UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549







FORM 10-Q





(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, 2011





 ̈
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




Uni Core Holdings Corporation


(Exact name of registrant as specified in its charter)




Formerly known as “Intermost Corporation”





Wyoming
87-0418721(State or other jurisdiction of
(IRS Employer Identification Number)Incorporation or Organization)Suite 5204, Central Plaza, 18 Harbour Road,
Wanchai, Hong Kong
000000(Address of principal executive offices)
(Zip Code)





852-2827-6898


(Registrant’s Telephone Number, including area code)





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No  ̈





Check whether the issuer is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer
 ̈
Accelerated Filer
 ̈Non-accelerated filer
 ̈
Smaller reporting company
x





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





Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 707,406,873 shares of common stock as of May 9, 2011.











TABLE OF CONTENTS





PART I.  Financial InformationItem 1.
Financial StatementsCondensed Consolidated Balance Sheets (Unaudited) as of March 31, 2011 and June 30, 2010
2Condensed Consolidated Statements of Operations (Unaudited) for the three months ended March 31, 2011 and March 31, 2010
4Condensed Consolidated Statements of Operations (Unaudited) for the nine months ended March 31, 2011 and March 31, 2010
5Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended March 31, 2011 and March 31, 2010
6Notes to Condensed Consolidated Financial Statements for the nine months ended  March 31, 2011 and March 31, 2010
7Item 2.
Management’s Discussion and Analysis or Plan of Operation
13Item 3.
Controls and Procedures
26PART II.  Other InformationItem 1.
Legal Proceedings
27Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
27Item 3.
Defaults Upon Senior Securities
27Item 4.
Submission of Matters to a Vote of Security Holders
27Item 5.
Other Information
27Item 6.
Exhibits
27Signatures
29




- 1 -


ITEM 1.  FINANCIAL STATEMENTS.





UNI CORE HOLDINGS CORPORATION AND SUBSIDIARIES


CONDENSED CONSOLIDATED BALANCE SHEETS





March 31, 2011


June 30, 2010USD


USDASSETSCurrent assetsCash and cash equivalents

$
1,608,950


$
2,108,546Accounts receivable, net


4,705,035



4,496,210Deposits, prepayment and other receivables


3,191,937



1,582,148Amount due from related company


0



413,929Other loan receivables


228,213



236,292Inventory


3,169,441



2,435,369Total current assets

$
12,903,576


$
11,272,494Unlisted investment


949,873



949,873Investment in associated companies


1



1Goodwill


11,157,681



11,157,681Plant and equipment, net


8,442,344



8,165,308Intangible assets, net


1,224,470



1,197,300TOTAL ASSETS

$
34,677,945


$
32,742,657LIABILITIES ANDSTOCKHOLDERS’ EQUITYCurrent liabilitiesAccounts payable

$
4,535,632


$
3,509,165Accrued liabilities and other payable


2,441,631



2,889,068Customers deposits


20,041



18,280Advance from a shareholder


663,700



337,658Finance leases


136,842



132,763Short term loan


5,951,548



5,527,978Business and other taxes payable


732



1,141Total current liabilities

$
13,750,126


$
12,416,053TOTAL LIABILITIES

$
13,750,126


$
12,416,053





See accompanying notes to consolidated financial statements


- 2 -





ITEM 1.  FINANCIAL STATEMENTS.





UNI CORE HOLDINGS CORPORATION AND SUBSIDIARIES


CONDENSED CONSOLIDATED BALANCE SHEETS





March 31, 2011


June 30, 2010USD


USDMinority interests

$
1,011,735


$
1,229,502STOCKHOLDERS’ EQUITYPreferred stock at $0.001 par value,5,000,000 shares authorized,Nil (2010:Nil) shares issued and outstanding


-



-Common stock at $0.001 par value,2,000,000,000 shares authorized, 707,406,873 shares and 664,031,873 issued and outstanding as at March 31, 2011 and June 30, 2010 respectively


707,407



664,032Additional paid-in capital


57,408,681



54,050,181Accumulated deficit


(38,833,797
)


(36,120,023
)Accumulated other comprehensive income


633,793



502,912$
19,916,084


$
19,097,102TOTAL LIABILITIES ANDSTOCKHOLDERS’ EQUITY

$
34,677,945


$
32,742,657





See accompanying notes to consolidated financial statements


- 3 -





UNI CORE HOLDINGS CORPORATION AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)





