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<title>China Security &amp; Surveillance Technology, Inc.: Form S-1 - Prepared by
TNT Filings Inc.</title>
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    As filed with the Securities and Exchange Commission on April
30, 2007
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    Registration No. _</font></b></font></td>
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    &nbsp;</td>
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<p align="center"><font size="5">SECURITIES AND EXCHANGE COMMISSION <br>
</font><font size="2">WASHINGTON, D.C. 20549 <br>
____________________________ </font></p>
<p align="center"><font size="5">FORM S-1 </font></p>
<p align="center"><font size="2">REGISTRATION STATEMENT UNDER <br>
THE SECURITIES ACT OF 1933 </font></p>
<p align="center"><font size="5">CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC.
<br>
</font><font size="2">(Exact name of registrant as specified in its charter)
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    Delaware</font></td>
    <td align="middle" width="33%"><font face="Times New Roman" size="2">3699</font></td>
    <td align="middle" width="34%"><font face="Times New Roman" size="2">
    98-0509431</font></td>
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    <td align="middle" width="33%"><font face="Times New Roman" size="2"><b>
    (State or other jurisdiction of</b></font></td>
    <td align="middle" width="33%"><font face="Times New Roman" size="2"><b>
    (Primary Standard Industrial</b></font></td>
    <td align="middle" width="34%"><font face="Times New Roman" size="2"><b>(I.R.S.
    Employer</b></font></td>
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    <td align="middle" width="33%"><font face="Times New Roman" size="2"><b>
    incorporation or organization)</b></font></td>
    <td align="middle" width="33%"><font face="Times New Roman" size="2"><b>
    Classification Code Number)</b></font></td>
    <td align="middle" width="34%"><font face="Times New Roman" size="2"><b>
    Identification No.)</b></font></td>
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<p align="center">13/F, Shenzhen Special Zone Press Tower Shennan Road <br>
Futian District, Shenzhen, China 518034 <br>
(86) 755-8351-0888<b> </p>
<p align="center">(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices) <br>
____________________________</p>
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    <td align="middle" width="50%">&nbsp;</td>
    <td align="middle" width="50%"><font size="2"><b>Louis A. Bevilacqua, Esq.</b></font></td>
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    <td align="middle" width="50%">&nbsp;</td>
    <td align="middle" width="50%"><font size="2"><b>Thomas M. Shoesmith, Esq.</b></font></td>
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    <td align="middle" width="50%"><font size="2"><b>Guoshen Tu</b></font></td>
    <td align="middle" width="50%"><font size="2"><b>Joseph R. Tiano, Jr., Esq.</b></font></td>
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    <td align="middle" width="50%"><font size="2">13/F, Shenzhen Special Zone
    Press Tower Shennan Road,</font></td>
    <td align="middle" width="50%"><font size="2">Thelen Reid Brown Raysman &amp;
    Steiner LLP</font></td>
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    <td align="middle" width="50%"><font size="2">Futian District, Zhenzhen,
    China 518034</font></td>
    <td align="middle" width="50%"><font size="2">701 8th Street, N.W.</font></td>
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    <td align="middle" width="50%"><font size="2">(86) 755-8351-0888</font></td>
    <td align="middle" width="50%"><font size="2">Washington, D.C. 20001</font></td>
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    <td align="middle" width="50%">&nbsp;</td>
    <td align="middle" width="50%"><font size="2">(202) 508-4000</font></td>
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<p align="center">(Names, addresses, including zip codes, and telephone numbers,
including area codes, of agents for service)<br>
____________________________ </p>
</b>
<p style="line-height: 13pt" align="justify">If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box.
</font>
<font face="Wingdings 2" size="2">Q</font></p>
<font face="Times New Roman" size="2">
<p style="line-height: 13pt" align="justify">If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.
</font>
<font face="Wingdings 2" size="2">&#163;</font></p>
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<p style="line-height: 13pt" align="justify">If this form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act, check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
<font face="Wingdings 2" size="2">&#163;</font></p>
<p style="line-height: 13pt" align="justify">If this form is a post-effective
amendment filed pursuant to Rule 462(d) under the Securities Act, check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement the same offering.
<font face="Wingdings 2" size="2">&#163;</font></p>
<p align="center" style="line-height: 13pt">CALCULATION OF REGISTRATION FEE </p>
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    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="middle" width="18%">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="middle" width="18%">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="middle" width="19%">
    <font size="2"><i>Proposed maximum</i></font></td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="middle" width="19%">
    &nbsp;</td>
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    <td style="BORDER-LEFT: 1px solid" align="middle" width="26%">
    <font size="2"><i>Title of each class of securities to be</i></font></td>
    <td style="BORDER-LEFT: 1px solid" align="middle" width="18%">
    <font size="2"><i>Amount to be</i></font></td>
    <td style="BORDER-LEFT: 1px solid" align="middle" width="18%">
    <font size="2"><i>Proposed maximum offering</i></font></td>
    <td style="BORDER-LEFT: 1px solid" align="middle" width="19%">
    <font size="2"><i>aggregate offering</i></font></td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-LEFT: 1px solid" align="middle" width="19%">
    <font size="2"><i>Amount of</i></font></td>
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    <font size="2"><i>registered</i></font></td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="middle" width="18%">
    <font size="2"><i>registered(1)(3)</i></font></td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="middle" width="18%">
    <font size="2"><i>price per share (2)</i></font></td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="middle" width="19%">
    <font size="2"><i>price(2)</i></font></td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="middle" width="19%">
    <font size="2"><i>registration fee</i></font></td>
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    <font size="2">Common stock, $0.0001 par value</font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="middle" width="18%" bgcolor="#E6E6E6">
    <font size="2">1,538,462</font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="middle" width="18%" bgcolor="#E6E6E6">
    <font size="2">$16.20</font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="middle" width="19%" bgcolor="#E6E6E6">
    <font size="2">$24,923,085</font></td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="middle" width="19%" bgcolor="#E6E6E6">
    <font size="2">$766</font></td>
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<p style="line-height: 13pt; text-indent: -30; margin-left: 30" align="justify">(1)&nbsp;&nbsp;&nbsp;&nbsp; In accordance with Rule 416(a), the Registrant is also registering
hereunder an indeterminate number of shares that may be issued and resold
resulting from stock splits, stock dividends or similar transactions. </p>
<p style="line-height: 13pt; text-indent: -30; margin-left: 30" align="justify">(2)&nbsp;&nbsp;&nbsp;&nbsp; Estimated pursuant to Rule 457(c) of the Securities Act of 1933 solely
for the purpose of computing the amount of the registration fee based on the
average of the high and low prices reported on the OTC Bulletin Board on April
26, 2006. </p>
<p style="line-height: 13pt; text-indent: -30; margin-left: 30" align="justify">(3)&nbsp;&nbsp;&nbsp;&nbsp; Represents shares of the Registrant's common stock being registered for
resale that have been issued to the selling stockholders named in this
registration statement. </p>
<b>
<p align="justify" style="line-height: 13pt">The registrant hereby amends this registration statement on
such date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that this
registration statement shall hereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting pursuant to such
Section 8(a), may determine. </p>
</b></font><hr color="#000000" size="5"><p style="page-break-before: always"><font face="Times New Roman"><b><i>
<p style="line-height: 13pt"><font size="2">PROSPECTUS </font></p>
<p style="line-height: 13pt"><font color="#ff0000" size="2">Subject to completion, dated____ , 2007 </font>
</p>
<font size="2">
<p align="justify" style="line-height: 13pt"><font color="#ff0000">The information in this prospectus is not complete and
may be changed. These securities may not be sold until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any jurisdiction where the offer or sale is not
permitted</font></font><font face="Times New Roman" size="2"><font color="#ff0000">.
</font></p>
</font></i>
<p align="center"><font size="5">CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC.
</font> </p>
<p align="center"><font size="2">1,538,462 Shares of Common Stock </font></p>
</b>
<p style="TEXT-INDENT: 26px; line-height:13pt" align="justify"><font size="2">This prospectus
relates to 1,538,462 shares of common stock of China Security &amp; Surveillance
Technology, Inc., a Delaware corporation, that may be sold from time to time by
the selling stockholders named in this prospectus. We will not receive any
proceeds from the sales by the selling stockholders. </font></p>
<p style="TEXT-INDENT: 26px; line-height:13pt" align="justify"><font size="2">Common stock of
China Security &amp; Surveillance Technology, Inc. is quoted on the OTC Bulletin
Board maintained by the National Association of Securities Dealers, Inc. under
the symbol &quot;CSCT.OB&quot;. The closing sales price for its common stock on April 26,
2007 was $16.20<b> </b>per share, as reported on the OTC Bulletin Board. You are
urged to obtain current market quotations of our common stock before purchasing
any of the shares being offered for sale pursuant to this prospectus. </font>
</p>
<p style="TEXT-INDENT: 26px; line-height:13pt" align="justify"><font size="2">Any selling
stockholders who are affiliates of broker-dealers and any participating
broker-dealers are deemed to be &quot;underwriters&quot; within the meaning of the
Securities Act of 1933, as amended, and any commissions or discounts given to
any such selling stockholders who are affiliates of broker-dealers and any such
broker-dealer may be regarded as underwriting commissions or discounts under the
Securities Act. The selling stockholders have informed us that they do not have
any agreement or understanding, directly or indirectly, with any person to
distribute their common stock. </font></p>
<b>
<p style="TEXT-INDENT: 26px; line-height:13pt" align="justify"><font size="2">Investing in the
shares being offered pursuant to this prospectus involves a high degree of risk.
You should carefully read and consider the information set forth in the section
of this prospectus titled &quot;Risk Factors,&quot; beginning on page 5, when determining
whether to purchase any of these shares. </font></p>
<p style="TEXT-INDENT: 26px; line-height:13pt" align="justify"><font size="2">Neither the
Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.</font></b><font size="2">
</font></p>
<p style="TEXT-INDENT: 26px; line-height:13pt"><font size="2">The date of this Prospectus is<b>
____</b>, 2007. </font></p>
</font><hr color="#000000" size="5"><p style="page-break-before: always"><font face="Times New Roman" size="2"><b>
<p align="center">TABLE OF CONTENTS </p>
</b></font>
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    <td width="75%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2"><b>PROSPECTUS SUMMARY</b></font></td>
    <td align="right" width="25%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2"><b>1</b></font></td>
  </tr>
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    <td width="75%"><font face="Times New Roman" size="2"><b>RISK FACTORS</b></font></td>
    <td align="right" width="25%"><font face="Times New Roman" size="2"><b>5</b></font></td>
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    <td width="75%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2"><b>CAUTIONARY
    STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS</b></font></td>
    <td align="right" width="25%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2"><b>15</b></font></td>
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    <td width="75%"><font face="Times New Roman" size="2"><b>USE OF PROCEEDS</b></font></td>
    <td align="right" width="25%"><font face="Times New Roman" size="2"><b>15</b></font></td>
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    <td width="75%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2"><b>MARKET FOR OUR
    COMMON STOCK AND RELATED STOCKHOLDER MATTERS</b></font></td>
    <td align="right" width="25%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2"><b>16</b></font></td>
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    <td width="75%"><font face="Times New Roman" size="2"><b>DESCRIPTION OF
    BUSINESS</b></font></td>
    <td align="right" width="25%"><font face="Times New Roman" size="2"><b>36</b></font></td>
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    <td width="75%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2"><b>MANAGEMENT</b></font></td>
    <td align="right" width="25%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2"><b>47</b></font></td>
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    <td width="75%"><font face="Times New Roman" size="2"><b>CHANGE IN AND
    DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND</b></font></td>
    <td align="right" width="25%">&nbsp;</td>
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    <td width="75%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2"><b>FINANCIAL
    DISCLOSURE</b></font></td>
    <td align="right" width="25%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2"><b>57</b></font></td>
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    <td width="75%"><font face="Times New Roman" size="2"><b>DESCRIPTION OF
    SECURITIES</b></font></td>
    <td align="right" width="25%"><font face="Times New Roman" size="2"><b>58</b></font></td>
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    <td width="75%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2"><b>SHARES ELIGIBLE FOR
    FUTURE SALE</b></font></td>
    <td align="right" width="25%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2"><b>59</b></font></td>
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    <td width="75%"><font face="Times New Roman" size="2"><b>PLAN OF
    DISTRIBUTION</b></font></td>
    <td align="right" width="25%"><font face="Times New Roman" size="2"><b>60</b></font></td>
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    <td width="75%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2"><b>LEGAL MATTERS</b></font></td>
    <td align="right" width="25%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2"><b>62</b></font></td>
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    <td width="75%"><font face="Times New Roman" size="2"><b>EXPERTS</b></font></td>
    <td align="right" width="25%"><font face="Times New Roman" size="2"><b>62</b></font></td>
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    <td width="75%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2"><b>WHERE YOU CAN FIND
    MORE INFORMATION</b></font></td>
    <td align="right" width="25%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2"><b>62</b></font></td>
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<font face="Times New Roman" size="2">
<p align="center">&nbsp;</p>
<p align="center">i </p>
</font>

<hr color="#000000" size="5"><p style="page-break-before: always"><font FACE="Times New Roman" size="2"><b>
<p align="center" style="line-height: 13pt">PROSPECTUS SUMMARY </p>
</b></font><font FACE="Times New Roman"><i>
<p ALIGN="justify" style="text-indent: 30; line-height:13pt"><font size="2">This summary
highlights some information from this prospectus, and it may not contain all of
the information that is important to you. You should read the following summary
together with the more detailed information regarding our company and the common
stock being sold in this offering, including &quot;Risk Factors&quot; and our financial
statements and related notes, included elsewhere in, or incorporated by
reference into, this prospectus. </font></p>
</i>
<p align="justify" style="text-indent: 30; line-height:13pt"><font size="2">Except as otherwise
indicated by the context, references in this prospectus to &quot;CSST,&quot; &quot;we,&quot; &quot;us,&quot;
&quot;our,&quot; &quot;our Company,&quot; or &quot;the Company&quot; are to China Security &amp; Surveillance
Technology, Inc., a Delaware corporation and its direct and indirect
subsidiaries. Unless the context otherwise requires, all references to (i) &quot;Safetech&quot;
are to China Safetech Holdings Limited, a British Virgin Islands corporation;
(ii) &quot;CSST HK&quot; are to China Security &amp; Surveillance Technology (HK) Ltd., a Hong
Kong corporation; (iii) &quot;CSST China&quot; are to China Security &amp; Surveillance
Technology (PRC) Ltd., a corporation incorporated in the People's Republic of
China; (iv)&quot;Golden&quot; are to Golden Group Corporation (Shenzhen) Limited, a
corporation incorporated in the People's Republic of China; (v) &quot;Cheng Feng&quot; are
to Shanghai Cheng Feng Digital Technology Co. Ltd.; (vi) &quot;Hongtianzhi&quot; are to
Shenzhen Hongtianzhi Electronics Co., Ltd; (vii) &quot;BVI&quot; are to British Virgin
Islands; (viii) &quot;PRC&quot; and &quot;China&quot; are to People's Republic of China; (ix) &quot;U.S.
dollar,&quot; &quot;$&quot; and &quot;US$&quot; are to United States dollars; (x) &quot;RMB&quot; are to Yuan
Renminbi of China; (xi) &quot;Securities Act&quot; are to Securities Act of 1933, as
amended; and (xii) &quot;Exchange Act&quot; are to the Securities Exchange Act of 1934, as
amended. </font></p>
</font><b><font FACE="Times New Roman" size="2">
<p align="center" style="line-height: 13pt">The Company </p>
</font><font FACE="Times New Roman"><i>
<p align="left" style="line-height: 13pt"><font size="2">Overview</font></i></font></b><font FACE="Times New Roman"><font size="2">
</font></p>
<p align="left" style="line-height: 13pt"><font size="2">We manufacture, distribute, install and service
security and surveillance products and systems and develop security and
surveillance related software in China. Our customers mainly comprise (i)
governmental entities (including customs agencies, courts, public security
bureaus and prisons), (ii) non-profit organizations (including schools, museums,
sports arenas and libraries) and (iii) commercial entities (including airports,
hotels, real estate, banks, mines, railways, supermarkets and entertainment
venues). These account for approximately 40%, 10% and 50% of revenues,
respectively. </font></p>
<p align="left" style="line-height: 13pt"><font size="2">A majority of our revenues is derived from the
provision of a packaged security and surveillance solution which includes the
products, installation and after sale service maintenance to our customers.
Because a majority of our revenues is derived from the installation of security
and surveillance systems for our customers which are generally non-recurring,
our revenues are not concentrated within any one customer or group of customers.
Maintenance services in our packaged solution are included for the first year
from the date of completion. Our customers have an option to sign up for our
maintenance program after the first year. </font></p>
<p ALIGN="left" style="line-height: 13pt"><font size="2">Our subsidiary Golden has 37 branch offices in
provincial cities, Cheng Feng has 22 distribution points and Hongtianzhi has 53
distribution points throughout China as our customers are located across the
country without any particular concentration in any region. </font></p>
</font>
<p align="center"><font size="2" face="Times New Roman">1</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always"><font FACE="Times New Roman"><i>
<p align="justify"><u><font size="2">Our Background and History</font></u></i><u><font size="2">
</font></u></p>
<p align="justify" style="line-height: 13pt"><font size="2">We were incorporated in the BVI on April 8,
2002 under the name &quot;Apex Wealth Enterprises Limited&quot; as a corporation under the
International Business Companies Ordinance of 1984. In February 2006, we changed
our name to China Security and Surveillance Technology Inc. In November 2006, we
changed our domicile from the BVI to Delaware by merging the BVI corporation
into a newly incorporated Delaware corporation. Prior to our reverse acquisition
of Safetech in September 2005, as discussed in more detail below, we were a
development stage enterprise and had not yet generated any revenues. Prior to
the reverse acquisition, we provided business advisory and management consulting
services in greater China, initially concentrating on the Hong Kong market. The
focus of these services was on small to medium size enterprises. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">From and after the reverse acquisition, our
business became the business of our indirect, wholly-owned subsidiary, Golden
and the newly acquired subsidiaries Cheng Feng and Hongtianzhi. Golden is a
corporation incorporated in the PRC which is engaged in the business of
manufacturing, distributing, installing and maintaining security and
surveillance systems. Golden was organized in the PRC in January 1995. In 2006,
we acquired Cheng Feng, a corporation incorporated in the PRC which is engaged
in the business of manufacturing, marketing and sales of security and
surveillance related hardware as well as the development and integration of
related software. In April 2007, we acquired Hongtianzhi, a corporation
incorporated in the PRC which is engaged in the business of manufacturing
digital cameras. We are headquartered in Shenzhen, China. </font></p>
<i>
<p align="justify" style="line-height: 13pt"><u><font size="2">Reverse Acquisition with Safetech </font>
</u></p>
</i>
<p align="justify" style="line-height: 13pt"><font size="2">On September 12, 2005, we acquired 50,000
shares of the issued and outstanding capital stock of Safetech, constituting all
of the issued and outstanding capital stock of Safetech. The 50,000 shares of
Safetech were acquired from the individual shareholders of Safetech in a share
exchange transaction in return for the issuance of 8,138,000 shares of our
common stock. As a result of this transaction, Safetech became our wholly-owned
subsidiary, and Golden became our indirect wholly-owned subsidiary. Completion
of the transaction resulted in a change in control of our Company. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">For accounting purposes, this transaction was
treated as a reverse acquisition, with Safetech as the acquirer and our Company
as the acquired party. When we refer in this prospectus to business and
financial information for periods prior to the consummation of the reverse
acquisition, we are referring to the business and financial information of our
operating PRC subsidiaries on a consolidated basis unless otherwise specified.
</font></p>
<i>
<p align="justify" style="line-height: 13pt"><u><font size="2">Subsequent Acquisitions </font></u></p>
</i>
<p align="justify" style="line-height: 13pt"><font size="2">On October 25, 2005, we entered into an
agreement with the equity owners of Shenzhen Yuan Da Wei Shi Technology Limited,
or &quot;Yuan Da,&quot; which was subsequently amended in April and May 2006. Pursuant to
the amended agreement, we acquired all of the assets of Yuan Da for RMB 1
million (approximately $0.125 million) and 200,000 shares of our common stock.
Yuan Da is a limited liability company established in Shenzhen, China and was
principally engaged in the sale and development of security and surveillance
systems. </font></p>
</font>
<p align="center"><font face="Times New Roman" size="2">2</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always"><font FACE="Times New Roman">
<p ALIGN="justify" style="line-height: 13pt"><font size="2">In July 2006, we entered into an agreement
with shareholders of Cheng Feng to acquire 100% ownership of Cheng Feng for a
consideration of RMB 120 million (approximately $15 million), consisting of RMB
60 million (approximately $7.5 million) in cash and 1,361,748 shares of our
common stock. The operational control of Cheng Feng passed to the Company in
July 2006, we received the relevant Chinese government approval for such
acquisition in December 2006 and all consideration to Cheng Feng has been paid
off as of the date of this prospectus. Cheng Feng is a company that is engaged
in the business of manufacturing, marketing and sales of security and
surveillance related hardware as well as the development and integration of
related software. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">In November 2006, we acquired the security and
surveillance business of Jian Golden An Ke Technology Co. Ltd., or &quot;Jian An Ke,&quot;
Shenzhen Golden Guangdian Technology Co. Ltd., or &quot;Shenzhen Guangdian,&quot; Shenyang
Golden Digital Technology Co. Ltd., or &quot;Shenyang Golden,&quot; and Jiangxi Golden
Digital Technology Co. Ltd., or &quot;Jiangxi Golden,&quot; of which our CEO and director
Guoshen Tu owned 80%, 60%, 42% and 90%, respectively. We refer to these
companies in this prospectus as the Four-Related Companies. Mr. Tu did not
receive any consideration for the acquisition of his interest in the
Four-Related Companies. The minority shareholders of these four companies and
their designees received in aggregate 850,000 shares of our common stock.
Shenzhen Guangdian is engaged in the business of manufacturing and distributing
security and surveillance products. The other three companies are engaged in the
business of distributing security and surveillance products. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">On April 2, 2007, we entered into an Equity
Transfer Agreement with Safetech and Zheng Huang, the sole owner of Chain Star
Investments Limited, a Hong Kong Corporation, or &quot;Chain Star,&quot; pursuant to which
Safetech purchased 100% ownership of Chain Star from Mr. Huang. Chain Star is a
holding company of Hongtianzhi. Pursuant to the terms of the Equity Transfer
Agreement, we will pay a total consideration of RMB 250 million (approximately
$32.1 million) in exchange for 100% ownership of Chain Star, consisting of RMB
125 million (approximately USD$16 million) in cash and RMB 125 million
(approximately $16 million) in the Company's shares of common stock. </font></p>
<b>
<p align="center"><font size="2">The Offering </font></p>
</b></font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="50%" valign="top"><font FACE="Times New Roman" size="2">Common stock offered
    by selling stockholders</font></td>
    <td WIDTH="50%"><font FACE="Times New Roman" size="2">1,538,462 shares</font></td>
  </tr>
  <tr>
    <td WIDTH="50%" valign="top">&nbsp;</td>
    <td WIDTH="50%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%" valign="top"><font FACE="Times New Roman" size="2">Common stock
    outstanding before the offering</font></td>
    <td WIDTH="50%"><font FACE="Times New Roman" size="2">34,941,406<b> </b>
    shares <sup>(1)</sup></font></td>
  </tr>
  <tr>
    <td WIDTH="50%" valign="top">&nbsp;</td>
    <td WIDTH="50%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%" valign="top"><font FACE="Times New Roman" size="2">Common stock
    outstanding after the offering</font></td>
    <td WIDTH="50%"><font FACE="Times New Roman" size="2">34,941,406<b> </b>
    shares</font></td>
  </tr>
  <tr>
    <td WIDTH="50%" valign="top">&nbsp;</td>
    <td WIDTH="50%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%" valign="top"><font FACE="Times New Roman" size="2">Proceeds to us</font></td>
    <td WIDTH="50%">
    <p align="justify"><font FACE="Times New Roman" size="2">We will not receive
    any proceeds from the sale of common stock
    covered by this prospectus.</font></td>
  </tr>
  <tr>
    <td WIDTH="50%" valign="top">&nbsp;</td>
    <td WIDTH="50%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%" valign="top"><font FACE="Times New Roman" size="2">Dividend policy</font></td>
    <td WIDTH="50%">
    <p align="justify"><font FACE="Times New Roman" size="2">Currently, we do not
    anticipate paying cash dividends.</font></td>
  </tr>
  <tr>
    <td WIDTH="50%" valign="top">&nbsp;</td>
    <td WIDTH="50%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%" valign="top"><font FACE="Times New Roman" size="2">Risk factors</font></td>
    <td WIDTH="50%">
    <p align="justify"><font FACE="Times New Roman" size="2">You should read &quot;Risk
    Factors&quot; for a discussion of factors that you
    should consider carefully before deciding
    whether to purchase shares of our common stock.</font></td>
  </tr>
  </table>
<font FACE="Times New Roman" size="2">
<p>(1)&nbsp;&nbsp;&nbsp; Based on 34,941,406<b> </b>shares of our common stock
issued and outstanding as of April 26, 2007.</font></p>
<p align="center"><font face="Times New Roman" size="2">3</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always"><font FACE="Times New Roman"><b>
<p style="line-height: 13pt"><font size="2">Summary Consolidated Financial Data
</font> </p>
</b>
<p align="justify" style="line-height: 13pt"><font size="2">The following summary consolidated statement of income and
comprehensive income data for the years ended December 31, 2004, 2005 and 2006
and the selected consolidated balance sheet data as of December 31, 2005 and
2006 are derived from our audited consolidated financial statements included
elsewhere in this prospectus. The summary consolidated financial data for the
year ended December 31, 2003 and the summary balance sheet data as of December
31, 2004 are derived from our audited consolidated financial statements not
included in this prospectus. The summary consolidated financial data for the
year ended December 31, 2002 is derived from our unaudited consolidated
financial statements that are not included in this prospectus. The following
summary consolidated financial information should be read in conjunction with
our consolidated financial statements and related notes and the information
contained in &quot;Management's Discussion and Analysis of Financial Condition and
Results of Operations,&quot; appearing elsewhere in this prospectus. Our historical
results are not necessarily indicative of our results for any future periods.
</font>
</p>
<p style="line-height: 13pt" align="center"><font size="2">( in thousands of U.S. dollars, except per share data)
</font> </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="3%" align="right" style="text-align: right; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2"><b>2006</b></font></td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2"><b>2005</b></font></td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2"><b>2004</b></font></td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2"><b>2003</b></font></td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2"><b>2002</b></font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="3%" align="right" style="text-align: right; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right; border-top-style: solid; border-top-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2"><b>Statement of Income
    Data</b></font></td>
    <td WIDTH="3%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="3%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Revenues</font></td>
    <td WIDTH="3%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">106,989</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">32,689</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">16,056</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">11,795</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">10,331</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="3%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">Cost of Sales</font></td>
    <td WIDTH="3%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">75,976</font></td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">23,473</font></td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">8,796</font></td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">7,581</font></td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">7,030</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="3%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Operating Expenses</font></td>
    <td WIDTH="3%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">5,779</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">1,737</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">1,129</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">952</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">1,097</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="3%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">Income From Operations</font></td>
    <td WIDTH="3%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">25,342</font></td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">7,479</font></td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">6,131</font></td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">3,262</font></td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">2,234</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="3%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Income Taxes</font></td>
    <td WIDTH="3%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">3,889</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">780</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">873</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">517</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">335</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="3%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">Net Income</font></td>
    <td WIDTH="3%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">22,931</font></td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">7,266</font></td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">5,724</font></td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">2,752</font></td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">1,899</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="3%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Number of Shares
    Issued and Outstanding</font></td>
    <td WIDTH="3%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">31,824,938</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">21,558,000</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">17,000,000</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">17,000,000</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">17,000,000</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="3%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">Income from Operations
    Per Share</font></td>
    <td WIDTH="3%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Basic</font></td>
    <td WIDTH="3%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">0.97</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">0.40</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">0.36</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">0.19</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">0.13</font></td>
  </tr>
  <tr>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">Diluted</font></td>
    <td WIDTH="3%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">0.94</font></td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">0.40</font></td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">0.36</font></td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">0.19</font></td>
    <td WIDTH="2%" align="right" style="text-align: right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right">
    <font FACE="Times New Roman" SIZE="2">0.13</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="3%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Weighted Average
    Number of Shares</font></td>
    <td WIDTH="3%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Outstanding</font></td>
    <td WIDTH="3%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#FFFFFF"><font FACE="Times New Roman" SIZE="2">Basic</font></td>
    <td WIDTH="3%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">
    <font FACE="Times New Roman" SIZE="2">26,052,519</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">
    <font FACE="Times New Roman" SIZE="2">18,521,479</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">
    <font FACE="Times New Roman" SIZE="2">17,000,000</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">
    <font FACE="Times New Roman" SIZE="2">17,000,000</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">
    <font FACE="Times New Roman" SIZE="2">17,000,000</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Diluted</font></td>
    <td WIDTH="3%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">26,940,215</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">18,521,479</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">17,000,000</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">17,000,000</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">17,000,000</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="3%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#FFFFFF"><font FACE="Times New Roman" SIZE="2">Net Income Per Share</font></td>
    <td WIDTH="3%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Basic</font></td>
    <td WIDTH="3%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">0.88</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">0.39</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">0.34</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">0.16</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">0.11</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#FFFFFF"><font FACE="Times New Roman" SIZE="2">Diluted</font></td>
    <td WIDTH="3%" align="right" style="text-align: right" bgcolor="#FFFFFF">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">
    <font FACE="Times New Roman" SIZE="2">0.85</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">
    <font FACE="Times New Roman" SIZE="2">0.39</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">
    <font FACE="Times New Roman" SIZE="2">0.34</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">
    <font FACE="Times New Roman" SIZE="2">0.16</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">
    <font FACE="Times New Roman" SIZE="2">0.11</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="3%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2"><b>Balance Sheet Data</b></font></td>
    <td WIDTH="3%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="3%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#FFFFFF"><font FACE="Times New Roman" SIZE="2">Working Capital</font></td>
    <td WIDTH="3%" align="right" style="text-align: right" bgcolor="#FFFFFF">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">
    <font FACE="Times New Roman" SIZE="2">63,535</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">
    <font FACE="Times New Roman" SIZE="2">20,546</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">
    <font FACE="Times New Roman" SIZE="2">8,494</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">
    <font FACE="Times New Roman" SIZE="2">
    <p style="text-align: left">7,918</font></td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">&nbsp;</td>
    <td WIDTH="2%" align="right" style="text-align: right" bgcolor="#FFFFFF">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" style="text-align: right" bgcolor="#FFFFFF">
    <font FACE="Times New Roman" SIZE="2">5,591</font></td>
  </tr>
</table>
<p align="center"><font face="Times New Roman" size="2">4</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="3%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Total Assets</font></td>
    <td WIDTH="3%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">114,527</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">29,117</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">22,009</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">16,977</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">13,582</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="3%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">Total Current
    Liabilities</font></td>
    <td WIDTH="3%" align="right"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="12%" align="right"><font FACE="Times New Roman" SIZE="2">22,604</font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" SIZE="2">4,505</font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" SIZE="2">5,208</font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" SIZE="2">5,900</font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" SIZE="2">4,126</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="3%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Net Assets</font></td>
    <td WIDTH="3%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">89,820</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">24,612</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">16,801</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">11,077</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">9,455</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="3%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">Total Shareholders'
    Equity</font></td>
    <td WIDTH="3%" align="right"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="12%" align="right"><font FACE="Times New Roman" SIZE="2">89,820</font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" SIZE="2">24,612</font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" SIZE="2">16,801</font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" SIZE="2">11,077</font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" SIZE="2">8,850</font></td>
  </tr>
</table>
<font FACE="Times New Roman"><b>
<p align="center"><font size="2">Risk Factors </font></p>
</b>
<p ALIGN="justify" style="line-height: 13pt"><font size="2">We face risks in operating our business,
including risks that may prevent us from achieving our business objectives or
that may adversely affect our business, financial condition and operating
results. You should consider these risks before investing in our Company. Risks
relating to our business and industry include, among others: our ability to
attract new customers; our ability to keep pace with technological developments
in the security and surveillance industry, and to develop and commercialize new
products; competition and competitive factors in the markets in which we
compete; and our ability to successfully integrate companies that we have
acquired and to avoid or mitigate potential damages arising from risks
associated with acquired companies and the legal structure utilized to
effectuate acquisitions of these companies. You should carefully consider the
risks discussed in &quot;RISK FACTORS&quot; before deciding to invest in our common stock.
</font></p>
<b>
<p align="center"><font size="2">Additional Information </font></p>
</b>
<p ALIGN="justify" style="line-height: 13pt"><font size="2">Our corporate headquarters are located at
13/F, Shenzhen Special Zone Press Tower, Shennan Road, Futian District,
Shenzhen, Peoples Republic of China, 518034. Our telephone number is (86)
755-8351-0888. We maintain a website at www.csstf.com that contains information
about our Company, but that information is not a part of this prospectus. </font>
</p>
<b>
<p align="center"><font size="2">RISK FACTORS </font></p>
</b></font><i><font FACE="Times New Roman">
<p ALIGN="justify" style="line-height: 13pt"><font size="2">You should carefully consider the following
risks and all of the other information set forth in this prospectus before
deciding to invest in shares of our common stock being offered for resale by the
selling stockholders. If any of the events or developments described below
actually occurs, our business, financial condition, and results of operations
may suffer. In that case, the trading price of our common stock may decline and
you could lose all or part of your investment. </font></p>
<b>
<p align="justify"><font size="2">RISKS RELATED TO OUR BUSINESS </font></p>
</b></font></i><font FACE="Times New Roman">
<p align="justify"><font size="2">DUE TO THE NATURE OF OUR BUSINESS, WE DO NOT
HAVE SIGNIFICANT AMOUNTS OF RECURRING REVENUES FROM OUR EXISTING CUSTOMERS AND
WE ARE HIGHLY DEPENDENT ON NEW BUSINESS DEVELOPMENT. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">Most of our revenues derive from the
installation of security and surveillance systems which are generally
non-recurring. Our customers are mainly governmental entities, non-profit
organizations and commercial entities, such as airports, customs agencies,
hotels, real estate developments, banks, mines, railways, supermarkets, and
entertainment enterprises. We manufacture and install security systems for these
customers and generate revenues from the sale of these systems to our customers
and, to a lesser extent, from maintenance of these systems for our customers.
After we have manufactured and installed a system at any particular customer
site, we have generated the majority of revenues from that particular client. We
would not expect to generate significant revenues from any existing client in
future years unless that client has additional installation sites for which our
services might be required. Therefore, in order to maintain a level of revenues
each year that is at or in excess of the level of revenues we generated in prior
years, we must identify and be retained by new clients. If our business
development, marketing and sales techniques do not result in an equal or greater
number of projects of at least comparable size and value for us in a given year
compared to the prior year, then we may be unable to increase our revenues and
earnings or even sustain current levels in the future. </font></p>
</font>
<p align="center"><font face="Times New Roman" size="2">5</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always"><font FACE="Times New Roman">
<p align="justify" style="line-height: 13pt"><font size="2">IN ORDER TO GROW AT THE PACE EXPECTED BY
MANAGEMENT, WE WILL REQUIRE ADDITIONAL CAPITAL TO SUPPORT OUR LONG-TERM BUSINESS
PLAN. IF WE ARE UNABLE TO OBTAIN ADDITIONAL CAPITAL IN FUTURE YEARS, WE MAY BE
UNABLE TO PROCEED WITH OUR LONG-TERM BUSINESS PLAN AND WE MAY BE FORCED TO
CURTAIL OR CEASE OUR OPERATIONS. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">We will require additional working capital to
support our long-term business plan, which includes identifying suitable targets
for horizontal or vertical mergers or acquisitions, so as to enhance the overall
productivity and benefit from economies of scale. Our working capital
requirements and the cash flow provided by future operating activities, if any,
will vary greatly from quarter to quarter, depending on the volume of business
during the period and payment terms with our customers. We may not be able to
obtain adequate levels of additional financing, whether through equity
financing, debt financing or other sources. Additional financings could result
in significant dilution to our earnings per share or the issuance of securities
with rights superior to our current outstanding securities. In addition, we may
grant registration rights to investors purchasing our equity or debt securities
in the future. If we are unable to raise additional financing, we may be unable
to implement our long-term business plan, develop or enhance our products and
services, take advantage of future opportunities or respond to competitive
pressures on a timely basis, if at all. In addition, a lack of additional
financing could force us to substantially curtail or cease operations. </font>
</p>
<p align="justify" style="line-height: 13pt"><font size="2">WE SOMETIMES EXTEND CREDIT TO OUR CUSTOMERS.
FAILURE TO COLLECT THE TRADE RECEIVABLES OR UNTIMELY COLLECTION COULD AFFECT OUR
LIQUIDITY. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">We extend credit to a large number of our
customers while generally requiring no collateral. Generally, our customers pay
in installments, with a portion of the payment upfront, a portion of the payment
upon receipt of our products by our customers and before the installation, and a
portion of the payment after the installation of our products and upon
satisfaction of our customer. Sometimes, a small portion of the payment will not
be paid until after a certain period following the installation. We perform
ongoing credit evaluations of our customers' financial condition and generally
have no difficulties in collecting our payments. However, if we encounter future
problems collecting amounts due from our clients or if we experience delays in
the collection of amounts due from our clients, our liquidity could be
negatively affected. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">IF OUR SUBCONTRACTORS FAIL TO PERFORM THEIR
CONTRACTUAL OBLIGATIONS, OUR ABILITY TO PROVIDE SERVICES AND PRODUCTS TO OUR
CUSTOMERS, AS WELL AS OUR ABILITY TO OBTAIN FUTURE BUSINESS, MAY BE HARMED.
</font></p>
</font>
<p align="center"><font face="Times New Roman" size="2">6</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always"><font FACE="Times New Roman">
<p align="justify" style="line-height: 13pt"><font size="2">Many of our contracts involve subcontracts
with other companies upon which we rely to perform a portion of the services
that we must provide to our customers. There is a risk that we may have disputes
with our subcontractors, including disputes regarding the quality and timeliness
of work performed by those subcontractors. A failure by one or more of our
subcontractors to satisfactorily perform the agreed-upon services may materially
and adversely impact our ability to perform our obligations to our customers,
could expose us to liability and could have a material adverse effect on our
ability to compete for future contracts and orders. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">IF WE ARE UNABLE TO ATTRACT AND RETAIN KEY
SENIOR MANAGEMENT AND QUALIFIED TECHNICAL AND SALES PERSONNEL, OUR OPERATIONS,
FINANCIAL CONDITION AND PROSPECTS WILL BE MATERIALLY ADVERSELY AFFECTED. </font>
</p>
<p align="justify" style="line-height: 13pt"><font size="2">Our future success depends in part on the
contributions of our management team and key technical and sales personnel and
our ability to attract and retain qualified new personnel. In particular, our
success depends on the continuing employment of our CEO, Mr. Guoshen Tu; our
CFO, Terence Yap; our Chief Technical Officer, Dr. Yong Zhao; our Chief
Operating Officer, Shufang Yang; our Vice President, Jianguo Jiang; and our Vice
President, Lingfeng Xiong. There is significant competition in our industry for
qualified managerial, technical and sales personnel and we cannot assure you
that we will be able to retain our key senior managerial, technical and sales
personnel or that we will be able to attract, integrate and retain other such
personnel that we may require in the future. If we are unable to attract and
retain key personnel in the future, our business, operations, financial
condition, results of operations and prospects could be materially adversely
affected. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">OUR GROWTH STRATEGY INCLUDES MAKING
ACQUISITIONS IN THE FUTURE, WHICH COULD SUBJECT US TO SIGNIFICANT RISKS, ANY OF
WHICH COULD HARM OUR BUSINESS. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">Our growth strategy includes identifying and
acquiring or investing in suitable candidates on acceptable terms. We recently
acquired the security and surveillance business of the Four-Related Companies
and acquired a 100% ownership interest in Cheng Feng and Hongtianzhi. We also
expect to close the acquisitions of HiEasy Electronic Technology Development
Co., Ltd., or &quot;HiEasy,&quot; Changzhou Minking Electronics Inc. Ltd, or &quot;Minking,&quot;
Hangzhou Tsingvision Intelligence System Co. Ltd., or &quot;Tsing,&quot; and Shenzhen
Wandaiheng Industry Ltd., or &quot;Wandai,&quot; and establish an exclusive cooperation
relationship with Shenzhen Chuang Guan Intelligence Network Technology Co.,
Ltd., or &quot;Chuang Guan,&quot; in 2007. In addition, over time, we may acquire or make
investments in other providers of products that complement our business and
other companies in the security industry. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">Acquisitions involve a number of risks and
present financial, managerial and operational challenges, including: </font></p>
<ul>
  <li>
  <p align="justify" style="margin-left: 30; margin-bottom: 10"><font size="2">
  diversion of management's attention from running our existing business; </font>
  </li>
  <li>
  <p align="justify" style="margin-left: 30; margin-bottom: 10"><font size="2">
  increased expenses, including travel, legal, administrative and compensation
  expenses resulting from newly hired employees; </font></li>
  <li>
  <p align="justify" style="margin-left: 30; margin-bottom: 10"><font size="2">
  increased costs to integrate personnel, customer base and business practices
  of the acquired company with our own; </font></li>
</ul>
<ul>
  <li>
  <p style="margin-left: 30; margin-bottom: 10"><font size="2">adverse effects
  on our reported operating results due to possible write-down of goodwill
  associated with acquisitions; </font></li>
  <li>
  <p style="margin-left: 30; margin-bottom: 10"><font size="2">potential
  disputes with sellers of acquired businesses, technologies, services, products
  and potential liabilities; and </font></li>
  <li>
  <p style="margin-left: 30; margin-bottom: 10"><font size="2">dilution to our
  earnings per share if we issue common stock in any acquisition. </font></li>
</ul>
<p style="line-height: 13pt" align="justify"><font size="2">Moreover, performance problems with an acquired business,
technology, product or service could also have a material adverse impact on our
reputation as a whole. In addition, any acquired business, technology, product
or service could significantly under-perform relative to our expectations, and
we may not achieve the benefits we expect from our acquisitions. For all of
these reasons, our pursuit of an acquisition and investment strategy or any
individual acquisition or investment could have a material adverse effect on our
business, financial condition and results of operations. </font></p>
<p style="line-height: 13pt" align="justify"><font size="2">OUR LIMITED ABILITY TO PROTECT OUR INTELLECTUAL PROPERTY MAY
ADVERSELY AFFECT OUR ABILITY TO COMPETE. </font></p>
<p style="line-height: 13pt" align="justify"><font size="2">We rely on a combination of trademarks, copyrights, trade
secret laws, confidentiality procedures and licensing arrangements to protect
our intellectual property rights. A successful challenge to the ownership of our
technology could materially damage our business prospects. Our competitors may
assert that our technologies or products infringe on their patents or
proprietary rights. We may be required to obtain from others licenses that may
not be available on commercially reasonable terms, if at all. Problems with
intellectual property rights could increase the cost of our products or delay or
preclude our new product development and commercialization. If infringement
claims against us are deemed valid, we may not be able to obtain appropriate
licenses on acceptable terms or at all. Litigation could be costly and
time-consuming but may be necessary to protect our technology license positions
or to defend against infringement claims. </font></p>
<p style="line-height: 13pt" align="justify"><font size="2">SAFETECH IS A BVI COMPANY, WHILE GOLDEN, CHENG FENG AND
HONGTIANZHI ARE PRC COMPANIES, AND ALL OF OUR OFFICERS AND DIRECTORS RESIDE
OUTSIDE THE UNITED STATES. THEREFORE, CERTAIN JUDGMENTS OBTAINED AGAINST OUR
COMPANY BY OUR SHAREHOLDERS MAY NOT BE ENFORCEABLE IN THE BVI OR CHINA. </font>
</p>
<p style="line-height: 13pt" align="justify"><font size="2">Safetech is a BVI company and our operating subsidiaries
Golden, Cheng Feng and Hongtianzhi are PRC companies. All of our officers and
directors reside outside of the United States. All or substantially all of our
assets and the assets of these persons are located outside of the United States.
As a result, it may not be possible for investors to effect service of process
within the United States upon our Company or such persons or to enforce against
it or these persons the United States federal securities laws, or to enforce
judgments obtained in United States courts predicated upon the civil liability
provisions of the federal securities laws of the United States, including the
Securities Act and the Exchange Act. </font></p>
<i><b>
<p style="line-height: 13pt" align="justify"><font size="2">RISKS RELATED TO OUR INDUSTRY </font></p>
</b></i>
<p style="line-height: 13pt" align="justify"><font size="2">SEASONALITY AFFECTS OUR OPERATING RESULTS. </font></p>
</font>
<p align="center"><font face="Times New Roman" size="2">8</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always"><font FACE="Times New Roman">
<p align="justify" style="line-height: 13pt"><font size="2">Our sales are affected by seasonality. Our
revenues are usually higher in the second half of the year than in the first
half of the year because fewer projects are undertaken during and around the
Chinese spring festival. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">OUR SUCCESS RELIES ON OUR MANAGEMENT'S ABILITY
TO UNDERSTAND THE HIGHLY EVOLVING SURVEILLANCE AND SECURITY INDUSTRY. </font>
</p>
<p align="justify" style="line-height: 13pt"><font size="2">The Chinese surveillance and security industry
is nascent and rapidly evolving. Therefore, it is critical that our management
is able to understand industry trends and make good strategic business
decisions. If our management is unable to identify industry trends and act in
response to such trends in a way that is beneficial to us, our business will
suffer. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">IF WE ARE UNABLE TO RESPOND TO THE RAPID
CHANGES IN OUR INDUSTRY AND CHANGES IN OUR CUSTOMERS' REQUIREMENTS AND
PREFERENCES, OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS COULD
BE ADVERSELY AFFECTED. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">If we are unable, for technological, legal,
financial or other reasons, to adapt in a timely manner to changing market
conditions or customer requirements, we could lose customers and market share.
