Uni Core (UCHC) 10-Q/A 2008 Q0 Quarterly report (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

FORM 10-Q/A

(Amendment No. 1)

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2007

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________ to ________________

Commission File Number:  000-30430

________________

INTERMOST CORPORATION

(Exact name of registrant as specified in its charter)

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

011-86-755-8221-0238

(Registrant’s telephone number, including area code)

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

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

Large acelerated filer  ☐	Accelerated filer ☐
Non-accelerated filer   ☐    (Do not check if a smaller reporting company)	Smaller reporting company ☒

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:  ++215,370,278 shares of common stock as of November 4, 2007.

EXPLANATORY NOTE

Intermost Corporation (the “Company”) is filing this Amendment No. 1 on Form 10Q/A to its Quarterly Report on Form 10-QSB for the three months ended September 30, 2007, as filed with the Securities and Exchange Commission on November 14, 2007 to (a) amend and restate (i) PART I, Item 1, Financial Statements and restate the financial statements of the Company as of September 30, 2007 and the three months then ended, (ii) Item 2, Management Discussion Analysis or Plan of Operations, and (iii) PART II, Item 1, Legal Proceedings; and (b) file as exhibits hereto currently dated certifications from our Principal Executive Officer and Principal Financial Officer.  Only the amended Items, financial statements and updated exhibits are being filed herewith. The restatement of the financial statements includes adjustments resulting from our restatement of the Company’s financial statements for the year ended June 30, 2007, adjustments to the Company’s disposal of subsidiary companies and the consolidation of the other Company’s subsidiaries. No other changes are being effected by this filing.  Therefore, information not affected by this amendment is unchanged and reflects the disclosures made at the time of the original filing.

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INTERMOST CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	Sept 30, 2007			June 30, 2007
	(unaudited)
	(restated)			(restated)
ASSETS	USD			USD
Current Assets
Cash and cash equivalents		438,299			530,468
Accounts receivable, net		4,066,438			4,085,123
Inventories		199,047			195,946
Deposits, prepayments and other receivables		1,476,064			1,538,435
Deposit of investment		150,000			150,000
Short-term loan		673,659			670,763
Short-term investment		373,909			368,083
Total current assets		7,377,416			7,538,818
Other Assets
Restricted cash		303,525			303,525
Unlisted investment		907,669			893,526
Property and equipment, net		46,098			51,414
Intangible assets, net		19,253			20,354
Investment in an associated company		1,152,388			1,134,433
TOTAL ASSETS		9,806,349			9,942,070
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable		3,903,138			3,927,964
Accrued liabilities and other payable		807,294			792,560
Customer deposits		96,545			105,708
Deferred revenue		9,244			0
Advance from shareholder		160,000			160,000
Total current liabilities		4,976,221			4,986,232
Minority interests		271,269			267,046
STOCKHOLDERS' EQUITY
Preferred stock, par value US$0.001 per share
Authorized - 5,000,000 shares
Issued and outstanding - None
Common stock, par value US$0.001 per share
Authorized - 5000,000,000 shares
Issued and outstanding - 215,370,278 shares		215,371			215,371
at June 30, 2007 and Sept 30, 2007
Treasury stock		(8,970	)		(8,970	)
Additional paid-in capital		24,216,705			24,216,705
Accumulated deficit		(19,468,557	)		(19,289,509	)
Accumulated other comprehensive loss		(395,690	)		(444,805	)
		4,558,859			4,688,792
TOTAL LIABILITIES, MINORITY INTERESTS AND
STOCKHOLDERS' EQUITY		9,806,349			9,942,070

