certified Public Accountants, the
Public Company Accounting Oversight Board, the SEC and various other bodies
formed to interpret and create appropriate accounting principles.  A
change in those principles can have a significant effect on our reported results
and may affect our reporting of transactions completed before a change is
announced.  Changes to those rules or the questioning of current
practices may adversely affect our reported financial results or the way we
conducts business.  For example, accounting principles affecting many
aspects of our business, including rules relating to equity-related
compensation, have recently been revised.  The Financial Accounting
Standards Board and other agencies finalized changes to U.S. generally accepted
accounting principles that required us, starting January 1, 2006, to record a
charge to earnings for employee stock option grants and other equity incentives.
We will have significant ongoing accounting charges resulting from option grant
and other equity incentive expensing that could reduce net income or increase
losses.  In addition, since we historically used equity-related
compensation as a component of our total employee compensation program, the
accounting change could make the use of equity-related compensation less
attractive and therefore make it more difficult to attract and retain
employees.





There is a
limited market for our common stock.





Our
common stock is not listed on any exchange and trades in the over-the-counter
(the “OTC”) market.  Additionally, one stockholder holds a majority of
our stock.  As such, the market for our common stock is limited and is
not regulated by the rules and regulations of any exchange. Further, the price
of our common stock and its volume in the OTC market may be subject to wide
fluctuations. Our stock price could decline regardless of our actual operating
performance, and stockholders could lose a substantial part of their investment
as a result of industry or market-based fluctuations. Our stock trades
relatively thinly.  If a more active public market for our stock is
not sustained, it may be difficult for stockholders to sell shares of our common
stock.  Because we do not anticipate paying cash dividends on our
common stock for the foreseeable future, stockholders will not be able to
receive a return on their shares unless they are able to sell
them.  The market price of our common stock will likely fluctuate in
response to a number of factors, including but not limited to, the
following:





·
            sales,
      sales cycle and market acceptance or rejection of our
    product;


·
            economic
      conditions within our industry;


·
            our
      failure to meet performance estimates or the performance estimates of
      securities analysts;


·
            the
      timing of announcements by us or our competitors of significant products,
      contracts or acquisitions or publicity regarding actual or potential
      results or performance thereof; and


·
            domestic
      and international economic, business and political
    conditions.





Failure to
maintain effective internal controls in accordance with Section 404 of the
Sarbanes-Oxley Act of 2002 could have a material adverse effect on our stock
price.





Section 404
of the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the
SEC require annual management assessments of the effectiveness of our internal
control over financial reporting and a report by our independent registered
public accounting firm attesting to and reporting on these
assessments.  If we fail to adequately maintain compliance with, or
maintain the adequacy of, our internal control over financial reporting, as such
standards are modified, supplemented or amended from time to time, we may not be
able to ensure that we can conclude on an ongoing basis that we have effective
internal control over financial reporting in accordance with Section 404 of
the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the
SEC.  If we cannot favorably assess, or our independent registered
public accounting firm is unable to provide an unqualified attestation report on
our assessment of the effectiveness of our internal control over financial
reporting, investor confidence in the reliability of our financial reports may
be adversely affected, which could have a material adverse effect on our stock
price.





-23-


ITEM
3A(T).  CONTROLS AND PROCEDURES





Evaluation
of Disclosure Controls and Procedures





The
Company maintains disclosure controls and procedures designed to ensure that
information required to be disclosed in the reports filed or submitted under the
Exchange Act of 1934 is recorded, processed, summarized and reported, within the
time periods specified in the rules and forms of the Securities and Exchange
Commission. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed in the reports filed under the Exchange Act of 1934 is accumulated and
communicated to management, including its principal executive and financial
officers, as appropriate, to allow timely decisions regarding required
disclosure.





The
Company carried out an evaluation, under the supervision and with the
participation of the Company’s management, including its principal executive and
financial officer, of the effectiveness of the design and operation of the
Company’s disclosure controls and procedures as of the end of the period covered
by this report.  Based upon and as of the date of that evaluation, the
Company's principal executive and financial officer concluded that the Company’s
disclosure controls and procedures are effective to ensure that information
required to be disclosed in the reports the Company files and submits under the
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission's rules and
forms.