The electronic security systems industry is characterized by rapid technological
change. Sudden changes in customer requirements and preferences, the frequent
introduction of new products and services embodying new technologies and the
emergence of new industry standards and practices could render our existing
products, services and systems obsolete. The emerging nature of products and
services in the electronic security systems industry and their rapid evolution
will require that we continually improve the performance, features and
reliability of our products and services. Our success will depend, in part, on
our ability to: </font></p>
<ul>
  <li>
  <p align="justify" style="margin-left: 30; margin-bottom: 10; line-height:13pt"><font size="2">
  enhance our existing products and services; </font></li>
  <li>
  <p align="justify" style="margin-left: 30; margin-bottom: 10; line-height:13pt"><font size="2">
  anticipate changing customer requirements by designing, developing, and
  launching new products and services that address the increasingly
  sophisticated and varied needs of our current and prospective customers; and
  </font></li>
  <li>
  <p align="justify" style="margin-left: 30; margin-bottom: 10; line-height:13pt"><font size="2">
  respond to technological advances and emerging industry standards and
  practices on a cost-effective and timely basis. </font></li>
</ul>
<p align="justify" style="line-height: 13pt"><font size="2">The development of additional products and
services involves significant technological and business risks and requires
substantial expenditures and lead time. If we fail to introduce products with
new technologies in a timely manner, or adapt our products to these new
technologies, our business, financial condition and results of operations could
be adversely affected. We cannot assure you that even if we are able to
introduce new products or adapt our products to new technologies that our
products will gain acceptance among our customers. In addition, from time to
time, we or our competitors may announce new products, product enhancements or
technological innovations that have the potential to replace or shorten the life
cycles of our existing products and that may cause customers to refrain from
purchasing our existing products, resulting in inventory obsolescence. </font>
</p>
</font>
<p align="center"><font face="Times New Roman" size="2">9</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<font FACE="Times New Roman">
<p align="justify" style="line-height: 13pt"><font size="2">WE MAY NOT BE ABLE TO MAINTAIN OR IMPROVE OUR
COMPETITIVE POSITION BECAUSE OF STRONG COMPETITION IN THE SECURITY AND
SURVEILLANCE INDUSTRY, AND WE EXPECT THIS COMPETITION TO CONTINUE TO INTENSIFY.
</font></p>
<p align="justify" style="line-height: 13pt"><font size="2">The Chinese security and surveillance industry
is highly competitive. There are about 15,000 companies in China that engage in
the business of manufacturing, designing and building surveillance and security
products. In addition, since China joined the World Trade Organization, &quot;WTO,&quot;
we also face competition from international competitors. Some of our
international competitors are larger than us and possess greater name
recognition, assets, personnel, sales and financial resources. These entities
may be able to respond more quickly to changing market conditions by developing
new products and services that meet customer requirements or are otherwise
superior to our products and services and may be able to more effectively market
their products than we can because they have significantly greater financial,
technical and marketing resources than we do. They may also be able to devote
greater resources than we can to the development, promotion and sale of their
products. Increased competition could require us to reduce our prices, result in
our receiving fewer customer orders, and result in our loss of market share. We
cannot assure you that we will be able to distinguish ourselves in a competitive
market. To the extent that we are unable to successfully compete against
existing and future competitors, our business, operating results and financial
condition could be materially adversely affected. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">OUR BUSINESS AND REPUTATION AS A MANUFACTURER
OF HIGH QUALITY SECURITY AND SURVEILLANCE PRODUCTS MAY BE ADVERSELY AFFECTED BY
PRODUCT DEFECTS OR SUBSTANDARD PERFORMANCE. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">We believe that we offer high quality products
that are reliable and competitively priced. If our products do not perform to
specifications, we might be required to redesign or recall those products or pay
substantial damages. Such an event could result in significant expenses, disrupt
sales and affect our reputation and that of our products. In addition, product
defects could result in substantial product liability. We do not have product
liability insurance. If we face significant liability claims, our business,
financial condition, and results of operations would be adversely affected.
</font></p>
<p align="justify" style="line-height: 13pt"><font size="2">OUR PRODUCT OFFERINGS INVOLVE A LENGTHY SALES
CYCLE AND WE MAY NOT ANTICIPATE SALES LEVELS APPROPRIATELY, WHICH COULD IMPAIR
OUR PROFITABILITY. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">Some of our products and services are designed
for medium to large commercial, industrial and government facilities desiring to
protect valuable assets and/or prevent intrusion into high security facilities
in China. Given the nature of our products and the customers that purchase them,
sales cycles can be lengthy as customers conduct intensive investigations and
deliberate between competing technologies and providers. For these and other
reasons, the sales cycle associated with some of our products and services is
typically lengthy and subject to a number of significant risks over which we
have little or no control. If sales in any period fall significantly below
anticipated levels, our financial condition and results of operations could
suffer. </font></p>
<i><b>
<p align="justify" style="line-height: 13pt"><font size="2">RISKS RELATED TO DOING BUSINESS IN CHINA
</font></p>
</b></i>
<p align="justify" style="line-height: 13pt"><font size="2">ECONOMIC, POLITICAL, LEGAL AND SOCIAL
UNCERTAINTIES IN CHINA COULD HARM OUR FUTURE INTERESTS IN CHINA. </font></p>
</font>
<p align="center"><font face="Times New Roman" size="2">10</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<font FACE="Times New Roman">
<p align="justify" style="line-height: 13pt"><font size="2">All of our future business projects and plans
are expected to be located in China. As a consequence, the economic, political,
legal and social conditions in China could have an adverse effect on our
business, results of operations and financial condition. The legislative trend
in China over the past decade has been to enhance the protection afforded to
foreign investment and to allow for more active control by foreign parties of
foreign invested enterprises. There can be no assurance, however, that
legislation directed towards promoting foreign investment will continue. More
restrictive rules on foreign investment could adversely affect our ability to
expand our operations in China or repatriate any profits earned there. Some of
the changes that could adversely affect us include: </font></p>
<ul>
  <li>
  <p align="justify" style="margin-left: -20; margin-bottom: 10; line-height:13pt"><font size="2">
  level of government involvement in the economy; </font></li>
  <li>
  <p align="justify" style="margin-left: -20; margin-bottom: 10; line-height:13pt"><font size="2">
  control of foreign exchange; </font></li>
  <li>
  <p align="justify" style="margin-left: -20; margin-bottom: 10; line-height:13pt"><font size="2">
  methods of allocating resources; </font></li>
  <li>
  <p align="justify" style="margin-left: -20; margin-bottom: 10; line-height:13pt"><font size="2">
  balance of payments position; </font></li>
  <li>
  <p align="justify" style="margin-left: -20; margin-bottom: 10; line-height:13pt"><font size="2">
  international trade restrictions; and</font></li>
  <li>
  <p align="justify" style="margin-left: -20; margin-bottom: 10; line-height:13pt"><font size="2">
  international conflict.&nbsp; </font></li>
</ul>
<p align="justify" style="line-height: 13pt"><font size="2">The Chinese economy differs from the economies
of most countries belonging to the Organization for Economic Cooperation and
Development, or &quot;OECD,&quot; in many ways. As a result of these differences, we may
not develop in the same way or at the same rate as might be expected if the
Chinese economy were similar to those of the OECD member countries. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">THE LEGAL ENVIRONMENT IN CHINA IS UNCERTAIN
AND YOUR ABILITY TO LEGALLY PROTECT YOUR INVESTMENT COULD BE LIMITED. </font>
</p>
<p align="justify" style="line-height: 13pt"><font size="2">The Chinese legal system is a civil law system
based on written statutes. Unlike common law systems, it is a system in which
precedents set in earlier legal cases are not generally used. The overall effect
of legislation enacted over the past 20 years has been to enhance the
protections afforded to foreign-owned enterprises in China. However, these laws,
regulations and legal requirements are relatively recent and are evolving
rapidly, and their interpretation and enforcement involve uncertainties. For
example, on March 16, 2007, PRC adopted new property and corporate income tax
laws and the implications of these new laws are uncertain as of the date of this
prospectus. These uncertainties could limit the legal protections available to
foreign investors, such as the right of foreign-invested enterprises to hold
licenses and permits such as requisite business licenses. In addition, all of
our executive officers and our directors are residents of China and not of the
United States, and substantially all the assets of these persons are located
outside the United States. As a result, it could be difficult for investors to
effect service of process in the United States, or to enforce a judgment
obtained in the United States against us or any of these persons. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">THE CHINESE GOVERNMENT EXERTS SUBSTANTIAL
INFLUENCE OVER THE MANNER IN WHICH WE MUST CONDUCT OUR BUSINESS ACTIVITIES.
</font></p>
<p align="justify" style="line-height: 13pt"><font size="2">China only recently has permitted provincial
and local economic autonomy and private economic activities. The Chinese
government has exercised and continues to exercise substantial control over
virtually every sector of the Chinese economy through regulation and state
ownership. Our ability to operate in China may be harmed by changes in its laws
and regulations, including those relating to taxation, import and export
tariffs, environmental regulations, land use rights, property and other matters.
We believe that our operations in China are in material compliance with all
applicable legal and regulatory requirements. However, the central or local
governments of these jurisdictions may impose new, stricter regulations or
interpretations of existing regulations that would require additional
expenditures and efforts on our part to ensure our compliance with such
regulations or interpretations. </font></p>
</font>
<p align="center"><font face="Times New Roman" size="2">11</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<font FACE="Times New Roman">
<p align="justify" style="line-height: 13pt"><font size="2">Accordingly, government actions in the future,
including any decision not to continue to support recent economic reforms and to
return to a more centrally planned economy, or regional or local variations in
the implementation of economic policies, could have a significant effect on
economic conditions in China or particular regions thereof, and could require us
to divest ourselves of any interest we then hold in Chinese properties or joint
ventures. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">FUTURE INFLATION IN CHINA MAY INHIBIT OUR
ACTIVITY TO CONDUCT BUSINESS IN CHINA. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">In recent years, the Chinese economy has
experienced periods of rapid expansion and widely fluctuating rates of
inflation. During the past ten years, the rate of inflation in China has been as
high as 20.7% and as low as -2.2%. These factors have led to the adoption by the
Chinese government, from time to time, of various corrective measures designed
to restrict the availability of credit or regulate growth and contain inflation.
High inflation may in the future cause the Chinese government to impose controls
on credit and/or prices, or to take other action, which could inhibit economic
activity in China, and thereby harm the market for our products. </font></p>
<p ALIGN="justify" style="line-height: 13pt"><font size="2">WE MAY BE UNABLE TO COMPLETE A BUSINESS
COMBINATION TRANSACTION EFFECTIVELY OR ON FAVORABLE TERMS DUE TO COMPLICATED
MERGER AND ACQUISITION REGULATIONS IMPLEMENTED ON SEPTEMBER 8, 2006. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">On September 8, 2006, the PRC Ministry of
Commerce, or &quot;MOFCOM,&quot; together with several other government agencies,
promulgated a comprehensive set of regulations governing the approval process by
which a Chinese company may participate in an acquisition of its assets or its
equity interests and by which a Chinese company may obtain public trading of its
securities on a securities exchange outside of the PRC. Depending on the
structure of the transaction, these regulations will require the Chinese parties
to make a series of applications and supplemental applications to the
governmental agencies. In some instances, the application process may require
the presentation of economic data concerning a transaction, including appraisals
of the target business and evaluations of the acquirer, which are designed to
allow the government to assess the transaction. Governmental approvals will have
expiration dates by which a transaction must be completed and reported to the
governmental agencies. Compliance with the new regulations is likely to be more
time consuming and expensive than in the past and the government now can exert
more control over the combination of two businesses. Accordingly, due to these
new regulations, our ability to engage in business combination transactions has
become significantly more complicated, time consuming and expensive and we may
not be able to negotiate a transaction that is acceptable to our stockholders or
sufficiently protect their interests in a transaction.</font><i><b><font size="2">
</font></b></i></p>
<p align="center"><font size="2">12</font></p>
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<font FACE="Times New Roman">
<p align="justify" style="line-height: 13pt"><font size="2">The new regulations allow PRC government
agencies to assess the economic terms of a business combination transaction.
Parties to a business combination transaction may have to submit to MOFCOM and
the other government agencies an appraisal report, an evaluation report and the
acquisition agreement, all of which form part of the application for approval,
depending on the structure of the transaction. The regulations also prohibit a
transaction at an acquisition price obviously lower than the appraised value of
the Chinese business or assets and in certain transaction structures, require
that consideration must be paid within defined periods, generally not in excess
of a year. The regulations also limit our ability to negotiate various terms of
the acquisition, including aspects of the initial consideration, contingent
consideration, holdback provisions, indemnification provisions and provisions
relating to the assumption and allocation of assets and liabilities. Transaction
structures involving trusts, nominees and similar entities are prohibited.
Therefore, such regulations may impede our ability to negotiate and complete a
business combination transaction on financial terms which satisfy our investors
and protect our stockholders' economic interests and we may not be able to
negotiate a business combination transaction on terms favorable to our
stockholders. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">In addition to the above risks, in many
instances, we will seek to structure transactions in a manner that avoids the
need to make applications or a series of applications with Chinese regulatory
authorities under these M&amp;A regulations. If we fail to effectively structure an
acquisition in a manner that avoids the need for such applications or if the
Chinese government interprets the requirements of the M&amp;A regulations in a
manner different from our understanding of such regulations, then acquisitions
that we have effected may be unwound or subject to rescission. Also, if the
Chinese government determines that our structure of any of our acquisitions does
not comply with these new regulations, then we may also be subject to fines and
penalties. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">RESTRICTIONS ON CURRENCY EXCHANGE MAY LIMIT
OUR ABILITY TO RECEIVE AND USE OUR REVENUES EFFECTIVELY. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">The majority of our revenues will be settled
in RMB, and any future restrictions on currency exchanges may limit our ability
to use revenue generated in RMB to fund any future business activities outside
China or to make dividend or other payments in U.S. dollars. Although the
Chinese government introduced regulations in 1996 to allow greater
convertibility of the RMB for current account transactions, significant
restrictions still remain, including the restriction that foreign-invested
enterprises may only buy, sell or remit foreign currencies after providing valid
commercial documents, and only at those banks in China authorized to conduct
foreign exchange business. In addition, conversion of RMB for capital account
items, including direct investment and loans, is subject to governmental
approval in China, and companies are required to open and maintain separate
foreign exchange accounts for capital account items. We cannot be certain that
the Chinese regulatory authorities will not impose more stringent restrictions
on the convertibility of the RMB. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">THE VALUE OF OUR SECURITIES WILL BE AFFECTED
BY THE FOREIGN EXCHANGE RATE BETWEEN THE U.S. DOLLARS AND RENMINBI. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">The value of our common stock will be affected
by the foreign exchange rate between U.S. dollars and RMB, and between those
currencies and other currencies in which our sales may be denominated. For
example, to the extent that we need to convert U.S. dollars into RMB for our
operational needs, should the RMB appreciate against the U.S. dollar at that
time, our financial position, the business of our Company, and the price of our
common stock may be harmed. Conversely, if we decide to convert our RMB into
U.S. dollars for the purpose of declaring dividends on our common stock or for
other business purposes, should the U.S. dollar appreciate against the RMB, the
U.S. dollar equivalent of our earnings from our subsidiaries in China would be
reduced. </font></p>
<p align="center"><font size="2">13</font></p>
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<font FACE="Times New Roman">
<p align="justify" style="line-height: 13pt"><font size="2">ACCOUNTING LAWS IN CHINA MANDATE ACCOUNTING
PRACTICES WHICH MAY NOT BE CONSISTENT WITH U.S. GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES AND THEREFORE OUR FINANCIALS AND THEIR INTERPRETATION INVOLVE
UNCERTAINTIES. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">The PRC accounting laws require an annual
&quot;statutory audit&quot; to be performed in accordance with PRC accounting standards
and the books of foreign invested enterprises to be maintained in accordance
with Chinese accounting laws. These Chinese accounting practices which may not
be consistent with U.S. generally accepted accounting principles. Article 14 of
the PRC 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. Noncompliance with such requirements
may cause revocation of our business license. The translation of the financial
statements from the requirements of the PRC to US GAAP, requires interpretation
and exercise of judgment. </font></p>
<i><b>
<p align="justify" style="line-height: 13pt"><font size="2">RISKS RELATED TO OUR COMMON STOCK AND THIS
OFFERING </font></p>
</b></i>
<p ALIGN="JUSTIFY" style="line-height: 13pt"><font size="2">OUR COMMON STOCK IS CURRENTLY QUOTED ONLY ON
THE OTC BULLETIN BOARD, WHICH MAY HAVE AN UNFAVORABLE IMPACT ON STOCK PRICE AND
LIQUIDITY. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">Our common stock is quoted only on the OTCBB.
The OTCBB is a significantly more limited market than the New York Stock
Exchange or NASDAQ system. The quotation of our shares on the OTCBB may result
in a less liquid market available for existing and potential stockholders to
trade shares of the common stock, could depress the trading price of the common
stock and could have a long-term adverse impact on our ability to raise capital
in the future. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">PROVISIONS IN OUR CERTIFICATE OF INCORPORATION
AND BYLAWS OR DELAWARE LAW MIGHT DISCOURAGE, DELAY OR PREVENT A CHANGE OF
CONTROL OF OUR COMPANY OR CHANGES IN ITS MANAGEMENT AND, THEREFORE DEPRESS THE
TRADING PRICE OF THE COMMON STOCK. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">Delaware corporate law and our certificate of
incorporation and bylaws contain provisions that could discourage, delay or
prevent a change in control of our Company or changes in its management that our
stockholders may deem advantageous. These provisions: </font></p>
<ul>
  <li>
  <p align="justify" style="margin-left: -20; margin-bottom: 10; line-height:13pt"><font size="2">
  deny holders of our common stock cumulative voting rights in the election of
  directors, meaning that stockholders owning a majority of our outstanding
  shares of common stock will be able to elect all of our directors; </font>
  </li>
  <li>
  <p align="justify" style="margin-left: -20; margin-bottom: 10; line-height:13pt"><font size="2">
  any stockholder wishing to properly bring a matter before a meeting of
  stockholders must comply with specified procedural and advance notice
  requirements; and </font></li>
  <li>
  <p align="justify" style="margin-left: -20; margin-bottom: 10; line-height:13pt"><font size="2">
  any vacancy on the Board of Directors, however the vacancy occurs, may only be
  filled by the directors. </font></li>
</ul>
<p align="justify" style="line-height: 13pt"><font size="2">In addition, Section 203 of the Delaware
General Corporation Law generally limits our ability to engage in any business
combination with certain persons who own 15% or more of our outstanding voting
stock or any of our associates or affiliates who at any time in the past three
years have owned 15% or more of our outstanding voting stock. These provisions
may have the effect of entrenching our management team and may deprive you of
the opportunity to sell your shares to potential acquirors at a premium over
prevailing prices. This potential inability to obtain a control premium could
reduce the price of our common stock. </font></p>
<p align="center"><font size="2">14</font></p>
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<font FACE="Times New Roman">
<p align="justify" style="line-height: 13pt"><font size="2">THE PRICE OF OUR COMMON STOCK MAY BE VOLATILE
AND MAY BE AFFECTED BY MARKET CONDITIONS BEYOND OUR CONTROL. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">Our share price is likely to fluctuate in the
future because of the volatility of the stock market in general and a variety of
factors, many of which are beyond our control, including: </font></p>
</font><font FACE="Symbol MT" LANG="JA">
<ul>
  <li>
  <p align="left" style="margin-left: 30; margin-bottom: 10; line-height:13pt"></font>
  <font size="2" FACE="Times New Roman">quarterly variations in actual or
  anticipated results of our operations; </font></li>
  <li>
  <p align="left" style="margin-left: 30; margin-bottom: 10; line-height:13pt">
  <font size="2" FACE="Times New Roman">changes in financial estimates by
  securities analysts; </font></li>
  <li>
  <p align="left" style="margin-left: 30; margin-bottom: 10; line-height:13pt">
  <font size="2" FACE="Times New Roman">actions or announcements by us or our
  competitors; </font></li>
  <li>
  <p align="left" style="margin-left: 30; margin-bottom: 10; line-height:13pt">
  <font size="2" FACE="Times New Roman">regulatory actions; </font></li>
  <li>
  <p align="left" style="margin-left: 30; margin-bottom: 10; line-height:13pt">
  <font size="2" FACE="Times New Roman">litigation; </font></li>
  <li>
  <p align="left" style="margin-left: 30; margin-bottom: 10; line-height:13pt">
  <font size="2" FACE="Times New Roman">additions or departures of key
  personnel; and </font></li>
  <li>
  <p align="left" style="margin-left: 30; margin-bottom: 10; line-height:13pt">
  <font FACE="Times New Roman"><font size="2">future sales of our common stock.
  </font></li>
</ul>
<p align="justify" style="line-height: 13pt"><font size="2">Market fluctuations could result in volatility
in the price of shares of our common stock, which could cause a decline in the
value of your investment. In addition, if our operating results fail to meet the
expectations of stock analysts or investors, we may experience an immediate and
significant decline in the trading price of our common stock. </font></p>
<p align="left" style="line-height: 13pt"><font size="2">WE DO NOT INTEND TO PAY DIVIDENDS FOR THE
FORESEEABLE FUTURE. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">For the foreseeable future, we intend to
retain any earnings to finance the development and expansion of our business,
and we do not anticipate paying any cash dividends on our common stock.
Accordingly, investors must be prepared to rely on sales of their common stock
after price appreciation to earn an investment return, which may never occur.
Investors seeking cash dividends should not purchase our common stock. Any
determination to pay dividends in the future will be made at the discretion of
our board of directors and will depend on our results of operations, financial
condition, contractual restrictions, restrictions imposed by applicable law and
other factors our board deems relevant. See &quot;Dividend Policy.&quot; </font></p>
<b>
<p align="center" style="line-height: 13pt"><font size="2">SPECIAL NOTE REGARDING <br>
FORWARD-LOOKING STATEMENTS </font></p>
</b>
<p align="justify" style="line-height: 13pt"><font size="2">We have made statements under the captions
&quot;Prospectus Summary,&quot; &quot;Risk Factors,&quot; &quot;Management's Discussion and Analysis of
Financial Condition and Results of Operations,&quot; and &quot;Business&quot; and in other
sections of this prospectus that are forward-looking statements. In some cases,
you can identify these statements by forward-looking words such as &quot;may,&quot;
&quot;might,&quot; &quot;will,&quot; &quot;should,&quot; &quot;expect,&quot; &quot;plan,&quot; &quot;anticipate,&quot; &quot;believe,&quot;
&quot;estimate,&quot; &quot;predict,&quot; &quot;potential,&quot; or &quot;continue,&quot; the negative of these terms,
and other comparable terminology, although not all forward-looking statements
contain these identifying words. These forward-looking statements, which are
subject to risks, uncertainties, and assumptions, may include projections of our
future financial performance based on our growth strategies and anticipated
trends in our business. These statements are only predictions based on our
current expectations and projections about future events. There are important
factors that could cause our actual results, level of activity, performance, or
achievements to differ materially from the results, level of activity,
performance, or achievements expressed or implied by the forward-looking
statements. Those factors include, but are not limited to, our ability to
attract new customers, changes in demand for our products and services, changes
in the security and surveillance industry, our ability to develop new products
and services, competitive pressures, risks associated with the integration of
acquisitions, changes in laws and regulations governing our business and the
other factors discussed under the caption &quot;Risk Factors.&quot; </font></p>
<p align="center"><font size="2">15</font></p>
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<font FACE="Times New Roman">
<p align="justify" style="line-height: 13pt"><font size="2">Although we believe the expectations reflected
in the forward-looking statements are reasonable, we cannot guarantee future
results, level of activity, performance, or achievements. Moreover, neither we
nor any other person assumes responsibility for the accuracy or completeness of
any of these forward-looking statements. You should not rely upon
forward-looking statements as predictions of future events. We are under no duty
to update any of these forward-looking statements after the date of this
prospectus to conform our prior statements to actual results or revised
expectations. </font></p>
<b>
<p align="center"><font size="2">USE OF PROCEEDS </font></p>
</b>
<p align="justify" style="line-height: 13pt"><font size="2">The proceeds from the sale of the shares of
our common stock being offered by the selling stockholders pursuant to this
prospectus will belong to the selling stockholders. We will not receive proceeds
from the sales of our common stock by the selling stockholders. </font></p>
<b>
<p align="center"><font size="2">DETERMINATION OF OFFERING PRICE </font></p>
</b>
<p align="justify" style="line-height: 13pt"><font size="2">The selling stockholders will determine at
what price they may sell the offered shares, and such sales may be made at
prevailing market prices or at privately negotiated prices. </font></p>
<b>
<p align="center"><font size="2">DIVIDEND POLICY </font></p>
</b>
<p align="justify" style="line-height: 13pt"><font size="2">We have never declared or paid cash dividends.
Any future decisions regarding dividends will be made by our Board of Directors.
We currently intend to retain and use any future earnings for the development
and expansion of our business and do not anticipate paying any cash dividends in
the foreseeable future. </font></p>
<b>
<p align="center"><font size="2">MARKET FOR OUR COMMON STOCK AND RELATED
STOCKHOLDER MATTERS </font></p>
</b>
<p align="justify" style="line-height: 13pt"><font size="2">Our common stock has been quoted on the OTCBB
since June 2005 and currently trades under the symbol &quot;CSCT.OB.&quot; The CUSIP
number is 16942J105. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">The following table sets forth the quarterly
high and low bid prices of a share of our common stock as reported by the OTCBB
for the periods indicated. The quotations listed below reflect inter-dealer
prices, without retail mark-ups, mark-downs or commissions and may not
necessarily represent actual transactions. </font></p>
<p align="center"><font size="2">16</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p align="justify">&nbsp;</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="70%">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="30%" align="center" colspan="2" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2">Closing Bid Prices<sup>(1)</sup></font></td>
  </tr>
  <tr>
    <td WIDTH="70%">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2">High</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2">Low</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2"><i><b>
    <p style="margin-left: 30">Year Ending December 31, 2007</b></i></font></td>
    <td WIDTH="15%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="70%"><font FACE="Times New Roman" size="2">
    <p style="margin-left: 30">1st Quarter</font></td>
    <td WIDTH="15%" align="right"><font FACE="Times New Roman" size="2">$16.50</font></td>
    <td WIDTH="15%" align="right"><font FACE="Times New Roman" size="2">$11.75</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">
    <p style="margin-left: 30">2nd Quarter (as of April 26, 2007)</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">17.90</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">16.20</font></td>
  </tr>
  <tr>
    <td WIDTH="70%">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="70%" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2"><i><b>
    <p style="margin-left: 30">Year Ended December 31, 2006</b></i></font></td>
    <td WIDTH="15%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="70%"><font FACE="Times New Roman" size="2">
    <p style="margin-left: 30">1st Quarter</font></td>
    <td WIDTH="15%" align="right"><font FACE="Times New Roman" size="2">4.40</font></td>
    <td WIDTH="15%" align="right"><font FACE="Times New Roman" size="2">3.50</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">
    <p style="margin-left: 30">2nd Quarter</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">8.10</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">3.60</font></td>
  </tr>
  <tr>
    <td WIDTH="70%"><font FACE="Times New Roman" size="2">
    <p style="margin-left: 30">3rd Quarter</font></td>
    <td WIDTH="15%" align="right"><font FACE="Times New Roman" size="2">6.70</font></td>
    <td WIDTH="15%" align="right"><font FACE="Times New Roman" size="2">4.00</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">
    <p style="margin-left: 30">4th Quarter</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">12.10</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">7.05</font></td>
  </tr>
  <tr>
    <td WIDTH="70%">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="70%" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2"><i><b>
    <p style="margin-left: 30">Year Ended December 31, 2005</b></i></font></td>
    <td WIDTH="15%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="70%"><font FACE="Times New Roman" size="2">
    <p style="margin-left: 30">1st Quarter</font></td>
    <td WIDTH="15%" align="right"><font FACE="Times New Roman" size="2">N/A</font></td>
    <td WIDTH="15%" align="right"><font FACE="Times New Roman" size="2">N/A</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">
    <p style="margin-left: 30">2nd Quarter</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">0.25</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">0.05</font></td>
  </tr>
  <tr>
    <td WIDTH="70%"><font FACE="Times New Roman" size="2">
    <p style="margin-left: 30">3rd Quarter</font></td>
    <td WIDTH="15%" align="right"><font FACE="Times New Roman" size="2">4.50</font></td>
    <td WIDTH="15%" align="right"><font FACE="Times New Roman" size="2">0.05</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">
    <p style="margin-left: 30" align="left">4th Quarter</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">
    <p>3.00</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">
    <p>1.85</font></td>
  </tr>
</table>
<font FACE="Times New Roman">
<p align="left"><font size="2">__________________ </font></p>
<p align="justify"><font size="2">(1) The above tables set forth the range of
high and low closing bid prices per share of our common stock as reported by
www.quotemedia.com for the periods indicated. </font></p>
<i><b>
<p align="justify"><font size="2">Approximate Number of Holders of Our Common
Stock </font></p>
</b></i>
<p align="justify"><font size="2">On April 26, 2007, there were approximately
1518<b> </b>stockholders of record of our common stock. This number excludes
shares of our common stock owned by stockholders holding stock under nominee
security position listings. </font></p>
<i><b>
<p align="justify"><font size="2">Reports to Stockholders </font></p>
</b></i>
<p align="justify"><font size="2">We plan to furnish our stockholders with an
annual report for each fiscal year ending December 31 containing financial
statements audited by our independent certified public accountants.
Additionally, we may, in our sole discretion, issue unaudited quarterly or other
interim reports to our stockholders when we deem appropriate. We intend to
maintain compliance with the periodic reporting requirements of the Exchange
Act. </font></p>
<b>
<p align="center"><font size="2">DILUTION </font></p>
</b>
<p align="justify"><font size="2">Our net tangible book value as of December 31,
2006 was $2.84 per share of common stock. Net tangible book value is determined
by dividing our tangible book value (total assets less intangible assets
including know-how, trademarks and patents and</font></font><font FACE="Times New Roman" size="2"><b>
</b>less</font><font FACE="Times New Roman"><font size="2"><b> </b>total
liabilities) by the number of outstanding shares of our common stock. Since this
offering is being made solely by the selling stockholders and none of the
proceeds will be paid to us, our net tangible book value will be unaffected by
this offering. </font></p>
<b>
<p align="center"><font size="2">SELECTED CONSOLIDATED FINANCIAL DATA</font></b><font size="2">
</font></p>
<p align="justify"><font size="2">The following selected consolidated financial
data should be read in conjunction with our consolidated financial statements
and the related notes, and with &quot;Management's Discussion and Analysis of
Financial Condition and Results of Operations,&quot; included elsewhere in this
prospectus. The statement of operations data for the years ended December 31,
2004, 2005 and 2006, and the balance sheet data as of December 31, 2004, 2005
and 2006, are derived from, and are qualified by reference to, our audited
consolidated financial statements that have been audited by GHP Horwath, P.C.
and Child, Van Wagoner &amp; Bradshaw, PLLC., independent registered public
accounting firms, and that are included in this prospectus. The statement of
operations data for the fiscal years ended December 31, 2003 and the balance
sheet data as of December 31, 2003 are derived from our audited consolidated
financial statements that are not included in this prospectus. The statement of
operations data for the fiscal years ended December 31, 2002 and the balance
sheet data as of December 31, 2002 are derived from our unaudited consolidated
financial statements that are not included in this prospectus. </font></p>
<p align="center"><font size="2">17</font></p>
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<font FACE="Times New Roman">
<p><font size="2">The unaudited consolidated financial statements include all
adjustments, consisting only of normal recurring adjustments, that we consider
necessary for the fair presentation of our financial position and results of
operations for these periods. Historical results are not necessarily indicative
of the results to be expected in the future. </font></p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="3">
  <tr>
    <td WIDTH="25%">
    <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
    <td WIDTH="76%" align="right" colspan="14">
    <p align="center"><u><font FACE="Times New Roman" size="2"><b>Year Ended
    December 31,</b></font></u></td>
  </tr>
  <tr>
    <td WIDTH="25%">
    <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
    <td WIDTH="3%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%">
    <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
    <td WIDTH="3%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <p style="margin-right: 4">
    <font FACE="Times New Roman" size="2"><b>2006</b></font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <p style="margin-right: 4">
    <font FACE="Times New Roman" size="2"><b>2005</b></font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <p style="margin-right: 4">
    <font FACE="Times New Roman" size="2"><b>2004</b></font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <p style="margin-right: 4">
    <font FACE="Times New Roman" size="2"><b>2003</b></font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <p style="margin-right: 4">
    <font FACE="Times New Roman" size="2"><b>2002</b></font></td>
  </tr>
  <tr>
    <td WIDTH="25%">
    <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
    <td WIDTH="3%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%">
    <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
    <td WIDTH="76%" align="right" colspan="14" valign="bottom">
    <p align="center" style="margin-right: 4"><font FACE="Times New Roman" size="2"><b>(in thousands,
    except per share data)</b></font></td>
  </tr>
  <tr>
    <td WIDTH="25%">
    <p style="text-indent: -26; margin-left: 26"><font FACE="Times New Roman" size="2"><b>Statement of
    operations data:</b></font></td>
    <td WIDTH="3%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%">
    <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
    <td WIDTH="3%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6">
    <p style="text-indent: -26; margin-left: 26"><font FACE="Times New Roman" size="2">
    Revenue</font></td>
    <td WIDTH="3%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="13%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">&nbsp;106,989</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">32,688</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">16,056</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">11,795</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">10,331</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">
    <p style="text-indent: -26; margin-left: 26"><font FACE="Times New Roman" size="2">Cost of Sales</font></td>
    <td WIDTH="3%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">75,976</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">23,473</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">8,796</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">7,581</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">7,030</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6">
    <p style="text-indent: -26; margin-left: 26"><font FACE="Times New Roman" size="2">Gross profit</font></td>
    <td WIDTH="3%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">31,013</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">9,215</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">7,260</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">4,214</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">3,301</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">
    <p style="text-indent: -26; margin-left: 26"><font FACE="Times New Roman" size="2">Other income</font></td>
    <td WIDTH="3%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">1,586</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">568</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">466</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">7</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">30</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6">
    <p style="text-indent: -26; margin-left: 26"><font FACE="Times New Roman" size="2">Operating expenses:</font></td>
    <td WIDTH="3%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">5,779</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">1,737</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">1,129</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">952</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">1,097</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">
    <p style="text-indent: -26; margin-left: 26"><font FACE="Times New Roman" size="2">Income from continuing operations before
    taxes</font></td>
    <td WIDTH="3%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">26,820</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">8,046</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">6,597</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">3,269</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">2,234</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6">
    <p style="text-indent: -26; margin-left: 26"><font FACE="Times New Roman" size="2">Income taxes</font></td>
    <td WIDTH="3%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">3,889</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">780</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">873</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">517</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">335</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">
    <p style="text-indent: -26; margin-left: 26"><font FACE="Times New Roman" size="2">Net income</font></td>
    <td WIDTH="3%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">22,931</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">7,266</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">5,724</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">2,752</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">1,899</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6">
    <p style="text-indent: -26; margin-left: 26"><font FACE="Times New Roman" size="2">Earnings per share -
    basic</font></td>
    <td WIDTH="3%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="13%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">0.88</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">0.39</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">0.34</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">0.16</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">0.11</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">
    <p style="text-indent: -26; margin-left: 26"><font FACE="Times New Roman" size="2">Earnings per share -
    diluted</font></td>
    <td WIDTH="3%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">0.85</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">0.39</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">0.34</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">0.16</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">0.11</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6">
    <p style="text-indent: -26; margin-left: 26"><font FACE="Times New Roman" size="2">Weighted average
    number of shares outstanding &#151;
    basic</font></td>
    <td WIDTH="3%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">26,052</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">18,521</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">17,000</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">17,000</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">17,000</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">
    <p style="text-indent: -26; margin-left: 26"><font FACE="Times New Roman" size="2">Weighted average
    number of shares outstanding
    &#151;diluted</font></td>
    <td WIDTH="3%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">26,940</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">18,521</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">17,000</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">17,000</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">17,000</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6">
    <p style="text-indent: -26; margin-left: 26"><font FACE="Times New Roman" size="2">Cash dividend declared
    per common share</font></td>
    <td WIDTH="3%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">-</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">-</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">-</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">-</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">-</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">
    <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
    <td WIDTH="3%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%">
    <p style="text-indent: -26; margin-left: 26"><font FACE="Times New Roman" size="2"><b>Cash flows data:</b></font></td>
    <td WIDTH="3%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%">
    <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
    <td WIDTH="3%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6">
    <p style="text-indent: -26; margin-left: 26"><font FACE="Times New Roman" size="2">Net cash flows
    provided by operating activities</font></td>
    <td WIDTH="3%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="13%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">2,984</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">799</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">684</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">1,019</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom"><font FACE="Times New Roman" size="2">(13)</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">
    <p style="text-indent: -26; margin-left: 26"><font FACE="Times New Roman" size="2">Net cash flows used in
    investing activities</font></td>
    <td WIDTH="3%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" valign="bottom"><font FACE="Times New Roman" size="2">(11,168)</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom"><font FACE="Times New Roman" size="2">(79)</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom"><font FACE="Times New Roman" size="2">(110)</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom"><font FACE="Times New Roman" size="2">(676)</font></td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" valign="bottom"><font FACE="Times New Roman" size="2">(2,673)</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6">
    <p style="text-indent: -26; margin-left: 26"><font FACE="Times New Roman" size="2">Net cash flows used in
    financing activities</font></td>
    <td WIDTH="3%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">35,912</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">1,063</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom"><font FACE="Times New Roman" size="2">(1,056)</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4"><font FACE="Times New Roman" size="2">72</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6" valign="bottom"><font FACE="Times New Roman" size="2">(1,629)</font></td>
  </tr>
</table>
<font FACE="Times New Roman">
<p align="center"><font size="2">18</font></p>
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="3">
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="76%" align="right" colspan="14">
    <p align="center"><font FACE="Times New Roman" size="2"><b>December 31,</b></font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="3%" align="right">&nbsp;</td>
    <td WIDTH="13%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="3%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2"><b>2006</b></font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="11%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2"><b>2005</b></font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="11%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2"><b>2004</b></font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="11%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2"><b>2003</b></font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="11%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2"><b>2002</b></font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="3%" align="right">&nbsp;</td>
    <td WIDTH="13%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="76%" align="right" colspan="14">
    <p align="center"><font FACE="Times New Roman" size="2"><b>(in thousands)</b></font></td>
  </tr>
  <tr>
    <td WIDTH="25%"><font FACE="Times New Roman" size="2"><b>Balance sheet data:</b></font></td>
    <td WIDTH="3%" align="right">&nbsp;</td>
    <td WIDTH="13%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">Cash and cash
    equivalents</font></td>
    <td WIDTH="3%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="13%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">30,980
    </font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">2,277</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">33</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">515</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">100</font></td>
  </tr>
  <tr>
    <td WIDTH="25%"><font FACE="Times New Roman" size="2">Working capital</font></td>
    <td WIDTH="3%" align="right">&nbsp;</td>
    <td WIDTH="13%" align="right"><font FACE="Times New Roman" size="2">63,535</font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">20,546</font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">8,494</font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">7,918</font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">5,591</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">Total assets</font></td>
    <td WIDTH="3%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">114,527</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">29,116</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">22,009</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">16,977</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">13,582</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="3%" align="right">&nbsp;</td>
    <td WIDTH="13%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">Total current
    liabilities</font></td>
    <td WIDTH="3%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">22,604</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">4,505</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">5,209</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">5,900</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">4,126</font></td>
  </tr>
  <tr>
    <td WIDTH="25%"><font FACE="Times New Roman" size="2">Long term liability</font></td>
    <td WIDTH="3%" align="right">&nbsp;</td>
    <td WIDTH="13%" align="right"><font FACE="Times New Roman" size="2">2,010</font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">-</font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">-</font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">-</font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">-</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">Total liabilities</font></td>
    <td WIDTH="3%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">24,614</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">4,505</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">5,209</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">5,900</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">4,126</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="3%" align="right">&nbsp;</td>
    <td WIDTH="13%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%"><font FACE="Times New Roman" size="2">Total stockholders'
    equity</font></td>
    <td WIDTH="3%" align="right">&nbsp;</td>
    <td WIDTH="13%" align="right"><font FACE="Times New Roman" size="2">89,819</font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">24,611</font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">16,800</font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">11,077</font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">8,850</font></td>
  </tr>
</table>
<font FACE="Times New Roman">
<p align="justify"><font size="2">The following table sets forth certain
unaudited financial information for each of the eight quarters ended December
31, 2006. The consolidated financial statements for each of these quarters have
been prepared on the same basis as the audited consolidated financial statements
included in this report and, in the opinion of management, include all
adjustments necessary for the fair presentation of the results of operations for
these periods. This information should be read together with our audited
consolidated financial statements and the related notes included elsewhere in
this report. </font></p>
<p align="center"><font size="2">All amounts in thousands of U.S. dollars,
except per share data </font></p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="3">
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2"><b>First</b></font></td>
    <td WIDTH="11%" COLSPAN="2" align="right">
    <font FACE="Times New Roman" size="2"><b>Second</b></font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2"><b>Third</b></font></td>
    <td WIDTH="2%" COLSPAN="2" align="right">
    <font FACE="Times New Roman" size="2"><b>Fourth</b></font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%"><font FACE="Times New Roman" size="2"><b>2006</b></font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2"><b>
    Quarter</b></font></td>
    <td WIDTH="11%" COLSPAN="2" align="right">
    <font FACE="Times New Roman" size="2"><b>Quarter</b></font></td>
    <td WIDTH="11%" COLSPAN="2" align="right">
    <font FACE="Times New Roman" size="2"><b>Quarter</b></font></td>
    <td WIDTH="2%" COLSPAN="2" align="right">
    <font FACE="Times New Roman" size="2"><b>Quarter</b></font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2"><b>Total</b></font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">Revenue</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">14,594</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">8,015</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">43,448</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">40,932</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">106,989</font></td>
  </tr>
  <tr>
    <td WIDTH="25%"><font FACE="Times New Roman" size="2">Gross profit</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">4,397</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">3,037</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">12,862</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">10,717</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">31,013</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">Income before income
    taxes and minority interest</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">4,121</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">2,858</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">11,025</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">8,807</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">26,811</font></td>
  </tr>
  <tr>
    <td WIDTH="25%"><font FACE="Times New Roman" size="2">Net income</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">3,500</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">2,536</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">10,262</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">6,633</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">22,931</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">Basic income per share</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">0.16</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">0.10</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">0.40</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">0.22</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">0.88</font></td>
  </tr>
  <tr>
    <td WIDTH="25%"><font FACE="Times New Roman" size="2">Diluted income per
    share</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">0.16</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">0.10</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">0.39</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">0.20</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">0.85</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%"><font FACE="Times New Roman" size="2"><b>2005</b></font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">Revenues</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">7,252</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">5,477</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">12,536</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">7,423</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">32,688</font></td>
  </tr>
  <tr>
    <td WIDTH="25%"><font FACE="Times New Roman" size="2">Gross profit</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">1,542</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">1,338</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">4,298</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">2,037</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">9,215</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">Income before income
    taxes and minority interest</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">1,716</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">967</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">4,148</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">1,216</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">8,046</font></td>
  </tr>
</table>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="3">
  <tr>
    <td WIDTH="25%"><font FACE="Times New Roman" size="2">Net income</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">2,618</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">1,210</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">3,365</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">73</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">7,266</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">Basic income per share</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">0.15</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">0.07</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">0.16</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">0.01</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">0.39</font></td>
  </tr>
  <tr>
    <td WIDTH="25%"><font FACE="Times New Roman" size="2">Diluted income per
    share</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">0.15</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">0.07</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">0.16</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">0.01</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" size="2">$</font></td>
    <td WIDTH="11%" align="right"><font FACE="Times New Roman" size="2">0.39</font></td>
  </tr>
</table>
<font FACE="Times New Roman">
<p align="center"><font size="2">19</font></p>
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<b><font FACE="Times New Roman" size="2">
<p align="center">MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS </p>
</font><font FACE="Times New Roman"><i>
<p align="justify"><font size="2">Overview</font></i></font></b><font FACE="Times New Roman"><font size="2">
</font></p>
<p align="justify" style="line-height: 13pt"><font size="2">We manufacture, distribute, install and
service security and surveillance products and systems and develop security and
surveillance related software in China. Our customers mainly comprise (i)
governmental entities (including customs agencies, courts, public security
bureaus and prisons), (ii) non-profit organizations (including schools, museums,
sports arenas and libraries) and (iii) commercial entities (including airports,
hotels, real estate, banks, mines, railways, supermarkets and entertainment
venues). These account for approximately 40%, 10% and 50% of revenues,
respectively. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">A majority of our revenue is derived from the
provision of a packaged solution which includes the products, installation and
after sale service maintenance to our customers. Because a majority of our
revenues is derived from the installation of security and surveillance systems
for our customers which are generally non-recurring, our revenues are not
concentrated within any one customer or group of customers. Maintenance services
in our packaged solution are included for the first year from the date of
completion. Our customers have an option to sign up for our maintenance program
after the first year. </font></p>
<p ALIGN="JUSTIFY" style="line-height: 13pt"><font size="2">Our subsidiary Golden has 37 branch offices in
provincial cities, Cheng Feng has 22 distribution points and Hongtianzhi has 53
distribution points throughout China as our customers are located across the
country without any particular concentration in any region. </font></p>
<i>
<p align="justify" style="line-height: 13pt"><u><font size="2">Our Background and History</font></u></i><u><font size="2">
</font></u></p>
<p align="justify" style="line-height: 13pt"><font size="2">We were incorporated in the BVI on April 8,
2002 under the name &quot;Apex Wealth Enterprises Limited&quot; as a corporation under the
International Business Companies Ordinance of 1984. In February 2006, we changed
our name to China Security and Surveillance Technology Inc. In November 2006, we
changed our domicile from the BVI to Delaware by merging the BVI corporation
into a newly incorporated Delaware corporation. Prior to our reverse acquisition
of Safetech in September 2005, we were a development stage enterprise and had
not yet generated any revenues. Prior to the reverse acquisition, we provided
business advisory and management consulting services in greater China, initially
concentrating on the Hong Kong market. The focus of these services was on small
to medium size enterprises. </font></p>
<p align="center"><font size="2">20</font></p>
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<font FACE="Times New Roman" size="2"><font FACE="Times New Roman">
<p align="justify" style="line-height: 13pt">From and after the reverse acquisition, our business became
the business of our indirect, wholly-owned subsidiary, Golden and the newly
acquired subsidiaries Cheng Feng and Hongtianzhi. Golden is a corporation
incorporated in the PRC which is engaged in the business of manufacturing,
distributing, installing and maintaining security and surveillance systems.