Three months ended March 31,2011


2010USD


USDNet revenue


4,586,333



47,888Cost of revenues


(4,214,552
)


(2,437
)Gross profit


371,781



45,451Costs and expenses:Selling, general and administrative expenses


(955,390
)


(877,790
)Impairment of goodwill


0



0Exchange differences


292,605



(147
)Amortization of intangible assets


(3,004
)


(1,700
)Total costs and expenses


(665,789
)


(879,637
)Loss from operations


(294,008
)


(834,186
)Interest income


15,077



204Interest expenses


(333,858
)


0Bad debts recovery


20,257



0Other income (loss), net


(56,132
)


41,744Loss before income taxes, minority interests and equity in earnings of associated companies


(648,664
)


(792,238
)Income taxes


0



0Loss before minority interests and equity in earnings of associated companies


(648,664
)


(792,238
)Minority interests


84,301



43,648Net loss


(564,363
)


(748,590
)Net loss per common share-basic and diluted


(0.0008
)


(0.0029
)Weighted average number of common shares outstanding-basic and diluted


684,324,756



256,721,654




- 4 -


UNI CORE HOLDINGS CORPORATION AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)





Nine months ended March 31,2011


2010USD


USDNet revenue


14,879,660



68,955Cost of revenues


(13,362,567
)


(8,729
)Gross profit


1,517,093



60,226Costs and expenses:Selling, general and administrative expenses


(3,973,445
)


(2,017,431
)Impairment of goodwill


0



0Exchange differences


7,120



(6,270
)Amortization of intangible assets


(9,149
)


(5,100
)Total costs and expenses


(3,975,474
)


(2,028,801
)Loss from operations


(2,458,381
)


(1,968,575
)Interest income


15,985



680Interest expenses


(554,474
)


0Bad debts recovery


50,840



0Other income (loss), net


(22,686
)


24,774Loss before income taxes, minority interests and equity in earnings of associated companies


(2,968,716
)


(1,943,121
)Income taxes


0



0Loss before minority interests and equity in earnings of associated companies


(2,968,716
)


(1,943,121
)Minority interests


254,942



202,252Net loss


(2,713,774
)


(1,740,869
)Net loss per common share-basic and diluted


(0.0040
)


(0.0069
)Weighted average number of common shares outstanding-basic and diluted


684,324,756



253,343,004




- 5 -


UNI CORE HOLDINGS CORPORATION AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)





Nine months ended March 31,2011


2010USD


USDCash flows from operating activitiesNet loss


(2,713,774
)


(1,740,869
)Amortization of intangible assets


2,964



5,103Depreciation


625,005



45,147Minority interest


(254,942
)


278,067Adjustments to reconcile net loss to net cash provided by operating activities:-Accounts receivables


(56,272
)


0Inventories


(641,183
)Deposits, prepayments and other receivables


(1,530,726
)


(983,785
)Accounts payable


893,138



0Accrued liabilities


(535,009
)


(56,770
)Customer deposits


1,126



13,510Deferred revenue


0



29Business taxes and government surcharges payable


(440
)


99Net cash generated from/(used in) operating activities


(4,210,113
)


(2,439,469
)Cash flows from investing activitiesAcquisition of plant and equipment


(626,687
)


(5,278
)Acquisition of intangible assets


(2,443
)


(5,500,000
)Short-term loan


15,782



1,128Net cash used in investing activities


(613,348
)


(5,504,150
)Cash flows from financing activitiesAdvances from related parties


730,275



0Bank loan


233,253



0Net proceeds from issuance of common stock


3,000,000



8,045,000Net cash generated from/(used in) financing activities


3,963,528



8,045,000Cash and cash equivalentsNet increase (decrease)


(859,933
)


101,381Accumulated other comprehensive loss


360,337



(261
)Balance at beginning of period


2,108,546



575,523Balance at end of period


1,608,950



676,643Supplemental cash flow information:Interest received


15,985



0Interest expenses


(554,474
)


0


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


- 6 -


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


NINE MONTHS ENDED MARCH 31, 2011 AND 2010





1.  ORGANIZATION AND BASIS OF PRESENTATION





The condensed consolidated financial statements include the accounts of Uni Core Holdings Corporation (formerly known as 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, 2011, the results of operations for the three months ended March 31, 2011 and 2010, and the cash flows for the nine months ended March 31, 2011 and 2010. The balance sheet as of June 30, 2010 is derived from the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2010.