Notwithstanding
the foregoing, there are inherent limitations to the effectiveness of any system
of disclosure controls and procedures, including the possibility of human error
and the circumvention or overriding of the controls and
procedures.  Accordingly, even effective disclosure controls and
procedure can only provide reasonable assurance of achieving their control
objectives.





This
quarterly report does not include an attestation report of the company’s
registered public accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by the
company’s public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the company to provide only management’s
report in this quarterly report.





Changes
in Internal Controls





There
were no changes in the Company’s internal controls or in other factors that
could have significantly affected those controls subsequent to the date of the
Company’s most recent evaluation.





PART
II - OTHER INFORMATION





Item
1.  Legal Proceedings.





We are a
party to the following legal proceedings:




(1)
Hainan Concord Financial Products Co., Ltd.





On
December 11, 2004, the Company’s wholly subsidiary, IMOT Information Technology
(Shenzhen) Ltd. (“IMOT Technology”) entered into a stock exchange agreement and
a profit guarantee agreement (respectively, the “Stock Swap Agreement” &
“Profit Guarantee Agreement”) with Guangzhou Di Tai Communication Co. Ltd &
Mr. Zai (collectively “Sellers”).  The Stock Swap Agreement called for
the Company to ultimately issue 5,000,000 shares of common stock in January 2005
in exchange for 80% of the issued and outstanding capital of Hainan Financial
Products Development Co., Ltd (“Hainan Financial Products”).  Under
the Profit Guarantee Agreement, the Sellers guaranteed that the net profit after
taxation of Hainan Financial Products for the year ended December 31, 2005 would
not be less than Rmb 5,000,000.  On February 7, 2005, the Sellers
received the share certificates of the 3,000,000 common stocks of the Company
from IMOT Technology.  In late 2006, IMOT Technology discovered that
the profit requirement of Rmb 5,000,000 of Hainan Financial Products had not
been met and Hainan Financial Products was a shelf company without any
registered capital.





In
accordance with the terms of Stock Swap Agreement, any dispute in a deadlock
situation should be referred to an Arbitration tribunal in Shenzhen to be
resolved.  As such, IMOT Technology and the Company decided to refer
the dispute (“the Dispute”) and apply to the China International Economic and
Trade Arbitration Commission, South China Sub-Commission in Shenzhen
(“Arbitration Commission”).  On December 20, 2006, the Arbitration
Commission approved the application.  Under the application, IMOT
Technology and the Company were named as joint applicants (“the Applicants”);
and the Sellers together with Hainan Special Economic Zone Property Rights
Exchange Centre and a securities-broker in Hainan province as respondents (“the
Respondents”).  The six orders sought under this arbitration include:
rescission of Share Swap Agreement and Profit Guarantee Agreement; return of
3,000,000 shares of common stock of the Company by the Sellers to the
Applicants; and to have all the legal costs and other costs incurred in this
arbitration reimbursed or born by the Sellers.  The share certificate
representing the remaining 2,000,000 shares of common stock is currently under
the custody of IMOT Technology.




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The
Respondents at the same time also applied to a court in Haikou of the Hainan
province to request that the Dispute be handled by the court.  On
April 29, 2007, this court ruled that the Dispute could be subject to its
jurisdiction.  IMOT Technology appealed to the Haikou Intermediate
Court arguing that the dispute should be under the jurisdiction of the
Arbitration Commission.  On August 16, the Haikou Intermediate Court
made a final decision that the Dispute should be under the jurisdiction of the
Arbitration Commission.  The Arbitration Commission is arranging a
trial date for the Dispute





(2)
Hainan Special Economic Zone Property Rights Exchange Centre





Pursuant
to an agreement (“ the Agreement”) signed with a third party on December 16,
2003, IMOT Information Technology (Shenzhen) Ltd. (“IMOT Technology”) acquired
21% of the issued and outstanding capital of Hainan Special Economic Zone
Property Rights Exchange Centre (“Hainan Exchange”).