Golden was organized in the PRC in January 1995. In 2006, we acquired Cheng Feng,
a corporation incorporated in the PRC which is engaged in the business of
manufacturing, </font>marketing and sales of security and surveillance related
hardware as well as the development and integration of related software. In
April 2007, we acquired Hongtianzhi, a corporation incorporated in the PRC which
is engaged in the business of manufacturing digital cameras. We are
headquartered in Shenzhen, China. </p>
</font><font FACE="Times New Roman"><i>
<p align="justify" style="line-height: 13pt"><u><font size="2">Reverse Acquisition with Safetech </font>
</u></p>
</i>
<p align="justify" style="line-height: 13pt"><font size="2">On September 12, 2005, we acquired 50,000
shares of the issued and outstanding capital stock of Safetech, constituting all
of the issued and outstanding capital stock of Safetech. The 50,000 shares of
Safetech were acquired from the individual shareholders of Safetech in a share
exchange transaction in return for the issuance of 8,138,000 shares of our
common stock. As a result of this transaction, Safetech became our wholly-owned
subsidiary, and Golden became our indirect wholly-owned subsidiary. Completion
of the transaction resulted in a change in control of our Company. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">For accounting purposes, this transaction was
treated as a reverse acquisition, with Safetech as the acquirer and our Company
as the acquired party. </font></p>
<i>
<p align="justify" style="line-height: 13pt"><u><font size="2">Subsequent Acquisitions </font></u></p>
</i>
<p align="justify" style="line-height: 13pt"><font size="2">On October 25, 2005, we entered into an
agreement with the equity owners of Yuan Da, which was subsequently amended in
April and May 2006. Pursuant to the amended agreement, we acquired all of the
assets of Yuan Da for RMB 1 million (approximately $0.125 million) and 200,000
shares of our common stock. Yuan Da is a limited liability company established
in Shenzhen, China and was principally engaged in the sale and development of
security and surveillance systems. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">In July 2006, we entered into an agreement
with shareholders of Cheng Feng to acquire 100% ownership of Cheng Feng for a
consideration of RMB 120 million (approximately $15 million), consisting of RMB
60 million (approximately $7.5 million) in cash and 1,361,748 shares of our
common stock. The operational control of Cheng Feng passed to the Company in
July 2006, we received the relevant Chinese government approval for such
acquisition in December 2006 and all consideration has been paid off as of the
date of this prospectus. Cheng Feng is a company that is engaged in the business
of manufacturing, marketing and sales of security and surveillance related
hardware as well as the development and integration of related software. </font>
</p>
<p align="justify" style="line-height: 13pt"><font size="2">In November 2006, we acquired the security and
surveillance business of the Four-Related Companies, of which our CEO and
director Guoshen Tu owned 80%, 60%, 42% and 90%, respectively. Mr. Tu did not
receive any consideration for the acquisition of his interest in the
Four-Related Companies. The minority shareholders of these four companies and
their designees received in aggregate 850,000 shares of our common stock.
Shenzhen Guangdian is engaged in the business of manufacturing and distributing
security and surveillance products. The other three companies are engaged in the
business of distributing security and surveillance products. </font></p>
<i><b>
<p align="justify" style="line-height: 13pt"><font size="2">Recent Development </font></p>
</b></i>
<p align="justify" style="line-height: 13pt"><font size="2">On February 5, 2007, we entered into a Notes
Purchase Agreement with Citadel Equity Fund Ltd., or &quot;Citadel,&quot; pursuant to
which, on February 8, 2007, we offered and sold to Citadel a $60 million Senior
Notes due February 16, 2007. Such notes were paid off on February 16, 2007.
</font></p>
</font>
<p align="center"><font face="Times New Roman" size="2">21</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<font FACE="Times New Roman">
<p align="justify" style="line-height: 13pt"><font size="2">On February 16, 2007, we completed a Notes
Purchase Agreement with Citadel for a $60 million guaranteed senior unsecured
convertible notes financing. This financing replaced the bridge financing
discussed in the immediate above paragraph. The notes bear an annual interest
rate of 1% and are due in 2012. The notes carry an initial conversion price of
$18 per share. If the notes are not converted before its maturity, the notes
will be redeemed by the Company on the maturity date at a redemption price equal
to 100% of the principal amount of the notes then outstanding plus an additional
amount such that the total amount represents to the holders thereof a gross
yield (including the paid or any accrued and unpaid interest) of 15.0% per
annum, calculated on a quarterly compounded basis, plus any accrued and unpaid
interest. The net proceeds will be used for our working capital and acquisition
plan. Please see our current report on Form 8-K filed on February 16, 2007 for
more details. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">Effective February 7, 2007, our Board of
Directors adopted our 2007 Equity Incentive Plan. The plan provides for grants
of stock options, stock appreciation rights, performance units, restricted
stock, restricted stock units and performance shares. A total of 8,000,000
shares of our common stock may be issued under the plan. The plan has a 5-year
term. On February 27, 2007, we granted an aggregate of 1,052,100 shares of
restricted stock pursuant to the plan to 383 employees and consultants of the
Company. These shares will vest with respect to each of the 383 employees and
consultants over a period of four years. Please see our current reports on Form
8-K filed on February 13, 2007 and March 8, 2007 for more details. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">On April 2, 2007, we entered into an Equity
Transfer Agreement with Safetech and Zheng Huang, the sole owner of Chain Star,
pursuant to which Safetech purchased 100% ownership of Chain Star from Mr.
Huang. Chain Star is a holding company of Hongtianzhi. Pursuant to the terms of
the Equity Transfer Agreement, we will pay total consideration of RMB 250
million (approximately $32.32 million) in exchange for 100% ownership of Chain
Star, consisting of RMB 125 million (approximately USD$16.16 million) in cash
and RMB 125 million (approximately $16.16 million) in the Company's shares of
common stock. Hongtianzhi is engaged in the business of manufacturing digital
cameras. Please see our current report on Form 8-K filed on April 2, 2007 for
more details. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">On April 24, 2007, we completed a Notes
Purchase Agreement with Citadel for a $50 million guaranteed senior unsecured
convertible notes financing. The notes bear an annual interest rate of 1% and
are due in 2012. The notes carry an initial conversion price of $23.6 per share.
If the notes are not converted before their maturity, the notes will be redeemed
by the Company on the maturity date at a redemption price equal to 100% of the
principal amount of the notes then outstanding plus an additional amount such
that the total amount represents to the holders thereof a gross yield (including
the paid or any accrued and unpaid interest) of 15.0% per annum, calculated on a
quarterly compounded basis, plus any accrued and unpaid interest. The net
proceeds will be used for our working capital and acquisition plan. Please see
our current report on Form 8-K filed on April 25, 2007 for more details. </font>
</p>
<i><b>
<p align="justify" style="line-height: 13pt"><font size="2">Material Opportunities and Challenges </font>
</b></i></p>
<p align="justify" style="line-height: 13pt"><font size="2">Regulations promulgated by governmental
agencies in China relating to security and surveillance industry often create
opportunities for us. Currently, there are a number of formal and planned
regulatory drivers which the Company believes offer significant growth
opportunities. These include the estimated $6 billion to $12 billion that the
Chinese government expects to spend for security infrastructure in preparation
for the 2008 Olympics, along with the planned investment by Shanghai for the
2010 Worlds Fair. In addition, several ordinances have been passed by the Chinese government which require security
surveillance systems to be installed in: (1) 660 cities throughout China for
street surveillance as part of the Safe City Project &quot;Plan 3111&quot;; (2) all
entertainment locations starting from March 1, 2006; (3) all Justice Departments
and Courts; and (4) all coal mines in China (currently estimated at 24,000) from
the beginning of 2008. </font>
</p>
</font>
<p align="center"><font face="Times New Roman" size="2">22</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<font FACE="Times New Roman">
<p align="justify" style="line-height: 13pt"><font size="2">We are actively pursuing near-term acquisition
prospects and other strategic opportunities. In the past twelve months, we
successfully acquired Cheng Feng and Hongtianzhi and the security and
surveillance business of the Four-Related Companies. In addition, we have
established an exclusive cooperation relationship with Chuang Guan in 2007 under
which, among other things, Chuang Guan will subcontract or assign certain of its
businesses to our Company to the extent permitted by the applicable PRC laws and
regulations. We also expect to close the acquisitions of HiEasy, Mingking, Tsing,
and Wandai in 2007. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">We have a government policy monitoring group
within the Company that regularly monitors changes in governmental regulations
affecting the security and surveillance industry in China. If we determine that
a new regulation or a change to an existing regulation presents an opportunity
for us, we will actively pursue such opportunity. As a result, we act promptly
on policy changes and are able to turn them into business opportunities. </font>
<b></p>
</b>
<p align="justify" style="line-height: 13pt"><font size="2">We also face the long-term challenge of
maintaining our rapid growth. In addition to maintaining the growth of our
existing businesses, we will employ an acquisition strategy. In addition, to
promote the continued growth of the group, we plan to explore others areas
related to the security and surveillance industry (including, but not limited
to, the fire and alarm sectors, access control, and related security and
surveillance services) and recurring revenue business models within our existing
business sectors. </font></p>
<i><b>
<p align="justify" style="line-height: 13pt"><font size="2">Results of Operations </font></p>
</b></i>
<p align="justify" style="line-height: 13pt"><font size="2">The following table summarizes the results of
the Company's operations during the fiscal years ended December 31, 2006 and
2005 and provides information regarding the dollar and percentage increase or
(decrease) from the 2005 fiscal period to the 2006 fiscal period: </font></p>
<p align="center" style="line-height: 13pt"><font size="2">All amounts, other than percentages, in
millions of U.S. dollars</font></p>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="80%" align="center" style="border-bottom-style: solid; border-bottom-width: 1" colspan="5">
<font FACE="Times New Roman">
    <font FACE="Times New Roman" size="2"><b>Years Ended December 31,</b></font></font></td>
  </tr>
  <tr>
    <td WIDTH="20%" align="left" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="20%" align="center" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="20%" align="center" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="20%" align="center" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" size="2"><b>Increase</b></font></td>
    <td WIDTH="20%" align="center" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" size="2"><b>% Increase</b></font></td>
  </tr>
  <tr>
    <td WIDTH="20%" align="left" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2"><b>Item</b></font></td>
    <td WIDTH="20%" align="center" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2"><b>2006</b></font></td>
    <td WIDTH="20%" align="center" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2"><b>2005</b></font></td>
    <td WIDTH="20%" align="center" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2"><b>(Decrease)</b></font></td>
    <td WIDTH="20%" align="center" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2"><b>(% Decrease)</b></font></td>
  </tr>
  <tr>
    <td WIDTH="20%" align="left" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">Revenue</font></td>
    <td WIDTH="20%" align="center" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">$106.99</font></td>
    <td WIDTH="20%" align="center" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">$32.69</font></td>
    <td WIDTH="20%" align="center" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">74.30</font></td>
    <td WIDTH="20%" align="center" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">227.29 %</font></td>
  </tr>
  <tr>
    <td WIDTH="20%" align="left"><font FACE="Times New Roman" size="2">Cost of
    Goods Sold</font></td>
    <td WIDTH="20%" align="center"><font FACE="Times New Roman" size="2">75.98</font></td>
    <td WIDTH="20%" align="center"><font FACE="Times New Roman" size="2">23.47</font></td>
    <td WIDTH="20%" align="center"><font FACE="Times New Roman" size="2">52.51</font></td>
    <td WIDTH="20%" align="center"><font FACE="Times New Roman" size="2">223.73
    %</font></td>
  </tr>
  <tr>
    <td WIDTH="20%" align="left" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">Gross
    Profit</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">31.01</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">9.22</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">21.79</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">236.33
    %</font></td>
  </tr>
  <tr>
    <td WIDTH="20%" align="left"><font FACE="Times New Roman" size="2">Operating
    Expenses</font></td>
    <td WIDTH="20%" align="center"><font FACE="Times New Roman" size="2">5.67</font></td>
    <td WIDTH="20%" align="center"><font FACE="Times New Roman" size="2">1.74</font></td>
    <td WIDTH="20%" align="center"><font FACE="Times New Roman" size="2">3.93</font></td>
    <td WIDTH="20%" align="center"><font FACE="Times New Roman" size="2">225.86
    %</font></td>
  </tr>
  <tr>
    <td WIDTH="20%" align="left" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">Other
    Income</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%" align="left" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">(expense)</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">1.48</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">0.57</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">0.91</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">159.65
    %</font></td>
  </tr>
  <tr>
    <td WIDTH="20%" align="left"><font FACE="Times New Roman" size="2">Provision
    for Taxes</font></td>
    <td WIDTH="20%" align="center"><font FACE="Times New Roman" size="2">3.89</font></td>
    <td WIDTH="20%" align="center"><font FACE="Times New Roman" size="2">0.78</font></td>
    <td WIDTH="20%" align="center"><font FACE="Times New Roman" size="2">3.11</font></td>
    <td WIDTH="20%" align="center"><font FACE="Times New Roman" size="2">398.72
    %</font></td>
  </tr>
  <tr>
    <td WIDTH="20%" align="left" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">Net
    income</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">22.93</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">7.27</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">15.66</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">215.41
    %</font></td>
  </tr>
</table>
<p align="center"><font face="Times New Roman" size="2">23</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p align="justify" style="line-height: 13pt"><font size="2">The following table summarizes the results of
the Company's operations during the fiscal years ended December 31, 2005 and
2004 and provides information regarding the dollar and percentage increase or
(decrease) from the 2004 fiscal period to the 2005 fiscal period: </font></p>
<p align="center" style="line-height: 13pt"><font size="2">All amounts, other than percentages, in
millions of U.S. dollars </font></p>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="80%" style="border-bottom-style: solid; border-bottom-width: 1" colspan="5" align="center">
<font FACE="Times New Roman">
    <font FACE="Times New Roman" size="2"><b>Years Ended December 31,</b></font></font></td>
  </tr>
  <tr>
    <td WIDTH="20%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="20%" align="center" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="20%" align="center" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="20%" align="center" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" size="2"><b>Increase</b></font></td>
    <td WIDTH="20%" align="center" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" size="2"><b>% Increase</b></font></td>
  </tr>
  <tr>
    <td WIDTH="20%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2"><b>Item</b></font></td>
    <td WIDTH="20%" align="center" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2"><b>2005</b></font></td>
    <td WIDTH="20%" align="center" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2"><b>2004</b></font></td>
    <td WIDTH="20%" align="center" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2"><b>(Decrease)</b></font></td>
    <td WIDTH="20%" align="center" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2"><b>(% Decrease)</b></font></td>
  </tr>
  <tr>
    <td WIDTH="20%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">Revenue</font></td>
    <td WIDTH="20%" align="center" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">$32.69</font></td>
    <td WIDTH="20%" align="center" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">$16.06</font></td>
    <td WIDTH="20%" align="center" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">16.63</font></td>
    <td WIDTH="20%" align="center" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">103.55%</font></td>
  </tr>
  <tr>
    <td WIDTH="20%"><font FACE="Times New Roman" size="2">Cost of Goods Sold</font></td>
    <td WIDTH="20%" align="center"><font FACE="Times New Roman" size="2">23.47</font></td>
    <td WIDTH="20%" align="center"><font FACE="Times New Roman" size="2">8.80</font></td>
    <td WIDTH="20%" align="center"><font FACE="Times New Roman" size="2">14.67</font></td>
    <td WIDTH="20%" align="center"><font FACE="Times New Roman" size="2">166.70%</font></td>
  </tr>
  <tr>
    <td WIDTH="20%" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">Gross Profit</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">9.22</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">7.26</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">1.96</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">27.00%</font></td>
  </tr>
  <tr>
    <td WIDTH="20%"><font FACE="Times New Roman" size="2">Operating Expenses</font></td>
    <td WIDTH="20%" align="center"><font FACE="Times New Roman" size="2">1.74</font></td>
    <td WIDTH="20%" align="center"><font FACE="Times New Roman" size="2">1.14</font></td>
    <td WIDTH="20%" align="center"><font FACE="Times New Roman" size="2">0.60</font></td>
    <td WIDTH="20%" align="center"><font FACE="Times New Roman" size="2">52.63%</font></td>
  </tr>
  <tr>
    <td WIDTH="20%" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">Other Income</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">(expense)</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">0.57</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">0.47</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">0.10</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">21.28%</font></td>
  </tr>
  <tr>
    <td WIDTH="20%"><font FACE="Times New Roman" size="2">Provision for Taxes</font></td>
    <td WIDTH="20%" align="center"><font FACE="Times New Roman" size="2">0.78</font></td>
    <td WIDTH="20%" align="center"><font FACE="Times New Roman" size="2">0.87</font></td>
    <td WIDTH="20%" align="center"><font FACE="Times New Roman" size="2">(0.09)</font></td>
    <td WIDTH="20%" align="center"><font FACE="Times New Roman" size="2">
    (10.34)%</font></td>
  </tr>
  <tr>
    <td WIDTH="20%" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">Net income</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">7.27</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">5.72</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">1.55</font></td>
    <td WIDTH="20%" align="center" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">27.10%</font></td>
  </tr>
</table>
<i>
<p><u><font size="2">Revenue </font></u></p>
</i>
<p align="justify" style="line-height: 13pt"><font size="2">Revenue for the year ended December 31, 2006
increased by 227.29% to $106.99 million as compared to $32.69 million for 2005.
Such increase was mainly due to the following factors: First, the population in
China in general has became wealthier, as a result, the demand for security and
surveillance products has also grown. Demand within various industries and
organizations has also been increasing dramatically. Second, the Chinese
government initiated several programs and regulatory drivers, such as the State
Ordinance 458 and the &quot;3111&quot; program, that require many public places, including
city-wide surveillance systems, traffic surveillance systems, critical
government locations, cyber caf&#233;s, bars and discotheques, to install security
systems. Third, our strategic efforts to increase our distribution channels
during 2004 and 2005 turned out to be a highly successful way to capture the
wave of growth in market demand in 2006. Fourth, we have been successful in
raising sufficient working capital to facilitate expansion in the China market.
Finally, our increased brand recognition in 2006 also contributed significantly
to the growth in sales revenue. Management expects growth in 2007 to remain
strong due to (i) continued strong growth in the security and surveillance
market both within the corporate and government sectors, (ii) better
capitalization of the Company to fuel the growth, (iii) significantly enhanced
branding and profiling in China, and (iv) acquisition strategy intended to boost
our market share and competitiveness. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">Revenue for the year ended December 31, 2005
increased by 103.55% to $32.69 million against $16.06 million for 2004. Such
increase was mainly due to the growth of the Chinese security and surveillance
market and the public's increased awareness of the importance of having security
and surveillance systems. </font></p>
<i>
<p align="justify" style="line-height: 13pt"><u><font size="2">Components of Revenue </font></u></p>
</i>
<p align="justify" style="line-height: 13pt"><font size="2">The following table shows the different
components comprising our total revenue over each of the past three fiscal
years. </font></p>
<p align="center"><font face="Times New Roman" size="2">24</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p align="center"><font size="2">All amounts in millions of U.S. dollars</font></p>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0" height="87">
  <tr>
    <td WIDTH="40%" height="19" valign="top">
    <font FACE="Times New Roman" size="2"><b>Revenue</b></font></td>
    <td WIDTH="20%" height="19" valign="top" align="center">
    <font FACE="Times New Roman" size="2"><b>2006</b></font></td>
    <td WIDTH="20%" height="19" valign="top" align="center">
    <font FACE="Times New Roman" size="2"><b>2005</b></font></td>
    <td WIDTH="20%" height="19" valign="top" align="center">
    <font FACE="Times New Roman" size="2"><b>2004</b></font></td>
  </tr>
  <tr>
    <td WIDTH="40%" height="19" valign="top">&nbsp;</td>
    <td WIDTH="20%" height="19" valign="top" align="center">&nbsp;</td>
    <td WIDTH="20%" height="19" valign="top" align="center">&nbsp;</td>
    <td WIDTH="20%" height="19" valign="top" align="center">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" height="15" valign="top" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">Project income from supply and
    installation of security and surveillance equipment</font></td>
    <td WIDTH="20%" height="15" valign="top" align="center" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">$94.16</font></td>
    <td WIDTH="20%" height="15" valign="top" align="center" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">$30.56</font></td>
    <td WIDTH="20%" height="15" valign="top" align="center" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">$15.53</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" height="19" valign="top">&nbsp;</td>
    <td WIDTH="20%" height="19" valign="top" align="center">&nbsp;</td>
    <td WIDTH="20%" height="19" valign="top" align="center">&nbsp;</td>
    <td WIDTH="20%" height="19" valign="top" align="center">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" height="15" valign="top" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">Outright sale of security and
    surveillance equipment</font></td>
    <td WIDTH="20%" height="15" valign="top" align="center" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">12.83</font></td>
    <td WIDTH="20%" height="15" valign="top" align="center" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">2.13</font></td>
    <td WIDTH="20%" height="15" valign="top" align="center" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">0.53</font></td>
  </tr>
</table>
<p align="justify" style="line-height: 13pt"><font size="2">Income from installation projects contributed
approximately 88% of total revenue in 2006 and was approximately 90% in each of
2004 and 2005. The main reason for the increase in outright sales revenue was
due to the acquisition of Cheng Feng, which generates most of its revenues from
the sales of security and surveillance equipment. Management believes that
revenues from the installation projects will continue to be the Company's major
revenue source in the next a few years. With the Company putting more resources
into research and development, the acquisition of Cheng Feng, Hongtianzhi and
the planned acquisitions as discussed above, management believes that the
percentage of revenue from the outright sale of products will increase in the
future. </font></p>
<i>
<p style="line-height: 13pt"><u><font size="2">Cost of Goods Sold </font></u></p>
</i>
<p align="justify" style="line-height: 13pt"><font size="2">Cost of goods sold for the year ended December
31, 2006 increased by 223.73% to $75.98 million as compared to $23.47 million
for the prior year. Such increase was mainly attributable to the increase of
sales revenue. </font></p>
<p ALIGN="JUSTIFY" style="line-height: 13pt"><font size="2">Cost of goods sold for the year ended December
31, 2005 increased by 166.70% to $23.47 million as compared to $8.80 million in
2004. The increase was generally in line with the revenue increase. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">The following table illustrates the items
constituting our cost of goods sold. </font></p>
<p align="center" style="line-height: 13pt"><font size="2">All amounts, other than percentages, in
millions of U.S. dollars </font></p>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0" height="157">
  <tr>
    <td WIDTH="25%" height="15"><font FACE="Times New Roman" size="2">Cost Item</font></td>
    <td WIDTH="25%" align="center" height="15">
    <font FACE="Times New Roman" size="2"><b>2006</b></font></td>
    <td WIDTH="25%" align="center" height="15">
    <font FACE="Times New Roman" size="2"><b>2005</b></font></td>
    <td WIDTH="25%" align="center" height="15">
    <font FACE="Times New Roman" size="2"><b>2004</b></font></td>
  </tr>
  <tr>
    <td WIDTH="25%" height="19">&nbsp;</td>
    <td WIDTH="25%" align="center" height="19">&nbsp;</td>
    <td WIDTH="25%" align="center" height="19">&nbsp;</td>
    <td WIDTH="25%" align="center" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" height="15" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">Purchases</font></td>
    <td WIDTH="25%" align="center" height="15" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">$74.43</font></td>
    <td WIDTH="25%" align="center" height="15" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">$22.38</font></td>
    <td WIDTH="25%" align="center" height="15" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">$7.79</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" height="19" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">(of raw
    material)</font></td>
    <td WIDTH="25%" align="center" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="25%" align="center" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="25%" align="center" height="19" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" height="15">
    <p style="margin-left: 26"><font FACE="Times New Roman" size="2">Percentage</font></td>
    <td WIDTH="25%" align="center" height="15">
    <font FACE="Times New Roman" size="2">97.96%</font></td>
    <td WIDTH="25%" align="center" height="15">
    <font FACE="Times New Roman" size="2">95.36%</font></td>
    <td WIDTH="25%" align="center" height="15">
    <font FACE="Times New Roman" size="2">88.52%</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="25%" align="center" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="25%" align="center" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="25%" align="center" height="19" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" height="6" bgcolor="#E6E6E6"><font FACE="Times New Roman" size="2">Salary</font></td>
    <td WIDTH="25%" align="center" height="6" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">1.55</font></td>
    <td WIDTH="25%" align="center" height="6" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">1.09</font></td>
    <td WIDTH="25%" align="center" height="6" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">1.01</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" height="15" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-left: 26">
    <font FACE="Times New Roman" size="2">Percentage</font></td>
    <td WIDTH="25%" align="center" height="15" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2">2.04%</font></td>
    <td WIDTH="25%" align="center" height="15" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2">4.64%</font></td>
    <td WIDTH="25%" align="center" height="15" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2">11.48%</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" height="19" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="25%" align="center" height="19" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="25%" align="center" height="19" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="25%" align="center" height="19" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" height="15" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2"><b>Total Percentage</b></font></td>
    <td WIDTH="25%" align="center" height="15" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">100%</font></td>
    <td WIDTH="25%" align="center" height="15" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">100%</font></td>
    <td WIDTH="25%" align="center" height="15" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" size="2">100%</font></td>
  </tr>
</table>
<p align="center"><font face="Times New Roman" size="2">25</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<i>
<p><u><font size="2">Gross Profit Margin </font></u></p>
<p align="justify" style="line-height: 13pt"></i><font size="2">Our gross profit margin increased slightly
from 28.20% for the year ended December 31, 2005 to 28.99% for the year ended
December 31, 2006. Such increase was mainly attributable to our efforts in price
stabilization and cost controls. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">Our gross profit margin decreased from 45.21%
for the year ended December 31, 2004 to 28.20% for the year ended December 31,
2005. This was mainly attributable to the increase in competition in the
security and surveillance business and our strategic decision in taking some
projects that had a lower profit margin, but were important for gaining market
share. </font></p>
<i>
<p align="justify" style="line-height: 13pt"><u><font size="2">Selling and Marketing Expenses</font></u></i><u><font size="2">
</font></u></p>
<p align="justify" style="line-height: 13pt"><font size="2">Selling and marketing expenses were $1.51
million for the year ended December 31, 2006, a $1.22 million increase as
compared to $0.29 million for the year ended December 31, 2005. This was mainly
attributable to the increase of our sales revenue and our increased marketing
and advertising campaigns to improve our brand awareness and market penetration.
</font></p>
<p align="justify" style="line-height: 13pt"><font size="2">Selling and marketing expenses were $0.29
million for the year ended December 31, 2005 as compared to $0.39 million for
the year ended December 31, 2004. The $0.10 million decrease in selling and
marketing expenses was mainly attributable to large costs incurred in connection
with the initial setting up of branches in 2004. All of our branch offices were
set up by the end of 2004. As a result, selling and marketing expenses decreased
in 2005. </font></p>
<i>
<p align="justify" style="line-height: 13pt"><u><font size="2">Depreciation and Amortization </font></u>
</p>
</i>
<p align="justify" style="line-height: 13pt"><font size="2">Depreciation and amortization expenses were
$1.12 million for the year ended December 31, 2006, a $0.86 million increase as
compared to $0.26 million for the year ended December 31, 2005. Such increase
was mainly attributed to the acquisition of Cheng Feng and the security and
surveillance business of the Four-Related Companies. The amortization of
intangible assets increased as a result of these acquisitions. In addition, the
Company acquired more than $5.00 million of property, plant and equipment during
2006, including new business premises and equipment to improve the production
capacity of the Company. </font></p>
<p align="justify" style="line-height: 13pt"><font size="2">Depreciation and amortization expenses were
$0.26 million for the year ended December 31, 2005 as compared to $0.22 million
for the year ended December 31, 2004. Such slight increase was mainly
attributable the acquisition of new equipments. </font></p>
<i>
<p align="justify" style="line-height: 13pt"><u><font size="2">General and Administrative Expenses </font>
</u></p>
</i>
<p align="justify" style="line-height: 13pt"><font size="2">General and administrative expenses were $3.04
million for the year ended December 31, 2006, a $1.85 million increase as
compared to $1.19 million for the year ended December 31, 2005. Such increase
was primarily due to the hiring of additional staff, increased property tax,
research and development costs, and professional expenses incurred in connection
with being a public reporting company. The number of our employees increased
from approximately 400 in 2005 to approximately 580 in 2006. We believe such
increase was generally in line with the increase in our revenue. We are now
working on improving our internal control system to ensure the compliance with
Sarbanes Oxley Act Section 404. As a result, we expect that our administrative
expenses will continue to increase until we fully implement our new accounting
system and implement Sarbanes Oxley Act Section 404. In addition, as we continue
our acquisition strategy, costs related to professional fees will continue to
increase. </font>
</p>
<p align="center"><font face="Times New Roman" size="2">26</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">General and administrative expenses were $1.19 million for the
year ended December 31, 2005 as compared to $0.51 million for the year ended
December 31, 2004. &nbsp;Such increase was mainly attributable to the increase in
daily office expenses resulted from the expansion of our business and profession
fees related to being a public reporting company. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
<font size="2"><br>
</font>
<i><u><font size="2">Interest Expense</font></u></i></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">In 2006, we borrowed funds under 2 short- term loans and a long-
term loan from local Chinese banks and incurred a total interest expense of
$0.11 million. We did not incur any finance costs in 2004 and 2005, as we had no
bank loans during these periods. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<i><u><font size="2">Income Tax Expenses</font></u></i></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">We incurred income tax expenses of $3.89 million for the year
ended December 31, 2006, an increase of 398.72% against $0.78 million for the
year ended December 31, 2005. &nbsp;Such increase was mainly attributable to the
increase of sales revenue and profits. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">We incurred income tax expenses of $0.78 million for the year
ended December 31, 2005, a decrease of 10.34% from the $0.87 million for the
year ended December 31, 2004. The provision for corporate income tax payable was
$1.37 million in fiscal year 2005 due to higher revenue and profit. &nbsp;However, a
net deferred tax asset of $0.59 million was recognized. &nbsp;As a result, the income
tax expense was reduced to $0.78 million.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
<font size="2"><br>
&nbsp;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">In accordance with the relevant tax laws and regulations of the
People's Republic of China for the Shenzhen Special Economic Zone, our Chinese
subsidiary Golden is subject to the Chinese enterprise income tax (&quot;EIT&quot;) rate
of 15% for the fiscal years 2006, 2005, and 2004. &nbsp;Cheng Feng is subject to an
EIT rate of 7.5% due to its software and high technology company status. &nbsp;We
anticipate that our effective tax rate will change from the current 15% in 2007
because the companies we acquired and intend to acquire are located in different
cities and may have different tax rates. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">On March 16, 2007, the National People's Congress of the PRC
determined to adopt a new corporate income tax law in its fifth plenary session.
The new corporate income tax law unifies the application scope, tax rate, tax
deduction and preferential policy for both domestic and foreign-invested
enterprises.&nbsp; The new corporate income tax law will be effective on January 1,
2008.&nbsp; According to the new corporate income tax law, the applicable income tax
rate for our operating subsidiaries may be subject to change.&nbsp; As the
implementation detail has not yet been announced, we cannot be sure of the
potential impact of such new corporate income tax law on our financial position
and operating results.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<i><u><font size="2">Net Income</font></u></i></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">We earned a net income of $22.93 million for the year ended
December 31, 2006, an increase of 215.41% against $7.27 million for the year
ended December 31, 2005. Such increase was mainly attributable to the increase
in revenue. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">We earned a net income of $7.27 million for the year ended
December 31, 2005, an increase of 27.10% from $5.72 million for the year ended
December 31, 2004. Such increase was mainly attributable to the increase in
revenue.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="center">
<font size="2"><br>
27</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
<i><u><font size="2">Net Income Margin</font></u></i></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Net income margin for the year ended December 31, 2006 was
21.43%, slightly decreased from the 22.23% for the year ended December 31, 2005.
The main reason for the decrease was the increase in general and administrative
expenses in 2006. Management believes that our future net income margin may
continue to decrease slightly due to the increase of costs associated with being
a public company.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Net income margin for the year ended December 31, 2005 was
22.23%, decreased from the 35.62% of the year ended December 31, 2004. The
decrease was mainly due to the increase in general and administrative expenses
related to the process of becoming a public company.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<i><u><font size="2">Amount Due From/(to) Directors</font></u></i></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">In the past, we made advances to our directors which were
non-interest bearing and repayable upon demand. &nbsp;The balances due were $1
million on December 31, 2004 all of which were repaid during 2005. &nbsp;Since our
reverse acquisition of Safetech in September 2005, we have adopted a policy of
not making any loans to our officers, directors or affiliates in order to comply
with the requirements of the Sarbanes-Oxley Act of 2002.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -36pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">We also received advances from our director to facilitate our
operations during the years ended December 31, 2005 and 2004. &nbsp;Such loans were
non-interest bearing and were payable upon demand. &nbsp;In 2006, we successfully
raised funds from the capital market and the need for directors to inject
capital to facilitate the operations of the Company no longer existed. The
balances due at December 31, 2006 and 2005 were $0.08 million and $0.07 million,
respectively. &nbsp;The balance at the end of 2006 is expected to be paid off by the
first quarter of 2007.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<i><u><font size="2">Inflation</font></u></i></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">We believe our operations have not been materially adversely
affected by inflation or changing prices.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<i><u><font size="2">Foreign Currency Translation Gains </font></u></i></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Our operating subsidiaries are located in China. &nbsp;The operating
subsidiaries purchase all products and render services in China, and receive
payment from customers in China using RMB as the functional currency. &nbsp;We do not
engage in currency hedging.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">We incurred a foreign currency translation gain of $1.66 million
for the year ended December 31, 2006 as compared with the foreign currency
translation gain of $0.55 million for the year ended December 31, 2005. On July
21, 2005, China reformed its foreign currency exchange policy, revalued RMB by
2.1 percent and allowed the RMB to appreciate as much as 0.3 percent per day
against the U.S. dollar. As a result, we implemented different exchange rates in
translating RMB into U.S. dollars in our financial statements for fiscal year
2006. In 2006, the exchange rates of 7.80, 7.97 and 8.07 were implemented in
calculating the assets and liabilities, revenue and expenses, and shareholders'
equity, respectively, which results in a $1.66 million foreign currency
translation gain in fiscal 2006.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
<font size="2">28</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
<b><i><font size="2">Liquidity and Capital Resources </font></i></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">As of December 31, 2006, we had cash and cash equivalents of
$30.98<b><i> </i></b>million. &nbsp;The following table provides detailed information
about our net cash flow for all financial statement periods presented in this
prospectus.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
<b><font size="2">Cash Flow </font></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
<font size="2">(in millions of U.S. dollars)</font></p>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="42%">&nbsp;</td>
    <td align="right" width="58%" colSpan="3"><font size="2"><b>
    <p align="center">Years Ended December 31,</b></font></td>
  </tr>
  <tr>
    <td width="42%">&nbsp;</td>
    <td align="right" width="19%">
    <p style="margin-right: 4"><font size="2"><b>2006</b></font></td>
    <td align="right" width="19%">
    <p style="margin-right: 4"><font size="2"><b>2005</b></font></td>
    <td align="right" width="19%">
    <p style="margin-right: 4"><font size="2"><b>2004</b></font></td>
  </tr>
  <tr>
    <td width="42%">&nbsp;</td>
    <td align="right" width="19%">
    <p style="margin-right: 4">&nbsp;</td>
    <td align="right" width="19%">
    <p style="margin-right: 4">&nbsp;</td>
    <td align="right" width="19%">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td width="42%" bgcolor="#E6E6E6"><font size="2">Net cash provided by operating activities</font></td>
    <td align="right" width="19%" bgcolor="#E6E6E6">
    <p style="margin-right: 4"><font size="2">$2.98</font></td>
    <td align="right" width="19%" bgcolor="#E6E6E6">
    <p style="margin-right: 4"><font size="2">$0.80</font></td>
    <td align="right" width="19%" bgcolor="#E6E6E6">
    <p style="margin-right: 4"><font size="2">$0.68</font></td>
  </tr>
  <tr>
    <td width="42%"><font size="2">Net cash  used in investing activities</font></td>
    <td align="right" width="19%"><font size="2">(11.17)</font></td>
    <td align="right" width="19%"><font size="2">(0.08)</font></td>
    <td align="right" width="19%"><font size="2">(0.11)</font></td>
  </tr>
  <tr>
    <td width="42%" bgcolor="#E6E6E6"><font size="2">Net cash provided by (used in) financing </font>
    <font size="2" FACE="Times New Roman">activities</font></td>
    <td align="right" width="19%" bgcolor="#E6E6E6">
    <p style="margin-right: 4"><font size="2">35.91</font></td>
    <td align="right" width="19%" bgcolor="#E6E6E6">
    <p style="margin-right: 4"><font size="2">1.06</font></td>
    <td align="right" width="19%" bgcolor="#E6E6E6"><font size="2">(1.05)</font></td>
  </tr>
  <tr>
    <td width="42%"><font size="2">Net cash flow</font></td>
    <td align="right" width="19%">
    <p style="margin-right: 4"><font size="2">27.72</font></td>
    <td align="right" width="19%">
    <p style="margin-right: 4"><font size="2">1.78</font></td>
    <td align="right" width="19%"><font size="2">(0.48)</font></td>
  </tr>
</table>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt">
<font size="2"><br>
</font><i><u><font size="2">Operating Activities: </font></u></i></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Net cash provided by operating activities was $2.98 million<b>
</b>for the year ended December 31, 2006 which is an increase of $2.18 million<b>
</b>from the $0.80 million<b> </b>net cash provided by operating activities for
the same period in 2005. &nbsp;The increase was mainly due to an increase in net
income. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Net cash provided by operating activities in 2005 totaled $0.80
million, which is an increase of $0.12 million from net cash provided by
operating activities of $0.68 million in 2004. The increase was mainly due to an
increase in current liabilities. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<i><u><font size="2">Investing Activities:</font></u></i></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Our main uses of cash for investing activities during 2006 were
payments for the acquisition of property, plant and equipment and businesses.<br>
&nbsp;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Net cash used for investing activities in the year ended December
31, 2006 was $11.17 million, which is an increase of $11.09 million<b> </b>from
net cash used for investing activities of $0.08 million<b> </b>in the same
period of 2005 due to the increased acquisition of property, plant, equipment
and businesses in 2006. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Net cash used for investing activities in the year 2005 was $0.08
million, which is a decrease of $0.03 million from net cash used for investing
activities of $0.11 million in 2004. Such decrease was primarily the result of
the decrease in purchases of fixed assets. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<i><u><font size="2">Financing Activities:</font></u></i></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Net cash provided by financing activities in the year ended
December 31, 2006 totaled $35.91 million<b> </b>as compared to $1.06 million<b>
</b>provided by financing activities in 2005. &nbsp;The increase of cash provided by
financing activities was mainly attributable to the issuance of common shares in
connection with several financing transactions closed in 2006. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
<font size="2">29</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Net cash provided by financing activities was $1.06 million in
2005, an increase of $2.11 million as compared to $1.05 million used for
financing activities in 2004. Such increase was mainly attributable to the cash
advance made to the Company by one of the directors in 2005. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 5pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 5pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">In 2006, we completed several private placement transactions. &nbsp;In
April 2006, we completed a private placement whereby we raised $8.00 million in
gross proceeds, which left us with approximately $7.35 million in net proceeds
after the deduction of approximately $0.65 million of offering expenses. &nbsp;In
July 2006, we completed another private placement of our common shares and
raised $16.2 million in gross proceeds, which left us with approximately $14.9
million in net proceeds after the deduction of offering expenses in the amount
of approximately $1.3 million. A majority of the net proceeds of these two
private placement transactions was used for the acquisition of Cheng Feng. In
November 2006, we sold an aggregate of 1,538,462 shares of our common stock for
a consideration of $10 million at a price of $6.50 per share, raising a total of
$10 million in net proceeds. The proceeds were used primarily to finance our
working capital.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 5pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 5pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">In addition, we have several loan agreements outstanding with
various banks. &nbsp;Long term liabilities are long term loans from banks. As of
December 31, 2006, our total long term liabilities were approximately $2.23
million, consisting of a 10-year loan from China Construction Bank for the
purposes of purchasing new office premises in Shenzhen. This loan was granted on
September 27, 2006. &nbsp;It matures on September 26, 2016 and has an annual interest
rate of 7.524%.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">On August 16, 2006, we entered into a loan agreement with a
Chinese bank. We borrowed RMB 10 million (approximately $1.28 million) with an
annual interest rate of 5.94%. The loan is due on February 16, 2007, and the
interest is payable at the end of each month. The loan agreement requires us to
use the loan proceeds only for our operations. The bank has the right to
increase the interest rate and demand repayment of the entire loan principal and
unpaid interest if we use the loan for purpose other than our operations. &nbsp;The
loan is guaranteed by Mr. Tu, our CEO.<br>
&nbsp;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">On October 3, 2006, we signed a banking facility agreement with
China Construction Bank, or &quot;CCB,&quot; under which CCB agreed to provide a new
receivable based facility to support our efforts in securing new contracts from
the Safe City Project initiative named &quot;Plan 3111.&quot; This facility will provide 3
possible financing options: (1) the government takes a loan from CCB to finance
the project; (2) we sell the account receivables to CCB. 85% of total account
receivables value will be paid by CCB to the Company and the remaining 15% will
be collected by CCB from the government. CCB will, in turn, retain the finance
charges before paying the Company; and (3) we take a loan from CCB to finance
the project. As part of this agreement, we will make periodic deposits with CCB,
which, depending upon the specific project, will provide a maximum factoring
capacity of five to ten times the amount deposited. None of the facility has
been drawn down as of the date of this prospectus.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 5pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 5pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">On November 1, 2005, Cheng Feng entered into a loan agreement
with a Chinese bank in its amount of RMB 6 million (approximately $0.77 million)
with an annual interest rate of 5.76%. The loan is due on November 7, 2007, and
the interest is payable at the end of each quarter. The loan agreement requires
us to use the loan proceeds only for our operations. The bank has the right to
increase the interest rate and demand repayment of the entire loan principal and
unpaid interest if we use the loan for purpose other than operations.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 5pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 5pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 5pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 5pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
<font size="2">30</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 5pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 5pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 5pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 5pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">We have no material commitments for capital expenditures as of
December 31, 2006. &nbsp;In order to facilitate our business expansion, we plan to
acquire an industrial park within Shenzhen. We expect to close the transaction
by the end of 2007. &nbsp;We believe that our currently available working capital,
after receiving the aggregate proceeds of the capital raising activities and
bank loans referred to above, should be adequate to sustain our operations at
our current levels through at least the next twelve months.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 5pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 5pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<br>
<b><i><font size="2">Contractual Obligations </font></i></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Below is a table which sets forth our contractual obligations as
of December 31, 2006:</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
<b><font size="2">(In thousands)</font></b></p>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="29%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="middle" width="74%" colSpan="10">
    <font size="2"><b>Payments due by period</b></font></td>
  </tr>
  <tr>
    <td width="29%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="7%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="7%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="7%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="7%"><font size="2">
    Less than 1</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="7%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="7%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="7%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="7%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="15%" colSpan="2">
    <font size="2">More than</font></td>
  </tr>
  <tr>
    <td width="29%">&nbsp;</td>
    <td align="right" width="7%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="7%">
    <font size="2">Total</font></td>
    <td align="right" width="7%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="7%">
    <font size="2">year</font></td>
    <td align="right" width="7%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="7%">
    <font size="2">1-3 years</font></td>
    <td align="right" width="7%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="7%">
    <font size="2">3-5 years</font></td>
    <td align="right" width="7%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="8%">
    <font size="2">5 years</font></td>
  </tr>
  <tr>
    <td width="29%" bgcolor="#E6E6E6"><font size="2">Long-term debt obligations</font></td>
    <td align="right" width="7%" bgcolor="#E6E6E6"><font size="2">$</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="7%" bgcolor="#E6E6E6"><font size="2">
    2,232</font></td>
    <td align="right" width="7%" bgcolor="#E6E6E6"><font size="2">$</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="7%" bgcolor="#E6E6E6"><font size="2">
    222</font></td>
    <td align="right" width="7%" bgcolor="#E6E6E6"><font size="2">$</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="7%" bgcolor="#E6E6E6"><font size="2">
    670</font></td>
    <td align="right" width="7%" bgcolor="#E6E6E6"><font size="2">$</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="7%" bgcolor="#E6E6E6"><font size="2">
    510</font></td>
    <td align="right" width="7%" bgcolor="#E6E6E6"><font size="2">$</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="8%" bgcolor="#E6E6E6"><font size="2">
    829</font></td>
  </tr>
  <tr>
    <td width="29%"><font size="2">Operating lease obligations</font></td>
    <td align="right" width="7%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="7%">
    <font size="2">66</font></td>
    <td align="right" width="7%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="7%">
    <font size="2">66</font></td>
    <td align="right" width="7%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="7%">
    <font size="2">-</font></td>
    <td align="right" width="7%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="7%">
    <font size="2">-</font></td>
    <td align="right" width="7%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="8%">
    <font size="2">-</font></td>
  </tr>
  <tr>
    <td width="29%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="right" width="7%" bgcolor="#E6E6E6">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="7%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="right" width="7%" bgcolor="#E6E6E6">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="7%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="right" width="7%" bgcolor="#E6E6E6">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="7%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="right" width="7%" bgcolor="#E6E6E6">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="7%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="right" width="7%" bgcolor="#E6E6E6">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="8%" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td width="29%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="right" width="7%" bgcolor="#E6E6E6"><font size="2">$</font></td>
    <td align="right" width="7%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="right" width="7%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="right" width="7%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="right" width="7%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="right" width="7%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="right" width="7%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="right" width="7%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="right" width="7%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="right" width="8%" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td width="29%" bgcolor="#E6E6E6"><font size="2">Total</font></td>
    <td align="right" width="7%" bgcolor="#E6E6E6">&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 2px solid" align="right" width="7%" bgcolor="#E6E6E6">
    <font size="2">2,298</font></td>
    <td align="right" width="7%" bgcolor="#E6E6E6"><font size="2">$</font></td>
    <td style="BORDER-BOTTOM: #000000 2px solid" align="right" width="7%" bgcolor="#E6E6E6">
    <font size="2">288</font></td>
    <td align="right" width="7%" bgcolor="#E6E6E6"><font size="2">$</font></td>
    <td style="BORDER-BOTTOM: #000000 2px solid" align="right" width="7%" bgcolor="#E6E6E6">
    <font size="2">670</font></td>
    <td align="right" width="7%" bgcolor="#E6E6E6"><font size="2">$</font></td>
    <td style="BORDER-BOTTOM: #000000 2px solid" align="right" width="7%" bgcolor="#E6E6E6">
    <font size="2">510</font></td>
    <td align="right" width="7%" bgcolor="#E6E6E6"><font size="2">$</font></td>
    <td style="BORDER-BOTTOM: #000000 2px solid" align="right" width="8%" bgcolor="#E6E6E6">
    <font size="2">829</font></td>
  </tr>
</table>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
<b><i><font size="2">Critical Accounting Policies </font></i></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">The preparation of financial statements, in conformity with
accounting principles generally accepted in the United States, requires our
management to make assumptions, estimates and judgments that affect the amounts
reported in the financial statements, including the notes thereto, and related
disclosures of commitments and contingencies, if any. We consider our critical
accounting policies to be those that require the more significant judgments and
estimates in the preparation of financial statements, including the following:</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: -14pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -18pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<i><font size="2">&#149;</font></i></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<i><font size="2">Basis of Consolidation</font></i><font size="2"> - The
consolidated financial statements of the Company and its subsidiaries are
prepared in accordance with accounting principles generally accepted in the
United States of America and include the accounts of the Company and its
subsidiaries. All material inter-company accounts and transactions have been
eliminated in the consolidation.&nbsp;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 18pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: -14pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -18pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<i><font size="2">&#149;</font></i></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<i><font size="2">Intangible Assets &#150;</font></i><font size="2"> Intangible
assets represent surveillance recording systems acquired from Yuan Da, the
acquisition of Cheng Feng and the businesses of the Four-Related Companies. The
value of a surveillance recording system was established by an independent
accounting firm. The valuations and allocation of intangible assets for the
acquisition of Cheng Feng and the businesses of the Four-Related Companies were
determined by a third party appraisal firm. The value of the recording system is
to be amortized as the following policies and rates: using the straight-line
method over its estimated useful life of five years. The values of the
intangible assets of the acquisition of Cheng Feng and the businesses of the
Four-Related Companies are to be amortized as the following policies and rates:
using straight-line and accelerated method over its estimated useful life of two
months to five years.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: -14pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -18pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<i><font size="2">&#149;</font></i></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<i><font size="2">Goodwill</font></i><font size="2"> &#150; Goodwill represents the
excess of the purchase price over the net of the fair value of the identifiable
tangible and intangible assets acquired and the fair value of liabilities
assumed in acquisitions. SFAS No: 142, &quot;Goodwill and Other Intangible Assets&quot;
(&quot;SFAS142&quot;) requires the testing of goodwill and indefinite-lived intangible
assets for impairment at least annually. &nbsp;We test goodwill for impairment in the
fourth quarter each year.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
<font size="2">31</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
&nbsp;</p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: -14pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -18pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
<i><font size="2">&#149;</font></i></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<i><font size="2">Inventories</font></i><font size="2"> - Inventories are stated
at the lower of cost, determined on a weighted average basis, and net realizable
value. Net realizable value is the estimated selling price in the ordinary
course of business less the estimated cost of completion and the estimated costs
necessary to make the sale.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 18pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">When inventories are sold, their carrying amount is charged to
expense in the year in which the revenue is recognized. Write-downs for declines
in net realizable value or for losses of inventories are recognized as an
expense in the year the impairment or loss occurs.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: -14pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -18pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<i><font size="2">&#149;</font></i></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<i><font size="2">Revenue Recognition - </font></i><font size="2">The Company
derives the bulk of its revenue from the supply and installation of security and
surveillance equipment and the two deliverables do not meet the separation
criteria under EITF issue 00-21. The installation is not considered to be
essential to the functionality of the equipment having regard to the following
criteria as set out in SAB 104:</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 72pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">(i)&nbsp;&nbsp;The security and surveillance equipment is a standard
product with minor modifications according to customers' specifications;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 72pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 72pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">(ii)&nbsp;&nbsp;Installation does not significantly alter the security and
surveillance equipment's capabilities; and</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 72pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 72pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">(iii)&nbsp;&nbsp;Other companies which possess the relevant licenses are
available to perform the installation services.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">In early 2006, the Company began performing much larger security
installation contracts than it had been doing previously. As a marketing
approach, the Company prepared standard contracts with its new larger customers,
whereby 90% of the contract amount was due when installation was complete and
payment of the remaining 10% was deferred for one year. Because of the newness
of the larger contracts and the inability to immediately determine the amount of
warranty work that would be required, the Company deferred recognizing the 10%
of the contract amount as revenue until empirical information was available to
revise the estimate. During the second and third quarters of 2006, the Company
carefully monitored the warranty work requested by its customers, and determined
that very little warranty work had been required to be performed. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Consequently, effective October 1, 2006, the Company reduced its
estimate of future warranty requirements to approximately 1% of contract
installation revenue. The fourth quarter reflects this change in the estimated
warranty expenses.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Revenue from the outright sale of security and surveillance
equipment is recognized when delivery occurs and risk of ownership passes to the
customers.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: -14pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -18pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<i><font size="2">&#149;</font></i></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<i><font size="2">Foreign Currency Translation</font></i><font size="2"> - The
functional currency of the Company is RMB and RMB is not freely convertible into
foreign currencies. The Company maintains its financial statements in the
functional currency. Monetary assets and liabilities denominated in currencies
other than the functional currency are translated into the functional currency
at rates of exchange prevailing at the balance sheet date. Transactions
denominated in currencies other than the functional currency are translated into
the functional currency at the exchange rates prevailing at the dates of the
transactions. Exchange gains or losses arising from foreign currency
transactions are included in the determination of net income for the respective
periods.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
<font size="2">32</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 18pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">For financial reporting purposes, the financial statements of the
Company which are prepared using the functional currency have been translated
into United States dollars. Assets and liabilities are translated at exchange
rates at the balance sheet dates and revenue and expenses are translated at the
average exchange rates and shareholders' equity is translated at historical
exchange rates. Any translation adjustments resulting are not included in
determining net income but are included in foreign exchange adjustment to other
comprehensive income, a component of shareholders' equity. The exchange rates
adopted are as follows:</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt">
&nbsp;</p>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="46%">
    <p style="MARGIN-LEFT: 50px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="18%">
    <font size="2"><b>2006</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="18%">
    <font size="2"><b>2005</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="18%">
    <font size="2"><b>2004</b></font></td>
  </tr>
  <tr>
    <td width="46%" bgcolor="#E6E6E6"><font size="2">
    <p style="MARGIN-LEFT: 50px">Year end RMB: exchange rate</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="18%" bgcolor="#E6E6E6"><font size="2">
    7.80</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="18%" bgcolor="#E6E6E6"><font size="2">
    8.07</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="18%" bgcolor="#E6E6E6"><font size="2">
    8.28</font></td>
  </tr>
  <tr>
    <td width="46%"><font size="2">
    <p style="MARGIN-LEFT: 50px">Average yearly RMB: exchange rate</font></td>
    <td align="right" width="18%"><font size="2">7.97</font></td>
    <td align="right" width="18%"><font size="2">8.19</font></td>
    <td align="right" width="18%"><font size="2">8.28</font></td>
  </tr>
</table>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">No representation is made that the RMB amounts could have been,
or could be, converted into U.S. dollars at the rates used in translation.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: -14pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -18pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
<i><font size="2">&#149;</font></i></p>
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<i><font size="2">Use of Estimates -</font></i><font size="2"> The preparation
of the financial statements in conformity with generally accepted accounting
principles in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Management makes these estimates using the best information
available at the time the estimates are made; however actual results could
differ materially from those estimates.&nbsp;</font></p>
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&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: -14pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -18pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<i><font size="2">&#149;</font></i></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<i><font size="2">Income Taxes -</font></i><font size="2"> Income tax expense is
based on reported income before income taxes. Deferred income taxes reflect the
effect of temporary differences between assets and liabilities that are
recognized for financial reporting purposes and the amounts that are recognized
for income tax purposes. In accordance with Statement of Financial Accounting
Standard (SFAS) No. 109, &quot;Accounting for Income Taxes,&quot; these deferred taxes are
measured by applying currently enacted tax laws.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: -14pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -18pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<i><font size="2">&#149;</font></i></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<i><font size="2">Recent Accounting Pronouncements-</font></i><font size="2"> In
September 2005, the Emerging Issues Task Force (EITF) ratified EITF 04-13 (EITF
04-13), &quot;Accounting for Purchases and Sales of Inventory with the Same
Counterparty.&quot; This issue addresses the circumstances under which two or more
inventory purchase and sales transactions with the same counterparty should be
viewed as a single exchange transaction and whether there are circumstances
under which such non-monetary exchanges should be accounted for at fair value.&nbsp;
The adoption of EITF 04-13 is effective for new or modified agreements for
fiscal periods beginning after March 15, 2006. It is not expected that the
adoption of EITF 04-13 will have a material effect on our financial position or
results of operations.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
<font size="2">33</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt">
<font size="2"><br>
&nbsp;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">In November 2005, FASB Staff Position (FSP) 115-1 The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments was
issued. The FSP addresses the determination as to when an investment is
considered impaired, whether that impairment is other-than-temporary, and the
measurement of an impairment loss. This FSP also includes accounting
considerations subsequent to the recognition of an other-than-temporary
impairment and requires certain disclosures about unrealized losses that have
not been recognized as other-than-temporary impairments. The guidance in this
FSP amends FASB Statement No. 115, Accounting for Certain Investments in Debt
and Equity Securities and APB Opinion No. 18, The Equity Method of Accounting
for Investments in Common Stock. The FSP applies to investments in debt and
equity securities and cost-method investments. The application guidance within
the FSP includes items to consider in determining whether an investment&nbsp; is
impaired, in evaluating if an impairment is other-than-temporary and recognizing
impairment losses equal to the difference between the investment's cost and its
fair value when an impairment is determined. The FSP is required for all
reporting periods beginning after December 15, 2005. Earlier application is
permitted. We do not anticipate the amendment will have a material effect on our
financial position or results of operations.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -43.2pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">In February&nbsp;2006, the Financial Accounting Standards Board (&quot;FASB&quot;)
issued SFAS No. 155, &quot;Accounting for Certain Hybrid Financial Instruments.&quot; SFAS
No. 155 amends SFAS No. 133 and 140. The statement applies to certain hybrid
financial instruments, which are instruments that contain embedded derivatives.
