UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

	For the fiscal year ended December 31, 2008

¨	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: 000-30292

Asiamart, Inc.

(Exact name of registrant as specified in its charter)

Delaware		88-0405437
(State of Incorporation)		(I.R.S. Employer Identification No.)

Room 801, 8/F., Yue Hwa International Building, Kowloon Park Drive, Tsim Sha Tsui, Kowloon		(852) 3580-8808
(Address of principal executive offices, including zip code)		(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.0001 per share

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No þ

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 þ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

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 (Check one):

Large Accelerated Filer ¨		Accelerated Filer ¨
Non-accelerated filer ¨		Smaller reporting company þ

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

As of April 23, 2009, the aggregate market value of the voting and non-voting common equity held by non-affiliates was approximately $111,352 based on a closing price of $0.015 (or average bid and asked price) per share of common stock as reported on the Over-the-Counter Bulletin Board on such date.

As of April 23, 2009, the Registrant had 24,744,177 shares of Common Stock issued and outstanding.

Asiamart, Inc.

FORM 10-K

For the Year Ended December 31, 2008

TABLE OF CONTENTS

			Page
	PART I

Item 1.		Business		4

Item 1A.		Risk Factors		10

Item 2.		Properties		18

Item 3.		Legal Proceedings		18

Item 4.		Submission of Matters to a Vote of Security Holders		19

		PART II

Item 5.		Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		19

Item 6.		Selected Financial Data		20

Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		20

Item 7A.		Quantitative and Qualitative Disclosures About Market Risk		26

Item 8.		Financial Statements and Supplementary Data		26

Item 9.		Disagreements With Accountants on Accounting and Financial Disclosure		27

Item 9A.		Controls and Procedures		27

		PART III

Item 10.		Directors, Executive Officers and Corporate Governance		28

Item 11.		Executive Compensation		31

Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		35

Item 13.		Certain Relationships and Related Transaction, and Director Independence		36

Item 14.		Principal Accounting Fees and Services		36

		PART IV

Item 15.		Exhibits, Financial Statement Schedules		37

		Signatures		41

Note Regarding Forward-Looking Statements

Statements contained in this Annual Report on Form 10-K, which are not historical facts, are forward-looking statements, as the term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, whether expressed or implied, are subject to risks and uncertainties that can cause actual results to differ materially from those currently anticipated, due to a number of factors, which include, but are not limited to:

•

Competition within our industry;


	•	Seasonality of our sales;


	•	Success of our R&D investments;


	•	Our relationships with tour companies;


	•	The popularity of our product line;


	•	Relationships with suppliers, including foreign suppliers;


	•	Financial and economic conditions in Asia;


	•	Regulatory requirements affecting our business;


	•	Currency fluctuations;


	•	Our future financing needs; and


	•	Our ability to attract additional investment capital on attractive terms.

Forward-looking statements also include the assumptions underlying or relating to any of the foregoing or other such statements. When used in this report, the words “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “continue,” and similar expressions are generally intended to identify forward-looking statements.

Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date hereof. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. Readers should carefully review the risk factors described in this report and other documents we file from time to time with the Securities and Exchange Commission, including the Quarterly Reports on Form 10-Q to be filed by us in fiscal year 2008.

As used in this Form 10-K, unless the context requires otherwise, "we", "us," the "Company" or "Asiamart" means Asiamart, Inc. and its subsidiaries.

PART I

Item 1.

BUSINESS

Overview

For the first three quarters of 2008, our core business was the operation of outlets and discount shopping centers catering principally to tourists visiting Hong Kong from other parts of mainland China. This business involved offering tourists discount prices on selected international brands in a wide range of merchandise categories such as consumer electronics, cosmetics, watches, dietary supplements, health care products and optical instruments.

We own and operate five subsidiaries, of which two are trading subsidiaries. The two trading subsidiaries, Raffle Limited and Sure Profits Trading Limited, engage in the import and local distribution of consumer electronic products. We source our products from suppliers worldwide in order to provide our customers with an extensive variety of products at competitive prices.

Over the past few years, our goal has been the development of our retail business with a focus on international tourists in Hong Kong. Under the weight of a global recession, management has re-evaluated the Company’s business model and operation. In the near future, the Company foresees a significant slowdown in retail sales and fierce competition from other retailers, anticipates a reduction in tourist visits from mainland China to Hong Kong, and a reduction in spending per tourist, partly as a result of adverse changes in travel policy and the domestic economic environment in China.

During the third quarter of 2008, the revenue of the Company significantly decreased due to the above-mentioned trends. In addition, in the period leading up to and during the Beijing 2008 Olympic Games, the Chinese government restricted outbound travel visas, and this policy has not been reversed following the Olympics. Further, management believes that the ongoing global economic recession is discouraging tourist visits to Hong Kong. In the present economic climate, management believes that the Company is unlikely to sustain profitability with operation of its retail outlets, and believes that changing its business model is in its best interest. Management believes the Company faces heavy competition from other local retailers seeking to make sales to a dwindling group of tourists, which is causing a trend toward lower profits. Retailers that wish to stay afloat have to compete fiercely by drastically marking down their prices, lowering their margins, and offering higher commissions to travel operators. Some of our competitors are in a better position to weather difficult economic conditions because they have better locations with heavier foot traffic and attract a higher density of tourists. Management believes that our sales will not improve in the near future due to the difficult economic climate, the location of our outlets, and the intense competition surrounding our area. Therefore, starting the third quarter of 2008, the Company has shifted its business model from being an outlet and discount shopping center operator to a retail service provider and has closed the operation of its two outlets at the end of 2008.

On October 28, 2008, three of the subsidiaries of the Company entered into a series of Management Service Agreements (the “Agreements”) with Best Paramount Industrial Limited (“Best Paramount”) whereby they agreed to act as a service provider to Best Paramount at the Emax premises, a coveted location within Hong Kong International Trade and Exhibition Center with heavy foot traffic from visiting tourists. The Company agreed to provide technical, commercial and operational management for Best Paramount. Under the terms of the Agreements, the scope of services provided by the Company includes, but is not limited to, accounting, human resources, administrative, marketing and sales consultancy, retail operation and inventory management. The Company is responsible for running Best Paramount’s Emax premises and provides its employees to staff Best Paramount’s operation at the Emax location. Best Paramount is responsible for paying its own rent, cost of sales, commissions to travel agents and taxes. The Company is responsible for paying all other expenses of the operation, including, but not limited to, advertising, utilities, insurance, salaries, transportation, cleaning and administrative (“Actual Costs”) on the behalf of Best Paramount. Best Paramount reimburses the Company for the Actual Costs, and in addition pays the Company a 5% mark-up of such Actual Costs as consideration for the Company’s services.

Under the terms of the Agreements, the Company also has the discretion to charge Best Paramount a discretionary fee, to be negotiated in detail in three to six months pursuant to actual performance of the operation. The Agreements may be terminated by mutual agreement, by either party giving the other written notice in the event of material breach, or by giving a 60-day prior written notice without cause. Best Paramount is reputed to be an experienced retail operator that sells a wide variety of appealing items that attract tourists, including, but not limited to, cosmetics, electronics, jewelry and branded watches, and it also has the advantage of securing an excellent location in the coveted Emax.

Corporate History

General

On June 22, 2006, we (then named WT Holdings Corporation) acquired the business that now constitutes our Hong-Kong based retail and trading operations, by executing an Agreement and Plan of Share Exchange (“Exchange Agreement”) by and among the company on the one hand, and Horizon Corporation Limited, a Hong Kong corporation (“Horizon”), Profits Dreams Development Ltd. (“PDD”) and its shareholders, and Forever Rise Holdings Limited (“FRHL”) and its shareholders on the other hand. Prior to the Exchange Agreement, FRHL was the parent company of Horizon, which in turn was the parent company of PDD, which in turn owns five operating subsidiaries: (i) Allied Fine Development Limited, (ii) Max Surplus International Development Limited, (iii) Manigood International Industrial Limited, (iv) Raffle Limited, and (v) Sure Profits Trading Limited, each a corporation organized under the laws of Hong Kong (the “Operating Subsidiaries”). Pursuant to the Exchange Agreement and on the Closing Date, we acquired the Horizon Group by issuing shares of the our common stock (the “WT Holdings Shares”) to FRHL, and in exchange, the PDD Shareholders assigned 100% of the outstanding common stock of PDD to us. As a result of the transactions under the Exchange Agreement, we acquired the business and operations of the Horizon Group, and our principal business activities are conducted through the Operating Subsidiaries. As a result of the transactions under the Exchange Agreement, (i) there were a total of 98,142,476 shares of our common stock issued and outstanding, (ii) the prior stockholders of the company (who prior to the transaction owned 100% of the shares), held 30% of the issued and outstanding shares of the company, and (iii) the remaining 70% of the issued and outstanding common stock of the company were then held by the FRHL Shareholders. The closing of the reverse acquisition transaction occurred on June 28, 2006. The above description of the reverse take-over transaction is qualified in its entirety with reference to our current report on Form 8-K, together with the exhibits included with such report, as filed with the SEC on June 28, 2006.

Senior Convertible Debenture Financing - October 2006

On October 6, 2006, we completed the issuance and sale of $3,069,895 principal amount of our senior convertible debentures in a private placement to accredited investors. The financing was conducted pursuant to a Securities Purchase Agreement dated October 6, 2006 entered into between us and the accredited investors named on the schedule of buyers thereto (“Securities Purchase Agreement”). Maxim Group LLC acted as the lead placement agent with Chardan Capital Markets LLC as the co-placement agent in the financing. Under the terms of the financing, the senior convertible debentures are unsecured, bear 8% interest per year payable in cash, and mature in three years. The debentures are convertible into a quantity of common stock ranging from approximately 11.6 to 16.0 million shares, depending upon a one-time adjustment to the conversion price, which shall occur on October 6, 2007. The initial conversion price of the debentures is $0.24 per share, which conversion price may be adjusted to equal the volume-weighted average trading price of our common stock for all trading days during the one year following the closing of the financing, subject to a maximum conversion price of $0.264 per share and a minimum conversion price of $0.192 per share (“Conversion Price Collar”). The conversion price of the debentures is also subject to anti-dilution adjustments within the Conversion Price Collar in the event we sell and issue shares of our common stock for below $0.24 per share. We may, at our election, force conversion of the debentures after the first anniversary of the closing, if the volume weighted average trading price of our common stock exceeds $0.48 per share for 30 consecutive trading days, and the average daily trading dollar volume exceeds $350,000. We may also redeem the debentures at 125% of the principal amount of the debentures plus accrued unpaid dividends at any time after the first anniversary of the closing.

In connection with our October 2006 financing, we also issued warrants to investors that are exercisable for up to approximately 8 million shares of our common stock with an exercise price ranging from $0.2112 to $0.2904 per share. The exercise price is adjustable based upon the conversion price of the debentures. The warrants are exercisable for a five-year period commencing on October 6, 2006. We also agreed to issue, in connection with the October 2006 financing, warrants to the placement agents for the purchase of up to 1,279,123 shares of our common stock with an exercise price ranging from $0.2112 to $0.2904 per share.

On October 6, 2006, in connection with the financing, we also entered into a registration rights agreement dated October 6, 2006 under which we agreed to use commercially reasonable efforts to cause the common stock issuable upon conversion of the debentures and exercise of the warrants issued to the investors and placement agent to be registered for resale on an appropriate form for registration to be filed with the SEC within 30 days following the closing, and to keep such registration statement effective until the shares underlying the investor warrants and senior convertible debentures can be sold without restriction under Rule 144(k). On November 3, 2006, we filed a registration statement pursuant to the registration rights agreement, in order to register these shares for resale by the investors in the October 2006 debenture financing, which became effective on January 16, 2007. Under our registration rights agreement with the investors, if we do not maintain the effectiveness of our registration statement, we may be subject to penalties.

The above description of the terms of the October 2006 financing is qualified in its entirety with reference to the forms of agreements included as Exhibits 10.1, 10.2, 10.3 and 10.4 to our current report on Form 8-K filed with the SEC on October 10, 2006.

Agreements with Best Paramount

On October 28, 2008, three of our subsidiaries entered into a series of agreements with Best Paramount whereby they agreed to act as a service provider to Best Paramount. The Company agreed to provide technical, commercial and operational management for Best Paramount. Under the terms of the Agreements, the scope of services provided by the Company includes, but is not limited to, accounting, human resources, administrative, marketing and sales consultancy, retail operation and inventory management. The Company is in charge of running Best Paramount’s premises and agreed to provide its employees to staff Best Paramount’s operation. Best Paramount is responsible for paying its own rent, cost of sales, commissions to travel agents and taxes. The Company is responsible for paying all other expenses of the operation, including, but not limited to, certain Actual Costs on the behalf of Best Paramount. Best Paramount agreed to reimburse the Company for the Actual Costs, and in addition pay Company a 5% mark-up of such Actual Costs as consideration for the Company’s services. Under the terms of the agreements, the Company also has the discretion to charge Best Paramount a discretionary fee, to be negotiated in detail in three to six months pursuant to actual performance of the operation. The agreements may be terminated by mutual agreement, by either party giving the other written notice in the event of material breach, or by giving a 60-day prior written notice without cause.

Our Shopping Centers

During the first three quarters of 2008, we operated the following two shopping centers:

•

Super Star Department Store. This shopping center has approximately 20,000 square feet of floor space and is located in the area in Hong Kong known as To Kwa Wan.

•

Hong Kong (Duty Free) Centre. This shopping center has approximately 20,000 square feet of floor space and is located in Whampoa Garden, in Hung Hom, close to convenient transportation centers.

During the first half of 2008, we employed approximately 130 highly trained salespersons in our shopping centers. During the latter half of 2008, due to the global recession and certain travel restrictions, we faced a significant slowdown in our shopping centers and had to make certain cost-saving business changes accordingly. We had to reduce the hours of operation of our shopping centers, alternate the shutdown of each of the shopping centers, reduce the hours and commissions of salespersons and cut the overall headcount of staff members to save costs. At the end of 2008, we reduced our salespersons to 45. During the second half of 2008, our stores were only in operation part-time due to the considerable slowdown in our business. We closed our two shopping centers at the end of 2008 in order to shift its focus to provide management services to other retail operators. Since the end of 2008, we have moved our staff from our shopping centers to staff the retail operation of Best Paramount.

Products

All the products sold at our shopping centers were internationally branded products of high quality, including high-end consumer electronics and prestigious cosmetics imported from Europe and Japan. In addition to cosmetics, our product line also included consumer electronics, health products, and herbal ornaments, which are the categories of products most sought after by mainland Chinese tourists.

All products sold at our stores were guaranteed to be authentic products from the original manufacturers. We provided our customers with a 180-day full refund policy, and an optional three-year repair service to cover certain appliances.

During the operation of our shopping centers, our merchandising strategy was to provide our customers with a broad range of well known, branded products that are the most popular in their respective categories, at prices consistently lower than could be obtained by our shoppers in mainland China. We sought to streamline and limit specific items in each product line to fast selling models, sizes and colors, focusing on selling popular products at high volume.

Sources of Products

Purchasing from Suppliers and Manufacturers. Over the past few years and prior to the closure of our shopping centers at the end of 2008, we sourced products from over 100 suppliers and manufacturers. We have developed strong and long-term relationships with our top five suppliers, and many of these suppliers have been working with us or our executives for nearly 20 years. Since most of the products we sold were generally available from more than one manufacturer, we secured secondary sources for most of our top-selling products. As a result, we did not experience any difficulty in obtaining sufficient quantities of merchandise and believed that if one or more of our current sources of supply became unavailable, we would be able to obtain alternative sources without experiencing a substantial disruption of our business.

Volume purchases from our suppliers allowed us to benefit from volume discounts and favorable trade credit terms. We had either written contracts or verbal agreements based on historical dealings with the vendors under which certain quantities must be purchased before we were qualified to have rebates or discounts. We were not, however, obligated to purchase any particular quantities from any of our suppliers. We carefully monitored sales trends and modified purchasing strategy to benefit from supplier discounts as a result of volume purchasing. These relationships allowed us to benefit from favorable trade terms resulting in payables of 90 to 150 days with our top suppliers.

Alliance and Affiliation Arrangements. In addition to purchasing from suppliers, we entered into alliance and affiliate arrangements with retailers, manufacturers and distributors of our products.

We have a business alliance with Jebsen & Co Ltd., one of the largest distributors of electronics worldwide. Jebsen & Co Ltd.is an authorized dealer of international brands such as Panasonic and JVC. Our alliance with Jebsen & Co Ltd. permits us access to deep volume discounts, as well as exclusive models sold.

Product Pricing

During the operation of our shopping centers in 2008, we aimed to price our products competitively and at a discount to most price points in the consumer retail industry. Our pricing system was relatively flexible in that our store managers had control over product pricing in the stores they managed. We held monthly and weekly meetings with our store managers to evaluate our pricing strategies, gross profit levels, and the performance of our sales force. Our purchasing team provided us with up-to-date information on market situation, products, and pricing in order to stay competitive.

Our Relationship with Travel Companies and Tour Operators

During the past few years and prior to the closure of our shopping centers, we built a strong relationship with over 100 Chinese travel companies and tour operators, including the following major tour operators, which, in 2008, held over 60% of the market share for outbound mainland Chinese travelers to Hong Kong:

Good Friendship (Hong Kong) Limited;

Golden Win International Travel Services Limited;

Harvest International Travel Services Limited;

Million Tour Limited;

Golden Fortress Tour Limited;

Federal Hong Kong Holdings Limited;

Amsito Travel Services Limited;

Superlink Travel Company Limited; and

Wah Wing Travel Services Limited.

We had arrangements with these and other tour operators, under which we paid a commission based on the sales volume generated from each tour. A commission was ordinarily paid to the tour operators within one week after sales are made. We will continue to maintain and utilize our relationships with tour companies and operators to increase traffic to the retail stores managed by us.

Seasonality

We were subject to more seasonality than typical retailers. We generally experienced increases in sales during the summer months, as travel and tourist activity increases. On the other hand, we generally experienced a decrease in sales during the winter months when there are fewer travelers. We typically experienced three peak periods when tourist activity usually increases, which are Chinese New Year (celebrated in January or February of each year), Golden Week (the first week of May), and National Day for the People’s Republic of China (October 1).

