Critical Accounting Policies and Estimates

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

The following critical accounting policies rely upon assumptions, judgments and estimates and were used in the preparation of the Company's consolidated financial statements:

Revenue Recognition

Revenues are recognized (i) with respect to services, at the time a project (or a milestone thereof) is completed and accepted by the customer, and (ii) with respect to products, at the time products are delivered to customers and collectability for such sales is reasonably assured. We have adopted Staff Accounting Bulletin No.101, Revenue Recognition ("SAB 101") in our financial statements. SAB 101 provides in part further interpretive guidance for public companies on the recognition, presentation, and disclosure of revenues in financial statements. The adoption of SAB 101 did not have a material impact on our revenue recognition practices.

Accounts Receivable

We typically extend credit to our customers. From time to time, e-commerce solution services are provided under fixed-price contracts where the revenues and the payment of related receivable balances are due upon the achievement of certain milestones. Management estimates the probability of collection of the receivable balances and provides an allowance for doubtful accounts based upon its judgment in assessing the realization of these receivable balances taking into account aging, historical experience, the customer's financial condition and general economic conditions.

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.

We evaluate 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.

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.

Currently our revenues are generated primarily by our subsidiaries, ChinaE and ChinaE Tech both of which distributes licenses for Chinese language translation software and offer web design and hosting services.

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.

During the fiscal year ended June 30, 2008 we incurred a net operating loss of $1,557,054. Our auditor, Albert Wong & Co., CPA, has issued a "going concern" opinion for our financial statements as of June 30, 2008.

Results of Operations

Following is summary financial information reflecting our operations for the periods indicated.

                                                    Year Ended June 30
                                                       2007             2008
                                                 (Restated)
Net revenues                                   $  4,680,532     $     26,108
Cost of revenues                                 (4,608,566 )        (68,328 )
Gross profit                                         71,966          (42,220 )
Selling, general and administrative expenses     (1,016,653 )     (1,565,844 )
Exchange difference                                  (6,413 )          8,734
Amortization of intangible assets                    (5,459 )         (5,862 )
Impairment of goodwill                           (3,119,872 )              0
Impairment of associated companies               (3,454,693 )              0
Impairment of deposit of investment              (1,217,475 )              0
Written off of loan receivables                     (49,818 )              0
Interest income                                      83,861           81,123
Investment income                                   102,230          277,755
Loss from operations                             (8,612,326 )     (1,246,314 )
Share of loss of associated companies                (3,398 )              0
Loss on disposal of a subsidiary                          0         (353,377 )
Other income, net                                       458           42,097
Loss before taxation                             (8,615,266 )     (1,557,594 )
Taxation                                                  0                0
Loss before minority interest                    (8,615,266 )     (1,557,594 )
Minority interests                                   17,209              540
Net loss                                         (8,598,057 )     (1,557,054 )

Year Ended June 30, 2008 Compared to Year Ended June 30, 2007

Net revenues.

Net revenues for the year ended June 30, 2008 decreased by $4,654K 1 , or 99%, to $26K from $4,680K for the year ended June 30, 2007.

Net revenues during fiscal 2008 were derived principally from e-commerce solutions. Net revenues during fiscal 2007 were derived principally from e-commerce solutions, sales of photographic equipment and VOIP services. 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:

                                   Total Net Revenues    Percentage of Total
                                                            Net Revenues
                                   Year Ended June 30    Year Ended June 30
                                         2007     2008      2007        2008
                                          US$      US$
          E-commerce solutions
           - Web site design and       80,285   26,108     1.72%     100.00%
          development
          Sales of photographic         1,628        0     0.03%       0.00%
          equipment
          VOIP services             4,598,619        0    98.25%       0.00%

           Total                    4,680,532   26,108   100.00%     100.00%

Total revenues derived from e-commerce solutions decreased by $54K, or 67%, to $26K in fiscal 2008 as compared to $80K in fiscal 2007. Sales of photographic equipment decreased by $2K, or 100%, to $0K in fiscal 2007 as compared to $2K in fiscal 2007. Sales of VOIP services decreased by $4,599K, or 100%, to $0K in fiscal 2008 as compared to $4,599K in fiscal 2007.

The decrease in total net revenues and the character of those sales was primarily attributable to management's decision to revise the Company's plan of operation to develop our business beyond the market for Internet products and services as well as to the recovery of the economy of China.

Costs of Revenues.

Costs of revenues consist principally of salaries for computer network technicians, depreciation, and other costs including travel, employee benefits, office expenses and related expenses allocated to the engineering and technician staff.

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

                          Total Cost of Revenues       Percentage of
                                                     Total Net Revenues
                            Year Ended June 30       Year Ended June 30
                                 2007         2008     2007        2008
                                  US$          US$
Engineers/technician          116,879       33,921    2.50%      49.64%
salaries
Cost of photographic            1,798            0    0.04%       0.00%
equipment
VOIP services               4,427,016          166   94.58%       0.24%
Depreciation                   17,835       19,574    0.38%      28.65%
Other                          45,038       14,667    0.96%      21.47%
 Total                      4,608,566       68,328   98.46%     100.00%

Compared to the 2007 fiscal year, the total costs of revenues for the 2008 fiscal year decreased by $4,540K, or 99%, to $68K. The decrease in costs of revenues was due to the exclusion of cost from digital security system, cost containment effort implemented by management and a deadline in sales. The decrease in salaries was due to the decrease of engineer and technician to develop the equity platform in the PRC. The principal components of costs of revenues during the 2008 fiscal year were costs associated with support of the engineering and technician staff, engineer and technician salaries, and depreciation of equipment utilized in connection with services.