The new standard establishes a requirement to evaluate beneficial interests in
securitized financial assets to determine if the interests represent
freestanding derivatives or are hybrid financial instruments containing embedded
derivatives requiring bifurcation. This new standard also permits an election
for fair value re-measurement of any hybrid financial instrument containing an
embedded derivative that otherwise would require bifurcation under SFAS No. 133.
The fair value election can be applied on an instrument-by-instrument basis to
existing instruments at the date of adoption and can be applied to new
instruments on a prospective basis. SFAS No. 155 shall be effective for all
financial instruments acquired, issued, or subject to a remeasurment (new basis)
event occurring after the beginning of first fiscal year that begins after
September 15, 2006. It is not expected that SFAS No. 155 will have a material
effect on the Company's financial position or results of operations.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -43.2pt; PADDING-TOP: 0pt">
<font size="2"><br>
&nbsp;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">In June&nbsp;2006, the FASB&nbsp;issued FASB Interpretation Number 48 (FIN
48), &quot;Accounting for Uncertainty in Income Taxes--an interpretation of FASB
Statement No.&nbsp;109.&quot; This interpretation contains a two step approach to
recognizing and measuring uncertain tax positions accounted for in accordance
with SFAS No.&nbsp;109. The first step is to evaluate the tax position for
recognition by determining if the weight of available evidence indicates it is
more likely than not that the position will be sustained on audit, including
resolution of related appeals or litigation processes, if any. The second step
is to measure the tax benefit as the largest amount which is more than 50%
likely of being realized upon ultimate settlement. The provisions are effective
for fiscal years beginning after December 15, 2006. It is not expected that FIN
48 will have a material effect on the Company's financial position or results of
operations.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">In September 2006, the FASB issued SFAS No. 157 &quot;Fair Value
Measurements&quot; which defines fair value, establishes a framework for measuring
fair value in generally accepted accounting principles and expands disclosure
about fair value measurements. The statement clarifies that the exchange price
is the price in an orderly transaction between market participants to sell the
asset or transfer the liability in the market in which the reporting entity
would transact for the asset or liability, that is, the principal or most
advantageous market for the asset or liability. It also emphasizes that fair
value is a market-based measurement, not an entity-specific measurement, and
that market participant assumptions include assumptions about risk and effect of
a restriction on the sale or use of an asset. The provisions are effective for
fiscal years beginning after November 15, 2007. The Company is currently
assessing the impact of the statement.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="center">
<font size="2"><br>
34</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">In February 2007, the FASB issued Statement No. 159, &quot;<i>The Fair
Value Option for Financial Assets and Financial Liabilities - Including an
amendment to FASB Statement No. 115&quot;.</i> &nbsp;This statement permits companies to
choose to measure many financial instruments and other items at fair value. The
objective is to improve financial reporting by providing entities with the
opportunity to mitigate volatility in reported earnings caused by measuring
related assets and liabilities differently without having to apply complex hedge
accounting provisions. This Statement is expected to expand the use of fair
value measurement of accounting for financial instruments. This statement
applies to all entities, including not for profit.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">The fair value option established by this statement permits all
entities to measure eligible items at fair value at specified election dates.
This statement is effective as of the beginning of an entity's first fiscal year
that begins after November 15, 2007.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">The Company is currently assessing the impact adoption of SFAS
No. 159 will have on its consolidated financial statements.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 18pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<b><i><font size="2">Seasonality</font></i></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Our operating results and operating cash flows historically have
been subject to seasonal variations. Our revenues are usually higher in the
second half of the year than in the first half of the year because fewer
projects are undertaken during and around the Chinese spring festival.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<b><i><font size="2">Off-Balance Sheet Arrangements</font></i></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">We do not have any off-balance sheet arrangements. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
<b><font size="2">QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
</font></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
<b><i><font size="2">Interest Rate Risk</font></i></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">The Company deposits surplus funds with Chinese banks earning
daily interest. The Company does not invest in any instruments for trading
purposes. The Company's operations are not sensitive to fluctuations in interest
rates.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
<b><i><font size="2">Foreign Exchange Risk</font></i></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">While our reporting currency is the U.S. Dollar, all of our
consolidated revenues and consolidated costs and expenses are denominated in RMB.
All of our assets are denominated in RMB except for cash. As a result, we are
exposed to foreign exchange risk as our revenues and results of operations may
be affected by fluctuations in the exchange rate between U.S. Dollars and RMB.
If the RMB depreciates against the U.S. Dollar, the value of our RMB revenues,
earnings and assets as expressed in our U.S. Dollar financial statements will
decline. We have not entered into any hedging transactions in an effort to
reduce our exposure to foreign exchange risk. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="center">
<font size="2"><br>
35</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
<b><i><font size="2">Inflation</font></i></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Inflationary factors such as increases in the cost of our product
and overhead costs may adversely affect our operating results. Although we do
not believe that inflation has had a material impact on our financial position
or results of operations to date, a high rate of inflation in the future may
have an adverse effect on our ability to maintain current levels of gross margin
and selling, general and administrative expenses as a percentage of net revenues
if the selling prices of our products do not increase with these increased
costs.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
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<b><font size="2">DESCRIPTION OF BUSINESS</font></b></p>
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<b><i><font size="2">Overview</font></i></b></p>
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&nbsp;</p>
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<font size="2">We are a holding company that owns two direct subsidiaries,
Safetech and CSST China. &nbsp;Safetech is a holding company that owns Golden, CSST
HK and Chain Star. &nbsp;CSST HK in turn owns Cheng Feng, and Chain Star owns
Hongtianzhi. &nbsp;Our primary business operations are conducted through our indirect
subsidiaries Golden, Cheng Feng and Hongtianzhi. &nbsp;Golden's business is focused
on manufacturing, distributing, installing and maintaining security and
surveillance systems in China. &nbsp;Cheng Feng's business is focused on the
manufacturing, marketing and sales of security and surveillance related hardware
as well as the development and integration of software. &nbsp;Hongtianzhi's business
is focused on the manufacture of digital cameras. &nbsp;Until our acquisition of
Safetech in September 2005, our business strategy and ownership changed over the
years as a result of several acquisitions of our stock that are discussed in the
section below entitled &quot;Our Background and History.&quot; </font></p>
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&nbsp;</p>
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<font size="2">The chart below demonstrates our corporate structure:</font></p>
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<font size="2"><br>
36</font></p>
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<font size="2"><br>
<img src="pagechart.gif" border="0" width="689" height="444"></font></p>
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<i><u><font size="2">Our Background and History</font></u></i></p>
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<font size="2">We were incorporated in the BVI on April 8, 2002 under the name &quot;Apex Wealth Enterprises Limited&quot; as a corporation under the International
Business Companies Ordinance of 1984. &nbsp;In&nbsp;February 2006, we changed our name to
China Security and Surveillance Technology Inc. &nbsp;In November 2006, we changed
our domicile from the BVI to Delaware by merging the BVI corporation into a
newly incorporated Delaware corporation China Security &amp; Surveillance
Technology, Inc. &nbsp;The main reasons for the change of domicile were to comply
with the covenants of a stock purchase agreement that we entered into on April
4, 2006 in connection with a financing transaction, as well as to take advantage
of the benefits of being a Delaware corporation, including the enhanced
credibility, greater flexibility in corporate law and attractiveness for
directors and officers. </font></p>
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<font size="2">Prior to our reverse acquisition of Safetech, which was
consummated on September 12, 2005 and is discussed in more detail below, we were
a development stage enterprise and had not yet generated any revenues. &nbsp;Prior to
the reverse acquisition, we provided business advisory and management consulting
services in greater China, initially concentrating on the Hong Kong market. &nbsp;The
focus of these services was on small to medium size enterprises.</font></p>
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<font size="2">From and after the reverse acquisition, our business became the
business of our indirect, wholly-owned subsidiary, Golden and the newly acquired
subsidiaries Cheng Feng and Hongtianzhi. &nbsp;Golden is a corporation incorporated
in the PRC which is engaged in the business of manufacturing, distributing,
installing and maintaining security and surveillance systems. &nbsp;Golden was
organized in the PRC in January 1995. &nbsp;In 2006, we acquired Cheng Feng, a
corporation incorporated in the PRC which is engaged in the business of
manufacturing, marketing and sales of security and surveillance related hardware
as well as the development and integration of software. &nbsp;In April 2007, we
acquired Hongtianzhi, a corporation incorporated in the PRC and a manufacturer
of digital cameras. &nbsp;We are headquartered in Shenzhen, China. </font></p>
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<font size="2">37</font></p>
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&nbsp;</p>
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<i><u><font size="2">Reverse Acquisition with Safetech</font></u></i></p>
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&nbsp;</p>
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<font size="2">On September 12, 2005, we acquired 50,000 shares of the issued
and outstanding capital stock of Safetech, constituting all of the issued and
outstanding capital stock of Safetech. &nbsp;The 50,000 shares of Safetech were
acquired from the individual shareholders of Safetech in a share exchange
transaction in return for the issuance of 8,138,000 shares of our common stock.
&nbsp;As a result of this transaction, Safetech became our wholly-owned subsidiary,
and Golden became our indirect wholly-owned subsidiary. &nbsp;Completion of the
transaction resulted in a change in control of our Company. &nbsp;&nbsp;After the
transaction, we were no longer a shell company. &nbsp;The contracts relating to this
transaction have been filed as exhibits to our current report on Form 6-K that
was filed with the SEC on July 22, 2005 and is incorporated herein by reference.</font></p>
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&nbsp;</p>
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<font size="2">For accounting purposes, this transaction was treated as a
reverse acquisition, with Safetech as the acquirer and our Company as the
acquired party. &nbsp;When we refer in this report to business and financial
information for periods prior to the consummation of the reverse acquisition, we
are referring to the business and financial information of Safetech and its
subsidiaries on a consolidated basis unless otherwise specified.</font></p>
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&nbsp;</p>
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<i><u><font size="2">Subsequent Acquisitions</font></u></i></p>
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&nbsp;</p>
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<font size="2">On October 25, 2005, we entered into an agreement with the equity
owners of Yuan Da, which was subsequently amended in April and May 2006.
&nbsp;Pursuant to the amended agreement, we acquired all of the assets of Yuan Da for
RMB 1 million (approximately $0.125 million) and 200,000 shares of our common
stock. &nbsp;Yuan Da is a limited liability company established in Shenzhen, China
and was principally engaged in the sale and development of security and
surveillance systems. &nbsp;</font></p>
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<font size="2">In July 2006, we entered into an agreement with shareholders of
Cheng Feng to acquire 100% ownership of Cheng Feng for a consideration of RMB
120 million (approximately $15 million), consisting of RMB 60 million
(approximately $7.5 million) in cash and 1,361,748 shares of our common stock.
&nbsp;The operational control of Cheng Feng passed to the Company in July 2006, we
received the relevant Chinese government approval for such acquisition in
December 2006 and all consideration has been paid off as of the date of this
prospectus. &nbsp;Cheng Feng is a company that is engaged in the business of
manufacturing, marketing and sales of security and surveillance related hardware
as well as the development and integration of related software. </font></p>
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<font size="2">In November 2006, we acquired the security and surveillance
business of the Four-Related Companies. &nbsp;Mr. Tu did not receive any
consideration for the acquisition of his interest in the Four-Related Companies.
&nbsp;The minority shareholders of these four companies and their designees received
in aggregate 850,000 shares of our common stock. &nbsp;Shenzhen Guangdian is engaged
in the business of manufacturing and distributing security and surveillance
products. The other three companies are engaged in the business of distributing
security and surveillance products. </font></p>
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<font size="2">On April 2, 2007, we entered into an Equity Transfer Agreement
with Safetech and Zheng Huang, the sole owner of Chain Star, pursuant to which
Safetech purchased 100% ownership of Chain Star from Mr. Huang. &nbsp;Chain Star is a
holding company of Hongtianzhi. &nbsp;Pursuant to the terms of the Equity Transfer
Agreement, we will pay total consideration of RMB 250 million (approximately
$32.32 million) in exchange for 100% ownership of Chain Star, consisting of RMB
125 million (approximately USD$16.16 million) in cash and RMB 125 million
(approximately $16.16 million) in the Company's shares of common stock. </font>
</p>
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<font size="2">38</font></p>
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&nbsp;</p>
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<b><i><font size="2">Industry Background and Our Principal Market</font></i></b></p>
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<font size="2">The Chinese surveillance and security industry was established at
the beginning of the 1980s and the surveillance and security products were used
primarily by government agencies, financial institutions, transportation and
mega-size companies. Since then, the industry has experienced significant growth
and is growing at an annual rate of approximately 40%, according to the China
Public Security Guide published by the Chinese Security and Protection
Association, which also predicts that the industry will grow by over 20%
annually in the near future and the Chinese market for security and surveillance
products and services will reach approximately $160 billion by 2010. </font></p>
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<font size="2">In 2006, the Chinese government promulgated Ordinance 458 which
requires all entertainment locations to install surveillance systems. In
addition, the booming Chinese real estate market and the increasing focus on the
security of the Chinese mining industry provide great opportunities for the
surveillance and security industry. &nbsp;The Chinese security and surveillance
industry is also expected to benefit from the expected spending of an estimated
$6 billion to $12 billion for security infrastructure by the Chinese government
in preparation for the 2008 Beijing Olympics, along with the planned investment
by the city of Shanghai for the 2010 World's Fair. &nbsp;Further, several other
ordinances have been passed by the Chinese government which require security
surveillance systems to be installed in: (1) 660 cities throughout China for
street surveillance as part of the Safe City Project &quot;Plan 3111&quot;; (2) all
Justice Departments and Courts; and (3) all coal mines in China (currently
estimated at 24,000) for gas detection and worker safety from the beginning of
2008. &nbsp;The Safe City Project is a nationwide initiative to enhance general
security in China's cities, which include the implementation of new surveillance
cameras in highly trafficked areas throughout a total of approximately 660
cities. Majority of the &quot;Plan 3111&quot; projects are expected to begin in 2007 and
continue to ramp into 2008 in preparation for the Beijing Summer Olympics. We
have been chosen as one of the government approved &quot;Plan 3111&quot; vendors. &nbsp;We
estimate that there are approximately 6000 courts and Departments of Justice
throughout the China that will be required to install security surveillance
equipment and the revenue of each installation is between $200,000 to $250,000.
&nbsp;&nbsp;&nbsp;</font></p>
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<font size="2">At present, video surveillance is estimated to have a market of
about RMB 60 billion (approximately $7.5 billion) and accounts for about 40%
market share of the surveillance and security market. It is expected that the
video surveillance market share will increase to approximately 60% of the whole
industry, according to the China Public Security Guide published by the China
Security and Protection Association.&nbsp;</font></p>
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<font size="2">There are many companies in China that engage in the business of
manufacturing, selling, installing and maintaining of security and surveillance
products. &nbsp;Due to the high growth of the industry and the fact that it is still
in the early stage of development, the Chinese security and surveillance market
is highly fragmented and there is no apparent market leader. &nbsp;</font></p>
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<b><i><font size="2">Principal Products and Services </font></i></b></p>
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<font size="2">Through our subsidiaries Golden, Cheng Feng and Hongtianzhi, we
engage in the business of manufacturing, distributing, installing and
maintaining surveillance and security products, as well as the development and
integration of related software in China. &nbsp;We generate revenues primarily
through the installation of security and surveillance systems and sales of
security and surveillance products. </font></p>
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<font size="2">39</font></p>
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&nbsp;</p>
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<i><font size="2">Installation Services</font></i></p>
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<font size="2">In 2006, we derived approximately 88% of our revenues from the
supply and installation of security and surveillance systems for various
projects involving railways, schools, banks, highways, commercial buildings, and
public security and government entities, among others. Generally, our
installation projects involve the following steps:</font></p>
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<font size="2">&#149;</font></p>
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<u><font size="2">Bidding</font></u></p>
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<font size="2">We receive most of our installation projects through a bidding
process. In a typical bidding process, our potential client will send us and our
competitors a request for proposal that outlines the work to be performed and
the specifications of the equipment to be installed. We then prepare and submit
our bid and the potential client chooses the winning contractor from among all
the bids submitted. On some projects, we also act as a subcontractor where a
third party has submitted a winning bid. </font></p>
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<font size="2">&#149;</font></p>
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<u><font size="2">System Design</font></u></p>
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<font size="2">Upon winning a project, we provide the final project design for
approval. System design is generally conducted through the joint efforts of our
research and development personnel, sales department, project service department
and quality control department. </font></p>
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<font size="2">&#149;</font></p>
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<u><font size="2">Manufacture and Purchase of Security and Surveillance Products</font></u></p>
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<font size="2">The major products used in our installation projects include
computer accessories, decoders, video capture cards, recorders and computer
cases. We use equipment manufactured by us in most of the installation projects,
but also use products from other manufacturers. Generally, approximately 60% of
the equipment used in any given project is equipment we have manufactured. &nbsp;</font></p>
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<font size="2">&#149;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<u><font size="2">Installation</font></u></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">We have a project service department that performs installations.
We use subcontractors for non-technical, labor intensive work. We usually assign
a project group with 5-10 members who are in charge of the technical components
of the project and manage the progress of each project.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: -14pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -18pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">&#149;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<u><font size="2">System Software Design and Integration</font></u></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">System software design and integration services are usually
conducted by our technical department. We design software for our customers'
security and surveillance systems in accordance with our customers'
specifications. We generally test the software on our own computer system before
integrating it into our customers' computer system. We then assign our
technicians to the site of each project to assist in the integration of the
security and surveillance system with our customers' computer system.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
<font size="2">40</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
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<font size="2">&#149;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
<u><font size="2">Testing</font></u></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Upon integration, our technical department will test and examine
the system to ensure the proper functioning of the installed security and
surveillance system.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<i><font size="2">Our Products </font></i></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">In 2006, we derived approximately 12% of our revenues from sales
of our products, excluding products sold in connection with the installation
projects described above. &nbsp;The recent acquisition of Cheng Feng and Hongtianzhi
and the security and surveillance businesses of Shenzhen Guangdian improved and
will continue to enhance our manufacturing capacity of our products. &nbsp;Cheng
Feng's Security Resources Integrated Management (&quot;SRIM&quot;) software platform will
enhance the functionality and management control of our key products. &nbsp;&nbsp;SRIM
software platform is essential to and facilitates coordination among systems
such as DVRs, building automation systems, access control systems, intruder
alarm systems and air-conditioning systems. &nbsp;Hongtianzhi's high quality and
reputable range of digital cameras will enhance the suite of comprehensive
products and services that we can offer to our customers. &nbsp;Hongtianzhi's digital
cameras will allow better quality capture of digital video during the day and
night. &nbsp;&nbsp;Hongtianzhi's digital cameras will allow our customers to enjoy better
quality video results. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">We manufacture the key components of the security and
surveillance products and rely on third party general electronic components. &nbsp;We
assemble the final products utilizing our technology. &nbsp;The final products are
sold under our brand names. Our main products include standalone digital video
recorders, embedded digital video recorders, mobile digital video recorders,
digital cameras and auxiliary apparatus.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: -14pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -18pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">&#149;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<u><font size="2">Standalone digital video recorders (Standalone DVR)</font></u></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">The Standalone DVR stores digital images captured via the
security cameras. It also controls the recording functions of the cameras and
manages the storage of the data.&nbsp;This product has a pre-installed surveillance
software system developed by us, which enables it to perform access control and
recording functions. It also has an upgradable hard drive which allows clients
to customize the digital storage capacity, network server functions&nbsp;which allow
the clients to access the digital images via Internet, MPEG-4 video compression
which allows a more efficient compression of the images and higher image
quality, and 4-16 signal input channels which allows 4 to 16 cameras to be
connected to the Standalone DVR. This product has the competitive features of
small size, low cost and high reliability. The primary markets for this product
are small to medium size businesses, non-profit organizations and home use. It
is generally used for small sized security and surveillance needs.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: -14pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -18pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">&#149;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<u><font size="2">Embedded digital video recorders (Embedded DVR)</font></u></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Similar to the Standalone DVR, the Embedded DVR provides
recording and compression functions. It has a pre-installed surveillance
software system developed by us, upgradable hard drive, network server function,
MPEG-4 Video compression and 4-36 signal input channels, and uses the Windows
operating system. The main difference is that the Embedded DVR has expanded
capacity to accommodate recording functions for a greater number of cameras
compared to the Standalone DVR. In addition, it is operated via Microsoft's
Windows Operating System.&nbsp;The primary markets for these products are large
projects and community security projects.</font></p>
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<font size="2">41</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
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<font size="2">&#149;</font></p>
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<u><font size="2">Mobile digital video recorders (Mobile DVR)</font></u></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Similar to the Standalone DVR, the Mobile DVR is smaller in size
and has a maximum of 4 ports. The Mobile DVR, which can be installed in a
vehicle, enables recording of digital video images within the cabin. This
product is easily installed, supports GPS/GPRS and has 1 to 4 signal input
channels and MPEG-4 video compression. The primary markets for this product are
the transportation industry and governmental agencies. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: -14pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -18pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">&#149;</font></p>
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<u><font size="2">Digital Cameras</font></u></p>
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<font size="2">Digital cameras can be easily installed in most locations on a
customer's site. The range of cameras that we produce and sell includes high
speed dome cameras, color Charge Coupled Device (&quot;CCD&quot;) cameras, indoor color
CCD dome cameras, color/black and white CCD flying saucer cameras, Infra Red CCD
multi-function cameras, mini digital signal processing cameras, indoor stand
alone sphere CCD cameras and network high speed sphere CCD cameras.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: -14pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -18pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">&#149;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<u><font size="2">Auxiliary apparatus</font></u></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Auxiliary apparatus includes DVR compression cards, video capture
cards, digital light processing monitors, decoders, alarm notification switches,
digital video fiber optics systems and matrix switch/control systems.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<b><i><font size="2">Raw Materials and Our Principal Suppliers </font></i></b>
</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">We use manufactured electronic components in our products. The
main components of our products include camcorders, monitors, frames, decoders,
lenses and outdoor hoods.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Shenzhen is one of the biggest and most concentrated bases for
electronic products in China. As a result, there are numerous suppliers and
vendors of the components that are needed for our products. Because of the high
level of competition among the suppliers, the prices of our principal components
are relatively stable and we are able to purchase these raw materials at
reasonable prices. We have entered into written contracts with several major
suppliers and vendors. The main suppliers to Golden are Shenzhen Ronghen Co.
Ltd., Shenzhen Dongxun Shidai Technology Co. Ltd., Shenzhen Kerui Electronic Co.
Ltd., Shenzhen Huichuang Computer Technology Co. Ltd. and Shenzhen Jingfeiya
Electronic Co. Ltd. &nbsp;The main suppliers to Cheng Feng are Hangzhou Hengsheng
Shiji Co., Ltd., Wuhan Hengyi Electronics Technology Development Co., Ltd.,
Shanghai Dongyang Electronics System Co., Ltd., Jiaenbi Electronics (Shenzhen)
Co., Ltd. and Fushan Yongxinlong Electronics Parts Co., Ltd. &nbsp;&nbsp;The main
suppliers to Hongtianzhi are &nbsp;Jian Jie Electronics Co., Ltd, Shenzhen Tian Yun
Electronic Co., Ltd, Changzhou Wei Duo Video Technology Co., Ltd, Shenzhen Hua
Qaing Electronic World Co., Ltd, Xing Xing Group Zhejiang Crystal
Photoelectricity Technology Co., Ltd. We believe we are not dependent on any of
these suppliers and will be able to replace them, if necessary, without material
difficulties. </font></p>
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<font size="2"><br>
&nbsp;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<b><i><font size="2">Our Distribution, Marketing, Customers and Customer
Programs </font></i></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Our customers are mainly government entities, non-profit
organizations and commercial entities throughout China, such as airports,
customs agencies, hotels, real estate developments, banks, mines, railways,
supermarkets, and entertainment enterprises. &nbsp;Because a large percentage of our
revenues derive from the installation of security and surveillance systems which
are generally non-recurring, we do not rely on one single or a small group of
customers. &nbsp;Not one single customer accounted for more than 10% of our total
revenue in 2006. &nbsp;We generally do not generate significant revenues from any
existing client after the installation project is completed unless that client
has additional installation sites for which our services might be required.
</font></p>
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&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="center">
<font size="2">42</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
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<font size="2"><br>
&nbsp;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">We have developed a multi-tiered marketing plan, allowing us to
effectively market products and services to our clients. We sell most of our
products and services through our own distribution network. Our distribution
network covers all of China. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">We have approximately 630 engineers and sales personnel. We
divide our market into 9 geographic regions. &nbsp;Each region is managed by a
regional manager who is responsible for technical support and management within
the region as well as client relations. &nbsp;Golden has 37 branch offices in
provincial capital cities, Cheng Feng has 22 distribution points and Hongtianzhi
has 53 distribution points throughout China. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">In addition to our own branch offices and employees, we cooperate
with independent sales agents and have established close relationships with
these sales agents in order to take advantage of their regional resources and
provide products and services that are tailored to the needs of our customers in
those regions. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Through this distribution and marketing network, we believe we
can continue to promote our brand recognition, strengthen the management of our
distribution network and improve our sales revenue and market share. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">We have also been marketing and promoting our products through
the following means:</font></p>
<ul>
  <li>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">participating in various industrial shows to display our products;</font></p>
  </li>
  <li>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">advertising in industrial magazines and periodicals to introduce and
promote our products;</font></p>
  </li>
  <li>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">publishing our own magazine which is distributed to our suppliers and sales
agents so that they can better understand our Company and strengthen their
confidence in us; and</font></p>
  </li>
  <li>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">utilizing the internet to promote our products, such as the public safety
network, Chinese Security Association network and HuiChong Network.</font></p>
  </li>
</ul>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
<b><i><font size="2">Competition</font></i></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">There are many companies in China engaged in the business of
manufacturing surveillance and security products and designing and installing
security and surveillance systems. The surveillance and security industry in
China is still nascent and no company has monopolized it. &nbsp;In addition, it is
difficult in the surveillance and security industry for very large companies to
reap benefits from their size, because most of the projects require the product
to be specially tailored to meet customers' individual requirements. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">In the security and surveillance industry, competition is based
on price, product quality, ability to distribute products, and ability to
provide after sales service. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Our major competitor in China is Hangzhou Haikang Weishi Digital
Technology Co. Ltd. which focuses on the development of video and audio decoding
technology and the development and manufacture of digital video compression
cards. &nbsp;Its most successful product is a digital video compression card which we
believe has a significant market share of such products in China. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Shenzhen Xiang Fei Technology Co., Ltd and Samsung Electronics
(China) Co., Ltd. which focus on the development of IR cameras and color box
cameras are major competitors to our subsidiary Hongtianzhi. The most successful
products are IR cameras and color box cameras which we believe has a significant
market share of such products in China. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
<font size="2">43</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Additional competition comes from international companies, such
as General Electric and Honeywell. &nbsp;Some of our international competitors are
larger than we are and possess greater name recognition, assets, personnel,
sales and financial resources. However, these competitors generally have higher
prices for their products, and most of them do not have distribution networks in
China that are as developed as ours. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">We believe that the range of our product and service offerings,
our brand recognition by the market, our capital resource, our relatively low
labor cost and our extensive distribution channels enable us to compete
favorably in the market for the security and surveillance products and services
that we offer in China. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<b><i><font size="2">Intellectual Property </font></i></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">We have registered with the Trademark office of the State
Administration for Industry and Commerce of China the following trademarks:</font></p>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="27%" style="border-bottom-style: none; border-bottom-width: medium">&nbsp;</td>
    <td align="middle" width="2%" style="border-bottom-style: none; border-bottom-width: medium">&nbsp;</td>
    <td align="middle" width="14%" style="border-bottom-style: none; border-bottom-width: medium"><font size="2">Trademark No./</font></td>
    <td align="middle" width="1%" style="border-bottom-style: none; border-bottom-width: medium">&nbsp;</td>
    <td align="middle" width="1%" style="border-bottom-style: none; border-bottom-width: medium">&nbsp;</td>
    <td align="middle" width="15%" style="border-bottom-style: none; border-bottom-width: medium">&nbsp;</td>
    <td align="middle" width="1%" style="border-bottom-style: none; border-bottom-width: medium">&nbsp;</td>
    <td align="middle" width="1%" style="border-bottom-style: none; border-bottom-width: medium">&nbsp;</td>
    <td align="middle" width="14%" style="border-bottom-style: none; border-bottom-width: medium">&nbsp;</td>
    <td align="middle" width="2%" style="border-bottom-style: none; border-bottom-width: medium">&nbsp;</td>
    <td align="middle" width="17%" style="border-bottom-style: none; border-bottom-width: medium">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" style="border-right-style: none; border-right-width: medium">&nbsp;</td>
    <td width="27%" style="border-left-style: none; border-left-width: medium; border-right-style: none; border-right-width: medium; border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1"><font size="2">Name</font></td>
    <td align="middle" width="2%" style="border-style: none; border-width: medium">&nbsp;</td>
    <td align="middle" width="14%" style="border-left-style: none; border-left-width: medium; border-right-style: none; border-right-width: medium; border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1"><font size="2">Application No.</font></td>
    <td align="middle" width="1%" style="border-style: none; border-width: medium">&nbsp;</td>
    <td align="middle" width="1%" style="border-style: none; border-width: medium">&nbsp;</td>
    <td align="middle" width="15%" style="border-left-style: none; border-left-width: medium; border-right-style: none; border-right-width: medium; border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1"><font size="2">Type</font></td>
    <td align="middle" width="1%" style="border-style: none; border-width: medium">&nbsp;</td>
    <td align="middle" width="1%" style="border-style: none; border-width: medium">&nbsp;</td>
    <td align="middle" width="14%" style="border-left-style: none; border-left-width: medium; border-right-style: none; border-right-width: medium; border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1"><font size="2">Expiration Date</font></td>
    <td align="middle" width="2%" style="border-style: none; border-width: medium">&nbsp;</td>
    <td align="middle" width="17%" style="border-left-style: none; border-left-width: medium; border-right-style: none; border-right-width: medium; border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1"><font size="2">Status</font></td>
  </tr>
  <tr>
    <td width="5%" style="border-right-style: none; border-right-width: medium">&nbsp;</td>
    <td width="27%" style="border-left-style: none; border-left-width: medium; border-right-style: none; border-right-width: medium; border-bottom-style: none; border-bottom-width: medium">&nbsp;</td>
    <td align="middle" width="17%" style="border-style: none; border-width: medium" colspan="3">&nbsp;</td>
    <td align="middle" width="17%" style="border-style: none; border-width: medium" colspan="3">&nbsp;</td>
    <td align="middle" width="17%" style="border-style: none; border-width: medium" colspan="3">&nbsp;</td>
    <td align="middle" width="17%" style="border-left-style: none; border-left-width: medium; border-right-style: none; border-right-width: medium; border-bottom-style: none; border-bottom-width: medium">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6">&nbsp;</td>
    <td width="27%" bgcolor="#E6E6E6" style="border-top-style: none; border-top-width: medium">&nbsp;</td>
    <td align="middle" width="17%" bgcolor="#E6E6E6" colspan="3" style="border-top-style: none; border-top-width: medium">&nbsp;</td>
    <td align="middle" width="17%" bgcolor="#E6E6E6" colspan="3" style="border-top-style: none; border-top-width: medium">
    <font size="2" FACE="Times New Roman">Word</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6" colspan="3" style="border-top-style: none; border-top-width: medium">&nbsp;</td>
    <td align="middle" width="17%" bgcolor="#E6E6E6" style="border-top-style: none; border-top-width: medium">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6"><font size="2">1</font></td>
    <td width="27%" bgcolor="#E6E6E6"><font size="2">Golden Group</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6" colspan="3"><font size="2">4108508</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6" colspan="3"><font size="2">(Chinese)</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6" colspan="3"><font size="2">July 2014</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font size="2">Approved</font></td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="27%">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6"><font size="2">2</font></td>
    <td width="27%" bgcolor="#E6E6E6"><font size="2">DVR</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">4108509</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">Word</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">July 2014</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font size="2">Approved</font></td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="27%">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6">&nbsp;</td>
    <td width="27%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">Word and</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="middle" width="17%" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6"><font size="2">3</font></td>
    <td width="27%" bgcolor="#E6E6E6"><img src="page307.gif" border="0" width="52" height="14"></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">4108511</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">Logo</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">July 2014</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font size="2">Approved</font></td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="27%">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6"><font size="2">4</font></td>
    <td width="27%" bgcolor="#E6E6E6"><img src="page308.jpg" border="0" width="33" height="25"></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">4108510</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">Logo</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">July 2014</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font size="2">Approved</font></td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="27%">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6"><font size="2">5</font></td>
    <td width="27%" bgcolor="#E6E6E6"><img src="page309.jpg" border="0" width="61" height="18"><font style="font-size: 12.0pt; font-family: MS Mincho">&#23041;&#21202;</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">3814725</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">Word and logo</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">December 2013</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font size="2">Approved</font></td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="27%">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6"><font size="2">6</font></td>
    <td width="27%" bgcolor="#E6E6E6"><font size="2">JDR</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">N/A</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">Word</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">N/A</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font size="2">Pending</font></td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="27%">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6">&nbsp;</td>
    <td width="27%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">Word and</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="middle" width="17%" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6"><font size="2">7</font></td>
    <td width="27%" bgcolor="#E6E6E6">
    <font lang="ZH-CN" style="font-size: 12.0pt; font-family: SimSun">&#23567;&#20445;&#23433;</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">4142706</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">Logo</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">September 2016</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font size="2">Approved</font></td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="27%">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6"><font size="2">8</font></td>
    <td width="27%" bgcolor="#E6E6E6"><font size="2">chenova</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">4207147</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">Word</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">December 2016</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font size="2">Approved</font></td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="27%">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6"><font size="2">9</font></td>
    <td width="27%" bgcolor="#E6E6E6"><img src="page3010.jpg" border="0" width="45" height="37"></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">4207148</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">Logo</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">December 2016</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font size="2">Approved</font></td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="27%">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6"><font size="2">10</font></td>
    <td width="27%" bgcolor="#E6E6E6"><font size="2"><b>IT</b>DVR</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">4289504</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">Word</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">N/A</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font size="2">Pending</font></td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="27%">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6">&nbsp;</td>
    <td width="27%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">Word and</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="middle" width="17%" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6"><font size="2">11</font></td>
    <td width="27%" bgcolor="#E6E6E6"><font size="2"><b>AUNIQUE</b></font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">5205739</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">Logo</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">N/A</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font size="2">Pending</font></td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="27%">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%" colspan="3">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6">&nbsp;</td>
    <td width="27%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">Word and</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="middle" width="17%" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6"><font size="2">12</font></td>
    <td width="27%" bgcolor="#E6E6E6"><font size="2"><b>ANK</b></font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">5205738</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">Logo</font></td>
    <td align="middle" width="17%" colspan="3" bgcolor="#E6E6E6"><font size="2">N/A</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font size="2">Pending</font></td>
  </tr>
</table>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
<font size="2">44</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="5%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">13</font></td>
    <td width="27%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">chenovation</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">4514946</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">Word</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">N/A</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">Pending</font></td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="27%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">14</font></td>
    <td width="27%" bgcolor="#E6E6E6"><img src="page3011.jpg" border="0" width="41" height="39"></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">4142705</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">Logo</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">N/A</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">Pending</font></td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="27%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6">&nbsp;</td>
    <td width="27%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="middle" width="17%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">Word
    and</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="middle" width="17%" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">15</font></td>
    <td width="27%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2"><b>IT</b>VS</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">4514947</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">Logo</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">N/A</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">Pending</font></td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="27%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6">&nbsp;</td>
    <td width="27%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="middle" width="17%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">Word
    and</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="middle" width="17%" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">16</font></td>
    <td width="27%" bgcolor="#E6E6E6">
    <font lang="ZH-CN" style="font-size: 12.0pt; font-family: SimSun">&#22885;&#23612;&#20811;</font><font lang="ZH-CN" style="font-size: 12.0pt; font-family: Times New Roman">
    </font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">5205737</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">Logo</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">N/A</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">Pending</font></td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="27%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">17</font></td>
    <td width="27%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">GAINY</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">3997890</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">Word</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">N/A</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    Approved</font></td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="27%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">18</font></td>
    <td width="27%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">HANEYE</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">3997888</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">Word</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">N/A</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    Approved</font></td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="27%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">19</font></td>
    <td width="27%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">HTS SECURITY</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">3859686</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">Word</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">N/A</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    Approved</font></td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="27%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">20</font></td>
    <td width="27%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">HTSTECH</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">3997889</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">Word</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">N/A</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    Approved</font></td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="27%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">21</font></td>
    <td width="27%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">HTS</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">3473088</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">Word</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">N/A</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    Approved</font></td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="27%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">22</font></td>
    <td width="27%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">TOPSCOUT</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">3997871</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">Word</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">N/A</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    Approved</font></td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="27%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">23</font></td>
    <td width="27%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">Viewse</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">848022</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">Word</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">N/A</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    Approved</font></td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="27%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">24</font></td>
    <td width="27%" bgcolor="#E6E6E6">
    <font lang="ZH-CN" style="font-size: 12.0pt; font-family: SimSun">&#23439;&#22825;&#35270;</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">4142511</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">Word</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">N/A</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    Approved</font></td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="27%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
    <td align="middle" width="17%">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">25</font></td>
    <td width="27%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2"><i>Viewse</i></font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">1414474</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">Word</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">N/A</font></td>
    <td align="middle" width="17%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    Approved</font></td>
  </tr>
</table>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">We have registered the domain name <font color="#0000FF"> <u>www.csstf.com</u></font>. In
addition, our subsidiaries, Golden, Cheng Feng and Hongtianzhi have registered
the domain names <font color="#0000FF"> <u>www.goldengroup.cn</u></font>,
<font color="#0000FF"> <u>www.cf1688.com</u></font>, <font color="#0000FF"> <u>
www.viewse.com</u></font> and <font color="#0000FF"> <u>www.hts.cn</u></font>, respectively. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 36pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">We hold no patents under our own name. &nbsp;We protect our trade
secrets through confidentiality provisions of the employment contracts we enter
into with our employees. In addition, our engineers are generally divided into
different project groups, each of which generally handles only a portion of the
project. As a result, no one engineer generally has access to the entire design
process and documentation for a particular product. <br>
&nbsp;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<b><i><font size="2">Employees</font></i></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">We have approximately 1,300 full-time employees. Approximately
168 of them are administrative and accounting staff, approximately 95 of them
are research and development staff and approximately 630 of them are engineers
and sales staff.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Approximately 645 employees are located in Shenzhen, and the rest
of the employees are located in various branches throughout China. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Approximately 80% of our employees have bachelor degrees, and
most of those majored in computer sciences. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="center">
<font size="2"><br>
45</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Our employees are members in trade unions which protect
employees' rights, aim to assist in the fulfillment of our economic objectives,
encourage employee participation in management decisions and assist in mediating
disputes between us and union members.&nbsp; We believe that we maintain
a&nbsp;satisfactory&nbsp;working relationship with our employees and we have not
experienced any significant labor disputes or any difficulty in recruiting staff
for our operations. </font><b><font size="2">&nbsp;</font></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">As required by applicable Chinese law, we have&nbsp;entered into
employment contracts with all of our officers, managers and employees.&nbsp;&nbsp;Our
employees in China participate in a state pension&nbsp;plan organized by Chinese
municipal and provincial governments.&nbsp; We are required to contribute monthly to
the&nbsp;plan&nbsp;at the rate of 23% of the average monthly salary.&nbsp; As of the date of
this report, we have complied with the regulation and have paid the state
pension plan as required by law.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">In addition, we are required by Chinese law to cover employees in
China with various types of social insurance. We have purchased social insurance
for some of our employees. For those whom we have not purchased social
insurance, the premium has been added into their salary so that they can
purchase social insurance in their individual capacity at the location of their
recorded residences. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">With the expansion of our business operations and several
anticipated acquisitions, we expect that the number of our employees will
increase in the next 12 months. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2"><br>
</font>
<b><i><font size="2">Research and Development </font></i></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Currently, we have approximately 95 employees devoted to our
research and development efforts, which are aimed at finding new varieties of
products, improving existing products, improving overall product quality and
reducing production costs. &nbsp;We have established a strategic partnership with
Beijing University through which we will provide funds to Beijing University for
the research and development of video surveillance and security products. &nbsp;Our
research and development efforts are led by Dr. Yong Zhao, who worked for the
research and development department of a large international surveillance and
security company and has extensive research experience. &nbsp;Under the partnership
agreement with Beijing University, we have agreed to provide Beijing University
up to RMB 2 million (approximately $250,000) for their research and development
efforts. &nbsp;We paid RMB 500,000 (approximately $62,500) under the agreement in
2006.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<b><i><font size="2">Government Regulation </font></i></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">All security and surveillance products produced in China must
satisfy testing by the China Public Security Bureau, and manufacturers of such
products must receive the Security Technology Protection Product Manufacturing
Permit from the provincial agency. &nbsp;Our subsidiary Golden satisfactorily
completed this testing in 2002 and also received a permit from Guangdong
province in May 2003. In addition, Golden a license from the Guangdong province
for the design, installation and repair of security protection systems. &nbsp;Hongtianzhi
received a permit from China National Accreditation of Laboratories in Sept,
2005. &nbsp;Cheng Feng received a permit from China National Accreditation of
Laboratories in Oct 2002. &nbsp;As Hongtianzhi and Cheng Feng do not participate in
the design, installation and repair of security protection systems, no other
licenses are required. &nbsp;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
<font size="2">46</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Because our operating subsidiaries Golden, Cheng Feng and
Hongtianzhi are located in PRC, we are regulated by the national and local laws
of PRC. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">There is no private ownership of land in China and all land
ownership is held by the government of the PRC, its agencies and collectives.
