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:December
        31,2007
 
 [   ]
              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 ofregistrant 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
                  RepublicofChina
              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 ExchangeAct during the past
        12 months (or for
        such shorter period that the registrant was required to file such reports),
        and
        (2) has been subject to such filing requirements for the past 90 days.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:++215,370,278
        sharesof common stock as
        ofNovember 4,
        2007.
 
 Transitional
        Small Business Disclosure Format (check one).  Yes o  No ý




TABLE
          OF CONTENTS
 PART
                    I.
                Financial
                    InformationItem
                    1.
                Financial
                    StatementsCondensed
                    Consolidated Balance
                    sheets as ofJune 30, 2007 and December 31, 2007(Unaudited)
                2Condensed
                    ConsolidatedStatements of Operations for the three months ended
                    December 31, 2006 and December 31, 2007
                    (Unaudited)
                3Condensed
                    Consolidated Statements
                    of
                    Operations for the six months ended December 31, 2006 and December
                    31,
                    2007 (Unaudited)
                4CondensedConsolidatedStatementsofCashFlowsforthesix
                    monthsendedDecember
                    31,
                    2006andDecember
                    31,2007 (Unaudited)
                5Notes
                    toCondensedConsolidatedFinancialStatementsfor
                    thesixmonths
                    endedDecember
                    31,
                    2006andDecember
                    31,2007
                6Item
                    2.
                Management’sDiscussion
                    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
                26Item
                    3.
                Defaults
                    Upon Senior Securities
                26Item
                    4.
                Submission
                    of Matters to a Vote of Security
                    Holders
                26Item
                    5.
                OtherInformation
                26Item
                    6.
                Exhibits
                26Signatures
                27
   1




INTERMOST
        CORPORATION AND SUBSIDIARIES
 CONDENSED
        CONSOLIDATED BALANCE SHEETS
  Dec
                    31, 2007
                  (unaudited)
                
                
                June
                    30, 2006USD
                
                
                USDASSETSCurrent
                    AssetsCash
                    and cash equivalents
                
                
                699,982
                
                
                
                833,993Accounts
                    receivable, net
                
                
                3,841,854
                
                
                
                4,085,123Inventories
                
                
                204,580
                
                
                
                195,946Security
                    bond deposit
                
                
                -
                
                
                
                -Stock
                    in custodian
                
                
                -
                
                
                
                -Short-term
                    Loan
                
                
                671,877
                
                
                
                670,763Deposits,
                    prepayments and other receivables
                
                
                2,219,520
                
                
                
                2,269,083Short-term
                    investment
                
                
                384,302
                
                
                
                368,083Total
                    current assets
                
                
                8,022,115
                
                
                
                8,422,991Other
                    AssetsUnlisted
                    investment
                
                
                932,899
                
                
                
                893,526Property
                    and equipment, net
                
                
                41,056
                
                
                
                51,414Investment
                    in an associated company
                
                
                6,790,404
                
                
                
                6,497,267Intangible
                    assets, net
                
                
                18,325
                
                
                
                20,354TOTAL
                    ASSETS
                
                
                15,804,799
                
                
                
                15,885,552




LIABILITIES
                  AND SHAREHOLDERS' EQUITYCurrent
                  LiabilitiesAccounts
                  payable
              
              
              3,696,654
              
              
              
              3,927,964Accrued
                  liabilities and other payable
              
              
              780,218
              
              
              
              792,560Customer
                  deposits
              
              
              104,900
              
              
              
              105,708Due
                  from shareholder
              
              
              270,949
              
              
              
              160,000Business
                  taxes and government surcharges payable
              
              
              -
              
              
              
              -Total
                  Current Liabilities
              
              
              4,852,721
              
              
              
              4,986,232Minority
                  Interests
              
              
              765,046
              
              
              
              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 & 215,370,278 shares at Dec 31, 2007
                  & June 30, 2007 respectively
              
              
              206,400
              
              
              
              215,371Additional
                  paid-in capital
              
              
              23,235,237
              
              
              
