Medarts Medical System 10QSB Quarterly report (small business)

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

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

For the quarterly period ended July 31, 2006

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

For the transition period from

Commission File No. 000-50814

MEDARTS MEDICAL SYSTEM, INC.

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

Delaware
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

6/F E Yang International Mansion #27

Science & Technology Road

Xi- an Hi- Tech Industry Development Zone

Xi’ an PRC 710075

(Address of principal executive offices )(Zip Code)

86-29-88319908

(Registrant’s telephone no., including area code)

(Former name, address and fiscal year, if changed since last report)

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

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

Yes x No o

State the number of shares outstanding of each of the issuer’s classes of common equity, as of November 2, 2006: 100,000 shares of common stock.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
Item 1.  Financial Information	1
Item 2.  Management’s Discussion and Analysis or Plan of Operation	10
Item 3.  Controls and Procedures	11
PART II -OTHER INFORMATION
Item 1.  Legal Proceedings.	12
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.	12
Item 3.  Defaults Upon Senior Securities.	12
Item 4.  Submission of Matters to a Vote of Security Holders.	12
Item 5.  Other Information.	12
Item 6.  Exhibits and Reports of Form 8-K.	12
SIGNATURES

i

PART I - FINANCIAL INFORMATION

Item 1. Financial Information

Medarts Medical System, Inc.
(Formerly, Unise Investment Holdings of China, Inc. and Along Mobile Technology, Inc.)
(A Development Stage Company)
Balance Sheet
July 31, 2006
(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	-
Total current assets	$	-
Liabilities and Stockholders' Deficit
Current liabilities
Accounts payable and accrued expenses	$	5,115
Total current liabilities		5,115
Stockholder's deficit
Common stock, $.0001 par value; 100,000,000 shares
authorized, 100,000 shares issued and outstanding		10
Additional paid-in capital		90
Deficit accumulated during the development stage		(5,215	)
Total stockholders' deficit		(5,115	)
Total liabilities and stockholders' deficit	$	-

The accompanying notes form an integral part of these unaudited financial statements.

1

Medarts Medical System, Inc.
(Formerly, Unise Investment Holdings of China, Inc. and Along Mobile Technology, Inc.)
(A Development Stage Company)
Statements of Operations
(Unaudited)
												Cumulative
												During the
												Development
	Three Month Periods Ended					Nine Month Periods Ended						Stage
	July 31					July 31						(August 19, 2004 to
	2006			2005		2006			2005			July 31, 2006)
Net revenues	$	-		$	-	$	-		$	-		$	-
General and administrative expense		1,500			-		3,265			1,350			5,215
Total expenses		1,500			-		3,265			1,350			5,215
Net loss	$	(1,500	)	$	-	$	(3,265	)	$	(1,350	)	$	(5,215	)
Net loss per share, basic and diluted	$	(0.02	)	$	-	$	(0.03	)	$	(0.01	)	$	-
Weighted average number of common
Shares outstanding, basic and diluted		100,000			100,000		100,000			100,000			100,000

The accompanying notes form an integral part of these unaudited financial statements.

2

Medarts Medical System, Inc.
(Formerly, Unise Investment Holdings of China, Inc. and Along Mobile Technology, Inc.)
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
							Cumulative
							During the
							Development
	Nine Month Periods Ended						Stage
	July 31,						(August 19,2004to
	2006			2005			July 31, 2006
Cash flows from operating activities
Net loss	$	(3,265	)	$	(1,350	)	$	(5,215	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Services rendered for common stock		-			-			100
Changes in operating assets and liabilities:
Accounts payable and accrued expenses		3,265			1,350			5,115
Net cash provided by (used in ) operating activities		-			-			-
Cash flows from investing activities		-			-			-
Cash flows from financing activities		-			-			-
Net increase decrease )in cash		-			-			-
Cash and cash equivalents - beginning of period		-			-			-
Cash and cash equivalents - end of period	$	-		$	-		$	-
Supplemental disclosures of cash flow information:
Interest paid	$	-		$	-		$	-
Income taxes paid	$	-		$	-		$	-

The accompanying notes form an integral part of these unaudited financial statements.