Land use rights can be obtained from the government for a period up to 70 years,
and are typically renewable. Land use rights can be transferred upon approval by
the land administrative authorities of the PRC (State Land Administration
Bureau) upon payment of the required land transfer fee. We have received the
necessary land use right certificate for the properties described under &quot;Item 2
&#150; Description of Property.&quot; &nbsp;See &quot;Item 2 &#150; Description of Property&quot; for more
details.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">In addition, we are also subject to PRC's foreign currency
regulations. The PRC government has control over RMB reserves through, among
other things, direct regulation of the conversion or RMB into other foreign
currencies. Although foreign currencies which are required for &quot;current account&quot;
transactions can be bought freely at authorized Chinese banks, the proper
procedural requirements prescribed by Chinese law must be met. At the same time,
Chinese companies are also required to sell their foreign exchange earnings to
authorized Chinese banks and the purchase of foreign currencies for capital
account transactions still requires prior approval of the Chinese government.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">We believe that we are in material compliance with all
registrations and requirements for the issuance and maintenance of all licenses
required by the governing bodies, and that all license fees and filings are
current</font><b><i><font size="2">. </font></i></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<b><i><font size="2">Legal Proceedings</font></i></b></p>
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&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">From time to time, we have disputes that arise in the ordinary
course of its business. &nbsp;Currently, there are no material legal proceedings to
which we are a party, or to which any of our property is subject, that we expect
to have a material adverse effect on our financial condition. &nbsp;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
<b><font size="2">MANAGEMENT</font></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
<b><i><font size="2">Directors and Executive Officers</font></i></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 36pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
<font size="2">The following sets forth the name and position of each of our
current executive officers and directors.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt">
<font size="2"><br>
&nbsp;</font></p>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="30%"><font face="Times New Roman" size="2"><b>
    <p style="MARGIN-LEFT: 50px">NAME</b></font></td>
    <td width="18%"><font face="Times New Roman" size="2"><b>AGE</b></font></td>
    <td width="52%"><font face="Times New Roman" size="2"><b>POSITION</b></font></td>
  </tr>
  <tr>
    <td width="30%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 50px">Guoshen Tu</font></td>
    <td width="18%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">42</font></td>
    <td width="52%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">CEO and Chairman of
    the Board</font></td>
  </tr>
  <tr>
    <td width="30%"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 50px">Terence Yap</font></td>
    <td width="18%"><font face="Times New Roman" size="2">36</font></td>
    <td width="52%"><font face="Times New Roman" size="2">CFO, Vice Chairman of
    the Board</font></td>
  </tr>
  <tr>
    <td width="30%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 50px">Shufang Yang</font></td>
    <td width="18%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">37</font></td>
    <td width="52%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">COO and Director</font></td>
  </tr>
  <tr>
    <td width="30%"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 50px">Jianguo Jiang</font></td>
    <td width="18%"><font face="Times New Roman" size="2">41</font></td>
    <td width="52%"><font face="Times New Roman" size="2">Vice President and
    Director</font></td>
  </tr>
  <tr>
    <td width="30%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 50px">Lingfeng Xiong</font></td>
    <td width="18%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">55</font></td>
    <td width="52%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">Vice President and
    Director</font></td>
  </tr>
  <tr>
    <td width="30%"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 50px">Yong Zhao</font></td>
    <td width="18%"><font face="Times New Roman" size="2">44</font></td>
    <td width="52%"><font face="Times New Roman" size="2">Chief Technology
    Officer</font></td>
  </tr>
</table>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 36pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<b><font size="2">Guoshen Tu</font></b><font size="2">. &nbsp;Mr. Tu has been our
Chief Executive Officer and a director since September 2005. &nbsp;He has extensive
experience in surveillance and technology. &nbsp;From 2001 to 2005, Mr. Tu was the
Chief Executive Officer and Secretary of Golden Group Corporation (Shenzhen)
Limited. &nbsp;From 1999 to 2001, he served as Chief Executive Officer of Zhongshan
Golden Grains Industry Limited and as President of Jiangxi Golden Group Limited.
&nbsp;Mr. Tu currently serves as the Chairman of Jiangxi Golden Motuo Che Zhizhao Co.
Ltd., but is not involved in the daily management of these companies. </font>
</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 36pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
&nbsp;</p>
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&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
<font size="2">47</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 36pt; PADDING-TOP: 0pt">
<font size="2"><br>
&nbsp;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 36pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<b><font size="2">Terence Yap</font></b><font size="2">. &nbsp;Mr. Yap has served as
our Chief Financial Officer since January 2007, and our director since March
2006. &nbsp;Mr. Yap was the President, CEO and a director of Digital Network Alliance
International, Inc., a Delaware company which is engaged in the business of
providing satellite Internet connections to customers in the Asia Pacific
region, including Hong Kong, Singapore, Indonesia, Bangladesh, Pakistan and
Mongolia, and the business of providing managed broadband services to commercial
office buildings and apartment buildings in Singapore and Hong Kong. &nbsp;Digital
Network Alliance International, Inc., is a reporting company with the U.S.
Securities and Exchange Commission. &nbsp;Mr. Yap has been affiliated with Digital
Network Alliance International, Inc. and its affiliated entities since January
2002. &nbsp;From April 2000 to December 2002, he was the Director of Business
Development for Skyhub Asia Co., Ltd., where he was responsible for the
development of partnerships and alliances with various partners in Hong Kong and
within the region. &nbsp;Skyhub Asia's main line of business was the provision of
satellite services within the Asia Pacific region. &nbsp;From June, 1999 to April,
2000, he served as the Business Development Manager of MCI WorldCom Asia
Pacific, Ltd., where he was part of the business development team in the Asia
Pacific region and was involved in mergers and acquisitions of licensed
telecommunications companies, building of physical points of presence and
negotiations with incumbent telecommunications operators. &nbsp;MCI WorldCom's main
line of business was the provision of global data communication services. &nbsp;From
June 1998 to June 1999, he served as the distribution manager for Tele Media
International H.K. Ltd (&quot;TMI&quot;), where he was responsible for distribution and
sale of the company's products and services within various countries in the Asia
Pacific region. &nbsp;TMI's main line of business was the provision of data
communication services within Europe and the Asia Pacific region. &nbsp;From January
1996 to June 1998, he was employed by Hutchison Corporate Access (HK) Ltd. and
Hutchison Corporate Access Pte. Ltd (HCA), first as a senior market development
executive and later as a business development manager. &nbsp;HCA's main line of
business is the provision of satellite data network services within the Asia
Pacific region. &nbsp;From June 1995 to January 1996, he was employed by Pacific
Century Corporate Access Pte. Ltd. (&quot;PCCA&quot;) as a project engineer. &nbsp;PCCA's main
line of business was the provision of satellite data networking services in the
Asia Pacific region. &nbsp;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 36pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 36pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<b><font size="2">Shufang Yang. &nbsp;</font></b><font size="2">&nbsp;Mr. Yang has served
as our Chief Operating Officer and director since August 17, 2006. &nbsp;Mr. Yang
worked for Zhejiang Yin Cheng Electronic Ltd. as the general manager from July
1998 to April 2001 and has served as the President and CEO of Chengfeng since
April 2001. &nbsp;Mr. Yang has extensive experience in the security and surveillance
industry and received an EMBA from China Europe International Business School.
</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 36pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 36pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<b><font size="2">Jianguo Jiang. &nbsp;</font></b><font size="2">&nbsp;Mr. Jiang has
served as our Vice President since August 2006<b> </b>and our director since
January 2006. &nbsp;From 1999 to 2003, Mr. Jiang worked for Shenzhen Shi Xun Tong
Electronics Ltd as a general manager. &nbsp;He was responsible for supervising daily
operations and marketing activities. &nbsp;From 2003 to 2005, Mr. Jiang served as the
president in Yuan Da Wei Shi Technology Limited. &nbsp;He is responsible for
strategic decision-making and market expansion of our Company. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 36pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 36pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<b><font size="2">Lingfeng Xiong</font></b><font size="2">. &nbsp;Mr. Xiong has been
our Vice President and our director since September 2005. &nbsp;He has served as the
Vice President of Golden since 2001. &nbsp;He supervises many aspects of our Company
and our products. &nbsp;</font></p>
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<font size="2"><br>
&nbsp;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="center">
<font size="2">48</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 36pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<b><font size="2">Yong Zhao</font></b><font size="2">. Dr. Zhao has been our
Chief Technology Officer since February 2006. &nbsp;From 2000 to 2004, Dr. Zhao
worked as a technology consultant for Honeywell Corporation, Ottawa, Canada,
which is one of the 30 biggest companies listed on the Dow Jones index. &nbsp;During
his service, Dr. Zhao was responsible for the development of core technology and
for supervising research and development activities. &nbsp;From 2004 to present, Dr.
Zhao has been a director of Mobile Video Networking Lab and an associate
professor of Shenzhen Graduate School of Peking University. &nbsp;His major
responsibilities include supervising the research and development activities in
the lab and providing valuable advice and instructions in key projects. &nbsp;Dr.
Zhao spends about 60% of his business time on our affairs and approximately 40%
of his business time on the affairs of Mobile Video Networking Lab and Shenzhen
Graduate School of Peking University.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 36pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<b><i><font size="2">Board Composition and Meetings of the Board of Directors</font></i></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Our board of the directors is currently composed of five members:
Goshen Tu , Terence Yap, Shufang Yang, Jianguo Jiang and Lingfeng Xiong. &nbsp;All
board action requires the approval of a majority of the directors in attendance
at a meeting at which a quorum is present. &nbsp;During 2006, our Board of Directors
met in person more than times and acted by unanimous written consent more than
10 times.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 36pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<b><i><font size="2">Committees and Audit Committee Financial Expert</font></i></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 36pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">We do not have a standing audit, nominating or compensation
committee or any committee performing a similar function, although we may form
such committees in the near future. &nbsp;Since we do not currently have an audit
committee, we have no audit committee financial expert. &nbsp;Our entire Board of
Directors handles the functions that would otherwise be handled by an audit
committee. &nbsp;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">In the future, we may search for a qualified independent expert
who would be willing to serve on our Board of Directors and who would be willing
to act as an audit committee financial expert. &nbsp;Before retaining any such
expert, our Board of Directors would make a determination as to whether such
person is both qualified and independent. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 36pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<b><i><font size="2">Independent Directors</font></i></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
<font size="2">No member of our Board of Directors qualifies as an &quot;independent
director&quot; under the listing standards of The Nasdaq Stock Market, New York Stock
Exchange or American Stock Exchange.</font></p>
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&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">During our 2007 fiscal year, we plan to identify directors who
qualify as &quot;independent directors,&quot; establish board committees on which such
independent directors may serve and adopt written board committee charters, as
appropriate, to assist in corporate governance. We expect that before the end of
our 2007 fiscal year, our Board will be comprised of a majority of independent
directors. &nbsp;We may add independent directors to our Board by expanding the size
of our board and having the incoming independent directors fill the vacancies
created by such increase or we may request that existing directors resign to
create a vacancy that can be filled by independent directors that are selected
by our board during the 2007 fiscal year.</font></p>
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<font size="2"><br>
49</font></p>
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&nbsp;</p>
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<b><i><font size="2">Policy Regarding Board Attendance</font></i></b></p>
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&nbsp;</p>
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<font size="2">Our directors are expected to attend board meetings as frequently
as necessary to properly discharge their responsibilities and to spend the time
needed to prepare for each such meeting. &nbsp;Our directors are expected to attend
annual meetings of stockholders, but we do not have a formal policy requiring
them to do so.</font></p>
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&nbsp;</p>
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<b><i><font size="2">Director Compensation</font></i></b></p>
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&nbsp;</p>
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<font size="2">No cash compensation or other compensation was paid to any member
of our Board of Directors for services as a director during the fiscal year
ended December 31, 2006 and we have no standard arrangement pursuant to which
any director is compensated for his or her services in such capacity. &nbsp;When
independent directors are appointed to our Board, we will likely compensate them
for their services as independent directors through a combination of equity
incentives and cash payments. &nbsp;Our Board has not yet established the
compensation levels for independent directors as we do not yet have any
independent directors. </font></p>
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&nbsp;</p>
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<font size="2">The Board may award special remuneration to any director
undertaking any special services on our behalf other than those services
ordinarily required of a director. &nbsp;In 2006, no such special remuneration was
paid to any of our directors. &nbsp;</font></p>
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&nbsp;</p>
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<font size="2">All authorized out-of-pocket expenses incurred by a director on
our behalf will be subject to reimbursement upon our receipt of required
supporting documentation of such expenses.</font></p>
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&nbsp;</p>
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<b><i><font size="2">Family Relationships</font></i></b></p>
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&nbsp;</p>
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<font size="2">There are no family relationships among our directors or
officers.</font></p>
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&nbsp;</p>
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<b><i><font size="2">Code of Ethics</font></i></b></p>
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&nbsp;</p>
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<font size="2">On June 9, 2006, our Board of Directors adopted a Code of Ethics
that applies to all of our directors, officers and employees, including our
principal executive officer, principal financial officer and principal
accounting officer. &nbsp;The Code of Ethics addresses, among other things, honesty
and ethical conduct, conflicts of interest, compliance with laws, regulations
and policies, including disclosure requirements under the federal securities
laws, confidentiality, trading on inside information and reporting violations of
the code. &nbsp;We are in the process of making our Code of Conduct available on our
website, which is located at <font color="#0000FF"> <u>www.csstf.com</u></font>. &nbsp;Once it is available on our
website, any amendments or waivers to the Code of Conduct will be posted on our
website within four business days of such amendment or waiver. &nbsp;Until such time,
however, any amendments or waivers to our Code of Conduct will be filed with the
SEC in a Current Report on Form 8-K.</font></p>
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&nbsp;</p>
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<b><font size="2">EXECUTIVE COMPENSATION</font></b></p>
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&nbsp;</p>
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<b><i><font size="2">Compensation Discussion and Analysis </font></i></b></p>
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&nbsp;</p>
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<b><i><font size="2">Background and Compensation Philosophy</font></i></b></p>
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&nbsp;</p>
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<font size="2">We are a holding company that owns two direct subsidiaries,
Safetech and CSST China. &nbsp;Safetech is a holding company that owns Golden, CSST
HK and Chain Star. &nbsp;CSST HK in turn owns Cheng Feng, and Chain Star owns
Hongtianzhi. &nbsp;Our primary business operations are conducted through our indirect
subsidiaries Golden, Cheng Feng and Hongtianzhi. &nbsp;Golden's business is focused
on manufacturing, distributing, installing and maintaining security and
surveillance systems in China. &nbsp;Cheng Feng's business is focused on the
manufacturing, marketing and sales of security and surveillance related hardware
as well as the development and integration of software. &nbsp;Hongtianzhi's business
is focused on the manufacture and selling of digital cameras. &nbsp;We employ
approximately 1,300 people and had revenues of approximately $107 million in
2006. &nbsp;Our compensation structure reflects our business. &nbsp;The overall
compensation offered is designed to attract and retain executives with the
appropriate amount of experience. &nbsp;</font></p>
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<font size="2"><br>
50</font></p>
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&nbsp;</p>
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<font size="2">We currently have two named executive officers, Goshen Tu, our
Chief Executive Officer and President, and Terence Yap, our Chief Financial
Officer and Vice President. &nbsp;Our named executives do not have employment
agreements, severance or change-of-control agreements, and the Company is not
obligated to pay severance or other enhanced benefits to executive officers upon
termination of their employment. &nbsp;Our named executives serve at the will of the
Board.</font></p>
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&nbsp;</p>
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<font size="2">Our Board of Directors, on which each of Messrs. Tu and Yap
serve, has historically determined the compensation to be paid to the Company's
executive officers based on the Company's financial and operating performance
and prospects, the level of compensation paid to similarly situated executives
in comparably sized companies and the contributions made by each of the
executive officers to the success of the Company. &nbsp;</font></p>
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&nbsp;</p>
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<font size="2">Our Board of Directors has not adopted or established a formal
policy or procedure for determining the amount of compensation paid to our
executive officers. &nbsp;No pre-established, objective performance goals or metrics
have been used by the Board of Directors in determining the compensation of our
executive officers. &nbsp;Mr. Tu and Mr. Yap are involved in the Board's
deliberations regarding executive compensation and provide recommendations with
respect to their and the other executive officers' compensation. &nbsp;&nbsp;&nbsp;&nbsp;</font></p>
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&nbsp;</p>
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<font size="2">No cash compensation or other compensation was paid to any member
of our Board of Directors for services as a director during the fiscal year
ended December 31, 2006 and we have no standard arrangement pursuant to which
any director is compensated for his or her services in such capacity. &nbsp;</font></p>
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&nbsp;</p>
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<font size="2">As our executive leadership and Board of Directors grows, our
Board of Directors may decide to form a compensation committee charged with the
oversight of executive compensation plans, policies and programs, but we have no
current plans to establish a compensation committee.</font></p>
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&nbsp;</p>
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<b><i><font size="2">Elements of Compensation</font></i></b></p>
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&nbsp;</p>
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<font size="2">We provide our executive officers with a base salary,
discretionary bonuses and equity incentives to compensate them for services
rendered during the year. &nbsp;Our policy of compensating our executives in this way
has served the Company well. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
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&nbsp;</p>
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<b><font size="2">Base Salary</font></b><font size="2">. &nbsp;The base salary paid
to each of our named executive officers during 2006 was approximately $15,000.
&nbsp;All such amounts were paid in cash. &nbsp;The amount of the base salary for each
individual is set at the sole discretion of the Board of Directors. &nbsp;</font></p>
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<font size="2"><br>
51</font></p>
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&nbsp;</p>
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<b><font size="2">Discretionary Bonus</font></b><font size="2">. &nbsp;Historically,
we have not paid bonus compensation to our executive officers and no bonus
compensation was paid to our executive officers in 2006. &nbsp;If the Board of
Directors determines to do so in the future, it will be on an ad hoc basis to
recognize superior performance by executive officers as determined in the sole
discretion of the Board of Directors.</font></p>
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&nbsp;</p>
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<b><font size="2">Equity Incentives</font></b><font size="2">. &nbsp;As of December
31, 2006, we did not have a stock option or other equity incentive plan. &nbsp;</font></p>
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&nbsp;</p>
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<font size="2">We granted stock options on an ad hoc basis in 2006 to encourage
performance and retention by providing additional incentives for executives to
further our growth, development and financial success by personally benefiting
through the ownership of our common shares. </font></p>
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&nbsp;</p>
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<font size="2">The exercise price of each stock option awarded to our executives
is the closing price of stock on the date of grant. &nbsp;We have no program, plan or
practice of granting equity awards that coincide with the release by the Company
of material non-public information. &nbsp;&nbsp;</font></p>
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&nbsp;</p>
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<font size="2">On February 7, 2007, our Board of Directors adopted the Company's
2007 Equity Incentive Plan, or the &quot;2007 Plan,&quot; to provide for grants of stock
options, stock appreciation rights, performance units, restricted stock,
restricted stock units and performance shares. &nbsp;The exercise price per share for
the shares to be issued pursuant to an exercise of a stock option will be no
less than the fair market value per share on the grant date, except in the case
of an incentive stock option granted to a 10% owner, where the exercise price
will be no less than 110% of the fair market value per share on the grant date.
No more than an aggregate of 2,500,000 shares (or for awards denominated in
cash, the fair market value of 2,500,000 shares on the grant date) may be
subject to awards under the 2007 Plan to any individual participant in any one
fiscal year of the Company. &nbsp;No awards may be granted under the 2007 Plan after
February 7, 2012, except that any award granted before then may extend beyond
that date. &nbsp;</font></p>
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&nbsp;</p>
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<b><font size="2">Retirement Benefits. &nbsp;</font></b><font size="2">Our executive
officers are not presently entitled to company-sponsored retirement benefits.
&nbsp;Our executive officers do, however, participate in a state pension&nbsp;plan
organized by Chinese municipal and provincial governments.&nbsp; The Company is
required to contribute monthly to the&nbsp;plan&nbsp;at the rate of 23% of the average
monthly salary.&nbsp; As of the date of this prospectus, we have complied with the
regulation and have paid the executives' state pension plan as required by the
law.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 72pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<b><font size="2">Perquisites. &nbsp;</font></b><font size="2">We have not provided
our executive officers with any material perquisites and other personal benefits
and, therefore, we do not view perquisites as a significant or necessary element
of our executive's compensation. &nbsp;&nbsp;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 72pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<b><font size="2">Deferred Compensation. &nbsp;</font></b><font size="2">We do not
provide our executives the opportunity to defer receipt of annual compensation.
&nbsp;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">The following table sets forth information concerning all cash
and non-cash compensation awarded to, earned by or paid to our Chief Executive
Officer and our Chief Financial Officer for services performed for us and our
subsidiaries during 2006 in all capacities. &nbsp;No executive officer, other than
Mr. Yap, received compensation of $100,000 or more in 2006. &nbsp;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
<font size="2">52</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 5pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
<b><font size="2">SUMMARY COMPENSATION TABLE</font></b></p>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" width="31%">
    <font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 10px">Name and Principal</font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="middle" width="17%">
    <font face="Times New Roman" size="2">Year</font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="middle" width="17%">
    <font face="Times New Roman" size="2">Salary</font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="middle" width="17%">
    <font face="Times New Roman" size="2">Stock</font></td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="middle" width="17%">
    <font face="Times New Roman" size="2">Total</font></td>
  </tr>
  <tr>
    <td style="BORDER-LEFT: 1px solid" width="31%">
    <font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 10px">Position</font></td>
    <td style="BORDER-LEFT: 1px solid" align="middle" width="17%">&nbsp;</td>
    <td style="BORDER-LEFT: 1px solid" align="middle" width="17%">
    <font face="Times New Roman" size="2">($)</font></td>
    <td style="BORDER-LEFT: 1px solid" align="middle" width="17%">
    <font face="Times New Roman" size="2">Awards</font></td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-LEFT: 1px solid" align="middle" width="17%">
    <font face="Times New Roman" size="2">($)</font></td>
  </tr>
  <tr>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" width="31%">
    <p style="MARGIN-LEFT: 10px">&nbsp;</td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="middle" width="17%">
    &nbsp;</td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="middle" width="17%">
    &nbsp;</td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="middle" width="17%">
    <font face="Times New Roman" size="2">($)</font></td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="middle" width="17%">
    &nbsp;</td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" width="31%" bgcolor="#E6E6E6">
    <font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 10px">Guoshen Tu, CEO,</font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="middle" width="17%" bgcolor="#E6E6E6">
    <font face="Times New Roman" size="2">2006</font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="middle" width="17%" bgcolor="#E6E6E6">
    <font face="Times New Roman" size="2">15,000</font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="middle" width="17%" bgcolor="#E6E6E6">
    &nbsp;</td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="middle" width="17%" bgcolor="#E6E6E6">
    <font face="Times New Roman" size="2">15,000</font></td>
  </tr>
  <tr>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" width="31%" bgcolor="#E6E6E6">
    <font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 10px">President, and Director</font></td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="middle" width="17%" bgcolor="#E6E6E6">
    &nbsp;</td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="middle" width="17%" bgcolor="#E6E6E6">
    &nbsp;</td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="middle" width="17%" bgcolor="#E6E6E6">
    &nbsp;</td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="middle" width="17%" bgcolor="#E6E6E6">
    &nbsp;</td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" width="31%">
    <p style="MARGIN-LEFT: 10px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="middle" width="17%">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="middle" width="17%">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="middle" width="17%">
    &nbsp;</td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="middle" width="17%">
    &nbsp;</td>
  </tr>
  <tr>
    <td style="BORDER-LEFT: 1px solid" width="31%">
    <font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 10px">Terence Yap, CFO, Vice</font></td>
    <td style="BORDER-LEFT: 1px solid" align="middle" width="17%">
    <font face="Times New Roman" size="2">2006</font></td>
    <td style="BORDER-LEFT: 1px solid" align="middle" width="17%">
    <font face="Times New Roman" size="2">15,000</font></td>
    <td style="BORDER-LEFT: 1px solid" align="middle" width="17%">
    <font face="Times New Roman" size="2">350,000 <sup>(3)</sup></font></td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-LEFT: 1px solid" align="middle" width="17%">
    <font face="Times New Roman" size="2">365,000</font></td>
  </tr>
  <tr>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" width="31%">
    <font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 10px">President and Director <sup>(1)</sup></font></td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="middle" width="17%">
    &nbsp;</td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="middle" width="17%">
    &nbsp;</td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="middle" width="17%">
    &nbsp;</td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="middle" width="17%">
    &nbsp;</td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" width="31%" bgcolor="#E6E6E6">
    <p style="MARGIN-LEFT: 10px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="middle" width="17%" bgcolor="#E6E6E6">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="middle" width="17%" bgcolor="#E6E6E6">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="middle" width="17%" bgcolor="#E6E6E6">
    &nbsp;</td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="middle" width="17%" bgcolor="#E6E6E6">
    &nbsp;</td>
  </tr>
  <tr>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" width="31%" bgcolor="#E6E6E6">
    <font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 10px">Jinxu Wu, Former CFO <sup>(2)</sup></font></td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="middle" width="17%" bgcolor="#E6E6E6">
    <font face="Times New Roman" size="2">2006</font></td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="middle" width="17%" bgcolor="#E6E6E6">
    <font face="Times New Roman" size="2">15,000</font></td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="middle" width="17%" bgcolor="#E6E6E6">
    &nbsp;</td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="middle" width="17%" bgcolor="#E6E6E6">
    <font face="Times New Roman" size="2">15,000</font></td>
  </tr>
</table>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 5pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; FONT-SIZE: 10pt; MARGIN-BOTTOM: -12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -18pt; LINE-HEIGHT: 12pt; PADDING-TOP: 0pt">
(1)</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 12pt; PADDING-TOP: 0pt" align="justify">
Mr. Yap has served as our CFO since January 2007, Vice President since May 2006
and director since March 2006.</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; FONT-SIZE: 10pt; MARGIN-BOTTOM: -12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -18pt; LINE-HEIGHT: 12pt; PADDING-TOP: 0pt" align="justify">
(2)</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 12pt; PADDING-TOP: 0pt" align="justify">
Mr. Wu served as our CFO from January 2005 to January 2007.</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; FONT-SIZE: 10pt; MARGIN-BOTTOM: -12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -18pt; LINE-HEIGHT: 12pt; PADDING-TOP: 0pt" align="justify">
(3)</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 12pt; PADDING-TOP: 0pt" align="justify">
Mr. Yap received 100,000 shares of our common stock valued at $350,000 in March
2006 in connection with a consulting agreement between the Company and Mr. Yap,
dated as of February 8, 2006, as amended on June 27, 2006. </p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
<font size="2"><br>
&nbsp;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<b><i><font size="2">Compensation Committee Interlocks and Insider Participation</font></i></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">During the last fiscal year we did not have a standing
compensation committee. &nbsp;Our Board of Directors was responsible for the
functions that would otherwise be handled by the compensation committee.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
<b><font size="2">TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN
CONTROL PERSONS</font></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 6pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
<b><i><font size="2">Transactions with Related Persons</font></i></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">The following includes a summary of transactions since the
beginning of the last fiscal year, or any currently proposed transaction, in
which we were or are to be a participant and the amount involved exceeded or
exceeds $120,000, and in which any related person had or will have a direct or
indirect material interest (other than compensation described under &quot;Executive
Compensation&quot;). &nbsp;We believe the terms obtained or consideration that we paid or
received, as applicable, in connection with the transactions described below
were comparable to terms available or the amounts that would be paid or
received, as applicable, in arm's-length transactions. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: -14pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -18pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
<font size="2">&#149;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">On September 5, 2006, we entered into agreements to purchase the
security and surveillance business of the Four-Related Companies, of which our
CEO and director Guoshen Tu is the Chairman and a shareholder. &nbsp;Mr. Tu received
no consideration for the acquisition of his interest in these companies, however
his wife Zhiqun Li who owns 20% of Jian An Ke and her designees received 100,000
shares of our Common Stock as part of the transaction. &nbsp;Our director and Vice
President Lingfeng Xiong, as the 10% shareholder of Jiangxi Golden, and his
designees received 50,000 shares of our Common Stock. &nbsp;Our director and Vice
President Jianguo Jiang, as the 40% shareholder of Shenzhen Guangdian, and his
designees received 550,000 shares of our Common Stock. &nbsp;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: -14pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -18pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">&#149;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">In July 6, 2006, we entered into a stock purchase agreement with
the shareholders of Cheng Feng pursuant to which we paid the shareholders of
Cheng Feng consideration of RMB 120 million (approximately $15 million) in
exchange for 100% ownership of Chengfeng. &nbsp;Our newly appointed Chief Operating
Officer and director Shufang Yang owns 46.26% of Cheng Feng.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
<font size="2">53</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: -14pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -18pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
<font size="2">&#149;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">We have leased property to Jiangxi Golden, Jian An Ke and Jiangxi
Golden Motuo Che Zhizhao Co. Ltd. of which Guoshen Tu, our CEO and director, is
the Chairman and a shareholder. &nbsp;The aggregated annual rental was $0.50 million,
$0.44 million and $0.48 million in 2006, 2005 and 2004, respectively. &nbsp;The
leases expire on December 31, 2007. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: -14pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -18pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">&#149;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: -14pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">We entered into a consulting service agreement with Terence Yap,
our CFO and director, on February 8, 2006, which was later amended on June 27,
2006. &nbsp;Pursuant to the agreement, as amended, we issued 100,000 shares of our
common stock to Terence Yap on March 1, 2006 in exchange for his consulting
services valued at $350,000, which are to be provided to our Company from
February 8, 2006 to February 7, 2009.<br>
&nbsp;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; FONT-SIZE: 12pt; MARGIN-BOTTOM: 6pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 6pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<b><i><font size="2">Policies and Procedures for Review, Approval or
Ratification of Transactions with Related Persons</font></i></b></p>
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<font size="2">We are in the process of adopting a written related-person
transactions policy that sets forth our policies and procedures regarding the
identification, review, consideration and approval or ratification of
&quot;related-persons transactions.&quot; &nbsp;For purposes of our policy only, a &quot;related-person transaction&quot; will be a transaction, arrangement or relationship
(or any series of similar transactions, arrangements or relationships) in which
we and any &quot;related person&quot; are participants involving an amount that exceeds
$50,000. &nbsp;Transactions involving compensation for services provided to us as an
employee, director, consultant or similar capacity by a related person will not
be covered by this policy. &nbsp;A related person will be any executive officer,
director or a holder of more than five percent of our common stock, including
any of their immediate family members and any entity owned or controlled by such
persons. </font></p>
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<font size="2">Under the policy, where a transaction has been identified as a
related-person transaction, management must present information regarding the
proposed related-person transaction to our Board for consideration and approval
or ratification. &nbsp;The presentation must include a description of, among other
things, the material facts, the direct and indirect interests of the related
persons, the benefits of the transaction to us and whether any alternative
transactions are available. &nbsp;To identify related-person transactions in advance,
we will rely on information supplied by our executive officers, directors and
certain significant stockholders. In considering related-person transactions,
our Board of Directors will take into account the relevant available facts and
circumstances including, but not limited to: </font></p>
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<font size="2">&#149;</font></p>
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<font size="2">the risks, costs and benefits to us; </font></p>
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<font size="2">&#149;</font></p>
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<font size="2">the impact on a director's independence in the event the related
person is a director, immediate family member of a director or an entity with
which a director is affiliated; </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: -14pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -18pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
<font size="2">&#149;</font></p>
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<font size="2">the terms of the transaction; </font></p>
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<font size="2">&#149;</font></p>
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<font size="2">the availability of other sources for comparable services or
products; and </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: -14pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: -18pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
<font size="2">&#149;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
<font size="2">the terms available to or from, as the case may be, unrelated
third parties or to or from our employees generally. </font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
<font size="2">54</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
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&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">In the event a director has an interest in the proposed
transaction, the director must excuse himself or herself form the deliberations
and approval. &nbsp;Our policy will require that, in determining whether to approve,
ratify or reject a related-person transaction, our Board, and if we establish an
audit committee, our audit committee, must consider, in light of known
circumstances, whether the transaction is in, or is not inconsistent with, the
best interests of our Company and our stockholders, as our board or audit
committee, as applicable, determines in the good faith exercise of its
discretion. We did not previously have a formal policy concerning transactions
with related persons..</font></p>
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&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 6pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt">
<b><i><font size="2">Promoters and Certain Control Persons</font></i></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">We did not have any promoters at any time during the past five
fiscal years. &nbsp;</font></p>
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&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 24pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
<b><font size="2">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</font></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 24pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">The following table sets forth information regarding beneficial
ownership of our common stock as of as of April 25, 2007 (i) by each person who
is known by us to beneficially own more than 5% of our common stock; (ii) by
each of our officers and directors; and (iii) by all of our officers and
directors as a group.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 24pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">Unless otherwise specified, the address of each of the persons
set forth below is in care of China Security &amp; Surveillance Technology, Inc.,
13/F, Shenzhen Special Zone Press Tower, Shennan Road, Futian District, Zhenzhen,
China, 518034.</font></p>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="40%"><font face="Times New Roman" size="2"><b><u>Name and Address</u></b></font></td>
    <td align="middle" width="29%"><font face="Times New Roman" size="2">Number
    of Shares</font></td>
    <td align="middle" width="30%">&nbsp;</td>
  </tr>
  <tr>
    <td width="40%">&nbsp;</td>
    <td align="middle" width="29%"><font face="Times New Roman" size="2"><u>
    Beneficially Owned</u></font></td>
    <td align="middle" width="30%"><font face="Times New Roman" size="2"><u>
    Percent of Class <sup>(3)</sup></u></font></td>
  </tr>
  <tr>
    <td width="40%">&nbsp;</td>
    <td align="middle" width="29%">&nbsp;</td>
    <td align="middle" width="30%">&nbsp;</td>
  </tr>
  <tr>
    <td width="40%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 26px">Guoshen Tu <sup>(1)</sup></font></td>
    <td align="middle" width="29%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    13,627,500<sup>(2)</sup></font></td>
    <td align="middle" width="30%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">39.0%</font></td>
  </tr>
  <tr>
    <td width="40%"><font face="Times New Roman">
    <p style="MARGIN-LEFT: 26px"><font size="2">Lingfeng Xiong </font><sup>
    <font size="2">(1)</font></sup></font></td>
    <td align="middle" width="29%"><font face="Times New Roman" size="2">120,000</font></td>
    <td align="middle" width="30%"><font face="Times New Roman" size="2">*</font></td>
  </tr>
  <tr>
    <td width="40%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 26px">Yong Zhao <sup>(1)</sup></font></td>
    <td align="middle" width="29%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">20,000</font></td>
    <td align="middle" width="30%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">*</font></td>
  </tr>
  <tr>
    <td width="40%"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 26px">Terence Yap <sup>(1)</sup></font></td>
    <td align="middle" width="29%"><font face="Times New Roman" size="2">160,000</font></td>
    <td align="middle" width="30%"><font face="Times New Roman" size="2">*</font></td>
  </tr>
  <tr>
    <td width="40%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 26px">Shufang Yang <sup>(1)</sup></font></td>
    <td align="middle" width="29%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">928,531</font></td>
    <td align="middle" width="30%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">*</font></td>
  </tr>
  <tr>
    <td width="40%"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 26px">Jianguo Jiang <sup>(1)</sup></font></td>
    <td align="middle" width="29%"><font face="Times New Roman" size="2">260,000</font></td>
    <td align="middle" width="30%"><font face="Times New Roman" size="2">*</font></td>
  </tr>
  <tr>
    <td width="40%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">All Current Officers
    and Directors as a Group</font></td>
    <td align="middle" width="29%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    15,116,031</font></td>
    <td align="middle" width="30%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">43.3%</font></td>
  </tr>
  <tr>
    <td width="40%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">(7 in number)</font></td>
    <td align="middle" width="29%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="middle" width="30%" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td width="40%"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 26px">Whitehorse Technology Ltd.</font></td>
    <td align="middle" width="29%"><font face="Times New Roman" size="2">
    11,000,000</font></td>
    <td align="middle" width="30%"><font face="Times New Roman" size="2">31.5%</font></td>
  </tr>
  <tr>
    <td width="40%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 26px">Li Zhi Qun <sup>(4)</sup></font></td>
    <td align="middle" width="29%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    13,627,500</font></td>
    <td align="middle" width="30%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">39.0%</font></td>
  </tr>
  <tr>
    <td width="40%"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 26px">Jayhawk China Fund (Cayman) Ltd. <sup>(5)</sup></font></td>
    <td align="middle" width="29%"><font face="Times New Roman" size="2">
    1,871,270</font></td>
    <td align="middle" width="30%"><font face="Times New Roman" size="2">5.3%</font></td>
  </tr>
  <tr>
    <td width="40%"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 26px">c/o Jayhawk Capital Management, LLC</font></td>
    <td align="middle" width="29%">&nbsp;</td>
    <td align="middle" width="30%">&nbsp;</td>
  </tr>
  <tr>
    <td width="40%"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 26px">8201 Mission Road, Suite 110</font></td>
    <td align="middle" width="29%">&nbsp;</td>
    <td align="middle" width="30%">&nbsp;</td>
  </tr>
  <tr>
    <td width="40%"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 26px">Prairie Village, Kansas 66208</font></td>
    <td align="middle" width="29%">&nbsp;</td>
    <td align="middle" width="30%">&nbsp;</td>
  </tr>
  <tr>
    <td width="40%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 26px">The Pinnacle Fund, L.P. <sup>(6)</sup></font></td>
    <td align="middle" width="29%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    1,674,167</font></td>
    <td align="middle" width="30%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">4.8%</font></td>
  </tr>
  <tr>
    <td width="40%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 26px">4965 Preston Park Blvd., Suite 240</font></td>
    <td align="middle" width="29%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="middle" width="30%" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td width="40%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 26px">Plano, Texas 75093</font></td>
    <td align="middle" width="29%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="middle" width="30%" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
</table>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="40%"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 26px">The Pinnacle China Fund, L.P. <sup>(7)</sup></font></td>
    <td align="middle" width="30%"><font face="Times New Roman" size="2">
    1,674,167</font></td>
    <td align="middle" width="30%"><font face="Times New Roman" size="2">4.8%</font></td>
  </tr>
  <tr>
    <td width="40%"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 26px">4965 Preston Park Blvd., Suite 240</font></td>
    <td align="middle" width="30%">&nbsp;</td>
    <td align="middle" width="30%">&nbsp;</td>
  </tr>
  <tr>
    <td width="40%"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 26px">Plano, Texas 75093</font></td>
    <td align="middle" width="30%">&nbsp;</td>
    <td align="middle" width="30%">&nbsp;</td>
  </tr>
  <tr>
    <td width="40%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 26px">Citadel Equity Fund Ltd. <sup>(8)</sup></font></td>
    <td align="middle" width="30%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    5,451,977</font></td>
    <td align="middle" width="30%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">13.5%</font></td>
  </tr>
  <tr>
    <td width="40%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 26px">18/F Chater House, 8 Connaught Road,</font></td>
    <td align="middle" width="30%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="middle" width="30%" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td width="40%" bgcolor="#E6E6E6"><font face="Times New Roman" size="2">
    <p style="MARGIN-LEFT: 26px">Central, Hong Kong</font></td>
    <td align="middle" width="30%" bgcolor="#E6E6E6">&nbsp;</td>
    <td align="middle" width="30%" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
</table>
<p align="center"><font size="2">55</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 36pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 12pt; PADDING-TOP: 0pt">
<sup>* Less than 1%.</sup></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; FONT-SIZE: 10pt; MARGIN-BOTTOM: 5pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 12pt; PADDING-TOP: 0pt">
<sup>&nbsp;(1)</sup> The person is an officer, a director or both.</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; FONT-SIZE: 10pt; MARGIN-BOTTOM: 5pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 12pt; PADDING-TOP: 0pt" align="justify">
<sup>(2) </sup>Includes 11,000,000 shares owned by Whitehorse Technology
Limited. &nbsp;Mr. Tu is the sole owner of Whitehorse and may be deemed the
beneficial owner of these shares. &nbsp;The total also includes the 2,627,500 shares
owned by Zhiqun Li, who is Mr. Tu's wife. &nbsp;Mr. Tu may be deemed the beneficial
owner of these shares as well.</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; FONT-SIZE: 10pt; MARGIN-BOTTOM: -12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 12pt; PADDING-TOP: 0pt" align="justify">
<sup>(3)</sup> A total of 34,941,406 shares of our common stock are considered
to be outstanding pursuant to SEC Rule 13d-3(d)(1). &nbsp;For each beneficial owner
above, any options exercisable within 60 days have been included in the
denominator.<br>
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; FONT-SIZE: 10pt; MARGIN-BOTTOM: 5pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 12pt; PADDING-TOP: 0pt" align="justify">
<sup>(4)</sup> Includes 11,000,000 shares owned by Whitehorse Technology Limited
of which Zhiqun Li's husband Guoshen Tu is the sole owner. &nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; FONT-SIZE: 10pt; MARGIN-BOTTOM: 5pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 12pt; PADDING-TOP: 0pt" align="justify">
<sup>(5)</sup> Includes 228,000 shares underlying the warrant to purchase shares
of our common stock. &nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; FONT-SIZE: 10pt; MARGIN-BOTTOM: 5pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 12pt; PADDING-TOP: 0pt" align="justify">
<sup>(6)</sup> &nbsp;Pinnacle Advisers, L.P. (&quot;<u>Advisers</u>&quot;) is the general
partner of The Pinnacle Fund, L.P. (&quot;<u>Pinnacle</u>&quot;), &nbsp;Pinnacle Fund
Management, LLC (&quot;<u>Management</u>&quot;) is the general partner of Advisers. &nbsp;Mr.
Barry Kitt is the sole member of Management. &nbsp;Mr.&nbsp;Kitt may be deemed to be the
beneficial owner of the shares of Common Stock beneficially owned by Pinnacle.
Mr.&nbsp;Kitt expressly disclaims beneficial ownership of all shares of Common Stock
beneficially owned by Pinnacle.<sup> </sup></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; FONT-SIZE: 10pt; MARGIN-BOTTOM: 5pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 12pt; PADDING-TOP: 0pt" align="justify">
<sup>(7)</sup> &nbsp;Pinnacle China Advisers, L.P. (&quot;<u>China Advisers</u>&quot;) is the
general partner of The Pinnacle China Fund, L.P. (&quot;<u>Pinnacle China</u>&quot;).
&nbsp;Pinnacle China Management, LLC (&quot;<u>China Management</u>&quot;) is the general
partner of China Advisers. &nbsp;Kitt China Management, LLC (&quot;<u>China Manager</u>&quot;)
is the manager of China Management. &nbsp;Mr. Barry Kitt is the manager of China
Management. &nbsp;Mr.&nbsp;Kitt may be deemed to be the beneficial owner of the shares of
Common Stock beneficially owned by Pinnacle China. Mr.&nbsp;Kitt expressly disclaims
beneficial ownership of all shares of Common Stock beneficially owned by
Pinnacle China.<sup> </sup></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; FONT-SIZE: 10pt; MARGIN-BOTTOM: 5pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 12pt; PADDING-TOP: 0pt">
<sup>(8)</sup> &nbsp;Includes 5,451,977 shares of our common stock that may be
acquired upon conversion of $110,000,000 in principal amount of the Company's
convertible notes.</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; FONT-SIZE: 10pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 12pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
<b><font size="2">SELLING STOCKHOLDERS</font></b></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">This prospectus relates to the resale by the selling stockholders
named below from time to time of up to a total of 1,538,462 shares of our common
stock, which were issued to the selling stockholders in connection with a
private placement transaction in November 2006. &nbsp;</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; PADDING-TOP: 0pt" align="justify">
&nbsp;</p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 6pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="justify">
<font size="2">The following table sets forth certain information regarding the
selling stockholders and the shares offered by them in this prospectus.