              23,235,236Treasury
                  stock
              
              
              -
              
              
              
              (8,970
              )Accumulated
                  deficit
              
              
              (14,878,444
              )
              
              
              (13,391,999
              )Accumulated
                  other comprehensive loss
              
              
              1,623,839
              
              
              
              116,92010,187,032
              
              
              
              10,166,558TOTAL
                  LIABLITIES, MINORITY INTERESTS AND STOCKHOLDERS’ EQUITY
              
              
              15,804,799
              
              
              
              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 Dec 31,2007
                
                
                2006USD
                
                
                USDNet
                    revenue
                
                
                4,445
                
                
                
                700,419Cost
                    of revenues
                
                
                (17,048
                )
                
                
                (684,666
                )Gross
                    profit
                
                
                (12,603
                )
                
                
                15,753Costs
                    and expenses:Selling,
                    general and administrative expenses
                
                
                (176,397
                )
                
                
                (237,655
                )Impairment
                    of goodwill
                
                
                -
                
                
                
                -Exchange
                    differences
                
                
                224
                
                
                
                559,368Amortization
                    of intangible assets
                
                
                (2,018
                )
                
                
                (8,354
                )Total
                    costs and expenses
                
                
                (178,191
                )
                
                
                313,359Income
                    (loss) from operations
                
                
                (190,794
                )
                
                
                329,112Interest
                    income
                
                
                28,115
                
                
                
                2,213Loan
                    interest income
                
                
                5
                
                
                
                6,431Investment
                    income / (loss)
                
                
                -
                
                
                
                -Other
                    income, net
                
                
                3,290
                
                
                
                100Income
                    before income taxes,minority
                    interests and equity inearnings
                    of associated companies
                
                
                (159,384
                )
                
                
                337,856Income
                    taxes
                
                
                -
                
                
                
                (3,042
                )Income
                    before minority interests and equity inearnings
                    of an associated companies
                
                
                (159,384
                )
                
                
                334,814Minority
                    interests
                
                
                -
                
                
                
                (7,630
                )Income
                    (loss) before equity in earnings ofassociated
                    companies
                
                
                (159,384
                )
                
                
                327,184Equity
                    in earnings of associated companies
                
                
                1,483
                
                
                
                -Profit
                    / (Loss) before extra-ordinary items
                
                
                (157,901
                )
                
                
                327,184Loss
                    on closing a subsidiary company
                
                
                -
                
                
                
                -Net
                    income (loss)
                
                
                (157,901
                )
                
                
                327,184Net
                    income (loss) per common share-basic and diluted
                
                
                (0.0015
                )
                
                
                0.002Weighted
                    average number of common sharesoutstanding-basic
                    and diluted
                
                
                103,199,962
                
                
                
                173,922,536






3




INTERMOST
        CORPORATION AND SUBSIDIARIES
 CONDENSED
        CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
  Six
                    months ended Dec 31,2007
                
                
                2006USD
                
                
                USDNet
                    revenue
                
                
                12,043
                
                
                
                991,963Cost
                    of revenues
                
                
                (54,013
                )
                
                
                (955,798
                )Gross
                    profit
                
                
                (41,970
                )
                
                
                36,165Costs
                    and expenses:Selling,
                    general and administrative expenses
                
                
                (349,519
                )
                
                
                (592,355
                )Impairment
                    of goodwill
                
                
                -
                
                
                
                (932,364
                )Exchange
                    differences
                
                
                224
                
                
                
                553,275Amortization
                    of intangible assets
                
                
                (2,850
                )
                
                
                (16,707
                )Total
                    costs and expenses
                
                
                (352,145
                )
                
                
                (988,151
                )Income
                    (loss) from operations
                
                
                (394,115
                )
                
                
                (951,986
                )Interest
                    income
                
                
                36,140
                
                
                
                4,108Loan
                    interest income
                
                
                16,249
                
                
                
                18,740Investment
                    income / (loss)
                
                
                -
                
                
                
                (3,649
                )Other
                    income, net
                
                
                3,290
                
                
                