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

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INTERMOST CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	Three months ended Sept 30,
	2007			2006
	(restated)
	USD			USD
Net revenue		7,598			280,399
Cost of revenues		(36,965	)		(260,767	)
Gross profit		(29,367	)		19,632
Costs and expenses:
Selling, general and administrative expenses		(173,122	)		(347,001	)
Impairment of goodwill		0			(896,725	)
Exchange differences		0			0
Amortization of intangible assets		(832	)		(8,034	)
Total costs and expenses		(173,954	)		(1,251,760	)
Loss from operations		(203,321	)		(1,232,128	)
Interest income		8,025			1,823
Loan interest income		16,244			11,837
Investment income (loss)		0			(3,509	)
Other income, net		0			(62	)
Loss before income taxes, minority interests
and equity in earnings of associated companies		(179,052	)		(1,222,039	)
Income taxes		0			(5,264	)
Loss before minority interests and equity in
earnings of associated companies		(179,052	)		(1,227,303	)
Minority interests		4			1,277
Loss before equity in earnings of
associated companies		(179,048	)		(1,226,026	)
Equity in earnings of associated companies		0			(3,280	)
Loss before extra-ordinary items		(179,048	)		(1,229,306	)
Loss on closing a subsidiary company		0			0
Net loss		(179,048	)		(1,229,306	)
Net loss per common share-basic and diluted		(0.001	)		(0.008	)
Weighted average number of common shares
outstanding-basic and diluted		215,370,278			153,290,278

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INTERMOST CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Three months ended Sept 30,
	2007			2006
	(restated)
	USD			USD
Cash flows from operating activites
Net loss		(179,048	)		(1,229,306	)
Impairment of goodwill		0			896,725
Amortization of intangible assets		832			8,034
Equity in earnings of associated companies		0			3,280
Loss on disposal of a subsidiary		0			0
Depreciation		6,125			7,354
Minority interests		11,593			(1,277	)
Increase (decrease) in operating assets-
Accounts receivables		18,685			2,288,680
Inventories		(3,101	)		(159,730	)
Deposits, prepayments and other receivables		98,610			(2,282,739	)
Increase (decrease) in operating liabilities-
Accounts payable		(24,826	)		4,936
Accrued liabilities		(11,121	)		484,341
Cutomer deposits		1,505			8,508
Deferred revenue		(1,424	)		(8,919	)
Business taxes and government surcharges payable		211			(14,301	)
Net cash used in operating activities		(81,959	)		5,586
Cash flows from investing activities
Acquisition of plant and equipment		0			(14,895	)
Increase (decrease) in short term loan		(2,896	)		600,148
Net cash provided by investing activities		(2,896	)		585,253
Cash flows from financing activities
Increase in security bond		0			(1,000,000	)
Net proceeds from issuance of common stock		0			1,000,000
Net cash provided by financing activities					0
Cash and cash equivalents
Net increase (decrease)		(84,855	)		590,839
Accumulated other comprehensive loss		(7,314	)		0
Balance at beginning of period		530,468			692,624
Balance at end of period		438,299			1,283,463
Supplemental cash flow information:
Cash paid for interest		0			0
Cash paid for income taxes		0			0
Non-cash investing and financing activities:
Receivable from issuance of common stock		0			0
Issuance of reserved common stock		0			0
Issuance of common stock for service		0			0
Acquisition of associated companies		0			0
Acquisition of subsidiaries:
Non-cash assets acquired		0			0
Liabilities assumed in acquisition		0			0
Issuance of common stock for service		0			0

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

THREE MONTHS ENDED SEPT 30, 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 September 31, 2007, the results of operations for the three months ended September 30, 2007 and 2006, and the cash flows for the three months ended September 30, 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, as amended on Form 10-KSB/A 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, as amended on Form 10-KSB/A 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 three months ended September 30, 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 three months ended September 30, 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 Rmb7.506 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.

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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$1 at June 30, 2007. And the Rmb was further appreciated to Rmb 7.506 for US$ 1 at this quarter ended September 30, 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 7.506.

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 three-month period ended September 30, 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.

The Company did not have any stock options outstanding during the period ended September 30, 2007. Accordingly, no pro forma financial disclosure is provided herein.

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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 adoption of FIN 48 is not expected to have a material 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 September 30, 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 adoption of SFAS 157 is not expected to have a material impact on the Company’s consolidated financial statements.

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 adoption of SFAS 159 is not expected to have a material impact on the Company’s consolidated financial statements.

