Unassociated Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2009

¨	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 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 x No o

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 x

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

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

ASIAMART, INC.

INDEX

		Page Number
PART I. Financial Statements

Item 1.	Financial Information	F-1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	8

Item 4.	Controls and Procedures	8

PART II. Other Information

Item 1.	Legal Proceedings	8

Item 1A.	Risk Factors	9

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16

Item 3.	Defaults Upon Senior Securities	16

Item 4.	Submission of Matters to a Vote of Security Holders	17

Item 5.	Other Information	17

Item 6.	Exhibits	17

Signatures		18

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ASIAMART, INC. AND SUBSIDIARIES

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

		Page

Condensed Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008		F-2

Condensed Consolidated Statements of Operations And Comprehensive (Loss) Income for the three months ended March 31, 2009 and 2008		F-3

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2009 and 2008		F-4

Condensed Consolidated Statement of Changes in Stockholders’ Deficit for the three months ended March 31, 2009		F-5

Notes to Condensed Consolidated Financial Statements		F-6 – F-18

F-1

ASIAMART, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2009 AND DECEMBER 31, 2008

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

	March 31, 2009			December 31, 2008
	(Unaudited)			(Audited)
ASSETS
Current assets:
Cash and cash equivalents	$	101,829		$	99,186
Accounts receivable, net		1,622,930			1,798,142
Inventories		226,705			159,569
Deposits and prepaid expenses, net		659,577			418,212
Income tax recoverable		246,967			144,885
Other receivables, net		132,446			54,152
Total current assets		2,990,454			2,674,146

Plant and equipment, net		536,261			592,141
Debt issuance costs, net		52,711			79,067
Total non-current assets		588,972			671,208

TOTAL ASSETS	$	3,579,426		$	3,345,354

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	1,642,661		$	1,104,528
Accrued liabilities and other payables		2,472,084			2,426,101
Customer deposits		108,083			108,515
Amount due to stockholders		288,457			288,456
Bank borrowings		5,864			23,216
Current portion of obligation under capital leases		58,046			82,287
Convertible debenture, net of discount of $526,364		2,543,531			2,287,706
Total current liabilities		7,118,726			6,320,809

Long-term liabilities
Obligation under capital leases		148,193			124,293
Total long-term liabilities		148,193			124,293

Total liabilities		7,266,919			6,445,102

Commitments and contingencies

Stockholders’ deficit:
Common stock, $0.001 par value; 200,000,000 shares authorized; 24,744,177 and 24,744,177 shares issued and outstanding as of March 31, 2009 and December 31, 2008		2,474			2,474
Additional paid-in capital		3,455,421			3,455,421
Accumulated deficit		(7,207,080	)		(6,619,390	)
Accumulated other comprehensive income		61,692			61,747
Total stockholders’ deficit		(3,687,493	)		(3,099,748	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	3,579,426		$	3,345,354

See accompanying notes to condensed consolidated financial statements.

F-2

ASIAMART, INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF

OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008

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

(Unaudited)

	Three months ended March 31,
	2009			2008
REVENUES, NET
Sale of products	$	3,762,793		$	10,987,262
Sale of products, related party		-			290,130
Service income		718,995			-

Total revenues, net		4,481,788			11,277,392

COST OF REVENUE (exclusive of depreciation)		4,331,353			5,813,486

GROSS PROFIT		150,435			5,463,906

Operating expenses:
Sales and marketing		-			3,215,785
Depreciation		43,727			64,968
General and administrative		494,880			1,774,674

Total operating expenses		538,607			5,055,427

(LOSS) INCOME FROM OPERATIONS		(388,172	)		408,479

Other income (expense):
Other income		66,706			-
Reversal of allowance for doubtful accounts		19,345			-
Gain on disposal of plant and equipment		16,223			-
Interest expense		(318,305	)		(322,934	)
Foreign exchange gain		16,513			201,462
Other expense		-			(2,670	)

Total other expense		(199,518	)		(124,142	)

(LOSS) INCOME BEFORE INCOME TAXES		(587,690	)		284,337

Income tax expense		-			(45,835	)

NET (LOSS) INCOME		(587,690	)		238,502

Other comprehensive (loss) income:
- Foreign currency translation (loss) gain		(55	)		6,830

COMPREHENSIVE (LOSS) INCOME	$	(587,745	)	$	245,332

Net (loss) income per share – Basic and diluted	$	(0.02	)	$	0.01

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

See accompanying notes to condensed consolidated financial statements.