                35Income
                    before income taxes,minority
                    interests and equity inearnings
                    of associated companies
                
                
                (338,436
                )
                
                
                (932,752
                )Income
                    taxes
                
                
                -
                
                
                
                (8,515
                )Income
                    before minority interests and equity inearnings
                    of an associated companies
                
                
                (338,436
                )
                
                
                (941,267
                )Minority
                    interests
                
                
                4
                
                
                
                (6,302
                )Income
                    (loss) before equity in earnings ofassociated
                    companies
                
                
                (338,432
                )
                
                
                (947,569
                )Equity
                    in earnings of associated companies
                
                
                6,665
                
                
                
                (3,410
                )Profit
                    / (Loss) before extra-ordinary items
                
                
                (331,767
                )
                
                
                (950,979
                )Loss
                    on closing a subsidiary company
                
                
                (1,154,678
                )
                
                
                -Net
                    income (loss)
                
                
                (1,486,445
                )
                
                
                (950,979
                )Net
                    income (loss) per common share-basic and diluted
                
                
                (0.007
                )
                
                
                (0.006
                )Weighted
                    average number of common sharesoutstanding-basic
                    and diluted
                
                
                210,885,101
                
                
                
                163,662,170






4




INTERMOST
        CORPORATION AND SUBSIDIARIES
 CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
  Six
                      months ended Dec 31,2007
                  
                  
                  2006USD
                  
                  
                  USDCash
                      flows from operating activities:Net
                      income (loss)
                  
                  
                  (331,767
                  )
                  
                  
                  (950,979
                  )Impairment
                      of goodwill
                  
                  
                  -
                  
                  
                  
                  932,364Amortization
                      of intangible assets
                  
                  
                  2,850
                  
                  
                  
                  16,707Equity
                      in earnings of associated companies
                  
                  
                  (6,665
                  )
                  
                  
                  3,410Loss
                      on disposal of a subsidiary
                  
                  
                  (1,145,037
                  )Depreciation
                  
                  
                  12,336
                  
                  
                  
                  14,841Minority
                      interests
                  
                  
                  32,284
                  
                  
                  
                  6,302(Increase)
                      decrease in operating assets -Accounts
                      receivable
                  
                  
                  243,269
                  
                  
                  
                  2,033,333Inventories
                  
                  
                  (8,634
                  )
                  
                  
                  (185,120
                  )Deposits,
                      prepayments and other receivables
                  
                  
                  76,568
                  
                  
                  
                  (2,371,211
                  )Increase
                      (decrease) in operating liabilities -Accounts
                      payable
                  
                  
                  (231,310
                  )
                  
                  
                  (22,836
                  )Accrued
                      liabilities
                  
                  
                  (38,197
                  )
                  
                  
                  50,722Customer
                      deposits
                  
                  
                  4,188
                  
                  
                  
                  9,625Deferred
                      revenue
                  
                  
                  (4,996
                  )
                  
                  
                  (14,421
                  )Business
                      taxes and government surcharges payable
                  
                  
                  (1,150
                  )
                  
                  
                  (10,663
                  )Net
                      cash used in operating activities
                  
                  
                  (1,396,261
                  )
                  
                  
                  (487,926
                  )Cash
                      flows from investing activities:Acquisition
                      of plant and equipment
                  
                  
                  -
                  
                  
                  
                  (22,923
                  )Increase
                      (decrease) in short-term loan
                  
                  
                  (1,114
                  )
                  
                  
                  152,205Net
                      cash provided by investing activities
                  
                  
                  (1,114
                  )
                  
                  
                  129,282Cash
                      flows from financing activities:Loan
                      from a related company
                  
                  
                  110,949Increase
                      in security bond
                  
                  
                  -
                  
                  
                  
                  (1,500,000
                  )Net
                      proceeds from issuance of common stock
                  
                  
                  -
                  
                  
                  
                  2,237,929Net
                      cash provided by financing activities
                  
                  
                  110,949
                  
                  
                  
                  737,929Cash
                      and cash equivalents:Net
                      increase (decrease)
                  