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-K for the fiscal year ended June 30, 2010, 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 three months ended March 31, 2011 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending June 30, 2010.





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 three months ended March 31, 2011 and 2010. 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 Rmb6.5601 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.  For further information, refer to the Note 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 Rmb8.28 to Rmb8.11 for US$1 following the removal of the peg to the US dollar and pressure from the United States. The Rmb continuously appreciated to Rmb6.7813 for US$1 at June 30, 2010. And the Rmb further appreciated to Rmb6.5601 or US$1 at this quarter ended March 31, 2011.




- 7 -


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 Rmb6.5601.





4.  STOCK-BASED COMPENSATION





The Company may periodically issue shares of common stock for services rendered or for financing costs. Such shares are valued based on the market price of the shares on the transaction date.





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.





ASC 718 "Compensation - Stock Compensation" formerly SFAS No. 123 prescribes accounting and reporting standards for all stock-based compensation plans, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights which may be classified as either equity or liabilities. The Company should determine if a present obligation to settle the share-based payment transaction in cash or other assets exists. A present obligation to settle in cash or other assets exists if: (a) the option to settle by issuing equity instruments lacks commercial substance or (b) the present obligation is implied because of an entity's past practices or stated policies. If a present obligation exists, the transaction should be recognized as a liability; otherwise, the transaction should be recognized as equity.





The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50 "Equity -Based Payments to Non-Employees" which codified SFAS 123 and the Emerging Issues Task Force consensus in Issue No. 96-18 ("EITF 96-18"), "Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services". Measurement of share-based payment transactions with non-employees shall be based on the fair market value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction should be determined at the earlier of performance commitment date or performance completion date.





In accordance with ASC 718, the cost of stock options and warrants issued to non-employees is measured at the grant date based on the fair market value of the award. The fair market 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.





Stock options issued to non-employee directors at fair market value will be accounted for under the intrinsic value method.





The Company did not have any stock options outstanding during the period ended March 31, 2011 (2009: Nil). Accordingly, no pro forma financial disclosure is provided herein.





5.  RECENT ACCOUNTING PRONOUNCEMENTS





In 2010, the FASB issued ASC Update ("ASU") No.2010-01, Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash.This update clarify that the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in earnings per share prospectively and is not a stock dividend. This ASU codified the consensus reached in EITF Issue No. 09-E "Accounting for Stock Dividends, Including Distributions to Shareholders with Components of Stock and Cash". ASU 2010-01 is effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis. The adoption of this update did not have any material impact on the Company's financial statements.




- 8 -


In 2010,the FASB issued ASC Updated ("ASU") No. 2010-02, Consolidation (Topics 810) - Accounting and Reporting for Decreases in Ownership of a Subsidiary - A Scope Clarification This updated provides guidance for noncontrolling interests and changes in ownership interests of a subsidiary. An entity is required to deconsolidate a subsidiary when the entity ceases to have a controlling financial interest in the subsidiary. Upon deconsolidation of a subsidiary, an entity recognizes a gain or loss on the transaction and measures any retained investment in the subsidiary at fair value. The gain or loss includes any gain or loss associated with the difference between the fair value of the retained investment in the subsidiary and its carrying amount at the date the subsidiary is deconsolidated. In contrast, an entity is required to account for a decrease in its ownership interest of a subsidiary that does not result in a change of control of the subsidiary as an equity transaction. The adoption of this update did not have any material impact on the Company's financial statements.





In 2010, the FASB issued ASC Update ("ASU") No.2010-13, Compensation - Stock Compensation (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades.This update is to codify the consensus reached in EITF Issue No. 09-J, "Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying equity Security Trades" The amendments to the Codification clarify that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity's equity shares trades should not be considered to contain a condition that is not a market, performance, or services condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The adoption of this update did not have any material impact on the Company's financial statements.





In 2010, the FASB issued ASC Update ("ASU") No.2010-21, Accounting for Technical Amendments to Various SEC Rules and Schedules.This update amends various SEC paragraphs in the FASB Accounting Standards Codification pursuant to SEC Final Rule, "Technical Amendments to Rules Forms, Schedules and Codification of Financial Reporting Policies". The adoption of this update did not have any material impact on the Company's financial statements.