Trading Operations for Excess Inventory

Because of our strong sales volume, rapid inventory turnover and strong relationships with our suppliers during the operation of our outlets, we were able to frequently negotiate to purchase an amount of products in excess of what we could sell in our shopping centers at substantial discounts. We had taken advantage of our ability to purchase products at such volume discounts by selling a portion of such products to other retail businesses for a quick profit through two of our wholly owned subsidiaries, Raffle Limited and Sure Profits Trading Limited. During the operation of our shopping centers in 2008, Raffle Limited sold $24 million, approximately 25% of its products purchased, to other retailers, supplying our shopping centers with the balance of the products. In 2008, Sure Profits Trading Limited sold $16 million, approximately 33% of its products purchased, to other retailers, supplying our shopping centers with the balance of the products.

Despite the closure of our shopping centers, we still own and operate our two trading subsidiaries, which engage in the import and local distribution of consumer electronic products. We source our products from suppliers worldwide in order to provide our customers with an extensive variety of products at competitive prices. We plan to source and distribute through our trading subsidiaries certain products to the retail operators under our management, such as Best Paramount.

Our Customers

Most of our customers were tourists from mainland China who were visiting Hong Kong through organized tour packages. Our shoppers were from all parts of mainland China, including Beijing, Shanghai, Tianjin, Shanxi, Shandong, Neimenggu, Sichuan, Gansu, Jilin, Anhui, Jiangxi, Jiangsu, and Yunnan. A visit to our shopping centers was part of the itinerary for all tourists who booked tours to Hong Kong through the travel companies and tour operators with whom we had a relationship, and such travel companies and tour operators transported those tourists directly to our shopping centers. Since one of the major draws for visiting Hong Kong is shopping and the typical Hong Kong tourist has limited shopping time, most of our shoppers viewed a visit to our shopping centers as an opportunity to gain access to goods that were difficult to find in mainland China or to find goods at an attractive price. The average time each tourist spent in our shopping centers was approximately two hours.

In 2006, we had an average of 1,800 tourists per day visiting our shopping centers. In 2007, we received an average of 1,300 visitors per day to our stores, representing a decrease of 28% from the previous year. In 2008, prior to the closure of our outlets, we received an average of 1,015 visitors per day to our stores, representing a decrease of 17% from the previous year.

Competition

Our industry is highly competitive and fragmented among a large number of retailers, wholesalers, direct marketers and other sellers. Prior to the second half of 2008, we believed we held a dominant position in the rapidly growing travel retail market in Hong Kong, which is regarded as a specialized segment of the overall consumer retail market. We have developed this position over several years by forming strong relationships with travel agencies and tour operators, and accruing experience in the market in which we specialize.

However, the global recession has changed our industry dramatically starting the second half 2008, including a reduction in tourist visits from mainland China to Hong Kong, and a reduction in spending per tourist, partly as a result of adverse changes in travel policy and the domestic economic environment in China. During the latter half of 2008, management believes the Company faced heavy competition from other local retailers seeking to make sales to a dwindling group of tourists, which caused a trend toward lower profits. Retailers that wish to stay afloat have to compete fiercely by drastically marking down their prices, lowering their margins, and offering higher commissions to travel operators. Some of our competitors are in a better position to weather difficult economic conditions because they have better locations with heavier foot traffic and attract a higher density of tourists. Management believes that our sales will not improve in the near future due to the difficult economic climate, the location of our outlets, and the intense competition surrounding our area. Therefore, the Company has closed our two shopping centers at the end of 2008and shifted its focus to provide management services to other retail operators, such as Best Paramount.

Intellectual Property

As of December 31, 2008, we did not have any registered or pending intellectual property.

Employees

As of December 31, 2008, we had approximately 110 employees.

Management Information System

We have invested considerably in our management information system, which we consider to be important in enabling us to effectively operate and manage our business. We have developed an in-house supply chain system that fully manages wholesale sales, inventory management, logistics and procurement. Our system, which has been in development for over five years, is capable of processing millions of transactions without significant infrastructure alterations and capital investment. Our information management system is capable of handling a large product line, and provides us real time control over our inventory, logistics, procurement processes and sales activity. We continue to develop our information systems to efficiently update our database of products, streamline our inventory management and provide financial reporting capabilities to aid in decision making. Our current software platform is significantly scalable and will allow us to achieve substantial growth with limited additional capital expenditures.

Our software operates on several hardware platforms, including four servers and 61 PCs. Our primary operating and application software is Microsoft-based. Our business management software is programmed in Microsoft Visual Foxpro and SQL. Our systems are updated and maintained by two in-house professionals. These professionals are trained in various programming languages including Microsoft SQL, Visual Foxpro, and Visual Basic.

We currently employ a point-of-sale system, which allows our management to monitor our sales and inventory levels in real time. Our systems allow us to adjust our strategy and pricing in response to changing market conditions. For example, our system allows us to make real time inventory inquiries and prepare comprehensive reports of sales activity for analysis by management. Our system includes over 30 modules for back office management, such as stock transfer (transfer of inventory), purchase order management, sales invoicing, and day-end and month-end processes.

Our inventory management system was developed in, and has been in operation since, 2000. We updated our system in 2006 at a cost of over $120,000 to enhance its capacity to provide prompt management information on sales, purchases, and inventory data. Our system allows management to react quicker to customer preferences based on such data. In addition, the system provides for extensive flexibility to locate inventory on-hand, estimate product delivery time, and order out-of-stock items.

We have used our inventory management system for the operation of our shopping centers and will continue to use such system for the management of other retailers, such as Best Paramount.

RISK FACTORS

You should carefully consider the risks described below together with all of the other information included in this report before making an investment decision with regard to our securities. The statements contained in or incorporated into this report that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.

Risks Relating to Our Business

Our sales are influenced by general economic cycles. A prolonged period of depressed consumer spending would have a material adverse effect on our profitability or the profitability of our affiliate retailers.

Retail is a cyclical industry that is dependent upon the overall level of consumer spending. The global economy is currently experiencing a downturn. Retail tends to decline in periods of uncertainty regarding future economic prospects, when consumer spending, particularly on discretionary items, and disposable income decline. Many factors affect the level of consumer spending in the retail industry, including, among others: prevailing economic conditions, levels of employment, salaries and wage rates, energy costs, interest rates, the availability of consumer credit, taxation and consumer confidence in future economic conditions. During periods of economic uncertainty, we may not be able to maintain or increase our sales or maintain or improve our margins from operations as a percentage of net sales. A prolonged period of depressed consumer spending would have a material adverse effect on our profitability.

We or our affiliate retailers face intense competition and operate in an industry with limited barriers to entry, and some of our competitors may be better positioned to capitalize on the rapidly growing retail sector in our geographic area.

The retail sector, in our geographic area, is rapidly evolving and intensely competitive. Many of our current and potential competitors have longer operating histories, larger customer bases, greater brand recognition and significantly greater financial, marketing, technical, management and other resources than we do. In addition, some of our competitors have used, and may continue to use, aggressive pricing or carry a larger inventory than we do. We expect that competition will further intensify in the future. Because barriers to entry are limited, current and new competitors may open retail locations that will compete with ours.

We believe that the primary competitive factors in the retail sector include brand recognition, price, shipping offers, product selection, product availability and customer service. We currently compete against other retailers within the specialized niche of travel retail in Asia.

We may also experience significant competitive pressure if any of our suppliers were to initiate their own retail operations in the locations we serve. Since our suppliers have access to merchandise at very low costs, they could sell products at lower prices and maintain a higher gross margin on their product sales than we can. In this event, our current and potential customers may decide to purchase directly from these suppliers. Increased competition from any supplier capable of maintaining high sales volumes and acquiring products at lower prices than us could significantly reduce our market share and adversely impact our financial results.

We compete not only for customers, but also for favorable product allocations from product manufacturers. Some of our competitors could enter into exclusive distribution arrangements with our suppliers, deny us access to their products and devote greater resources to marketing and promotional campaigns.

The seasonality of our business places increased strain on our operations or the operations of our affiliate retailers.

We generally experience increases in sales during the summer months, as travel and tourist activity increases. On the other hand, we generally experience a decrease in sales during the winter months when there are fewer travelers. In addition, if we are unable to meet customer demand for our products during these peak periods, our revenues and future growth could be adversely affected. Furthermore, we may be unable to adequately staff our retail outlets and warehousing operations during these periods.

Our future operating results may fluctuate and cause the price of our common stock to decline.

We expect that our revenues and operating results will continue to fluctuate significantly from quarter to quarter due to various factors, many of which are beyond our control. The factors that could cause our operating results to fluctuate include, but are not limited to:

•

seasonality of the business;

•

price competition from other retailers;

•

general price increases by suppliers and manufacturers;

•

our ability to maintain and expand our distribution relationships;

•

increases in the cost of advertising;

•

unexpected increases in shipping costs or delivery times;

•

our ability to build and maintain customer loyalty;

•

the introduction of new services, products and strategic alliances by us and our competitors;

•

the success of our brand-building and marketing campaigns;

•

government regulations, changes in tariffs, duties, and taxes;

•

our ability to maintain, upgrade and develop the retail stores managed by us;

•

the amount and timing of operating costs and capital expenditures relating to expansion of our business, operations and infrastructure; and

•

general economic conditions as well as economic conditions specific to the retail sector.

If our quarterly revenues or operating results fall below the expectations of investors or securities analysts, the price of our common stock could significantly decline.

We or our affiliate retailers depend on our relationships with tour companies to bring customers to retail locations, and losing these sources would adversely affect our revenues and financial results.

We attract retail traffic by entering into arrangements with tour companies who schedule shopping tours with their customers. In order to maintain a flow of tourist traffic, we must continually monitor and maintain our relationships with the tour companies with which we do business. If the tour companies modify or terminate their relationship with us, we could lose customers, and traffic in our retail stores could decrease.

If we or our affiliate retailers fail to offer a broad selection of products and brands that customers find attractive, our revenues could decrease.

In order to meet our strategic goals, we must successfully offer, on a continuous basis, a broad selection of appealing products that reflect our customers’ preferences. Consumer tastes are subject to frequent, significant and sometimes unpredictable changes. To be successful in our line of business, our product offerings must be broad, deep in scope and affordable to a wide range of consumers whose preferences may change regularly. We cannot predict with certainty that we will be successful in offering products that meet these requirements. If our product offerings fail to satisfy customers’ tastes or respond to changes in customer preferences, our revenues could decline. In addition, any failure to offer products that satisfy customers’ preferences could allow our competitors to gain market share.

If we or our affiliate retailers do not successfully optimize and operate retail locations under our management, our business could decline.

If we do not successfully operate the retail locations under our management, this could significantly limit our ability to meet customer demand and cause a decline in sales at retail locations under our management. This in turn cuts into our profits since our management fees are a percentage of actual costs paid by us on the behalf of the retail locations we manage. Because it is difficult to predict demand, we may not manage our facilities optimally, which may result in excess or insufficient inventory, and distribution capacity. Failure to optimize inventory will increase our net shipping cost by requiring us to make long-distance shipments or partial shipments from different locations. As we continue to sign on new retailers under our management with different inventory management requirements, operating our inventory management system becomes more challenging and there can be no assurance that we will be able to operate our system effectively.

We have limited control over the actions of our or our affiliate retailers, distributors, retailers or their vendors.

We rely on distributors for the sale of our branded products, and those distributors maintain inventory and prepare merchandise for shipment to retailers and individual customers. We have limited control over the products that our distributors purchase or keep in stock, and our arrangements with our distributors do not require them to set aside any amount of inventory to satisfy demand. Our distributors may not accurately forecast the products that will be in high demand. In addition, we have limited control over their sales process, shipping and order processing procedures. Although we have not experienced disruptions in the past, and we do not presently foresee possible disruptions in the near future, a widespread inability of our distributors to successfully supply our branded products, if it occurred, would substantially harm our business.

We or our affiliate retailers are dependent upon third parties for significant functions, and if these functions or operations are interrupted for any significant period of time or if we experience other problems with our third-party service providers, our business and results of operations would be substantially harmed.

In addition, we rely upon third party tour operators for a large portion of our customer flow. As a result, we are subject to cancellations and disruptions due to factors that are beyond our control, including employee strikes and inclement weather. Further, increased fuel costs may adversely affect tourist traffic. If cooperating tour companies were to experience cancellations and disruptions, this could negatively affect our sales revenue.

We rely on foreign sources for the supply of many of the products we or our affiliate retailers sell.

We rely on long term supply relationships with several manufacturers in the PRC, and in the future may rely upon supply relationships with other foreign sources. Regional disruptions relating to political or environmental conditions could cause shipping delays, which could interfere with our ability to supply our customers and harm our financial results. A significant breakdown in the manufacturing process or among suppliers could result in product shortages, and our revenues could decline due to the loss of these suppliers and manufacturers.

Our operating results could be impaired if we are unable to meet our future capital needs.

We may need to raise additional capital in the future to maintain our current operation as a retail service provider. If we raise additional funds by issuing equity or convertible debt securities, the percentage ownership of our stockholders will be diluted. Furthermore, any new securities could have rights, preferences and privileges senior to those of our common stock. We currently do not have any commitments for additional financing. We cannot be certain that additional financing will be available when and to the extent required or that, if available, it will be on acceptable terms. If adequate funds are not available on acceptable terms, we may not be able to fund our expansion, develop or enhance our products or services or respond to competitive pressures.

The loss of key members of our executive management could negatively affect our business.

We depend on the continued services and performance of our executive management and other key personnel, in particular, Alex Chun Shan Yue, our Chief Executive Officer, and Danny Sau Kwong Leung, our Chief Operating Officer. The loss of any of these executive officers or other key persons could harm our business.

We or our affiliate retailers may be adversely affected by the financial health of the retail industry in Asia.

We are subject to broad economic factors that drive consumer spending and maintain the health of the retail industry in Asia. These factors include, but are not limited to, unemployment rates, consumer credit levels, consumer confidence, and household discretionary income. If any of these or other economic factors should erode, consumer spending may fall and the Asian retail industry may suffer a downturn. Consequently, our earnings would be adversely impacted by lower sales.

We or our affiliate retailers may be adversely affected by the trend towards retail trade consolidation.

As we pursue our retail distribution strategy, our sales will be contingent upon favorable wholesale prices that we can obtain from retailers. If retailers merge or the retail industry consolidates, the larger, combined retailers will have significant pricing power because of the sheer size of their retail networks. As a result, we may not be able to obtain reasonable prices for our products. Consequently, our margins may decline and our results of operations may be reduced. There can be no assurance that we will be able to obtain reasonable wholesale prices for our products under a scenario where retailers merge and consolidate into larger entities.

Risks Related to Doing Business in China

Adverse changes in economic and political policies of the PRC government could have a material adverse effect on the overall economic growth of China, which could adversely affect our business.

All of our business operations are currently conducted in Hong Kong, under the jurisdiction of the PRC government. Accordingly, our results of operations, financial condition and prospects are subject to a significant degree to economic, political and legal developments in China. China’s economy differs from the economies of most developed countries in many respects, including with respect to the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. While the PRC economy has experienced significant growth in the past 20 years, growth has been uneven across different regions and among various economic sectors of China. The PRC government has implemented various measures to encourage economic development and guide the allocation of resources. Some of these measures benefit the overall PRC economy, but may also have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations that are applicable to us. Since early 2004, the PRC government has implemented certain measures to control the pace of economic growth. Such measures may cause a decrease in the level of economic activity in China, which in turn could adversely affect our results of operations and financial condition.

Abrupt and forceful regulation by governmental authorities may impose costly requirements on our business, which could have a material adverse effect on our business and overall financial results.

Our industry, particularly the market segment dealing with inbound visitors from China, is relatively new, and until recent times it has been left unregulated. Governmental authorities in the PRC and in Hong Kong may impose regulations designed to protect consumers, or even to curtail what the PRC government might view as a loss of domestic retail sales, import duties and tax revenue. Changes in policies affecting the tourist retail industry may be enacted abruptly without transitional periods that may force us to make rapid and costly adjustments in our operations in an effort to comply. It is not always possible for management to anticipate changes in government policies, or the impact of those changes to our business.

On June 15, 2007, the Hong Kong government implemented its “Refund Protection Scheme for Mainland China’s Inbound Tour Group Shoppers,” enacted by the Travel Industry Council of Hong Kong. The Refund Protection Scheme is aimed at protecting the consumer rights of mainland China’s tourist visitors to Hong Kong, and improving the service standards in the industry as a whole.

Under the Refund Protection Scheme, retailers who intend to arrange for mainland China's Inbound group visitors must register with the Travel Industry Council and one of the conditions of registration is that registered retailers shall offer six-month, full refund protection to mainland China's inbound group visitors. As a part of the conditions of the Refund Protection Scheme, registered retailers must assist tour operators and inbound visitors seeking refunds. Registered retailers who fail to comply may be subjected to penalties imposed by the Travel Industry Council. We have registered with the Travel Industry Council under the new rules and offer a 180-day refund policy to our customers.

Our operations may be negatively impacted by these heightened standards and implementation of the new rules.

Fluctuation in the value of RMB and the Hong Kong Dollar relative to other currencies may have a material adverse effect on our business and/or an investment in our shares.

The value of RMB and the Hong Kong Dollar against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions. Although the exchange rate between RMB and the U.S. dollar has been effectively pegged by the People’s Bank of China since 1994, and the rate between the Hong Kong Dollar has been pegged to the U.S. dollar since 1983, there can be no assurance that these currencies will remain pegged to the U.S. dollar, especially in light of the significant international pressure on the Chinese government to permit the free floatation of the RMB, which would result in fluctuations in the exchange rate between the RMB and the U.S. dollar, and other geopolitical factors If the RMB were to increase in value against the dollar, for example, mainland Chinese consumers would experience a reduction in the relative prices of goods and services, which may translate into a positive increase in sales. On the other hand, a decrease in the value of the RMB against the dollar would have the opposite effect. In addition, a strengthening of the U.S. dollar against the Hong Kong Dollar, if it occurred, would adversely affect the value of your investment.

We face risks related to health epidemics and other outbreaks.

Our business could be adversely affected by the effects of SARS and other epidemics or outbreaks. China reported a number of cases of SARS in the spring of 2003, which severely impacted the tourism industry for many months. Any prolonged recurrence of SARS or other adverse public health developments in China could negatively impact tourism in Hong Kong, which would have a material adverse effect on our business operations. For instance, health or other government regulations adopted in response may require temporary travel restrictions, or even closure of our facilities or offices. Such closures would severely disrupt our customer flow and business operations, and adversely affect our results of operations. We have not adopted any written preventive measures or contingency plans to combat any future outbreak of SARS or any other epidemic.

Risks Related to an Investment in Our Securities

We will need additional capital, which may not be accessible on attractive terms or at all.

