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<SEC-DOCUMENT>0001275287-06-001702.txt : 20060331
<SEC-HEADER>0001275287-06-001702.hdr.sgml : 20060331
<ACCEPTANCE-DATETIME>20060331171658
ACCESSION NUMBER: 0001275287-06-001702
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 7
CONFORMED PERIOD OF REPORT: 20051231
FILED AS OF DATE: 20060331
DATE AS OF CHANGE: 20060331
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: CHINA AUTOMOTIVE SYSTEMS INC
CENTRAL INDEX KEY: 0001157762
STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714]
IRS NUMBER: 330885775
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-33123
FILM NUMBER: 06730012
BUSINESS ADDRESS:
STREET 1: NO. 1, HENGLONG ROAD
STREET 2: YU QIAO DEVELOPMENT ZONE,JINGZHOU CICITY
CITY: HUBEI PROVINCE
STATE: F4
ZIP: XXXXX
BUSINESS PHONE: 0716-8324631
MAIL ADDRESS:
STREET 1: NO. 1, HENGLONG ROAD
STREET 2: YU QIAO DEVELOPMENT ZONE,JINGZHOU CITY
CITY: HUBEI PROVINCE
STATE: F4
ZIP: XXXXX
FORMER COMPANY:
FORMER CONFORMED NAME: VISIONS IN GLASS INC
DATE OF NAME CHANGE: 20010820
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>ca5269.htm
<DESCRIPTION>FORM 10-K
<TEXT>
<html>
<head>
<title></title>
</head>
<body bgcolor="white">
<hr size="4" width="100%" noshade color=black>
<p align="center">
<font size="5" face="Times New Roman"><b>UNITED STATES<br> SECURITIES AND EXCHANGE COMMISSION<br> </b></font>
<font size="3"><b>WASHINGTON, D.C. 20549</b></font></p>
<p align="center">
<font size="5" face="Times New Roman"><b>FORM 10-K</b></font></p>
<table align="center" border="0" style="border-collapse:collapse" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td colspan="2" valign="bottom">
<p>
<font size="2" face="Times New Roman"><b>(Mark One)</b></font></p> </td>
</tr>
<tr>
<td width="5%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="95%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p>
<font size="3" face="Wingdings">x</font></p> </td>
<td valign="top">
<p>
<font size="3" face="Times New Roman"><b>ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934.</b></font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td colspan="2" valign="bottom">
<p align="center">
<font size="2" face="Times New Roman"><b>For the fiscal year ended December 31, 2005</b></font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td colspan="2" valign="bottom">
<p align="center">
<font size="2" face="Times New Roman"><b>OR</b></font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p>
<font size="3" face="Wingdings">o</font></p> </td>
<td valign="top">
<p>
<font size="3" face="Times New Roman"><b>TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934.</b></font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td colspan="2" valign="bottom">
<p align="center"><font size="2" face="Times New Roman"><b>For the transition period from ____________ to ____________</b></font></p> </td>
</tr>
</table>
<p align="center">
<font size="2" face="Times New Roman"><b>Commission File Number 000-33123</b></font></p>
<hr size="2" width="21%" noshade color=black>
<p align="center">
<font size="6" face="Times New Roman"><b>CHINA AUTOMOTIVE SYSTEMS, INC.</b></font><br>
<font size="2" face="Times New Roman"><i>(Exact name of Registrant as specified in its charter)</i></font></p>
<table align="center" border="0" style="border-collapse:collapse" cellspacing="0" cellpadding="0" width="99%">
<tr>
<td width="49%" valign="bottom">
<p align="center">
<font size="2" face="Times New Roman"><b>Delaware</b></font></p> </td>
<td width="1%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="49%" valign="bottom">
<p align="center">
<font size="2" face="Times New Roman"><b>33-0885775</b></font></p> </td>
</tr>
<tr>
<td valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
</tr>
<tr>
<td valign="bottom">
<p align="center">
<font size="2" face="Times New Roman"><i>(State or Other Jurisdiction<br> of Incorporation or Organization)</i></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align="center">
<font size="2" face="Times New Roman"><i>(I.R.S. Employer<br> Identification No.)</i></font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p align="center"><font size="2" face="Times New Roman"><b>No. 1 Henglong Road, Yu Qiao Development Zone<br> Shashi District, Jing Zhou City Hubei Province, China</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align="center">
<font size="2" face="Times New Roman"><b>434000</b></font></p> </td>
</tr>
<tr>
<td valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
</tr>
<tr>
<td valign="bottom">
<p align="center">
<font size="2" face="Times New Roman"><i>(Address of Principal Executive Offices)</i></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align="center">
<font size="2" face="Times New Roman"><i>(Zip Code)</i></font></p> </td>
</tr>
</table>
<BR>
<table align="center" border="0" style="border-collapse:collapse" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td width="100%" valign="bottom">
<p align="center">
<font size="2" face="Times New Roman"><b>(86) 716-8329196</b></font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p align="center">
<font size="2" face="Times New Roman"><i>(Issuer’s Telephone Number, Including Area Code)</i></font></p> </td>
</tr>
</table>
<p>
<font size="2" face="Times New Roman"> Indicate by
check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act. Yes </font>
<font size="2" face="Wingdings">o</font> <font size="2" face="Times New Roman">No </font>
<font size="2" face="Wingdings">x</font></p>
<p>
<font size="2" face="Times New Roman"> Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes </font>
<font size="2" face="Wingdings">o</font> <font size="2" face="Times New Roman">No </font>
<font size="2" face="Wingdings">x</font></p>
<p><font size="2" face="Times New Roman"> Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for past 90 days. Yes </font>
<font size="2" face="Wingdings">x</font> <font size="2" face="Times New Roman">No </font>
<font size="2" face="Wingdings">o</font></p>
<p>
<font size="2" face="Times New Roman"> Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. </font>
<font size="2" face="Wingdings">x</font></p>
<p>
<font size="2" face="Times New Roman"> Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.</font></p>
<p>
<font size="2" face="Times New Roman">Large Accelerated Filer </font>
<font size="2" face="Wingdings">o</font> Accelerated Filer
<font size="2" face="Wingdings">o</font> Non-Accelerated Filer
<font size="2" face="Wingdings">x</font></p>
<p>
<font size="2" face="Times New Roman"> Indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act). Yes </font>
<font size="2" face="Wingdings">o</font><font size="2" face="Times New Roman"> No </font><font size="2" face="Wingdings">x</font></p>
<p>
<font size="2" face="Times New Roman"> The Company’s revenues for its most recent fiscal year were $ 63,572,301 </font></p>
<p>
<font size="2" face="Times New Roman"> The aggregate market value of the voting and non-voting common equity held by no-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days was $21,859,597 based on a closing bid price of $12.77 on February 28, 2006.</font></p>
<p><font size="2" face="Times New Roman">
The number of shares
outstanding of the issuer’s common stock, as of the latest practicable date
February 28, 2006 was 22,574,543 shares outstanding.</font></p>
<p>
<font size="2" face="Times New Roman"> Transitional Small Business Disclosure Format (check one): Yes </font>
<font size="2" face="Wingdings">o</font> <font size="2" face="Times New Roman">No </font>
<font size="2" face="Wingdings">x</font></p>
<hr size="4" width="100%" noshade color=black>
<div style="page-break-before:always"></div>
<PAGE>
<br>
<p align="center">
<font size="2" face="Times New Roman">CHINA AUTOMOTIVE SYSTEMS, INC.</font></p>
<p align="center">
<font size="2" face="Times New Roman">FORM 10-K</font></p>
<p align="center">
<font size="2" face="Times New Roman">INDEX</font></p>
<table align="center" border="0" style="border-collapse:collapse" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td width="8%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="84%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="8%" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>Page</b></font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<hr size="1" width="100%" noshade color=black> </td>
</tr>
<tr>
<td colspan="2" valign="bottom">
<p>
<font size="2" color=blue face="Times New Roman"><u><a href="#ca_001">PART I</a></u></font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="2" face="Times New Roman">Item 1.</font></p> </td>
<td valign="bottom">
<p>
<font size="2" color=blue face="Times New Roman"><u><a href="#ca_002">Description of Business</a></u></font></p> </td>
<td valign="bottom">
<p align=right>
<font size="2" face="Times New Roman">2</font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size="2" face="Times New Roman">Item 1A.</font></p> </td>
<td valign="bottom">
<p>
<font size="2" color=blue face="Times New Roman"><u><a href="#ca_003">Risk Factors</a></u></font></p> </td>
<td valign="bottom">
<p align=right>
<font size="2" face="Times New Roman">11</font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="2" face="Times New Roman">Item 1B.</font></p> </td>
<td valign="bottom">
<p>
<font size="2" color=blue face="Times New Roman"><u><a href="#ca_004">Unresolved Staff Comments</a></u></font></p> </td>
<td valign="bottom">
<p align=right>
<font size="2" face="Times New Roman">17</font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="2" face="Times New Roman">Item 2.</font></p> </td>
<td valign="bottom">
<p>
<font size="2" color=blue face="Times New Roman"><u><a href="#ca_005">Description of Property</a></u></font></p> </td>
<td valign="bottom">
<p align=right>
<font size="2" face="Times New Roman">17</font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="2" face="Times New Roman">Item 3.</font></p> </td>
<td valign="bottom">
<p>
<font size="2" color=blue face="Times New Roman"><u><a href="#ca_006">Legal Proceedings</a></u></font></p> </td>
<td valign="bottom">
<p align=right>
<font size="2" face="Times New Roman">18</font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size="2" face="Times New Roman">Item 4.</font></p> </td>
<td valign="bottom">
<p>
<font size="2" color=blue face="Times New Roman"><u><a href="#ca_007">Submission of Matters of a Vote of Security Holders</a></u></font></p> </td>
<td valign="bottom">
<p align=right>
<font size="2" face="Times New Roman">18</font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td colspan="2" valign="bottom">
<p>
<font size="2" color=blue face="Times New Roman"><u><a href="#ca_008">PART II</a></u></font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="2" face="Times New Roman">Item 5.</font></p> </td>
<td valign="bottom">
<p>
<font size="2" color=blue face="Times New Roman"><u><a href="#ca_009">Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities</a></u></font></p> </td>
<td valign="bottom">
<p align=right>
<font size="2" face="Times New Roman">18</font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="2" face="Times New Roman">Item 6.</font></p> </td>
<td valign="bottom">
<p>
<font size="2" color=blue face="Times New Roman"><u><a href="#ca_010">Selected Financial Data</a></u></font></p> </td>
<td valign="bottom">
<p align=right>
<font size="2" face="Times New Roman">20</font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size="2" face="Times New Roman">Item 7.</font></p> </td>
<td valign="bottom">
<p>
<font size="2" color=blue face="Times New Roman"><u><a href="#ca_011">Management’s Discussion and Analysis of Financial Condition and Results of Operations</a></u></font></p> </td>
<td valign="bottom">
<p align=right>
<font size="2" face="Times New Roman">23</font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="2" face="Times New Roman">Item 7A.</font></p> </td>
<td valign="bottom">
<p>
<font size="2" color=blue face="Times New Roman"><u><a href="#ca_012">Quantitative and Qualitative Disclosures About Market Risk</a></u></font></p> </td>
<td valign="bottom">
<p align=right><font size=2 face="Times New Roman">51</font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="2" face="Times New Roman">Item 8.</font></p> </td>
<td valign="bottom">
<p>
<font size="2" color=blue face="Times New Roman"><u><a href="#ca_013">Financial Statements and Supplementary Data</a></u></font></p> </td>
<td valign="bottom">
<p align=right><font size=2 face="Times New Roman">54</font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="2" face="Times New Roman">Item 9.</font></p> </td>
<td valign="bottom">
<p>
<font size="2" color=blue face="Times New Roman"><u><a href="#ca_014">Changes in and Disagreements with Accountants on Accounting and Financial Disclosure</a></u></font></p> </td>
<td valign="bottom">
<p align=right><font size=2 face="Times New Roman">55</font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size="2" face="Times New Roman">Item 9A.</font></p> </td>
<td valign="bottom">
<p>
<font size="2" color=blue face="Times New Roman"><u><a href="#ca_015">Controls and Procedures</a></u></font></p> </td>
<td valign="bottom">
<p align=right><font size=2 face="Times New Roman">55</font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="2" face="Times New Roman">Item 9B</font></p> </td>
<td valign="bottom">
<p>
<font size="2" color=blue face="Times New Roman"><u><a href="#ca_016">Other Information</a></u></font></p> </td>
<td valign="bottom">
<p align=right><font size=2 face="Times New Roman">55</font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td colspan="2" valign="bottom">
<p>
<font size="2" color=blue face="Times New Roman"><u><a href="#ca_017">PART III</a></u></font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="2" face="Times New Roman">Item 10.</font></p> </td>
<td valign="bottom">
<p>
<font size="2" color=blue face="Times New Roman"><u><a href="#ca_018">Directors and Executive Officers of the Registrant</a></u></font></p> </td>
<td valign="bottom">
<p align=right><font size=2 face="Times New Roman">55</font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size="2" face="Times New Roman">Item 11.</font></p> </td>
<td valign="bottom">
<p>
<font size="2" color=blue face="Times New Roman"><u><a href="#ca_019">Executive Compensation</a></u></font></p> </td>
<td valign="bottom">
<p align=right><font size=2 face="Times New Roman">59</font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="2" face="Times New Roman">Item 12.</font></p> </td>
<td valign="bottom">
<p>
<font size="2" color=blue face="Times New Roman"><u><a href="#ca_020">Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters</a></u></font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman">60</font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="2" face="Times New Roman">Item 13.</font></p> </td>
<td valign="bottom">
<p>
<font size="2" color=blue face="Times New Roman"><u><a href="#ca_021">Certain Relationships and Related Transactions</a></u></font></p> </td>
<td valign="bottom">
<p align=right><font size=2 face="Times New Roman">61</font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="2" face="Times New Roman">Item 14.</font></p> </td>
<td valign="bottom">
<p>
<font size="2" color=blue face="Times New Roman"><u><a href="#ca_022">Principal Accountant Fees and Services</a></u></font></p> </td>
<td valign="bottom">
<p align=right><font size=2 face="Times New Roman">62</font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td colspan="2" valign="bottom">
<p><font size="2" color=blue face="Times New Roman"><u><a href="#ca_023">PART IV</a></u></font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="2" face="Times New Roman">Item 15.</font></p> </td>
<td valign="bottom">
<p>
<font size="2" color=blue face="Times New Roman"><u><a href="#ca_024">Exhibits and Financial Statement Schedules</a></u></font></p> </td>
<td valign="bottom">
<p align=right><font size=2 face="Times New Roman">63</font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td colspan="2" valign="bottom">
<p>
<font size="2" color=blue face="Times New Roman"><u><a href="#ca_025">Signatures</a></u></font></p> </td>
<td valign="bottom">
<p align=right><font size=2 face="Times New Roman">64</font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td colspan="2" valign="bottom">
<p>
<font size="2" color=blue face="Times New Roman"><u><a href="#ca_026">Financial Statements</a></u></font></p> </td>
<td valign="bottom">
<p align=right><font size=2 face="Times New Roman">68</font></p> </td>
</tr>
</table>
<BR>
<hr size="1" width="100%" noshade color=black>
<div style="page-break-before:always"></div>
<PAGE>
<br>
<p>
<font size="2" face="Times New Roman">Cautionary Statement</font></p>
<p>
<font size="2" face="Times New Roman"> This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934.  These statements relate to future events or the Company’s future financial performance.  The Company has attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “expects,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predict,” “should” or “will” or the negative of these terms or other comparable terminology.  Such statements are subject to certain risks and uncertainties, including the matters set forth in this report or other reports or documents the Company