In 2010, the FASB issued ASC Update ("ASU") No.2010-22, Accounting for Various Topics. This update amends various SEC paragraphs in the FASB Accounting Standards Codification based on external comments received and the issuance of Staff Accounting Bulletin (SAB) No. 112 which amends or rescinds portion of certain SAB topics. SAB 112 was issued to bring existing SEC guidance into conformity with ASC 805 "Business Combination" and ASC 810 "Consolidation". The adoption of this update did not have any material impact on the Company's financial statements.





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 the 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.




- 9 -


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 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, 2005, the Rmb was revalued from Rmb8.28 to Rmb8.11 for US$1 following the removal of the peg to the US dollar and pressure from the United States. The Peoples Bank of China also announced that the Renminbi would be pegged to a basket of foreign currencies, rather than 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 dollars 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.  For further information, refer to the Note 3.





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.





See generally the caption “Overview” under Item 2 and the sub captions “Risks Associated with Doing Business in China” and “Certain Factors Affecting Operating Results” under the caption “Overview.





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 33%.





Intermost Limited, China Equity Platform Holding Group Limited and Leader Palace International Limited, the Company's subsidiaries incorporated under the International Business Companies Act of the British Virgin Islands, are 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 16.5%.




- 10 -


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





8.  CONCENTRATION





The Company had entered into a joint venture agreement with other PRC investors on February 19, 2009 to spin off the subsidiaries and investments in operating equity exchange.  The PRC investors will form a new company to hold these subsidiaries and investments and seek an independent listing of the new company on a US exchange.  The name of the new company is China Equity Platform Holding Group Limited. When the spin off process is completed, the Company will get 53.4% –common stock of the newly formed company. The spin off process is still under processing and waiting for the approval from U.S. Securities and Exchange Commission. The subsidiary and associate companies will be spun off are listed as following:





ChinaE.com Technology (Shenzhen) Company Limited


ChinaE.com Investment Consultant (Shenzhen) Company Limited


ChinaE.com E-commerce Company Limited


Intermost Focus Advertising Company Limited


Shenzhen International Hi-Tech Property Right Exchange Centre


Hainan Special Economic Zone Property Rights Exchange Centre





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 two principle business segments which are: E-Commerce solutions and Consulting. E-Commerce Solutions comprises revenue from web-site development contracts and maintenance contracts.  The Consulting segment comprises services rendered for provision of information on property exchange matters.





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.  Segment information for the nine months period ended March 31, 2011 is as follows:





(a)
Net revenues:





Nine Months Ended March 31, 2011Net revenues by major categories

Rmb’000


US$’000Sales of paper products


96,882



14,524E-commerce solutions- website design and development


51



8Consulting


2,319



34899,252



14,880





All net revenues were generated in PRC.


- 11 -


(b)
Net loss before equity in earnings of associated companies:





Nine Months Ended March 31, 2011Rmb’000


US$’000Sales of paper products


(12,399
)


(1,859
)E-commerce solutions- website design and development


(1,618
)


(243
)Consulting


(1,880
)


(282
)Corporate


(2,205
)


(330
)(18,102
)


(2,714
)





(c)
Assets:





As of March 31, 2011Rmb’000


US$’000Sales of paper products


124,993



19,054E-commerce solutions- website design and development


8,518



1,298Consulting


11,012



1,679Corporate


85,646



12,647230,169



34,678





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




(d)
Other items:





Nine Months Ended March 31, 2011Rmb’000


US$’000Depreciation:Sales of paper products


3,842



576E-commerce solutions- website design and development


302



45Corporate


25



44,169



625





There was fixed expenditure for fixed assets $626,687 during the nine months ended March 31, 2011.


- 12 -


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





Certain statements contained in this Form 10-Q 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 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-Q, 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, despite recent global economic slowdown, 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.





Amidst global economic slowdown we continue to diversify our business, not only so that we will no longer be dependent on one market for revenue, but also so that we will be poised to take advantage of future economic recovery.  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 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.