We anticipate that we will need to raise additional funds in the future through public or private financing. Our ability to obtain additional financing will be subject to a number of factors, including market conditions, our operating performance and the terms of our existing indebtedness. The terms of our senior convertible debentures limit our ability to incur additional debt because any such additional debt we incur, other than a limited senior credit facility, must be contractually subordinated, as to payment and liquidation, to the payment in full of the debentures. We cannot assure you that we will be able to raise additional funds on terms favorable to us or at all. If we raise additional funds through the sale of equity or convertible debt securities, your ownership percentage of our common stock will be reduced. In addition, any such transactions may dilute the value of our common stock. We may have to issue securities that have rights, preferences and privileges senior to our common stock. The terms of any additional indebtedness may include restrictive financial and operating covenants that would limit our ability to compete and expand. Our failure to obtain any required future financing could materially and adversely affect our financial condition.

Conversion of the debentures into shares of our common stock will dilute the ownership interests of existing stockholders, including holders who will have already converted their debentures.

The conversion of some or all of the debentures into our shares of our common stock will dilute the ownership interests of existing stockholders. Any sales in the public market of the shares of common stock issuable upon such conversion could adversely affect prevailing market prices of our shares of common stock. In addition, the existence of the debentures may encourage short selling by market participants because the conversion of the debentures could depress the price of our shares of common stock.

To date, we have not paid any cash dividends and no cash dividends will be paid in the foreseeable future.

We do not anticipate paying cash dividends on our common stock in the foreseeable future and we may not have sufficient funds legally available to pay dividends. Even if the funds are legally available for distribution, we may nevertheless decide not to pay any dividends. We intend to retain all earnings for our operations.

The application of the “penny stock” rules could adversely affect the market price of our common stock and increase your transaction costs to sell those shares.

If our stock becomes quoted on an exchange, as long as the trading price of our common shares is below $5 per share, the open-market trading of our common shares will be subject to the “penny stock” rules. The “penny stock” rules impose additional sales practice requirements on broker-dealers who sell securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of securities and have received the purchaser’s written consent to the transaction before the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the broker-dealer must deliver, before the transaction, a disclosure schedule prescribed by the Securities and Exchange Commission relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements must be sent disclosing recent price information on the limited market in penny stocks. These additional burdens imposed on broker-dealers may restrict the ability or decrease the willingness of broker-dealers to sell our common shares, and may result in decreased liquidity for our common shares and increased transaction costs for sales and purchases of our common shares as compared to other securities.

Our common shares are not currently traded at high volume, and you may be unable to sell at or near ask prices or at all if you need to sell or liquidate a substantial number of shares at one time.

We cannot predict the extent to which an active public market for its common stock will develop or be sustained. However, the Company does not rule out the possibility of applying for listing on the Nasdaq Capital Market or other markets.

Our common shares are currently traded, but currently with low volume, based on quotations on the “Over-the-Counter Bulletin Board”, meaning that the number of persons interested in purchasing our common shares at or near bid prices at any given time may be relatively small or non-existent. This situation is attributable to a number of factors, including the fact that we are a small company which is still relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader or more active public trading market for our common stock will develop or be sustained, or that trading levels will be sustained.

Stockholders should be aware that, according to SEC Release No. 34-29093, the market for “penny stocks” has suffered in recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices could increase the future volatility of our share price.

Our corporate actions are substantially controlled by our principal stockholders and affiliated entities.

Our principal stockholders and their affiliated entities own approximately 80% of our outstanding ordinary shares, representing approximately 80% of our voting power. These stockholders, acting individually or as a group, could exert substantial influence over matters such as electing directors and approving mergers or other business combination transactions. In addition, because of the percentage of ownership and voting concentration in these principal stockholders and their affiliated entities, elections of our board of directors will generally be within the control of these stockholders and their affiliated entities. While all of our stockholders are entitled to vote on matters submitted to our stockholders for approval, the concentration of shares and voting control presently lies with these principal stockholders and their affiliated entities. As such, it would be difficult for stockholders to propose and have approved proposals not supported by management. There can be no assurances that matters voted upon by our officers and directors in their capacity as stockholders will be viewed favorably by all of our stockholders.

The elimination of monetary liability against our directors, officers and employees under Delaware law and the existence of indemnification rights to our directors, officers and employees may result in substantial expenditures by our company and may discourage lawsuits against our directors, officers and employees.

Our certificate of incorporation does not contain any specific provisions that eliminate the liability of our directors for monetary damages to our company and stockholders, but we are prepared to give such indemnification to our directors and officers to the extent provided by Delaware law. We may also have contractual indemnification obligations under our employment agreements with our officers. The foregoing indemnification obligations could result in our company incurring substantial expenditures to cover the cost of settlement or damage awards against directors and officers, which we may be unable to recoup. These provisions and resultant costs may also discourage our company from bringing a lawsuit against directors and officers for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our stockholders against our directors and officers even though such actions, if successful, might otherwise benefit our company and stockholders.

Legislative actions, higher insurance costs and potential new accounting pronouncements may impact our future financial position and results of operations.

There have been regulatory changes, including the Sarbanes-Oxley Act of 2002, and there may potentially be new accounting pronouncements or additional regulatory rulings that will have an impact on our future financial position and results of operations. The Sarbanes-Oxley Act of 2002 and other rule changes as well as proposed legislative initiatives following the Enron bankruptcy are likely to increase general and administrative costs and expenses. In addition, insurers are likely to increase premiums as a result of high claims rates over the past several years, which we expect will increase our premiums for insurance policies. Further, there could be changes in certain accounting rules. These and other potential changes could materially increase the expenses we report under generally accepted accounting principles, and adversely affect our operating results.

Past activities of the company and our affiliates may lead to future liability for us.

Prior to our entry into the Agreement and Plan of Share Exchange (“Share Exchange Agreement”) on June 22, 2006, the Horizon Group was engaged in the Company’s operations. Although for a period of two years after the Closing Date the major shareholders of the Horizon Group will indemnify the Company against any loss, liability, claim, damage, or expense arising out of or based on any breach of or inaccuracy in any of their representations and warranties made in the Share Exchange Agreement, any liabilities relating to such prior business against which the Company is not completely indemnified may have a material adverse effect on the Company.

We may need additional capital, and the sale of additional shares or other equity securities could result in additional dilution to our shareholders.

We believe that our current cash and cash equivalents, anticipated cash flow from operations and the net proceeds from this offering will be sufficient to meet our anticipated cash needs for the near future. We may, however, require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions we may decide to pursue. If our resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity securities could result in additional dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.

You may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited because our subsidiaries are incorporated in non-U.S. jurisdictions, we conduct substantially all of our operations in Hong Kong, and all of our officers reside outside the United States.

Although we are incorporated in Delaware, we conduct substantially all of our operations in China through our wholly owned subsidiaries in Hong Kon. All of our officers reside outside the United States and some or all of the assets of those persons are located outside of the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in Hong Kong in the event that you believe that your rights have been violated under U.S. securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of Hong Kong may render you unable to enforce a judgment against our assets or the assets of our directors and officers.

As a result of all of the above, our public shareholders may have more difficulty in protecting their interests through actions against our management, directors or major stockholders than would shareholders of a corporation doing business entirely within the United States.

If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.

We will be subject to reporting obligations under the U.S. securities laws. The Securities and Exchange Commission (“SEC”), as required by Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”), adopted rules requiring every public company to include a management report on such company’s internal controls over financial reporting in its annual report, which contains management’s assessment of the effectiveness of the company’s internal controls over financial reporting. In addition, an independent registered public accounting firm must attest to and report on management’s assessment of the effectiveness of the company’s internal controls over financial reporting. These requirements will first apply to our annual report on Form 10-K for the fiscal year ending December 31, 2007. Our management may conclude that our internal controls over our financial reporting are not effective. Moreover, even if our management concludes that our internal controls over financial reporting are effective, our independent registered public accounting firm may still decline to attest to our management’s assessment or may issue a report that is qualified if it is not satisfied with our controls or the level at which our controls are documented, designed, operated, or reviewed, or if it interprets the relevant requirements differently from us. Our reporting obligations as a public company will place a significant strain on our management, operational, and financial resources and systems for the foreseeable future. Effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to help prevent fraud. As a result, our failure to achieve and maintain effective internal controls over financial reporting could result in the loss of investor confidence in the reliability of our financial statements, which in turn could harm our business and negatively impact the trading price of our stock. Furthermore, we anticipate that we will incur considerable costs and use significant management time and other resources in an effort to comply with Section 404 and other requirements of the Sarbanes-Oxley Act.

We will incur increased costs as a result of being a public company.

As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act, as well as new rules subsequently implemented by the SEC, have required changes in corporate governance practices of public companies. We expect these new rules and regulations to increase our legal, accounting and financial compliance costs and to make certain corporate activities more time-consuming and costly. In addition, we will incur additional costs associated with our public company reporting requirements. We are currently evaluating and monitoring developments with respect to these new rules, and we cannot predict or estimate the amount of additional costs we may incur, or the timing of such costs.

Item 1B.

UNRESOLVED STAFF COMMENTS

There are no unresolved staff comments as of the date of this report with respect to periodic or current reports under the Securities Exchange Act of 1934 made by the Company.

Item 2.

PROPERTIES

Our corporate headquarters are located in Hong Kong, where we lease an office of approximately 2,700 square feet. We also lease additional facilities in connection with our shopping centers. Please see the subsection entitled “Our Shopping Centers” under the “Business” section above. The leases of our shopping centers will expire in September 2009 and will not be renewed. We have already closed the operations of our shopping centers at the end of 2008 to shift our focus to being a retail service provider. Since the end of 2008, we have used and will continue to use the shopping centers as warehouses for our inventory until the expiration of the leases in September 2009.

We believe that our existing space is adequate for our current anticipated operations. We currently do not own any real property.

Item 3.

LEGAL PROCEEDINGS

Other than the proceeding described below, we are not currently involved in any material legal proceedings, nor have we been involved in any such proceeding that has had, or may have, a significant effect on us. We are not aware of any material legal proceedings pending against us.

We are involved in a legal proceeding called Everest Special Situations Fund, LP v. Asiamart, Inc. (Index No. 603666/07). On or about November 5, 2007, Everest Special Situations Fund, LP filed a Complaint in the Supreme Court for the State of New York, County of New York (the “Court”), alleging claims for fraud and breach of contract related to a Securities Purchase Agreement entered into with the Company on October 6, 2006. The Company filed a Motion to Dismiss the Complaint, which was submitted on March 26, 2008. The Court granted the Motion and dismissed the action pursuant to an Order entered on April 8, 2008. Everest Special Situations Fund, LP filed a Motion for Reargument of the Motion to Dismiss the Complaint in May 2008. On June 24, 2008, the Court entered an order partially granting and partially denying the Motion for Reargument. The Court ruled that Everest Special Situations Fund, LP could amend the complaint to assert a claim for rescission, but the order dismissing claims for damages was affirmed. On or about January 29, 2009, Everest Special Situations Fund, LP filed a motion for leave to amend and supplement the complaint. The motion remains pending and no ruling has been issued from the Court.

Item 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth quarter of our fiscal year ended December 31, 2008, no matters were submitted to a vote of security holders through the solicitation of proxies or otherwise.

PART II

Item 5.

MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market for Common Stock

Our common stock is not listed on any stock exchange. The common stock is quoted on the Over-the-Counter Electronic Bulletin Board under the symbol “AAMA.” The following table sets forth the high and low bid information for the common stock for each quarter within the last two fiscal years, as reported by the OTC Bulletin Board. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

	Bid Price
PERIOD	HIGH		LOW
FISCAL YEAR 2008:
Quarter ended December 31, 2008	$	0.06	$	0.03
Quarter ended September 30, 2008	$	0.06	$	0.05
Quarter ended June 30, 2008	$	0.18	$	0.04
Quarter ended March 31, 2008	$	0.25	$	0.04

FISCAL YEAR 2007:
Quarter ended December 31, 2007	$	0.40	$	0.20
Quarter ended September 30, 2007	$	0.37	$	0.21
Quarter ended June 30, 2007	$	1.01	$	0.37
Quarter ended March 31, 2007	$	1.50	$	0.75

As of April 23, 2009, there were approximately 264 stockholders or record of our common stock, and 16 preferred stockholders. The number of registered stockholders excludes any estimate by us of the number of beneficial owners of common shares held in street name. On April 23, 2009, the closing sale price of our common stock on the OTC Bulletin Board was $0.015 per share.

Dividend Policy

We do not currently intend to pay any cash dividends in the foreseeable future on our common stock and, instead, intend to retain earnings, if any, for future operation and expansion. Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, our results of operations, cash requirements, financial condition, contractual restrictions and other factors that our board of directors may deem relevant.

Item 6.

SELECTED FINANCIAL DATA

Not applicable.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the results of operations and financial condition of the Company for the fiscal years ended December 31, 2008 and 2007 should be read in conjunction with Selected Consolidated Financial Data and the Company’s financial statements and the notes to those financial statements that are included as exhibits to this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Note Regarding Forward-Looking Statements and Business sections in this report. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

Overview

For the first three quarters of 2008, our core business was the operation of outlet and discount shopping centers catering principally to tourists visiting Hong Kong from other parts of mainland China who were brought directly to our shopping centers through a large network of travel companies and tour operators. This business involved offering this captive group of tourists discount prices on selected international brands in a wide range of merchandise categories such as consumer electronics, cosmetics, watches, dietary supplements, health care products and optical instruments, producing high sales volume and rapid inventory turnover. The high sales volume and rapid inventory turnover provided us with volume purchasing power, and combined with the relatively low overhead of our shopping centers strategically located in low to moderate rent districts, we had been able to quickly achieve profitability since our inception, and continued to grow our profits over the past several years.

Most of our customers were brought to our shopping centers by various mainland Chinese travel companies and travel tour operators. Over the years, we had aggressively and strategically pursued development of our retail business with a focus on international tourists in Hong Kong. This had been proven as successful as we were the largest retail enterprise in this market until we decided to shift our business focus in the latter half of 2008.

During the third quarter of 2008, the revenue of the Company significantly decreased due to the above-mentioned trends. In addition, in the period leading up to and during the Beijing 2008 Olympic Games, the Chinese government restricted outbound travel visas, and this policy has not been reversed following the Olympics. Further, management believes that the current ongoing global economic crisis is discouraging tourist visits to Hong Kong. In the present economic climate, management believes that the Company is unlikely to sustain profitability with operation of its retail outlets, and believes that changing its business model is in its best interest. Management believes the Company faces heavy competition from other local retailers seeking to make sales to a dwindling group of tourists, which is causing a trend toward lower profits. Retailers that wish to stay afloat have to compete fiercely by drastically marking down their prices, lowering their margins, and offering higher commissions to travel operators. Some of our competitors are in a better position to weather the economic storm because they have better locations with heavier foot traffic and attract a higher density of tourists. Management believes that our sales will not improve in the near future due to the difficult economic climate, the location of our outlets, and the intense competition surrounding our area. Starting the third quarter of 2008, the Company has shifted its business model from being an outlet and discount shopping center operator to a retail service provider and has closed the operation of its two outlets at the end of 2008.

During October 2008, three of our subsidiaries entered into a series of agreements with Best Paramount whereby they agreed to act as a service provider to Best Paramount. Best Paramount is reputed to be an experienced retail operator that sells a wide variety of appealing items that attract tourists, including, but not limited to, cosmetics, electronics, jewelry and branded watches, and it also has the advantage of securing an excellent location in the coveted Emax within Hong Kong International Trade and Exhibition Center, an attractive location with heavy foot traffic from visiting tourists.

The Company agreed to provide technical, commercial and operational management for Best Paramount. Under the terms of the agreements with Best Paramount, the scope of services provided by the Company includes, but is not limited to, accounting, human resources, administrative, marketing and sales consultancy, retail operation and inventory management. The Company is in charge of running Best Paramount’s premises and agreed to provide its employees to staff Best Paramount’s operation. Best Paramount is responsible for paying its own rent, cost of sales, commissions to travel agents and taxes. The Company is responsible for paying all other expenses of the operation, including, but not limited to, certain Actual Costs on the behalf of Best Paramount. Best Paramount shall reimburse the Company for the Actual Costs, and in addition pay Company a 5% mark-up of such Actual Costs as consideration for the Company’s services. Under the terms of the agreements, the Company also has the discretion to charge Best Paramount a discretionary fee, to be negotiated in detail in three to six months pursuant to actual performance of the operation. The agreements may be terminated by mutual agreement, by either party giving the other written notice in the event of material breach, or by giving a 60-day prior written notice without cause.

Apart from the above, we own and operate two trading subsidiaries - Raffle Limited and Sure Profits Trading Limited, which engage in the import and local distribution of consumer electronic products. We source our product from suppliers worldwide in order to provide our customers with an extensive variety of products at competitive prices.

Quarterly Results May Fluctuate

Our business is subject to some seasonality, with decreases in sales during the winter months due to decreases in travel and tourist activity, and increases in sales during the summer months due to increases in such activity. Due to the seasonality of our sales, our quarterly results will fluctuate, perhaps significantly. Our operating results can also be impacted by the supply of products from suppliers caused by manufacturing delays or delivery issues. Additionally, the offering of new products or utilization of new sales channels can cause our quarterly operating results to fluctuate. For a discussion of these and other risks related to seasonality of our business, see “Risk Factors.”

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition or plan of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make 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 as well as the reported net sales and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and assumptions. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in Note 3 to our consolidated financial statements, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating our reported financial results.

Revenue recognition. The Company derives the major revenues from the sale of products and referral income. Referral income is derived from referring our customers to other non-directly competitive shops. Sales and referral income are recognized when the following four revenue criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed or determinable, and collectability is reasonably assured. Sales revenue is recognized net of sales discount and actual returns at the time when the merchandise is sold to the customer. Based on historical experience, management estimates that sales returns are immaterial and has not made allowance for estimated sales returns. Referral income is the income derived from referring customers to other non-directly competitive duty-free shops. The Company recognized referral income according to the number of visitors referred during the financial period. Service income is primarily derived from the provision of management service to other retail operators. These services are generally billed on a monthly basis. Revenue is recognized when service is rendered and accepted by the customers.