6.  CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES

Country Risk - The Company is subject to the consideration and risks of operating in the People's Republic of China (the "PRC"). These include risks associated with the political and economic environment, foreign currency exchange and the legal system in the PRC. The economy of 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.

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

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., and ChinaE.com Investment Consultant (Shenzhen) Limited) are subject to PRC enterprise income taxes at a rate of 15%.

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8.  CONCENTRATION

On August 10, 2004, we purchased 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 for $3.24 million, payable by issuance of 12 million shares of our common stock.  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.  On or about February 15, 2007 we 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%.  We recently discovered that GATL is no longer seeking a public listing and negotiated an exit settlement under which they will buy back our 49% ownership interest for US$1 million.  This investment was treated as “Impairment of Associated Company” in our annual report, as amended under cover of form 10-KSB/A for the fiscal year ended June 30, 2007.

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 three months period ended September 30, 2007 is as follows:

(a)  Net revenues:

	Three Months Ended September 30, 2007
	Rmb’000		US$’000
E-commerce solutions		54		7
VOIP call minutes		3		-
Photographic business		-		-
Digital security imaging system		-		-
		57		7

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

	Three Months Ended September 30, 2007
	Rmb’000			US$’000
E-commerce solutions		(596	)		(79	)
Consulting		-			-
Photographic business		-			-
VOIP call minutes		11			2
Digital security imaging system		-			-
Corporate		(769	)		(102	)
		(1,354	)		(179	)

(c)  Assets:

	As at September 30, 2007
	Rmb’000		US$’000
E-commerce solutions		737		98
Consulting		3,375		450
Digital security imaging system		-		-
Photographic business		1,984		264
VOIP call minutes		36,937		4,921
Corporate		30,425		4,073
		73,458		9,806

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

(d)  Other items:

	Three Months Ended September 30, 2007
	Rmb’000		US$’000
Depreciation:
E-commerce solutions		44		6
Consulting		0		0
Corporate expenses		2		0
		46		6

There was no fixed expenditure for fixed assets during the three months ended September 30, 2007.

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

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

Overview

We believe that the People’s Republic of China represents an exciting emerging world market whose role in the global economy is 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.

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

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

Certain Factors Affecting Future Operating Results

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

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

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

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

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

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

· 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;

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· 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 collectability 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 collectability 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.

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.

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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. The adoption of FIN 48 “Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109” is not expected to have a material impact on the Company’s consolidated financial statements.

Results of Operations - Three Months Ended September 30, 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 September 30, 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 Revenue
	2006	2006	2007	2007
3 months ended September 30	USD'000	%	USD'000	%
E-commerce solutions	22	8%	7	100%
Sale of digital security imaging equipments	257	92%	-	0%
VOIP	0	0%	-	0%
Sale of photographic equipments	1	0%	-	0%
Consulting	0	0%	-	0%
	280	100%	7	100%

Total net revenues decreased by 98% to $7K during the three months ended September 30, 2007, as compared to $280K during the three months ended September 30, 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.

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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 Revenue
	2006	2006	2007	2007
3 months ended September 30	USD'000	%	USD'000	%
Salaries of technicians / engineers	32	12%	25	67%
Sale of photographic equipments	2	1%	0	0%
Sale of digital security imaging equipments	213	81%	0	0%
Depreciation	4	2%	5	14%
VOIP	0	0%	0	0%
Others	10	4%	7	19%
	261	100%	37	100%

Cost of revenues decreased by 99% to $37K or 96% of net revenues for the three months ended September 30, 2007, as compared to $261K during the three months ended September 30, 2006.

The principal components of cost of revenues during the three months ended September 30, 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.

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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 Expenses
	2006	2006	2007	2007
3 months ended September 30	USD'000	%	USD'000	%
Sales & Marketing salaries & commissions	18	12%	34	20%
Advertising & other sales & marketing expenses	7	9%	4	2%
Rentals	23	10%	15	8%
Administrative salaries	53	23%	67	39%
Corporate overhead	246	46%	53	31%
	347	100%	173	100%

For the three months ended September 30, 2007, SG&A expense decreased by 50% to $173K, as compared to $347K for the three months ended September 30, 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 September 30, 2007.  During the three months ended September 30, 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 September 30, 2007 were $0K and $5K for the three months ended September 30, 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 derived from Intermost Focus Advertising Co.