- 13 -


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, 2005 Rmb was revalued from Rmb 8.28 to Rmb8.11 for US$1 following the removal of the peg to the US dollar and pressure for the United States. The Peoples Bank of China also announced that the Renminbi would be pegged to a basket of foreign currencies, rather than being strictly tied to the US dollar and would trade within a narrow 0.3% band against this basket of currencies, which is dominated by the US dollar, Euro, Japanese Yen and South Korean Won, with a smaller proportion made up of the British pound, Thai Baht and Russian Ruble. No representation is made that the Rmb amounts have been, or could be, converted into US$ 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;




- 14 -


·
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





Management’s discussion and analysis of results of operations and financial condition are based upon the Company’s consolidated financial statements.  These statements have been prepared in accordance with the generally accepted accounting principles as used in the United States of America.  These principles require management to make certain estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.  On an on-going basis, we evaluate our estimates based on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under 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 collectability is probable.





Revenue from web-site development contracts is recognized based on the terms of the contract. The Company uses either the percentage of completion when the contract is long-term or the completed contract method when the contract is short-term to recognize such revenue. Contracts are short-term in nature and require acceptance by the customer pursuant to the respective contracts are accounted for under the completed contract method. Revenues are allocated to the elements of the contract based on the fair values of the elements. Provisions for estimated contract losses are recognized in the year the loss becomes probable and can be reasonably estimated.




- 15 -


Revenue from maintenance contracts is recognized on a straight-line basis over the term of the maintenance contract, generally twelve months. The unearned portion of maintenance revenue is classified as deferred revenue and amortized over the life of the contract.





Revenue represents the invoiced value of goods sold recognized upon the delivery of goods to customers. Revenue is recognized when all of the following criteria are met:





- Persuasive evidence of an arrangement exists;


- Delivery has occurred or services have been rendered;


- The seller’s price to the buyer is fixed or determinable; and


- Collection is reasonably assured.





Inventories





Inventories consist of finished goods and raw materials, and are stated at the lower of cost or market value. Substantially all inventory costs are determined using the weighted average basis. Finished goods are comprised of direct materials, direct labor and an appropriate proportion of overhead. The management regularly evaluates the composition of its inventory to identify slow-moving and obsolete inventories to determine if additional write-downs are required.





Accounts Receivable





Accounts receivable is carried at the net invoiced value charged to customer.  The Company records an allowance for doubtful accounts to cover estimated credit losses. Management reviews and adjusts this allowance periodically based on historical experience and its evaluation of the collectability of outstanding accounts receivable. The Company evaluates the credit risk of its customers utilizing historical data and estimates of future performance.





Goodwill





Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. In accordance with Accounting Standards Codification ASC 350 “Intangibles - Goodwill and Other” formerly Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets", goodwill is no longer subject to amortization. Rather, goodwill is subject to at least an annual assessment for impairment, applying a fair-value based test. Fair value is generally determined using a discounted cash flow analysis. See Note 4 for goodwill impairment details.





Accounting for the Impairment of Long-Lived Assets





Impairment of Long-Lived Assets is evaluated for impairment at a minimum on an annual basis whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with ASC 360-10 “Impairments of Long-Lived Assets” formerly SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". An asset is considered impaired if its carrying amount exceeds the future net cash flow the asset is expected to generate. If an asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair market value. The recoverability of long-lived assets is assessed by determining whether the unamortized balances can be recovered through undiscounted future net cash flows of the related assets. The amount of impairment, if any, is measured based on projected discounted future net cash flows using a discount rate reflecting the Company's average cost of capital.


- 16 -


Income Taxes





The Company uses the accrual method of accounting to determine and report its taxable income and tax credit in the year in which they are available.  The Company has implemented ASC 740 “Income Taxes” formerly SFAS No. 109, Accounting for Income Taxes.





Income tax liabilities computed according to the United States, People’s Republic of China (PRC), Taiwan (ROC) and Hong Kong SAR tax laws are provided for the tax effects of transactions reported in the financial statements and consists of taxes currently due plus deferred taxes related primarily to differences between the basis of fixed assets and intangible assets for financial and tax reporting.  The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled.  Deferred taxes also are recognized for operating losses that are available to offset future income taxes.  A valuation allowance is created to evaluate deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize that tax benefit, or that future realization is uncertain.