                  
                  (1,286,426
                  )
                  
                  
                  379,285Accumulated
                      other comprehensive loss
                  
                  
                  1,152,415
                  
                  
                  
                  292,370Balance
                      at beginning of period
                  
                  
                  833,993
                  
                  
                  
                  720,151Balance
                      at end of period
                  
                  
                  699,982
                  
                  
                  
                  1,391,806Supplemental
                      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)


SIX
        MONTHS
        ENDED DEC 31, 2006 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
        December 31, 2007, the results of operations for the six months ended December
        31, 2007 and 2006, and the cash flows for the six months ended December 31,
        2007
        and 2006. 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 six months ended December 31, 2007 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 six months ended December 31,
        2006
        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 Rmb7.303 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$1 at June 30, 2007. And the Rmb was further appreciated to Rmb
      7.303 for US$ 1 at this quarter ended December 31, 2007.





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
      7.303.





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 December 31, 2007
      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
      December 31, 2007. 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 December 31, 2007. 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 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.




8


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%.





For
      the
      six months ended December 31, 2007 and 2006, Shenzhen Golden Anke Technology
      Ltd. generated approximately the majority of the Company's consolidated taxable
      income. Since the losses from one subsidiary cannot be offset against the income
      from another subsidiary in determining the provision for income taxes, the
      Company's provision for income taxes for the six months ended December 31,
      2007
      and 2006 are mainly for the taxable income generated by Shenzhen Golden Anke
      Technology Ltd.




9




8.  CONCENTRATION
 
 On
        August
        10, 2004, all necessary government approvals were obtained to complete the
        transfer 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, to
        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.  On
        August 10, 2004 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 approximately two
        percent (2%) of the outstanding shares in Golden Anke to an unaffiliated
        minority stockholder so that this minority stockholder could seek an independent
        listing of Golden Anke on a UK exchange thus reducing our ownership from
        approximately 51% to approximately 49%.
 
 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 six months period ended December 31, 2007 is
        as
        follows:
  (a)  Net
        revenues:
  Six
                    Months Ended December 31,
                    2007Rmb’000
                
                
                US$’000E-commerce
                    solutions
                
                
                87
                
                
                
                12VOIP
                    call minutes
                
                
                3
                
                
                
                -Photographic
                    business
                
                
                -
                
                
                
                -Digital
                    security imaging system
                
                
                -
                
                
                
                -90
                
                
                
                12








10




(b)  Net
      income (loss):




Six
                  Months Ended December 31,
                  2007Rmb’000
              
              
              US$’000E-commerce
                  solutions
              
              
              (925
              )
              
              
              (123
              )Consulting
              
              
              -
              
              
              
              -Photographic
                  business
              
              
              -
              
              
              
              -VOIP
                  call minutes
              
              
              172
              
              
              
              23Digital
                  security imaging system
              
              
              -
              
              
              
              -Corporate
              
              
              (10,390
              )
              
              
              (1,386
              )(11,143
              )
              
              
              (1,486
              )




(c)Assets:




As
                  at December 31, 2007Rmb’000
              
              
              US$’000E-commerce
                  solutions
              
              
              510
              
              
              
              70Consulting
              
              
              3,375
              
              
              
              455Digital
                  security imaging system
              
              
              -
              
              
              
              -Photographic
                  business
              
              
              1,984
              
              
              
              306VOIP
                  call minutes
              
              
              34,628
              
              
              
              4,742Corporate
              
              
              74,728
              
              
              
              10,232115,225
              
              
              
              15,805




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




(d)  Other
      items:




Six
                  Months Ended December 31,
                  2007Rmb’000
              
              
              US$’000Depreciation:E-commerce
                  solutions
              
              
              88
              
              
              
              12Consulting
              
              
              0
              
              
              
              0Corporate
                  expenses
              
              
              4
              
              
              
              092
              
              
              
              12




There
        was
        no fixed expenditure for fixed assets during the six months ended December
        31,
        2007.
 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 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.
 