3

Medarts Medical System, Inc.
(Formerly, Unise Investment Holdings of China, Inc. and Along Mobile Technology, Inc.)
(A Development Stage Company)
Statements of Stockholders' Deficit
From inception August 19,2004 through July 31,2006
(Unaudited)
					Additional					Total
	Common Stock				paid in		Accumulated			Stockholders'
	Shares		Amount		Capital		Deficit			Deficit
Stock issued on acceptance
of incorporation expenses		100,000	$	10	$	90	$	-		$	100
Net Loss		-		-		-		(600	)		(600	)
Total at October 31, 2004		100,000		10		90		(600	)		(500	)
Net loss		-		-		-		(1,350	)		(1,350	)
Total at October 30,2005		100,000		10		90		(1,950	)		(1,850	)
Net loss		-		-		-		(1,765	)		(1,765	)
Total at April 30, 2006		100,000		10		90		(3,715	)		(3,615	)
Net loss		-		-		-		(1,500	)		(1,500	)
Total at July 31, 2006		100,000	$	10	$	90	$	(5,215	)	$	(5,115	)

The accompanying notes form an integral part of these unaudited financial statements.

4

MEDARTS MEDICAL SYSTEM, INC.

(FORMERLY, UNISE INVESTMENT HOLDINGS OF CHINA, INC.)

(A Development Stage Company)

Notes to Financial Statements

For the Nine Month Period Ended July 31, 2006 and

2005 and For the Period from August 19, 2004 (Inception)

to July 31, 2006 (Unaudited)

NOTE 1 - ORGANIZATION

Medarts Medical System, Inc. (formerly, Unise Investment Holding of China, Inc.)(the “Company”) was incorporated in the State of Delaware on August 19, 2004 under the name Edmonds 3, Inc. On June 29, 2005, the sole officer, director, and stockholder of the Company sold all 100,000 issued and outstanding shares of the Company’s Common Stock to Shaanxi Jialong Hi-Tech Industries Inc. (“Shaanxi”), a corporation organized in China, for $76,000 cash. Also on June 29, 2005, the Company’s name was changed from Edmonds 3, Inc. to Along Mobile Technology Inc. On June 29, 2005, the Company’s intention was to merge with Shaanxi Jialong High-tech Industries, Inc., a development stage company planning to engage in the business of publishing wireless entertainment applications. Subsequently, the Company decided to seek other business entities to combine with. The combination will likely take the form of a merger, stock for stock exchange, or stock for assets exchange.

On June 28, 2006, the Company changed its name to Medarts Medical System, Inc. The Company has no products or services; the Company is seeking a business to merge with or acquire.

NOTE 1 - BASIS OF PRESENTATION

The unaudited financial statements as of July 31, 2006 and for the nine months ended July 31, 2006 and 2005 and for the period August 19, 2004 (inception) to July 31, 2006 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with instructions to Form 10-QSB. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of July 31, 2006 and the results of operations and cash flows for the periods ended July 31, 2006 and 2005. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the nine month period ended July 31, 2006 are not necessarily indicative of the results to be expected for any subsequent quarter of the entire year ending October 31, 2006. The balance sheet at October 31, 2005 has been derived from the audited financial statements at that date.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission’s rules and regulations. These unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto for the year ended October 31, 2005 as included in our report on Form 10-KSB.

5

MEDARTS MEDICAL SYSTEM, INC.

(FORMERLY, UNISE INVESTMENT HOLDINGS OF CHINA, INC.)

(A Development Stage Company)

Notes to Financial Statements

For the Nine Month Period Ended July 31, 2006 and

2005 and For the Period from August 19, 2004 (Inception)

to July 31, 2006 (Unaudited)

NOTE 3 - DEVELOPMENT STAGE ENTERPRISE & GOING CONCERN

The Company has been presented as a “development stage enterprise” in accordance with Statement of Financial Accounting Standards (“SFAS”) No.7, “Accounting and Reporting by Development Stage Enterprises”. Since inception, the Company’s activities have been limited to organizational efforts and making various filings with the Securities and Exchange Commission (“SEC”).

GOING CONCERN

At July 31, 2006, the Company had no working capital and a negative stockholders’ deficiency of $5,115. For the period August 19, 2004 (inception) to July 31, 2006, the Company incurred net losses of $5,215. These factors create uncertainty as to the Company’s ability to continue as a going concern. The Company is making efforts to acquire a business with assets and operations. However, there is no assurance that the Company will be successful in accomplishing this objective. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

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 and 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.

Cash and Cash Equivalents

Cash and cash equivalents include cash in hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.