Results of Operations - Three Months Ended March 31, 2011 and 2010





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, 2011 derived principally from sales of paper products of APT Paper Group Limited and e-commerce solutions & consultancy services provided by ChinaE.com Tech and ChinaE.com Investment Consultants. 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:




3 months ended March 312011


2011


2010


2010USD'000


%


USD'000


%Sales of paper products


4,499



98
%


-



-
%E-commerce solutions- website design and development


4



0
%


3



5
%Consulting


83



2
%


45



95
%4,586



100
%


48



100
%




Total net revenues increased to $4,586K during the three months ended March 31, 2011, as compared to $48K during the three months ended March 31, 2010. The increase in total net revenues was primarily due to the revenue from the sales of paper products which was generated from the subsidiary, APT Paper Group Limited which was acquired in June 2010.




- 17 -


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:





3 months ended March 312011


2011


2010


2010USD'000


%


USD'000


%Direct materials


3,678



80
%


-



-Direct labor


122



3
%


-



-Manufacturing overhead


206



4
%


-



-Depreciation


178



4
%


-



-Others


31



1
%


2



5
%4,215



92
%


2



5
%





The increase in costs of revenues for the three months ended March 31, 2011 compared with 2010 was due to the acquisition of APT Paper Group Limited. Costs of revenues consist principally of the production cost of paper products for the three months ended March 31, 2011. The costs of revenues for the period consist of principally direct material cost, direct labor, manufacturing overhead, depreciation, and other costs including travel, employee benefits and office expenses.





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:





3 months ended March 312011


2011


2010


2010USD'000


%


USD'000


%Sales & Marketing salaries & commissions


150



3
%


29



61
%Advertising & other sales & marketing expenses


280



6
%


13



26
%Rentals


300



7
%


36



75Administrative salaries


162



4
%


80



167
%Consultancy fee


0



-



634



1325
%Corporate overhead


63



1
%


86



179
%955



21
%


878



1833
%





The principal components of SG&A during the three months ended March 31, 2011 were sales and marketing salaries and commissions, other marketing expenditures, administrative salaries and benefits, and other corporate expenses, which includes legal and professional fees, general office expenses, traveling expenses, general employee benefit expense, depreciation consultancy fees, and allowance for bad and doubtful accounts.





For the three months ended March 31, 2011, SG&A expense increased by 9% to $955K, as compared to $878K for the three months ended March 31, 2010.




- 18 -


The increased in SG&A was mainly come from the newly acquired subsidiaries, APT Paper Group Limited and its subsidiaries.





Income Taxes





There was no income tax for both the three months ended March 31, 2011 and the three months ended March 31, 2010.





Minority Interest





Minority interests reflect the minority shareholders' proportionate interests in the net loss of the group operating losses of China Equity Platform Holding Group Limited.





Net Income (Loss)





The Company had net loss of $564K during the three months ended March 31, 2011, as compared to a net loss of $749K during the three months ended March 31, 2010.





Results of Operations - Nine Months Ended March 31, 2011 and 2010





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, 2011 derived principally from sales of paper products of APT Paper Group Limited and e-commerce solutions & consultancy services provided by ChinaE.com Tech and ChinaE.com Investment Consultants. 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:




9 months ended March 312011


2011


2010


2010USD'000


%


USD'000


%Sales of paper products


14,524



98
%


-



-
%E-commerce solutions- website design and development


8



0
%


16



22
%Consulting


348



2
%


53



78
%14,880



100
%


69



100
%




Total net revenues increased to $14,880K during the nine months ended March 31, 2011, as compared to $69K during the nine months ended March 31, 2010. The increase in total net revenues was primarily due to the revenue from the sales of paper products which was generated from the subsidiary, APT Paper Group Limited which was acquired in June 2010.




- 19 -


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:





9 months ended March 312011


2011


2010


2010USD'000


%


USD'000


%Direct materials


10,362



70
%


-



-Direct labor


882



6
%


-



-Manufacturing overhead


1,495



10
%


-



-Depreciation


519



3
%


-



-Others


105



1
%


9



13
%13,363



90
%


9



13
%





The increase in costs of revenues for the nine months ended March 31, 2011 compared with 2010 was due to the acquisition of APT Paper Group Limited. Costs of revenues consist principally of the production cost of paper products for the nine months ended March 31, 2011. The costs of revenues for the period consist of principally direct material cost, direct labor, manufacturing overhead, depreciation, and other costs including travel employee benefits and office expenses.