files with the Securities and Exchange Commission from time to time, which could cause actual results or outcomes to differ materially from those projected.  Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance or achievements.  Undue reliance should not be placed on these forward-looking statements which speak only as of the date hereof.  The Company’s expectations are as of the date this Form 10-K is filed, and the Company does not intend to update any of the forward-looking statements after the date this Annual Report on Form 10-K is filed to confirm these statements to actual results, unless required by law.</font></p>
<p align="center"><a name="ca_001"></a><font size="2" face="Times New Roman">PART I</font></p>
<p><a name="ca_002"></a>
<font size="2" face="Times New Roman">ITEM 1. DESCRIPTION OF BUSINESS.</font></p>
<p>
<font size="2" face="Times New Roman">COMPANY HISTORY </font></p>
<p>
<font size="2" face="Times New Roman"> China Automotive Systems, Inc. (“China Automotive” or the “Company”) was incorporated in the State of Delaware on June 29, 1999 under the name Visions-In-Glass, Inc., which was principally engaged in the business of designing, marketing and selling custom-designed stained glass, leaded glass artifacts and leaded glass windows through a web site.  From August 23, 2002 to March 2003, the Company had no business operations.</font></p>
<p>
<font size="2" face="Times New Roman"> Pursuant to a
Share Exchange Agreement dated as of March 5, 2003, among Yarek Bartosz, Guofu
Dong (“Dong”), Liping Xie (“Xie”), Qizhou Wu
(“Wu”), Tse, Yiu Wong, Andy (“Tse”), Hanlin Chen
(“Chen”, Chen, Dong, Tse, Wu and Xie, collectively, the
“Sellers”) and Great Genesis Holding Limited, a corporation organized
under the laws of the Hong Kong Special Administrative Region, China
(“Genesis”), the Company acquired from the Sellers (the
“Acquisition”) all of the issued and outstanding equity interests of
Genesis (the “Genesis Shares”).  As consideration for the Genesis
Shares, the Company issued 20,914,250 shares of common stock to the
Sellers.  After the acquisition, the Company continued the operations of
Genesis.  Genesis owns all of the capital stock of Ji Long Enterprises
Investment Corp. Ltd., a Hong Kong Company (“Ji Long”).  Ji Long
in turn owns interests in five Sino-joint ventures, which manufacture power
steering systems and/or related products for different segments of the
automobile industry in China. </font></p>
<p>
<font size="2" face="Times New Roman"> Effective March 10, 2003, Hanlin Chen, Guofu Dong, Liping Xie, Qizhou Wu, and Tse, Yiu Wong, Andy began serving their terms as members of the Company’s Board of Directors.  The newly elected directors appointed Hanlin Chen as the Chief Executive Officer and Chairman of the Board of Directors, Qizhou Wu as the Chief Operating Officer and Daming Hu as Chief Financial Officer.</font></p>
<p><font size="2" face="Times New Roman"> On May 19, 2003, the Company changed its name from Visions-In-Glass, Inc. to China Automotive Systems, Inc.</font></p>
<p>
<font size="2" face="Times New Roman">BUSINESS OVERVIEW </font></p>
<p>
<font size="2" face="Times New Roman"> Unless the context indicates otherwise, the Company uses the terms “the Company”, “we”, “our” and “us” to refer to Genesis and China Automotive collectively on a consolidated basis.  The Company is a holding company and has no significant business operations or assets other than its interest in Genesis.  Through Genesis, the Company manufactures power steering systems and other component parts for automobiles.  All operations are conducted through five Sino-foreign joint ventures in China.  Set forth below is an organizational chart as at December 31, 2005.</font></p>
<p align="center">
<font size="2" face="Times New Roman">2</font></p>
<hr size="1" width="100%" noshade color=black>
<div style="page-break-before:always"></div>
<PAGE>
<br>
<table align="center" border="0" style="border-collapse:collapse" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td width="35%" valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td width="30%" valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="35%" valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">China Automotive Systems, Inc.</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">|</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center"><font size="2" face="Times New Roman">(100%)<br> Great Genesis Holdings Limited</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">|</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">(100%)<br> Ji Long Enterprise Investment Limited</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">|</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
</table>
<BR>
<table align="center" border="0" style="border-collapse:collapse" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td width="18%" valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="18%" valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="18%" valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="18%" valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="18%" valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
</tr>
<tr>
<td valign="top">
<p align="center" style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">|</font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">|</font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">|</font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">|</font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">|</font></p> </td>
</tr>
<tr>
<td valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
</tr>
<tr>
<td valign="top">
<p align="center" style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">(44.5%)</font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">(81%)</font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">(70%)</font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">(51%)</font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">(60%)</font></p> </td>
</tr>
<tr>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">Jinzhou Henglong<br> Automotive Parts Co., Ltd.<br> (“Henglong)</font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">Shashi Jiulong Power<br> Steering Gears Co., Ltd.<br> (“Jiulong”)</font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">
Shenyang Jinbei Henglong<br> Automotive Steering<br> Systems Co., Ltd.<br>
(“Shenyang”)</font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">Zhejiang Henlong & VIE<br> Pump Co., Ltd.<br> (“Zhejiang”)</font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">Universal Sensor<br> Application, Inc.<br> (“USAI”)</font></p> </td>
</tr>
<tr>
<td valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
</tr>
</table>
<p><font size="2" face="Times New Roman"> Henglong was
established in 1997, mainly engaged in the production of rack and pinion power
steering gears for cars, light duty vehicles.</font></p>
<p><font size="2" face="Times New Roman">
Jiulong was
established in 1993, and mainly engaged in the production of integral power
steering gears for heavy-duty vehicles.</font></p>
<p>
<font size="2" face="Times New Roman"> Shenyang was
established in 2002 and focused on power steering parts. As of December 31, 2003,
the Company owned 55% equity interest of Shenyang. On December 31, 2003, the
Company owned 55% of Shenyang.  On April 8, 2004, the Board of Directors
approved an increase in Shenyang’s registered capital and total capital
from $5,421,687 (RMB45,000,000) to $8,132,530 (RMB67,500,000); the Chinese
investor was changed from Shenyang Jinbei Automotive Industry Co., Ltd. to
Shenyang Jinbei Automotive Company Limited.  The shareholder transfer and
capital increase, along with the newly signed Joint Venture Agreement and
Articles of Incorporation, were approved by the applicable PRC
authorities.  Accordingly, Shenyang’s registered capital is now
$8,132,530 (RMB67,500,000), including $5,692,771 (RMB47,250,000) from the
Company, which is 70% of the total registered capital, and $2,439,759
(RMB20,250,000)
from Shenyang Jinbei Automotive Company Limited, which is 30% of the total registered capital. The increase in capital of $2,710,843
(RMB22,500,000) has been contributed to Shenyang.</font></p>
<p><font size="2" face="Times New Roman"> Zhejiang was
established in 2002 and focused on power steering pumps.</font></p>
<p>
<font size="2" face="Times New Roman"> Jingzhou Henglong Fulida Textile Co., Ltd. (“Jingzhou”) was formed in February 2003 to produce environmental textiles and raw materials, and was owned 51% by Ji Long.  Effective August 31, 2004, in order to concentrate on its main products, namely steering and automotive parts, the Company disposed of a 51% interest in Jingzhou owned by Ji Long by entering into an equity exchange agreement (the “Exchange Agreement”) with Hubei Wanlong Investment Co., Ltd. (“HBWL”) controlled by Mr. Hanlin Chen, the Company’s Chairman.  Pursuant to the Exchange Agreement, the 51% equity interest in Jingzhou owned by Ji Long was exchanged for 2.5% of HBWL’s equity interest in Henglong based on their respective fair market values as determined by an independent appraisal firm.  The difference between the fair value and the book value resulting from the disposition of the
joint venture interest in Jingzhou was debited to additional paid-in capital.  With respect to consideration paid by the Company in excess of its chairman’s basis for his investment, such excess has been charged to additional paid-in capital as a distribution to the chairman, resulting in the acquired 2.5% equity interest in Henglong being recorded by the Company at the chairman’s original cost basis.  The Company paid approximately $90,000 to HBWL in conjunction with this transaction.</font></p>
<p align="center"><font size="2" face="Times New Roman">3</font></p>
<hr size="1" width="100%" noshade color=black>
<div style="page-break-before:always"></div>
<PAGE>
<br>
<p>
<font size="2" face="Times New Roman"> The divested non-core business of Jingzhou has been treated as a discontinued operation under SFAS No. 144.  Jingzhou’s results of operation and related charges have been reclassified as discontinued operations in the Company’s consolidated statements of operations as of December 31, 2004. </font></p>
<p>
<font size="2" face="Times New Roman"> On April 12, 2005, one of the subsidiary companies, Great Genesis entered into a Joint Venture Agreement with Shanghai Hongxi Investment Inc. (“Hongxi”, a company controlled by Mr. Hanlin Chen, the Company’s Chairman) and Sensor System Solution Inc. (“Sensor”) to establish a joint venture - Universal Sensor Application Inc. (“USAI”) in the Wuhan East Lake development zone.  USAI will produce and sell sensor modular.  The registered capital of the joint venture is $10,000,000.  Great Genesis and Hongxi will invest $6,000,000 and $1,000,000 respectively including cash, land and building which will account for 60% and 10% of the total registered capital, respectively.  Sensor will invest $3,000,000 in technology, accounting for 30% of the total registered capital.  The registered capital is required to be paid in three installments within one year
after signing of the Joint Venture Agreement (April 12, 2005).  As of December 31, 2005, Great Genesis and Sensor have invested $432,100 and $3,000,000 respectively with cash and technology.  Hongxi has not invested any capital.  USAI’s main activities in 2005 were to prepare for the technology and manufacturing in production operations and will likely continue to do so in 2006.</font></p>
<p>
<font size="2" face="Times New Roman"> The Company
has business relations with more than sixty vehicle manufacturers, among them
are FAW Group and Dongfeng Auto Group, two of the five largest automobile
manufacturers in China; Shenyang Brilliance Jinbei Co., Ltd., the largest van
manufacturers in China; Cherry Automobile Co., Ltd, the largest state owned car
manufacturer in China, and Zhejiang Geely Automobile Co., Ltd., the largest
private owned car manufacturer.  In 2005, the Company has supplied the
power steering pump for SAIC GM Wuling Co., one of the Sino-Foreign joint
ventures invested by GM.  Furthermore, the Company signed product
development letters of intent with FAW-Volkswagen Auto Co., Ltd., one of the
Sino-Foreign joint ventures partially owned by Volkswagen AG in China, and with
Dongfeng Peugeot Citroen Automobile Company Ltd., a venture partially owned by
DFM China, PSA France.</font></p>
<p><font size="2" face="Times New Roman"> The Company currently owns two trademarks on automobile parts and twelve Chinese patents on power steering technology.  The Company is in the process of integrating new advanced technologies such as electronic chips in power steering systems into its current production line and is pursuing aggressive strategies in technology to maintain a competitive edge within the automobile industry.  In 2001, the Company signed a Ten-Year Licensing Agreement with Bishop Steering Technology Limited, a leader in automotive steering gear technology innovation which is expected to offer advanced technology of steering valves within specified 10 years.  In 2003, the Company signed a Technology Transfer Agreement with Namyang Ind. Co. Ltd., a leading steering column maker, for the technology necessary for electronic power steering (EPS) systems.  In addition, the Company established with Tsinghua
University a steering systems research institute designed to develop the Electronic Power Steering (EPS) and Electronic Hydraulic Steering System (EHPS) .</font></p>
<p>
<font size="2" face="Times New Roman">STRATEGIC PLAN</font></p>
<p>
<font size="2" face="Times New Roman"> The Company’s short to mid-term strategic plan is to focus on both domestic and international market expansion.  To achieve this goal and higher profitability, the Company focused on brand recognition, quality control, decreasing costs, research and development and strategic acquisitions.  Set forth below are the Company’s measures:</font></p>
<p>
<font size="2" face="Times New Roman"> - Brand Recognition.  Under the Henglong and Jiulong brands, the Company offers four separate series of power steering sets and 310 models of power steering sets, steering columns, steering oil pumps and steering hoses.</font></p>
<p>
<font size="2" face="Times New Roman"> - Quality Control.  The Henglong and Jiulong manufacturing facilities passed the ISO/TS 16949 System Certification in January 2004, a well-recognized quality control system in auto industry developed by TUVRheindland of Germany.</font></p>
<p>
<font size="2" face="Times New Roman"> - Decrease Cost.  By improving the Company’s production ability and enhancing equipment management, optimizing the process and products structure, perfecting the supplier system and cutting production cost, the Company’s goal is to achieve a more competitive profit margin.</font></p>
<p align="center"><font size="2" face="Times New Roman">4</font></p>
<hr size="1" width="100%" noshade color=black>
<div style="page-break-before:always"></div>
<PAGE>
<br>
<p>
<font size="2" face="Times New Roman"> - Research and Development.  By partnering with Bishop Steering Technology Limited for the development of advanced steering systems, the Company’s objective is to gain increased market share in China.</font></p>
<p>
<font size="2" face="Times New Roman"> - International Expansion.  The Company has established contacts with several international vehicle manufacturers and auto parts modules suppliers and carried on preliminary negotiations regarding future development projects.</font></p>
<p>
<font size="2" face="Times New Roman"> - Acquisitions.  The Company is exploring opportunities to create long-term growth through new ventures or acquisitions of other auto component manufacturers.  The Company will seek acquisition targets that fulfill the following criteria:</font></p>
<p>
<font size="2" face="Times New Roman"> - companies that can be easily integrated into product manufacturing and corporate management;</font></p>
<p>
<font size="2" face="Times New Roman"> - companies that have strong joint venture partners that would become major customers; and</font></p>
<p>
<font size="2" face="Times New Roman"> - companies involved with power steering systems, oil pump or engine-cooling systems.</font></p>
<p>
<font size="2" face="Times New Roman">CUSTOMERS</font></p>
<p>
<font size="2" face="Times New Roman"> The Company’s ten largest customers represent 69.9% of the Company’s total sales for the year ended December 31, 2005.  The following table sets forth information regarding the Company’s ten largest customers.</font></p>
<table align="center" border="0" style="border-collapse:collapse" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="3" valign="bottom">