&nbsp;Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission, or SEC. &nbsp;In computing the number of shares
beneficially owned by a selling stockholder and the percentage of ownership of
that selling stockholder, shares of common stock underlying shares of options or
warrants held by that selling stockholder that are convertible or exercisable,
as the case may be, within 60&nbsp;days of April 25, 2007 are included. &nbsp;Those
shares, however, are not deemed outstanding for the purpose of computing the
percentage ownership of any other selling stockholder. &nbsp;Each selling
stockholder's percentage of ownership in the following table is based upon
34,941,406<b> </b>shares of common stock outstanding as of April 25, 2007.</font></p>
<p style="PADDING-RIGHT: 0pt; MARGIN-TOP: 0pt; PADDING-LEFT: 0pt; MARGIN-BOTTOM: 6pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 0pt; COLOR: #000000; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; PADDING-TOP: 0pt" align="center">
<font size="2">56</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p align="justify"><font size="2">Except as specifically set forth in the
footnotes to the table, none of the selling stockholders has held a position as
an officer or director of our, nor has any selling stockholder had any material
relationship of any kind with us or any of our affiliates. All information with
respect to share ownership has been furnished by the selling stockholders. The
shares being offered are being registered to permit public secondary trading of
the shares and each selling stockholder may offer all or part of the shares
owned for resale from time to time. In addition, none of the selling
stockholders has any family relationships with our officers, directors or
controlling stockholders. Furthermore, except as specifically set forth in the
footnote to the table below, no selling stockholder is a registered
broker-dealer or an affiliate of a registered broker-dealer. </font></p>
<p align="justify"><font size="2">For additional information, refer to &quot;SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT&quot; above. </font></p>
<p align="justify"><font size="2">The term &quot;selling stockholders&quot; also includes
any transferees, pledges, donees, or other successors in interest to the selling
stockholders named in the table below. To our knowledge, subject to applicable
community property laws, each person named in the table has sole voting and
investment power with respect to the shares of common stock set forth opposite
such person's name. We will file a supplement to this prospectus (or ,if
required by applicable law, a post-effective amendment) to name successors to
any named selling stockholders who are able to use this prospectus to resell the
securities registered hereby. </font></p>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" width="33%">
    <p style="MARGIN-LEFT: 10px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="right" width="16%">
    <p style="MARGIN-RIGHT: 10px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="right" width="17%">
    <p style="MARGIN-RIGHT: 10px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="right" width="17%">
    <p style="MARGIN-RIGHT: 10px">&nbsp;</td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="right" width="17%">
    <font size="2">
    <p style="MARGIN-RIGHT: 10px">Percentage</font></td>
  </tr>
  <tr>
    <td style="BORDER-LEFT: 1px solid" width="33%">
    <p style="MARGIN-LEFT: 10px">&nbsp;</td>
    <td style="BORDER-LEFT: 1px solid" align="right" width="16%">
    <p style="MARGIN-RIGHT: 10px">&nbsp;</td>
    <td style="BORDER-LEFT: 1px solid" align="right" width="17%"><font size="2">
    <p style="MARGIN-RIGHT: 10px">Shares of</font></td>
    <td style="BORDER-LEFT: 1px solid" align="right" width="17%">
    <p style="MARGIN-RIGHT: 10px">&nbsp;</td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-LEFT: 1px solid" align="right" width="17%">
    <font size="2">
    <p style="MARGIN-RIGHT: 10px">of</font></td>
  </tr>
  <tr>
    <td style="BORDER-LEFT: 1px solid" width="33%">
    <p style="MARGIN-LEFT: 10px">&nbsp;</td>
    <td style="BORDER-LEFT: 1px solid" align="right" width="16%">
    <p style="MARGIN-RIGHT: 10px">&nbsp;</td>
    <td style="BORDER-LEFT: 1px solid" align="right" width="17%"><font size="2">
    <p style="MARGIN-RIGHT: 10px">Common</font></td>
    <td style="BORDER-LEFT: 1px solid" align="right" width="17%">
    <p style="MARGIN-RIGHT: 10px">&nbsp;</td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-LEFT: 1px solid" align="right" width="17%">
    <font size="2">
    <p style="MARGIN-RIGHT: 10px">Common</font></td>
  </tr>
  <tr>
    <td style="BORDER-LEFT: 1px solid" width="33%">
    <p style="MARGIN-LEFT: 10px">&nbsp;</td>
    <td style="BORDER-LEFT: 1px solid" align="right" width="16%"><font size="2">
    <p style="MARGIN-RIGHT: 10px">Beneficial</font></td>
    <td style="BORDER-LEFT: 1px solid" align="right" width="17%"><font size="2">
    <p style="MARGIN-RIGHT: 10px">Stock</font></td>
    <td style="BORDER-LEFT: 1px solid" align="right" width="17%"><font size="2">
    <p style="MARGIN-RIGHT: 10px">Beneficial</font></td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-LEFT: 1px solid" align="right" width="17%">
    <font size="2">
    <p style="MARGIN-RIGHT: 10px">Stock</font></td>
  </tr>
  <tr>
    <td style="BORDER-LEFT: 1px solid" width="33%">
    <p style="MARGIN-LEFT: 10px">&nbsp;</td>
    <td style="BORDER-LEFT: 1px solid" align="right" width="16%"><font size="2">
    <p style="MARGIN-RIGHT: 10px">Before</font></td>
    <td style="BORDER-LEFT: 1px solid" align="right" width="17%"><font size="2">
    <p style="MARGIN-RIGHT: 10px">Included</font></td>
    <td style="BORDER-LEFT: 1px solid" align="right" width="17%"><font size="2">
    <p style="MARGIN-RIGHT: 10px">Ownership</font></td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-LEFT: 1px solid" align="right" width="17%">
    <font size="2">
    <p style="MARGIN-RIGHT: 10px">Owned</font></td>
  </tr>
  <tr>
    <td style="BORDER-LEFT: 1px solid" width="33%">
    <p style="MARGIN-LEFT: 10px">&nbsp;</td>
    <td style="BORDER-LEFT: 1px solid" align="right" width="16%"><font size="2">
    <p style="MARGIN-RIGHT: 10px">the</font></td>
    <td style="BORDER-LEFT: 1px solid" align="right" width="17%"><font size="2">
    <p style="MARGIN-RIGHT: 10px">in</font></td>
    <td style="BORDER-LEFT: 1px solid" align="right" width="17%"><font size="2">
    <p style="MARGIN-RIGHT: 10px">After the</font></td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-LEFT: 1px solid" align="right" width="17%">
    <font size="2">
    <p style="MARGIN-RIGHT: 10px">After</font></td>
  </tr>
  <tr>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" width="33%">
    <font size="2">
    <p style="MARGIN-LEFT: 10px">Name and Address</font></td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="16%">
    <font size="2">
    <p style="MARGIN-RIGHT: 10px">Offering</font></td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="17%">
    <font size="2">
    <p style="MARGIN-RIGHT: 10px">Prospectus</font></td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="17%">
    <font size="2">
    <p style="MARGIN-RIGHT: 10px">Offering <sup>(1)</sup></font></td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="17%">
    <font size="2">
    <p style="MARGIN-RIGHT: 10px">Offering <sup>(1)</sup></font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid; BORDER-BOTTOM: medium none" width="33%" bgcolor="#E6E6E6">
    <p style="MARGIN-LEFT: 10px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="right" width="16%" bgcolor="#E6E6E6">
    <p style="MARGIN-RIGHT: 10px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="right" width="17%" bgcolor="#E6E6E6">
    <p style="MARGIN-RIGHT: 10px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="right" width="17%" bgcolor="#E6E6E6">
    <p style="MARGIN-RIGHT: 10px">&nbsp;</td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="right" width="17%" bgcolor="#E6E6E6">
    <p style="MARGIN-RIGHT: 10px">&nbsp;</td>
  </tr>
  <tr>
    <td style="BORDER-TOP: medium none; BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" width="33%" bgcolor="#E6E6E6">
    <font size="2">
    <p style="MARGIN-LEFT: 10px">JLF Partners I, LP <sup>(2)</sup></font></td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="16%" bgcolor="#E6E6E6">
    <font size="2">
    <p style="MARGIN-RIGHT: 10px">630,820</font></td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="17%" bgcolor="#E6E6E6">
    <font size="2">
    <p style="MARGIN-RIGHT: 10px">630,820</font></td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="17%" bgcolor="#E6E6E6">
    <font size="2">
    <p style="MARGIN-RIGHT: 10px">0</font></td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="17%" bgcolor="#E6E6E6">
    <font size="2">
    <p style="MARGIN-RIGHT: 10px">*</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" width="33%">
    <p style="MARGIN-LEFT: 10px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="right" width="16%">
    <p style="MARGIN-RIGHT: 10px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="right" width="17%">
    <p style="MARGIN-RIGHT: 10px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="right" width="17%">
    <p style="MARGIN-RIGHT: 10px">&nbsp;</td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="right" width="17%">
    <p style="MARGIN-RIGHT: 10px">&nbsp;</td>
  </tr>
  <tr>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" width="33%">
    <font size="2">
    <p style="MARGIN-LEFT: 10px">JLF Partners II, LP <sup>(2)</sup></font></td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="16%">
    <font size="2">
    <p style="MARGIN-RIGHT: 10px">49,205</font></td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="17%">
    <font size="2">
    <p style="MARGIN-RIGHT: 10px">49,205</font></td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="17%">
    <font size="2">
    <p style="MARGIN-RIGHT: 10px">0</font></td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="17%">
    <font size="2">
    <p style="MARGIN-RIGHT: 10px">*</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" width="33%" bgcolor="#E6E6E6">
    <p style="MARGIN-LEFT: 10px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="right" width="16%" bgcolor="#E6E6E6">
    <p style="MARGIN-RIGHT: 10px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="right" width="17%" bgcolor="#E6E6E6">
    <p style="MARGIN-RIGHT: 10px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="right" width="17%" bgcolor="#E6E6E6">
    <p style="MARGIN-RIGHT: 10px">&nbsp;</td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-TOP: 1px solid; BORDER-LEFT: 1px solid" align="right" width="17%" bgcolor="#E6E6E6">
    <p style="MARGIN-RIGHT: 10px">&nbsp;</td>
  </tr>
  <tr>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" width="33%" bgcolor="#E6E6E6">
    <font size="2">
    <p style="MARGIN-LEFT: 10px">JLF Offshore Fund, Ltd. <sup>(2)</sup></font></td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="16%" bgcolor="#E6E6E6">
    <font size="2">
    <p style="MARGIN-RIGHT: 10px">858,437</font></td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="17%" bgcolor="#E6E6E6">
    <font size="2">
    <p style="MARGIN-RIGHT: 10px">858,437</font></td>
    <td style="BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="17%" bgcolor="#E6E6E6">
    <font size="2">
    <p style="MARGIN-RIGHT: 10px">0</font></td>
    <td style="BORDER-RIGHT: 1px solid; BORDER-LEFT: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="17%" bgcolor="#E6E6E6">
    <font size="2">
    <p style="MARGIN-RIGHT: 10px">*</font></td>
  </tr>
</table>
<font style="FONT-SIZE: 9pt" face="Times New Roman">
<p align="justify">*Less than 1% <sup><br>
(1)</sup> Assuming that all securities offered are sold. <sup><br>
(2) </sup>Jeffrey Feinberg has investment discretion over these securities by
virtue of Jeffrey Feinberg's position in the investment manager of these Funds.
Mr. Feinberg disclaims beneficial ownership over these securities except to the
extent of his pecuniary interest therein. </p>
</font>
<p align="justify"><font size="2">We will not receive any of the proceeds from
the sale of any shares by the selling stockholders. We have agreed to bear
expenses incurred by the selling stockholders that relate to the registration of
the shares being offered and sold by the selling stockholders, including the SEC
registration fee and legal, accounting, printing and other expenses of this
offering. </font></p>
<b>
<p align="center"><font size="2">CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE </font></p>
</b>
<p align="justify"><font size="2">Prior to our reverse acquisition of Safetech,
our independent registered public accounting firm was PKF Certified Public
Accountants (&quot;PKF&quot;) while Golden's independent registered public accounting firm
was Child, Van Wagoner &amp; Bradshaw, PLLC, formerly known as Child, Sullivan &amp;
Company, (&quot;Child Van Wagoner&quot;). On February 2, 2006, in connection with the
change of control resulted from the reverse acquisition, our Board of Directors
elected to appoint GHP Horwath, P.C. as our independent registered public
accounting firm and approved the dismissal of PKF and Child, Van Wagoner. </font>
</p>
<font face="Times New Roman" size="2">
<p align="center">57 </p>
</font><hr color="#000000" size="5"><p style="page-break-before: always">
<p align="justify"><font size="2">No accountant's report issued by Child, Van
Wagoner &amp; Bradshaw, PLLC. or PKF on the financial statements for either of the
past two (2) years contained an adverse opinion or a disclaimer of opinion or
was qualified or modified as to uncertainty, audit scope or accounting
principles. </font></p>
<p align="justify"><font size="2">During our fiscal years ended December 31,
2005 and 2004 and from January 1, 2006 to the date of this prospectus, there
were no disagreements with Child, Van Wagoner or PKF on any matter of accounting
principles or practices, financial disclosure, or auditing scope or procedure.
There were no reportable events, as described in Item 304(a)(1)(iv)(B) of
Regulation S-K, during our fiscal years ended December 31, 2005 and 2004 and
from January 1, 2006 to the date of this prospectus. </font></p>
<p align="justify"><font size="2">We furnished a copy of this disclosure to
Child, Van Wagoner and PKF and requested Child, Van Wagoner and PKF to furnish
us with a letter addressed to the SEC stating whether they agree with the
statements made by us herein in response to Item 304(a) of Regulation S-K and,
if not, stating the respect in which it does not agree. A copy of the letter was
filed by us as Exhibits 16.1 and 16.2 to our current report on Form 6-K, filed
March 27, 2006. </font></p>
<b><font face="Times New Roman" size="2">
<p align="center">DESCRIPTION OF SECURITIES </p>
<i>
<p>General </p>
</i></font></b><font face="Times New Roman" size="2">
<p align="justify">Our authorized capital stock consists of 100,000,000 shares
of common stock, par value $0.0001 per share. As of April 25, 2007, 34,941,406
shares of our common stock were issued and outstanding. </p>
</font><i><b>
<p align="justify"><font size="2">Common Stock </font></p>
</b></i>
<p align="justify"><font size="2">Each outstanding share of our common stock
entitles the holder thereof to one vote per share on all matters. Our bylaws
provide that the persons receiving the greatest number of votes shall be the
directors. Stockholders do not have preemptive rights to purchase shares in any
future issuance of our common stock. Upon our liquidation, dissolution or
winding up, and after payment of creditors, our assets will be divided pro rata
on a share-for-share basis among the holders of the shares of common stock.
</font></p>
<p align="justify"><font size="2">The holders of shares of our common stock are
entitled to dividends out of funds legally available when and as declared by our
Board of Directors. Our Board of Directors has never declared a dividend and
does not anticipate declaring a dividend in the foreseeable future. Should we
decide in the future to pay dividends, as a holding company, our ability to do
so and meet other obligations depends upon the receipt of dividends or other
payments from its operating subsidiaries and other holdings and investments. In
addition, our operating subsidiaries, from time to time, may be subject to
restrictions on their ability to make distributions to us, including as a result
of restrictive covenants in loan agreements, restrictions on the conversion of
local currency into U.S. dollars or other hard currency and other regulatory
restrictions. </font></p>
<font face="Times New Roman" size="2">
<p align="center">58 </p>
</font><hr color="#000000" size="5"><p style="page-break-before: always"><font face="Times New Roman" size="2">
<p>All of the issued and outstanding shares of our common stock are duly
authorized, validly issued, fully paid and non-assessable. To the extent that
additional shares of our common stock are issued, the relative interests of its
existing stockholders will be diluted. </p>
</font><i><b>
<p><font size="2">Transfer Agent and Registrar </font></p>
</b></i>
<p><font size="2">Our independent stock transfer agent is American Stock
Transfer Company. Their mailing address is 6201 15<sup>th</sup> Avenue,
Brooklyn, NY, 11219. Their phone number is 718.921.8210. </font></p>
<b>
<p align="center"><font size="2">SHARES ELIGIBLE FOR FUTURE SALE </font></p>
</b>
<p><font size="2">As of April 25, 2007, 34,941,406 shares of our common stock
were issued and outstanding. </font></p>
<i>
<p><font face="Times New Roman" size="2"><b>Shares Covered by this Prospectus
</p>
</b></font></i><font face="Times New Roman" size="2">
<p>All of the 1,538,462 shares being registered in this offering may be sold
without restriction under the Securities Act. </p>
</font><i><b>
<p><font size="2">Rule 144 </font></p>
</b></i>
<p align="justify"><font size="2">The resale of shares that are held by our
affiliates and the resale of shares that are held by non-affiliates for a period
of less than two years are governed by the following requirements of Rule 144 of
the Securities Act. </font></p>
<p><font size="2">In general, under Rule 144 as currently in effect, a person
(or persons whose shares are aggregated) who has beneficially owned shares of
our common stock for at least one year, including any person who may be deemed
to be an &quot;affiliate&quot; (as the term &quot;affiliate&quot; is defined under the Securities
Act of 1933), would be entitled to sell, within any three-month period, a number
of shares that does not exceed the greater of: </font></p>
<ul>
  <li><font face="Times New Roman" size="2">1% of the number of shares of common
  stock then outstanding, which as of April 25, 2007 equaled approximately
  349,414; or </font></li>
  <li><font face="Times New Roman" size="2">the average weekly trading volume of
  our common stock during the four calendar weeks preceding the filing of a
  notice on Form 144 with respect to such sale. </font></li>
</ul>
<p align="justify"><font size="2">Sales under Rule 144 are also governed by
other requirements regarding the manner of sale, notice filing and the
availability of current public information about us. Under Rule 144, however, a
person who is not, and for the three months prior to the sale of such shares has
not been, an affiliate of the issuer is free to sell shares that are &quot;restricted
securities&quot; which have been held for at least two years without regard to the
limitations contained in Rule 144. The selling shareholders will not be governed
by the foregoing restrictions when selling their shares pursuant to this
prospectus. </font></p>
<p align="justify"><font size="2">We believe that none of our outstanding shares
may currently be sold in reliance on Rule 144. However, shares held by our
officers and directors that were registered under a separate registration
statement on Form S-4 which was declared effective in November 2006 are
considered Rule 145 shares under the Securities Act. There shares are subject to
the same limitations on the volume of shares that can be re-sold by such
affiliates as would be applicable under Rule 144 as discussed above. There are a
total of 14,916,031 Rule 145 shares held by our </font>
<font face="Times New Roman" size="2">affiliates, not including the shares being
registered for the account of the selling stockholders named in this prospectus.
</p>
<p align="center">59 </p>
</font><hr color="#000000" size="5"><p style="page-break-before: always"><i><b>
<p align="justify"><font size="2">Rule 144(k) </font></p>
</b></i>
<p align="justify"><font size="2">Under Rule 144(k), a person who is not deemed
to have been one of our affiliates at any time during the three months preceding
a sale, and who has beneficially owned the shares proposed to be sold for at
least two years, including the holding period of any prior owner other than an
affiliate, is entitled to sell such shares without complying with the manner of
sale, notice filing, volume limitation or notice provisions of Rule 144. </font>
</p>
<p align="justify"><font size="2">We believe that none of our outstanding shares
may currently be sold in reliance on Rule 144(k). </font></p>
<b>
<p align="justify"><font size="2">PLAN OF DISTRIBUTION </font></p>
</b>
<p align="justify"><font size="2">The selling stockholders, may, from time to
time, sell, transfer or otherwise dispose of any or all of their shares of our
common stock or interests in shares of our common stock on any stock exchange,
market or trading facility on which the shares are traded or in private
transactions. These dispositions may be at fixed prices, at prevailing market
prices at the time of sale, at prices related to the prevailing market price, at
varying prices determined at the time of sale, or at negotiated prices. </font>
</p>
<p align="justify"><font size="2">The selling stockholders may use any one or
more of the following methods when disposing of shares or interests therein:
</font></p>
<p style="MARGIN-LEFT: 26px" align="justify"><font size="2">- ordinary brokerage
transactions and transactions in which the broker-dealer solicits purchasers;
</font></p>
<p style="MARGIN-LEFT: 26px" align="justify"><font size="2">- block trades in
which the broker-dealer will attempt to sell the shares as agent, but may
position and resell a portion of the block as principal to facilitate the
transaction; </font></p>
<p style="MARGIN-LEFT: 26px" align="justify"><font size="2">- purchases by a
broker-dealer as principal and resale by the broker-dealer for its account;
</font></p>
<p style="MARGIN-LEFT: 26px" align="justify"><font size="2">- an exchange
distribution in accordance with the rules of the applicable exchange; </font>
</p>
<p style="MARGIN-LEFT: 26px" align="justify"><font size="2">- privately
negotiated transactions; </font></p>
<p style="MARGIN-LEFT: 26px" align="justify"><font size="2">- short sales
effected after the date the registration statement of which this prospectus is a
part is declared effective by the SEC; </font></p>
<p style="MARGIN-LEFT: 26px" align="justify"><font size="2">- through the
writing or settlement of options or other hedging transactions, whether through
an options exchange or otherwise; </font></p>
<p style="MARGIN-LEFT: 26px" align="justify"><font size="2">- broker-dealers may
agree with the selling stockholders to sell a specified number of such shares at
a stipulated price per share; and </font></p>
<p style="MARGIN-LEFT: 26px" align="justify"><font size="2">- a combination of
any such methods of sale. </font></p>
<p align="justify"><font size="2">The selling stockholders may, from time to
time, pledge or grant a security interest in some or all of the shares of our
common stock owned by them and, if they default in the performance of their
secured obligations, the pledgees or secured parties may offer and sell the
shares of our common stock, from time to time, under this prospectus, or under
an amendment to this prospectus under Rule 424(b)(3) or other applicable
provision of the Securities Act amending the list of selling stockholders to
include the pledgee, transferee or other successors in interest as selling
stockholders under this prospectus. The selling stockholders also may transfer
the shares of our common stock in other circumstances, in which case the
transferees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus. </font></p>
<p align="center"><font face="Times New Roman" size="2">60 </font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p align="justify"><font size="2">In connection with the sale of our common
stock or interests therein, the selling stockholders may enter into hedging
transactions with broker-dealers or other financial institutions, which may in
turn engage in short sales of our common stock in the course of hedging the
positions they assume. The selling stockholders may also sell shares of our
common stock short and deliver these securities to close out their short
positions, or loan or pledge the shares of our common stock to broker-dealers
that in turn may sell these securities. The selling stockholders may also enter
into option or other transactions with broker-dealers or other financial
institutions or the creation of one or more derivative securities which require
the delivery to such broker-dealer or other financial institution of shares
offered by this prospectus, which shares such broker-dealer or other financial
institution may resell pursuant to this prospectus (as supplemented or amended
to reflect such transaction). </font></p>
<p align="justify"><font size="2">The aggregate proceeds to the selling
stockholders from the sale of shares of our common stock offered by them will be
the purchase price of the common stock less discounts or commissions, if any.
Each of the selling stockholders reserves the right to accept and, together with
their agents from time to time, to reject, in whole or in part, any proposed
purchase of our common stock to be made directly or through agents. We will not
receive any of the proceeds from this offering. Broker-dealers engaged by the
selling stockholders may arrange for other broker-dealers to participate in
sales. </font></p>
<p align="justify"><font size="2">Broker-dealers may receive commissions or
discounts from the selling stockholders (or, if any broker-dealer acts as agent
for the purchase of shares, from the purchaser) in amounts to be negotiated.
</font></p>
<p align="justify"><font size="2">The selling stockholders do not expect these
commissions and discounts to exceed what is customary in the types of
transactions involved. The selling stockholders also may resell all or a portion
of the shares in open market transactions in reliance upon Rule 144 under the
Securities Act, provided that they meet the criteria and conform to the
requirements of that rule. </font></p>
<p align="justify"><font size="2">The selling stockholders and any underwriters,
broker-dealers or agents that participate in the sale of our common stock or
interests therein are &quot;underwriters&quot; within the meaning of Section 2(11) of the
Securities Act. Any discounts, commissions, concessions or profit they earn on
any resale of the shares may be underwriting discounts and commissions under the
Securities Act. Selling stockholders who are &quot;underwriters&quot; within the meaning
of Section 2(11) of the Securities Act will be subject to the prospectus
delivery requirements of the Securities Act. We know of no existing arrangements
between any of the selling stockholders and any other stockholder, broker,
dealer, underwriter, or agent relating to the sale or distribution of the
shares, nor can we presently estimate the amount, if any, of such compensation.
See &quot;Selling Stockholders&quot; for description of any material relationship that a
stockholder has with us and the description of such relationship. </font></p>
<p align="justify"><font size="2">To the extent required, the shares of our
common stock to be sold, the names of the selling stockholders, the respective
purchase prices and public offering prices, the names of any agents, dealers or
underwriters, any applicable commissions or discounts with respect to a
particular offer will be set forth in an accompanying prospectus supplement or,
if appropriate, a post-effective amendment to the registration statement that
includes this prospectus. </font></p>
<font face="Times New Roman" size="2">
<p align="center">61 </p>
</font><hr color="#000000" size="5"><p style="page-break-before: always">
<p align="justify"><font size="2">In order to comply with the securities laws of
some states, if applicable, the shares of our common stock may be sold in these
jurisdictions only through registered or licensed brokers or dealers. In
addition, in some states the common stock may not be sold unless it has been
registered or qualified for sale or an exemption from registration or
qualification requirements is available and is complied with. </font></p>
<p align="justify"><font size="2">We have advised the selling stockholders that
the anti-manipulation rules of Regulation M under the Exchange Act may apply to
sales of shares in the market and to the activities of the selling stockholders
and their affiliates. In addition, we will make copies of this prospectus (as it
may be supplemented or amended from time to time) available to the selling
stockholders for the purpose of satisfying the prospectus delivery requirements
of the Securities Act. The selling stockholders may indemnify any broker-dealer
that participates in transactions involving the sale of the shares against
certain liabilities, including liabilities arising under the Securities Act.
</font></p>
<p align="justify"><font size="2">We have agreed to pay certain fees and
expenses incurred by us incident to the registration of the shares. Such fees
and expenses are estimated to be $65,757. We have agreed to indemnify the
selling stockholders against liabilities, including liabilities under the
Securities Act and state securities laws, relating to the registration of the
shares offered by this prospectus. </font></p>
<p align="justify"><font size="2">We have agreed with the selling stockholders
to keep the registration statement of which this prospectus constitutes a part
effective until the earlier of (1) such time as all of the shares covered by
this prospectus have been disposed of pursuant to and in accordance with the
registration statement or (2) the date on which the shares may be sold pursuant
to Rule 144(k) of the Securities Act. </font></p>
<b>
<p align="center"><font size="2">LEGAL MATTERS </font></p>
</b>
<p align="justify"><font size="2">The validity of the common stock offered by
this prospectus will be passed upon for us by Thelen Reid Brown Raysman &amp;
Steiner, LLP, Washington, D.C. </font></p>
<b>
<p align="center"><font size="2">EXPERTS </font></p>
</b>
<p align="justify"><font size="2">The consolidated financial statements of the
Company for the year ended December 31, 2004 included in this prospectus and in
the registration statement have been audited by the accounting firm of Child,
Van Wagoner &amp; Bradshaw, PLLC, independent registered public accounting firm, and
are included in reliance upon their report dated September 1, 2005, given upon
such firm's authority as experts in auditing and accounting. </font></p>
<p align="justify"><font size="2">The consolidated financial statements of the
Company for the years ended December 31, 2006 and 2005 included in this
prospectus have been audited by the accounting firm of GHP Horwath, P.C.,
independent registered public accounting firm, and are included in reliance upon
their report dated March 21, 2007, given upon such firm's authority as experts
in auditing and accounting. </font></p>
<b>
<p align="center"><font size="2">WHERE YOU CAN FIND MORE INFORMATION </font></p>
</b>
<p align="justify"><font size="2">We have filed with the SEC a registration
statement on Form S-1 under the Securities Act with respect to the common stock
offered in this offering. This prospectus does not contain all of the </font>
<font face="Times New Roman" size="2">information set forth in the registration
statement. For further information with respect to us and the common stock
offered in this offering, we refer you to the registration statement and to the
attached exhibits. With respect to each such document filed as an exhibit to the
registration statement, we refer you to the exhibit for a more complete
description of the matters involved. </p>
<p align="center">62 </p>
</font><hr color="#000000" size="5"><p style="page-break-before: always"><font face="Times New Roman" size="2">
<p align="justify">You may inspect our registration statement and the attached
exhibits and schedules without charge at the public reference facilities
maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may
obtain copies of all or any part of our registration statement from the SEC upon
payment of prescribed fees. You may obtain information on the operation of the
public reference room by calling the SEC at 1-800-SEC-0330. </p>
<p align="justify">Our SEC filings, including the registration statement and the
exhibits filed with the registration statement, are also available from the
SEC's website at www.sec.gov, which contains reports, proxy and information
statements and other information regarding issuers that file electronically with
the SEC.</p>
</font>
<p align="center">&nbsp;</p>
<p align="center"><font face="Times New Roman" size="2">63</font></p>
<hr color="#000000" size="5">
</font>
<p style="page-break-before: always">
&nbsp;<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>FINANCIAL STATEMENTS</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>FOR THE YEARS ENDED</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>DECEMBER 31, 2006, 2005 AND 2004</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:2pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC.</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B><U>TABLE OF CONTENTS</U></B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=682><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=259>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>Pages</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=682><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
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</TD></TR>
<TR>
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  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>Reports of Independent Registered Public Accounting Firms</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=259>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>F2&nbsp;- F3</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=682><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=259><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=682>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>Consolidated Balance Sheets as of December 31, 2006 and 2005</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=259>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>F4</P>
</TD></TR>
<TR>
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</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=259><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=682>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>Consolidated Statements of Income and Comprehensive Income for the</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=259><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=682>
  <P style="margin:0pt; padding-left:9.9pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>years ended December 31, 2006, 2005 and 2004</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=259>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>F5</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=682><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=259><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=682>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>Consolidated Statements of Changes in Shareholders' Equity for the</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=259><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=682>
  <P style="margin:0pt; padding-left:9.9pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>years ended December 31, 2006, 2005 and 2004</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=259>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>F6</P>
</TD></TR>
<TR>
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</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=259><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=682>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>Consolidated Statements of Cash Flows for the years ended December 31,</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=259><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=682>
  <P style="margin:0pt; padding-left:9.9pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>2006, 2005 and 2004</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=259>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>F7 - F8</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=682><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=259><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=682>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>Notes to Consolidated Financial Statements for the years ended December 31, 2006, 2005 and 2004</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=259>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>F9 - F27</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=682><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=259><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-1</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The Board of Directors and Shareholders</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>China Security &amp; Surveillance Technology, Inc.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>We have audited the accompanying consolidated balance sheets of China Security &amp; Surveillance Technology, Inc. and subsidiaries as of December 31, 2006 and 2005 and the related consolidated statements of income and comprehensive income, changes in shareholders' equity and cash flows for each of the years in the two-year period ended December 31, 2006. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of China Security &amp; Surveillance Technology, Inc. and subsidiaries as of December 31, 2006 and 2005, and the results of their operations and their cash flows for each of the years in the two-year period ended December 31, 2006 in conformity with accounting principles generally accepted in the United States of America.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>/s/ GHP Horwath, P.C.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>GHP Horwath, P.C.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Denver, Colorado</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>March 21, 2007</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-2</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>
<img src="fs001.jpg" alt="[fs001.jpg]" align=middle height=117 width=661></P>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=239><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">
  <img src="fs002.jpg" alt="[fs002.jpg]" align=middle height=780 width=120><SMALL>&nbsp;</SMALL></P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=701><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>To The Board of Directors and Stockholders</P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>China Security &amp; Surveillance Technology, Inc.</P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>We have audited the accompanying consolidated statements of income and comprehensive income, changes in shareholders' equity and cash flows of Golden Group Corporation (Shenzhen) Ltd. (predecessor to China Security &amp; Surveillance Technology, Inc.) for the year ended December 31, 2004. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.</P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company was not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting, as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.</P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>In our opinion, the financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of Golden Group Corporation (Shenzhen) Ltd. (predecessor to China Security &amp; Surveillance Technology, Inc.) for the year ended December 31, 2004, in conformity with accounting principles generally accepted in the United States of America.</P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>/s/ Child, Van Wagoner &amp; Bradshaw, PLLC</P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Child, Van Wagoner &amp; Bradshaw, PLLC</P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Salt Lake City, Utah</P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">September 1, 2005</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-3</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:2pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2006 AND 2005</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>Expressed in thousands of U.S. dollars</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>(Except for share and per share amounts)</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<TABLE style="margin-left:0pt; border-collapse:collapse" cellspacing="0" cellpadding="0" width="100%" border="0" bordercolor="#111111"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=924 colspan=7><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B><U>ASSETS</U></B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=505><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=141 colspan=2>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center><B>December 31,</B></P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center><B>2006</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=142 colspan=2>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center><B>December 31,</B></P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center><B>2005</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>CURRENT ASSETS</B></P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=141 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=142 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=505>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">Cash and cash equivalents</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>30,980</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>2,277</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=505>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">Accounts receivable, net</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>26,754</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>11,643</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=505>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">Related party receivables</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>440</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>3,783</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=505>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">Inventories, net</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>19,721</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>5,311</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=505>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">Prepayment and deposits</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>3,533</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=505>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">Advances to suppliers</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>2,889</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>1,493</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=505>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">Other receivables</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>1,697</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>415</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=505>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">Deferred tax assets - current portion</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>125</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>129</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=505>
  <P style="margin:0pt; padding-left:59.4pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">Total current assets</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>86,139</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>25,051</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=505><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=101><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=102><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Plant and equipment, net</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>8,339</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>1,952</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Land use rights, net</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>1,152</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>1,142</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Intangible assets</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>9,997</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>511</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Investment, at cost</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>12</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Goodwill</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>8,426</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Deferred tax assets - non-current portion</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>462</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>460</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=505>
  <P style="margin:0pt; padding-left:29.7pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">TOTAL ASSETS</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=20>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>114,527</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=20>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>29,116</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=505><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=101><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=102><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=964 colspan=8>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center><B><U>LIABILITIES AND SHAREHOLDERS' EQUITY</U></B></P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>CURRENT LIABILITIES</B></P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=101><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=102><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Notes payable - short term</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>2,272</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Accounts payable</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>4,000</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>1,077</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Accrued expenses</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>749</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>763</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Advances from customer</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>5,432</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Taxes payable</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>1,660</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>1,115</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Payable for acquisition of business</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>7,500</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>593</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Deferred income</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>831</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>887</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Due to director</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>76</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>70</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Deferred tax liabilities</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>84</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=505>
  <P style="margin:0pt; padding-left:59.4pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">Total current liabilities</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>22,604</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>4,505</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=505><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=101><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=102><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>LONG TERM LIABILITIES</B></P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=101><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=102><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Notes payable - long term</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>2,010</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=505>
  <P style="margin:0pt; padding-left:29.7pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">Total liabilities</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>24,614</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>4,505</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=505><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=101><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=102><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES</B></P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>94</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=505><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=101><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=102><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>SHAREHOLDERS' EQUITY</B></P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=101><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=102><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Common stock, $0.0001 par value; 100,000,000 shares authorized 31,824,938 (2006) and 21,558,000 (2005) shares issued and outstanding</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>3</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>2</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Additional paid-in capital</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>45,320</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>4,708</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Retained earnings</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>41,483</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>18,552</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Statutory surplus reserve fund</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>804</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>804</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=505>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Accumulated other comprehensive income</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>2,209</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>545</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=505>
  <P style="margin:0pt; padding-left:59.4pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">Total shareholders' equity</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>89,819</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>24,611</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=505>
  <P style="margin:0pt; padding-left:29.7pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>&nbsp;</B>TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=20>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=101>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>114,527</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=20>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=102>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>29,116</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=505><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=101><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=102><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=505><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=101><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=28><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=102><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>See accompanying notes to the consolidated financial statements.&nbsp;</P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">&nbsp;</p>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-4</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>Expressed in thousands of U.S. dollars</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>(Except for share and per share amounts)</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=125 colspan=2>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center><B>2006</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=127 colspan=2>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center><B>2005</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=127 colspan=2>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center><B>2004</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=125 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=127 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=127 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=125 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=127 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=127 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Revenues</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>106,989</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>32,688</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>16,056</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Cost of goods sold</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>75,976</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>23,473</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>8,796</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>Gross profit</B></P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>31,013</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>9,215</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>7,260</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Selling and marketing</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>1,511</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>288</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>391</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">General and administrative</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>3,036</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>1,189</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>513</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Depreciation and amortization</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>1,124</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>260</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>225</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>Income from operations</B></P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>25,342</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>7,478</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>6,131</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Rental income from related parties</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>496</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>439</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>478</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Other income (expense), net</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>711</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>120</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(25)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Interest income</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>63</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>9</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>13</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Interest expense</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(108)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Gain on sale of affiliated company</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>307</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>Income before income taxes and minority interest</B></P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>26,811</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>8,046</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>6,597</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Minority interest in income of consolidated subsidiaries&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>9</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Income taxes</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(3,889)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(780)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(873)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>Net income</B></P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>22,931</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>7,266</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>5,724</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Foreign currency translation gain</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>1,664</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>545</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>COMPREHENSIVE INCOME</B></P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=15>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>24,595</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=16>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>7,811</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=16>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>5,724</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>NET INCOME PER SHARE</B></P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>BASIC</B></P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>0.88</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>0.39</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>0.34</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>DILUTED</B></P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>0.85</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>0.39</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>0.34</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING</B></P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>BASIC</B></P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>26,052,519</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>18,521,479</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>17,000,000</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>DILUTED</B></P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>26,940,215</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>18,521,479</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>17,000,000</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=363><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=11><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=363><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=11><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>See accompanying notes to the consolidated financial statements.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-5</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>Expressed in thousands of U.S. dollars</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;<B>(Except for share and per share amounts)</B></P>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" cellspacing="0" cellpadding="0" bordercolor="#111111"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=170 colspan=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=65 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=65 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=56 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=63 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=81 colspan=2>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>Common Stock Shares&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=41 colspan=2>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>Par Value&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=65 colspan=2>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>Additional</P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>Paid-in Capital</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=65 colspan=2>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>Retained Earnings &nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=90 colspan=2>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>Accumulated</P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>Other</P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>Comprehensive Income</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=56 colspan=2>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>Statutory</P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>Surplus Reserve Fund</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=63 colspan=2>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>Total&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=81 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=41 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=65 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=65 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=56 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=63 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=133>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:-19.8pt; font-size:10pt; color:#000000"><B>BALANCE AT JANUARY 1, 2004</B></P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=55>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>17,000,000</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=13>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>1</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=37>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>4,709</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=36>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>6,366</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=52>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=9>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=34>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>11,076</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=133>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:-19.8pt; font-size:10pt; color:#000000">Net income for the year</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=55>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=13>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=37>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=36>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>5,724</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=52>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=25>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=34>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>5,724</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=133>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:-19.8pt; font-size:10pt; color:#000000"><B>BALANCE AT DECEMBER 31, 2004</B></P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=55>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>17,000,000</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=13>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>1</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=37>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>4,709</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=36>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>12,090</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=52>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=34>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>16,800</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=13><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=37><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=36><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=52><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=133>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:-19.8pt; font-size:10pt; color:#000000">Common stock issued for consulting services</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=55>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>1,420,000</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=13>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=37>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=36>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=52>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=34>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=133>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:-19.8pt; font-size:10pt; color:#000000">Common stock issued to previous Apex</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=13><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=37><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=36><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=52><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=133>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:-19.8pt; font-size:10pt; color:#000000">shareholders (Note 1)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=55>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>3,138,000</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=13>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>1</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=37>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(1)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=36>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=52>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=34>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=133>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:-19.8pt; font-size:10pt; color:#000000">Foreign currency translation</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=55>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=13>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=37>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=36>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=52>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>545</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=34>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>545</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=133>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:-19.8pt; font-size:10pt; color:#000000">Net income for the year</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=55>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=13>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=37>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=36>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>7,266</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=52>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=34>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>7,266</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=133>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:-19.8pt; font-size:10pt; color:#000000">Transfer</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=55>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=13>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=37>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=36>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(804)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=52>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=25>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>804</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=34>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=133>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:-19.8pt; font-size:10pt; color:#000000"><B>BALANCE AT DECEMBER 31, 2005</B></P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=55>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>21,558,000</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=13>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>2</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=37>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>4,708</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=36>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>18,552</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=52>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>545</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>804</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=34>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>24,611</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=13><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=37><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=36><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=52><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=133>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:-19.8pt; font-size:10pt; color:#000000">Warrants granted for consulting services</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=55>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=13>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=37>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>185</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=36>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=52>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=34>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>185</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=133>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:-19.8pt; font-size:10pt; color:#000000">Common stock issued for consulting services</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=55>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>100,000</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=13>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=37>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>350</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=36>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=52>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=34>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>350</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=133>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:-19.8pt; font-size:10pt; color:#000000">Common stock issued for acquisition of Yuan Da</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=55>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>200,000</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=13>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=37>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>500</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=36>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=52>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=34>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>500</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=133>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:-19.8pt; font-size:10pt; color:#000000">Common stock issued under securities purchase agreements</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=55>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>7,301,259</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=13>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>1</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=37>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>22,284</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=36>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=52>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=34>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>22,285</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=133>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:-19.8pt; font-size:10pt; color:#000000">Common stock issued for acquisition of businesses of four related companies</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=55>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>850,000</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=13>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=37>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>6,970</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=36>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=52>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=34>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>6,970</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=133>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:-19.8pt; font-size:10pt; color:#000000">Common stock issued for investor relations services</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=55>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>50,000</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=13>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=37>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>200</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=36><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=52><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=34>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>200</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=133><P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:-19.8pt; line-height:12pt; font-size:10pt; color:#000000">Common stock issued for private placement</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>1,538,462</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=13><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=37><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>10,000</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=36><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=52><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>10,000</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=133><P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:-19.8pt; line-height:12pt; font-size:10pt; color:#000000">Warrants exercised (cashless) per Securities Purchase Agreement</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>123,750</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=13><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=37><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=36><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=52><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=133><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Warrants exercised for cash per Securities Purchase Agreement</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>25,714</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=13><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=37><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>123</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=36><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=52><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>123</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=133><P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:-19.8pt; line-height:12pt; font-size:10pt; color:#000000">Warrants exercised (cashless) per investor relation service agreement</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>77,753</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=13><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=37><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=36><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=52><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=133><P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:-19.8pt; line-height:12pt; font-size:10pt; color:#000000">Foreign currency translation</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=13><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=37><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=36><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=52><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>1,664</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>1,664</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=133><P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:-19.8pt; line-height:12pt; font-size:10pt; color:#000000">Net income for the year</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=13><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=37><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=36><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>22,931</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=52><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>22,931</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=133><P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:-19.8pt; line-height:12pt; font-size:10pt; color:#000000"><B>BALANCE AT DECEMBER 31, 2006</B></P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>31,824,938</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=13><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>3</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=37><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>45,320</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=36><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>41,483</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=52><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>2,209</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>804</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>89,819</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=13><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=37><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=36><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=52><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=13><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=37><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=36><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=52><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=9><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=5><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=7><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>See accompanying notes to the consolidated financial statements.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-6</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CONSOLIDATED STATEMENTS OF CASH FLOWS</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>Expressed in thousands of U.S. dollars</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>(Except for share and per share amounts)</B></P>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=125 colspan=2>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center><B>2006</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=127 colspan=2>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center><B>2005</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=127 colspan=2>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center><B>2004</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>CASH FLOWS FROM OPERATING ACTIVITIES:</B></P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=125 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=127 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=127 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Net income</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>22,931</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>7,266</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>5,724</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">Adjustments to reconcile net income to net cash provided by operating activities:</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Depreciation and amortization</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>1,124</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>260</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>225</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Allowance for doubtful accounts</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>113</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>239</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Provision for obsolete inventories</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>230</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Deferred income taxes</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>107</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(590)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Amortization of loan origination fees</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>37</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Common stock issued for services</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>250</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Gain on disposal of plant and equipment</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(15)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Issue of warrants for investor relation services</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>185</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Gain on sale of the affiliated company</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(307)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Minority interest</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(9)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Changes in operating assets and liabilities:</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">(Increase) decrease in:</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Accounts receivable</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(13,992)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(7,270)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>526</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Related party receivables</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>3,768</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>369</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(888)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">Other receivables</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(401)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(337)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(78)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Inventories</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(13,328)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>771</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(4,537)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Advances to suppliers</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(1,323)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>1,780</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>114</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Prepayment &amp; deposits</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(3,233)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">(Decrease) increase in:</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Accounts payable, accrued expenses and advance from customers</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>6,300</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(3,630)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(393)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Payable for acquisition of business</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>593</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Deferred income</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(26)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>887</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Customer deposit</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(540)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Taxes payable</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>582</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>700</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>292</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Related party payable</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(9)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Net cash provided by operating activities</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>2,984</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>799</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>684</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>CASH FLOWS FROM INVESTING ACTIVITIES:</B></P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Additions to plant and equipment</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(5,114)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(49)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(110)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding-left:29.7pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:-9.9pt; font-size:10pt; color:#000000">Additions to intangible assets, other than through business acquisition</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(107)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Proceeds from dispositions of non current assets</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>592</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">Net cash outflow on acquisition of net assets of businesses acquired (net of cash acquired)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(6,539)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(30)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Net cash used in investing activities</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(11,168)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(79)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(110)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>CASH FLOWS FROM FINANCING ACTIVITIES:</B></P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Cash received from (advanced to) directors</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>9</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>1,063</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(1,056)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">Proceeds from bank borrowings</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>3,495</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">Warrants exercised</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>123</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Issue of common stock, net of issuing expenses</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>32,285</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Net cash provided by (used in) financing activities</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>35,912</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>1,063</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(1,056)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS</B></P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>27,728</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>1,783</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(482)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">Effect of exchange rate changes on cash</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>975</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>461</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:19.8pt; font-size:10pt; color:#000000">Cash and cash equivalents, beginning of year</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>2,277</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>33</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>515</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=363>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>CASH AND CASH EQUIVALENTS, END OF YEAR</B></P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=15>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=90>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>30,980</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=16>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>2,277</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=16>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=91>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>33</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=363><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=11>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=363><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=90><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=16><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=11>&nbsp;</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>Continued</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-7</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>Expressed in thousands of U.S. dollars</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>(Except for share and per share amounts)</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=408.933><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000"><B>SUPPLEMENTARY CASH FLOW INFORMATION:</B></P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=14.333><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=86.933 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=14.333><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=86.933 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=14.333><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=86.867 colspan=2 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7.133 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=408.933><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=14.333><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=86.933 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=14.333><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=86.933 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=14.333><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=86.867 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=7.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=408.933><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Interest paid</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=14.333><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=78.933><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>103</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=14.333><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=78.933><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=14.333><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=78.867><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=7.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=408.933><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Income taxes paid</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=14.333><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=78.933><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>3,166</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=14.333><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=78.933><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>1,404</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=14.333><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=78.867><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>621</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=7.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000"><B>SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(a)&nbsp;&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=842><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The Company purchased net assets of Yuan Da Wei Shi Technology Limited (&quot;Yuan Da&quot;) for $630 as detailed in note 1. In conjunction with the acquisition, liabilities were assumed as follows:-</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="50%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=248><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=143 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=38><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=248><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Fair value of net assets acquired</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=43><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=80><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>630</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=38><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=248><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Cash paid</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=43><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=80><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>37</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=38><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=248><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Amount owed at December 31, 2005</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=43><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=80><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>593</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=38><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(b)&nbsp;&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=842><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>1,420,000 shares of common stock were issued to consultants for services provided to the Company during 2005 in connection with the acquisition of Safetech by Apex (Note 1).</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(c)&nbsp;&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=843><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>850,000 shares of common stock were issued for acquisition of businesses of the Four-Related Companies during 2006. (Note 3)</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(d)&nbsp;&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=844><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>1,361,748 shares of common stock issuable in satisfaction of the equity portion of the purchase price of approximately $7,500 in the acquisition of Shanghai Cheng Feng Digital High-tech Co., Ltd., (&quot;Cheng Feng&quot;), which were issued in the first quarter of 2007. (Note 3)</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(e)&nbsp;&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=842><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>200,000 shares of common stock were issued for acquisition of Yuan Da during 2006. (Note 1)</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>See accompanying notes to the consolidated financial statements.</P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">&nbsp;</p>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-8</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>Expressed in thousands of U.S. dollars</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>(Except for share and per share amounts)</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;&nbsp;</P>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">1.&nbsp;&nbsp;&nbsp;&nbsp;ORGANIZATION AND PRINCIPAL ACTIVITIES</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Apex Wealth Enterprises Limited (&quot;Apex&quot; or the
&quot;Company&quot;) was incorporated in the British Virgin Islands in April 2002 with an authorized capital of $50 divided into 50,000 shares of common stock at $1 par value and operated as a corporation under the International Business Companies Ordinance of 1984. On August 1, 2002, the authorized capital was subdivided into 5,000,000 shares of common stock at $0.0001 par value. On May 12, 2003, the authorized capital was increased to $1,000, which was divided into 100,000,000 shares of common stock at $0.0001 par value. Apex was a development stage company whose significant activities consist of organization, the registering and offering of shares, and forming a subsidiary company in the People's Republic of China (&quot;PRC&quot;or
&quot;China&quot;) to apply for a consultancy license, and business development.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>On July 23, 2005, Apex executed a Stock Purchase Agreement and an Agreement for Share Exchange. Both agreements closed on September 12, 2005. Under the Stock Purchase Agreement, Whitehorse Technology Ltd. (&quot;Whitehorse&quot;, purchased a total of 8,862,000 shares, or approximately 66.04% of the issued and outstanding common stock of Apex, from First Asia International Holdings Ltd. Whitehorse is the largest shareholder of China Safetech Holdings Limited (&quot;Safetech&quot;), a British Virgin Islands corporation. Safetech is the investment holding vehicle of the entire equity interest of Golden Group Corporation (Shenzhen) Ltd. (&quot;Golden&quot;). Golden is a corporation in the PRC engaged in the business of the manufacturing and distribution of security and surveillance systems, which integrates development, manufacturing, marketing, and maintenance of digital video surveillance and network communication together.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Simultaneously with the closing under the Stock Purchase Agreement, Apex issued a total of 8,138,000 shares of its common stock to the shareholders of Safetech under the Agreement for Share Exchange. Through the share exchange, Apex acquired 50,000 shares of the issued and outstanding stock of Safetech, which constituted 100% of its issued and outstanding stock from the individual shareholders of Safetech. As a result of the transaction, Safetech and Golden became wholly-owned subsidiaries of Apex.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The acquisition of Safetech by Apex has been recorded as a reverse acquisition based on factors demonstrating that Safetech represents the accounting acquirer. The shareholders of Safetech received 17,000,000 shares (or approximately 78.86%) of the post-acquisition common stock of Apex. In addition, post-acquisition management personnel and the board members of the Company now consist of individuals previously holding position with Safetech. The historical shareholders' equity of Safetech prior to the exchange has been retroactively restated (a recapitalization) for the equivalent number of shares received in the exchange after giving effect to any differences in the par value of the Apex and Safetech common stock, with an offset to additional paid-in capital. The restated consolidated retained earnings of the accounting acquirer (Safetech) have been carried forward after the exchange.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>On October 25, 2005, the Company entered into an agreement with the equity owners of Yuan Da, which was subsequently amended in April and May 2006. Pursuant to the agreement, the Company acquired all of the assets of Yuan Da. Yuan Da is a limited liability company established in Shenzhen, China and was principally engaged in the sales and development of security and surveillance systems. Under the agreement with Yuan Da, as amended, the purchase price consisted of (i) a cash payment of RMB1,000 (approximately $125) and (ii) the issuance of 200,000 unregistered shares of the Company's common stock valued at $500 (based upon the average closing market price during the twenty days before the date of the agreement). The shares of common stock were issued on March 10, 2006.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>On February 8, 2006, Apex changed its name to China Security &amp; Surveillance Technology Inc. (&quot;CSST&quot; or the
&quot;Company&quot;). The Company's Board of Directors authorized changing its fiscal year from that used in its most recent filing. The new fiscal year will be December 31, and the Company filed an annual report on Form 20-F for the year ended December 31, 2005.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The Company entered into a consulting service agreement on February 8, 2006. Pursuant to the agreement, the Company issued 100,000 shares of its common stock to the consultant on March 1, 2006 in exchange for consulting services valued at $350, which were to be provided to the Company from February 8, 2006 to October 31, 2006. The agreement was amended in June 2006 and the service period was extended to February 2009.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>On April 4, 2006, the Company entered into a Securities Purchase Agreement (the
&quot;Agreement&quot;) with certain investors (the &quot;Investors&quot;) for the sale of 2,666,667 shares (the
&quot;Shares&quot;) of the Company's common stock at a price of $3.00 per share. Net proceeds to the Company from the sale of all of the common stock were approximately $7,400.</P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">&nbsp;</p>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-9</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>Expressed in thousands of U.S. dollars</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;&nbsp;<B>(Except for share and per share amounts)</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">1.&nbsp;&nbsp;&nbsp;&nbsp;ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Pursuant to this Agreement, the Company also issued warrants to a private placement agent to purchase 416,667 shares of its common stock as commission for its services in connection with the private placement. A total of 150,000 of the warrants are exercisable at a price of $3.80 per share, which is the closing bid price for the Company's stock as of the date of closing under the Agreement, and a total of 266,667 of the warrants are exercisable at a price of $3.00 per share. All of the warrants have a term of 5 years and include a cashless exercise feature. On October 16, 2006, 150,000 warrants were exercised using the cashless exercise feature and 82,500 shares of its common stock were issued.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">On July 6, 2006, the Company entered into a definitive Securities Purchase agreement (the
&quot;Securities Purchase Agreement&quot;) with certain accredited investors relating to the private placement of 2,675,794 units for an aggregate gross cash purchase price of $12,041.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Each unit consists of one share of the Company's common stock and a warrant to purchase one-fifth of one share of common stock. The exercise price for each whole warrant was originally $5.40. The warrants have a term of five years and include a cashless exercise feature. The units were to be sold under the Securities Purchase Agreement at a price of $4.50 per unit. Under the terms of the Securities Purchase Agreement, all of such funds were required to be placed into escrow by the investors by July 7, 2006.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">The Securities Purchase Agreement was amended on July 30, 2006 and July 31, 2006 and closing under the amended agreement occurred July 31, 2006. The major amendments to the Securities Purchase Agreement include the waiver of a closing condition which permitted the Company to break escrow notwithstanding the fact that the acquisition of Cheng Feng would not be fully consummated until certain governmental approvals were obtained, the reduction of the purchase price of each unit from $4.50 to $3.50 and the exercise price for each whole warrant from $5.40 to $4.80, and the grant of a put right by the Company to all of the investors which allowed the investors to require the Company to repurchase all, but not less than all, of the securities issued under the Securities Purchase Agreement if the Company failed to obtain the necessary governmental approval to consummate the Acquisition on or before December 31, 2006. Necessary governmental approvals were obtained before December 31, 2006.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Pursuant to the amended Securities Purchase Agreement, the Company sold 4,634,592 units to certain accredited investors for $16,200. Each unit consists of one share of common stock and a warrant to purchase one- fifth of one share of common stock. The exercise price for each whole warrant is $4.80. The warrants have a term of five years and include a cashless exercise feature. The units were sold under the Securities Purchase Agreement at a price of $3.50 per unit. Net proceeds to the Company from the sale of all of the units are approximately $14,900. In November 2006, 25,714 warrants were exercised at $4.80 per share.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">In conjunction with execution of the Securities Purchase Agreement, the Company also executed a Registration Rights Agreement under which it is obligated to file a registration statement on Form S-4 and S-1, or other available form, to register the shares and the shares underlying the warrants for resale, within 45 days and 55 days after the closing date, respectively. The Company was obligated to use its best efforts to cause the registration statement to be declared effective within 180 days of the closing date, and was liable for payment of penalties to the purchasers in the event the registration statement has not declared effective within the 180-day period. The Company filed an S-4 on October 2, 2006, which was 12 days later than the required filing date. Therefore, liquidated damages totaling approximately $65 were incurred.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">The Company also issued warrants to purchase 324,421 shares of its common stock with an exercise price of $4.20 to two private placement agents as commission for their services in connection with the private placement. On October 16, 2006, 75,000 warrants were exercised using the cashless exercise feature and 41,250 shares of its common stock was issued.</P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-10</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>Expressed in thousands of U.S. dollars</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;<B>(Except for share and per share amounts)</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">1.&nbsp;&nbsp;&nbsp;&nbsp;ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">In October 2006, the Company issued 50,000 shares of its common stock to an investor relations firm as a payment for their services rendered pursuant to a consulting agreement dated February 9, 2006. The fair value of the common stock issued was $200 and is being expensed over the one year contract term.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">In November 2006, we changed our domicile from the BVI to Delaware through merging the BVI company into its recently-formed wholly owned Delaware subsidiary. The main reasons for the change of domicile were to comply with the covenants of a stock purchase agreement that we entered into on April 4, 2006 in connection with a financing transaction, as well as to take advantage of the benefits of being a Delaware corporation, including the enhanced credibility, greater flexibility in corporate law and attractiveness for directors and officers.