Accounts receivable. Accounts receivable consist primarily of trade receivables and amounts due from banks for customer credit card transactions. Accounts receivable are recognized and carried at original invoiced amount less an allowance for any uncollectible accounts. Management reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer’s financial condition, credit history, and the current economic conditions to make adjustments in the allowance when it is considered necessary. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Inventories. We value inventory at the lower of cost or market, using the first-in, first-out or weighted average basis method, and regularly reviews the book value of discontinued product lines and stock keeping units to determine if these items are properly valued. If the market value of the product is less than cost, management will write down the related inventory to the estimated net realizable value. The management regularly evaluates the composition of its inventory to identify slow-moving and obsolete inventories to determine if additional write-downs are required. This valuation requires significant judgment from management as to the salability of its inventory based on forecasted sales. It is particularly difficult to judge the potential sales of new products. Should the forecasted sales not materialize, it would have a significant impact on the company’s results of operations and the valuation of its inventory, resulting in a charge to income in the period such determination is made.

Property and equipment. Property and equipment are recorded at cost less accumulated depreciation and amortization and impairment losses. Gains or losses on disposals are reflected as gain or loss in the year of disposal. The cost of improvements that extend the life of plant, property and equipment are capitalized. These capitalized costs may include structural improvements, equipment and fixtures. All ordinary repair and maintenance costs are expensed as incurred. Property and equipment held-for-sale are measured at the lower of their carrying amount or fair value less cost to sell. Depreciation or amortization for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets.

Impairment of long-lived assets. We account for impairment of property, plant and equipment and amortizable intangible assets in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which requires us to evaluate a long-lived asset for recoverability when there is an event or circumstance that indicates the carrying value of the asset may not be recoverable. An impairment loss is recognized when the carrying amount of a long-lived asset or asset group is not recoverable (when carrying amount exceeds the gross, undiscounted cash flows from use and disposition) and is measured as the excess of the carrying amount over the asset’s (or asset group’s) fair value.

2008 Highlights

In October 2008, three of our subsidiaries executed the Agreements with Best Paramount whereby we provided technical, commercial and operational management for Best Paramount. In 2008, the following three major trends affected our core business:

1.	A reduction in tourist visits from mainland China to Hong Kong partly as a result of adverse changes in travel policy and the domestic economic environment in China;

2.	A reduction in spending per tourist due to a downturn in global economic conditions; and

3.	Severe competition from other local retailers seeking to make sales to a dwindling group of tourists, in the midst of a downturn in tourism.

As a result, management decided to close its shopping centers and change its business model from being an outlet and discount shopping center operator to a retail service provider. Thus, we entered into the Agreements with Best Paramount and derived service fee. We believe this change can enhance the Company’s profitability.

2009 Outlook

We will focus on our new business model to provide management services to other retail operators, such as Best Paramount. We are optimistic that our new business direction will enable the Company to produce a more stable stream of income and achieve profitability for the Company and its shareholders.

RESULTS OF OPERATIONS

Comparison of Three Months Ended December 31, 2007 and December 31, 2008.

Sales. For the three months ended December 31, 2008, sales decreased 68% from $16.5 million to $5.3 million relative to the three months ended December 31, 2007. The average spending per capita increased from $78 for the three months ended December 31, 2007 to $82 for the same period of 2008, an increase of 5% mainly because of more tourists coming from cities with a higher average household income. Our retail sales for the three months ended December 31, 2008 were $2.7 million, a decrease of 73% from $10 million for the same quarter last year. The significant decrease in sales is attributable to the closure of our retail stores in November 2008, a reduction in tourist visits from mainland China to Hong Kong partly as a result of adverse changes in travel policy and the domestic economic environment in China, and severe competition from other local retailers seeking to make sales to a dwindling group of tourists, in the midst of a downturn in tourism.

Cost of Sales. Cost of sales decreased from $10.2 million for the three months ended December 31, 2007 to $6.2 million for the three months ended December 31, 2008, a decrease of 39%, as compared to a 68% decrease in sales over the same comparable quarters in 2008 and 2007. The decrease in our cost of sales was due to the decline of watch sales to our product offerings, which have a higher cost relative to the average retail sales price per unit. Our gross profit margin was reduced from 39% for the three months ended 2007 to gross loss of 18% for the same period in 2008. The drop in margin was mainly due to our tactic of keeping our prices competitive

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased from $7.3 million for the three months ended December 31, 2007 to $5.4 million for the same period in 2008. Our selling expenses decreased from $5.6 million for the three months ended December 31, 2007 to $2.6 million for the three months ended December 31, 2008. As a percentage of retail sales, our selling expenses decreased to 33% for the three months ended December 31, 2008 from 56% for the same period in the last year. Our selling expenses decreased as a result of a decrease in the sales volume-based incentives payable to the tour operators.

Other Income. Other income mainly represented management service income derived from the provision of retail service and the gain on exchange from converting RMB received from customers to Hong Kong Dollars. The other income on exchange remains relatively the same at $0.3 million for the three months ended December 31, 2007 and for the same period in 2008. We only started to derive service income from the three months ended December 31, 2008 due to the change in business model to become a retail service provider.

Comparison of Year Ended December 31, 2007 and December 31, 2008.

Sales. For the year ended December 31, 2008, our overall sales decreased 40% from $58.4 million to $35.0 million relative to the year ended December 31, 2007. Reasons attributable to this considerable decrease include a reduction in tourist visits from mainland China to Hong Kong partly as a result of adverse changes in travel policy and the domestic economic environment in China, and severe competition from other local retailers seeking to make sales to a dwindling group of tourists, which is causing a trend toward lower profits starting the second half of 2008. For 2008, approximately $27 million were sales generated by our retail segment and $8 million was generated from our trading segment. The number of customer visits to our stores dropped from 461,620 for 2007 to 380,875 for 2008, a decrease of 17%. Although the number of customer visits declined, the average spending per capita increased from $74 for 2007 to $79 for 2008 as a result of our continued focus on quality customers and a shift toward more first-time visitors from higher income cities.

Cost of Sales. Cost of sales decreased from $36 million for the year ended December 31, 2007 to $23 million for the year ended December 31, 2008, representing a decrease of 36%. The decrease in cost of sales was mainly due to the closure of our retail stores in November 2008. Our overall gross profit margin declined by 4% from 38% for the year ended December 31, 2007 to 34% for the same period in 2008.

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased from $23.4 million for the year ended December 31, 2007 to $21.3 million for the same period in 2008. Our selling expenses decreased from $15.5 million for the year ended December 31, 2007 to $11.7 million for the year ended December 31, 2008. As a percentage of retail sales, our selling expenses decreased to 43% for the year ended December 31, 2008 from 40% for the same period in 2007. On the other hand, our administrative expenses increased by about $1.6 million from $8 million in 2007 to $9.6 million in 2008 due to inflation and uncollectable debt in 2008.

Other Income. Other income mainly represented management service income derived from the provision of retail service and the gain on exchange from converting RMB received from customers to Hong Kong Dollars. Another significant source of other income was from concessionaire sales. Financing costs included $1 million of amortization of the discount on the debentures payable and $0.26 million interest expenses on our convertible debentures and other borrowings. Due to the change in business model from the third quarter in 2008 from being an outlet and discount shopping center operator to a retail service provider, we started to derive management service income from the provision management service to other retail operators in 2008. The management service income for the year ended December 31, 2008 was derived from the provision of management service to Best Paramount in accordance with the agreements executed in October 2008.

Comparison of Year Ended December 31, 2006 and December 31, 2007.

Sales. For the year ended December 31, 2007, our overall sales increased 10% from $53.1 million to $58.4 million relative to the year ended December 31, 2006. For 2007, $14.3 million in sales resulted from watches, a new addition to our product line. Of the remaining $44.1 million in sales, approximately $34.3 million were sales generated by our retail segment (excluding watches), $9.4 million was generated from our trading segment, and $0.4 million was referral income. Since January 2007, we began cooperating with a watch retailer in Hong Kong in an arrangement in which we merchandized high-value watches and sold them through our cooperating watch retailer’s store on a consignment basis. The profit margin from our watch sales was about 6%. The number of customer visits to our stores dropped from 651,778 for 2006 to 461,620 for 2007, a decrease of 29%. Although the number of customer visits declined, the average spending per capita increased from $68 for 2006 to $74 for 2007 as a result of our continued focus on quality customers and a shift toward more first-time visitors from higher income cities. Management believes the decrease in overall customer visits in 2007 is partly due to the trend away from organized group tours in favor of individual or independent travel, as discussed above.

Cost of Sales. Cost of sales increased from $24 million for the year ended December 31, 2006 to $36 million for the year ended December 31, 2007, representing an increase of 50%. The increase of cost of sales was mainly due to the addition of watches to our product line. The cost of watch sales was $13.6 million and the profit margin on our watch sales was about 6%. Excluding the cost of sales from watches, and for purposes of comparing our cost of sales during the same period in the prior year, our other cost of sales was $22.4 million. Our overall gross profit margin declined by 31% from 55% for the year ended December 31, 2006 to 38% for the same period in 2007. However, if the effect of watch sales is excluded, our gross profit margin with respect to all other parts of our business declined only from 55% to 49% over the year of 2006 and 2007.

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased from $25.7 million for the year ended December 31, 2006 to $23.4 million for the same period in 2007. Our selling expenses increased from $15.3 million for the year ended December 31, 2006 to $15.5 million for the year ended December 31, 2007. As a percentage of retail sales, our selling expenses increased to 45% for the year ended December 31, 2007 from 33% for the same period in 2006. In order for travel agents and operators to support our refund guarantee scheme, we paid increased commissions to travel agents and operators. We also increased our advertising efforts by spending approximately $800,000 in 2007 on advertising as compared to $0 spent on advertising in 2006. On the other hand, our administrative expenses decreased by about $2 million from $10 million in 2006 to $8 million in 2007 due to the closure of one of our three stores in early 2007.

Other Income. Other income mainly represented the gain on exchange from converting RMB received from customers to Hong Kong Dollars. Another significant source of other income was from concessionaire sales, which was expanded to two shops in the third quarter 2007 compared to only one shop in the same period of 2006. On the other hand, higher finance costs were incurred due to issuing convertible debentures in October 2006. Financing costs included $1 million of amortization of the discount on the debentures payable and $0.24 million interest expenses on our convertible debentures issued in October of 2006. As a result, total other income decreased from $1.5 million for the year ended December 31, 2006 to $0.1 million for the same period in 2007.

Related Party Transactions

For a description of our related party transactions see the section of this report entitled “Certain Relationships and Related Transactions.”

Liquidity and Capital Resources

Cash Flows. For the year 2008, net cash flows used in operations was $1,049,959. The increase in net cash flows used in operations in 2008 was due to a decrease in sales and gross profit margin.

Net cash flows used in investing activities in 2008 was $71,154, which was primarily due to purchase of plant and equipment.

Net cash flows drawn by financing activities was $592,475 in 2008, which was mainly attributable to the repayment of loan and capital lease.

We believe that our existing cash balances and anticipated cash flows from operations will be sufficient to meet our operating, acquisition and capital requirements for at least the next 12 months. However, there is no assurance that we will not need to raise additional equity or debt financing within this period. We also may require additional capital for other purposes not presently contemplated. If we are unable to obtain sufficient capital, we could be required to curtail our expenditures, including capital expenditures for property and equipment, which could harm our business.

Contractual Obligations

We have certain fixed contractual obligations and commitments that include future estimated payments. Changes in our business needs, cancellation provisions, changing interest rates, and other factors may result in actual payments differing from the estimates. We cannot provide certainty regarding the timing and amounts of payments. We have presented below a summary of the most significant assumptions used in our determination of amounts presented in the tables, in order to assist in the review of this information within the context of our consolidated financial position, results of operations, and cash flows.

The following tables summarize our contractual obligations as of December 31, 2008, and the effect these obligations are expected to have on our liquidity and cash flows in future periods.

	Payments Due by Period
	Total		Less than 1 year	1-3 Years		4-5 Years	5 Years +
	(in thousands of dollars)
Contractual Obligations:

Total Indebtedness		318	66		—	—		—

Capital Lease Obligations		205	45		—	—		—

Operating Leases		470	90		—	—		—
Total Contractual Obligations:		993	201		—	—		—

Total indebtedness consists of an installment loan from a financial institution in Hong Kong.

Capital lease amounts primarily consist of equipment to support our wholesale operations. See “Note 7—Property and Equipment” in the notes to the consolidated financial statements, included elsewhere in this report.

Operating lease amounts include minimum lease payments under our non-cancelable operating leases for office facilities, as well as limited computer and office equipment that we utilize under lease arrangements. The amounts presented are consistent with contractual terms and are not expected to differ significantly, unless a substantial change in our headcount needs requires us to exit an office facility early or expand our occupied space.

Other purchase obligation amounts include minimum purchase commitments for advertising and other goods and services that were entered into through our ordinary course of business.

Off-Balance Sheet Arrangements

We do not have any off balance-sheet arrangements, investments in special purpose entities or undisclosed borrowings or debt. Additionally, we are not a party to any derivative contracts or synthetic leases.

Item 7A.

Quantitative and Qualitative Disclosures about Market Risk

We do not use derivative financial instruments in our investment portfolio and have no foreign exchange contracts. Our financial instruments consist of cash and cash equivalents, trade accounts receivable, accounts payable and long-term obligations. We consider investments in highly-liquid instruments purchased with a remaining maturity of 90 days or less at the date of purchase to be cash equivalents.

Interest Rates. Our exposure to market risk for changes in interest rates relates primarily to our short-term investments and short-term obligations; thus, fluctuations in interest rates would not have a material impact on the fair value of these securities. At December 31, 2008, we had approximately $0.1 million in cash and cash equivalents. A hypothetical 5% increase or decrease in either short term or long term interest rates would not have a material impact on our earnings or loss, or the fair market value or cash flows of these instruments.

Foreign Exchange Rates. We generally transact business in Hong Kong Dollars, and do not have significant exposure to exchange rates between and among the U.S. Dollar or Chinese Renminbi (RMB). Since 1983, the Hong Kong Dollar has been pegged to the U.S. Dollar, and, as of March 31, 2009, has an exchange rate of 7.7504 Hong Kong Dollars for each U.S. Dollar. Our stores typically hold insignificant amounts of U.S. Dollars and RMB, i.e., 200,000 to 250,000 RMB, and $5,000 to $10,000 in U.S. Dollars. However, see the section titled “Risk Factors—Fluctuation in the value of RMB and Hong Kong Dollar relative to other currencies may have a material adverse effect on our business and/or investment in our shares.”

Item 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Financial Statements and Financial Statement Schedule begin on the next page, and are included in Part IV, Item 15(a)(1) and (2) of this annual report on Form 10-K.

ASIAMART, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page

Report of Independent Registered Public Accounting Firm, ZYCPA Company Limited (Formerly Zhong Yi (Hong Kong) C.P.A. Company Limited)		F-2

Report of Independent Registered Public Accounting Firm, Cordovano and Honeck LLP		F-3

Consolidated Balance Sheets		F-4

Consolidated Statements of Operations And Comprehensive Loss		F-5

Consolidated Statements of Cash Flows		F-6

Consolidated Statements of Stockholders’ (Deficit) Equity		F-7

Notes to Consolidated Financial Statements		F-8 - F-29

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of

Asiamart, Inc.

We have audited the accompanying consolidated balance sheets of Asiamart, Inc. and its subsidiaries (“the Company”) as of December 31, 2008 and the related consolidated statements of operations and comprehensive loss, cash flows and stockholders’ deficit for the year ended December 31, 2008. The financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2008, and the results of operations and cash flows for the year ended December 31, 2008 and in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has incurred substantial losses during this year, all of which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ ZYCPA Company Limited

ZYCPA Company Limited

(Formerly Zhong Yi (Hong Kong) C.P.A. Company Limited)

Certified Public Accountants

Hong Kong, China

May 4, 2009

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Asiamart, Inc. and subsidiaries

We have audited the accompanying consolidated balance sheet of Asiamart, Inc. and subsidiaries (“the Company”) as of December 31, 2007 and the related consolidated statements of operations, cash flows and stockholders’ equity for the year ended December 31, 2007. The financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits include consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2007 and the results of operations and cash flows for the year ended December 31, 2007 and in conformity with accounting principles generally accepted in the United States of America.

Cordovano and Honeck LLP

Certified Public Accountants

Englewood, Colorado USA

April 15, 2008

F-3

ASIAMART, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2008 AND 2007

(Currency expressed in United States Dollars (“US$”), except for number of shares)

	As of December 31,
	2008			2007
ASSETS
Current assets:
Cash and cash equivalents	$	99,186		$	1,817,148
Accounts receivable, net		1,798,142			1,883,609
Inventories, net		159,569			3,817,215
Deposits and prepaid expenses, net		418,212			1,500,599
Income tax recoverable		144,885			-
Other receivables, net		54,152			475,513
Total current assets		2,674,146			9,494,084

Non-current assets:
Plant and equipment, net		592,141			848,978
Long-term loans receivable, net		-			1,211,580
Long-term rental and utilities deposits		-			157,922
Debt issuance costs		79,067			184,492
Income tax recoverable		-			54,829
Total non-current assets		671,208			2,457,801

TOTAL ASSETS	$	3,345,354		$	11,951,885

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$	1,104,528		$	2,482,382
Accrued liabilities and other payables		2,426,101			1,136,981
Customer deposits		108,515			95,292
Amounts due to stockholders		288,456			286,585
Current portion of bank borrowings		23,216			318,322
Current portion of obligation under capital leases		82,287			205,113
Convertible debenture, net of discount of $782,189		2,287,706			-
Total current liabilities		6,320,809			4,524,675

Long-term liabilities:
Deferred tax liabilities		-			15,455
Obligation under capital leases		124,293			68,711
Bank borrowings		-			47,205
Convertible debenture		-			1,264,406
Total long-term liabilities		124,293			1,395,777

Total liabilities		6,445,102			5,920,452

Commitments and contingencies

Stockholders’ (deficit) equity:
Common stock, $0.001 par value; 200,000,000 shares authorized; 24,744,177 and 24,744,177 shares issued and outstanding as of December 31, 2008 and 2007		2,474			2,474
Additional paid-in capital		3,455,421			3,455,421
(Accumulated deficit) retained earnings		(6,619,390	)		2,507,417
Accumulated other comprehensive income		61,747			66,121
Total stockholders’ (deficit) equity		(3,099,748	)		6,031,433

TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY	$	3,345,354		$	11,951,885

See accompanying notes to consolidated financial statements.