 We
          intend
          to finalize an acquisition of a Taiwan touch panel manufacturing company
          which
          we believe will be a good addition to our business.
 
 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.
  12


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$1 following the removal of the peg to the
        US
        dollar and pressure for the United States. The Peoples Bank of China also
        announced that the Renminbi would be pegged to a basket of foreign currencies,
        rather then being strictly tied to the US dollar and would trade within a
        narrow
        0.3% band against this basket of currencies, which is dominated by the US
        dollar, Euro, Japanese Yen and South Korean Won, with a smaller proportion
        made
        up of the British pound, Thai Baht and Russian Ruble. No representation is
        made
        that the Rmb amounts have been, or could be, converted into US$ 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.
 
 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 December 31, 2007 and 2006
 
 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 December 31, 2007 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
                    Revenue2006
                
                
                2006
                
                
                2007
                
                
                20073
                    months ended December 31
                
                USD'000
                
                
                %
                
                
                USD'000
                
                
                %E-commerce
                    solutions
                
                
                23
                
                
                
                3
                %
                
                
                4
                
                
                
                100
                %Sale
                    of digital security imaging equipments
                
                
                219
                
                
                
                31
                %
                
                
                -
                
                
                
                0
                %VOIP
                
                
                458
                
                
                
                66
                %
                
                
                -
                
                
                
                0
                %Sale
                    of photographic equipments
                
                
                -
                
                
                
                0
                %
                
                
                -
                
                
                
                0
                %Consulting
                
                
                -
                
                
                
                0
                %
                
                
                -
                
                
                
                0
                %700
                
                
                
                100
                %
                
                
                4
                
                
                
                100
                %




15




Total
        net
        revenues decreased by 99% to $4K during the three months ended December 31,
        2007, as compared to $800K during the three months ended December 31, 2006.
        The
        decrease in total net revenues was primarily due to the decrease in sales
        of
        digital security imaging systems made through the Company's previous subsidiary,
        Shenzhen Golden Anke.  The main reason for the decrease in sales
        during the period is due to the change of shareholdings in Golden Anke, changed
        from a subsidiary to an associated company as at year ended June 30,
        2007.  As a result of this, there were no more sales of digital
        security imaging systems taken into the Company, but the performance of Golden
        Anke was included in the share of profits of associated
        companies.  Due to the VOIP service contract has been expired in
        Taiwan, there was no VOIP income for the period.
 
 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 Revenue2006
                
                
                2006
                
                
                2007
                
                
                20073
                    months ended December 31
                
                USD'000
                
                
                %
                
                
                USD'000
                
                
                %Salaries
                    of technicians / engineers
                
                
                31
                
                
                
                4
                %
                
                
                7
                
                
                
                175
                %Sale
                    of photographic equipments
                
                
                -
                
                
                
                0
                %
                
                
                0
                
                
                
                0
                %Sale
                    of digital security imaging equipments
                
                
                191
                
                
                
                27
                %
                
                
                0
                
                
                
                0
                %Depreciation
                
                
                4
                
                
                
                1
                %
                
                
                5
                
                
                
                125
                %VOIP
                
                
                448
                
                
                
                64
                %
                
                
                0
                
                
                
                0
                %Others
                
                
                10
                
                
                
                2
                %
                
                
                5
                
                
                
                100
                %684
                
                
                
                98
                %
                
                
                17
                
                
                
                400
                %




Cost
        of
        revenues decreased by 98% to $17K or 400% of net revenues for the three months
        ended December 31, 2007, as compared to $684K during the three months ended
        December 31, 2006.
 