F-3

ASIAMART, INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008

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

(Unaudited)

	Three months ended March 31,
	2009			2008
Cash flow from operating activities:
Net (loss) income	$	(587,690	)	$	238,502
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation		43,727			64,968
Reversal of allowance for doubtful accounts		19,345			-
Gain on disposal of plant and equipment		(16,223	)		-
Amortization of discount and debt issuance costs on convertible debenture		282,180			282,181
Change in operating assets and liabilities:
Accounts receivable, trade		175,212			(245,683	)
Inventories		(67,136	)		253,343
Deposits, prepaid expenses and other receivables		(339,004	)		(189,015	)
Income tax recoverable		(102,082	)		45,776
Accounts payable		538,133			(727,709	)
Amount due to stockholders		-			306
Accrued liabilities and other payables		45,983			(102,783	)
Customers deposit		(432	)		-
Deferred tax liabilities		-			16
Net cash used in operating activities		(7,987	)		(380,098	)

Cash flows from investing activities:
Proceed from disposal of plant and equipment		21,828			-
Long-term loans from travel agencies		-			15,011
Net cash provided by investing activities		21,828			15,011

Cash flows from financing activities:
Repayment of installment loan		(17,338	)		(136,975	)
Proceed from capital lease obligations		56,562			-
Repayment of capital lease obligations		(56,765	)		(69,962	)
Net cash used in financing activities		(17,541	)		(206,937	)

Effect of exchange rate changes in cash and cash equivalents		6,343			6,830

CHANGE IN CASH AND CASH EQUIVALENTS		2,643			(565,194	)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		99,186			1,817,148

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	101,829		$	1,251,954

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for income taxes	$	135,144		$	-
Cash paid for interest	$	2,540		$	6,750

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Motor vehicle purchased under capital lease	$	56,562		$	-

See accompanying notes to condensed consolidated financial statements

F-4

ASIAMART, INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE THREE MONTHS ENDED MARCH 31, 2009

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

(Unaudited)

	Common stock				Additional		Accumulated			Accumulated other comprehensive			Total stockholders’
	No. of shares		Amount		paid-in capital		deficit			(loss) income			deficit

Balance as of January 1, 2009		24,744,177	$	2,474	$	3,455,421	$	(6,619,390	)	$	61,747		$	(3,099,748	)

Foreign currency translation adjustment		-		-		-		-			(55	)		(55	)

Net loss for the period		-		-		-		(587,690	)		-			(587,690	)

Balance as of March 31, 2009		24,744,177	$	2,474	$	3,455,421	$	(7,207,080	)	$	61,692		$	(3,687,493	)

See accompanying notes to condensed consolidated financial statements

F-5

ASIAMART, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2009

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

(Unaudited)

NOTE 1

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared by management in accordance with both accounting principles generally accepted in the United States (“GAAP”), and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.

In the opinion of management, the consolidated balance sheet as of December 31, 2008 which has been derived from audited financial statements and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the period ended March 31, 2009 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2009 or for any future period.

These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2008.

NOTE 2

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, a retailing segment providing management services to other retailers, and a trading segment which is primarily involved in the import and local distribution of consumer electronic products.

Since the fourth quarter of 2008, the Company has restructured its major operation from being an outlet and discount shopping center operator to a retail service provider. The Company has closed its two retail outlets at the end of 2008 and shifted its resources to provide management services to other retail operators in Hong Kong.

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

NOTE 3

GOING CONCERN UNCERTAINTIES

These condensed 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 three months ended March 31, 2009, the Company incurred a net loss of $587,690. Additionally, the Company had a working capital deficit of $4,128,272 and the accumulated deficit of $3,687,493, as of March 31, 2009. 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 condensed 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.

F-6

ASIAMART, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2009

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

(Unaudited)

NOTE 4

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation

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

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

Use of estimates

In preparing these condensed 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 periods reported. Actual results may differ from these estimates.

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.

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

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.

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:

	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

F-7

ASIAMART, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2009

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

(Unaudited)

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.