F-4

ASIAMART, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE LOSS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Currency expressed in United States Dollars (“US$”), except for number of shares)

	Years ended December 31,
	2008			2007
REVENUE, NET:
Sale of products	$	34,636,938		$	56,987,173
Sale of products, related parties		-			997,636
Referral income		-			426,642
Service income		389,980			-

Total revenue, net		35,026,918			58,411,451

COST OF REVENUE (exclusive of depreciation)		22,840,546			36,069,653

GROSS PROFIT		12,186,372			22,341,798

Operating expenses:
Sales and marketing		11,733,432			15,455,353
Depreciation		275,202			258,773
Impairment loss on long-lived assets		235,709			-
Uncollectible receivable write-off		398,040			-
Allowance for doubtful accounts		2,175,748			-
General and administrative		6,483,930			7,704,491

Total operating expenses		21,302,061			23,418,617

LOSS FROM OPERATIONS		(9,115,689	)		(1,076,819	)

Other income (expenses):
Other income		348,379			581,306
Foreign exchange gain		933,059			1,041,112
Interest income		140			5,737
Interest expense		(1,265,603	)		(1,327,396	)
Other expense		-			(197,875	)

Total other income		15,975			102,884

LOSS BEFORE INCOME TAXES		(9,099,714	)		(973,935	)

Income tax expense		27,093			96,093

NET LOSS	$	(9,126,807	)	$	(1,070,028	)

Other comprehensive income:
- Foreign currency translation (loss) gain		(4,374	)		18,563

COMPREHENSIVE LOSS	$	(9,131,181	)	$	(1,051,465	)

Net loss per share – Basic and diluted	$	(0.37	)	$	(0.04	)

Weighted average shares outstanding – Basic and diluted		24,744,177			24,617,442

See accompanying notes to consolidated financial statements.

F-5

ASIAMART, INC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Currency expressed in United States Dollars (“US$”))

	Years ended December 31,
	2008			2007
Cash flows from operating activities:
Net loss	$	(9,126,807	)	$	(1,070,028	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation		275,202			258,773
Amortization of discount and debt issuance costs on convertible debenture		1,128,725			1,128,722
Obsolete inventory write-back		(475,295	)		-
Uncollectible receivables write-off		398,040			-
Allowance for doubtful accounts		2,175,748			-
Impairment loss on long-lived assets		235,709			-
Change in operating assets and liabilities:
Accounts receivable, trade		(322,916	)		2,367,289
Inventories		4,132,941			(2,775,191	)
Deposits, prepaid expenses and other receivables		14,769			(294,805	)
Income tax recoverable		(105,511	)		-
Accounts payable		(1,377,854	)		800,782
Accrued liabilities and other payables		1,982,196			16,492
Customers deposit		13,223			84,108
Amounts due to stockholders		1,871			-
Income tax payable		-			(367,151	)
Deferred tax liabilities		-			(53	)
Net cash (used in) provided by operating activities		(1,049,959	)		148,938

Cash flows from investing activities:
Increase in amount due from shareholders		-			(17,775	)
Long-term loans to travel agencies		-			(180,963	)
Proceeds from disposal of plant and equipment		-			-
Purchase of plant and equipment		(71,154	)		(428,876	)
Net cash used in investing activities		(71,154	)		(627,614	)

Cash flows from financing activities:
Proceeds from installment loan		-			302,316
Repayment of installment loan		(342,311	)		(470,198	)
Proceeds from capital lease		-			326,655
Repayment of capital lease		(250,164	)		(441,816	)
Net cash used in financing activities		(592,475	)		(283,043	)

Effect of exchange rate change on cash and cash equivalents		(4,374	)		18,563

NET CHANGE IN CASH AND CASH EQUIVALENTS		(1,717,962	)		(743,156	)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		1,817,148			2,560,304

CASH AND CASH EQUIVALENTS, END OF YEAR	$	99,186		$	1,817,148

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest expense	$	14,890		$	62,965
Cash paid for income taxes	$	118,401		$	463,244

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Partial settlement of long-term loans receivable against travel agencies’ commission payable	$	613,774		$	-
Plant and equipment purchased under capital lease	$	182,920		$	-
Cashless conversion of warrants	$	-		$	20

See accompanying notes to consolidated financial statements

F-6

ASIAMART, INC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Currency expressed in United States Dollars (“US$”), except for number of shares)

	Common stock				Additional			Retained earnings (accumulated			Accumulated other Comprehensive			Total stockholders’
	No. of shares		Amount		paid-in capital			deficit)			income			equity (deficit)

Balance as of January 1, 2007		24,535,755	$	2,454	$	3,455,441		$	3,577,445		$	47,558		$	7,082,898

Net loss for the year		-		-		-			(1,070,028	)		-			(1,070,028	)

Cashless conversion of warrants		208,422		20		(20	)		-			-			-

Foreign currency translation adjustment		-		-		-			-			18,563			18,563

Balance as of December 31, 2007		24,744,177	$	2,474	$	3,455,421		$	2,507,417		$	66,121		$	6,031,433

Net loss for the year		-		-		-			(9,126,807	)		-			(9,126,807	)

Foreign currency translation adjustment		-		-		-			-			(4,374	)		(4,374	)

Balance as of December 31, 2008		24,744,177	$	2,474	$	3,455,421		$	(6,619,390	)	$	61,747		$	(3,099,748	)

See accompanying notes to consolidated financial statements

F-7

ASIAMART, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Currency expressed in United States Dollars (“US$”), except for number of shares)

1. DESCRIPTION OF BUSINESS AND ORGANIZATION

Asiamart, Inc. (“AAMA” or the “Company”) was incorporated under the laws of the State of Delaware on August 25, 1997 as WT Holdings Corporation. On November 30, 2006, the Company further changed to its current name.

The Company through its subsidiaries, engages in two operating segments, trading and retailing. Trading consists of selling products wholesale to other retail operators and retailing consists of selling products primarily to tourist through two discount shopping centers in Hong Kong.

Description of wholly-owned subsidiaries

	Company name	Trading name	Place/date of incorporation	Particulars of issued share capital	Principal activities

1	Profits Dream Development Limited (“Profits Dream”)	N/A	British Virgin Islands, July 26, 2002	1,000 issued shares of common stock of $1 each	Investment holdings

2	Raffle Limited (“Raffle”)	N/A	Hong Kong, August 7, 1998	2,000,000 issued shares of ordinary shares of HK$1 each	Trading of general merchandise

3	Sure Profits Trading Limited (“Sure Profits”)	N/A	Hong Kong, August 3, 2001	1,000,000 issued shares of ordinary shares of HK$1 each	Trading of general merchandise

4	Manigood International Industrial Limited (“Manigood”)	Hong Kong (Duty Free) Center	Hong Kong, December 15, 2003	1,000,000 issued shares of ordinary shares of HK$1 each	Operating a discount shopping center in Hong Kong

5	Allied Fine Development Limited (“Allied Fine”)	Super Star Department Store	Hong Kong, September 19, 2003	10,000 issued shares of ordinary shares of HK$1 each	Operating a discount shopping center in Hong Kong

6	Max Surplus International Development Limited (“Max Surplus”)	Golden Bauhinia Duty Free	Hong Kong, July 26, 2004	2 issued shares of ordinary shares of HK$1 each	Dormant

F-8

The Company’s outlets and discount shopping centers cater to tourists visiting Hong Kong from other parts of China (“mainland China”) who are transported directly to the Company’s shopping centers by a large network of travel companies and tour operators. The Company’s outlets and shopping centers offer the tourists discount prices on a limited selection of international branded and selected private label products in a wide range of merchandise categories such as consumer electronics, cosmetics, watches, dietary supplements, health care products and optical instruments. A number of travel companies and tour operators have agreements, partnerships or affiliation arrangements with the Company to transport tourists from mainland China to the Company’s outlets and shopping centers for shopping. All current operations and assets of the Company are located in Hong Kong.

AAMA and its subsidiaries are hereinafter referred to as “the Company”.

2.	GOING CONCERN UNCERTAINTIES

These consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.

For the year ended December 31, 2008, the Company had incurred a net loss of $9,126,807 and generated a negative operating cash flow of $1,049,959. Additionally, the Company had a working capital deficit of $3,646,663 and an accumulated deficit of $6,619,390, as of December 31, 2008. The continuation of the Company is dependent upon the continuing financial support of shareholders and the anticipation of business restructuring plan. As a result, the consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of the Company’s ability to continue as a going concern.

3.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

l	Basis of presentation

These accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America.

l	Basis of consolidation

The consolidated financial statements include the financial statements of AAMA and its subsidiaries.

F-9

All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.

l	Use of estimates

In preparing these consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the years reported. Actual results may differ from these estimates.

l	Cash and cash equivalents

Cash and cash equivalents are carried at cost and represent cash on hand, demand and time deposits with banks and liquid investments with an original maturity of three months or less as of the purchase date of such investments.

l	Accounts receivable

Accounts receivable consist primarily of trade receivables and amounts due from banks for customer credit card transactions. Accounts receivable are recognized and carried at original invoiced amount less an allowance for any uncollectible accounts. Management reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer’s financial condition, credit history, and the current economic conditions to make adjustments in the allowance when it is considered necessary. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

l	Inventories

The Company values inventory at the lower of cost or market, using the first-in, first-out or weighted average method, and regularly reviews the book value of discontinued product lines and stock to determine if these items are properly valued. If the market value of the product is less than cost, management will write down the related inventory to its estimated net realizable value. The management regularly evaluates the composition of its inventory to identify slow-moving and obsolete inventories to determine if additional write-downs are required. This valuation requires significant judgment from management as to the salability of its inventory based on forecasted sales. It is particularly difficult to judge the potential sales of new products. Should the forecasted sales not materialize, it would have a significant impact on the Company’s results of operations and the valuation of its inventory, resulting in a charge to income in the period if such determination is made.

l	Plant and equipment

Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational:

F-10

		Depreciable life
Leasehold improvements		the shorter of the useful life or the remaining lease term
Furniture and fixtures		5 years
Office equipment		5 years
Motor vehicles		5 years

Expenditure for repairs and maintenance is expensed as incurred. When assets have retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.

l	Capital leases

Leases that transfer substantially all the rewards and risks of ownership to the lessee, other than legal title, are accounted for as capital leases. Substantially all of the risks or benefits of ownership are deemed to have been transferred if any one of the four criteria is met: (i) transfer of ownership to the lessee at the end of the lease term, (ii) the lease containing a bargain purchase option, (iii) the lease term exceeding 75% of the estimated economic life of the leased asset, (iv) the present value of the minimum lease payments exceeding 90% of the fair value. At the inception of a capital lease, the Company as the lessee records an asset and an obligation at an amount equal to the present value of the minimum lease payments. The leased asset is amortized over the shorter of the lease term or its estimated useful life if title does not transfer to the Company, while the leased asset is depreciated in accordance with the Company’s normal depreciation policy if the title is to eventually transfer to the Company. The periodic rent payments made during the lease term are allocated between a reduction in the obligation and interest element using the effective interest method in accordance with APB Opinion No. 21, “Interest on Receivables and Payables”.

l	Impairment of long-lived assets

The Company accounts for impairment of plant and equipment and long-term loans receivables in accordance with SFAS No. 144, “Accounting for Impairment or disposal of Long-Lived Assets”, which requires the Company to evaluate a long-lived asset for recoverability when there is event or circumstance that indicates the carrying value of the asset may not be recoverable. An impairment loss is recognized when the carrying amount of a long-lived asset or asset group is not recoverable (when carrying amount exceeds the gross, undiscounted cash flows from use and disposition) and is measured as the excess of the carrying amount over the asset’s (or asset group’s) fair value.

l	Revenue recognition

In accordance with the SEC’s Staff Accounting Bulletin No. 104, “Revenue Recognition”, the Company records revenue when services are received by the customers and realized the amounts net of provisions for discounts, allowance and taxes which are recognized at the time of services performed.

Sale of products represents the sale of watches and electronic appliances at retail outlets and through trading network. Sale of products is recognized when the following four revenue criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed or determinable, and collectability is reasonably assured. Revenue is recorded, net of sales discount and actual returns at the time when the merchandise is sold to the customer. Based on historical experience, management estimates that sales returns are immaterial and has not made allowance for estimated sales returns.

F-11

Referral income is the income derived from referring customers to other non-directly competitive duty-free shops. The Company recognized referral income according to the number of visitors referred during the financial period.

Service income is primarily derived from the provision of management service to other retail operators. These services are generally billed on a monthly basis. Revenue is recognized when service is rendered and accepted by the customers.

Interest income is recognized on a time apportionment basis, taking into account the principal amounts outstanding and the interest rates applicable.

l	Cost of revenue

Cost of revenue primarily consisted of the cost of finished goods purchased for re-sale such as watches and electronic appliances. Shipping and handling costs, associated with the distribution of finished products to customers, are recorded in costs of revenue and are recognized when the related finished product is shipped to the customer.

l	Advertising cost

The Company expenses advertising costs as incurred in accordance with SOP 93-7 “Reporting for Advertising Costs”. Advertising expenses for the years ended December 31, 2008 and 2007 were $77,272 and $386,341, respectively.

l	Retirement plan costs

Contributions to retirement schemes (which are defined contribution plans) are charged to general and administrative expenses in the consolidated statements of operation and comprehensive loss as and when the related employee service is provided.

l	Income taxes

The Company accounts for income tax using SFAS No. 109 “Accounting for Income Taxes”, which requires the asset and liability approach for financial accounting and reporting for income taxes. Under this approach, deferred income taxes are provided for the estimated future tax effects attributable to temporary differences between financial statement carrying amounts of assets and liabilities and their respective tax bases, and for the expected future tax benefits from loss carry-forwards and provisions, if any. Deferred tax assets and liabilities are measured using the enacted tax rates expected in the years of recovery or reversal and the effect from a change in tax rates is recognized in the consolidated statement of operations and comprehensive income in the period of enactment. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all of the deferred tax assets will not be realized.

F-12

The Company also adopts Financial Accounting Standards Board ("FASB") Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" (FIN 48), on January 1, 2007. FIN 48 prescribes a more likely than not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures. The Company did not have any adjustment to the opening balance of retained earnings as of January 1, 2007 as a result of the implementation of FIN 48. In accordance with FIN 48, the Company also adopted the policy of recognizing interest and penalties, if any, related to unrecognized tax positions as income tax expense. For the years ended December 31, 2008 and 2007, the Company did not have any interest and penalties associated with tax positions. As of December 31, 2008 and 2007, the Company did not have any significant unrecognized uncertain tax positions.

The Company conducts major businesses in Hong Kong and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the foreign tax authority.

l	Net loss per share

The Company calculates net loss per share in accordance with SFAS No. 128, “Earnings per Share”. Basic loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.

l	Comprehensive income

SFAS No. 130, “Reporting Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated comprehensive income, as presented in the accompanying consolidated statements of stockholders’ equity consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.

l	Foreign currencies translation

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.

The reporting currency of the Company is the United States dollar ("US$"). The Company’s subsidiaries operating in Hong Kong maintained their books and records in its local currency, Hong Kong Dollars ("HK$"), which are functional currencies as being the primary currency of the economic environment in which these entities operate.

F-13

In general, assets and liabilities are translated into US$, in accordance with SFAS No. 52, “Foreign Currency Translation”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the year. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.

Translation of amounts from HK$ into US$1 has been made at the following exchange rates for the respective year:

	2008		2007
Years end HK$:US$1 exchange rate		7.751		7.805
Average rates HK$:US$1 exchange rate		7.787		7.802

l	Stock based compensation

The Company adopts SFAS No. 123 (revised 2004), "Share-Based Payment" ("SFAS No. 123(R)") using the fair value method. Under SFAS No. 123(R), the stock-based compensation is measured using the Black-Scholes Option-Pricing model on the date of grant under the modified prospective method. The fair value of stock-based compensation that are expected to vest are recognized using the straight-line method over the requisite service period.

l	Related parties

Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.

l	Segment reporting

SFAS No. 131 “Disclosures about Segments of an Enterprise and Related Information” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in the financial statements. For the year ended December 31, 2008, the Company operates in two reportable segments in Hong Kong.

l	Fair value of financial instruments

The Company values its financial instruments as required by SFAS No. 107, “Disclosures about Fair Value of Financial Instruments”. The estimated fair value amounts have been determined by the Company, using available market information and appropriate valuation methodologies. The estimates presented herein are not necessarily indicative of amounts that the Company could realize in a current market exchange.

The Company’s financial instruments primarily consist of cash and cash equivalents, accounts receivable, deposits and prepaid expenses, other receivables, accounts payable, accrued liabilities and other payables, customers deposit, amount due to stockholders and income tax payable.

As of the balance sheet dates, the estimated fair values of the financial instruments were not materially different from their carrying values as presented due to the short term maturities of these instruments and that the interest rates on the borrowings approximate those that would have been available for loans of similar remaining maturity and risk profile at respective year ends.

F-14

l	Recently accounting pronouncements

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.

In September 2006, the FASB issued Statement of Financial Accounting Standard (“SFAS“) No. 157, "Fair Value Measurements" ("SFAS No. 157"). SFAS No. 157 defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measures required under other accounting pronouncements, but does not change existing guidance as to whether or not an instrument is carried at fair value. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. In February 2008, the FASB deferred SFAS No. 157's effective date for all non-financial assets and liabilities, except those items recognized or disclosed at fair value on an annual or more frequently recurring basis, until years beginning after November 15, 2008. The Company believes that SFAS No. 157 should not have a material impact on the consolidated financial position or results of operations.

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS No. 159"). SFAS No. 159 permits entities to choose to measure, on an item-by-item basis, specified financial instruments and certain other items at fair value. Unrealized gains and losses on items for which the fair value option has been elected are required to be reported in earnings at each reporting date. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007, the provisions of which are required to be applied prospectively. The Company believes that SFAS No. 159 should not have a material impact on the consolidated financial position or results of operations.

In December 2007, the FASB issued SFAS No. 141 (Revised 2007), "Business Combinations" ("SFAS No. 141R"). SFAS No. 141R will change the accounting for business combinations. Under SFAS No. 141R, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS No. 141R will change the accounting treatment and disclosure for certain specific items in a business combination. SFAS No. 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Accordingly, any business combinations the Company engages in will be recorded and disclosed following existing GAAP until January 1, 2009. The Company expects SFAS No. 141R will have an impact on accounting for business combinations once adopted but the effect is dependent upon acquisitions at that time. The Company is still assessing the impact of this pronouncement.

In April 2008, the FASB issued FSP No. 142-3, “Determination of the Useful Life of Intangible Assets” (FSP No.142-3) that amends the factors considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142. FSP No. 142-3 requires a consistent approach between the useful life of a recognized intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the fair value of an asset under SFAS No. 141(R). FSP No. 142-3 also requires enhanced disclosures when an intangible asset’s expected future cash flows are affected by an entity’s intent and/or ability to renew or extend the arrangement. FSP No. 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008 and is applied prospectively. The Company does not expect the adoption of FSP No.142-3 to have a material impact on its consolidated results of operations or financial condition.