Selling, General and Administrative Expense.

Selling, general and administrative expense ("SG&A") consists principally of (1)
sales commissions, advertising, trade show and seminar expenses, and
direct-field sales expense, (2) salaries for administrative and sales staff, (3)
corporate overhead, and (4) allowances for bad and doubtful accounts. The
following table reflects the principal components of SG&A and the percentage of
net revenues represented by each component for the periods indicated:

                             Total SG&A           Percentage of
                                                Total Net Revenues
                         Year Ended June 30     Year Ended June 30
                             2007        2008     2007        2008
                              US$         US$
Sales and marketing
salaries and
 commission                55,887      42,407    1.19%      22.28%
Other sale and             52,510      13,009    1.12%       6.83%
marketing
Rent obligation            75,856      50,802    1.62%      26.69%
Administrative salaries   166,209     274,587    3.55%     144.26%
Corporate overhead        666,191   1,185,039   14.23%     622.58%
 Total                  1,016,653   1,565,844   21.72%     822.65%

The principal components of SG&A during the 2008 year were sales and marketing salaries and commissions, other marketing expenditures, administrative salaries and benefits, and other corporate expenses, which includes legal and professional fees, general office expenses, traveling expenses, general employee benefit expense, depreciation consultancy fees.

For the 2008 fiscal year, SG&A increased by $549K, or 54%, to $1,566K as compared to $1,017K for the 2007 fiscal year. Sales and marketing salaries and commissions decreased 24% during the 2008 fiscal year, to $42K, as compared to $56K for the 2007 fiscal year. During the 2008 fiscal year, administrative salaries increased by $107K or 65% to $275K during the 2008 fiscal year, as compared to $166K in the 2007 fiscal year. Other corporate expense increased during the 2008 fiscal year, by $519K or 78% to $1,185K, as compared to $666K in the 2007 fiscal year. The increase in SG&A was principally attributable to the payment to Mr. Rocky Wulianghai in term of IMOT shares as a one-time bonus for services already rendered to IMOT.

Minority Interest.

We reported a minority interest in our losses of $1K for the 2008 fiscal year, reflecting the proportionate interest in the losses of Intermost Focus Advertising Company Ltd. owned by other parties as compared to a minority interest in an earnings of $17K for the 2007 fiscal year, reflecting the ownership of third parties in Shanghai Newray and Hainan Concord.

Liquidity and Capital Resources

To date, we have funded our operations with cash from our operating activities, sales of our securities and by using our common stock to make acquisitions and purchases.

At June 30, 2008 we had cash and cash equivalents of $640K and working capital of $1,747K as compared to $530K of cash and cash equivalents and $2,553K of working capital as of June 30, 2007.

Net cash used in operating activities totaled $1,300K during the 2008 fiscal year as compared to $1,848K of cash in operating activities used during the 2007 fiscal year. Cash generated from operating activities was partially offset by non-cash charges, including depreciation expense in the amount of $31K and amortization of intangible assets in the amount of $6K.

Net cash provided by investing activities was $134K for the 2008 fiscal year while net cash used in investing activities was $1,390K for the 2007 fiscal year. Funds used in investing activities consisted of addition of office equipment, increased in short-term investment and deposit of investment.

Net cash provided by financing activities was $555K for the 2008 fiscal year while net cash used in financing activities was $2,174K for the 2007 fiscal year. Funds provided by financing activity were the net proceeds from the issuance of common stock during fiscals 2008 and 2007.

We had no long term debt as of June 30, 2008. Except as otherwise described herein, we have no plans to make any major capital expenditures during the next 12 months and we are not aware of any trends or uncertainties that could affect sales of our products. We do not have any off balance sheet arrangements.

We have implemented various cost management measures to reduce our overhead. The Company will likely need to borrow money or obtain additional equity financing in order to sustain operations. At present, we have no commitments for funding and there is no assurance that funding will be available to us, or that any such funding would be on acceptable terms. If we need financing and cannot obtain it, we may be required to severely curtail, or even cease, our operations.

Our 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:

· Our ability to successfully implement our business plan;

· Whether or not we will be able to obtain the additional capital necessary to support our operations;

· Whether or not we will find joint venture prospects or acquisition prospects with which to enhance our business;

· Whether or not we can successfully integrate acquisitions that we make into our business;

· The level and rate of acceptance of our products and services by the Chinese people;

· Continued growth in the use of the Internet in China;

· Entry of new competition (including established companies from outside China and companies with substantially greater resources) into our market;

· Fluctuations in the level of orders for services delivered in a quarter;

· Rescheduling or cancellation of orders by customers;

· Competitive pressures on selling prices;

· Changes in product, service or customer mix;

· Rapid changes in technology, which result in our technology becoming obsolete;

· Availability and cost of computer technicians;

· Loss of any strategic relationships;

· Loss of our largest customers;

· Our ability to introduce new products and services on a timely basis;

· New product and service introductions by our competitors;

· Fluctuations in exchange rates, and

· Adverse changes in the general economic, social or political conditions in the People's Republic of China.