Depreciation expense for the three months ended March 31, 2009 and 2008 were $43,727 and $64,968, respectively.

As of March 31, 2009, motor vehicles and certain equipment under capital leases were included with the aggregate net book value of $341,961.

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”.

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.

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 electronic appliances 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.

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.

F-8

ASIAMART, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2009

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

(Unaudited)

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.

The Company adopts Financial Accounting Standards Board ("FASB") Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" (FIN 48). 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. 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 three months ended March 31, 2009 and 2008, the Company did not have any interest and penalties associated with tax positions. As of March 31, 2009, 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.

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.

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.

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.

F-9

ASIAMART, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2009

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

(Unaudited)

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.

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 period:

	Three months ended March 31,
	2009		2008
Period end HK$ : US$1 exchange rate		7.7519		7.7827
Average period HK$ : US$1 exchange rate		7.7537		7.7954

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.

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 three months ended March 31, 2009, the Company operates in two reportable segments in Hong Kong.

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, customer deposits, 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 period-ends.

Recent accounting pronouncements

F-10

ASIAMART, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2009

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

(Unaudited)

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does 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 December 2007, the FASB issued a revision to SFAS No. 141, “Business Combinations” (“SFAS No. 141(R)”). SFAS No. 141(R) revises the accounting for business combinations. Under SFAS No. 141(R), an acquiring entity will be required to recognize the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. Specifically, SFAS No. 141(R) will change the accounting for acquisition costs, noncontrolling interests, acquired contingent liabilities, restructuring costs associated with a combination and certain tax-related items, as well as require additional disclosures. SFAS No. 141(R) 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. The Company is required to apply SFAS No. 141(R) to any acquisitions in 2009 or thereafter.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51” (“SFAS No. 160”). SFAS No. 160 establishes accounting and reporting standards for noncontrolling interests in subsidiaries. This statement requires the reporting of all noncontrolling interests as a separate component of stockholders’ equity, the reporting of consolidated net income (loss) as the amount attributable to both the parent and the noncontrolling interests and the separate disclosure of net income (loss) attributable to the parent and to the noncontrolling interests. In addition, this statement provides accounting and reporting guidance related to changes in noncontrolling ownership interests. Other than the reporting requirements described above which require retrospective application, the provisions of SFAS No. 160 are to be applied prospectively in the first annual reporting period beginning on or after December 15, 2008. The Company’s adoption of SFAS No. 160 on January 1, 2009 did not have an impact on its consolidated results of operations or financial position.

In December 2008, the FASB issued 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. This adoption did not have any impact on the condensed consolidated financial statements.

On January 12, 2009, the FASB issued FSP EITF 99-20-01, “Amendment to the Impairment Guidance of EITF Issue No. 99-20”. This FSP amends the impairment guidance in EITF Issue No. 99-20, “Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests That Continue to be Held by a Transferor in Securitized Financial Assets,” to achieve more consistent determination of whether an other-than-temporary impairment has occurred. The FSP also retains and emphasizes the objective of an other-than-temporary impairment assessment and the related disclosure requirements in SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities”, and other related guidance. The FSP is shall be effective for interim and annual reporting periods ending after December 15, 2008, and shall be applied prospectively. Retrospective application to a prior interim or annual reporting period is not permitted. The Company does not believe this pronouncement will impact its financial statements.

NOTE 5

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.

F-11

ASIAMART, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2009

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

(Unaudited)

	March 31, 2009			December 31, 2008
	(Unaudited)			(Audited)

Accounts receivable, cost	$	2,126,181		$	2,301,393
Less: allowance for doubtful accounts		(503,251	)		(503,251	)

Accounts receivable, net	$	1,622,930		$	1,798,142

For the three months ended March 31, 2009 and 2008, no allowance for doubtful accounts was provided.

NOTE 6

DEPOSITS AND PREPAID EXPENSES

Deposits and prepaid expenses consisted of the following:

	March 31, 2009			December 31, 2008
	(Unaudited)			(Audited)

Rental & utility expense	$	131,954		$	156,415
Purchase and other deposits		856,722			641,003
Prepaid expense		805,892			775,130
		1,794,568			1,572,548
Less: allowance for doubtful accounts		(1,134,991	)		(1,154,336	)

Deposits and prepaid expenses, net	$	659,577		$	418,212

For the three months ended March 31, 2009, the Company has reversed $19,345 allowance for doubtful accounts due to subsequent recovery from other deposits.