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 $179K during the three months ended September 30, 2007, as compared to a net income of $1,229K during the three months ended September 30, 2006.

Liquidity and Capital Resources – September 30, 2007

At September 30, 2007, the Company had cash and cash equivalents of $ 742K and working capital of $2,704K, as compared to $1,283K of cash and cash equivalents and $11,302K of working capital at September 30, 2006.

Net cash used in operating activities was $82K for the three months ended September 30, 2007, as compared to net cash used in operating activities of $6K for the three months ended September 30, 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 $3K for the three months ended September 30, 2007, consisting of increase in short term loan. Net cash generated from investing activities were $585K for the three months ended September 30, 2006.

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Net cash provided by financing activities were $0K for both three months ended September 30, 2007 and 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 September 30, 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 September 30, 2007.

Off-Balance Sheet Arrangements

The Company does not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements at September 30, 2007.

Restatements

The Company received a comment letter from the Office of the Chief Accountant of the Division of Corporation Finance of SEC regarding certain disclosures in the Company’s financial statements for the year ended June 30, 2007. The Company could not reach the original auditor for assistance. Therefore, it determined to re-do the 2007 audit and restate the financial statements.  The change of balance sheet figures and retained earnings had affected the quarterly reporting for Sept 30, 2007.  The effects of the restatements are shown in the following tables.

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CONSOLIDATED BALANCE SHEET (Unaudited)
	Original			Restated
	Sept 30
ITEMS	2007			2007
Current Assets
Cash and cash equivalents		741,824			438,299
Accounts receivable, net		4,066,438			4,066,438
Inventories		199,047			199,047
Deposits, prepayments and other receivables		2,196,117			1,476,064
Deposit of investment		0			150,000
Short-term loan		673,659			673,659
Short-term investment		373,909			373,909
Total current assets		8,250,994			7,377,416
Other Assets
Restricted cash		0			303,525
Unlisted investment		907,669			907,669
Property and equipment, net		46,098			46,098
Intangible assets, net		19,253			19,253
Investment in an associated company		6,605,320			1,152,388
TOTAL ASSETS		15,829,334			9,806,349
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable		3,903,138			3,903,138
Accrued liabilities and other payable		967,294			807,294
Customer deposits		96,545			96,545
Deferred revenue		9,244			9,244
Advance from shareholder		0			160,000
Total current liabilities		4,976,221			4,976,221
Minority interests		744,355			271,269
STOCKHOLDERS' EQUITY
Preferred stock, par value US$0.001 per share
Authorized - 5,000,000 shares
Issued and outstanding - None
Common stock, par value US$0.001 per share
Authorized - 5000,000,000 shares
Issued and outstanding - 215,370,278 shares		215,371			215,371
at June 30, 2007 and Sept 30, 2007
Treasury stock		(8,970	)		(8,970	)
Additional paid-in capital		23,235,236			24,216,705
Accumulated deficit		(14,710,902	)		(19,468,557	)
Accumulated other comprehensive loss		1,378,023			(395,690	)
		10,108,758			4,558,859
TOTAL LIABILITIES, MINORITY INTERESTS AND
STOCKHOLDERS' EQUITY		15,829,334			9,806,349

As a result of the restatement of our consolidated balance sheet as of Sept 30, 2007, total assets decreased from $15,829,334 as originally reported, to $9,780,705, a decrease of $6,022,985. The decrease of total assets was derived from a decrease of $303,525 in cash and cash equivalents, a decrease of $720,053 in deposits, prepayments and other receivables, an increase of $150,000 for deposit of investment, a decrease of $5,452,932 for investments in associated companies, and an increase $303,525 in restricted cash. There were no changes in liabilities, but we reported a decrease of $160,000 in accrued liabilities and other payables and an increase of $160,000 for an advance from shareholder. The minority interest was decreased from $744,355 to $271,269, a $473,086 reduction. The corresponding changes in Stockholders’ equity were an increase of $981,469 in addition to a paid-in capital, increase of accumulated deficit in the amount of $4,757,655 and an increase of accumulated other comprehensive loss of $1,773,713 from $1,378,023 as originally reported, to ($395,690). The total stockholders’ equity was restated from $10,108,758 as originally reported, to $4,558,859, a decrease of $5,549,899. The total liabilities and stockholders’ equity were restated from $15,829,334 as originally reported, to $9,806,349, a decrease of $6,022,985