In 2006,
Hainan Exchange rejected the request of IMOT Technology to hold a general
meeting for its shareholders, and Hainan Exchange also declined to provide any
current financial information or reports.  In addition, Hainan refused
to fulfill certain obligations under the Co-operative Agreement.  The
Company is currently seeking legal advice as to those matters.  The
Company believes that Hainan Exchange has contravened its Articles of
Association, and IMOT Technology has the right to sue under the current
legislation.





(3)
Shanghai Newray Photographic Equipment Co. Ltd





In prior
years, IMOT Information Technology (Shenzhen) Ltd. (“IMOT Technology”) acquired
51% of the issued and outstanding capital of Shanghai Newray Photographic
Equipment Co. Ltd (“Shanghai Newray”) from Mr. Tang who in turn acts as the
trustee of IMOT Technology, holding shares in Shanghai Newray on behalf of IMOT
Technology.  On March 31, 2007, the shareholders in a special meeting
passed a resolution (“the Resolution”) to take action to terminate the operation
of Shanghai Newray.  On November 2, 2006, Shanghai Newray set up a
liquidation working team to take over the operations with one of its duties
being to commence all the necessary procedures for the members’ voluntary
liquidation.





Mr. Zhu,
as the legal representative, manager and the executive director of Shanghai
Newray, refused to comply with all the requests of the liquidation working team,
resulting in delay of the liquidation procedures.  On January 18,
2007, Mr. Tang took civil action under the Companies Law against Mr.
Zhu.  Under this action, Mr. Zhu Wei was requested to comply with the
Resolution passed on March 31, 2007 to reimburse legal and other related costs
of Rmb 30,000 incurred by Mr. Tang for this case, and also to bear all the court
costs to be incurred.





On
January 24, 2007, Shanghai Hongkou District Court accepted the
case.  Recently discovery was completed.





Item
2.  Unregistered Sales of Equity Securities and Use of
Proceeds.





Not
applicable.





Item
3.  Defaults Upon Senior Securities.





Not
applicable.





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





On
February 18, 2008, pursuant to a Special Shareholders Meeting, our Bylaws were
amended to reduce the number of directors, within an authorized range of
directors of three to seven, from seven to four.  Prior to the meeting
the directors included Fred Peck, Chia Hsun Wu, Rocky Wulianghai, Wilbert Kam,
Catalina Chan, and Deng Xiang Xiong.  The four directors elected at
the Special Shareholders Meeting were Fred Peck, Chia Hsun Wu, Rocky Wulianghai,
and Hiroshi Shinohara.





Item
5.  Other Information.





Not
applicable.





-25-


Item
6.  Exhibits





Exhibit
      Number
            Description of
      Exhibit2.1
            Articles
      of Merger (1)3.1
            Articles
      of Incorporation (1)3.2
            Bylaws*31.1
            Certification
      of the Chief Executive Officer required by Rule 13a-14(a) of the
      Securities Exchange Act of 1934, as amended, as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.*31.2
            Certification
      of the Chief Financial Officer required by Rule 13a-14(a) of the
      Securities Exchange Act of 1934, as amended, as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.*32.1
            Certification
      of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.*32.2
            Certification
      of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.*





*Filed
herewith.





(1)
            Incorporated
      by reference to the respective exhibits filed with Registrant’s
      Registration Statement on Form 10-SB12G filed with the United States
      Securities and Exchange Commission on June 11,
  1996.





SIGNATURES





In
accordance with Section 13 or 15(d) the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.





Date:  May
      10, 2008
            
            INTERMOST
      CORPORATIONBy:
            /s/ Rocky
      WulianghaiRocky
      WulianghaiPresident
      and Chief Executive Officer:
            By
            /s/ Thomas LeeThomas
      LeeChief
      Financial Officer





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