F-15

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” ("SFAS No. 162"). This statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements in conformity with generally accepted accounting principles (GAAP) in the United States. This statement is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles”. The Company does not expect the adoption of SFAS No. 162 to have a material effect on the financial condition or results of operations of the Company.

In May 2008, the FASB issued SFAS No. 163, "Accounting for Financial Guarantee Insurance Contracts—an interpretation of FASB Statement No. 60" ("SFAS No. 163"). SFAS No. 163 interprets Statement 60 and amends existing accounting pronouncements to clarify their application to the financial guarantee insurance contracts included within the scope of that Statement. SFAS No. 163 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years. As such, the Company is required to adopt these provisions at the beginning of the fiscal year ended December 31, 2009. The Company is currently evaluating the impact of SFAS No. 163 on its financial statements but does not expect it to have an effect on the Company's financial position, results of operations or cash flows.

Also in May 2008, the FASB issued FSP APB 14-1, "Accounting for Convertible Debt Instruments that may be Settled in Cash upon Conversion (Including Partial Cash Settlement)" ("FSP APB 14-1"). FSP APB 14-1 applies to convertible debt securities that, upon conversion, may be settled by the issuer fully or partially in cash. FSP APB 14-1 specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity's nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. FSP APB 14-1 is effective for financial statements issued for fiscal years after December 15, 2008, and must be applied on a retrospective basis. Early adoption is not permitted. The Company does not expect it to have an effect on the Company's financial position, results of operations or cash flows.

In June 2008, the FASB issued FASB Staff Position ("FSP") EITF 03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities" ("FSP EITF 03-6-1"). FSP EITF 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting, and therefore need to be included in the earnings allocation in computing earnings per share under the two-class method as described in SFAS No. 128, Earnings per Share. Under the guidance of FSP EITF 03-6-1, unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings-per-share pursuant to the two-class method. FSP EITF 03-6-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008 and all prior-period earnings per share data presented shall be adjusted retrospectively. Early application is not permitted. The Company does not expect it to have an effect on the Company's financial position, results of operations or cash flows.

F-16

Also in June 2008, the FASB ratified EITF No. 07-5, "Determining Whether an Instrument (or an Embedded Feature) is Indexed to an Entity's Own Stock" ("EITF 07-5"). EITF 07-5 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument's contingent exercise and settlement provisions. EITF 07-5 is effective for financial statements issued for fiscal years beginning after December 15, 2008. Early application is not permitted. The Company is assessing the potential impact of this EITF 07-5 on the financial condition and results of operations and does not expect it to have an effect on the Company's financial position, results of operations or cash flows.

In September 2008, the FASB issued FSP 133-1 and FIN 45-4, “Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161” (“FSP FAS 133-1” and “FIN 45-4”). FSP FAS 133-1 and FIN 45-4 amends disclosure requirements for sellers of credit derivatives and financial guarantees. It also clarifies the disclosure requirements of SFAS No. 161 and is effective for quarterly periods beginning after November 15, 2008, and fiscal years that include those periods. The adoption of FSP FAS 133-1 and FIN 45-4 did not have a material impact on the Company’s current consolidated financial position, results of operation or cash flows.

In October 2008, the FASB issued Staff Position (“FSP”) No. 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active” (“FSP FAS 157-3.”) FSP FAS 157-3 clarifies the application of SFAS No. 157 in an inactive market. It illustrated how the fair value of a financial asset is determined when the market for that financial asset is inactive. FSP FAS 157-3 was effective upon issuance, including prior periods for which financial statements had not been issued. The adoption of FSP FAS 157-3 did not have a material impact on the Company’s current consolidated financial position, results of operations or cash flows.

In December 2008, FASB issues Staff Position (“FSP”) No. 140-4 and FIN 46(R)-8, “Disclosures by Public Entities about Transfers of Financial Assets and Interests in Variable Interest Entities”. The purpose of this FSP is to promptly increase disclosures by public entities and enterprises until the pending amendments to SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”, (“SFAS No. 140”) and FASB Interpretation No. 46 (revised December 2003), “Consolidation of Variable Interest Entities”, (“FIN 46(R)”) are finalized and approved by the FASB. The FSP is effective for reporting periods (interim and annual) ending after December 15, 2008. The Company adopted this FSP for the year ended December 31, 2008 and the adoption did not have any impact on the consolidated financial statements.

4.	BUSINESS RESTRUCTURING

During 2008, the Company has experienced a significant slowdown in retail sales and encountered a continuing reduction in tourist visits from mainland China to Hong Kong, and a reduction in spending per tourist, partly as a result of adverse changes in travel policy and the domestic economic environment in China. Further, management believes that the current ongoing global financial crisis is discouraging tourist visits to Hong Kong. In the present economic climate, management believes that the Company is not likely to be able to sustain profitability with operation of its retail outlets in their current form, and believes that changing its business model will be in its best interest. During the fourth quarter of 2008, the Company anticipated to restructure its major operation from being an outlet and discount shopping center operator to a retail service provider. The Company has scaled down its current retail outlets and has gradually shifted its resources to provide management services to other retail operators. The Company currently does not intend to dispose the outlet retailing business by sale.

F-17

On October 28, 2008, the Company, through its subsidiaries entered into a series of Management Service Agreements (the “Agreements”) with Best Paramount Industrial Limited (“Best Paramount”) whereby the Company shall provide management service to Best Paramount to operate the retailing outlets. Under the terms of the Agreements, Best Paramount shall be responsible for paying its own rent, cost of sales, commissions to travel agents and taxes. The Company shall be responsible for paying all other expenses of the operation, including, but not limited to, advertising, utilities, insurance, salaries, transportation, cleaning and administrative (“Actual Costs”) on the behalf of Best Paramount. Best Paramount shall reimburse the Company for the Actual Costs, and in addition pay Company a 5% mark-up of such Actual Costs as consideration for the Company’s services. The Agreements may be terminated by mutual agreement, by either party giving the other written notice in the event of material breach, or by giving a 60-day prior written notice without cause.

For the year ended December 31, 2008, the Company recognized $389,980 of service income from the provision of management services to Best Paramount.

5.	TRADE ACCOUNTS RECEIVABLE

The majority of the Company’s sales are on open credit terms and in accordance with terms specified in the contracts governing the relevant transactions. The Company evaluates the need of an allowance for doubtful accounts based on specifically identified amounts that management believes to be uncollectible. If actual collections experience changes, revisions to the allowance may be required.

	As of December 31,
	2008			2007

Accounts receivable, cost	$	2,301,393		$	2,081,037
Less: allowance for doubtful accounts		(503,251	)		(94,868	)
Less: allowance for sales return		-			(102,560	)

Accounts receivable, net	$	1,798,142		$	1,883,609

In the fourth quarter of 2008, the Company has reviewed individually for collectability. Past due balances over 180 days are fully provided the allowance for doubtful accounts, determined principally on the basis of historical repayment history and the ability to pay outstanding balances. For the years ended December 31, 2008 and 2007, the Company provided the allowance for doubtful accounts of $408,383 and $94,868, respectively.

F-18

6.	INVENTORIES

Inventories consisted of the following:

	As of December 31,
	2008		2007

Inventories, finished goods	$	159,569	$	4,292,510
Less: reserve for obsolescence		-		(475,295	)

Inventories, net	$	159,569	$	3,817,215

As of December 31, 2008 and 2007, the reserve for obsolescence was $0 and $475,295, respectively. Reserve for obsolescence was decreased by $475,295 as write-back in 2008, due to the sale of the obsolete inventories in the fourth quarter of 2008.

The following table represents the changes of the reserve for obsolescence:

	Balance at beginning of year		Charged to costs and expenses		Amounts written-back			Balance at end of year

Year ended December 31, 2008
Reserves and allowances deducted from asset accounts
- Reserve for obsolescence	$	475,295	$	-	$	(475,295	)	$	-

Year ended December 31, 2007
Reserves and allowances deducted from asset accounts
- Reserve for obsolescence	$	301,110	$	174,185	$	-		$	475,295

7.	PLANT AND EQUIPMENT

Plant and equipment consisted of the following:

	As of December 31,
	2008			2007

Leasehold improvements	$	30,383		$	510,792
Furniture and fixtures		7,627			45,932
Office equipment		646,654			755,197
Motor vehicles		332,158			129,273
		1,016,822			1,441,194
Less: accumulated depreciation		(424,681	)		(592,216	)

Plant and equipment, net	$	592,141		$	848,978

Depreciation expense for the years ended December 31, 2008 and 2007 were $275,202 and $258,773, respectively.

F-19

For the year ended December 31, 2008, the Company tested for impairment in accordance with the SFAS No. 142. Based on the results of the Company's undiscounted cash flows calculation, the Company evaluated whether or not there was an impairment loss by comparing the fair value of the intangible asset to its carrying value. Since the carrying value of certain long-lived assets exceeded their fair values, the Company recognized an impairment loss of $235,709 to write down their carrying values.

As of December 31, 2008 and 2007, motor vehicles and certain equipment under capital leases were included with the aggregate net book value of $320,500 and $189,170, respectively (see Note 11).

8.	LONG-TERM LOANS RECEIVABLE

As of December 31, 2008 and 2007, long-term loans receivable from travel agencies total $0 and $1,211,580, which are unsecured and non-interest bearing with a term of 2 years, repayable in December 2008. Upon the maturity, the travel agencies partially settled the loan advances with the commission payable of $613,774 as the reduction in long-term loans receivable.

Based on management’s assessment, balances that remain outstanding after the Company has exhausted the reasonable collection efforts are written off and charged $398,040 as a credit to loans receivable. The Company has also provided an allowance of $120,464 for doubtful balances.

9.	ALLOWANCE FOR DOUBTFUL ACCOUNTS, NON-TRADE

In the fourth quarter of 2008, management anticipated the business restructuring plan and conducted a thorough review of non-trade receivables. As a result, the Company has made an allowance for doubtful accounts of $1,767,365 to the operations in 2008. This was based on the Company’s best estimate of probable losses when determining the collectability of individual and specific accounts: credit-worthiness, past transaction history and current economic industry trend. Account balances are charged against the allowance after all collection efforts have been exhausted and the potential for recovery is considered remote, as follows:

	As of December 31, 2008
Current portion:
Deposits and prepaid expenses	$	1,572,548
Less: allowance for doubtful accounts		(1,154,336	)

Deposits and prepaid expenses, net	$	418,212

Other receivables	$	546,717
Less: allowance for doubtful accounts		(492,565	)

Other receivables, net	$	54,152

Non-current portion:
Long-term loans receivable, net of write-offs	$	120,464
Less: allowance for doubtful accounts		(120,464	)

Long-term loans receivable, net	$	-

F-20

10.	ACCRUED LIABILITIES AND OTHER PAYABLES

Accrued liabilities and other payables consisted of the following:

	As of December 31,
	2008		2007

Accrued liabilities	$	314,552	$	326,903
Commission payable		1,460,101		325,896
Salaries payable		303,387		373,411
Other payables		348,061		110,771

	$	2,426,101	$	1,136,981

11.	LONG-TERM DEBTS

Long-term debts consisted of the following:

	As of December 31,
	2008			2007
Payable to financial institutions in Hong Kong:

Installment loan from Dah Sing Bank, with an effective annual interest rate of 11%, due April 18, 2009, guaranteed by two of the Company's directors	$	23,216		$	88,476
Installment loan from Citic Ka Wah Bank, with effective annual interest rate of 4.10%, due March 23, 2008, guaranteed by one of the Company's directors		-			43,521
Installment loan from Bank of China, with an effective annual interest rate of 6%, due October 28, 2008, guaranteed by two of the Company's directors		-			252,036

Total bank borrowings		23,216			384,033
Obligation under capital leases		206,580			255,318

Total		229,796			639,351
Less: current portion of bank borrowings		(23,216	)		(318,322	)
Less: current portion of obligation under capital leases		(82,287	)		(205,113	)

Total long-term debts, net of current portion	$	124,293		$	115,916

The Company also purchased certain equipment and motor vehicles under capital lease arrangements with several independent financial institutions in Hong Kong, with an effective interest rate ranging from 6.0% to 9.6% per annum, due through 2009 to 2013 and repayable the principal and interest monthly. The maturities of the capital leases obligation for the next five years are as follows:

F-21

Years ending December 31:
2009	$	87,464
2010		42,746
2011		41,931
2012		41,348
2013		13,783
Total capital leases obligation		227,272
Less: interest		(20,692	)

Present value of net minimum obligation	$	206,580

The Company’s certain equipment and motor vehicles are held under capital lease and the related depreciation is included in depreciation expense (see Note 7).

12.	CONVERTIBLE DEBENTURE

On October 6, 2006, the Company issued $3,069,895 of senior convertible debentures in a private placement to fourteen accredited investors (“Financing”). The Financing was conducted pursuant to a Securities Purchase Agreement. Maxim Group LLC acted as the lead placement agent with Chardan Capital Markets LLC as the co-placement agent.

Under the terms of the Financing, the debentures are unsecured, bear 8% interest, and mature in three years. The debentures are convertible into a quantity of common stock ranging from approximately 11.6 to 16.0 million shares, depending upon a one-time adjustment to the conversion price, available on October 6, 2007. The initial conversion price of the debentures is $0.24 per share which may be adjusted to equal the volume-weighted average trading price of the Company’s common stock for all trading days during the one year following the closing of the Financing, subject to a maximum conversion price of $0.264 per share, and a minimum conversion price of $0.192 per share (“Conversion Price Collar”). The conversion price of the debentures is also subject to anti- dilution adjustments, within the Conversion Price Collar, in the event the Company sells and issues shares of its common stock for below $0.24 per share. The Company may, at its election, force conversion of the debentures after the first anniversary of the closing, if the volume weighted average trading price of its common stock exceeds $0.48 per share for 30 consecutive trading days, and the average daily trading dollar volume exceeds $350,000. The Company may also redeem the debentures at 125% of the principal amount of the debentures plus accrued unpaid dividends, at any time after the first anniversary of the closing.

In connection with the Financing, on October 6, 2006 the Company issued warrants to investors that are exercisable for up to approximately 8 million shares of common stock of the Company with an exercise price ranging from $0.2112 to $0.2904 per share. The exercise price is adjustable based upon the conversion price of the debentures. The warrants are exercisable for a five-year period commencing on October 6, 2006. The Company also agreed to issue, in connection with the Financing, a warrant to the lead placement agent for the purchase of up to 1,279,123 shares of common stock of the Company, with an exercise price ranging from $0.2112 to $0.2904 per share.

F-22

The Company also entered into a registration rights agreement, under which it agreed to use its commercially reasonable efforts to register the common stock underlying the convertible debentures and all warrants related to the Financing, within 30 days following the closing. The Company is subject to a monthly penalty of 1% of the offering amount, up to a maximum of 24% for failing to register the shares timely.

The debentures were discounted for the fair value of warrants, pursuant to APB 14 “Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants”. The debentures were further discounted for the intrinsic value of the beneficial conversion feature, pursuant to EITF 98-5 “Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios.” The discount is being amortized over the life of the debentures. For the years ended December 31, 2008 and 2007, $1,023,300 and $1,023,300 were amortized and recorded as part of financing expenses, respectively.

The fair value of the warrants was determined using the Black-Scholes option pricing model, using the following assumptions:


Expected volatility	201.4	%
Expected term in years	5	%
Risk-free interest rate	4.64	%
Expected dividend yield	0	%

Expected volatilities are calculated using the historical prices of the Company’s common stock and based on the historical volatility of a similar company’s common stock that has similar characteristic in terms of revenue and share price and other factors. The expected term of warrants granted is based on the term of the exercisable periods. The risk-free interest rates are based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of grant.

13.	INCOME TAXES

For the years ended December 31, 2008 and 2007, the local (United States) and foreign components of (loss) income before income taxes were comprised of the following:

	Years ended December 31,
	2008				2007
Tax jurisdictions from:
– Local		$	(1,356,137	)		$	(1,372,890	)
– Foreign			(7,743,577	)			398,955

Loss before income taxes		$	(9,099,714	)		$	(973,935	)

F-23

Significant components of the provision for income taxes are as follows:

	Years ended December 31,
	2008			2007
Current:
– Local	$	-		$	-
– Foreign		42,576			96,093

Deferred:
– Local		-			-
– Foreign		(15,483	)		-

Income tax expense	$	27,093		$	96,093

The effective tax rate in the years presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. The Company and its subsidiaries are mainly operated in United States and Hong Kong that are subject to tax in the jurisdiction in which they operate, as follows:

United States of America

AAMA is registered in the State of Delaware and is subject to the tax laws of United States of America.

For the year ended December 31, 2008, the operation in the United States of America incurred $1,356,137 of net operating losses available for federal tax purposes, which are available to offset future taxable income. The net operating loss carry forwards begin to expire in 2029, if unutilized. The Company has provided for a full valuation allowance against the deferred tax assets of the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

Hong Kong

The Company’s subsidiaries operating in Hong Kong are subject to Hong Kong Profits Tax at the statutory income rate of 16.5% and 17.5% on assessable income for the years ended December 31, 2008 and 2007, respectively. The reconciliation of income tax rate to the effective income tax rate based on income (loss) before income taxes from foreign operation for the years ended December 31, 2008 and 2007 is as follows:

	Years ended December 31,
	2008			2007

(Loss) income before income taxes	$	(7,743,577	)	$	398,955
Statutory income tax rate		16.5	%		17.5	%
Income tax impact at Hong Kong Profits Tax statutory rate		(1,277,690	)		69,817
Expenses not deductible for tax purposes		653,873			51,699
Non-taxable income		(57,622	)		(1,023	)
Difference between book and tax depreciation		(27,261	)		(59,286	)
Prior year adjustments		15,966			-
Net operating loss carryforwards		719,827			34,886

Income tax expense	$	27,093		$	96,093

Income tax recoverable as of December 31, 2008 and 2007 consisted of Hong Kong Profits Tax of $144,885 and $54,829, respectively.

F-24

For the year ended December 31, 2008, Profits Dream, Manigood and Allied Fine incurred net operating losses and, accordingly, no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recognized due to the uncertainty of the realization of any tax assets. As of December 31, 2008, the aggregate net operating loss carryforwards was approximately $6,574,123 for Hong Kong tax purpose at no expiration.