<p align="center" style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman"><b>List of Major Customers</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="3" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td width="15%" valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="48%" valign="bottom">
<p align="center" style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman"><b>Name of Customer</b></font></p> </td>
<td width="4%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="18%" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>Percentage of Total<br> Revenue in 2005</b></font></p> </td>
<td width="15%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr >
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Brilliance China Automotive Holdings Limited</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">14.0%</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr >
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Beiqi Foton Motor Co., Ltd.</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">11.6%</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr >
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">Chery Automobile Co., Ltd</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">11.5%</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr >
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Zhejiang Geely Holding Co., Ltd</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman"> 9.5%</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr >
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Dongfeng Auto Group Co., Ltd</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman"> 8.8%</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr >
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">China FAW Group Corporation</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman"> 5.1%</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr >
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Shanxi Heavy Auto Co., Ltd</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman"> 3.3%</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr >
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Great Wall Motor Company Limited</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman"> 2.4%</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr >
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Southeast (Fujian) Auto Industry Co., Ltd</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman"> 2.1%</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr >
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">Huainan Unity Machinery Co., Ltd.</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman"> 1.6%</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
</table>
<p align="center">
<font size="2" face="Times New Roman">5</font></p>
<hr size="1" width="100%" noshade color=black>
<div style="page-break-before:always"></div>
<PAGE>
<br>
<p>
<font size="2" face="Times New Roman"> We primarily
sell our products to the above-mentioned customers; we also have excellent
relationships with them, including as the first-ranking supplier and
new product development for new model.  While we intend to continue to
focus on retaining and winning this business, we cannot ensure that we will
succeed in doing so.  It is difficult to keep these contracts as a result
of severity price competition and customers’s diversification of its supply
base to keep these contracts. The Company’s business would be materially
and adversely affected if it loses one or more of these major
customers.</font></p>
<p>
<font size="2" face="Times New Roman">SALES AND MARKETING</font></p>
<p>
<font size="2" face="Times New Roman"> The Company’s sales and marketing team has 70 sales persons, which are divided into an original equipment manufacturing (“OEM”) team, a sales service team and a working group dedicated to international business.  These sales and marketing teams provide a constant interface with the Company’s key customers.  They are located in all major vehicle producing regions to more effectively represent the Company’s customers’ interests within the Company’s organization, to promote customer programs and to coordinate customer strategies with the goal of enhancing overall customer service and satisfaction.  The Company’s ability to support its customers is further enhanced by its broad presence in terms of sales offices, manufacturing facilities, engineering technology center and joint ventures.</font></p>
<p><font size="2" face="Times New Roman"> The Company’s sales and marketing organization and activities are designed to create overall awareness and consideration of, and therefore to increase sales of, the Company’s modular systems and components.  To achieve that objective, the Company organized delegations to visit the United States, Korea, India and Japan and met with potential customers.  Through these activities, the Company has generated potential business interests as a strong base for future development.</font></p>
<p>
<font size="2" face="Times New Roman">DISTRIBUTION</font></p>
<p>
<font size="2" face="Times New Roman"> The Company’s distribution system covers all of China.  The Company has established sales and service offices with certain significant customers to deal with matters related to such customers in a timely fashion.  The Company also established distribution warehouses close to major customers to ensure in a timely fashion delivery.  The Company maintains strict control over inventories.  Each of these sales and service offices sends back to the Company through e-mail or fax information related to the inventory and customers’ needs.  The Company guarantees product delivery in 8 hours for those customers who are located within 200 km from the Company’s distribution warehouses, and 24 hours for customers who are located outside of 200 km from the Company’s distribution warehouses.  Delivery time is a very important competitive factor in terms of customer
decision making, together with quality, pricing and long-term relationships.</font></p>
<p>
<font size="2" face="Times New Roman">EMPLOYEES AND FACILITIES</font></p>
<p>
<font size="2" face="Times New Roman"> As of
December 31, 2005, the Company employed approximately 1,965
persons, including approximately 1,536 by Henglong and Jiulong, approximately
206 by Shengyan, approximately 208 by Zhejiang and approximately 15 by
USAI.  </font></p>
<p>
<font size="2" face="Times New Roman"> As of December 31, 2005, each of Henglong and Jiulong, Shenyan and Zhejiang has an area of 137,971 square meters, 35,000 square meters, and 27,000 square meters, respectively. </font></p>
<p><font size="2" face="Times New Roman"> Hubei Province, which is home to Dongfeng, one of the largest automakers in China, provides an ample supply of inexpensive but skilled labor to automotive-related industries.  The annual production of Henglong and Jiulong was approximately 420,000 units, 450,000 units and 510,000 units in 2003, 2004 and 2005 respectively.  Although the production process continues to rely heavily on manual labor, the Company has invested substantially in high-level production machinery to improve capacity and production quality.  Approximately $28 million was spent over the last three years on professional-grade equipment -- approximately 80% of which is already in place and in use.</font></p>
<p align="center">
<font size="2" face="Times New Roman">6</font></p>
<hr size="1" width="100%" noshade color=black>
<div style="page-break-before:always"></div>
<PAGE>
<br>
<p>
<font size="2" face="Times New Roman">RAW MATERIALS</font></p>
<p>
<font size="2" face="Times New Roman"> The Company purchases various manufactured components and raw materials for use in the Company’s manufacturing processes.  The principal components and raw materials the Company purchases include castings, electronic parts, molded plastic parts, finished sub-components, fabricated metal, aluminum and steel.  The most important raw material is steel.  The Company enters into purchase agreements with local suppliers.  The annual purchase plans are determined at the beginning of the calendar year but are subject to revision every three months as a result of customers’ orders.  A purchase order is made according to monthly production plans.  This protects the Company from building up inventory when the orders from customers change.</font></p>
<p>
<font size="2" face="Times New Roman"> The Company’s ten largest suppliers represent aggregate 22.9% of all components and raw materials the Company purchases for the year ended December 31, 2005. The following table sets forth information regarding the Company’s ten largest suppliers.</font></p>
<table align="center" border="0" style="border-collapse:collapse" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="3" valign="bottom">
<p align="center" style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman"><b>List of Major Suppliers</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="3" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td width="15%" valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="48%" valign="bottom">
<p align="center" style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman"><b>Name of Suppliers</b></font></p> </td>
<td width="4%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="18%" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>Percentage of Total<br> Purchases in 2005</b></font></p> </td>
<td width="15%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Shaoxing Sonmic Automotive Components Co., Ltd.</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">7.6%</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Wugang Group Wuhan Metallurgy Equipment Co., Ltd.</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">2.9%</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">HuiXian Auto-Accessories Inc. Ltd.</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">2.6%</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Changzhou Jingling Foundry & Forge Co., Ltd.</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">2.4%</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Jingmen Zhongjin Aluminium Casting Co., Ltd.</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">1.5%</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">Jingzhou Square & Round Automobile Parts Factory</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">1.3%</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Jingmen Zhonghe Xinyuan Aluminium Co., Ltd.</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">1.3%</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Guangzhou Free Trade Zone Yong Qiang Rubber Plastic Machineries Parts Co., Ltd.</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align="center">
<font size="2" face="Times New Roman">1.1%</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Shenyang Automobile Steering Gears Factory</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">1.1%</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">Jingzhou Golden Horse Automotive Parts Co., Ltd.</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="top">
<p align="center">
<font size="2" face="Times New Roman">1.1%</font></p> </td>
<td valign="top">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
</table>
<p align="center">
<font size="2" face="Times New Roman">7</font></p>
<hr size="1" width="100%" noshade color=black>
<div style="page-break-before:always"></div>
<PAGE>
<br>
<p>
<font size="2" face="Times New Roman"> All components and raw materials are available from numerous sources.  The Company has not, in recent years, experienced any significant shortages of manufactured components or raw materials and normally does not carry inventories of these items in excess of what is reasonably required to meet the Company’s production and shipping schedules.</font></p>
<p>
<font size="2" face="Times New Roman">RESEARCH AND DEVELOPMENT</font></p>
<p>
<font size="2" face="Times New Roman"> The Company has a ten-year consulting and licensing agreement with Bishop Steering Technology Ltd, one of the leading design firms in power steering systems.  Bishop’s technology in power steering systems is currently used by carmakers such as BMW and Mercedes Benz.  Pursuant to the agreement, the Company has implemented the Bishop steering valve technology into the Henglong brand R&P power steering gear. </font></p>
<p>
<font size="2" face="Times New Roman"> Henglong owns a Hubei Provincial-Level Technical Center, which is approved by the Hubei Economic Commission.  The center has a staff of 110, including 25 senior engineers, 4 foreign experts and 70 engineers primarily focused on steering system R&D, tests, production process improvement and new material and production methodology application.</font></p>
<p><font size="2" face="Times New Roman"> The Company has established an R&D center, Changchun Hualong Auto Technology Co., Ltd., with 45 employees which is composed of 10 senior engineers, 3 foreign experts and 25 engineers, all focusing on steering system R&D, tests, and new material applications.  The Company currently owns twelve Chinese patents for power steering technology and four international patents.</font></p>
<p>
<font size="2" face="Times New Roman"> In addition, the Company has partnered with Tsinghua University to establish a steering system research center, called Tsinghua Henglong Automobile Steering Research Institute, for the purposes of R&D and experimentation for Electronic-controlled Power Steering (EPS) .</font></p>
<p>
<font size="2" face="Times New Roman"> We believe that our engineering and technical expertise, together with our emphasis on continuing research and development, allows us to use the latest technologies, materials and processes to solve problems for our customers and to bring new, innovative products to market.  We believe that continued research and development activities (including engineering) are critical to maintaining our pipeline of technologically advanced products.  We have aggressively managed costs in other portions of our business in order to maintain our total expenditures for research and development activities (including engineering) at approximately $1,000,000, $1,500,000 and $1,000,000 for the years ended December 31, 2005, 2004 and 2003.  In 2005 the sales of newly developed products accounted for about 7% of total sales.</font></p>
<p>
<font size="2" face="Times New Roman">COMPETITION</font></p>
<p>
<font size="2" face="Times New Roman"> The
automotive components industry is extremely competitive.  Criteria for the
Company’s customers include quality, price/cost competitiveness, system and
product performance, reliability and timeliness of delivery, new product and
technology development capability, excellence and flexibility in operations,
degree of global and local presence, effectiveness of customer service and
overall management capability.  The power steering system market is
fragmented in China, and the Company has seven major competitors.  Of these
competitors, two are Sino-foreign joint ventures while the other five are
state-owned.  Like many competitive industries, there is downward
pressure on selling prices.  For the year ended December 31, 2005, the
selling price of the Company’s principal products was reduced by an average
of 11%. </font></p>
<p><font size="2" face="Times New Roman"> The
Company’s major competitors, including Shanghai ZF and FKS, are component
suppliers to specific automobile manufacturers.  Shanghai ZF is the joint
venture of SAIC and ZF Germany, which is an
exclusive supplier to SAIC-Volkswagen and SAIC-GM.  First Auto FKS, a joint
venture between First Auto Group and Japan’s Koyo Company, is the third
largest in the market, and its main customer is FAW-Volkswagen Company.</font></p>
<p align="center">
<font size="2" face="Times New Roman">8</font></p>
<hr size="1" width="100%" noshade color=black>
<div style="page-break-before:always"></div>
<PAGE>
<br>
<p>
<font size="2" face="Times New Roman"> While the Chinese Government limits foreign ownership of auto assemblers to 50%, there is no analogous limitation in the automotive components industry.  Thus opportunities exist for foreign component suppliers to set up factories in China.  These overseas competitors employ technology that may be more advanced and may have already maintained a long-term relationship with the global automobile assemblers, but they are generally not as competitive as the Company in China in terms of production cost and flexibility in meeting client requirements.</font></p>
<p>
<font size="2" face="Times New Roman">CHINESE AUTOMOBILE INDUSTRY </font></p>
<p>