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:





9 months ended March 312011


2011


2010


2010USD'000


%


USD'000


%Sales & Marketing salaries & commissions


520



4
%


110



160
%Advertising & other sales & marketing expenses


762



5
%


31



45
%Rentals


900



6
%


106



152
%Administrative salaries


790



5
%


267



387
%Consultancy fee


452



3
%


1,292



1874
%Corporate overhead


549



4
%


211



307
%3,973



27
%


2,017



2925
%





The principal components of SG&A during the nine months ended March 31, 2011 were rentals, administrative salaries, consulting fees, sales and marketing salaries and commissions, other marketing expenditures, administrative salaries and benefits, and other corporate expenses, which includes legal and professional fees, general office expenses, traveling expenses, general employee benefit expense, depreciation consultancy fees, and allowance for bad and doubtful accounts.




- 20 -


For the nine months ended March 31, 2011, SG&A expense increased by 97% to $3,973K, as compared to $2,017K for the nine months ended March 31, 2010.





The increase in SG&A was mainly come from the newly acquired subsidiaries, APT Paper Group Limited and its subsidiaries.





Income Taxes





There was no income tax for both the nine months ended March 31, 2011 and the nine months ended March 31, 2010.





Minority Interest





Minority interests reflect the minority shareholders' proportionate interests in the net loss of the group operating losses of China Equity Platform Holding Group Limited.





Net Income (Loss)





The Company had net loss of $2,713,000 during the nine months ended March 31, 2011, as compared to a net loss of $1,741,000 during the nine months ended March 31, 2010.





Liquidity and Capital Resources – March 31, 2011





At March 31, 2011, the Company had cash and cash equivalents of $1,609K and net current liabilities of $847K, as compared to $677K of cash and cash equivalents and $2,396K of working capital at March 31, 2010.





Net cash used in operating activities was $4,210K and $2,439K for the nine months ended March 31, 2011 and March 31, 2010 respectively.





Net cash used in investing activities was $613K for the nine months ended March 31, 2011, mainly consisting of an increase in additions of fixed assets. Net cash used in investing activities was $5,504K for the nine months ended March 31, 2010 respectively, mainly consisting of and $5,500K for the deposit of acquisition of APT Paper Group Limited for the period ended March 31, 2010.





Net cash generated from financing activities was $3,964K for nine months ended March 31, 2011, mainly the private placement of working capital of $3,000K from third parties. Net cash generated from financing activities was $8,045K for the nine months ended March 31, 2010, mainly the issuance of share capital for the payment of consultancy fee to Star Fair Ventures Corp. and the consideration of deposit of acquisition of APT Paper Group Limited.





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, 2011, the Company has operating lease agreements for office premises, which are expiring in June 2035. The Company does not have any material commitments for 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, 2011.




- 21 -


Subsequent Event





The Company had entered into a joint venture agreement with other PRC investors on February 19, 2009 to spin off the subsidiaries and investments in operating equity exchange.  The PRC investors will form a new company to hold these subsidiaries and investments and seek an independent listing of the new company on a US exchange.  The name of the new company is China Equity Platform Holding Group Limited. When the spin off process is completed, the Company will get 53.4% –common stock of the newly formed company. The spin off process is still under processing and waiting for the approval from U.S. Securities and Exchange Commission. The subsidiary and associate companies that will be spun off are listed as following:





ChinaE.com Technology (Shenzhen) Company Limited


ChinaE.com Investment Consultant (Shenzhen) Company Limited


ChinaE.com E-commerce Company Limited


Intermost Focus Advertising Company Limited


Shenzhen International Hi-Tech Property Right Exchange Centre


Hainan Special Economic Zone Property Rights Exchange Centre


- 22 -


RISK FACTORS




In addition to other information in this Form 10-Q, 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-Q, the risks identified in our Annual Report on Form 10-K for the fiscal year ended June 30, 2010, 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, 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 product and services are complex and may at times contain 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 liability, and, 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.




- 23 -


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 or 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.





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 attract and 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.




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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.





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 conduct 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 in the United States.  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 in the United States or China. 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:




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·
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.





ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Pursuant to Instruction (e) of Item 305 of Regulation S-K, a smaller reporting company such as the Company is not required to provide the information required by Item 305 in response to this Item 3.