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CONSOLIDATED BALANCE SHEET
	Original			Restated
	June 30
ITEMS	2007			2007
Current Assets
Cash and cash equivalents		833,993			530,468
Accounts receivable, net		4,085,123			4,085,123
Inventories		195,946			195,946
Deposits, prepayments and other receivables		2,269,083			1,538,435
Deposit of investment		0			150,000
Short-term loan		670,763			670,763
Short-term investment		368,083			368,083
Total current assets		8,422,991			7,538,818
Other Assets
Restricted cash		0			303,525
Unlisted investment		893,526			893,526
Property and equipment, net		51,414			51,414
Intangible assets, net		20,354			20,354
Investment in an associated company		6,497,267			1,134,433
TOTAL ASSETS		15,885,552			9,942,070
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable		3,927,964			3,927,964
Accrued liabilities and other payable		792,560			792,560
Customer deposits		105,708			105,708
Advance from shareholder		160,000			160,000
Total current liabilities		4,986,232			4,986,232
Minority interests		732,762			267,046
STOCKHOLDERS' EQUITY
Preferred stock, par value US$0.001 per share
Authorized - 5,000,000 shares
Issued and outstanding - None
Common stock, par value US$0.001 per share
Authorized - 5000,000,000 shares
Issued and outstanding - 215,370,278 shares		215,371			215,371
at June 30, 2007 and Sept 30, 2007
Treasury stock		(8,970	)		(8,970	)
Additional paid-in capital		23,235,236			24,216,705
Accumulated deficit		(13,391,999	)		(19,289,509	)
Accumulated other comprehensive loss		116,920			(444,805	)
		10,166,558			4,688,792
TOTAL LIABILITIES, MINORITY INTERESTS AND
STOCKHOLDERS' EQUITY		15,885,552			9,942,070

As a result of the restatement of our consolidated balance sheet as of June 30, 2007, total assets decreased from $15,885,552 as originally reported, to $9,942,070, a decrease of $5,943,482. The decrease of total assets was derived from a decrease of $303,525 in cash and cash equivalents, a decrease of $730,648 in deposit, prepayment and other receivables, an increase of $150,000 for deposit in investment, a decrease $5,362,834 investment in associated companies and an increase $303,525 in restricted cash. There were no changes in liabilities. The minority interest was decreased from $732,762 to $267,046, a $561,725 reduction. The corresponding changes in Stockholders’ equity were an increase of $981,469 in additional paid-in capital, an increase of accumulated deficit of $5,897,510 and a decrease of accumulated other comprehensive income of $561,725. The total stockholders’ equity was restated from $10,166,558 as originally reported, to $4,688,792, a decrease of $5,477,766. The total liabilities and stockholders’ equity were restated from $15,885,552 as originally reported, to $9,942,070, a decrease of $5,943,482.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
	Original			Restated
	Three months ended Sept 30
ITEMS	2007			2007
Net revenue		7,598			7,598
Cost of revenues		(36,965	)		(36,965	)
Gross profit		(29,367	)		(29,367	)
Costs and expenses:
Selling, general and administrative expenses		(173,122	)		(173,122	)
Impairment of goodwill		0			0
Exchange differences		0			0
Amortization of intangible assets		(832	)		(832	)
Total costs and expenses		(173,954	)		(173,954	)
Loss from operations		(203,321	)		(203,321	)
Interest income		8,025			8,025
Loan interest income		16,244			16,244
Investment income (loss)		0			0
Other income, net		0			0
Loss before income taxes, minority interests
and equity in earnings of associated companies		(179,052	)		(179,052	)
Income taxes		0			0
Loss before minority interests and equity in
earnings of associated companies		(179,052	)		(179,052	)
Minority interests		4			4
Loss before equity in earnings of
associated companies		(179,048	)		(179,048	)
Equity in earnings of associated companies		5,182			0
Loss before extra-ordinary items		(173,866	)		(179,048	)
Loss on closing a subsidiary company		(1,145,037	)		0
Net loss		(1,318,903	)		(179,048	)
Net loss per common share-basic and diluted		(0.006	)		(0.001	)
Weighted average number of common shares
outstanding-basic and diluted		215,370,278			215,370,278