The following table sets forth the significant components of the aggregate net deferred tax assets and liabilities of the Company as of December 31, 2008 and 2007:

	As of December 31,
	2008			2007
Deferred tax assets:
Net operating loss carryforwards:
- United States	$	1,041,868		$	580,782
- Hong Kong		844,117			34,886
Total net deferred tax assets		1,885,985			615,668
Less: valuation allowance		(1,885,985	)		(615,668	)

Net deferred tax assets	$	-		$	-

As of December 31, 2008, the Company incurred $9,638,441 of the aggregate net operating loss carryforwards available to offset its taxable income for income tax purposes. The Company has provided for a full valuation allowance against the deferred tax assets of $1,885,985 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future. For the year ended December 31, 2008, the valuation allowance increased by $1,270,317, primarily relating to net operating loss carryforwards.

14.	NET LOSS PER SHARE

The following table sets forth the computation of basic and diluted net loss per share for the years ended December 31, 2008 and 2007:

	Years ended December 31,
	2008			2007
Basis and diluted net income per share calculation
Numerator:
- Net loss in computing basic net loss per share	$	(9,126,807	)	$	(1,070,028	)

Denominator:
- Weighted average ordinary shares outstanding		24,744,177			24,617,442

Basic and diluted net loss per share	$	(0.37	)	$	(0.04	)

Since the Company reported a net loss for the years ended December 31, 2008 and 2007, all potential common shares have been excluded from the computation of the dilutive net loss per share for all periods presented because the effect would have been anti-dilutive.

F-25

15.	PENSION PLAN

The Company participates in a defined contribution pension scheme under the Mandatory Provident Fund Schemes Ordinance “MPF Scheme” for all its eligible employees in Hong Kong.

The MPF Scheme is available to all employees aged 18 to 64 with at least 60 days of service in the employment in Hong Kong. Contributions are made by the Company’s subsidiary operating in Hong Kong at 5% of the participants’ relevant income with a ceiling of HK$20,000. The participants are entitled to 100% of the Company’s contributions together with accrued returns irrespective of their length of service with the Company, but the benefits are required by law to be preserved until the retirement age of 65. The only obligation of the Company with respect to MPF Scheme is to make the required contributions under the plan. The assets of the schemes are controlled by trustees and held separately from those of the Company. The total contributions made for MPF Scheme were $161,963 and $175,971 for the years ended December 31, 2008 and 2007, respectively.

16.	RELATED PARTY TRANSACTIONS

(a)	Trade receivable and sales – related party

For the year ended December 31, 2007, the Company earned revenue from the sale of products to Prince Digital, a related company which was previously controlled by Mr. Tsoi Kee Kwong Ricky, a shareholder of the Company, with the sales amounts of $997,636 and trade receivable of $451,594, respectively. The sales transactions were recorded at the fair market value in a normal course of business.

(b)	Amounts due to stockholders

As of December 31, 2008 and 2007, amounts due to stockholders totaling $288,456 and $286,585, represented the temporary advances to the Company. The balances were unsecured, interest-free and repayable on demand.

17.	SEGMENT INFORMATION

The Company’s operating businesses are structured and managed separately, according to the nature of their operations and the products and services they provide. The Company identifies its reportable segments based on management responsibility: (i) the trading segment and (ii) the retailing segment.

	Years ended December 31,
	2008			2007
Revenue, net:
Trading	$	21,153,336		$	10,173,830
Retailing		32,130,086			48,237,621
Less: inter-segment sales		(18,256,504	)		-

	$	35,026,918		$	58,411,451

F-26

	Years ended December 31,
	2008			2007
Income (loss) before income tax:
Trading	$	72,355		$	68,604
Retailing		(9,172,069	)		(1,042,539	)

	$	(9,099,714	)	$	(973,935	)

	As of December 31,
	2008		2007
Total assets:
Trading	$	2,447,291	$	6,446,113
Retailing		898,063		5,505,772

	$	3,345,354	$	11,951,885

All of the Company’s revenue and assets are located in Hong Kong.

18.	CONCENTRATIONS OF RISK

The Company is exposed to the following concentrations of risk:

(a)	Major customers

For the years ended December 31, 2008 & 2007, there was no customer account for 10% or more of revenues.

(b)	Major vendors

The following is a table summarizing the purchases from vendors that individually represents greater than 10% of the total purchases for each of the years ended December 31, 2008 and 2007 their outstanding balances as at year-end date:

	Year ended December 31, 2008
Vendors	Purchases		Percentage of total purchases			Accounts payable, trade

Vendor A	$	5,797,682		30	%	$	320,262
Vendor B		2,197,685		11	%		6,239

Total:	$	7,995,367		41	%	$	326,501

F-27

	Year ended December 31, 2007
Vendors	Purchases		Percentage of total purchases			Accounts payable, trade

Vendor A	$	16,549,692		46	%	$	259,285
Vendor B		4,856,774		13	%		383,600
Vendor C		1,283,471		4	%		419,455

Total:	$	22,689,937		63	%	$	1,062,340

(c)	Credit risks

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and trade accounts receivable. The Company performs ongoing credit evaluations of its customers’ financial condition, but does not require collateral to support such receivables.

(d)	Interest rate risk

As the Company has no significant interest-bearing assets, the Company’s income and operating cash flows are substantially independent of changes in market interest rates.

The Company’s interest-rate risk arises from bank borrowings and capital leases. Borrowings issued at variable rates expose the Company to cash flow interest-rate risk. Borrowings issued at fixed rates expose the Company to fair value interest-rate risk. Company policy is to maintain approximately all of its borrowings in fixed rate instruments. As of December 31, 2008, all borrowings were at fixed rates.

(e)	Exchange rate risk

The Company cannot guarantee that the current exchange rate will remain steady; therefore there is a possibility that the Company could post the same amount of net income for two comparable periods and because of the fluctuating exchange rate actually post higher or lower profit depending on the exchange rate of HK$ converted to US$ on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.

19.	COMMITMENTS AND CONTINGENCIES

(a)	Operating lease commitments

The Company has entered into several non-cancelable operating agreements for office premises and outlets expiring through 2009. Total rent expense for the years ended December 31, 2008 and 2007 amounted to $576,998 and $451,874, respectively.

As of December 31, 2008, the Company has future minimum rental payments of $323,353 under these operating leases in the next 12 months.

F-28

(b)	Legal proceedings

On November 5, 2007, Everest Special Situations Fund, LP filed a Complaint in the Supreme Court for the State of New York, County of New York (the “Court”), alleging claims for fraud and breach of contract related to a Securities Purchase Agreement entered into with the Company on October 6, 2006. The Company filed a Motion to Dismiss the Complaint, which was submitted on March 26, 2008. The Court granted the Motion and dismissed the action pursuant to an Order entered on April 8, 2008. Everest Special Situations Fund, LP filed a Motion for Reargument of the Motion to Dismiss the Complaint in May 2008. On June 24, 2008, the Court entered an order partially granting and partially denying the Motion for Reargument. The Court ruled that Everest Special Situations Fund, LP could amend the complaint to assert a claim for rescission, but that order dismissing claims for damages was affirmed. Subsequently on January 29, 2009, Everest Special Situations Fund, LP filed a motion for leave to amend and supplement the complaint. The motion remains pending and no ruling has been issued from the Court.

20.	COMPARATIVE FIGURES

Certain of the comparative figures have been reclassified to conform to the current period's presentation.

F-29

ITEM 9.

DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

On December 26, 2007, Cordovano and Honeck (“C&H”) was appointed as our independent auditor. C&H served as the independent auditor for the Company from December 26, 2007 through February 26, 2009. On February 26, 2009, C&H was dismissed as the Company’s certifying independent accountant. The board of directors of the Company approved the dismissal of C&H in a meeting held on February 25, 2009.

During the two most recent fiscal years and the interim periods through February 26, 2009, there were no disagreements with C&H on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements if not resolved to the satisfaction of C&H would have caused them to make reference to this subject matter of the disagreements in connection with their report, nor were there any “reportable events” as such term is described in Item 304(a)(1)(iv) of Regulation S-B. On February 26, 2009, we dismissed C&H as our certifying independent auditor. Prior to their dismissal, there were no disagreements with C&H on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements if not resolved to the satisfaction of C&H would have caused them to make reference to this subject matter of the disagreements in connection with their report, nor were there any “reportable events” as such term is described in Item 304(a)(1)(v) of Regulation S-K.

ITEM 9A.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Based on their evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of December 31, 2008, our Chief Executive Officer and Chief Operating Officer have concluded that our disclosure controls and procedures 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 recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and are operating in an effective manner. Our Chief Financial Officer whom was appointed on April 20, 2009 is in the process of familiarizing himself with our disclosure controls and procedures and will ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and will be operating in an effective manner for fiscal year 2009.

Management’s Annual Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company, as such term is defined under Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934, as amended. In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, management has conducted an assessment, including testing, using the criteria in Internal Control—Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on our Chief Executive Officer and Chief Operating Officer’s review of our internal control structure under Sarbanes-Oxley section 404, for the fiscal year ended December 31, 2008, we believe that, as of December 31, 2008, our internal control over financial reporting is effective based on those criteria. Our Chief Financial Officer whom was appointed on April 20, 2009 is in the process of reviewing our internal control structure under Sarbanes-Oxley section 404 and will ensure our internal control over financial reporting will be effective based on those criteria for fiscal year 2009.

This annual report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.

Changes in Internal Controls

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) during the year ended December 31, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART III

ITEM 10.

DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

Ms. Cary Pui Yee Shek resigned from the board of directors, effective April 11, 2008.

Effective April 20, 2009, Mr. Kwan Pui Wong tendered his resignation as Chief Financial Officer of the Company. Mr. Wong also resigned as a director from the board of directors of the Company effective April 20, 2009.

Effective on the same day as Mr. Wong’s resignation, Mr. Man Wai Ma was appointed as the interim Chief Financial Officer of the Company, to serve until his termination or resignation and when his successor is duly elected and qualified.

Effective April 20, 2009, Ms. Feng Zhang and Mr. Zhong Wei were each appointed as the Company’s directors, to serve until terminated, or he or she resigns and when his or her successor is duly elected and qualified.

Current Management

The following table sets forth the names and ages of our directors and executive officers, as of the date of this report:

Name	Age	Position
Alex Chun Shan Yue	52	Chief Executive Officer and Chairman of the Board of Directors

Danny Sau Kwong Leung	42	Director and Chief Operating Officer

Edward Man Wai Ma	39	Chief Financial Officer

Feng Zhang	27	Director

Zhong Wei	24	Director

Alex Chun Shan Yue has served as the Chairman of the board of directors of our predecessor, Horizon Group, since January 2006, and is currently the Chairman of the board of directors of the Company. Mr. Yue is a co-founder of our predecessor, Horizon Group, of which he has served as a director since 2005. Prior to joining the Company, Mr. Yue served as Chief Executive Officer of China Jewelry Import & Export Limited, a retailer with a focus on Taiwanese and Malaysian outbound tourists, from 1987 to 1994. Since 1992, Mr. Yue has been an entrepreneur in real estate and logistics at his own firm. Mr. Yue has over 21 years of experience in the retail and tourism industry.

Danny Sau Kwong Leung has served as the Chief Operating Officer of our predecessor, Horizon Group, since January 2006, and is currently the Chief Operating Officer and a director of the Company. Prior to this position, Mr. Leung was our sales and operations specialist from 2002 to 2006. Since 2000, Mr. Leung has served as a director of various affiliated operating companies of the Horizon Group, including Raffle Limited, Manigood International Industrial Limited, Max Surplus International Development Limited, and Allied Fine Development Limited. Prior to joining us, Mr. Leung served operations consultant to Chain World Development Ltd., which focused on consumer electronics retailing. Mr. Leung also serves as a director of On Success International Trading Limited, an unaffiliated trading company.

Edward Man Wai Ma was appointed as the Company’s interim Chief Financial Officer as of April 20, 2009. Mr. Ma served as a director for Top C Consulting Limited from 2001 to 2004. From 1995 to the present, Mr. Ma has served and continues to serve as Secretary of China Flavors and Fragrances Company Limited. Mr. Ma also serves as the Senior Manager of KL CPA Limited from 2007 to present. Mr. Ma serves as a director for Macro Wealth Investments (Shenzhen) Limited, and has held such position since 2008. Mr. Ma holds a degree in Accounting from Queensland University of Technology.

Feng Zhang was appointed as the Company’s director as of April 20, 2009. Ms. Zhang worked as the General Manager of Century 21 China Real Estate from 2003 to 2009.

Zhong Wei was appointed as the Company’s director as of April 20, 2009. Mr. Wei worked as the Managing Director of Century 21 Real Estate from 2005 to 2008.

The Board of Directors and Committees

Our board of directors is currently composed of four members, two of whom are employees. All members of our board of directors serve in this capacity until their terms expire or until their successors are duly elected and qualified.

Our board of directors does not maintain a separate audit, nominating or compensation committee. Functions customarily performed by such committees are performed by its board of directors as a whole. We are not required to maintain such committees under the applicable rules of the Over-the-Counter Bulletin Board. We do not currently have an “audit committee financial expert” since we currently do not have an audit committee in place. We intend to create board committees, including an independent audit committee, in the near future.

We do not currently have a process for security holders to send communications to the board.

Director Independence

Our common stock is quoted on the Over-the-Counter Bulletin Board and, therefore, we are not required to maintain a board consisting of majority independent directors and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our board of directors include "independent" directors. Our board of directors reviewed the independence of the directors using the criteria established by the American Stock Exchange and has determined that two of our current directors, namely Ms. Zhang and Mr. Wei, are independent based on such criteria.

Family Relationships

There are no family relationships among the foregoing directors and executive officers.

Legal Proceedings

None of the directors or executive officers has, during the past five years: (a) had any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (b) been convicted in a criminal proceeding or subject to a pending criminal proceeding; (c) been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, futures, commodities or banking activities; and (d) been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

Arrangements

There are no arrangements or understandings between any of our directors or officers and any other person pursuant to which any director or officer was or is to be selected as a director or officer, and there are no arrangements, plans or understandings as to whether non-management stockholders will exercise their voting rights to continue to elect the current board of directors. There are also no arrangements, agreements or understandings between non-management stockholders that may directly or indirectly participate in or influence the management of our affairs.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act") requires our directors and executive officers, and persons who beneficially own more than ten percent of a registered class of our equity securities, to file with the Securities and Exchange Commission (the "Commission") initial reports of beneficial ownership and reports of changes in beneficial ownership of our Common Stock. The rules promulgated by the Commission under Section 16(a) of the Exchange Act require those persons to furnish us with copies of all reports filed with the Commission pursuant to Section 16(a). There were no late filings of such reports by our directors, executive officers, or ten percent shareholders. The information in this section is based solely upon a review of Forms 3, Forms 4, and Forms 5 received by us or written representations from the reporting persons.

Changes in Procedures for Security Holders to Nominate Directors

There have been no material changes to the procedures by which our security holders may recommend nominees to our board of directors.

Director Compensation

Currently we do not pay any compensation to members of our board of directors for their service on the board. However, we intend to review and consider future proposals regarding board compensation.

Compensation Committee Interlocks and Insider Participation

No interlocking relationship exists between our board of directors and the board of directors or compensation committee of any other company, nor has any interlocking relationship existed in the past.

Code of Ethics

For the year ended December 31, 2008, we did not have formal written code of ethics applicable to our principal executive officer and principal financial officer because the board of directors has not determined it to be immediately necessary from a management perspective to adopt a formal code at this time.

ITEM 11.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This compensation discussion and analysis describes the material elements of the compensation awarded to our current executive officers. This compensation discussion focuses on the information contained in the following tables and related footnotes and narrative for the last completed fiscal year. Our board of directors currently oversees the design and administration of our executive compensation program.

Our current executive compensation program includes the following principal components: (i) base salary, (ii) discretionary annual cash performance-based incentives, (iii) termination/severance and change of control payments, and (iv) perquisites and benefits. We have no immediate plan to include stock option grants as an element of executive compensation.

Our Compensation Philosophy and Objectives

Our philosophy regarding compensation of our executive officers includes the following principles:

•

our compensation program should reward the achievement of our strategic initiatives and short- and long-term operating and financial goals;

•

compensation should appropriately reflect differences in position and responsibility;compensation should be reasonable; and

•

the compensation program should be understandable and transparent.

In order to implement such compensation principles, we have developed the following objectives for our executive compensation program:

•

overall compensation levels must be sufficiently competitive to attract and retain talented leaders and motivate those leaders to achieve superior results;

•

a portion of total compensation should be contingent on, and variable with, achievement of objective corporate performance goals, and that portion should increase as an executive’s position and responsibility increases;

•

total compensation should be higher for individuals with greater responsibility and greater ability to influence our achievement of operating goals and strategic initiatives;

•

the number of elements of our compensation program should be kept to a minimum, and those elements should be readily understandable by and easily communicated to executives, stockholders, and others; and

•

executive compensation should be set at responsible levels to promote a sense of fairness and equity among all employees and appropriate stewardship of corporate resources among stockholders.

Determination of Compensation Awards

Our board of directors is provided with the primary authority to determine the compensation awards available to our executive officers. To aid the board in making its determination for the last fiscal year, our current senior management provided recommendations to the board regarding the compensation of all executive officers.

Compensation Benchmarking and Peer Group

Our board did not rely on any consultants or utilize any peer company comparisons or benchmarking in 2008 in setting executive compensation. However, our management informally considered competitive market practices by reviewing publicly available information relating to compensation of executive officers at other comparable companies in making its recommendations to our board regarding our executives’ compensation for fiscal year 2008. As our company grows, we expect to take steps, including the utilization of peer company comparisons and/or hiring of compensation consultants, to ensure that the board has a comprehensive picture of the compensation paid to our executives and with a goal toward total direct compensation for our executives that are on a par with the median total direct compensation paid to executives in peer companies if annually established target levels of performance at the company and business segment level are achieved.

Elements of Compensation

The principal elements of our executive compensation are:

•

base salary;

•

discretionary annual cash performance-based incentives;

•

long-term incentive plan awards; and

•

perquisites and other compensation.

Base Salaries

Base salary is used to recognize the experience, skills, knowledge and responsibilities required of our employees, including our named executive officers. All of our named executive officers, with the exception of our newly appointed interim Chief Financial Officer, are subject to employment agreements, and accordingly each of their compensation has been determined as set forth in their respective agreement. When establishing base salaries for 2008, subject to the provisions of each person’s employment agreement, our board and management considered a number of factors, including the seniority of the individual, the functional role of the position, the level of the individual’s responsibility, the ability to replace the individual, the base salary of the individual at their prior employment and the number of well qualified candidates to assume the individual’s role. Generally, we believe that executive base salaries should be targeted near the median of the range of salaries for executives in similar positions at comparable companies.