ITEM 4.  CONTROLS AND PROCEDURES.





Evaluation of Disclosure Controls and Procedures





We maintain controls and procedures designed to ensure that we are able to collect the information we are required to disclose in the reports we file with the SEC, and to record, process, summarize and disclose this information within the time periods specified by the SEC.  Based on an evaluation of our disclosure controls and procedures as of the end of the period covered by this report conducted by management, the Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures are not effective to ensure that we are able to record, process, summarize and report the information we are required to disclosure in the reports we file with the SEC within the required time periods.





Management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a-15(f) or 15d-15(f) under the Securities Exchange Act of 1934, as amended.  Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, we assessed the effectiveness of our internal control over financial reporting as of March 31, 2011.





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.




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PART II - OTHER INFORMATION





Item 1.  Legal Proceedings





We had no legal proceedings outstanding as at March 31, 2011.





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.





Not applicable.





Item 5.  Other Information.





Not applicable.





Item 6.  Exhibits





ExhibitNumber

Description of Exhibit2.1

Articles of Merger (1)3.1

Articles of Incorporation (1)3.2

Bylaws (1)10.1

Cooperative Agreement re: formation of Jiayin E-Commerce joint venture (2)10.2

Agreement Regarding Transfer of Properties on 38th Floor, Guomao Building (3)10.3

Shareholding Transfer Agreement dated May 23, 2003 between IMOT Information Technology (Shenzhen) Ltd. and Shanghai Newray Business Development Co., Ltd. (4)10.4

Share Transfer Agreement among IMOT Information Technology (Shenzhen) Ltd., Shenzhen Golden Anke Technology Co. Ltd., Intermost Corporation, Tu Guoshen and Li Zhiquan (5)10.5

Sale and Purchase Agreement among IMOT Information Technology (Shenzhen) Ltd., Shanghai Fortune Venture Limited, North Shanghai Branch of Shanghai Technology Property Right Exchange Center and Intermost Corporation (6)10.6

Distributorship Agreement dated November 28, 2002 between KanHan Technologies Limited and ChinaE.com Information Technology Ltd. (7)10.7

Intermost Corporation 2003 Equity Incentive Plan (8)10.8

Joint Venture Agreement among Intermost Corporation and Entities and/or Individuals Collectively Referred to as “Investors.”(9)14

Code of Ethics (10)16

Letter on Change in Certifying Accountant (11)31.1

Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) and 15d-14(a)*31.2

Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) and 15d-14(a)*32.1

Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*32.2

Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*




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(1)

Incorporated by reference to the respective exhibits filed with the Registrant’s 10-KSB Amendment filed with the SEC on October 15, 2004(2)

Incorporated by reference to the respective exhibits filed with Registrant’s Registration Statement on Form 10-SB (Commission File No. 0-30430).(3)

Incorporated by reference to the respective exhibits filed with the Registrant’s Quarterly Report on Form 10-QSB for the quarter ended March 31, 2000.(4)

Incorporated by reference to the exhibit filed with the Registrant’s Current Report on Form 8-K filed with the SEC on June 9, 2003.(5)

Incorporated by reference to the exhibit filed with the Registrant’s Current Report on Form 8-K filed with the SEC on August 17, 2004.(6)

Incorporated by reference to the exhibit filed with the Registrant’s Current Report on Form 8-K filed with the SEC on April 26, 2004.(7)

Incorporated by reference to the exhibit filed with the Registrant’s Current Report on Form 8-K filed with the SEC on February 14, 2003.(8)

Incorporated by reference to the exhibit filed with the Registrant’s Proxy Statement filed with the SEC on January 6, 2004.(9)

Incorporated by reference to the exhibit filed with the Registrant’s 10-KSB with the SEC on November 7, 2008.(10)

Incorporated by reference to the exhibit filed with the Registrant’s 10-KSB Amendment filed with the SEC on October 25, 2004.(11)

Incorporated by reference to the exhibit filed with the Registrant’s Current Report on Form 8-K filed with the SEC on March 8, 2004.*

Filed herewith.




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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 13, 2011
UNI CORE HOLDINGS CORPORATIONBy:
/s/ Chia Hsun Wu.Chia Hsun WuChief Executive OfficerBy:
/s/ Thomas Lee.Thomas LeeChief Financial Officer




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