NOTE 7

ACCRUED LIABILITIES AND OTHER PAYABLES

Accrued liabilities and other payables consisted of the following:

	March 31, 2009		December 31, 2008
	(Unaudited)		(Audited)

Accrued liabilities	$	316,407	$	314,552
Commission payable		1,460,101		1,460,101
Salaries payable		432,917		303,387
Other payables		262,659		348,061
	$	2,472,084	$	2,426,101

F-12

ASIAMART, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2009

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

(Unaudited)

NOTE 8

BANK BORROWINGS

Bank borrowings consisted of the following:

	March 31, 2009			December 31, 2008
	(Unaudited)			(Audited)
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	$	5,864		$	23,216
Obligation under capital leases		206,239			206,580

Total		212,103			229,796
Less: current portion of bank borrowings		(5,864	)		(23,216	)
Less: current portion of obligation under capital leases		(58,046	)		(82,287	)

Total debts, net of current portion	$	148,193		$	124,293

The Company 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:

Period ending March 31:
2010	$	66,428
2011		66,428
2012		53,422
2013		44,795
Total capital leases obligation		231,073
Less: interest		(24,834	)

Present value of net minimum obligation	$	206,239

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

NOTE 9

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.

F-13

ASIAMART, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2009

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

(Unaudited)

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.

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 three months ended March 31, 2009 and 2008, $255,825 and $255,825 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.

NOTE 10

INCOME TAXES

For the three months ended March 31, 2009 and 2008, the local (United States) and foreign components of (loss) income before income taxes were comprised of the following:

	Three months ended March 31,
	2009			2008

Tax jurisdictions from:
– Local	$	(342,121	)	$	(342,540	)
– Foreign		(245,569	)		626,877

(Loss) income before income taxes	$	(587,690	)	$	284,337

F-14

ASIAMART, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2009

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

(Unaudited)

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

	Three months ended March 31,
	2009		2008
Current:
– Local	$	-	$	-
– Foreign		-		45,835

Deferred:
– Local		-		-
– Foreign		-		-

Income tax expense	$	-	$	45,835

The effective tax rate in the periods 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.

As of March 31, 2009, the operation in the United States of America has $342,121 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 three months ended March 31, 2009 and 2008, respectively.

For the period ended March 31, 2009, Hong Kong operations 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 March 31, 2009, the aggregate net operating loss carryforwards was approximately $245,569 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 March 31, 2009 and December 31, 2008:

	March 31, 2009			December 31, 2008
	(Unaudited)			(Audited)
Deferred tax assets:
Net operating loss carryforwards:
- United States	$	1,158,189		$	1,041,868
- Hong Kong		884,635			844,117
Total net deferred tax assets		2,042,824			1,885,985
Less: valuation allowance		(2,042,824	)		(1,885,985	)

Net deferred tax assets	$	-		$	-

F-15

ASIAMART, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2009

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

(Unaudited)

Management believes that it is more likely than not that the deferred tax assets will not be fully realizable in the future. Accordingly, the Company provided for a full valuation allowance against its deferred tax assets of $2,042,824 as of March 31, 2009. For the three months ended March 31, 2009, the valuation allowance increased by $156,839, primarily relating to net operating loss carryforwards.

NOTE 11

RELATED PARTY TRANSACTIONS

(a) Trade receivable and sales – related party

For the three months ended March 31, 2009, the Company incurred no related party transactions.

For the three months ended March 31, 2008, the Company earned revenue from the sale of products to Prince Digital, a related company which was previously controlled by Mr. Ricky Kee Kwong Tsoi, a stockholder of the Company, with the sales amounts of $290,130 and trade receivable of $737,991, respectively. The sales transactions were recorded at the fair market value in a normal course of business.

(b) Amounts due to stockholders

As of March 31, 2009 and December 31, 2008, amounts due to stockholders totaling $288,457 and $288,456, represented the temporary advances to the Company. The balances were unsecured, interest-free and repayable on demand.

NOTE 12

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.