 The
        principal components of cost of revenues during the three months ended December
        31, 2007 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 costs of revenues in 2007 as compared to 2006 was principally
        attributable to the 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
                  Expenses2006
              
              
              2006
              
              
              2007
              
              
              20073
                  months ended December 31
              
              USD'000
              
              
              %
              
              
              USD'000
              
              
              %Sales
                  & Marketing salaries & commissions
              
              
              9
              
              
              
              1
              %
              
              
              14
              
              
              
              350
              %Advertising
                  & other sales & marketing expenses
              
              
              4
              
              
              
              1
              %
              
              
              10
              
              
              
              250
              %Rentals
              
              
              20
              
              
              
              3
              %
              
              
              9
              
              
              
              225
              %Administrative
                  salaries
              
              
              37
              
              
              
              5
              %
              
              
              43
              
              
              
              1075
              %Corporate
                  overhead
              
              
              168
              
              
              
              24
              %
              
              
              100
              
              
              
              2500
              %238
              
              
              
              34
              %
              
              
              176
              
              
              
              4400
              %




For
        the
        three months ended December 31, 2007, SG&A expense decreased by 26% to
        $176K, as compared to $238K for the three months ended December 31,
        2006.
 
 The
        increase in SG&A expense in 2007 as compared to 2006 was principally
        attributable to cost cutting measures implemented in the quarter ended December
        31, 2007.  During the three months ended December 31, 2007, 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 also implemented a firm-wide cost-cutting exercise.
 
 Income
        Taxes
 
 Income
        taxes for the three months ended December 31, 2007 were $0K and $3K for the
        three months ended December 31, 2006.
 
 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
        losses of an associated company represents the Company's proportionate share
        of
        the loss of Hainan Property Right Exchange Centre.
 
 Net
        Income
        (Loss)
 
 The
        Company had net loss of $158K during the three months ended December 31,
        2007,
        as compared to a net income of $327K during the three months ended December
        31,
        2006.
 
 Results
        of Operations - Six Months Ended December 31, 2007 and 2006
 
 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 six months ended December 31, 2007 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
                    Revenue2006
                
                
                2006
                
                
                2007
                
                
                20076
                    months ended December 31
                
                USD'000
                
                
                %
                
                
                USD'000
                
                
                %E-commerce
                    solutions
                
                
                45
                
                
                
                5
                %
                
                
                12
                
                
                
                100
                %Sale
                    of digital security imaging equipments
                
                
                487
                
                
                
                49
                %
                
                
                -
                
                
                
                0
                %VOIP
                
                
                458
                
                
                
                46
                %
                
                
                -
                
                
                
                0
                %Sale
                    of photographic equipments
                
                
                2
                
                
                
                0
                %
                
                
                -
                
                
                
                0
                %Consulting
                
                
                0
                
                
                
                0
                %
                
                
                -
                
                
                
                0
                %992
                
                
                
                100
                %
                
                
                12
                
                
                
                100
                %




Total
        net
        revenues decreased by 99% to $12K during the six months ended December 31,
        2007,
        as compared to $992K during the six months ended December 31, 2006. The decrease
        in total net revenues was primarily due to the decrease in sales of digital
        security imaging systems made through the Company's previous subsidiary,
        Shenzhen Golden Anke.  The main reason for the decrease in sales
        during the period is due to the change of shareholdings in Golden Anke, changed
        from a subsidiary to an associated company as at year ended June 30,
        2007.  As a result of this, there were no more sales of digital
        security imaging systems taken into the Company, but the performance of Golden
        Anke was included in the share of profits of associated
        companies.  Due to the VOIP service contract has been expired in
        Taiwan, there was no VOIP income for the period.
 
 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 Revenue2006
                
                
                2006
                
                
                2007
                
                
                20076
                    months ended December 31
                
                USD'000
                
                
                %
                
                
                USD'000
                
                
                %Salaries
                    of technicians / engineers
                
                
                64
                
                
                
                6
                %
                
                
                32
                
                
                
                265
                %Sale
                    of photographic equipments
                
                
                2
                
                
                
                0
                %
                
                
                0
                
                
                
                0
                %Sale
                    of digital security imaging equipments
                
                
                412
                
                
                
                42
                %
                
                
                0
                
                
                
                0
                %Depreciation
                
                
                9
                
                
                
                1
                %
                
                
                10
                
                
                
                83
                %VOIP
                
                
                448
                
                
                
                45
                %
                
                
                0
                
                
                
                0
                %Others
                
                
                21
                
                
                
                2
                %
                
                
                12
                
                
                
                100
                %956
                
                
                
                96
                %
                
                
                54
                
                
                
                448
                %




18


Cost
      of
      revenues decreased by 94% to $54K or 448% of net revenues for the six months
      ended December 31, 2007, as compared to $956K during the six months ended
      December 31, 2006.