<font size="2" face="Times New Roman"> The Company was a supplier to produce and sell automotive parts and its operations are all located in China.  The increase or decrease in output and sales of Chinese vehicles could result in the increase or decrease of the Company’s results of operations.  According to the latest statistics from China Association of Automobile Manufacturers (CAAM) in 2005, the output and sales volume of domestic made vehicles has reached 5,707,700 and 5,758,200 units respectively, with an increase of 12.55% and 13.54% compared with the same period last year.  The output and sales volume of passenger vehicles has reached 3,930,700 and 3,971,100 units respectively with an increase of 19.73% and 21.40%.  The output and sales volume of commercial vehicles has reached 1,777,000 and 1,787,100 respectively with a decrease of 0.60% and 0.75%, as compared with the corresponding period in the preceding
year.  Accordingly, the Company’s sales of steering gears and steering pump for passenger vehicles increased by 47% and 41% respectively as compared with the corresponding period in 2004, however, the Company’s sales of steering gears for commercial vehicles decreased by 34% as compared with the corresponding period in 2004.</font></p>
<p><font size="2" face="Times New Roman"> The Company expects that in 2006 China’s automobile market will steadily develop. </font></p>
<p>
<font size="2" face="Times New Roman"> Huaping Liang, the commander of AnHui Association of Automobile Manufacturers, predicted that in 2006 the output and sales of passenger vehicles would increase by approximately 20%, the output and sales of commercial vehicles would be similar or a little higher as compared to 2005.  Based on this prediction, management believes that the sales of steering gear and pump for passenger vehicles and steering gears for commercial and accessories will increase in quantity at the level of 40%-50% and 1%-3% in 2006, respectively, and it is possible that the net sales would increase by 15%-20%.</font></p>
<p>
<font size="2" face="Times New Roman">CHINESE ECONOMY</font></p>
<p>
<font size="2" face="Times New Roman"> Management believes that the most important factor in understanding the Chinese automobile industry is the country’s rapid economic growth. The Chinese economic growth was 7.5% and 8.3% in 2001 and 2002 respectively.  Since the Asian financial crisis, the Central Government has implemented a positive financial policy and stable monetary policy for several years which has led to the Chinese economic growth rate of 9.5% in 2003, and continued the growth rate in 2004.  According to data from State Statistical Bureau, the Chinese economic growth has reached 9.9% in 2005.  The strong demand in the auto sector has been, and will continue to be, underpinned by the desire of residents to improve their living standards given significant increases in income levels. The Central Economic Working Conference which was held in December of 2005 even took the several measures as the policies of
expanding consumption in 2006, including growth in urban and rural incomes, expanding consumption areas, fostering new consumption growth areas and improving the consumption environment.  Other measures of expanding consumption will further significantly stimulate the consumption market and strengthen the economy growth, such as lightening the consumption tax burden on residents’ housing and vehicles, policy enactment on removal of a small displacement vehicle limits.</font></p>
<p><font size="2" face="Times New Roman"> Management believes that the Chinese economy will show a strong momentum in 2006.  It is estimated that the GDP will increase by 8.5% - 9%, the growth of investment and export will slow down, and the price index range of household consumption will drop to approximately 1%.  The slowing down of investment growth rate will exert a negative influence on the sales of the commercial vehicles, however, the rapid and steady growth in consumption demand will improve the sales of passenger vehicles.</font></p>
<p align="center">
<font size="2" face="Times New Roman">9</font></p>
<hr size="1" width="100%" noshade color=black>
<div style="page-break-before:always"></div>
<PAGE>
<br>
<p>
<font size="2" face="Times New Roman">HIGHWAY DEVELOPMENT</font></p>
<p>
<font size="2" face="Times New Roman"> Management believes that the continuing development of the highway system will have a significant positive impact on the manufacture and sale of private automobiles.  Statistics from the Ministry of Communications show that 49,000 kilometers of highway and 6,700 kilometers of expressway were developed in 2005. Total highways and expressways now amount to 1,920,000 kilometers and 40,000 kilometers, respectively.</font></p>
<p>
<font size="2" face="Times New Roman"> China has developed 24,000 kilometers of expressway during the 10th Five-Year Plan period, with total highway in operation having leapt to second place in the world with an increase of 1,000 kilometers each year, as compared with the 9th Five-Year Plan period.  The expressway network of “Five Horizontal and Five Vertical and Three Important Road Sections” has been completed, including TongJiang to Sanya, Beijing to Zhuhai, Lienyunkang to Horguos, Shanghai to Chengdu, Beijing to Shenyang, Beijing to Shanghai and the routes in the southwestern part of the country leading to the sea.  It is estimated that by 2008 the aggregate road and expressways will reach 2,100,000 to 2,300,000 kilometers and 65,000 kilometers respectively based on the plan of Ministry of Communications.</font></p>
<p align="center">
<font size="2" face="Times New Roman">DOING BUSINESS IN CHINA</font></p>
<p>
<font size="2" face="Times New Roman">CHINESE LEGAL SYSTEM</font></p>
<p><font size="2" face="Times New Roman"> The practical effect of the Chinese legal system on the Company’s business operations in China can be viewed from two separate but intertwined considerations.  First, as a matter of substantive law, the Foreign Invested Enterprise Laws provide significant protection from government interference.  In addition, these laws guarantee the full enjoyment of the benefits of corporate articles and contracts to Foreign Invested Enterprise participants.  These laws, however, do impose standards concerning corporate formation and governance, which are not qualitatively different from the general corporation laws of the several provinces.  Similarly, the Chinese accounting laws mandate accounting practices, which are not consistent with US Generally Accepted Accounting Principles.  The Chinese accounting laws require that an annual “statutory audit” be performed in
accordance with Chinese accounting standards and that the books of account of Foreign Invested Enterprises be maintained in accordance with Chinese accounting laws.  Article 14 of the People’s Republic of China Wholly Foreign-Owned Enterprise Law requires a Wholly Foreign-Owned Enterprise to submit certain periodic fiscal reports and statements to designated financial and tax authorities.  Otherwise there is risk that its business license will be revoked.</font></p>
<p>
<font size="2" face="Times New Roman"> Second, while the enforcement of substantive rights may appear less clear than those in the United States, the Foreign Invested Enterprises and Wholly Foreign-Owned Enterprises are Chinese registered companies which enjoy the same status as other Chinese registered companies in business dispute resolution.  Because the terms of the Company’s various Articles of Association provide that all business disputes pertaining to Foreign Invested Enterprises will be resolved by the Arbitration Institute of the Stockholm Chamber of Commerce in Stockholm, Sweden applying Chinese substantive law, the Chinese minority partner in the Company’s joint venture companies will not assume any advantageous position regarding such disputes.  Any award rendered by this arbitration tribunal is, by the express terms of the various Articles of Association, enforceable in accordance with the “United Nations
Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958).”  Therefore, as a practical matter, although no assurances can be given, the Chinese legal infrastructure, while different from its United States counterpart, should not present any significant impediment to the operation of Foreign Invested Enterprises.</font></p>
<p><font size="2" face="Times New Roman">ECONOMIC REFORM ISSUES</font></p>
<p>
<font size="2" face="Times New Roman"> Although the Chinese Government owns the majority of productive assets in China, in the past several years the Government has implemented economic reform measures that emphasize decentralization and encourage private economic activity.  Because these economic reform measures may be inconsistent or ineffectual, there is no assurance that:</font></p>
<p align="center">
<font size="2" face="Times New Roman">10</font></p>
<hr size="1" width="100%" noshade color=black>
<div style="page-break-before:always"></div>
<PAGE>
<br>
<p>
<font size="2" face="Times New Roman"> - The Company will be able to capitalize on economic reforms;</font></p>
<p>
<font size="2" face="Times New Roman"> - The Chinese Government will continue its pursuit of economic reform policies;</font></p>
<p>
<font size="2" face="Times New Roman"> - The economic policies, even if pursued, will be successful;</font></p>
<p>
<font size="2" face="Times New Roman"> - Economic policies will not be significantly altered from time to time; and</font></p>
<p>
<font size="2" face="Times New Roman"> - Business operations in China will not become subject to the risk of nationalization.</font></p>
<p>
<font size="2" face="Times New Roman"> Negative impact on economic reform policies or nationalization could result in a total investment loss in the Company’s common stock.</font></p>
<p>
<font size="2" face="Times New Roman"> Since 1979, the Chinese Government has reformed its economic systems.  Because many reforms are unprecedented or experimental, they are expected to be refined and readjusted.  Other political, economic and social factors, such as political changes, changes in the rates of economic growth, unemployment or inflation, or in the disparities in per capita wealth between regions within China, could lead to further readjustment of the reform measures.  This refining and readjustment process may negatively affect the Company’s operations.</font></p>
<p><font size="2" face="Times New Roman"> Over the last few years, China’s economy has registered a high growth rate.  Recently, there have been indications that the rate of inflation has increased.  In response, the Chinese Government recently has taken measures to curb the excessively expansive economy.  These measures included implementation of a unitary and well-managed floating exchange rate system based on market supply and demand for the exchange rates of Renminbi, restrictions on the availability of domestic credit, reduction of the purchasing capability of certain of its citizens, and centralization of the approval process for purchases of certain limited foreign products.  These austerity measures alone may not succeed in slowing down the economy’s excessive expansion or control inflation, and may result in severe dislocations in the Chinese economy.  The Chinese Government may adopt additional
measures to further combat inflation, including the establishment of freezes or restraints on certain projects or markets.</font></p>
<p>
<font size="2" face="Times New Roman"> To date reforms to China’s economic system have not adversely affected the Company’s operations and are not expected to adversely affect the Company’s operations in the foreseeable future; however, there can be no assurance that reforms to China’s economic system will continue or that the Company will not be adversely affected by changes in China’s political, economic, and social conditions and by changes in policies of the Chinese Government, such as changes in laws and regulations, measures which may be introduced to control inflation, changes in the rate or method of taxation, imposition of additional restrictions on currency conversion and remittance abroad, reduction in tariff protection and other import restrictions.</font></p>
<p><a name="ca_003"></a>
<font size="2" face="Times New Roman">ITEM 1A. RISK FACTORS.</font></p>
<p>
<font size="2" face="Times New Roman"> The Company’s business, financial conditions and results of operations could be materially and adversely affected by many risk factors.  Because of these risk factors, actual results might differ significantly from those projected in the forward-looking statements.  Factors that might cause such differences include, among others, the following: </font></p>
<p><font size="2" face="Times New Roman"><u>Risks Related to the Company’s Business and Industry</u></font></p>
<p>
<font size="2" face="Times New Roman"><i>Because the Company is a holding company with substantially all of its operations conducted through its subsidiaries, its performance will be affected by the performance of its subsidiaries.  </i></font></p>
<p>
<font size="2" face="Times New Roman">
The Company has no
operations independent of those of Great Genesis and its subsidiaries, and its
principal assets are its investments in Great Genesis and its
subsidiaries.  As a result, the Company is dependent upon the performance
of Great Genesis and its subsidiaries and will be subject to the financial,
business and other factors affecting Great Genesis as well as general economic
and financial conditions.  As substantially all of the Company’s
operations are and will be conducted through its subsidiaries, it will be
dependent on the cash flow of its subsidiaries to meet its obligations.
</font></p>
<p align="center">
<font size="2" face="Times New Roman">11</font></p>
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<PAGE>
<br>
<p>
<font size="2" face="Times New Roman">
Because virtually all of the Company’s assets are and will be held by
operating subsidiaries, the claims of its stockholders will be structurally
subordinate to all existing and future liabilities and obligations, and trade
payables of such subsidiaries.  In the event of the Company’s
bankruptcy, liquidation or reorganization, the Company’s assets and those
of its subsidiaries will be available to satisfy the claims of its stockholders
only after all of the Company’s and its subsidiaries’ liabilities and
obligations have been paid in full.</font></p>
<p>
<font size="2" face="Times New Roman"><i>With the automobile parts markets being highly competitive and many of the Company’s competitors having greater resources than it does, the Company may not be able to compete successfully. </i></font></p>
<p>
<font size="2" face="Times New Roman"> The automobile parts industry is a highly competitive business. Criteria for the Company’s customers include: </font></p>
<p>
<font size="2" face="Times New Roman"> • Quality;<br> • Price/cost competitiveness;<br> • System and product performance;<br> • Reliability and timeliness of delivery;<br> • New product and technology development capability;<br> • Excellence and flexibility in operations;<br> • Degree of global and local presence;<br>
• Effectiveness of customer service; and<br> • Overall management capability. </font></p>
<p><font size="2" face="Times New Roman"> The Company’s competitors include independent suppliers of parts, as well as suppliers formed by spin-offs from its customers, who are becoming more aggressive in selling parts to other vehicle manufacturers.  Depending on the particular product, the number of the Company’s competitors varies significantly.  Many of the Company’s competitors have substantially greater revenues and financial resources than it does, as well as stronger brand names, consumer recognition, business relationships with vehicle manufacturers, and geographic presence than it has.  The Company may not be able to compete favorably and increased competition may substantially harm its business, business prospects and results of operations. </font></p>
<p>
<font size="2" face="Times New Roman"> Internationally, the Company faces different market dynamics and competition.  The Company may not be as successful as its competitors in generating revenues in international markets due to the lack of recognition of its products or other factors.  Developing product recognition overseas is expensive and time-consuming and the Company’s international expansion efforts may be more costly and less profitable than it expects.  If the Company is not successful in its target markets, its sales could decline, its margins could be negatively impacted and the Company could lose market share, any of which could materially harm the Company’s business, results of operations and profitability. </font></p>
<p>
<font size="2" face="Times New Roman"><i>The cyclical nature of automotive production and sales could result in a reduction in automotive sales, which could adversely affect the Company’s business and results of operations. </i></font></p>
<p>