	Three months ended March 31,
	2009			2008
Revenue, net:
Trading	$	3,792,424		$	5,658,488
Retailing		718,995			10,357,771
Less: inter-segment sales		(29,631	)		(4,738,867	)

	$	4,481,788		$	11,277,392

	Three months ended March 31,
	2009			2008
(Loss) income before income tax:
Trading	$	(91,977	)	$	339,071
Retailing		(495,713	)		(54,734	)

	$	(587,690	)	$	284,337

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

F-16

ASIAMART, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2009

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

(Unaudited)

NOTE 13

CONCENTRATIONS OF RISK

The Company is exposed to the following concentrations of risk:

(a) Major customers

	Three months ended March 31, 2009
Customers	Sales		Percentage of total sales			Accounts receivable, net

Customer A	$	1,776,028		47	%	$	457,721
Customer B		1,673,252		44	%		254,414

Total:	$	3,449,280		91	%	$	712,135

For the three months ended March 31, 2008, 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 three months ended March 31, 2009 and 2008 their outstanding balances as at period-end date:

	Three months ended March 31, 2009
Vendors	Purchases		Percentage of total purchases			Accounts payable, trade

Vendor A	$	1,951,767		52	%	$	764,854
Vendor D		450,778		12	%		194,552

Total:	$	2,402,545		64	%	$	959,406

	Three months ended March 31, 2008
Vendors	Purchases		Percentage of total purchases			Accounts payable, trade

Vendor A	$	1,484,011		28	%	$	426,905
Vendor B		1,031,716		20	%		222,491
Vendor C		518,382		10	%		121,659

Total:	$	3,034,109		58	%	$	771,055

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.

F-17

ASIAMART, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2009

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

(Unaudited)

(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 March 31, 2009, 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.

NOTE 14

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 three months ended March 31, 2009 and 2008 amounted to $101,290 and $105,511, respectively.

As of March 31, 2009, the Company has future minimum rental payments of $203,368 under these operating leases in the next 12 months.

(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 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 case is presently proceeding to the discovery phase. No trial date has been set.

NOTE 15

COMPARATIVE FIGURES

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

F-18

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS

Note Regarding Forward-Looking Statements

This quarterly report on Form 10-Q and other reports filed by Registrant from time to time with the Securities and Exchange Commission (collectively the “Filings”) contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, Registrant’s management as well as estimates and assumptions made by Registrant’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the filings, the words “anticipate”, “believe”, “estimate”, “expect”, “future”, “intend”, “plan”, or the negative of these terms and similar expressions as they relate to Registrant or Registrant’s management identify forward-looking statements. Such statements reflect the current view of Registrant with respect to future events and are subject to risks, uncertainties, assumptions, and other factors (including the risks contained in the section of this report entitled “Risk Factors”) relating to Registrant’s industry, Registrant’s operations and results of operations, and any businesses that Registrant may acquire. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

Although Registrant believes that the expectations reflected in the forward-looking statements are reasonable, Registrant cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Registrant does not intend to update any of the forward-looking statements to conform these statements to actual results. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this quarterly report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations, and prospects.

In this Form 10-Q, references to “we”, “our”, “us”, “our company”, “Asiamart” or the “Registrant” refer to Asiamart, Inc., a Delaware corporation.

Overview

Our core business, prior to the third quarter of 2008, was the operation of outlets and discount shopping centers catering principally to tourists visiting Hong Kong from other parts of mainland China. We offered 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. Nearly all of our customers were brought to our shopping centers by various mainland Chinese travel companies and travel tour operators.

Over the past few years, our goal has been the development of our retail business with a focus on international tourists in Hong Kong. With the downturn of the economy, management has re-evaluated the Company’s business model and operation. In the near future, management foresees a significant slowdown in retail sales, 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. As such, management has changed its business model from being an outlet and discount shopping center operator to a retail service provider.

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 recession is discouraging tourist visits to Hong Kong.

In the present economic climate, management believes that the Company is unlikely to sustain profitability with the operation of its retail outlets, and believes that changing its business model will be 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. 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 our subsidiaries 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. 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.

Under the Agreements, the Company agreed to provide technical, commercial and operational management for 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 responsible for 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, 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 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. The Company believes its new direction will position the Company to produce a more stable stream of income and achieve profitability for the Company and its shareholders.