The
        principal components of cost of revenues during the six months ended December
        31, 2007 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 costs of revenues in 2007 as compared to 2006 was principally
        attributable to the decrease in sales volume of the Company's e-commerce
        solutions and no sales for VOIP.
 
 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
                    Expenses2006
                
                
                2006
                
                
                2007
                
                
                20076
                    months ended December 31
                
                USD'000
                
                
                %
                
                
                USD'000
                
                
                %Sales
                    & Marketing salaries & commissions
                
                
                28
                
                
                
                3
                %
                
                
                48
                
                
                
                40
                %Advertising
                    & other sales & marketing expenses
                
                
                11
                
                
                
                1
                %
                
                
                14
                
                
                
                12
                %Rentals
                
                
                43
                
                
                
                4
                %
                
                
                25
                
                
                
                21
                %Administrative
                    salaries
                
                
                92
                
                
                
                10
                %
                
                
                125
                
                
                
                104
                %Corporate
                    overhead
                
                
                418
                
                
                
                42
                %
                
                
                138
                
                
                
                115
                %592
                
                
                
                60
                %
                
                
                350
                
                
                
                292
                %




For
        the
        six months ended December 31, 2007, SG&A expense decreased by 41% to $350K,
        as compared to $592K for the six months ended December 31, 2006.
 
 The
        decrease in SG&A expense in 2007 as compared to 2006 was principally
        attributable to cost cutting measures implemented in the period ended December
        31, 2007.  During the six months ended December 31, 2007, 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 also implemented a firm-wide cost-cutting exercise.
 
 Income
        Taxes
 
 Income
        taxes for the six months ended December 31, 2007 were $0K and $8K for the
        six
        months ended December 31, 2006.
 
 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
        losses of an associated company represents the Company's proportionate share
        of
        the loss of Hainan Property Right Exchange Centre.
 
 19


Net
      Income
      (Loss)


The
        Company had net loss of $1,486K during the six months ended December 31,
        2007,
        as compared to a net income of $951K during the six months ended December
        31,
        2006.
 
 Liquidity
        and Capital Resources – December 31, 2007
 
 At
        December 31, 2007, the Company had cash and cash equivalents of $ 700K and
        working capital of $3,169K, as compared to $1,392K of cash and cash equivalents
        and $13,585K of working capital at December 31, 2006.
 
 Net
        cash
        used in operating activities was $1,396K for the six months ended December
        31,
        2007, as compared to net cash used in operating activities of $488K for the
        six
        months ended December 31, 2006. The decrease in net cash provided by operating
        activities in 2007 as compared to 2006 is reflected in the disposal of a
        subsidiary.
 
 Net
        cash
        used in investing activities was $1K for the six months ended December 31,
        2007,
        consisting of increase in short term loan. Net cash generated from investing
        activities were $129K for the six months ended December 31, 2006.
 
 Net
        cash
        provided by financing activities were $111K in cash advance from a related
        company for the six months ended December 31, 2007, as compared to the net
        proceeds from the issuance of common stock for the six months ended December
        31,
        2006.
 
 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
        December 31, 2007, 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 December 31, 2007.
 
 Off-Balance
        Sheet Arrangements
 
 The
        Company does not have any transactions, obligations or relationships that
        could
        be considered off-balance sheet arrangements at December 31, 2007.
 
 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.
  20


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
        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.
  22


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
        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 met
        and Hainan Financial Products was a shelf company without any registered
        capital.
  24




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 China International Economic and Trade
        Arbitration Commission, South China Sub-Commission in Shenzhen (“Arbitration
        Commission”).  On December 20, 2006, 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 to be reimbursed or born by the Sellers.  The share
        certificate of the remaining 2,000,000 shares common stock is currently under
        the custody of IMOT Technology.
 