<font size="2" face="Times New Roman"> The Company’s business relies on automotive vehicle production and sales by its customers, which are highly cyclical and depend on general economic conditions and other factors, including consumer spending and preferences.  They also can be affected by labor relations issues, regulatory requirements, and other factors.  In addition, in the last two years, the price of automobiles in China has generally declined.  As a result, the volume of automotive production in China has fluctuated from year to year, which give rise to fluctuations in the demand for the Company’s products.  Any significant economic decline that results in a reduction in automotive production and sales by the Company’s customers would have a material adverse effect on its results of operations. Moreover, if the prices of automobiles do not remain low, then demand for automobile parts could fall and
result in lower revenues and profitability.</font></p>
<p align="center">
<font size="2" face="Times New Roman">12</font></p>
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<PAGE>
<br>
<p><font size="2" face="Times New Roman"><i>Increasing costs for manufactured components and raw materials may adversely affect the Company’s profitability. </i></font></p>
<p>
<font size="2" face="Times New Roman"> The Company uses a broad range of manufactured components and raw materials in its products, including castings, electronic components, finished sub-components, molded plastic parts, fabricated metal, aluminum and steel, and resins.  Because it may be difficult to pass increased prices for these items on to the Company’s customers, a significant increase in the prices of the Company’s components and materials could materially increase its operating costs and adversely affect its profit margins and profitability.</font></p>
<p>
<font size="2" face="Times New Roman"><i>Pricing pressure by automobile manufacturers on their suppliers may adversely affect the Company’s business and results of operations. </i></font></p>
<p>
<font size="2" face="Times New Roman"> Recently, pricing pressure from automobile manufacturers has been prevalent in the automotive parts industry in China.  Virtually all vehicle manufacturers seek price reductions each year, including requiring suppliers to pay a “three warranties” service charge for compensation, exchange and withdrawal in an amount equal to one percent of the total amount of parts supplied.  Although the Company has tried to reduce costs and resist price reductions, these reductions have impacted the Company’s sales and profit margins.  If the Company cannot offset continued price reductions through improved operating efficiencies and reduced expenditures, price reductions will have a material adverse effect on the Company’s results of operations. </font></p>
<p>
<font size="2" face="Times New Roman"><i>The Company’s business, revenues and profitability would be materially and adversely affected if it loses any of its large customers. </i></font></p>
<p>
<font size="2" face="Times New Roman"> For the year ended December 31, 2005, approximately 14% of the Company’s sales were to Brilliance China Automotive Holdings Limited, approximately 11.6% were to Beiqi Foton Motor Co., Ltd., approximately 11.5% were to Chery Automobile Co., Ltd. and approximately 9.5% were to Zhejiang Geely Holding Co., Ltd., the Company’s four largest customers.  The loss of, or significant reduction in purchases by, one or more of these major customers could adversely affect the Company’s business. </font></p>
<p><font size="2" face="Times New Roman"><i>The Company may be subject to product liability and warranty and recall claims, which may increase the costs of doing business and adversely affect the Company’s financial condition and liquidity. </i></font></p>
<p>
<font size="2" face="Times New Roman"> The Company may be exposed to product liability and warranty claims if its products actually or allegedly fail to perform as expected or the use of its products results, or is alleged to result, in bodily injury and/or property damage.  The Company started to pay to its customers’ increased after-sales service expenses due to consumer rights protection policies of “recall” issued by the Chinese Government in 2004, such as the recalling flawed vehicles policy.  Beginning in 2004, automobile manufacturers unilaterally required their suppliers to pay a “3-R Guarantees “ service charge (for repair, replacement and refund) in an amount equal to one percent of the total amount of parts supplied.  Accordingly, the Company has experienced and shall continue to experience higher after sales service expenses.  Product liability, warranty and recall costs may have a
material adverse effect on the Company’s financial condition. </font></p>
<p>
<font size="2" face="Times New Roman"><i>The Company is subject to environmental and safety regulations, which may increase the Company’s compliance costs and may adversely affect the Company’s results of operation. </i></font></p>
<p>
<font size="2" face="Times New Roman"> The Company is subject to the requirements of environmental and occupational safety and health laws and regulations in China.  The Company cannot provide assurance that it has been or will be at all times in full compliance with all of these requirements, or that it will not incur material costs or liabilities in connection with these requirement.  Additionally, these regulations may change in a manner that could have a material adverse effect on the Company’s business, results of operations and financial condition.  The capital requirements and other expenditures that may be necessary to comply with environmental requirements could increase and become a material expense of doing business. </font></p>
<p>
<font size="2" face="Times New Roman"><i>Non-performance by the Company’s suppliers may adversely affect its operations by delaying delivery or causing delivery failures, which may negatively affect demand, sales and profitability.  </i></font></p>
<p><font size="2" face="Times New Roman"> The Company purchases various types of equipment, raw materials and manufactured component parts from its suppliers.  The Company would be materially and adversely affected by the failure of its suppliers to perform as expected.  The Company could experience delivery delays or failures caused by production issues or delivery of non-conforming products if its suppliers failed to perform, and the Company also faces these risks in the event any of its suppliers becomes insolvent or bankrupt. </font></p>
<p align="center">
<font size="2" face="Times New Roman">13</font></p>
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<PAGE>
<br>
<p>
<font size="2" face="Times New Roman"><i>The Company’s business and growth may suffer if it fails to attract and retain key personnel. </i></font></p>
<p>
<font size="2" face="Times New Roman"> The Company’s ability to operate its business and implement its strategies effectively depends on the efforts of its executive officers and other key employees.  The Company depends on the continued contributions of its senior management and other key personnel.  The Company’s future success also depends on its ability to identify, attract and retain highly skilled technical, particularly engineers and other employees with electronics expertise, managerial, finance and marketing personnel.  The Company does not maintain a key person life insurance policy on Mr. Hanlin Chen.  The loss of the services of any of the Company’s key employees or the failure to attract or retain other qualified personnel could substantially harm the Company’s business. </font></p>
<p>
<font size="2" face="Times New Roman"><i>The Company’s management controls approximately 92.4% of its outstanding common stock and may have conflicts of interest with its minority stockholders. </i></font></p>
<p>
<font size="2" face="Times New Roman"> Members of the Company’s management beneficially own approximately 92.4% of the outstanding shares of the Company’s common stock.  As a result, these majority stockholders have control over decisions to enter into any corporate transaction and have the ability to prevent any transaction that requires the approval of stockholders, which could result in the approval of transactions that might not maximize stockholders’ value.  Additionally, these stockholders control the election of members of the Company’s board, have the ability to appoint new members to the Company’s management team and control the outcome of matters submitted to a vote of the holders of the Company’s common stock.  The interests of these majority stockholders may at times conflict with the interests of the Company’s other stockholders. </font></p>
<p><font size="2" face="Times New Roman"><i>There is a limited public float of the Company’s common stock, which can result in its stock price being volatile and prevent the realization of a profit on resale of the Company’s common stock</i></font></p>
<p>
<font size="2" face="Times New Roman"> There is a limited public float of the Company’s common stock.  Of the Company’s outstanding common stock, approximately 11% is considered part of the public float.  The term “public float” refers to shares freely and actively tradable on the NASDAQ SmallCap Market and not owned by officers, directors or affiliates, as such term is defined under the Securities Act.  Due to the Company’s relatively small public float and the limited trading volume of its common stock, purchases and sales of relatively small amounts of the Company’s common stock can have a disproportionate effect on the market price for the Company’s common stock.  As a result, the market price of the Company’s common stock can be volatile. This stock price volatility could prevent a stockholder seeking to sell Company common stock from being able to sell it at or above the price
at which the stock was bought.</font></p>
<p>
<font size="2" face="Times New Roman"><i>Provisions in the Company’s certificate of incorporation and bylaws and the General Corporation Law of Delaware may discourage a takeover attempt. </i></font></p>
<p>
<font size="2" face="Times New Roman"> Provisions in the Company’s certificate of incorporation and bylaws and the General Corporation Law of Delaware, the state in which the Company is organized, could make it difficult for a third party to acquire the Company, even if doing so might be beneficial to the Company’s stockholders.  Provisions of the Company’s certificate of incorporation and bylaws impose various procedural and other requirements, which could make it difficult for stockholders to effect certain corporate actions and possibly prevent transactions that would maximize stockholders’ value. </font></p>
<p>
<font size="2" face="Times New Roman"><u>Risks Related to Doing Business in China and other International Countries</u></font></p>
<p>
<font size="2" face="Times New Roman"><i>Because the Company’s operations are all located outside of the United States and are subject to Chinese laws, any change of Chinese laws may adversely affect the Company’s business. </i></font></p>
<p align="center"><font size="2" face="Times New Roman">14</font></p>
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<PAGE>
<br>
<p>
<font size="2" face="Times New Roman"> All of the Company’s operations are outside the United States and in China, which exposes it to risks, such as exchange controls and currency restrictions, currency fluctuations and devaluations, changes in local economic conditions, changes in Chinese laws and regulations, exposure to possible expropriation or other Chinese government actions, and unsettled political conditions.  These factors may have a material adverse effect on the Company’s operations or on the Company’s business, results of operations and financial condition. </font></p>
<p>
<font size="2" face="Times New Roman"><i>The Company’s international expansion plans subject it to risks inherent in doing business internationally. </i></font></p>
<p>
<font size="2" face="Times New Roman"> The Company’s long-term business strategy relies on the expansion of the Company’s international sales outside China by targeting markets, such as the United States.  Risks affecting the Company’s international expansion include challenges caused by distance, language and cultural differences, conflicting and changing laws and regulations, foreign laws, international import and export legislation, trading and investment policies, foreign currency fluctuations, the burdens of complying with a wide variety of laws and regulations, protectionist laws and business practices that favor local businesses in some countries, foreign tax consequences, higher costs associated with doing business internationally, restrictions on the export or import of technology, difficulties in staffing and managing international operations, trade and tariff restrictions, and variations in tariffs, quotas, taxes
and other market barriers.  These risks could harm the Company’s international expansion efforts, which could in turn materially and adversely affect the Company’s business, operating results and financial condition. </font></p>
<p>
<font size="2" face="Times New Roman"><i>The Company faces risks associated with currency exchange rate fluctuations, any adverse fluctuation may adversely affect the Company’s operating margins. </i></font></p>
<p><font size="2" face="Times New Roman"> Although the Company is incorporated in the United States, the majority of its current revenues are in Chinese currency.  Conducting business in currencies other than US dollars subjects the Company to fluctuations in currency exchange rates that could have a negative impact on the Company’s reported operating results.  Fluctuations in the value of the US dollar relative to other currencies impact the Company’s revenues, cost of revenues and operating margins and result in foreign currency translation gains and losses.  Historically, the Company has not engaged in exchange rate hedging activities. Although the Company may implement hedging strategies to mitigate this risk, these strategies may not eliminate the Company’s exposure to foreign exchange rate fluctuations and involve costs and risks of their own, such as ongoing management time and expertise, external costs to
implement the strategy and potential accounting implications. </font></p>
<p>
<font size="2" face="Times New Roman"><i>If relations between the United States and China worsen, the Company’s stock price may decrease and the Company may have difficulty accessing the U.S. capital markets. </i></font></p>
<p>
<font size="2" face="Times New Roman"> At various times during recent years, the United States and China have had disagreements over political and economic issues.  Controversies may arise in the future between these two countries.  Any political or trade controversies between the United States and China could adversely affect the market price of the Company’s common stock and the Company’s ability to access US capital markets. </font></p>
<p>
<font size="2" face="Times New Roman"><i>The Chinese Government could change its policies toward private enterprises, which could adversely affect the Company’s business. </i></font></p>
<p>
<font size="2" face="Times New Roman"> The Company’s business is subject to political and economic uncertainties in China and may be adversely affected by its political, economic and social developments.  Over the past several years, the Chinese Government has pursued economic reform policies including the encouragement of private economic activity and greater economic decentralization.  The Chinese Government may not continue to pursue these policies or may alter them to the Company’s detriment from time to time.  Changes in policies, laws and regulations, or in their interpretation or the imposition of confiscatory taxation, restrictions on currency conversion, restrictions or prohibitions on dividend payments to stockholders, devaluations of currency or the nationalization or other expropriation of private enterprises could have a material adverse effect on the Company’s business.  Nationalization or
expropriation could result in the total loss of the Company’s investment in China.</font></p>
<p align="center">
<font size="2" face="Times New Roman">15</font></p>
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<PAGE>
<br>
<p><font size="2" face="Times New Roman"><i>The economic, political and social conditions in China could affect the Company’s business. </i></font></p>
<p>
<font size="2" face="Times New Roman"> All of the Company’s business, assets and operations are located in China.  The economy of China differs from the economies of most developed countries in many respects, including government involvement, level of development, growth rate, control of foreign exchange, and allocation of resources.  The economy of China has been transitioning from a planned economy to a more market-oriented economy.  Although the Chinese Government has implemented measures recently emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the Chinese Government.  In addition, the Chinese Government continues to play a significant role in regulating industry by imposing industrial policies. 