In addition, 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 products from suppliers worldwide in order to provide our customers with an extensive variety of products at competitive prices. We have also established a comprehensive quality assurance and service protocol. Our customers are entitled to a full refund within 180 days of their purchase of a product if the product does not meet their satisfaction. In cases where there is a manufacturer’s warranty, during the warranty period our customers can bring their products directly to manufacturers in China, including Hong Kong and Macau, for repair. We mark the receipts for our products with a special symbol to denote our guarantee that the product is authentic and sourced directly from the manufacturer or an authorized dealer.

Critical Accounting Policies and Estimates

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. We evaluate our estimates and assumptions on an ongoing basis. 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 4 to our consolidated financial statements, we believe that the following accounting policies are the most critical to assist you in fully understanding and evaluating our reported financial results.

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 electronic appliances through our 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.

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

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. 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.

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. 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. Depreciation expense for the three months ended March 31, 2009 and 2008 were $43,727 and $64,968, respectively. As of March 31, 2009, motor vehicles and certain equipment under capital leases were included with the aggregate net book value of $341,961.

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.

Results of Operations

Comparison of Three Months Ended March 31, 2009 and March 31, 2008.

Revenues. For the three months ended March 31, 2009, total revenue decreased 60% from $11.3 million to $4.5 million relative to the three months ended March 31, 2008. During the latter half of 2008, we switched business direction from being a retail operator to a retail service provider due to the economic recession which led to a significant slowdown in retail sales and fierce competition from other retailers. We terminated the retail operations of our business and closed our two shopping centers during the fourth quarter of 2008, which caused a significant reduction in our revenue. We currently derive our revenue from providing management services to Best Paramount and the distribution of consumer electronic products through our trading segment.

Cost of Sales. Cost of sales decreased from $5.8 million for the three months ended March 31, 2008 to $4.3 million for the three months ended March 31, 2009, a decrease of 25.5% in cost of sales. The decrease in cost of sales is due to the fact that the cost of sales for the first quarter of 2009 represented only the cost of the trading segment compared to the cost of sales for the first quarter of 2008 which is inclusive of both the trading and retail segments of our business.

Gross Profit. Gross profit decreased from $5.5 million for the three months ended March 31, 2008 to $0.2 million for the three months ended March 31, 2009, a decrease of 97.2% in gross profit. The decrease in gross profit was because the gross profit for the first quarter of 2009 represented the gross profit of the trading segment and the management services provided compared to the gross profit for the first quarter of 2008 which is inclusive of both the trading and retail segments of our business. This significant decrease of gross profit was mainly attributable to the change from the closure of our shopping centers in 2008 to the provision of management services. The retail operations produced a much higher gross profit margin compared to our trading segment. Therefore, the termination of our retail operations caused a significant decrease in our overall gross profit.

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased from $5.1 million for the three months ended March 31, 2008 to $0.5 million for the same period in 2009, a decrease of 89.3%. Our selling, general and administrative expenses significantly decreased due to the closure of our shopping centers which reduced our overall overhead expenses.

Other Income (Expense). Other income (expense) primarily represents the gain or loss on exchange from converting RMB received from customers to Hong Kong Dollars and amortization expenses on the debt discount. Total other expense increased from $0.1 million for the three months ended 2008 to $0.2 million for the same period in 2009.

Business Segments

Our operating businesses are structured and managed separately, according with the nature of their operations and the products and services they provide. We identify our reportable segments based on management responsibility, and these reportable segments are (i) the trading segment (“Trading Segment”) and (ii) the retailing segment providing management services to other retailers (“Retailing Segment”). Information on segments and reconciliations to income before income taxes are described in Note 12 to our consolidated financial statements and is incorporated herein by reference.

Trading Segment

Sales revenue from external customers in the Trading Segment during the first quarter decreased 33.0%, from $5.7 million for the three month period ended March 31, 2008 to $3.8 million for the same period in 2009. The decrease was attributable to a downturn in the economy. During times of economic downturn, consumers tend to spend less on electronics and other discretionary products, and we believe this larger economic trend has affected our sales revenue in our trading segment.