As a result of the restatement of our consolidated statement of operations for the three months ended Sept 30, 2007, total net loss decreased from $1,318,903 as originally reported, to $179,048, a decrease of $1,139,855. The decreased loss was composed of a decrease of $5,182 in equity in earnings of associated companies and a decrease of $1,145,037 loss on the closing of a subsidiary company.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
	Original			Restated
	Three months ended Sept 30
ITEMS	2007			2007
Cash flows from operating activites
Net loss		(173,866	)		(179,048	)
Impairment of goodwill		0			0
Amortization of intangible assets		832			832
Equity in earnings of associated companies		(5,182	)		0
Loss on disposal of a subsidiary		(1,145,037	)		0
Depreciation		6,125			6,125
Minority interests		11,593			11,593
Increase (decrease) in operating assets-
Accounts receivables		18,685			18,685
Inventories		(3,101	)		(3,101	)
Deposits, prepayments and other receivables	��	98,610			98,610
Increase (decrease) in operating liabilities-
Accounts payable		(24,826	)		(24,826	)
Accrued liabilities		(11,121	)		(11,121	)
Cutomer deposits		1,505			1,505
Deferred revenue		(1,424	)		(1,424	)
Business taxes and government surcharges payable		211			211
Net cash used in operating activities		(1,226,996	)		(81,959	)
Cash flows from investing activities
Acquisition of plant and equipment		0			0
Increase (decrease) in short term loan		(2,896	)		(2,896	)
Net cash used in investing activities		(2,896	)		(2,896	)
Cash flows from financing activities
Increase in security bond		0			0
Net proceeds from issuance of common stock		0			0
Net cash provided by financing activities		0
Cash and cash equivalents
Net increase (decrease)		(1,229,892	)		(84,855	)
Accumulated other comprehensive loss		1,137,723			(7,314	)
Balance at beginning of period		833,993			530,468
Balance at end of period		741,824			438,299
Supplemental cash flow information:
Cash paid for interest		0			0
Cash paid for income taxes		0			0
Non-cash investing and financing activities:
Receivable from issuance of common stock		0			0
Issuance of reserved common stock		0			0
Issuance of common stock for service		0			0
Acquisition of associated companies		0			0
Acquisition of subsidiaries:
Non-cash assets acquired		0			0
Liabilities assumed in acquisition		0			0
Issuance of common stock for service		0			0

As a result of the restatement, the net cash used in operating activities for three months ended Sept 30, 2007 decreased by $1,145,037 from $1,226,996 as originally reported, to $81,959; no change in net cash used in investing activities; and the effect of foreign currency translation on cash and cash equivalents was increased by $1,145,037 from $1,137,723 as originally reported, to ($7,314). The cash and cash equivalents at year-end was decreased by $303,525 from $741,824 as originally reported, to $438,299 owing to the reclassification of cash and cash equivalents to restricted cash.

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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.

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 three 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. For the subsequent development of this case, please refer to Page 13 of the 10-KSB filed on November 7, 2008

(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 September 30, 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.

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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 September 30, 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.

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

Item 6.  Exhibits

Exhibit Number	Description of Exhibit
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. *
31.1	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.*
32.2	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
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. *

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:  November 25, 2008		INTERMOST CORPORATION
	By:	/s/ Rocky Wulianghai
		Rocky Wulianghai
		President and Chief Executive Officer
	By:	/s/ Thomas Lee
		Thomas Lee
		Chief Financial Officer

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