 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, On January 24, 2008, The Arbitration Commission rendered
        a decision ordering the return of the 5,000,000 IMOT shares common stock
        and the
        Respondents were liable to compensate Rmb184,000 for the attorney fees and
        court
        costs incurred by IMOT Technology.
 
 (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 December 31, 2006, 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 December 31, 2006 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.
  25


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.
 
 Not
        applicable.
 
 Item
        5.  Other Information.
 
 Not
        applicable.
 
 Item
        6.  Exhibits
  Exhibit
                    Number
                
                Description
                    of Exhibit2.1
                
                Articles
                    of Merger (1)3.1
                
                Articles
                    of Incorporation (1)3.2
                
                Bylaws
                    (1)10.1
                
                Employment
                    Agreement, dated March 12, 2004, between Intermost Corporation
                    and Andy
                    Lin (2)10.3
                
                Cooperative
                    Agreement re: formation of Jiayin E-Commerce joint venture
                    (1)10.4
                
                Agreement
                    Regarding Transfer of Properties on 38th Floor, Guomao Building
                    (3)10.5
                
                Shareholding
                    Transfer Agreement dated May 23, 2003 between IMOT Information
                    Technology
                    (Shenzhen) Ltd. and Shanghai Newray Business Development Co.,
                    Ltd.
                    (4)10.6
                
                Share
                    Transfer Agreement among IMOT Information Technology
                    (Shenzhen)  Ltd., Shenzhen Golden Anke Technology Co. Ltd.,
                    Intermost Corporation, Tu Guoshen and Li Zhiquan (5)10.7
                
                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)10.8
                
                Distributorship
                    Agreement dated November 28, 2002 between KanHan Technologies
                    Limited and
                    ChinaE.com Information Technology Ltd. (7)10.9
                
                Intermost
                    Corporation 2003 Equity Incentive Plan (8)10.10
                
                Share
                    Transfer Agreement dated March 31, 2004 between IMOT Information
                    Technology (Shenzhen) Ltd. and Tu Guoshen and Li Zhiquan for
                    the
                    acquisition of 51% of the Golden Anke Technology, Ltd.
                    (9)10.11
                
                Share
                    Transfer Agreement dated December 8, 2004 between IMOT Information
                    Technology (Shenzhen) Ltd. and Shenzhen Merchant Technology Investment
                    Co., Ltd. for the acquisition of 15% of Shenzhen International
                    Hi-Tech
                    Exchange (9)10.12
                
                Share
                    Exchange Agreement dated December 11, 2004 between IMOT Information
                    Technology (Shenzhen) Ltd. and Guangzhou Digital Communication
                    Co., Ltd.
                    and Zhai Xiya for the acquisition of 80% of Hainan Concord Financial
                    Products Development Co. Ltd. (9)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.
                    *






26




*Filed
        herewith.
 
 (1)
              Incorporated
                  by reference to the respective exhibits filed with Registrant's
                  Registration Statement on Form 10-SB (Commission File No.
                  0-30430).
 (2)
              Incorporated
                  by reference to the exhibit filed with the Registrant's Current
                  Report on
                  Form 8-K filed with the SEC on March 25,
                  2004.
 (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 Quarterly
                  Report
                  on Form 10-QSB for the quarter ended December 31, 2002 filed with
                  the SEC
                  on February 14, 2003.
 (8)
              Incorporated
                  by reference to the Registrant's Proxy Statement filed with the
                  SEC on
                  January 6, 2004.
 (9)
              Incorporated
                  by reference to the Exhibit filed with Form 10-KSB, amendment No.
                  1 for
                  the year ended June 30, 2005.






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:  February
                  8, 2008
              
              INTERMOST
                  CORPORATIONBy:
              /s/Rocky
                WulianghaiRocky
                  WulianghaiPresident
                  and Chief Executive OfficerBy:
              /s/
                Thomas
                LeeThomas
                  LeeChief
                  Financial Officer










27