Income Taxes

The Company utilizes SFAS No. 109, “Accounting for Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

6

MEDARTS MEDICAL SYSTEM, INC.

(FORMERLY, UNISE INVESTMENT HOLDINGS OF CHINA, INC.)

(A Development Stage Company)

Notes to Financial Statements

For the Nine Month Period Ended July 31, 2006 and

2005 and For the Period from August 19, 2004 (Inception)

to July 31, 2006 (Unaudited)

Recent Pronouncements

In September 2006, FASB issued SFAS 158 ‘Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R)’ This Statement improves financial reporting by requiring an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity or changes in unrestricted net assets of a not-for-profit organization. This Statement also improves financial reporting by requiring an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. An employer with publicly traded equity securities is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006. An employer without publicly traded equity securities is required to recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after June 15, 2007. However, an employer without publicly traded equity securities is required to disclose the following information in the notes to financial statements for a fiscal year ending after December 15, 2006, but before June 16, 2007, unless it has applied the recognition provisions of this Statement in preparing those financial statements:

a.   A brief description of the provisions of this Statement

b.   The date that adoption is required

c.   The date the employer plans to adopt the recognition provisions of this Statement, if earlier.

The requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year-end statement of financial position is effective for fiscal years ending after December 15, 2008. The management is currently evaluating the effect of this pronouncement on financial statements.

In September 2006, FASB issued SFAS 157 ‘Fair Value Measurements’. This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. However, for some entities, the application of this Statement will change current practice. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The management is currently evaluating the effect of this pronouncement on financial statements.

7

MEDARTS MEDICAL SYSTEM, INC.

(FORMERLY, UNISE INVESTMENT HOLDINGS OF CHINA, INC.)

(A Development Stage Company)

Notes to Financial Statements

For the Nine Month Period Ended July 31, 2006 and

2005 and For the Period from August 19, 2004 (Inception)

to July 31, 2006 (Unaudited)

In March 2006 FASB issued SFAS 156 'Accounting for Servicing of Financial Assets' this Statement amends FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, with respect to the accounting for separately recognized servicing assets and servicing liabilities. This Statement:

1. Requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract.

2. Requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if practicable.

3. Permits an entity to choose 'Amortization method' or 'Fair value measurement method' for each class of separately recognized servicing assets and servicing liabilities.

4. At its initial adoption, permits a one-time reclassification of available-for-sale securities to trading securities by entities with recognized servicing rights, without calling into question the treatment of other available-for-sale securities under Statement 115, provided that the available-for-sale securities are identified in some manner as offsetting the entity's exposure to changes in fair value of servicing assets or servicing liabilities that a service elects to subsequently measure at fair value.

5. Requires separate presentation of servicing assets and servicing liabilities subsequently measured at fair value in the statement of financial position and additional disclosures for all separately recognized servicing assets and servicing liabilities.

This Statement is effective as of the beginning of the Company's first fiscal year that begins after September 15, 2006. Management believes that this statement will not have a significant impact on the consolidated financial statements.

8

MEDARTS MEDICAL SYSTEM, INC.

(FORMERLY, UNISE INVESTMENT HOLDINGS OF CHINA, INC.)

(A Development Stage Company)

Notes to Financial Statements

For the Nine Month Period Ended July 31, 2006 and

2005 and For the Period from August 19, 2004 (Inception)

to July 31, 2006 (Unaudited)

In February 2006, FASB issued SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments". SFAS No. 155 amends SFAS No 133, "Accounting for Derivative Instruments and Hedging Activities", and SFAF No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities".  SFAS No. 155, permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS No. 133, establishes a requirement to evaluate interest in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives, and amends SFAS No. 140 to eliminate the prohibition on the qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument.  This statement is effective for all financial instruments acquired or issued after the beginning of the Company's first fiscal year that begins after September 15, 2006.  The Company has not evaluated the impact of this pronouncement its financial statements.

NOTE 5 - INCOME TAXES

No provision for income taxes has been recorded since the Company has incurred net losses since inception.

At July 31, 2006, deferred tax assets consist of:

Net operating loss carryforward	$	5,215
Less valuation allowance		(5,215	)
Net	$	-

Based on management’s present assessment, the Company has not yet determined it to be more likely than not that a deferred tax asset of $753 attributable to the future utilization of the $5,215 net operating loss carryforward as of July 31, 2006 will be realized. Accordingly, the Company has provided a 100% allowance against the deferred tax asset in the financial statements at July 31, 2006. The Company will continue to review this valuation allowance and make adjustments as appropriate. The net operating loss carryforward expires in years 2024, 2025, and 2026 in the amounts of $600, $1,350 and $3,265, respectively.

Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.

NOTE 6 - RELATED PARTY TRANSACTIONS

The Company uses the offices of Shaanxi at no cost to the Company. Shaanxi has agreed to continue this arrangement until the Company completes an acquisition or merger.

NOTE 7 - RECLASSIFICATION

Certain prior period amounts have been reclassified to conform to the nine-month period ended July 31, 2006 presentation.

9

Item 2.Management’s Discussion and Analysis or Plan of Operation

This Quarterly Report on Form 10-QSB includes “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), which can be identified by the use of forward-looking terminology such as, “may,” “believe,” “expect,” “intend,” “anticipate,” “estimate” or “continue” or the negative thereof or other variations thereon or comparable terminology. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors with respect to any such forward-looking statements include, but are not limited to, the Company’s limited history of operations, the availability of additional capital necessary to execute the Company’s plan of operations, the volatility of the over-the-counter bulletin board market and the effect of such volatility on the value of the marketable securities received by the Company for its services, and changes in the state and federal regulation of securities, as well as the availability of necessary personnel and general economic conditions within the United States.

Plan of Operation

The Registrant is continuing its efforts to locate a merger Candidate for the purpose of a merger. It is possible that the registrant will be successful in locating such a merger candidate and closing such merger. However, if the registrant cannot effect a non-cash acquisition, the registrant may have to raise funds from a private offering of its securities under Rule 506 of Regulation D. There is no assurance the registrant would obtain any such equity funding.

Results of Operation

The Company did not have any operating income from inception (August 19, 2004) through July 30, 2006, the registrant recognized a net loss of $5,215. Some general and administrative expenses from inception were accrued. Expenses from inception were comprised of costs mainly associated with legal, accounting and office.

Liquidity and Capital Resources

At July 30, 2006 the Company had no capital resources and will rely upon the issuance of common stock and additional capital contributions from shareholders to fund administrative expenses pending acquisition of an operating company.

Management anticipates seeking out a target company through solicitation. Such solicitation may include newspaper or magazine advertisements, mailings and other distributions to law firms, accounting firms, investment bankers, financial advisors and similar persons, the use of one or more World Wide Web sites and similar methods. No estimate can be made as to the number of persons who will be contacted or solicited. Management may engage in such solicitation directly or may employ one or more other entities to conduct or assist in such solicitation. Management and its affiliates will pay referral fees to consultants and others who refer target businesses for mergers into public companies in which management and its affiliates have an interest. Payments are made if a business combination occurs, and may consist of cash or a portion of the stock in the Company retained by management and its affiliates, or both.

The Company and or shareholders will supervise the search for target companies as potential candidates for a business combination. The Company and or shareholder may pay as their own expenses any costs incurred in supervising the search for a target company. The Company and or shareholders may enter into agreements with other consultants to assist in locating a target company and may share stock received by it or cash resulting from the sale of its securities with such other consultants.

10

Critical Accounting Policies

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue, and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use if estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

Item 3.Controls and Procedures

(a)Evaluation of disclosure controls and procedures.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), as of July 30, 2006. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that our disclosure and controls are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

(b)Changes in internal controls.

There were no changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controls over financial reporting that occurred during the third quarter ended July 30, 2006 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 

PART II - OTHER INFORMATION

Item 1.Legal Proceedings.

We are currently not a party to any pending legal proceedings and no such actions by, or to the best of our knowledge, against us have been threatened.

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

None

Item 3.Defaults Upon Senior Securities.

None

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

No matter was submitted during the quarter ending July 30, 2006, covered by this report to a vote of our shareholders, through the solicitation of proxies or otherwise.

Item 5.Other Information.

None

11

Item 6.Exhibits and Reports of Form 8-K.

(a)	Reports on Form 8-K and Form 8K-A
	None
(b)	Exhibits
	Exhibit Number	Exhibit Title
	31.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1	Certification of 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 Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

12

SIGNATURES

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

MEDARTS MEDICAL SYSTEM, INC.
By:	/s/ Wang Jun
	Wang Jun Chief Executive Officer President
Dated:	November 13, 2006