In connection with the change of domicile, the par value of the Company's common
stock then changed from $0.01 per share to $0.0001 per share.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>On November 27, 2006, the Company entered into an agreement with three accredited investors (the
&quot;buyers&quot;), two of whom are qualified institutional buyers as defined in Rule 144A under the Securities Act of 1933. (the
&quot;Securities Act&quot;).The Company issued an aggregate of 1,538,462 shares of its common stock for a consideration of $10,000 at a price of $6.50 per share.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The Company agreed to pay RMB 120,000 (approximately $15,000) in exchange for 100% ownership of Shanghai Cheng Feng Digital High-Tech Co. Ltd. (&quot;Cheng Feng&quot;), consisting of RMB 60,000 (approximately $7,500) in cash and RMB 60,000 in the Company's restricted stock. RMB 2,000 (approximately $250) of the purchase price was paid as a deposit on May 18, 2006. An additional RMB 8,000 (approximately $1,000) was paid in August 2006. The balance of the cash portion of the purchase price, RMB 50,000 (approximately $6,250), was paid in December 2006. The number of shares issuable in satisfaction of the equity portion of the purchase price is 1,361,748, which were issued in the first quarter of 2007.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>In November 2006, we acquired the security and surveillance business of Jian Golden An Ke Technology Co. Ltd., or
&quot;Jian An Ke,&quot; Shenzhen Golden Guangdian Technology Co. Ltd., or &quot;Shenzhen Guangdian,&quot; Shenyang Golden Digital Technology Co. Ltd., or
&quot;Shenyang Golden,&quot; and Jiangxi Golden Digital Technology Co. Ltd., or &quot;Jiangxi Golden,&quot; of which our CEO and director Guoshen Tu owned 80%, 60%, 42% and 90%, respectively. We refer to these companies in these financial statements as the Four-Related Companies. Mr. Tu did not receive any consideration for the acquisition of his interest in the Four-Related Companies. &nbsp;The minority shareholders of these four companies received in aggregate 850,000 shares of the Company's common stock, which was valued at $6,970 by an independent appraisal firm. Shenzhen Guangdian is engaged in the business of manufacturing and distributing security and surveillance products. The other three companies are engaged in the business of distributing security and surveillance products.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">In September 2005, the Company entered into an investor relation service agreement and granted a warrant to purchase 100,000 shares of its common stock at $1.85 per share in exchange for the services for a two-year period. The fair value of $185 was estimated at the date of grant using the Black-Scholes option pricing model and the following assumptions: 4.18% risk free interest rate, zero dividend yield, 2-year service contract term and 400% expected volatility. This fair value was allocated to the 2-year service period and the remaining fair value of the service fee was charged to income when the service agreement was terminated by the Company in February 2006.</P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">&nbsp;</p>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-11</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:2pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:45pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>Expressed in thousands of U.S. dollars</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;<B>(Except for share and per share amounts)</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">1.&nbsp;&nbsp;&nbsp;&nbsp;ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)</P>
</TD></TR>
  <TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720>&nbsp;</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>A summary of the status of the Company's stock warrants granted in 2006 and 2005 and the changes during the years then ended is presented below:</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<div align="center">
  <center>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="75%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=195><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=39><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=300 colspan=5><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>2006</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=322 colspan=5><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>2005</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=18><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=195><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=39><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=109 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=126 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>Weighted Average Exercise</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=126 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=130 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>Weighted Average Exercise</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=18><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=195><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=39><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=109 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>Shares</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=126 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>Prices</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=126 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>Shares</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=130 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>Prices</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=18><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=195 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Outstanding at beginning of year</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=39 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>100,000</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=21 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>1.85</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=26 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=86 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=26 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=87 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=18 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=195><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Granted</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=39><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=85><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>1,668,006</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=21><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=85><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>4.31</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=86><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>100,000</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=87><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>1.85</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=18><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=195><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Exercised</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=39><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(350,714)</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25>&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=21><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(3.23)</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=26>&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=86><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=87><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=18><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=195 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Outstanding at end of year</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=39 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=4 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=85 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>1,417,292</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=21 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=85 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>4.40</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=20 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=86 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>100,000</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=87 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>1.85</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=18 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=195><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Warrants exercisable at end of year</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=39><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=85><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>1,417,292</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=21><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=86><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>100,000</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=87><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=18><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">2.&nbsp;&nbsp;&nbsp;&nbsp;SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(a)&nbsp;&nbsp;&nbsp;&nbsp;Basis of Consolidation</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The consolidated financial statements of the Company and its subsidiaries are prepared in accordance with accounting principles generally accepted in the United States of America and include the accounts of the Company and its subsidiaries. All material inter-company accounts and transactions have been eliminated in consolidation.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(b)&nbsp;&nbsp;&nbsp;&nbsp;Economic and Political Risks</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The Company's operations are conducted in the PRC. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The Company's operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(c)&nbsp;&nbsp;&nbsp;&nbsp;Plant and Equipment</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided over the assets' estimated useful lives, using the straight-line method. Estimated useful lives of the plant and equipment are as follows:</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<div align="center">
  <center>
<TABLE style="margin-left:0pt; border-collapse:collapse" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=170.133><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Building</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=117.8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>20 years</P>
</TD></TR>
<TR><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=170.133><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Leasehold improvements</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=117.8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>10 years</P>
</TD></TR>
<TR><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=170.133><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Plant and equipment</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=117.8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>5 years</P>
</TD></TR>
<TR><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=170.133><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Electronics equipment</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=117.8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>5 years</P>
</TD></TR>
<TR><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=170.133><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Motor vehicles</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=117.8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>5 years</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of income. The cost of maintenance and repairs is charged to the statement of income as incurred, whereas significant renewals and betterments are capitalized.</P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">&nbsp;</p>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-12</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:2pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>Expressed in thousands of U.S. dollars</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>(Except for share and per share amounts)</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">2.&nbsp;&nbsp;&nbsp;&nbsp;SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(d)&nbsp;&nbsp;&nbsp;&nbsp;Intangible Assets</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Intangible assets represent a surveillance recording system, surveillance software, customer relationship and contracts, acquired from Yuan Da, Cheng Feng and the Four-Related Companies (see notes 3 and 9).</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">The value of intangible assets was acquired from Yuan Da was established by an independent accounting firm. The valuation and allocation in intangible assets of the acquisition of Cheng Feng and the businesses of the Four-Related Companies were determined by an independent appraisal firm.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The values of the intangible assets are being amortized using the following amortization methods and estimated useful lives:</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<div align="center">
  <center>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="75%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=212.4><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify><U>Nature</U></P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=196.2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify><U>Amortization method</U></P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=131.333><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify><U>Useful lives</U></P>
</TD></TR>
<TR><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=212.4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=196.2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=131.333><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
</TD></TR>
<TR><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=212.4><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Acquisition of Yuan Da</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=196.2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Straight-line method</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=131.333><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>5 years</P>
</TD></TR>
<TR><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=212.4><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Acquisition of Cheng Feng</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=196.2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Straight-line and accelerated method</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=131.333><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>5 years</P>
</TD></TR>
<TR><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=212.4><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Acquisition of the businesses of the Four-Related Companies</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=196.2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Straight-line and accelerated method</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=131.333><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>2 months to 5 years</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(e)&nbsp;&nbsp;&nbsp;&nbsp;Accounting for the Impairment of Long-Lived Assets</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technology or other industry changes. Determination of recoverability of assets to be held and used is by comparing the carrying amount of an asset to future net undiscounted cash flows to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:39.6pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>There was no impairment of long-lived assets as of December 31, 2006 and 2005.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:39.6pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(f)&nbsp;&nbsp;&nbsp;&nbsp;Goodwill</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Goodwill represents the excess of the purchase price over the net of the fair value of the identifiable tangible and intangible assets acquired and the fair value of liabilities assumed in acquisitions. SFAS No; 142,
&quot;Goodwill and Other Intangible Assets&quot; (&quot;SFAS142&quot;) requires the testing of goodwill and indefinite-lived intangible assets for impairment at least annually. We test goodwill for impairment in the fourth quarter each year.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>With the acquisition of Cheng Feng in July 2006, we recorded goodwill of $8,426. Goodwill impairment is computed using the expected present value of associated future cash flows.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:39.6pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>There was no impairment of goodwill as of December 31, 2006.</P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">&nbsp;</p>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-13</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>Expressed in thousands of U.S. dollars</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;<B>(Except for share and per share amounts)</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">2.&nbsp;&nbsp;&nbsp;&nbsp;SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(g)&nbsp;&nbsp;&nbsp;&nbsp;Accounting for Computer Software To Be Sold, Leased or Otherwise Marketed</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The Company accounts for software development costs in accordance with Statement of Financial Accounting Standards (&quot;SFAS&quot;) No. 86,
&quot;Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed&quot;. Costs related to establishing the technological feasibility of a software product are expensed as incurred as a part of research and development in general and administrative expenses. Costs that are incurred to produce the finished product after technological feasibility is established are capitalized and amortized over the estimated economic life of 5 years. The Company performs periodic reviews to ensure that unamortized program costs remain recoverable from future revenue.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>At December 31, 2006 and 2005, unamortized computer software costs were $267 and $0, respectively. During 2006, $39 amortization expense was charged to income.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(h)&nbsp;&nbsp;&nbsp;&nbsp;Deferred Income</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Deferred income represents amounts billed for contracts for supply and installation of security and surveillance equipment which have not been fully completed at the balance sheet date in accordance with accounting policy note 2(o).</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(i)&nbsp;&nbsp;&nbsp;&nbsp;Inventories</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Inventories are stated at the lower of cost, determined on a weighted average basis, or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated costs necessary to make the sale.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>When inventories are sold, their carrying amount is charged to expense in the year in which the revenue is recognized. Write-downs for declines in net realizable value or for losses of inventories are recognized as an expense in the year the impairment or loss occurs. Declines in net realizable value of inventory for the years ended December 31, 2006, 2005 and 2004 amounted to $0, $0 and $42.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>During the years ended December 31, 2006, 2005, and 2004 approximately 92%, 89%, and 88%, of total inventory purchases were from five suppliers, respectively.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(j)&nbsp;&nbsp;&nbsp;&nbsp;Accounts Receivable</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Trade receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An estimate for doubtful accounts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>No trade receivable due from one individual customer exceeds 10% of total accounts receivable at December 31, 2006 and 2005.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(k)&nbsp;&nbsp;&nbsp;&nbsp;Cash and Cash Equivalents</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(l)&nbsp;&nbsp;&nbsp;&nbsp;Advances to Suppliers</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Advances to suppliers represent the cash paid in advance for purchasing of inventory items from suppliers.</P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">&nbsp;</p>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-14</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:2pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;<B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>Expressed in thousands of U.S. dollars</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>(Except for share and per share amounts)</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">2.&nbsp;&nbsp;&nbsp;&nbsp;SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)</P>
</TD></TR>
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<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(m)&nbsp;&nbsp;&nbsp;&nbsp;Land Use Rights</P>
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<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>According to the laws of China, the government owns all the land in China. Companies or individuals are authorized to possess and use the land only through land use rights granted by the Chinese government. Land use rights are being amortized using the straight-line method over the lease term of the rights.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The Company paid in advance for the lease of three parcels of land for 48 to 50 year time periods, consisting of approximately $1,445. The lease periods began in 1997 and expire during 2045 and 2047. The amount is being amortized and recorded as expense over the 48-50 year terms of the leases. The Company adopted the provisions of SFAS No. 142, Goodwill and Other Intangible Assets (&quot;SFAS 142&quot;), effective January 1, 2002. Under SFAS 142, finite lived intangible assets are amortized over their lives, and are reviewed annually for impairment, or more frequently, if indications of possible impairment exist. The Company has performed the requisite annual transitional impairment tests on intangible assets and determined that no impairment adjustments were necessary.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(n)&nbsp;&nbsp;&nbsp;&nbsp;Fair Value of Financial Instruments</P>
</TD></TR>
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<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The Company's financial instruments include cash and cash equivalents, accounts receivable, related party receivables, advances to suppliers, other receivables, taxes payable, accounts payable and notes payable. Management estimates that the carrying amounts of the non related party financial instruments approximate their fair values due to their short-term nature. The fair value of the related party receivables is not practicable to estimate due to the related party nature of the underlying transactions.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(o)&nbsp;&nbsp;&nbsp;&nbsp;Revenue Recognition</P>
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<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The Company derives the bulk of its revenue from the supply and installation of security and surveillance equipment and the two deliverables do not meet the separation criteria under EITF issue 00-21. The installation is not considered to be essential to the functionality of the equipment having regard to the following criteria as set out in SAB 104:</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(i)&nbsp;&nbsp;&nbsp;&nbsp;The security and surveillance equipment is a standard product with minor modifications according to customers' specifications;</P>
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<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(ii)&nbsp;&nbsp;&nbsp;&nbsp;Installation does not significantly alter the security and surveillance equipment's capabilities; and</P>
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<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(iii)&nbsp;&nbsp;&nbsp;&nbsp;Other companies which possess the relevant licenses are available to perform the installation services.</P>
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<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>In early 2006, the Company began performing much larger security installation contracts than it had been doing previously. As a marketing approach, the Company prepared standard contracts with its new larger customers, whereby 90% of the contract amount was due when installation was complete and payment of the remaining 10% was deferred for one year. Because of the newness of the larger contracts and the inability to immediately determine the amount of warranty work that would be required, the Company initially deferred recognizing the 10% of the contract amount as revenue and amortized this amount to income over the one year period. During the second and third quarters of 2006, the Company carefully monitored the warranty work requested by its customers, and determined that very little warranty work had been required to be performed.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Consequently, effective October 1, 2006, the Company reduced its estimate of future warranty requirements to approximately 1% of contract installation revenue. The fourth quarter reflects this change in the estimated warranty expenses and this fourth quarter adjustment increased revenue, tax expense and net income, by $3,557, $534 and $3,023, respectively.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Revenue from the outright sale of security and surveillance equipment is recognized when delivery occurs and risk of ownership passes to the customers.</P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">&nbsp;</p>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-15</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:2pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>Expressed in thousands of U.S. dollars</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>(Except for share and per share amounts)</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">2.&nbsp;&nbsp;&nbsp;&nbsp;SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)</P>
</TD></TR>
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<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(p)&nbsp;&nbsp;&nbsp;&nbsp;Research and Development Costs</P>
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<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Research and development costs are expensed as incurred. Research and development costs included in general and administrative expenses for the years ended December 31, 2006, 2005 and 2004 amounted to $209, $0 and $0, respectively.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(q)&nbsp;&nbsp;&nbsp;&nbsp;Advertising Costs</P>
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<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">The Company expenses advertising costs as incurred or the first time advertising takes place. During the years ended 2006, 2005 and 2004, the Company incurred approximately $134, $7, and $10, respectively. &nbsp;&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(r)&nbsp;&nbsp;&nbsp;&nbsp;Foreign Currency Translation</P>
</TD></TR>
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<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The functional currency of the Company is Renminbi (&quot;RMB&quot;) and the RMB is not freely convertible into foreign currencies. The Company maintains its financial statements in the functional currency. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet date. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. Exchange gains or losses arising from foreign currency transactions, which are not material, are included in the determination of net income for the respective periods.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>For financial reporting purposes, the financial statements of the Company which are prepared using the functional currency have been translated into United States dollars. Assets and liabilities are translated at exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates and shareholders' equity is translated at historical exchange rates. Any translation adjustments resulting are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component of shareholders' equity. The exchange rates adopted are as follows:-</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<div align="center">
  <center>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="75%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=149.8><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23.8><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=87.933 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>2006</B></P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23.8><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=87.933 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>2005</B></P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23.8><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=87.933 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>2004</B></P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=18.733><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=149.8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Year end&nbsp;RMB exchange rate</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23.8><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=18.733><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=69.2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>7.80</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23.8><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=18.733><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=69.2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>8.07</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23.8><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=18.733><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=69.2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>8.28</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=18.733><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=149.8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Average yearly&nbsp;RMB exchange rate</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23.8><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=18.733><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=69.2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>7.97</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23.8><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=18.733><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=69.2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>8.19</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23.8><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=18.733><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=69.2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>8.28</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=18.733><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(s)&nbsp;&nbsp;&nbsp;&nbsp;Retirement Benefits</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Retirement benefits in the form of contributions under defined contribution retirement plans to the relevant authorities are charged to the consolidated statements of income as incurred. The retirement benefit expenses for 2006, 2005 and 2004 were $68, $35 and $31, respectively and are included in general and administrative expenses.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(t)&nbsp;&nbsp;&nbsp;&nbsp;Use of Estimates</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The preparation of the financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made; however actual results could differ materially from those estimates.</P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">&nbsp;</p>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-16</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:2pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>Expressed in thousands of U.S. dollars</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>(Except for share and per share amounts)</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">2.&nbsp;&nbsp;&nbsp;&nbsp;SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(u)&nbsp;&nbsp;&nbsp;&nbsp;Income Taxes</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Income tax expense is based on reported income before income taxes. Deferred income taxes reflect the effect of temporary differences between assets and liabilities that are recognized for financial reporting purposes and the amounts that are recognized for income tax purposes. In accordance with Statement of Financial Accounting Standard (&quot;SFAS&quot;) No. 109,
&quot;Accounting for Income Taxes,&quot; these deferred taxes are measured by applying currently enacted tax laws.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(v)&nbsp;&nbsp;&nbsp;&nbsp;Earnings Per Share</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>SFAS No. 128, Earnings Per Share, requires dual presentation of basic and diluted earnings per share (&quot;EPS) with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation.&nbsp; Basic EPS excludes dilution.&nbsp; Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.&nbsp; There were no dilutive securities outstanding during 2005 or 2004.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Earning per basic share of common stock is based on the weighted average number of shares of common stock outstanding during each respective period.&nbsp; Earnings per diluted share of common stock adds to basic weighted shares the weighted average number of shares issuable under convertible securities, contingent issuances, stock options and warrants outstanding during each respective period, using the if-converted or treasury-stock methods.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The calculation of diluted earnings per share for 2006 has been calculated using the treasury stock method based on the weighted average number of dilutive securities outstanding during 2006.&nbsp; The 1,361,748 shares of common stock which were contingently issuable in the acquisition of Cheng Feng have been included in dilutive securities from July 2006 through December 31, 2006. At December 31, 2006, warrants were outstanding to acquire 1,417,292 shares of common stock.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(w)&nbsp;&nbsp;&nbsp;&nbsp;Reclassifications</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Certain amounts reported in the 2005 and 2004 financial statements have been reclassified to conform to the 2006 presentation.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">(x)&nbsp;&nbsp;&nbsp;&nbsp;Recent Accounting Pronouncements</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>In September 2005, the Emerging Issues Task Force (EITF) ratified EITF 04-13 (EITF 04-13),
&quot;Accounting for Purchases and Sales of Inventory with the Same Counterparty.&quot; This issue addresses the circumstances under which two or more inventory purchase and sales transactions with the same counterparty should be viewed as a single exchange transaction and whether there are circumstances under which such non-monetary exchanges should be accounted for at fair value.&nbsp; The adoption of EITF 04-13 is effective for new or modified agreements for fiscal periods beginning after March 15, 2006. It is not expected that the adoption of EITF 04-13 will have a material effect on our financial position or results of operations.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">In November 2005, FASB Staff Position (FSP) 115-1 The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments was issued. The FSP addresses the determination as to when an investment is considered impaired, whether that impairment is other-than-temporary, and the measurement of an impairment loss. This FSP also includes accounting considerations subsequent to the recognition of an other-than-temporary impairment and requires certain disclosures about unrealized losses that have not been recognized as other-than-temporary impairments. The guidance in this FSP amends FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities and APB Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock. The FSP applies to investments in debt and equity securities and cost-method investments. The application guidance within the FSP includes items to consider in determining whether an investment</P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">&nbsp;</p>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-17</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>Expressed in thousands of U.S. dollars</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>(Except for share and per share amounts)</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=717><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">2.&nbsp;&nbsp;&nbsp;&nbsp;SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>(x)&nbsp;&nbsp;&nbsp;&nbsp;Recent Accounting Pronouncements (continued)</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>is impaired, in evaluating if an impairment is other-than-temporary and recognizing impairment losses equal to the difference between the investment's cost and its fair value when an impairment is determined. The FSP is required for all reporting periods beginning after December 15, 2005. Earlier application is permitted. We do not anticipate the amendment will have a material effect on our financial position or results of operations.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>In February&nbsp;2006, the Financial Accounting Standards Board (&quot;FASB&quot;) issued SFAS No. 155,
&quot;Accounting for Certain Hybrid Financial Instruments.&quot; SFAS No. 155 amends SFAS No. 133 and 140. The statement applies to certain hybrid financial instruments, which are instruments that contain embedded derivatives. The new standard establishes a requirement to evaluate beneficial interests in securitized financial assets to determine if the interests represent freestanding derivatives or are hybrid financial instruments containing embedded derivatives requiring bifurcation. This new standard also permits an election for fair value re-measurement of any hybrid financial instrument containing an embedded derivative that otherwise would require bifurcation under SFAS No. 133. The fair value election can be applied on an instrument-by-instrument basis to existing instruments at the date of adoption and can be applied to new instruments on a prospective basis. SFAS No. 155 shall be effective for all financial instruments acquired, issued, or subject to a remeasurment (new basis) event occurring after the beginning of first fiscal year that begins after September 15, 2006. It is not expected that SFAS No. 155 will have a material effect on the Company's financial position or results of operations.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>In June&nbsp;2006, the FASB&nbsp;issued FASB Interpretation Number 48 (FIN 48),
&quot;Accounting for Uncertainty in Income Taxes--an interpretation of FASB Statement No.&nbsp;109.&quot; This interpretation contains a two step approach to recognizing and measuring uncertain tax positions accounted for in accordance with SFAS No.&nbsp;109. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. The provisions are effective for fiscal years beginning after December 15, 2006. It is not expected that FIN 48 will have a material effect on the Company's financial position or results of operations.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">In September 2006, the FASB issued SFAS No. 157
&quot;Fair Value Measurements&quot; which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosure about fair value measurements. The statement clarifies that the exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability in the market in which the reporting entity would transact for the asset or liability, that is, the principal or most advantageous market for the asset or liability. It also emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and that market participant assumptions include assumptions about risk and effect of a restriction on the sale or use of an asset. The provisions are effective for fiscal years beginning after November 15, 2007. The Company is currently assessing the impact of the statement.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>
In February 2007, the FASB issued Statement No. 159, &quot;<I>The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment to FASB Statement No. 115&quot;.</I> &nbsp;This statement permits companies to choose to measure many financial instruments and other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement of accounting for financial instruments. This statement applies to all entities, including not for profit.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The fair value option established by this statement permits all entities to measure eligible items at fair value at specified election dates. This statement is effective as of the beginning of an entity's first fiscal year that begins after November 15, 2007.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">The Company is currently assessing the impact adoption of SFAS No. 159 will have on its consolidated financial statements.</P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">&nbsp;</p>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-18</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:2pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>Expressed in thousands of U.S. dollars</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>(Except for share and per share amounts)</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=964><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">3.&nbsp;&nbsp;&nbsp;&nbsp;ACQUISITION OF SHANGHAI CHENG FENG DIGITAL HIGH-TECH CO. LTD AND THE BUSINESS OF 4 RELATED COMPANIES</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>On July 6, 2006, the Company entered into a Stock Transfer Agreement (the
&quot;agreement&quot;) relating to the acquisition of 100 percent of the equity of Cheng Feng. The acquisition was financed with proceeds from the Company's private placement of common stock. The results of operations of Cheng Feng are included in our consolidated financial statements beginning on July 6, 2006.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The Company agreed to pay RMB 120,000 (approximately $15,000) in exchange for 100% ownership of Cheng Feng, consisting of RMB 60,000 (approximately $7,500) in cash and RMB 60,000 in the Company's restricted stock. RMB 2,000 (approximately $250) of the purchase price was paid as a deposit on May 18, 2006. An additional RMB 8,000 (approximately $1,000) was paid in August 2006. The balance of the cash portion of the purchase price, RMB 50,000 (approximately $6,250), was paid in December 2006. The number of shares issuable in satisfaction of the equity portion of the purchase price is 1,361,748, which were issued in the first quarter of 2007.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The operational control of Cheng Feng passed to the Company and all the assets of Cheng Feng were acquired by the Company effective July 6, 2006. Government approval to consummate the acquisition was subsequently received. The results of Cheng Feng's operations from July 6, 2006 through December 31, 2006 are included in the Company's consolidated statement of income and comprehensive income.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The following represents the purchase price allocation at the date of the Cheng Feng acquisition:</P>
<div align="center">
  <center>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="75%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=210.6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=46.467><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=131.2 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=43.6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=210.6>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Cash and cash equivalents</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=46.467><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=45.8>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85.4>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>1,143</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=43.6>&nbsp;</TD></TR>
<TR><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=210.6>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Other current assets</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=46.467><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=45.8><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=85.4>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>3,118</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=43.6>&nbsp;</TD></TR>
<TR><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=210.6>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Property and equipment</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=46.467><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=45.8><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85.4>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>1,680</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=43.6>&nbsp;</TD></TR>
<TR><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=210.6>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Other assets</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=46.467><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=45.8><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=85.4>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>598</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=43.6>&nbsp;</TD></TR>
<TR><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=210.6>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Goodwill</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=46.467><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=45.8><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85.4>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>8,426</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=43.6>&nbsp;</TD></TR>
<TR><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=210.6>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Intangible assets</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=46.467><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=45.8><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=85.4>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>3,088</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=43.6>&nbsp;</TD></TR>
<TR><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=210.6>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Current liabilities</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=46.467><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=45.8><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85.4>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(2,113)</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=43.6>&nbsp;</TD></TR>
<TR><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=210.6>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Long-term liabilities</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=46.467><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=45.8><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=85.4>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(717)</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=43.6>&nbsp;</TD></TR>
<TR><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=210.6>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Minority interest in consolidated subsidiaries</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=46.467><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=45.8><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85.4>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(127)</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=43.6>&nbsp;</TD></TR>
<TR><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=210.6>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">Exchange differences</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=46.467><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=45.8><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=85.4>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(96)</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=43.6>&nbsp;</TD></TR>
<TR><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=210.6>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;Total purchase price</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=46.467><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=45.8>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=85.4>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>15,000</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=43.6>&nbsp;</TD></TR>
<TR><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=210.6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=46.467><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=45.8><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=85.4><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=43.6><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The purchase price allocation was considered final as of December 31, 2006. As a result of the goodwill impairment test we completed in the fourth quarter of 2006 in accordance with SFAS 142, we determined there were no impairment loss of goodwill during 2006.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">The following table shows supplemental information of the results of operations on a pro forma basis for the years ended December 31, 2006 and 2005 as though the Cheng Feng acquisition had been completed at the beginning of 2006 and 2005:</P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">&nbsp;</p>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-19</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>Expressed in thousands of U.S. dollars</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>(Except for share and per share amounts)</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=963><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">3.&nbsp;&nbsp;&nbsp;&nbsp;ACQUISITION OF SHANGHAI CHENG FENG DIGITAL HIGH-TECH CO. LTD AND THE BUSINESS OF 4 RELATED COMPANIES (CONTINUED)</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">For the year ended December 31, 2006 (Unaudited)</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
<div align="center">
  <center>
<TABLE style="margin-left:0pt; border-collapse:collapse" cellspacing="0" cellpadding="0" width="75%" bordercolor="#111111"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=158><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=315 colspan=5>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center><B>Historical</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=130 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=127 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=14><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=158><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=125 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=125 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=130 colspan=2>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center><B>Pro Forma</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=127 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=14><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=158><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=125 colspan=2>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center><B>CSST</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=125 colspan=2>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center><B>Cheng Feng</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=130 colspan=2>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center><B>Adjustments</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=127 colspan=2>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;<B>PRO FORMA</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=14><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=158><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=125 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=125 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=130 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=127 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=14><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=158 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>Revenues</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>100,286</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>10,258</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=88 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=26 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=21 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=86 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>110,544</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=14 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=158><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=85><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=85><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=88><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=21><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=86><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=14><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=158>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>Income From Operations</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>25,521</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>1,547</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=88>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(449)</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=26>&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=21>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=86>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>26,619</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=14><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=158 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=85 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=85 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=88 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=21 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=86 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=14 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=158 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>Net Income</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>21,649</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>2,087</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=88 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(449)</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=26 bgcolor="#E6E6E6">&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=21 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=86 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>23,287</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=14 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=158><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=85><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=85><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=88><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=21><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=86><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=14><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=158>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>Net Income Per Share</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=88><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=21><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=86><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=14><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=158 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>Basic</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=85 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>0.83</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=85 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=88 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=21 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=86 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>0.87</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=14 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=158>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>Diluted</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>0.82</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=88><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=21>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=86>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>0.86</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=14><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<A NAME="TAB1"></A><P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>For the year ended December 31, 2005 (Unaudited)</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
<div align="center">
  <center>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="75%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=158><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=315 colspan=5>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center><B>Historical</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=130 colspan=2>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center><B>Pro Forma</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=127 colspan=2>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;<B>Pro Forma</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=158><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=125 colspan=2>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center><B>CSST</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=125 colspan=2>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center><B>Cheng Feng</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=130 colspan=2>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center><B>Adjustments</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=127 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=158><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=125 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=125 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=130 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=127 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=158 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>Revenues</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>32,688</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>8,189</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=88 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=26 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=21 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=86 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>40,877</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=158><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=85><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=85><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=88><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=21><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=86><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=158>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>Income From Operations</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>7,478</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>795</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=88>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(439)</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=26>&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=21>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=86>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>7,834</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=158 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=85 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=85 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=88 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=21 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=86 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=158 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>Net Income</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>7,266</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>937</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=88 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>(439)</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=26 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=21 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=86 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>7,764</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=158><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=85><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=85><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=88><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=21><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=86><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=158>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>Net Income Per Share</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=88><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=21><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=86><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=158 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>Basic</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=85 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>0.39</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=20 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=85 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=88 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=21 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=86 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>0.32</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=15 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=158>
  <P style="margin:0pt; padding-left:19.8pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000"><B>Diluted</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>0.39</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=20><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=85><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=88><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=21>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=86>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>0.32</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=15><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align="justify">In November 2006, the Company acquired the security and surveillance business of Jian An Ke, Shenzhen Guangdian, Shenyang Golden, and Jiangxi Golden, of which our CEO and director Guoshen Tu owned 80%, 60%, 42% and 90%, respectively. Mr. Tu
did not receive any consideration for the acquisition of his interest in the
Four-Related Companies.&nbsp; The minority shareholders of these four companies, received in aggregate 850,000 shares of our common stock.<B><I> &nbsp;</I></B>&nbsp;Shenzhen Guangdian is engaged in the business of manufacturing and distributing security and surveillance products. The other three companies are engaged in the business of distributing security and surveillance products. The Company did not acquire any of the assets or liabilities of the four related companies, and the entire purchase price was allocated to intangible assets, consisting of contracts in process, non-competition agreements and the customer base.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Total intangible assets acquired by the Company amounted to $6,970. Amortization expense for the year ended December 31, 2006 was $107.</P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">&nbsp;</p>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-20</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:2pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>Expressed in thousands of U.S. dollars</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>(Except for share and per share amounts)</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">4.&nbsp;&nbsp;&nbsp;&nbsp;ACCOUNTS RECEIVABLE</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The Company provides an allowance for doubtful accounts related to its receivables. The receivables and allowance balances at December 31, 2006 and 2005 are as follows:</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<div align="center">
  <center>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="75%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=272><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=206 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>2006</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=208 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;<B>2005</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=53><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=272><P style="margin:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=206 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=208 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=53><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=272><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Accounts receivable</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=57><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>26,877</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=58><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=130><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>11,653</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=53><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=272><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Less: allowance for doubtful accounts</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=57><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(123)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=58><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=130><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(10)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=53>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=272><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Accounts receivable, net</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=57><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>26,754</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=58><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=130><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>11,643</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=53><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<div align="center">
  <center>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="75%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=271><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=61><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=208 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>2006</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=208 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;<B>2005</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=51><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=271><P style="margin:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=61><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=208 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=208 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=51><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=271><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Provision for doubtful accounts, January 1</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=61><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=59><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>10</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=59><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>10</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=51><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=271><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Add: allowance for doubtful accounts</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=61><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=59><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>113</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=59><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=51><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=271><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Provision for doubtful accounts, December 31</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=61><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=59><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>123</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=59><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>10</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=51><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">5.&nbsp;&nbsp;&nbsp;&nbsp;RELATED PARTY RECEIVABLES</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The Company has receivables from several companies whose directors and shareholders are common with the Company. All receivables arise from advances made prior to the date of the reverse merger of September 22, 2005 as detailed in note 1 and from the rental of real estate properties. The receivables are classified as related party receivables on the balance sheets. The balances as of December 31, 2006 and 2005 are as follows:</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<div align="center">
  <center>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="75%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=272><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=206 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>2006</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=208 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>2005</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=49><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=272><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=57><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=58><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=130><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=49><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=272><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Related party receivables</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=57><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>440</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=58><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=130><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>4,019</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=49><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=272><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Less: allowance for doubtful accounts</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=57><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=58><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=130><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(236)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=49>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=272><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Related party receivables, net</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=57><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>440</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=58><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=130><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>3,783</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=49><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<div align="center">
  <center>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="75%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=271><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=61><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=208 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>2006</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=208 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;<B>2005</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=53><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=271><P style="margin:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=61><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=208 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=208 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=53><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=271><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Provision for doubtful accounts, January 1</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=61><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=59><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>236</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=59><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>236</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=53><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=271><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Less: bad debt recovered</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=61><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=59><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(236)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=59><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=53><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=271><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Provision for doubtful accounts, December 31</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=61><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=59><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=59><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>236</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=53><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">The Company has leased offices to three related parties since January 1, 2004. The leases expire on December 31, 2007 and annual rental income for all periods is RMB3,960 ($507). Rental income was $496, $439 and $478 in 2006, 2005 and 2004, respectively. The rental income from the related parties was included in other income.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:10pt; font-size:8pt; color:#000000" align=center>&nbsp;</P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-21</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>Expressed in thousands of U.S. dollars</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>(Except for share and per share amounts)</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">6.&nbsp;&nbsp;&nbsp;&nbsp;INVENTORIES</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Inventories consist of the following as of December 31, 2006 and 2005:</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<div align="center">
  <center>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="75%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=272><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=206 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>2006</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=208 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;<B>2005</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=53><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=272><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=206 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=208 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=53><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=272><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Inventories</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=57><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>19,994</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=58><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=130><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>5,354</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=53><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=272><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Less: allowance for obsolete inventories</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=57><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(273)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=58><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=130><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(43)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=53>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=272><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Inventories, net</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=57><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>19,721</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=58><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=130><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>5,311</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=53><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<div align="center">
  <center>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="75%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=271><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=61><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=208 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>2006</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=208 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;<B>2005</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=45><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=271><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=61><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=208 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=208 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=45><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=271><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Provision for obsolete inventories , January 1</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=61><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=59><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>43</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=59><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>43</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=45><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=271><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Add: allowance for obsolete inventories</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=61><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=59><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>230</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=59><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=45><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=271><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Provision for obsolete inventories, December 31</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=61><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=59><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>273</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=59><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>43</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=45><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">7.&nbsp;&nbsp;&nbsp;&nbsp;ADVANCE PAYMENTS</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The Company has made payments to unrelated suppliers in advance of receiving merchandize. The advance payments are meant to ensure preferential pricing and delivery. The amounts advanced under such arrangements totaled $2,889 and $1,493 as of December 31, 2006 and 2005, respectively.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">8.&nbsp;&nbsp;&nbsp;&nbsp;PLANT AND EQUIPMENT</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">At December 31, 2006 and 2005, plant and equipment, at cost, consist of</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<div align="center">
  <center>
<TABLE style="margin-left:0pt; border-collapse:collapse" cellspacing="0" cellpadding="0" width="75%" bordercolor="#111111"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=272><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=206 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>2006</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=208 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>2005</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=50><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=272><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=206 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=208 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=50><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=272><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Buildings</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=57><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>7,450</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=58><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=130><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>2,202</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=50><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=272><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Leasehold improvements</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=57><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>888</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=58><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=130><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>694</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=50><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=272><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Plant and equipment</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=57><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>267</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=58><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=130><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>55</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=50><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=272><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Electronic equipment</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=57><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>669</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=58><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=130><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>137</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=50><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=272><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Motor vehicles</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=57><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>938</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=58><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=130><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>49</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=50><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=272><P style="margin:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=57><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>10,212</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=58><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=130><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>3,137</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=50><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=272><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Less: accumulated depreciation</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=57><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(1,873)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=58><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=130><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(1,185)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=50>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=272><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Plant and equipment, net</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=57><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>8,339</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=58><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=130><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>1,952</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=50><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:39.6pt; line-height:12pt; font-size:10pt; color:#000000">Depreciation expense for the years ended December 31, 2006, 2005 and 2004 was $397, $232 and $197, respectively.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:10pt; font-size:8pt; color:#000000" align=center>&nbsp;</P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-22</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>Expressed in thousands of U.S. dollars</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>(Except for share and per share amounts)</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">9.&nbsp;&nbsp;&nbsp;&nbsp;LAND USE RIGHTS</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Land use rights consist of the following as of December 31, 2006 and 2005</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
<div align="center">
  <center>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="75%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=196><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=41><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=151 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>2006</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=41><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=153 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>2005</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=196><P style="margin:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=41><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=151 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=41><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=153 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=196><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Cost of land use rights</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=41><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=40><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>1,445</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=41><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=41><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=92><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>1,397</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=196><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Less: accumulated amortization</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=41><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=40><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(293)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=41>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=41><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=92><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(255</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=34>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=196><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Land use rights, net</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=41><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=40><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=91><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>1,152</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=41><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=41><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=92><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>1,142</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:39.6pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>&nbsp;Amortization expense for the years ended December 31, 2006, 2005 and 2004 was $29, $28 and $28, respectively.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Estimated amortization expense for the next five years and thereafter is as follows:</P>
<div align="center">
  <center>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="50%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=141><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">&nbsp;2007</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=49><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>29</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=47><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=141><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">2008</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=49><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>29</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=47><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=141><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">2009</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=49><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>29</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=47><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=141><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">2010</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=49><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>29</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=47><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=141><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">2011</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=49><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>30</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=47><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=141><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Thereafter</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=49><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>1,006</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=47><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=141><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Total</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=49><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>1,152</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=47><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">10.&nbsp;&nbsp;&nbsp;&nbsp;INTANGIBLE ASSETS</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
<div align="center">