It also exercises significant control over China’s economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.  Therefore, the Chinese Government’s involvement in the economy could adversely affect the Company’s business operations, results of operations and/or the financial condition.</font></p>
<p>
<font size="2" face="Times New Roman"><i>The significant but uneven growth in the economy of China in the past 20 years could have an adverse effect on the Company’s business and results of operations.  </i></font></p>
<p>
<font size="2" face="Times New Roman"> The Chinese Government has implemented various measures from time to time to control the rate of economic growth.  Some of these measures benefit the overall economy of China, but may have a negative effect on us. </font></p>
<p>
<font size="2" face="Times New Roman"><i>Government control of currency conversion and future movements in exchange rates may adversely affect the Company’s operations and financial results. </i></font></p>
<p><font size="2" face="Times New Roman"> The Company receives substantially all of its revenues in Renminbi, the currency of China.  A portion of such revenues will be converted into other currencies to meet the Company’s foreign currency obligations.  Foreign exchange transactions under the Company’s capital account, including principal payments in respect of foreign currency-denominated obligations, continue to be subject to significant foreign exchange controls and require the approval of the State Administration of Foreign Exchange in China.  These limitations could affect the Company’s ability to obtain foreign exchange through debt or equity financing, or to obtain foreign exchange for capital expenditures. </font></p>
<p>
<font size="2" face="Times New Roman"> The Chinese Government controls its foreign currency reserves through restrictions on imports and conversion of Renminbi into foreign currency.  Although the exchange rate of the Renminbi to the US dollar has been stable since January 1, 1994, and the Chinese Government has stated its intention to maintain the stability of the value of Renminbi, there can be no assurance that exchange rates will remain stable.  The Renminbi could devalue against the US dollar.  The Company’s financial condition and results of operations may also be affected by changes in the value of certain currencies other than the Renminbi in which the Company’s earnings and obligations are denominated.  In particular, a devaluation of the Renminbi is likely to increase the portion of the Company’s cash flow required to satisfy the Company’s foreign currency-denominated obligations.</font></p>
<p>
<font size="2" face="Times New Roman"><i>Because the Chinese legal system is not fully developed, the Company’s legal protections may be limited. </i></font></p>
<p>
<font size="2" face="Times New Roman"> The Chinese legal system is based on written statutes and their interpretation by the Supreme People’s Court.  Although the Chinese government introduced new laws and regulations to modernize its business, securities and tax systems on January 1, 1994, China does not yet possess a comprehensive body of business law.  Because Chinese laws and regulations are relatively new, interpretation, implementation and enforcement of these laws and regulations involve uncertainties and inconsistencies and it may be difficult to enforce contracts.  In addition, as the Chinese legal system develops, changes in such laws and regulations, their interpretation or their enforcement may have a material adverse effect on the Company’s business operations.  Moreover, interpretative case law does not have the same precedential value in China as in the United States, so legal compliance in China
may be more difficult or expensive.</font></p>
<p align="center"><font size="2" face="Times New Roman">16</font></p>
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<PAGE>
<br>
<p>
<font size="2" face="Times New Roman"><i>It may be difficult to serve the Company with legal process or enforce judgments against the Company’s management or the Company. </i></font></p>
<p>
<font size="2" face="Times New Roman"> All of the Company’s assets are located in China and three out of the Company’s directors and officers are non-residents of the United States, and all or substantial portions of the assets of such non-residents are located outside the United States.  As a result, it may not be possible to effect service of process within the United States upon such persons to originate an action in the United States.  Moreover, there is uncertainty that the courts of China would enforce judgments of U.S. courts against the Company, its directors or officers based on the civil liability provisions of the securities laws of the United States or any state, or an original action brought in China based upon the securities laws of the United States or any state. </font></p>
<p><a name="ca_004"></a>
<font size="2" face="Times New Roman">ITEM 1B. UNRESOLVED STAFF COMMENTS.</font></p>
<p>
<font size="2" face="Times New Roman">Not Applicable.</font></p>
<p><a name="ca_005"></a>
<font size="2" face="Times New Roman">ITEM 2. DESCRIPTION OF PROPERTY.</font></p>
<p>
<font size="2" face="Times New Roman"> The Company’s headquarters are located at No. 1 Henglong Road, Yu Qiao Development Zone Shashi District, Jing Zhou City Hubei Province, PRC.  Set forth below are the manufacturing facilities operated by each joint venture.  The Company has long-term rights (forty to fifty years) to use the land and owns all of the land improvements.</font></p>
<table align="center" border="0" style="border-collapse:collapse" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman"><b>Name of Entity</b></font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>Product</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>Total Area<br> (M<sup>2</sup>)</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>Building Area<br> (M<sup>2</sup>)</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>Original Cost of<br> Equipment</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>Site</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td width="12%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="1%" valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="21%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="1%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="10%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="1%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="10%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="1%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="10%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="1%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td align="Left" width="25%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="1%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr bgcolor="#cceeff">
<td rowspan="2">
<p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">Henglong</font></p> </td>
<td>
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p>
<font size="2" face="Times New Roman">Automotive</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right>
<font size="2" face="Times New Roman">435,233</font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right>
<font size="2" face="Times New Roman">29,892</font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right>
<font size="2" face="Times New Roman">$</font></p> </td>
<td>
<p align=right>
<font size="2" face="Times New Roman">18,316,247</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p>
<font size="2" face="Times New Roman">Jingzhou City, Hubei Province</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr bgcolor="#cceeff">
<td>
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p>
<font size="2" face="Times New Roman">Parts</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right>
<font size="2" face="Times New Roman">13,393</font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right>
<font size="2" face="Times New Roman">13,707</font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p>
<font size="2" face="Times New Roman">Wuhan City, Hubei Province</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td>
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr bgcolor="#cceeff">
<td>
<p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">Jiulong</font></p> </td>
<td>
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p>
<font size="2" face="Times New Roman">Power Steering Gears</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right>
<font size="2" face="Times New Roman">98,441</font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right>
<font size="2" face="Times New Roman">17,401</font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right>
<font size="2" face="Times New Roman">10,847,407</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p>
<font size="2" face="Times New Roman">Jingzhou City, Hubei Province</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td>
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr bgcolor="#cceeff">
<td>
<p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">Shenyang</font></p> </td>
<td>
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p>
<font size="2" face="Times New Roman">Automotive Steering Gears</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right>
<font size="2" face="Times New Roman">35,354</font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right>
<font size="2" face="Times New Roman">11,413</font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right>
<font size="2" face="Times New Roman">2,244,542</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p>
<font size="2" face="Times New Roman">Shenyang City, Liaoning Province</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td>
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr bgcolor="#cceeff">
<td>
<p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Zhejiang</font></p> </td>
<td>
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p>
<font size="2" face="Times New Roman">Steering Pumps</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right>
<font size="2" face="Times New Roman">27,756</font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right>
<font size="2" face="Times New Roman">7,262</font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right>
<font size="2" face="Times New Roman">3,462,843</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p>
<font size="2" face="Times New Roman">Zhuji City, Zhejiang Province</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td>
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr bgcolor="#cceeff">
<td>
<p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">USAI</font></p> </td>
<td>
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p>
<font size="2" face="Times New Roman">Sensor Modular</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=2 face="Times New Roman">— </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=2 face="Times New Roman">— </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right>
<font size="2" face="Times New Roman">50,337</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p>
<font size="2" face="Times New Roman">Wuhan City, Hubei Province</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td>
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<hr size="1" width="100%" noshade color=black></td>
<td>
<hr size="1" width="100%" noshade color=black> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<hr size="1" width="100%" noshade color=black></td>
<td>
<hr size="1" width="100%" noshade color=black> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<hr size="1" width="100%" noshade color=black></td>
<td>
<hr size="1" width="100%" noshade color=black> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr bgcolor="#cceeff">
<td>
<p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">Total</font></p> </td>
<td>
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right>
<font size="2" face="Times New Roman">610,177 M<sup>2</sup></font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right>
<font size="2" face="Times New Roman">79,675 M<sup>2</sup></font></p> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p align=right>
<font size="2" face="Times New Roman">$</font></p> </td>
<td>
<p align=right>
<font size="2" face="Times New Roman">34,921,376</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td>
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<hr size="3" width="100%" noshade color=black></td>
<td>
<hr size="3" width="100%" noshade color=black> </td>
<td>
<p align=right><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<hr size="3" width="100%" noshade color=black></td>
<td>
<hr size="3" width="100%" noshade color=black> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p></td>
<td> <hr size="3" width="100%" noshade color=black> </td>
<td valign="bottom">
<hr size="3" width="100%" noshade color=black></td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td>
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
</table>
<p align="center">
<font size="2" face="Times New Roman">17</font></p>
<hr size="1" width="100%" noshade color=black>
<div style="page-break-before:always"></div>
<PAGE>
<br>
<p>
<font size="2" face="Times New Roman"> The Company is not involved in investments in (i) real estate or interests in real estate, (ii) real estate mortgages, and (iii) securities of or interests in persons primarily engaged in real estate activities, as all of its land rights are used for production purposes.</font></p>
<p><a name="ca_006"></a>
<font size="2" face="Times New Roman">ITEM 3. LEGAL PROCEEDINGS.</font></p>
<p>
<font size="2" face="Times New Roman"> The Company is not a party to any pending or to the best of the Company’s knowledge, any threatened legal proceedings.  No director, officer or affiliate of the Company, or owner of record of more than five percent (5%) of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.</font></p>
<p><a name="ca_007"></a><font size="2" face="Times New Roman">ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS</font></p>
<p>
<font size="2" face="Times New Roman"> During the
fiscal year 2005, we held a shareholder meeting and approved the stock option
plan, elected directors and approved the engagement of Schwartz Levitsky Feldman LLP as independent
auditor.</font></p>
<p align="center"><a name="ca_008"></a>
<font size="2" face="Times New Roman"><b>PART II</b></font></p>
<p><a name="ca_009"></a>
<font size="2" face="Times New Roman">ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.</font></p>
<p>
<font size="2" face="Times New Roman">(a) MARKET PRICES OF COMMON STOCK</font></p>
<p>
<font size="2" face="Times New Roman"> The Company’s common stock has been traded on the Over-The-Counter Bulletin Board under the symbol “CAAS.OB” from March 2003 till August 24, 2004, when the Company was listed and traded on the NASDAQ Small Cap market under the symbol “CAAS”.  The high and low bid intra-day prices of the common stock in 2004 and 2005 were reported on the OTCBB and NASDAQ for the time periods indicated on the table below.  Accordingly, the table below contains the high and low bid closing prices of the common stock as reported on the OTCBB and NASDAQ for the time periods indicated.</font></p>
<p align="center">
<font size="2" face="Times New Roman">18</font></p>
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<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
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<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="11" valign="bottom">
<p align="center"><font size="1" face="Times New Roman"><b>Price Range</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
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<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
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<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="11" valign="bottom">
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</td>
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<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
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<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
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<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="5" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>2005</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="5" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>2004</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
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<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
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<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="5" valign="bottom">
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</td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="5" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
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<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
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<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>High</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>Low</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>High</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>Low</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
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<tr>
<td width="46%" valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="2%" valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
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</td>
<td width="10%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="10%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="10%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="10%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="1%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">First Quarter</font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">12.46</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">8.53</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">18.45</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">8.05</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Second Quarter</font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">9.80</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">6.14</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">9.65</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">3.70</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">Third Quarter</font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">7.85</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">4.10</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">6.47</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">3.25</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Fourth Quarter</font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">10.00</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">4.27</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">18.09</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">3.50</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
</table>
<p>
<font size="2" face="Times New Roman"> The above quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.</font></p>
<p>
<font size="2" face="Times New Roman">(b) STOCKHOLDERS</font></p>
<p>
<font size="2" face="Times New Roman"> The Company’s common shares are issued in registered form.  Securities Transfer Corporation in Frisco, Texas is the registrar and transfer agent for the Company’s common stock.  As of December 31, 2005, there were 22,574,543 shares of the Company’s common stock outstanding and the Company had approximately 50 stockholders of record.</font></p>
<p>
<font size="2" face="Times New Roman">(c) DIVIDENDS</font></p>
<p>
<font size="2" face="Times New Roman"> The Company has never declared or paid any cash dividends on its common stock and it does not anticipate paying any cash dividends in the foreseeable future.  The Company currently intends to retain future earnings, if any, to finance operations and the expansion of its business.  Any future determination to pay cash dividends will be at the discretion of the Board of Directors and will be based upon the Company’s financial condition, operating results, capital requirements, plans for expansion, restrictions imposed by any financing arrangements and any other factors that the Board of Directors deems relevant.</font></p>
<p><font size="2" face="Times New Roman">(d) SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS</font></p>
<p>
<font size="2" face="Times New Roman"> The securities authorized for issuance under equity compensation plans are as follows:</font></p>
<table align="center" border="0" style="border-collapse:collapse" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman"><b>Plan category</b></font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>Number of securities to be<br> issued upon exercise of<br> outstanding options,<br> warrants and rights</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>Weighted average<br> exercise price of<br> outstanding options,<br> warrants and rights</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>Number of<br> securities<br> remaining<br> available for<br> future issuance</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td width="45%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="17%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="15%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="12%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="1%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Equity compensation plans approved by security holders</font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">2,200,000</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">5.66</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">2,155,000</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">Equity compensation plans not approved by security holders</font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">Total</font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">2,200,000</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">5.66</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">2,155,000</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
</table>
<p><font size="2" face="Times New Roman">The stock options plan proposed by management was approved in the 2004 Annual Meeting of Stockholders, and the maximal common shares for issuance under this plan is 2,200,000 with a period of 10 years.</font></p>
<p>
<font size="2" face="Times New Roman">(e) SALES OF UNREGISTERED SECURITIES </font></p>
<p>
<font size="2" face="Times New Roman"> During 2004, the Company issued options to purchase 7,500 shares of common stock to each of its three independent directors.  Such share options vest immediately upon grant and are exercisable at $4.50 per share over a period of two years.</font></p>
<p>
<font size="2" face="Times New Roman"> On June 28, 2005, the Company issued additional options to purchase 7,500 shares of common stock to each of its three independent directors.  Such stock options vest immediately upon grant and are exercisable at $6.83 per share over a period of five years.  The exercise price represents the fair market value based on the grant date of the stock options.</font></p>
<p align="center"><font size="2" face="Times New Roman">19</font></p>
<hr size="1" width="100%" noshade color=black>
<div style="page-break-before:always"></div>
<PAGE>
<br>
<p><a name="ca_010"></a>
<font size="2" face="Times New Roman">ITEM 6. SELECTED FINANCIAL DATA.</font></p>
<p>
<font size="2" face="Times New Roman"> The following selected financial data reflects the results of operations and cash flows.  The data below should be read in conjunction with, and is qualified by reference to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto included elsewhere in this report.  The financial information presented may not be indicative of our future performance.</font></p>
<table align="center" border="0" style="border-collapse:collapse" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td colspan="14" valign="bottom"><p align="center"> <font size="1" face="Times New Roman"><b>Year Ended December 31, (Unit: US Dollars)</b></font></p></td>
<td valign="bottom"><p align="center"><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td colspan="14" valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p align="center"><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td colspan="2" valign="bottom"><p align="center"> <font size="1" face="Times New Roman"><b>2005</b></font></p></td>
<td valign="bottom"><p align="center"><font size=1 face="Times New Roman"> </font></p></td>
<td colspan="2" valign="bottom"><p align="center"> <font size="1" face="Times New Roman"><b>2004</b></font></p></td>
<td valign="bottom"><p align="center"><font size=1 face="Times New Roman"> </font></p></td>
<td colspan="2" valign="bottom"><p align="center"> <font size="1" face="Times New Roman"><b>2003</b></font></p></td>
<td valign="bottom"><p align="center"><font size=1 face="Times New Roman"> </font></p></td>
<td colspan="2" valign="bottom"><p align="center"> <font size="1" face="Times New Roman"><b>2002</b></font></p></td>
<td valign="bottom"><p align="center"><font size=1 face="Times New Roman"> </font></p></td>
<td colspan="2" valign="bottom"><p align="center"> <font size="1" face="Times New Roman"><b>2001<br>(Unaudited)</b></font></p></td>
<td valign="bottom"><p align="center"><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td width="43%" valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td width="2%" valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td width="1%" valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom"><p align="center"><font size=1 face="Times New Roman"> </font></p></td>
<td width="1%" valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom"><p align="center"><font size=1 face="Times New Roman"> </font></p></td>
<td width="1%" valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom"><p align="center"><font size=1 face="Times New Roman"> </font></p></td>
<td width="1%" valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom"><p align="center"><font size=1 face="Times New Roman"> </font></p></td>