Discretionary Annual Cash Performance-Based Incentives

Our board of directors has discretion to approve the annual cash bonus for our Chief Executive Officer and each other named executive officer. Since we do not have a compensation committee, any bonus awards will be generally based on our management’s recommendations and ultimately decided upon by our board. Our board of directors has not yet determined cash bonus levels for our named executive officers for 2008. The annual bonuses, if any, are intended to compensate officers for individual performance, for our overall financial performance, and for achieving important operational and financial milestones during the fiscal year.

Long-Term Incentive Plan Awards

We currently do not have an equity incentive plan, and no separate stock awards or stock option grants were made to any of the named executive officers during the fiscal year ended December 31, 2008. No stock options were held by the named executive officers as of December 31, 2008.

Perquisites and Other Compensation

We do not have any retirement or pension plans in place for any of our named executives. Our named executive officers are eligible for group medical benefits that generally available to and on the same terms as our other employees.

Management’s Role in the Compensation-Setting Process

Our management plays an important role in our compensation-setting process. The most significant aspects of management’s role are evaluating other executive officers’ performances, recommending business performance targets and objectives, and recommending salary levels and option awards. Our management makes recommendations to our Board of Directors regarding our executive’s compensation packages. During this process, management may be asked to provide the Board with their evaluation of the executive officers’ performances, the background information regarding our strategic financial and operational objectives, and compensation recommendations as to the executive officers.

Summary of Cash and Other Compensation

The following summary compensation table indicates the cash and non-cash compensation earned during each of our last three fiscal years ended December 31, 2008, December 31, 2007, and December 31, 2006 by (i) all individuals serving as our principal executive officer or acting in a similar capacity during the last completed fiscal year; (ii) all individuals serving as our principal financial officer or acting in a similar capacity during the last completed fiscal year; (iii) our three most highly compensated executive officers other than our principal executive officer and principal financial officer who were serving as executive officers at the end of the last completed fiscal year and whose total compensation exceeded $100,000 during the applicable fiscal year; and (iv) up to two additional individuals for whom disclosure would have been provided but for the fact that the individual was not serving as an executive officer of the Company at the end of the last completed fiscal year.

SUMMARY COMPENSATION TABLE

Name and Principal Position	Year	Salary (1)		Bonus		Stock Awards		Option Awards		Non-Equity Incentive Plan Compensation		All Other Compensation		Total
Alex Chun Shan Yue	2006	$	162,432	$	—	$	—	$	—	$	—	$	—	$	162,432
Chief Executive Officer	2007	$	92,504	$	—	$	—	$	—	$	—	$	—	$	92,504
	2008	$	97,280	$	—	$	—	$	—	$	—	$	—	$	97,280

Kwan Pui Wong	2006	$	0	$	—	$	—	$	—	$	—	$	—	$	0
Former Chief Financial Officer	2007	$	66,185	$	—	$	—	$	—	$	—	$	—	$	66,185
	2008	$	106,144	$	—	$	—	$	—	$	—	$	—	$	106,144

Danny Sau Kwong Leung	2006	$	230,642	$	—	$	—	$	—	$	—	$	—	$	230,642
Chief Operating Officer	2007	$	187,859	$	—	$	—	$	—	$	—	$	—	$	187,859
	2008	$	175,825	$	—	$	—	$	—	$	—	$	—	$	175,825

Albert Chi Wai Wong	2006	$	111,369	$	—	$	—	$	—	$	—	$	—	$	111,369
Former Chief Financial Officer	2007	$	52,111	$	—	$	—	$	—	$	—	$	—	$	52,111
	2008	$	0	$	—	$	—	$	—	$	—	$	—	$	0

Tsoi Kee Kwong	2006	$	262,185	$	—	$	—	$	—	$	—	$	—	$	262,185
General Manager	2007	$	122,419	$	—	$	—	$	—	$	—	$	—	$	122,419
	2008	$	155,509	$	—	$	—	$	—	$	—	$	—	$	155,509

(1)

The salaries for 2006 and 2007 were expressed in U.S. Dollars based on the interbank exchange rate of 7.7988 Hong Kong Dollars for each 1.00 U.S. Dollar, on December 31, 2007. The salaries for 2008 were expressed in U.S. Dollars based on the interbank exchange rate of 7.751Hong Kong Dollars for each 1.00 U.S. Dollar, on December 31, 2008.

Grants of Plan-Based Awards

We currently have no non-equity or equity-incentive plans.

Outstanding Equity Awards at Fiscal Year-End

We do not have any outstanding equity awards as of December 31, 2008.

Nonqualified Deferred Compensation Plans

We do not have any non-qualified deferred compensation plans.

Director Compensation

For the year ended December 31, 2008, none of the members of our board of directors received compensation for his or her service as a director. We do not currently have an established policy to provide compensation to members of our board of directors for their services in that capacity.

Indemnification of Officers and Directors

Section 145 of the Delaware General Corporation Law authorizes a court to award, or a corporation’s board of directors to grant, indemnity to directors and officers in terms sufficiently broad to permit indemnification for liabilities, including reimbursement for expenses incurred, arising under the Securities Act. This indemnification may, however, be unenforceable as against public policy.

As permitted by Delaware law, our certificate of incorporation includes a provision that eliminates the personal liability of its directors for monetary damages for breach of fiduciary duty as a director, except for liability:

•

for any breach of the director’s duty of loyalty to us or our stockholders;

•

for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;

•

under Section 174 of the Delaware law regarding unlawful dividends and stock purchases; or

•

for any transaction from which the director derived an improper personal benefit.

As permitted by Delaware law, our certificate of incorporation and our bylaws provide that:

•

we are required to indemnify our directors and officers to the fullest extent permitted by Delaware law, so long as such person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of our Company, and with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful;

•

we are permitted to indemnify our other employees to the extent that we indemnify our officers and directors, unless otherwise required by law, our amended and restated certificate of incorporation, our amended and restated bylaws or other agreements;

•

we are required to advance expenses to our directors and officers incurred in connection with a legal proceeding to the fullest extent permitted by Delaware law, subject to very limited exceptions; and

•

the rights conferred in our bylaws are not exclusive.

Our board of directors has authorized management to negotiate and obtain directors’ and officers’ liability insurance.

Employment or Director Compensation Agreements and Arrangements

The following is a summary of the material terms of our executive officers’ employment agreements as of fiscal year 2008.

•

Under the terms of his employment agreement, Mr. Yue’s annual salary is HK$754,000 Hong Kong Dollars (“HK$”) (approximately $ 97,280 in U.S. dollars).

•

While he was employed with the Company and under the terms of his employment agreement, Mr. Kwan Pui Wong’s annual salary was HK$960,000 (approximately $123,096 in U.S. dollars).

•

Under the terms of his employment agreement, Mr. Leung’s annual salary is HK$1,250,000 plus bonus (approximately $160,125 in U.S. dollars).

The employment agreements described above are terminable at will by either the employee or by us upon three months’ prior notice to the other party. Further, the board of directors may award executive officers and other key personnel, including consultants, with option grants and/or bonuses based upon performance. Under our agreements with our executive officers and other key personnel, we may adjust the salaries and benefits payable from time to time at our discretion.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding the beneficial ownership of our common stock as of April 23, 2009, determined in accordance with Rule 13d-3 and 13d-5 of the Securities Exchange Act of 1934, as amended, for each of the following persons:

•

each of our executive officers and directors;

•

all executive officers and directors as a group; and

•

each person who is known by us to beneficially own five percent or more of our common stock.

Beneficial ownership is determined in accordance with the rules of the SEC. Unless otherwise indicated in the table, the persons and entities named in the table have sole voting and sole investment power with respect to the shares set forth opposite the stockholder’s name. Unless otherwise indicated, the address of each beneficial owner listed below is c/o Asiamart, Inc., Room 1508, Peninsula Square, 18 Sung On Street, Hung Hom, Kowloon, Hong Kong. The percentage of class beneficially owned set forth below is based on 24,744,177 shares of common stock outstanding on April 23, 2009.

	Common Stock Beneficially Owned
Named executive officers and directors:	Number of Shares beneficially owned		Option Shares	Percentage of Class Beneficially Owned
Alex Chun Shan Yue (1)		16,412,327	—		66.3	%
Edward Wai Man Ma		—	—		—
Danny Sau Kwong Leung		—	—		—
Total drectors and executive officers as a group (3 persons)		16,412,327	—		66.3	%
5% Stockholders:
Forever Rise Holdings Limited (2)		16,412,327	—		66.3	%

(1)	Includes 16,412,327 shares of common stock held by Forever Rise Holdings Limited, of which Mr. Yue is an approximate 12% shareholder and a director. Mr. Yue disclaims beneficial ownership of these shares except to the extent of his pecuniary interest in this entity.

(2)

The mailing address of Forever Rise Holdings Limited is Room 402-404, 4/F, Allied Kajima Building, 138 Gloucester Road, Wanchai, Hong Kong. Ricky Kee Kwong Tsoi, our former Chief Executive Officer, is a majority stockholder and director of Forever Rise Holdings. Alex Chun Shan Yue, our current Chief Executive Officer, is an approximate 12% stockholder and director of Forever Rise Holdings.

Securities Authorized for Issuance under Equity Compensation Plans

We currently do not have any securities authorized for issuance under any equity compensation plans.

Transfer Agent and Registrar

Our transfer agent and registrar is Continental Stock Transfer and Trust Company, located at 17 Battery Place, New York, New York 10004. Continental’s telephone number is (212) 509-4000.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Certain Relationships and Related Transactions

Director Independence

Our common stock is quoted on the Over-the-Counter Bulletin Board and, therefore, we are not required to maintain a board consisting of majority independent directors and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our board of directors include "independent" directors. Our board of directors reviewed the independence of the directors using the criteria established by the American Stock Exchange and has determined that two of our current directors, namely Mr. Zhang and Mr. Wei, are independent based on such criteria.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Fees for professional services provided by our current independent auditors, ZYCPA Company Limited (formerly Zhong Yi (Hong Kong) C.P.A. Company Limited), in each of the last two fiscal years, in each of the following categories are:

		2008*		2007*
Audit fees	$	23,000	$	—
Audit- related fees		—		—
Tax fees		—		—
All Other fees		—		—

* We retained ZYCPA Company Limited (formerly Zhong Yi (Hong Kong) C.P.A. Company Limited) on February 26, 2009

Fees for professional services provided by our former independent auditors, Cordovano and Honeck LLP, in each of the last two fiscal years, in each of the following categories are:

		2008*		2007*
Audit fees	$	36,000	$	69,000
Audit- related fees		—		—
Tax fees		—		—
All Other fees		—		—

* We retained Cordovano and Honeck LLP on December 26, 2007

Fees for professional services provided by our former independent auditors, Moore Stephens Wurth Frazer and Torbet, LLP, in each of the last two fiscal years, in each of the following categories are:

	2008		2007
Audit fees	$	—	$	80,000
Audit- related fees		—		—
Tax fees		—		5,000
All Other fees		—		—

Fees for audit services include fees associated with the annual audit and the review of documents filed with the Securities and Exchange Commission, including quarterly reports on Form 10-Q and the annual report on Form 10-K. Audit-related fees principally included accounting consultation and information system control reviews. Tax fees included tax compliance, tax advice and tax planning work.

On February 26, 2009, Cordovano and Honeck LLP was dismissed as our certifying independent accountant and on February 26, 2009 we retained the services of our new certifying independent accountant, ZYCPA Company Limited (formerly Zhong Yi (Hong Kong) C.P.A. Company Limited).

PART IV

ITEM 15.

EXHIBITS, FINANCIAL STATEMENTS SCHEDULE AND REPORTS ON FORM 8-K

(a)(1) Financial Statements

Report of Independent Registered Public Accounting Firm, ZYCPA Company Limited (formerly Zhong Yi (Hong Kong) C.P.A. Company Limited)
Report of Independent Public Accounting Firm, Cordovano and Honeck LLP
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Loss
Consolidated Statements of Cash Flows
Consolidated Statements of Stockholders’ (Deficit) Equity
Notes to Consolidated Financial Statements

(a)(2) Financial Statement Schedule

Schedules are omitted because the required information is not present or is not present in amounts sufficient to require submission of the schedule or because the information required is given in the consolidated financial statements or the notes thereto.

(b) Exhibits

EXHIBIT INDEX

Exhibit Number		Description
2.1		Agreement and Plan of Share Exchange (incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K filed on June 28, 2006)

3.1		Certificate of Incorporation dated August 20, 1997 (incorporated by reference to Exhibit 2.1 of the Registration Statement on Form 10-SB filed on October 30, 1998)

3.2		Amended and Restated Bylaws, dated June 22, 2006 (incorporated by reference to Exhibit 3.2 of the Current Report on Form 8-K filed on June 28, 2006)

3.3		Certificate of Amendment of the Certificate of Designation, Preferences and Rights of Series A Preferred Stock (incorporated by reference to Exhibit 3.7 of the Current Report on Form 8-K filed on May 24, 2006)

3.4		Certificate of Amendment of the Certificate of Designation, Preferences and Rights of Series B Preferred Stock (incorporated by reference to Exhibit 3.8 of the Current Report on Form 8-K filed on May 24, 2006)

3.5		Certificate of Amendment of the Certificate of Designation, Preferences and Rights of Series C Preferred Stock (incorporated by reference to Exhibit 3.9 of the Current Report on Form 8-K filed on May 24, 2006)

3.6		Certificate of Amendment, amending registrant’s Certificate of Incorporation, effective November 24, 2004 (incorporated by reference to Exhibit 3.6 of the Quarterly Report on Form 10-QSB filed on November 24, 2004).

3.7		Certificate of Amendment, amending registrant’s Certificate of Incorporation, effective March 30, 2006 (incorporated by reference to Exhibit 3.7 of the Current Report on Form 8-K filed on June 28, 2006)

10.1		Tenancy Agreement dated September 28, 2005 by and between Wong Yu Lut Julius and Horizon Corporation Limited (English Translation) (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on June 28, 2006)

10.2		Lease commencing August 1, 2004 between Sea Dragon Billiard & Snooker Association Ltd. and Manigood International Industrial Limited (English Translation) (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed on June 28, 2006)

10.3		Rental Agreement commencing February 15, 2004 by and between Good Merit International Enterprise Limited and Allied Fine Development Limited (English Translation) (incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K filed on June 28, 2006) (1)

10.4		Duty Free Cooperation Agreement commencing September 2004 by and between Good Merit International Enterprise Ltd. and Manigood International Industrial Limited (English Translation) (incorporated by reference to Exhibit 10.4 of the Current Report on Form 8-K filed on June 28, 2006) (1)

10.5		Executive Employment Agreement (Alex Yue) (incorporated by reference to Exhibit 10.5 of the Current Report on Form 8-K filed on June 28, 2006)

10.6		Executive Employment Agreement (Ricky Tsoi) (incorporated by reference to Exhibit 10.6 of the Current Report on Form 8-K filed on June 28, 2006)

10.7		Executive Employment Agreement (Danny Leung) (incorporated by reference to Exhibit 10.7 of the Current Report on Form 8-K filed on June 28, 2006)

10.8		Executive Employment Agreement (Albert Wong) (incorporated by reference to Exhibit 10.8 of the Current Report on Form 8-K filed on June 28, 2006)

10.9		Executive Employment Agreement (Anita Yeung) (incorporated by reference to Exhibit 10.9 of the Current Report on Form 8-K filed on June 28, 2006)

10.10		Agreement to Cancel Shares (incorporated by reference to Exhibit 10.11 of the Current Report on Form 8-K filed on June 28, 2006)

10.11		Securities Purchase Agreement dated October 6, 2006 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on October 10, 2006)

10.12		Form of Debenture issued pursuant to the Securities Purchase Agreement dated October 6, 2006 (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed on October 10, 2006)

10.13		Form of Investor Warrant issued pursuant to the Securities Purchase Agreement dated October 6, 2006 (incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K filed on October 10, 2006)

10.14		Registration Rights Agreement in connection with the Securities Purchase Agreement dated October 6, 2006 (incorporated by reference to Exhibit 10.4 of the Current Report on Form 8-K filed on October 10, 2006)

10.15		Tenancy Agreement dated September 13, 2006 by and between Max Hon Knight Properties & Investments Limited and Allied Fine Development Limited (incorporated by reference to Exhibit 16.1 of the Annual Report on Form 10-K filed on April 4, 2007)

10.16		Employment Agreement dated July 1, 2007 by and between the Company and Mr. Kwan Pui Wong (incorporated by reference to Exhibit 10.1 of Current Report on Form 8-K filed on July 6, 2007)

10.17		Management Service Agreement dated October 28, 2008 by and between Allied Fine Development Limited and Best Paramount Industrial Limited (incorporated by reference to Exhibit 10.1 of Current Report on Form 8-K filed on November 3, 2008)

10.18		Management Service Agreement dated October 28, 2008 by and between Manigood International Industrial Limited and Best Paramount Industrial Limited (incorporated by reference to Exhibit 10.1 of Current Report on Form 8-K filed on November 3, 2008)

10.19		Management Service Agreement dated October 28, 2008 by and between Profits Dreams Development Limited and Best Paramount Industrial Limited (incorporated by reference to Exhibit 10.1 of Current Report on Form 8-K filed on November 3, 2008)

16.1		Letter from Moore Stephens Wurth Frazer and Torbet, LLP dated January 3, 2008 (incorporated by reference to Exhibit 16.1 of Amendment No. 1 to Current Report on Form 8-K filed on January 4, 2008)

16.2		Letter from Cordovano and Honeck LLP dated March 2, 2009 (incorporated by reference to Exhibit 16.1 of Current Report on Form 8-K filed on March 3, 2009)

21.1		Subsidiaries of the Company (incorporated by reference to Exhibit 21.1 of Annual Report on Form 10-K filed on April 15, 2008)

23.1		Consent of Cordovano and Honeck LLP (incorporated by reference to Exhibit 21.1 of Annual Report on Form 10-K filed on April 15, 2008)

23.2		Consent of Moore Stephens Wurth Frazer and Torbet, LLP (incorporated by reference to Exhibit 21.1 of Annual Report on Form 10-K filed on April 15, 2008)

31.1		Rule 13a-14(a)/15d-14(a)(4) Certification by Chief Executive Officer *

31.2		Rule 13a-14(a)/15d-14(a)(4) Certification by Chief Financial Officer *

32.1		Section 1350 Certification by Chief Executive Officer *

ASIAMART, INC. 10-K