Retailing Segment

Management services revenue during the first quarter ended March 31, 2009 was $0.7 million, compared to $10.2 million revenue earned by our retail operations during the first quarter ended March 31, 2008. Since our two shopping centers closed at the end of 2008, the revenue from our retail operations in the Retailing Segment has been replaced with the revenue from our management services.

Liquidity and Capital Resources

Cash Flows

For the three month period ended March 31, 2009, net cash flow used in operating activities was $7,987, compared to the net cash flow used in operating activities of $380,098 for the same period in 2008. The improvement in cash flow used in operating activities was mainly due to deferred payments and an increase in accounts payable.

Net cash flow provided by investing activities in the first quarter of 2009 was $21,828, compared to $15,011 of net cash flow provided by investing activities in the first quarter of 2008. The increase of net cash flow provided by investing activities was due to the disposal of plant and equipment.

Net cash flow used in financing activities was $17,541 for the three month period ended March 31, 2009 compared to the net cash flow used in financing activities of $206,937 for the same period in 2008. The decrease was mainly due to a decrease in repayment of installment loan.

Capital Resources

At March 31, 2009, we had cash and cash equivalents of $0.1 million, other current assets of $2.9 million and current liabilities of $7.1 million. We presently finance our operations primarily from the cash flow from our operations, and we anticipate that this will continue to be our primary source of funds to finance our short-term cash needs.

The continuation of the Company is dependent upon the continuing financial support of shareholders and the anticipation of a business restructuring plan. There is no assurance, however, 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 present 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 March 31, 2009, and the effect that 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	$	6	$	6	$	—		—	$	—

Capital Lease Obligations		231		66		165		—		—

Operating Leases		203		203		—		—		—

Total Contractual Obligations:	$	440	$	275	$	165	$	-	$	—

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

Capital lease amounts primarily consist of vehicles and equipment to support our wholesale operations.

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 have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that would be considered material to investors.

Effects of Inflation

We are subject to price risks arising from price fluctuations in the market prices of the products that we sell under our Trading Segment. Price risks are managed by our Trading Segment through productivity improvements and cost-containment measures. Management does not believe that inflation risk is material to our business or our consolidated financial position, results of operations, or cash flows.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Derivative Financial Instruments

We do not use derivative financial instruments in our investment portfolio and do not have any 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 do not have a material impact on the fair value of these securities. At March 31, 2009, 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 we 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 currently has an exchange rate of 7.8 Hong Kong Dollars for each U.S. Dollar. However, see the risk factor in Part II below entitled “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.”

ITEM 4. CONTROLS AND PROCEDURES

Based on an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of March 31, 2009, our Chief Executive Officer and Chief Financial Officer believe that our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) of the Exchange Act) are effective to ensure that information required to be disclosed by us in this report is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. 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 quarter ended March 31, 2009 that have been materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. 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 case is presently proceeding to the discovery phase. No trial date has been set.

ITEM 1A. 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:

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seasonality of the business;

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price competition from other retailers;

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general price increases by suppliers and manufacturers;

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our ability to maintain and expand our distribution relationships;

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increases in the cost of advertising;

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unexpected increases in shipping costs or delivery times;

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our ability to build and maintain customer loyalty;

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

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the success of our brand-building and marketing campaigns;

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

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

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

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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, Swine Flu, or 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 Kong. 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 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

The following exhibits are included in this report or incorporated by reference into this report:

Exhibit Number		Description

10.20		Addendum to Management Service Agreement dated April 29, 2009 by and between Allied Fine Development Limited and Best Paramount Industrial Limited*

10.21		Addendum to Management Service Agreement dated April 29, 2009 by and between Manigood International Industrial Limited and Best Paramount Industrial Limited*

10.22		Addendum to Management Service Agreement dated April 29, 2009 by and between Profits Dreams Development Limited and Best Paramount Industrial Limited*

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

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

32.1		Section 1350 Certification by Principal Executive Officer *

32.2		Section 1350 Certification by Principal Accounting and Financial Officer *

* Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ASIAMART, INC.

Dated: May 20, 2009	By:	/s/ Alex Chun Shan Yue
		Alex Chun Shan Yue Chief Executive Officer (Principal Executive Officer)

Dated: May 20, 2009	By:	/s/ Edward Man Wai Ma
		Edward Man Wai Ma Chief Financial Officer (Principal Financial and Accounting Officer)