<td width="1%" valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td width="1%" valign="bottom"><p align="center"><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Statement of Operations Data:</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Net sales</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">63,572,301</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">58,185,845</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">53,624,868</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"> <font size="1" face="Times New Roman">Cost of sales</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">41,105,478</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">35,042,352</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">28,635,908</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Gross profit</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">22,466,823</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">23,143,493</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">24,988,960</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Cost and expenses:</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Selling expenses</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">4,585,570</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">3,473,804</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">2,719,576</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"> <font size="1" face="Times New Roman">General and administrative expenses</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">6,244,646</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">6,478,859</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">7,603,756</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">1,000</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">4,977</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">R & D expenses</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">966,782</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">1,518,512</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">1,017,031</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p> <font size="1" face="Times New Roman">Depreciation and amortization (1)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">2,577,944</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">848,009</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">1,321,601</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Stock-based compensation</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">68,850</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">55,125</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">1,300,000</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Total of cost and expenses</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">14,443,792</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">12,374,309</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">13,961,964</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">1,000</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">4,977</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Operating income (loss)</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">8,023,031</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">10,769,184</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">11,026,996</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(1,000</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(4,977</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p><font size="1" face="Times New Roman">Other income (expenses)</font></p></td>
<td valign="bottom"><p ><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"> <font size="1" face="Times New Roman">Joint venture interests income (2)</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">4,160,000</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">2,005,059</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Other non-operating income</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">510,795</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">1,651,560</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">532,583</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"> <font size="1" face="Times New Roman">Financial costs</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(1,166,167</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(730,962</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(333,336</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Other income, net</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(655,372</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">920,598</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">199,247</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">4,160,000</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">2,005,059</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Income before income taxes</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">7,367,659</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">11,689,782</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">11,226,243</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">4,159,000</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">2,000,082</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Income taxes</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">1,371,863</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">618,400</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">1,750,940</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">—</font> <font size="1" face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">—</font> <font size="1" face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Profit before minority shareholders’ interests</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">5,995,796</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">11,071,382</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">9,475,303</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">4,159,000</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">2,000,082</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"> <font size="1" face="Times New Roman">Minority shareholders’ interests</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">2,680,318</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">4,182,454</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">5,476,495</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">—</font> <font size="1" face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">—</font> <font size="1" face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Profits from continued operations</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">3,315,478</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">6,888,928</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">3,998,808</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">4,159,000</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">2,000,082</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Loss from discontinued operations (3A)</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">—</font> <font size="1" face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(21,591</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(127,539</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">—</font> <font size="1" face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">—</font> <font size="1" face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Net income</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">3,315,478</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">6,867,337</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">3,871,269</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">4,159,000</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">2,000,082</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Net income from continued operation - Basic and diluted</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">0.15</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">0.31</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">0.19</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">0.20</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">0.10</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Net (loss) from discontinued operation - Basic and diluted (3B)</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">0.00</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(0.00</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(0.01</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">0.20</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">0.10</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Basic</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">0.15</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">0.30</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">0.18</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">0.20</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">0.10</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Diluted</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">0.15</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">0.30</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">0.18</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">0.20</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">0.10</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Statement of Cash Flows Data:</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"> <font size="1" face="Times New Roman">Net cash provided by (used in) continued operating activities</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">13,393,946</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">22,719,873</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">1,561,151</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(1,000</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(4,977</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p><font size="1" face="Times New Roman">Net cash provided by (used in) discontinued operating activities (3C)</font></p></td>
<td valign="bottom"><p ><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(1,354,506</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">2,364,436</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Net Cash provided by (used in) operating activities</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">13,393,946</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">21,365,367</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">3,925,587</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(1,000</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(4,977</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Net cash (used in) continued investing activities</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(12,013,878</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(18,352,025</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(6,885,384</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(51,000</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">4,977</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"> <font size="1" face="Times New Roman">Net cash (used in) discontinued investing activities (3D)</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">—</font> <font size="1" face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">121,769</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(2,312,422</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">—</font> <font size="1" face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">—</font> <font size="1" face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Net cash (used in) investing activities</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(12,013,878</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(18,230,256</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(9,197,806</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(51,000</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">4,977</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p><font size="1" face="Times New Roman">Net cash (used in) continued financing activities</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(169,763</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(3,882,077</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">10,384,665</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">52,000</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Net cash provided by discontinued financing activities (3E)</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">—</font> <font size="1" face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">1,180,723</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">—</font> <font size="1" face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font> </p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font> </p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p><font size="1" face="Times New Roman">Net cash provided by (used in) financing activities</font></p></td>
<td valign="bottom"><p ><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(169,763</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">(2,701,354</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">10,384,665</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">52,000</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Other Financial Data:</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"> <font size="1" face="Times New Roman">EBITDA (4)</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">10,761,751</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">10,244,342</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">8,474,028</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">4,159,000</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">2,000,082</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Balance Sheet Data:</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"> <font size="1" face="Times New Roman">Total assets</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">119,529,723</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">105,486,645</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">95,846,750</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">19,427,000</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">12,288,764</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Total liability</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">60,851,575</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">55,776,357</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">51,145,176</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">13,330,000</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"> <font size="1" face="Times New Roman">Minority interest</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">21,751,043</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">17,571,838</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">18,686,712</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Stockholders’ Equity</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right><font size="1" face="Times New Roman">36,927,105</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right><font size="1" face="Times New Roman">32,138,450</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right><font size="1" face="Times New Roman">26,014,862</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right><font size="1" face="Times New Roman">6,097,000</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size="1" face="Times New Roman">$</font></p></td>
<td valign="bottom"><p align=right><font size="1" face="Times New Roman">12,288,764</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
</tr>
</table>
<p align="center">
<font size="2" face="Times New Roman">20</font></p>
<hr size="1" width="100%" noshade color=black>
<div style="page-break-before:always"></div>
<PAGE>
<br>
<hr size="1" align="Left" width="25%" noshade color=black>
<font size="2" face="Times New Roman">(1). Depreciation and amortization:  Exclude the depreciation and amortization in sales of cost. </font>
<p>
<font size="2" face="Times New Roman">(2). Joint venture interests income:  The minority joint venture partner has the right to participate in management before January 1, 2003.  Pursuant to EITF 96-16, the Company accounted for its interest in these joint ventures under the equity method for the years ended December 31, 2002 and 2001.  During early 2003, the directors of the Company and the other joint ventures in the Company’s Sino-foreign joint ventures executed “Act in Concert” agreements, accordingly, the Company has accounted for the above joint ventures on a consolidated basis since January 1, 2003 because the Company has exercised sufficient control over their management and operations.</font></p>
<p><font size="2" face="Times New Roman">(3A-3E). Loss from discontinued operation:  Effective August 31, 2004, in order to concentrate on its main products, namely steering and other automotive parts, the Company disposed of its 51% interest in Jingzhou.  The divested non-core business of Jingzhou has been treated as a discontinued operation under SFAS No. 144.</font></p>
<p>
<font size="2" face="Times New Roman">(4). “EBITDA” is defined as income before provision for interest expense and interest income, income taxes, depreciation and amortization.  EBITDA is not presented as an alternative measure of operating results or cash flow from operations, as determined in accordance with generally accepted accounting principles, but because we believe it is a widely accepted indicator of our ability to incur and service debt.  EBITDA does not give effect to cash used for debt service requirements and thus does not reflect funds available for dividends, reinvestment or other discretionary uses.  In addition, EBITDA as presented herein may not be comparable to similarly titled measures reported by other companies. </font></p>
<p>
<font size="2" face="Times New Roman">The following is the calculation of EBITDA: </font></p>
<table align="center" border="0" style="border-collapse:collapse" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="14" valign="bottom">
<p align="center"><font size="1" face="Times New Roman"><b>Year Ended December 31, (Unit: US Dollars)</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="14" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>2005</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>2004</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>2003</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>2002</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>2001<br>(Unaudited)</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td width="43%" valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="2%" valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="1%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Net income</font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">3,315,478</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">6,867,337</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">3,871,269</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">4,159,000</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">2,000,082</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">Loss from discontinued operation</font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">21,591</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">127,539</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom">
<p><font size="1" face="Times New Roman">Interest expense</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">1,208,315</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">789,535</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">386,394</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">Interest income</font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">(42,148</font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">)</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">(58,573</font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">)</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">(53,058</font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">)</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom">
<p><font size="1" face="Times New Roman">Income tax expense</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">1,371,863</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">618,400</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">1,750,940</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">Depreciation and amortization (1)</font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">4,908,243</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">2,006,052</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">2,390,944</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom">
<p style="margin-left:3em; text-indent:-1em"><font size="1" face="Times New Roman">EBITDA</font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">10,761,751</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">10,244,342</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">8,474,028</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">4,159,000</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">2,000,082</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
</table>
<p align="center"><font size="2" face="Times New Roman">21</font></p>
<hr size="1" width="100%" noshade color=black>
<div style="page-break-before:always"></div>
<PAGE>
<br>
<hr size="1" align="Left" width="25%" noshade color=black>
<font size="2" face="Times New Roman">(1) Depreciation and amortization:  Include the depreciation and amortization in sales of cost.</font>
<p>
<font size="2" face="Times New Roman">The following is the reconciliation of cash provided by (used in) operating activities to EBITDA: </font></p>
<table align="center" border="0" style="border-collapse:collapse" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="14" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>Year Ended December 31, (Unit: US dollars)</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="14" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center"><font size="1" face="Times New Roman"><b>2005</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>2004</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>2003</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>2002</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>2001<br>(Unaudited)</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td width="43%" valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="2%" valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="1%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Net cash provided by operating activities</font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">13,393,946</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">21,365,367</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">3,925,587</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">(1,000</font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">)</font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">(4,977</font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">)</font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">Net cash provided by discontinued operating activities</font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">1,354,506</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">(2,364,436</font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">)</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom">
<p><font size="1" face="Times New Roman">Add: Joint venture interests income</font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">4,160,000</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">2,005,059</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">Less: Minority shareholders’ interests</font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">(2,680,318</font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">)</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">(4,182,454</font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">)</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">(5,476,495</font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">)</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom">
<p><font size="1" face="Times New Roman">Less: foreign currency translation gain</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">(730,896</font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">)</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">Less: Stock-Based Compensation</font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">(68,850</font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">)</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">(55,125</font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">)</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">(1,300,000</font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">)</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom">
<p><font size="1" face="Times New Roman">Interest expense</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">1,208,315</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">789,535</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">386,394</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">Interest income</font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">(42,148</font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">)</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">(58,573</font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">)</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">(53,058</font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">)</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom">
<p><font size="1" face="Times New Roman">Income tax expense</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">1,371,863</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">618,400</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">1,750,940</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">Net changes in operating assets and liabilities</font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">(1,690,161</font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">)</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">(9,587,314</font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">)</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">11,605,096</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td width="43%" valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="2%" valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td width="1%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom">
<p><font size="1" face="Times New Roman">EBITDA</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">10,761,751</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">10,244,342</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">8,474,028</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">4,159,000</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p>
<font size="1" face="Times New Roman">$</font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">2,000,082</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td width="43%" valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="2%" valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom">
<hr size="3" width="100%" noshade color=black>
</td>
<td width="1%" valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
</table>
<p align="center">
<font size="2" face="Times New Roman">22</font></p>
<hr size="1" width="100%" noshade color=black>
<div style="page-break-before:always"></div>
<PAGE>
<br>
<p><a name="ca_011"></a>
<font size="2" face="Times New Roman">ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.</font></p>
<p>
<font size="2" face="Times New Roman"> The following is management’s discussion and analysis of certain significant factors which have affected the Company’s financial position and operating results during the periods included in the accompanying consolidated financial statements, as well as information relating to the plans of its current management.  This report includes forward-looking statements.  These statements relate to future events or the Company’s future financial performance.  The Company has attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “expects,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predict,” “should” or “will” or the negative of these terms or
other comparable terminology.  Such statements are subject to certain risks and uncertainties, including the matters set forth in this report or other reports or documents the Company files with the Securities and Exchange Commission from time to time, which could cause actual results or outcomes to differ materially from those projected.  Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance or achievements.  Undue reliance should not be placed on these forward-looking statements which speak only as of the date hereof.  The Company undertakes no obligation to update these forward-looking statements.  The Company’s expectations are as of the date this Form 10-K is filed, and the Company does not intend to update any of the forward-looking statements after the date this Annual Report on Form 10-K is filed to confirm these statements to
actual results, unless required by law.</font></p>
<p><font size="2" face="Times New Roman"> The following discussion and analysis should be read in conjunction with the Company’s consolidated financial statements and the related notes thereto and other financial information contained elsewhere in this Form 10-K.</font></p>
<p>
<font size="2" face="Times New Roman">GENERAL OVERVIEW: </font></p>
<p>
<font size="2" face="Times New Roman"> Effective March 5, 2003, Visions-In-Glass, Inc., a United States public company incorporated in the State of Delaware (“Visions”) , entered into a Share Exchange Agreement to acquire 100% of the shareholder interest in Great Genesis Holding Limited, a company incorporated on January 3, 2003 under The Companies Ordinance of Hong Kong as a limited liability company (“Great Genesis”) , as a result of which Great Genesis became a wholly-owned subsidiary of Visions.  At the closing, the old directors and officers of Visions resigned, and new directors and officers were appointed.  Visions subsequently changed its name to China Automotive Systems, Inc.</font></p>
<p>
<font size="2" face="Times New Roman"> China Automotive Systems, Inc., including, when the context so requires, its subsidiaries and the subsidiaries’ interests in the Sino-foreign joint ventures described below, is referred to herein as the “Company”.  The Company, through its Sino-foreign joint ventures engaged in the manufacture and sales of automotive systems and components in the People’s Republic of China (the “PRC” or “China”) as described below.</font></p>
<p>
<font size="2" face="Times New Roman"> Ji Long Enterprise Investment Limited was incorporated on October 8, 1992 under the Companies Ordinance of Hong Kong as a limited liability company (“Ji Long”) .  Ji Long is an investment holding company.  Effective March 4, 2003, all of the shareholders of Ji Long exchanged their 100% shareholder interest for a 100% shareholder interest in Great Genesis, as a result of which Ji Long became a wholly-owned subsidiary of Great Genesis.</font></p>
<p>
<font size="2" face="Times New Roman"> In exchange for the acquisition of 100% of the shareholder interest in Great Genesis, the shareholders of Great Genesis were issued 20,914,250 shares of common stock of Visions.  In addition, the shareholders of Great Genesis paid $320,000 to the former officer, director and controlling shareholder of Visions in two installments for the cancellation of 17,424,750 shares of common stock in 2003 and 2004.</font></p>
<p><font size="2" face="Times New Roman"> The acquisition of Great Genesis by the Company was accounted for as a recapitalization of Great Genesis, pursuant to which the accounting basis of Great Genesis continued unchanged subsequent to the transaction date.  Accordingly, the pre-transaction financial statements of Great Genesis are the historical financial statements of the Company.</font></p>
<p align="center">
<font size="2" face="Times New Roman">23</font></p>
<hr size="1" width="100%" noshade color=black>
<div style="page-break-before:always"></div>
<PAGE>
<table align="center" border="0" style="border-collapse:collapse" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td colspan="8" valign="bottom"><div align="center"><font size="1" face="Times New Roman"><b>Percentage Interest</b></font></div></td>
<td valign="bottom"> </td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td colspan="8" valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p align="center"><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"> <font size="1" face="Times New Roman"><b>Name of Entity</b></font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td colspan="2" valign="bottom"><p align="center"> <font size="1" face="Times New Roman"><b>2005</b></font></p></td>
<td valign="bottom"><p align="center"><font size=1 face="Times New Roman"> </font></p></td>
<td colspan="2" valign="bottom"><p align="center"> <font size="1" face="Times New Roman"><b>2004</b></font></p></td>
<td valign="bottom"><p align="center"><font size=1 face="Times New Roman"> </font></p></td>
<td colspan="2" valign="bottom"><p align="center"> <font size="1" face="Times New Roman"><b>2003</b></font></p></td>
<td valign="bottom"><p align="center"><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td width="65%" valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td width="1%" valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom"><p align="center"><font size=1 face="Times New Roman"> </font></p></td>
<td width="1%" valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td width="2%" valign="bottom"><p align="center"><font size=1 face="Times New Roman"> </font></p></td>
<td width="1%" valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td width="8%" valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td width="1%" valign="bottom"><p align="center"><font size=1 face="Times New Roman"> </font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Jingzhou Henglong Automotive Parts Co., Ltd. (“Henglong”)</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">44.5</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">%</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">44.5</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">%</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">42.0</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">%</font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Shashi Jiulong Power Steering Gears Co., Ltd. (“Jiulong”)</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">81.0</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">%</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">81.0</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">%</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">81.0</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">%</font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"> <font size="1" face="Times New Roman">Shenyang Jinbei Henglong Automotive Steering System Co., Ltd. (“Shenyang”)</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">70.0</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">%</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">70.0</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">%</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">55.0</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">%</font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"> <font size="1" face="Times New Roman">Zhejiang Henglong & Vie Pump-Manu Co., Ltd. (“Zhejiang”)</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">51.0</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">%</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">51.0</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">%</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">51.0</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">%</font></p></td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom"><p><font size="1" face="Times New Roman">Jingzhou Henglong Fulida Textile Co., Ltd.  (“ Jingzhou ”)</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">51.0</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">%</font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"> <font size="1" face="Times New Roman">Universal Sensor Application Inc. (“USAI”)</font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">60.0</font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman">%</font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman">— </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman"> </font></p></td>
</tr>
<tr>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"> <font size="1" face="Times New Roman"> </font></p></td>
<td valign="bottom"><p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman"> </font></p></td>
<td valign="bottom"><p> <font size="1" face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><p align=right> <font size="1" face="Times New Roman"> </font></p></td>
<td valign="bottom"><p><font size=1 face="Times New Roman"> </font></p></td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom"><p> <font size="1" face="Times New Roman"> </font></p></td>
</tr>
</table>
<br>
<p>
<font size="2" face="Times New Roman"> The Company owns the following aggregate net interests in five Sino-foreign joint ventures organized in the PRC as of December 31, 2005 (Jingzhou was sold in August, 2004):</font></p>
<p><font size="2" face="Times New Roman"> Jiulong and Henglong were formed in 1993 and 1997 respectively, and they are mainly engaged in the production of rack and pinion power steering gear and integral power steering gear for cars and light and heavy-duty vehicles.  Shenyang and Zhejiang were established in 2002 for the production of power steering parts and power steering pumps, respectively. USAI was established in 2005 and mainly engaged in the production and sales of sensor modular.</font></p>
<p>
<font size="2" face="Times New Roman"> On December 31, 2003, the Company owned 55% of Shenyang.  On April 8, 2004, the Board of Directors approved an increase in Shenyang’s registered capital and total capital from $5,421,687 (RMB45,000,000) to $8,132,530 (RMB67,500,000); the Chinese investor was changed from Shenyang Jinbei Automotive Industry Co., Ltd. to Shenyang Jinbei Automotive Company Limited.  The shareholder transfer and capital increase, along with the newly signed Joint Venture Agreement and Articles of Incorporation, were approved by the applicable PRC authorities.  Accordingly, Shenyang’s registered capital is now $8,132,530 (RMB67,500,000), including $5,692,771 (RMB47,250,000) from the Company, which is 70% of the total registered capital, and $2,439,759 (RMB20,250,000) from Shenyang Jinbei Automotive Company Limited, which is 30% of the total registered capital.  The increase in capital of
$2,710,843 (RMB22,500,000) has been contributed to Shenyang. </font></p>
<p align="center">
<font size="2" face="Times New Roman">24</font></p>
<hr size="1" width="100%" noshade color=black>
<div style="page-break-before:always"></div>
<PAGE>
<br>
<p>
<font size="2" face="Times New Roman"> Jingzhou Henglong Fulida Textile Co., Ltd. (“Jingzhou”) was formed in February 2003 to produce environmental textiles and raw materials, and was owned 51% by Ji Long.  Effective August 31, 2004, in order to concentrate on its main products, namely steering and automotive parts, the Company disposed of its 51% interest in Jingzhou by entering into an equity exchange agreement (the “Exchange Agreement”) with Hubei Wanlong Investment Co., Ltd., (“Hubei Wanlong”), controlled by Mr. Hanlin Chen, the Company’s Chairman.  Pursuant to the Exchange Agreement, the 51% equity interest in Jingzhou owned by Ji Long was exchanged for 2.5% of Hubei Wanlong’s equity interest in Henglong based on their respective fair market values as determined by an independent appraisal firm.  The difference between the fair value and the book value resulting from the disposition
of the joint venture interest in Jingzhou was debited to additional paid-in capital.  With respect to consideration paid by the Company in excess of its Chairman’s basis for his investment, such excess has been charged to additional paid-in capital as a distribution to the Chairman, resulting in the acquired 2.5% equity interests in Henglong being recorded by the Company at the Chairman’s original cost basis.  The Company paid approximately $90,000 to Hubei Wanlong in conjunction with this transaction.</font></p>
<p><font size="2" face="Times New Roman"> The divested non-core business of Jingzhou has been treated as a discontinued operation under SFAS No. 144.  Jingzhou’s results of operation and related charges have been reclassified as discontinued operations in the Company’s consolidated statements of operations in 2004.</font></p>
<p>
<font size="2" face="Times New Roman"> On April 12, 2005, one of the subsidiary companies, Great Genesis entered into a Joint Venture Agreement with Shanghai Hongxi Investment Inc. (“Hongxi”, a company controlled by Mr. Hanlin Chen, the Company’s Chairman) and Sensor System Solution Inc. (“Sensor”) to establish a joint venture - Universal Sensor Application Inc. (“USAI”) in the Wuhan East Lake development zone.  USAI will produce and sell sensor modular.  The registered capital of the joint venture is $10,000,000.  Great Genesis and Hongxi will invest $6,000,000 and $1,000,000 respectively including cash, land and building which will account for 60% and 10% of the total registered capital, respectively.  Sensor will invest $3,000,000 in technology, accounting for 30% of the total registered capital.  The registered capital is required to be paid in three installments within one year
after signing of the Joint Venture Agreement (April 12, 2005).  As of December 31, 2005, Great Genesis and Sensor have invested $432,100 and $3,000,000 respectively with cash and technology.  Hongxi has not invested any capital.  USAI will conduct its operation of business in 2006.</font></p>
<p>
<font size="2" face="Times New Roman"> The Company
has business relations with more than sixty vehicle manufacturers,
among them are FAW Group and Dongfeng Auto Group, two of the five largest
automobile manufacturers in China, Shenyang Brilliance Jinbei Co., Ltd., the
largest van manufacturers in China, Cherry Automobile Co., Ltd., the largest
state owned car manufacturer in China, and Zhejiang Geely Automobile Co., Ltd.,
the largest private owned car manufacturer.  In 2005, the Company has
already begun to supply power steering pumps for SAIC GM Wuling Co., one of the
Sino-Foreign joint ventures partially owned by GM.  Furthermore, the
Company signed product development letters of intent with FAW-Volkswagen Auto Co., Ltd.,
one of the Sino-Foreign joint ventures partially owned by Volkswagen AG in
China, and with Dongfeng Peugeot Citroen Automobile Company Ltd., one of the
joint ventures partially owned by DFM China, PSA France.</font></p>
<p><font size="2" face="Times New Roman">CRITICAL ACCOUNTING POLICIES:</font></p>
<p>
<font size="2" face="Times New Roman"> The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America.  The preparation of these financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.  Management periodically evaluates the estimates and judgments made.  Management bases its estimates and judgments on historical experience and on various factors that are believed to be reasonable under the circumstances.  Actual results may differ from these estimates as a result of different assumptions or conditions.</font></p>
<p align="center">
<font size="2" face="Times New Roman">25</font></p>
<hr size="1" width="100%" noshade color=black>
<div style="page-break-before:always"></div>
<PAGE>
<br>
<p>
<font size="2" face="Times New Roman"> Minority shareholders’ interest refers to the percentage of the owner’s equity of a subsidiary owned by investors other than controlling shareholder in company.  Minority shareholders’ interest in the consolidated financial statements means the percentage of the Company’s net assets owned by shareholders of the Company’s Sino-foreign joint ventures other than the Company, according to their respective investment ratios.</font></p>
<p>
<font size="2" face="Times New Roman"> The following critical accounting policies affect the more significant judgments and estimates used in the preparation of the Company’s consolidated financial statements.</font></p>
<p>
<font size="2" face="Times New Roman">REVENUES:</font></p>
<p>
<font size="2" face="Times New Roman"> The Company recognizes revenue when the significant risks and rewards of ownership have been transferred to the customer pursuant to PRC law, including factors such as when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, sales and value added tax laws have been complied with, and collectibility is probable.  The Company recognizes product sales generally at the time the product is shipped.  Concurrent with the recognition of revenue, the Company reduces revenue for estimated product returns.  Shipping and handling costs are included in cost of goods sold. </font></p>
<p><font size="2" face="Times New Roman">ACCOUNTS RECEIVABLE:</font></p>
<p>
<font size="2" face="Times New Roman"> In order to determine the value of the Company’s accounts receivable, the Company records a provision for doubtful accounts to cover estimated credit losses.  Management reviews and adjusts this allowance periodically based on historical experience and its evaluation of the collectibility of outstanding accounts receivable.  The Company evaluates the credit risk of its customers utilizing historical data and estimates of future performance. Revenue is presented net of any sales tax and value added tax.</font></p>
<p>
<font size="2" face="Times New Roman">INVENTORIES:</font></p>
<p>
<font size="2" face="Times New Roman"> Inventories are stated at the lower of cost or net realizable value.  Cost is calculated on the moving-average basis and includes all costs to acquire and other costs incurred in bring the inventories to their present location and condition.  The Company evaluates the net realizable value of its inventories on a regular basis and records a provision for loss to reduce the computed moving-average cost if it exceeds the net realizable value.</font></p>
<p>
<font size="2" face="Times New Roman">INCOME TAXES:</font></p>
<p>
<font size="2" face="Times New Roman"> The Company records a tax provision to reflect the expected tax payable on taxable income for the period, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous periods.</font></p>
<p>
<font size="2" face="Times New Roman">IMPAIRMENT OF LONG-LIVED ASSETS:</font></p>
<p>
<font size="2" face="Times New Roman"> The Company’s long-lived assets consist of property, equipment and certain intangible assets.  In assessing the impairment of such assets, the Company periodically makes assumptions regarding the estimated future cash flows and other factors to determine the fair value of the respective assets.  If these estimates or the related assumptions indicate that the carrying amount may not be recoverable, the Company records impairment charges for these assets at such time.</font></p>
<p><font size="2" face="Times New Roman">FOREIGN CURRENCIES:</font></p>
<p>
<font size="2" face="Times New Roman"> The Company maintains its books and records in Renminbi (“RMB”), the currency of the PRC, its functional currency.  The exchange rate between US Dollar and RMB is subject to the foreign exchange quotation publicized by the People’s Bank of China on the specific day.  The conversion between overseas convertible foreign currency and RMB are reflected using the temporal method.  Under this method, all monetary items are translated into the functional currency at the rate of exchange prevailing at the balance sheet date.  Non-monetary items are translated at historical rates. Income and expenses are translated at the rate in effect on the transaction dates.  Transaction gains and losses, if any, are included in the determination of net income (loss) for the period.</font></p>
<p align="center">
<font size="2" face="Times New Roman">26</font></p>
<hr size="1" width="100%" noshade color=black>
<div style="page-break-before:always"></div>
<PAGE>
<br>
<p><font size="2" face="Times New Roman">OFF-BALANCE SHEET ARRANGEMENTS</font></p>
<p>
<font size="2" face="Times New Roman"> The Company does not have any off-balance sheet arrangements.</font></p>
<p>
<font size="2" face="Times New Roman">RESULTS OF OPERATIONS</font></p>
<p>
<font size="2" face="Times New Roman"> During early 2003, the directors of the Company and the other joint ventures in the Company’s Sino-foreign joint ventures executed “Act in Concert” agreements<b>,</b> accordingly, the Company has accounted for the above joint ventures on a consolidated basis since January 1, 2003 because the Company has exercised sufficient control over their management and operations.</font></p>
<p>
<font size="2" face="Times New Roman"> For the years ended December 31, 2005, 2004 and 2003, the Company’s condensed statements of operations were as follows:</font></p>
<table align="center" border="0" style="border-collapse:collapse" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="8" valign="bottom">
<p align="center"><font size="1" face="Times New Roman"><b>Parent Company</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="8" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>Henglong</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="8" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="8" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>2005</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>2004</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>2003</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>2005</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>2004</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="1" face="Times New Roman"><b>2003</b></font></p> </td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade color=black>
</td>
<td valign="bottom">
<p align="center"><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr bgcolor="#cceeff">
<td width="32%" valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Proportionate ownership interest at end of year</font></p> </td>
<td width="2%" valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td width="1%" valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td width="8%" valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">100</font></p> </td>
<td width="2%" valign="bottom">
<p>
<font size="1" face="Times New Roman">%</font></p> </td>
<td width="1%" valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td width="8%" valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">100</font></p> </td>
<td width="2%" valign="bottom">
<p>
<font size="1" face="Times New Roman">%</font></p> </td>
<td width="1%" valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td width="8%" valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">100</font></p> </td>
<td width="2%" valign="bottom">
<p>
<font size="1" face="Times New Roman">%</font></p> </td>
<td width="1%" valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td width="8%" valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">44.50</font></p> </td>
<td width="2%" valign="bottom">
<p>
<font size="1" face="Times New Roman">%</font></p> </td>
<td width="1%" valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td width="8%" valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">44.50</font></p> </td>
<td width="2%" valign="bottom">
<p>
<font size="1" face="Times New Roman">%</font></p> </td>
<td width="1%" valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td width="8%" valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">42</font></p> </td>
<td width="1%" valign="bottom">
<p>
<font size="1" face="Times New Roman">%</font></p> </td>
</tr>
<tr>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">Net sales</font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman">$ </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman">$ </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman">$ </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman">$ </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">35,424,735</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman">$ </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">29,029,209</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman">$ </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">33,929,946</font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
</tr>
<tr bgcolor="#cceeff">
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">Cost of goods sold</font></p> </td>
<td valign="bottom">
<p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p align=right>
<font size="1" face="Times New Roman">— </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
<p><font size=1 face="Times New Roman"> </font></p> </td>
<td valign="bottom">
&l