  <center>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="75%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=305><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=119 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>2006</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=27><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=121 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>2005</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=17><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=305><P style="margin:0pt; padding:0pt; text-indent:39.6pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=119 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=27><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=121 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=17><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=305><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Acquired customer base from the Four-Related Companies (life of 5 years)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=77><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>5,840</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=27><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=78><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=17><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=305><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Acquired contracts in progress from the Four-Related Companies (life of 2 months)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=77><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>177</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=27><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=78><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=17><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=305><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Acquired non-competition contracts from the Four-Related Companies (life of 5 years)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=77><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>953</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=27><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=78><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=17><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=305><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Acquired surveillance software and patents from Cheng Feng (life of 5 years)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=77><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>3,159</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=27><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=78><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=17><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=305><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Acquired surveillance recording system from Yuan Da (life of 5 years)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=77><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>511</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=27><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=78><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>511</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=17><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=305><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Less: accumulated amortization</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=77><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(643)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=27>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=78><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=17><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=305><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Intangible assets, net</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=26><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=22><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=77><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>9,997</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=27><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=23><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=78><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>511</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=17><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">The Company acquired Cheng Feng and businesses of the Four-Related Companies during 2006. The valuations and allocation of the intangible assets was determined by a third party appraisal firm.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">The Company's intangible assets from Yuan Da represent the value determined by an independent accounting firm for the intellectual property pertaining to a surveillance recording system developed by Yuan Da which was acquired by the Company on December 31, 2005.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Amortization expense for the years ended December 31, 2006, 2005 and 2004 was $643, $0 and $0, respectively.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Estimated amortization expense for the next five years and thereafter is as follows:</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<div align="center">
  <center>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="50%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=141><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">2007</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=49><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>1,706</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=46><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=141><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">2008</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=49><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>1,987</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=46><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=141><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">2009</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=49><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>2,784</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=46><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=141><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">2010</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=49><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>2,145</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=46><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=141><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">2011</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=49><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>1,145</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=46><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=141><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Thereafter</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=49><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>230</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=46><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=141><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Total</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=49><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=55><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>9,997</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=46><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-23</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:2pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>Expressed in thousands of U.S. dollars</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>(Except for share and per share amounts)</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">&nbsp;11.&nbsp;&nbsp;&nbsp;&nbsp;EQUITY IN AFFILIATED COMPANIES</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Prior to the acquisition by the Company, Cheng Feng owned 36.5% of Shanghai Yiruida, a non-public Chinese entity. The investment balance in Shanghai Yiruida at June 30, 2006 was $7. Shanghai Yiruida was sold to a third party for approximately $320 in November 2006 and a gain of $307 on the sale was recorded in other income.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">12.&nbsp;&nbsp;&nbsp;&nbsp;NOTES PAYABLE</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">The following is a summary of our short-term and long-term notes payable as of December 31, 2006 and 2005:</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<div align="center">
  <center>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="75%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=271><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=61><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=208 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>2006</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=208 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>2005</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=50><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=271><P style="margin:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=61><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=208 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=208 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=50><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=271><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Bank loans</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=61><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=59><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>4,282</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=59><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=50><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=271><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Less: current portion</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=61><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=59><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(2,272)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=59><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=50><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=271><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Long-term portion</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=61><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=59><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>2,010</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=59><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=129><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=50><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<div align="center">
  <center>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="75%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=125.333><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=102.133 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;<B>Long-term notes</B></P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=102.933 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;<B>Short-term notes</B></P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=102.133 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;<B>Total</B></P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22.733><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=125.333><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=102.133 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=102.933 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=102.133 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22.733><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=125.333><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">2007</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25.333><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=76.8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>222</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25.467><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=77.467><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>2,050</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25.333><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=76.8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>2,272</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22.733><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=125.333><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">2008</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25.333><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=76.8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>212</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25.467><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=77.467><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25.333><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=76.8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>212</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22.733><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=125.333><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">2009</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25.333><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=76.8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>223</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25.467><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=77.467><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25.333><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=76.8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>223</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22.733><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=125.333><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">2010</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25.333><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=76.8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>236</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25.467><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=77.467><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=25.333><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=76.8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>236</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22.733><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=125.333><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">2011</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25.333><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=76.8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>248</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25.467><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=77.467><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=25.333><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=76.8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>248</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22.733><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=125.333><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Thereafter</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=25.333><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=76.8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>1,091</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=25.467><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=77.467><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=25.333><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=76.8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>1,091</P>
</TD><TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=22.733><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=125.333><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Total</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=25.333><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=76.8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>2,232</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=25.467><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=77.467><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>2,050</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=28.133><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=25.333><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=76.8><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>4,282</P>
</TD><TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=22.733><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>On August 16, 2006, the Company entered into a loan agreement with a Chinese bank. The Company borrowed RMB 10,000 (approximately $1,281) with an annual interest rate of 5.94%. The loan is due on February 16, 2007, and the interest is payable at the end of each month. The loan agreement requires the Company to use the loan proceeds only for the Company's operations. The bank has the right to increase the interest rate and demand repayment of the entire loan principal and unpaid interest if the Company uses the loan for purpose other than operations. The loan is guaranteed by the CEO of the Company.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Long term liabilities are long term loans from banks. As of December 31, 2006, total long term liabilities were $2,232, is a 10-year loan borrowed from China Construction Bank for the purposes of purchasing new office premises in Shenzhen. This loan was granted on September 27, 2006, maturing on September 26, 2016, with an annual interest rate of 7.524%.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>On November 1, 2005, Cheng Feng entered into a loan agreement with a Chinese bank in its amount of RMB 6,000 (approximately $769) with an annual interest rate of 5.76%. The loan is due on November 7, 2007, and the interest is payable at the end of each quarter. The loan agreement requires the Company to use the loan proceeds only for the Company's operations. The bank has the right to increase the interest rate and demand repayment of the entire loan principal and unpaid interest if the Company uses the loan for purpose other than operations.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The loan is guaranteed by two third-party companies. According to the guaranty and security agreement, the loan is also collateralized by the office building owned by the Company and the personal assets of Chief Executive Officer of Cheng Feng. The Company is also required to pay the guarantors a loan default fee equal to 20% of the loan amount plus interest at 10.7% if the loan is in default.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">The Company is required to pay the guarantors an annual guaranty fee equal to 2.5% of the loan principal amount and an annual management and security fee equal to 3% of the loan principal. The Company prepaid these fees in November 2005 and amortizes the fees throughout the loan term.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:10pt; font-size:8pt; color:#000000" align=center>&nbsp;</P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-24</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:2pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>Expressed in thousands of U.S. dollars</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>(Except for share and per share amounts)</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">13.&nbsp;&nbsp;&nbsp;&nbsp;DEFERRED INCOME</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Deferred income balances as of December 31, 2006 and 2005 were $831 and $887 respectively, and represented amounts invoiced but deferred as revenue as an estimated warranty reserve in accordance with the accounting policy in note 2(o).</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">14.&nbsp;&nbsp;&nbsp;&nbsp;DUE TO DIRECTOR</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:49.5pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The Company has received advances from a director. The advances are non-interest bearing and are repayable upon demand. The balances due to the director were $76 and $70, at December 31, 2006 and 2005, respectively.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">15.&nbsp;&nbsp;&nbsp;&nbsp;INCOME TAXES</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>(a)&nbsp;&nbsp;&nbsp;&nbsp;<U>Corporation Income Tax (&quot;CIT&quot;)</U></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">CSST is governed by the Income Tax Laws of the PRC. The PRC federal statutory tax rate is 30% and the local tax rate is 3%. CSST's operating companies, Golden Group and Cheng Feng enjoyed the following preferential tax benefits:</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Golden Group is located in the Shenzhen Special Economic Zone and its corporate income tax rate is 15% for the years ended December 31, 2006, 2005, 2004 and future years.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Cheng Feng is located in Shanghai and its corporate tax rate ranges from 7.5% to 15% as it receives lower tax rates as a high-tech company. As a software company, it is exempt from local taxes.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The reconciliation of income taxes/(tax benefit) computed at the PRC federal and local statutory tax rate applicable to software and high-tech enterprises operating in Shanghai and in the Shenzhen Special Economic Zone in the PRC, to income tax expense is as follows:</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<div align="center">
  <center>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="75%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=231><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=148 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>2006</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=37><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=149 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;<B>2005</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=38><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=150 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;<B>2004</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=35><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=231><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=148 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=37><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=149 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=38><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=150 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=35><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=231><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">PRC Federal and local statutory tax rate</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=30><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>33%</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=37><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=30><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>33%</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=38>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=31><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>33%</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=35>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=231><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=30><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=37><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=30><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=38><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=31><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=35>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=231><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Computed expected expense</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=30><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>8,848</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=37><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=30><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>2,655</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=38><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=31><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>2,186</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=35>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=231><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Temporary differences</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=30><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>37</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=37><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=30><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(529)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=38>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=31><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(62)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=35>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=231><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Non-deductible items</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=30><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>489</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=37><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=30><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>135</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=38>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=31><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>10)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=35>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=231><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Non-taxable items</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=30><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(107)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=37>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=30><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(2)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=38>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=31><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(28)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=35>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=231><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Tax losses not recognized</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=30><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>30</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=37>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=30><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=38>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=31><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=35>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=231><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Difference arising from differential tax rates</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=30><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>11</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=37>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=30><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=38>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=31><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=35>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=231><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Others</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=30><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(9)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=37>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=30><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=38>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=31><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(41)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=35>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=231><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Over/(under) provision</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=30><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(92)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=37>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=30><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(31)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=38>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=31><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=35>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=231><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Preferential tax treatment</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=30><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(5,318)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=37>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=30><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(1,448)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=38>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=31><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(1,192)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=35>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=231><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Income tax expense</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=34><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=30><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=98><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>3,889</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=37>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=30><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>$780</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=38><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=31><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=99><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>873</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=35>&nbsp;</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-25</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:2pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>Expressed in thousands of U.S. dollars</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>(Except for share and per share amounts)</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">15.&nbsp;&nbsp;&nbsp;&nbsp;INCOME TAXES (CONTINUED)</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:59.4pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The provision for income taxes for each of the three years ended December 31, 2006, 2005, and 2004 are summarized as follows:</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<div align="center">
  <center>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="75%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=164><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=43><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=164 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>2006</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=43><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=164 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;<B>2005</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=44><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=166 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;<B>2004</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=32><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=164><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=43><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=164 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=43><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=164 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=44><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=166 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=32><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=164><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Current</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=43><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=40><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=104><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>3,802</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=43><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=40><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=104><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>1,370</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=44><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=41><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=105><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>873</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=32><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=164><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Deferred</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=43><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=40><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=104><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>87</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=43><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=40><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=104><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(590)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=44>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=41><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=105><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=32><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=164><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=43><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=40><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=104><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>3,889</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=43><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=40><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=104><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>780</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=44><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=41><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=105><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>873</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=32><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:59.4pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The tax effects of temporary differences that give rise to the Company's net deferred tax assets and liabilities as of December 31, 2006 and 2005 are as follows:</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:59.4pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<div align="center">
  <center>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="75%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=264><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=209 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>2006</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=210 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;<B>2005</B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=53><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=264><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Deferred income tax assets:</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=209 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=210 colspan=2><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=53><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=264><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Deferred income</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=127><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>125</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=128><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>133</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=53><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=264><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Depreciation</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=127><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>462</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=128><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>474</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=53><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=264><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Deferred income tax liability:</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=127><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=128><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=53><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=264><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Provision for doubtful debt</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=127><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(84)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=128><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(17)</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=53>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=264><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Net deferred tax assets</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=127><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>503</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=128><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>590</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=53>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=264><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=127><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=62>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=128><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=53>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=264><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">&nbsp;Deferred income tax assets:</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=127><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=128><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=53>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=264><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Current portion</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=127><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>125</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=128><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>130</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=53>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=264><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Non-current portion</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=127><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>462</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=128><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>460</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=53>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=264><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=127><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>587</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=128><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>590</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=53>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=264><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">Less: Deferred income tax liability -current portion</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=127><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>(84)</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=62>&nbsp;</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=128><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>--</P>
</TD>
  <TD style="background-color:#FFFFFF; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #FFFFFF" align=left valign=top width=53>&nbsp;</TD></TR>
<TR>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=264><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=127><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>503</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=62>&nbsp;</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=62><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">$</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt double #000000" align=left valign=top width=128><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=right>590</P>
</TD>
  <TD style="background-color:#E6E6E6; padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #E6E6E6" align=left valign=top width=53>&nbsp;</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:59.4pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>(b)&nbsp;&nbsp;&nbsp;&nbsp;<U>Value Added Tax (&quot;VAT&quot;)</U></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:59.4pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">In accordance with the relevant taxation laws in the PRC, the normal VAT rate for domestic sales is 17%, which is levied on the invoiced value of sales and is payable by the purchaser. For companies in the Shenzhen Special Economic Zone, the VAT rate is 4%, which is levied on the invoiced value of sales and is payable by the purchaser. The Company is required to remit the VAT it collects to the tax authority.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:59.4pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">For software sales that are inter-company transactions which have been eliminated in consolidation, the applicable VAT rate is 3% under the relevant tax concession for
&quot;high-tech&quot; corporations. The Company needs to pay the full amount of VAT calculated at 17% of the invoiced value of sales as required and subsequently receives a refund on 14% of the invoiced value of sales.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:59.4pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The VAT refundable balance was $23 at December 31, 2006 and VAT payable balance was $63 at December 31, 2005.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:10pt; font-size:8pt; color:#000000" align=center>&nbsp;</P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-26</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>Expressed in thousands of U.S. dollars</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=center><B>(Except for share and per share amounts)</B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=center>&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">16.&nbsp;&nbsp;&nbsp;&nbsp;COMMITMENTS AND CONTINGENCIES</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>(a)&nbsp;&nbsp;&nbsp;&nbsp;<U>Leases</U></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>During 2006, 2005 and 2004, the Company's branches leased offices in various cities in the PRC. The lease agreements expire on various dates through October 15, 2007. Rent expense for the years ended December 31, 2006, 2005 and 2004 was approximately $118, $53 and $22, respectively.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>Future minimum lease payments for these office leases for the year ending December 31, 2007 amount to $66.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>(b)&nbsp;&nbsp;&nbsp;&nbsp;<U>Warranty commitments</U></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The Company issues a one year warranty with the sales of its surveillance and security systems. See note 2(o) for the calculation of this commitment.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>(c)&nbsp;&nbsp;&nbsp;&nbsp;<U>Research and Development Commitment</U></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>The Company has established a strategic partnership with Beijing University under which the Company will provide funds to Beijing University for the research and development of video surveillance and security products. Under the agreement, the Company has agreed to provide Beijing University a maximum amount of RMB 2,000 ($256). The Company has paid RMB500 ($63) during 2006.&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:79.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<TABLE style="margin-left:0pt"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=720><P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">17.&nbsp;&nbsp;&nbsp;&nbsp;SUBSEQUENT EVENTS</P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify><U>Notes Purchase Agreement</U></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:8pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>On February 20, 2007, the Company completed a Notes Purchase Agreement with Citadel Equity Fund Ltd. for a $60,000 guaranteed senior unsecured convertible notes financing. This financing replaced the existing bridge financing that was closed on February 8, 2007 in which the Company issued to Citadel $60,000 aggregate principal amount of Senior Notes. The notes will bear interest at a rate of 1% and are due in 2012. The notes carry an initial conversion price of $18 per share. The net proceeds will be used for the Company's working capital and acquisition plan.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify><U>Equity Incentive Plan</U></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>On February 7, 2007, the Board of Directors of adopted the 2007 Equity Incentive Plan, which provides for grants of stock options, stock appreciation rights, performance units, restricted stock, restricted stock units and performance shares (collectively, the
&quot;Awards&quot;). Thereafter, on February 16, 2007, the Company filed a registration statement on Form S-8 registering the shares issuable pursuant to the 2007 Plan.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; font-size:10pt; color:#000000" align=justify>&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding-left:39.6pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000" align=justify>On February 27, 2007, the Company granted an aggregate of 1,052,100 shares of restricted stock pursuant to the 2007 Plan to 383 employees and consultants of the company. These shares will vest with respect to each of the 383 employees and consultants over a period of four years.</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:10pt; font-size:8pt; color:#000000" align=center>&nbsp;</P>
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">
<font size="2">F-27</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:12pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000" align=center><B>
<font size="5">CHINA SECURITY &amp; SURVEILLANCE TECHNOLOGY, INC.</font></B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:12pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000" align=center><B>
<font size="2">1,538,462 &nbsp;shares of common stock</font></B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:6pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000" align=center><B>
<font size="2">PROSPECTUS</font></B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:6pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000" align=center><B>
<font size="2">_______ , 2007</font></B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:6pt; padding:0pt; text-indent:0pt; color:#000000" align=center>
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:6pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
<font size="2">Dealer Prospectus delivery obligation</font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:6pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
<font size="2">----------------------------------------------</font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:6pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
<font size="2">Until 90 days from the date of this prospectus, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. &nbsp;This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
</font> </P>
<p>&nbsp;</p>
<p><BR></p>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"><BR></P>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:12pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000" align=center><B>
<font size="2">PART&nbsp;II</font></B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:12pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000" align=center><B>
<font size="2">INFORMATION NOT REQUIRED IN THE PROSPECTUS</font></B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000"><B>
<font size="2">Item 13. &nbsp;Other Expenses of Issuance and Distribution</font></B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">The following table sets forth the costs and expenses, other than underwriting discounts and commissions, payable by us in connection with the sale of common stock being registered. &nbsp;All amounts, other than the SEC registration fee, are estimates. &nbsp;We will pay all these expenses.
</font> </P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000">
<font size="2"><BR></font></P>
<div align="center">
  <center>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="75%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=627 height="37">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; color:#000000" align=center><B>
  <font size="2">&nbsp;</font></B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=31 height="37">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; color:#000000" align=center><B>
  <font size="2">&nbsp;</font></B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=227 colspan=4 height="37">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000" align=center><B>
  <font size="2">Amount&nbsp;to&nbsp;be</font></B></P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000" align=center><B>
<font size="2">Paid</font></B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=16 height="37">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; color:#000000" align=center><B>
  <font size="2">&nbsp;</font></B></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=627 height="19" bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">SEC Registration Fee</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=31 height="19" bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=23 height="19" bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=29 height="19" bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">$</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=91 height="19" bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000" align=right>
  <font size="2">766</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=24 height="19" bgcolor="#E6E6E6">&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=16 height="19" bgcolor="#E6E6E6">
  <font size="2">&nbsp;</font></TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=627 height="17">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Printing Fees and Expenses</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=31 height="17"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=23 height="17"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000" align=right></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=140 colspan=2 height="17">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000" align=right>
  <font size="2">5,000</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=24 height="17"></TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=16 height="17">
  <font size="2">&nbsp;</font></TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=627 height="17" bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Legal Fees and Expenses</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=31 height="17" bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=23 height="17" bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=140 colspan=2 height="17" bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000" align=right>
  <font size="2">10,000</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=24 height="17" bgcolor="#E6E6E6">&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=16 height="17" bgcolor="#E6E6E6">
  <font size="2">&nbsp;</font></TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=627 height="17">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Accounting Fees and Expenses</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=31 height="17"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=23 height="17"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000" align=right></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=140 colspan=2 height="17">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000" align=right>
  <font size="2">10,000</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=24 height="17"></TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=16 height="17">
  <font size="2">&nbsp;</font></TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=627 height="17" bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Blue Sky Fees and Expenses</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=31 height="17" bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=23 height="17" bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=140 colspan=2 height="17" bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000" align=right>
  <font size="2">1,000</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=24 height="17" bgcolor="#E6E6E6">&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=16 height="17" bgcolor="#E6E6E6">
  <font size="2">&nbsp;</font></TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=627 height="17">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Transfer Agent and Registrar Fees</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=31 height="17"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000"></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=23 height="17"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000" align=right></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=140 colspan=2 height="17">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000" align=right>
  <font size="2">500</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=24 height="17"></TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=16 height="17">
  <font size="2">&nbsp;</font></TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=627 height="18" bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Miscellaneous</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=31 height="18" bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=23 height="18" bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=140 colspan=2 height="18" bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000" align=right>
  <font size="2">5,000</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=24 height="18" bgcolor="#E6E6E6">&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=16 height="18" bgcolor="#E6E6E6">
  <font size="2">&nbsp;</font></TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=627 height="19">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Total</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=31 height="19"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=23 height="19"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000" align=right>&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-bottom:0.75pt solid #000000" align=left valign=top width=29 height="19">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">$</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt; border-top:0.75pt solid #000000; border-bottom:0.75pt solid #000000" align=left valign=top width=91 height="19">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000" align=right>
  <font size="2">32,266</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=24 height="19">&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=16 height="19">
  <font size="2">&nbsp;</font></TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000"><B>
<font size="2">Item 14. &nbsp;Indemnification of Directors and Officers</font></B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">Our bylaws provide for the indemnification of our present and prior directors and officers or any person who may have served at our request as a director or officer of another corporation in which we own shares of capital stock or of which we are a creditor, against expenses actually and necessarily incurred by them in connection with the defense of any actions, suits or proceedings in which they, or any of them, are made parties, or a party, by reason of being or having been director(s) or officer(s) of us or of such other corporation, in the absence of negligence or misconduct in the performance of their duties. &nbsp;This indemnification policy could result in substantial expenditure by us, which we may be unable to recoup.
</font> </P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">Insofar as indemnification by us for liabilities arising under the Securities Act may be permitted to our directors, officers and &nbsp;controlling persons pursuant to provisions of the Articles of Incorporation and Bylaws, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy and is, therefore, unenforceable. &nbsp;In the event that a claim for indemnification by such director, officer or controlling person of us in the successful defense of any action, suit or proceeding is asserted by such director, officer or controlling person in connection with the securities being offered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.</font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">At the present time, there is no pending litigation or proceeding involving a director, officer, employee or other agent of ours in which indemnification would be required or permitted. &nbsp;We are not aware of any threatened litigation or proceeding which may result in a claim for such indemnification.
</font> </P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000" align="center">
<font size="2"><BR>II-1</font></P>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">&nbsp;</p>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
<font size="2">&nbsp;<A NAME="id_0_26"></A><A NAME="Item14_IndemnificationOfDirector"></A></font><B><font size="2">Item 15. &nbsp;Recent Sales of Unregistered Securities
</font> </B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">On April 24, 2007, we entered into a Notes Purchase Agreement<A NAME="exp2"></A> with Citadel pursuant to which the Company issued and sold to Citadel $50 million Guaranteed Senior Unsecured Convertible Notes due 2012. &nbsp;The notes carry an initial conversion price of $23.6 per share. &nbsp;If the notes are not converted before its maturity, the notes will be redeemed by the Company on the maturity date at a redemption price equal to 100% of the principal amount of the notes then outstanding plus an additional amount such that the total amount represents to the holders thereof a gross yield (including the paid or any accrued and unpaid interest) of 15.0% per annum, calculated on a quarterly compounded basis, plus any accrued and unpaid interest. &nbsp;The offer and sale of the Notes were made in an offshore transaction pursuant to Regulation S under the Securities Act.
</font> </P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">On February 16, 2007, we entered into a Notes Purchase Agreement with Citadel pursuant to which the Company issued and sold to Citadel $60 million Guaranteed Senior Unsecured Convertible Notes due 2012. &nbsp;The notes carry an initial conversion price of $18 per share. &nbsp;If the notes are not converted before its maturity, the notes will be redeemed by the Company on the maturity date at a redemption price equal to 100% of the principal amount of the notes then outstanding plus an additional amount such that the total amount represents to the holders thereof a gross yield (including the paid or any accrued and unpaid interest) of 15.0% per annum, calculated on a quarterly compounded basis, plus any accrued and unpaid interest. &nbsp;The offer and sale of the Notes were made in an offshore transaction pursuant to Regulation S under the Securities Act.
</font> </P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">On December 19, 2006, we issued 1,361,748 shares of our common stock to the former owners of all of the issued and outstanding common stock of Cheng Feng in connection with our acquisition of Chen Feng. &nbsp;Prior to the acquisition of Cheng Feng, <A NAME="exp1"></A>no material relationship existed between the Company and the Sellers and/or their affiliates, directors, officers or any associate of an officer or director. &nbsp;These stock issuances were made in an offshore transaction pursuant to Regulation S under the Securities Act.
</font> </P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">On November 27, 2006, we entered into an agreement with three accredited investors, two of whom are qualified institutional buyers as defined in Rule 144A under the Securities Act of 1933, whereby we agreed to sell an aggregate of 1,538,462 shares of our common stock for a consideration of $10 million at a price of $6.50 per share. &nbsp;There was no general solicitation or advertising for securities issued in reliance upon Regulation D.</font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">In November 2006, we issued an aggregate of 850,000 shares of our common stock to the minority shareholders of the Four-Related Companies pursuant to our acquisition of the Four-Related Companies. &nbsp;These stock issuances were made in an offshore transaction pursuant to Regulation S under the Securities Act.
</font> </P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">In October 2006, we issued 50,000 shares of our common stock to Hayden Communications, Inc. as payment for their investor relationship services rendered pursuant to a consulting agreement dated February 9, 2006. &nbsp;These stock issuances were exempt from registration pursuant to Section 4(2) of the Securities Act.</font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">On July 31, 2006, we issued <A NAME="up"></A>4,634,592 units to 26 accredited investors for an aggregate gross cash purchase price of $16,221,093 at a price of $3.50 per share. &nbsp;Each unit consists of one share of our common stock and a warrant to purchase one-fifth of one share of our common stock. &nbsp;We also issued warrants to purchase 324,421 shares of our common stock with an exercise price of $4.20 to two placement agents as compensation for their services in connection with the private placement. &nbsp;The issuance of our shares to these individuals was made in reliance on the exemption provided by Section 4(2) of the Securities Act&nbsp;for the offer and sale of securities not involving a public offering&nbsp;and regulation D promulgated thereunder.
</font> </P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000" align="center">
<font size="2">II-2</font></P>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">&nbsp;</p>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
<font size="2">&nbsp;</font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">On April 4, 2006, we completed a private placement in which we sold 2,666,667 shares of our common stock at a price of $3.00 per share for aggregate gross proceeds of $800,000 to certain accredited investors. &nbsp;We also issued warrants to purchase 416,667 shares of our common stock to certain entities as compensation for their services in connection with the private placement, 150,000 of which have an exercise price of $3.80 per share, while the remaining 266,667 are exercisable at a price of $3.00 per share. &nbsp;The issuance of our shares to these individuals was made in reliance on the exemption provided by Section 4(2) of the Securities Act&nbsp;for the offer and sale of securities not involving a public offering&nbsp;and Regulation D promulgated thereunder.
</font> </P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">In March 2006, we issued 100,000 shares of common stock to Terence Yap as payment for his services rendered. &nbsp;The value attributed to these shares was $350,000 ($3.50 per share). These stock issuances were exempt from registration pursuant to Section 4(2) of the Securities Act.</font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">In October 2005, we issued 200,000 shares of common stock to shareholders of Yuanda in connection with our acquisition of Yuanda. &nbsp;The value attributed to these shares was $500,000 ($2.50 per share). &nbsp;These stock issuances were exempt from registration pursuant to Section 4(2) of the Securities Act.</font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">In September 2005, we granted warrants to purchase 100,000 shares of our common stock to Rubenstein Investor Relations, Inc. and its officers with an exercise price of $1.85 as payment for the investor relationship services rendered. &nbsp;These stock issuances were exempt from registration pursuant to Section 4(2) of the Securities Act.</font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">In September 2005, we issued 8,138,000 shares of our common stock to stockholders of Safetech. &nbsp;The total consideration for the 8,138,000 shares of our common stock is 50,000 shares of capital stock of Safetech, which is all the issued and outstanding capital stock of Safetech. &nbsp;We did not receive any cash consideration in connection with the share exchange. &nbsp;The number of our shares issued to the stockholders of Safetech was determined based on an arms-length negotiation. &nbsp;The issuance of our shares to these individuals was made in reliance on the exemption provided by Section 4(2) of the Securities Act&nbsp;for the offer and sale of securities not involving a public offering.
</font> </P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">In instances described above where we issued securities in reliance upon Regulation D, we relied upon Rule 506 of Regulation D under the Securities Act. &nbsp;These stockholders who received the securities in such instances made representations that (a) the stockholder is acquiring the securities for his, her or its own account for investment and not for the account of any other person and not with a view to or for distribution, assignment or resale in connection with any distribution within the meaning of the Securities Act, (b) the stockholder agrees not to sell or otherwise transfer the purchased shares unless they are registered under the Securities Act and any applicable state securities laws, or an exemption or exemptions from such registration are available, (c) the stockholder has knowledge and experience in financial and business matters such that he, she or it is capable of evaluating the merits and risks of an investment in us, (d) the stockholder had access to all of our documents, records, and books pertaining to the investment and was provided the opportunity ask questions and receive answers regarding the terms and conditions of the offering and to obtain any additional information which we possessed or were able to acquire without unreasonable effort and expense, and (e) the stockholder has no need for the liquidity in its investment in us and could afford the complete loss of such investment. &nbsp;Management made the determination that the investors in instances where we relied on Regulation D are Accredited Investors (as defined in Regulation D) based upon management's inquiry into their sophistication and net worth. &nbsp;In addition, there was no general solicitation or advertising for securities issued in reliance upon Regulation D.</font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000" align="center">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000" align="center">
<font size="2">II-3</font></P>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">&nbsp;</p>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; color:#000000">
<font size="2">&nbsp;&nbsp;</font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">In instances described above where we indicate that we relied upon Regulation S promulgated under the Securities Act in issuing securities, our reliance was based upon the following factors (a) each subscriber was neither a U.S. person nor acquiring the shares for the account or benefit of any U.S. person, (b) each subscriber agreed not to offer or sell the shares (including any pre-arrangement for a purchase by a U.S. person or other person in the United States) directly or indirectly, in the United States or to any natural person who is a resident of the United States or to any other U.S. person as defined in Regulation S unless registered under the Securities Act and all applicable state laws or an exemption from the registration requirements of the Securities Act and similar state laws is available, (c) each subscriber made his, her or its subscription from the subscriber's residence or offices at an address outside of the United States and (d) each subscriber or the subscriber's advisor has such knowledge and experience in financial and business matters that the subscriber is capable of evaluating the merits and risks of, and protecting his interests in connection with an investment in us.
</font> </P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">In instances described above where we indicate that we relied upon Section 4(2) of the Securities Act in issuing securities, our reliance was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there were only a limited number of offerees; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d) the securities were not broken down into smaller denominations; and (e) the negotiations for the sale of the stock took place directly between the offeree and us.</font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000"><B>
<font size="2">Item 16. Exhibits and Financial Statement Schedules</font></B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:6pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">The following exhibits are included as part of this Form S-1.
</font> </P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000">
<font size="2"><BR></font></P>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000"><B><U>
  <font size="2">Exhibit Number</font></U></B></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000"><B><U>
  <font size="2">Description</font></U></B></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">2.1</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Plan of Merger by and between China Security &amp; Surveillance Technology, Inc., a BVI corporation, and China Security &amp; Surveillance Technology, Inc., a Delaware corporation, dated September 30, 2006 (herein incorporated by reference from the registrant's registration statement on Form S-4 filed with the Securities and Exchange Commission on October 4, 2006).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">2.2</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Share Exchange Agreement, dated as of July 22, 2005, between the registrant and China Safetech Holdings Limited (herein incorporated by reference from the registrant's current report on Form 6-K filed with the Securities and Exchange Commission on July 22, 2005).</font></P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000" align="center">
<font size="2">II-4</font></P>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">&nbsp;</p>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" bordercolor="#111111" cellpadding="0" cellspacing="0">
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">3.1</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Certificate of Incorporation of the registrant (herein incorporated by reference from the registrant's registration statement on Form S-4 filed with the Securities and Exchange Commission on October 4, 2006).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">3.2</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">By-laws of the registrant (herein incorporated by reference from the registrant's registration statement on Form S-4 filed with the Securities and Exchange Commission on October 4, 2006).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">&nbsp;</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">4.1</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Notes Purchase Agreement, dated February 5, 2007, by and between the registrant and Citadel Equity Fund Ltd. (herein incorporated by reference from the registrant's report on Form 8-K filed with the Securities and Exchange Commission on February 9, 2007).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">4.2</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Share Pledge Agreement, dated February 8, 2007, by and among Citadel Equity Fund Ltd., The Bank of New York, Guoshen Tu, Zhiqun Li and Whitehorse Technology Limited (herein incorporated by reference from the registrant's report on Form 8-K filed with the Securities and Exchange Commission on February 9, 2007).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">4.3</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Form of the Notes (herein incorporated by reference from the registrant's report on Form 8-K filed with the Securities and Exchange Commission on February 9, 2007).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">4.4</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Notes Purchase Agreement, dated February 16, 2007, by and among the registrant, Safetech, CSST HK, CSST PRC, Golden, Cheng Feng and Citadel Equity Fund Ltd. (herein incorporated by reference from the registrant's report on Form 8-K filed with the Securities and Exchange Commission on February 16, 2007).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">4.5</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Indenture, dated February 16, 2007, among the registrant, Safetech, CSST HK and The Bank of New York (herein incorporated by reference from the registrant's report on Form 8-K filed with the Securities and Exchange Commission on February 16, 2007).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">4.6</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Investor Rights Agreement, dated February 16, 2007, among the registrant, Safetech, CSST HK, CSST PRC, Golden, Cheng Feng, Guoshen Tu, Zhiqun Li, Whitehorse Technology Limited and Citadel Equity Fund Ltd. (herein incorporated by reference from the registrant's report on Form 8-K filed with the Securities and Exchange Commission on February 16, 2007).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">&nbsp;</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">4.7</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Supplemental Indenture, dated March 29, 2007, among the Company, Safetech, CSST-HK and The Bank of New York (herein incorporated by reference from the registrant's report on Form 8-K filed with the Securities and Exchange Commission on April 2, 2007).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137>&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805>&nbsp;</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">4.8</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Amendment to the Investor Rights Agreement, dated March 29, 2007, among the Company, Safetech, CSST-HK, CSST-PRC, Golden, Cheng Feng, Mr. Tu, Ms. Li, Whitehorse and Citadel (herein incorporated by reference from the registrant's report on Form 8-K filed with the Securities and Exchange Commission on April 2, 2007).</font></P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000" align="center">
<font size="2">II-5</font></P>
<hr color="#000000" size="5"><p style="page-break-before: always">
<p style="text-indent: 0pt; color: #000000; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="center">&nbsp;</p>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" bordercolor="#111111" cellpadding="0" cellspacing="0">
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">&nbsp;</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">4.9</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Notes Purchase Agreement by and among the Company, Chain Star, Safetech, CSST HK, CSST PRC, Golden, Cheng Feng, Cheng Feng Equipment, Cheng Feng Public Safety, Hongtianzhi, Shixing, Tongxing and Citadel, dated April 24, 2007 (herein incorporated by reference from the registrant's report on Form 8-K filed with the Securities and Exchange Commission on April 25, 2007).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137>&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805>&nbsp;</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">4.10</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Indenture by and among the Company, Chain Star, Safetech, CSST HK and The Bank of New York, dated April 24, 2007 (herein incorporated by reference from the registrant's report on Form 8-K filed with the Securities and Exchange Commission on April 25, 2007).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">&nbsp;</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">4.11</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Amended and Restated Investor Rights Agreement by and among the Company, Chain Star, Safetech, CSST HK, CSST PRC, Golden, Cheng Feng, Cheng Feng Equipment, Cheng Feng Public Safety, Hongtianzhi, Shixing, Tongxing, Mr. Tu, Ms. Li, Whitehorse and Citadel, dated April 24, 2007 (herein incorporated by reference from the registrant's report on Form 8-K filed with the Securities and Exchange Commission on April 25, 2007).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137>&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805>&nbsp;</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">4.12</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Second Supplemental Indenture by and among the Company, Chain Star, Safetech, CSST HK and The Bank of New York, dated April 24, 2007 (herein incorporated by reference from the registrant's report on Form 8-K filed with the Securities and Exchange Commission on April 25, 2007).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">&nbsp;</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">5</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Opinion of Thelen Reid Brown Raysman &amp; Steiner LLP*</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">10.1</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Share Purchase Agreement, dated as of July 22, 2005, by and among the registrant, Whitehorse Technology Limited and First Asia International Holdings Limited (herein incorporated by reference from the registrant's report on Form 6-K filed with the Securities and Exchange Commission on July 22, 2005).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">10.2</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Equity Transfer Agreement, dated as of October 25, 2005, by and among the registrant, Golden Group Corporation (Shenzhen) Limited, Shenzhen Yuan Da Wei Shi Technology Limited and its stockholders Jianguo Jiang and Jing Li (herein incorporated by reference from the registrant's report on Form 20-F filed with the Securities and Exchange Commission on June 14, 2006). (English Summary)</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137>&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">10.3</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Amendment No. 1 to the Equity Transfer Agreement, dated as of April 28, 2006, by and among the registrant, Golden Group Corporation (Shenzhen) Limited, Shenzhen Yuan Da Wei Shi Technology Limited and its stockholders Jianguo Jiang and Jing Li (herein incorporated by reference from the registrant's report on Form 20-F filed with the Securities and Exchange Commission on June 14, 2006). (English Summary)</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">10.4</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Amendment No. 2 to the Equity Transfer Agreement, dated as of May 25, 2006, by and among the registrant, Golden Group Corporation (Shenzhen) Limited, Shenzhen Yuan Da Wei Shi Technology Limited and its stockholders Jianguo Jiang and Jing Li. (herein incorporated by reference from the registrant's report on Form 20-F filed with the Securities and Exchange Commission on June 14, 2006). (English Summary)</font></P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000" align="center">
<font size="2">II-6</font></P>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">&nbsp;</P>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" bordercolor="#111111" cellpadding="0" cellspacing="0">
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">10.5</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Securities Purchase Agreement, dated as of April 4, 2006, among the registrant and certain investors (herein incorporated by reference from the registrant's current report on Form 6-K filed with the Securities and Exchange Commission on April 5, 2006).&nbsp;
  </font> </P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">10.6</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Registration Rights Agreement, dated as of April 4, 2006, among the registrant and certain investors (herein incorporated by reference from the registrant's current report on Form 6-K filed with the Securities and Exchange Commission on April 5, 2006).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">10.7</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Cooperation Agreement, dated as of February 17, 2006, by and between Golden Group Corporation (Shenzhen) Limited and Graduate School (Shenzhen) of Beijing University (herein incorporated by reference from the registrant's report on Form 20-F filed with the Securities and Exchange Commission on June 14, 2006). (English Summary)</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137>&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805>&nbsp;</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">10.8</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Consulting Agreement, dated as of February 8, 2006, by and between the registrant and Terence Yap (herein incorporated by reference from the registrant's report on Form 20-F filed with the Securities and Exchange Commission on June 14, 2006).
  </font> </P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">10.9</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Amendment No. 1 to Consulting Agreement, dated as of June 27, 2006, by and between the registrant and Terence Yap (herein incorporated by reference from the registrant's annual report on Form 20-F filed with the Securities and Exchange Commission on June 28, 2006).
  </font> </P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">10.10</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Form of Securities Purchase Agreement, dated as July 6, 2006, by and among CSST BVI and certain investors (herein incorporated by reference from the registrant's current report on Form 6-K filed with the Securities and Exchange Commission on July 6, 2006).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">10.11</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Form of Registration Rights Agreement, dated as July 6, 2006, by and among CSST BVI and certain investors (herein incorporated by reference from the registrant's current report on Form 6-K filed with the Securities and Exchange Commission on July 6, 2006).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">10.12</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Form of Warrant (herein incorporated by reference from the registrant's current report on Form 6-K filed with the Securities and Exchange Commission on July 6, 2006).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">10.13</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Form of Escrow Agreement, dated July 6, 2006, by and among the registrant, certain investors and Thelen Reid &amp; Priest LLP (herein incorporated by reference from the registrant's current report on Form 6-K filed with the Securities and Exchange Commission on July 6, 2006).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">10.14</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Framework Agreement, dated July 6, 2006, by and among the registrant, China Safetech Holdings Limited and shareholders of Shanghai Cheng Feng Digital Technology Co., Ltd (herein incorporated by reference from the registrant's current report on Form 6-K filed with the Securities and Exchange Commission on July 7, 2006). (English Summary)</font></P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000" align="center">
<font size="2">II-7</font></P>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">&nbsp;</P>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" bordercolor="#111111" cellpadding="0" cellspacing="0">
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">10.15</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Form of Waiver and Amendment to Securities Purchase Agreement, dated July 26, 2006, by and among the registrant and certain investors (herein incorporated by reference from the registrant's current report on Form 6-K filed with the Securities and Exchange Commission on July 31, 2006).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#FFFFFF"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#FFFFFF"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#FFFFFF">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">10.16</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#FFFFFF">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Form of Second Waiver and Amendment, dated July 27, 2006, by and among the registrant and certain investors (herein incorporated by reference from the registrant's current report on Form 6-K filed with the Securities and Exchange Commission on July 31, 2006).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">10.17</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Asset Purchase Agreement, dated September 5, 2006, by and among the registrant, Golden Group Corporation (Shenzhen) Limited and Jian Golden An Ke Technology Co. Ltd. (English Summary) (herein incorporated by reference from the registrant's registration statement on Form S-1 filed with the Securities and Exchange Commission on October 23, 2006).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#FFFFFF"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#FFFFFF"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#FFFFFF">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">10.18</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#FFFFFF">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Asset Purchase Agreement, dated September 5, 2006, by and among the registrant, Golden Group Corporation (Shenzhen) Limited and Shenzhen Golden Guangdian Technology Co. Ltd. (English Summary) (herein incorporated by reference from the registrant's registration statement on Form S-1 filed with the Securities and Exchange Commission on October 23, 2006).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">10.19</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Asset Purchase Agreement, dated September 5, 2006, by and among the registrant, Golden Group Corporation (Shenzhen) Limited and Shenyang Golden Digital Technology Co. Ltd. (English Summary) (herein incorporated by reference from the registrant's registration statement on Form S-1 filed with the Securities and Exchange Commission on October 23, 2006).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#FFFFFF"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#FFFFFF"><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#FFFFFF">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">10.20</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#FFFFFF">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Asset Purchase Agreement, dated September 5, 2006, by and among the registrant, Golden Group Corporation (Shenzhen) Limited and Jiangxi Golden Digital Technology Co. Ltd. (English Summary) (herein incorporated by reference from the registrant's registration statement on Form S-1 filed with the Securities and Exchange Commission on October 23, 2006).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">&nbsp;</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">10.21</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">China Security &amp; Surveillance Technology, Inc. 2007 Equity Incentive Plan (herein incorporated by reference from the registrant's current report on Form 8-K filed with the Securities and Exchange Commission on February 13, 2007).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#FFFFFF">&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#FFFFFF">&nbsp;</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#FFFFFF">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">10.22</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#FFFFFF">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Letter Agreement Regarding Stock Purchase, dated as of November 27, 2006, by and among the registrant and certain investors (herein incorporated by reference from the registrant's current report on Form 8-K filed with the Securities and Exchange Commission on November 19, 2006).</font></P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000" align="center">
<font size="2">II-8</font></P>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">&nbsp;</P>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" bordercolor="#111111" cellpadding="0" cellspacing="0">
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">&nbsp;</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">10.23</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Strategic Cooperation Agreement, dated September 28, 2006, by and between the registrant and China Construction Bank. (English Translation) (herein incorporated by reference from the registrant's annual report on Form 10-K filed with the Securities and Exchange Commission on March 21, 2007).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#FFFFFF">&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#FFFFFF">&nbsp;</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#FFFFFF">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">14</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#FFFFFF">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Code of Ethics (herein incorporated by reference from the registrant's annual report on Form 20-F filed with the Securities and Exchange Commission on June 28, 2006).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">&nbsp;</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">21</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">List of Subsidiaries *</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#FFFFFF">&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#FFFFFF">&nbsp;</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#FFFFFF">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">23.1</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#FFFFFF">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Consent of GHP Horwath, P.C. *</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">&nbsp;</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">23.2</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Consent of Child, Van Wagoner &amp; Bradshaw, PLLC. *</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#FFFFFF">&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#FFFFFF">&nbsp;</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#FFFFFF">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">24</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#FFFFFF">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Power of Attorney (included on signature page).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">&nbsp;</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">99.1</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Form of Restricted Stock Grant Agreement (herein incorporated by reference from the registrant's current report on Form 8-K filed with the Securities and Exchange Commission on March 8, 2007).</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#FFFFFF">&nbsp;</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#FFFFFF">&nbsp;</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=137 bgcolor="#FFFFFF">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">99.2</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=805 bgcolor="#FFFFFF">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Real Property Trust Agreement, dated August 21, 2006, by and between Zhiqun Li and Golden Group Corporation (Shenzhen) Limited (English Translation) (herein incorporated by reference from the registrant's annual report on Form 10-K filed with the Securities and Exchange Commission on March 21, 2007).</font></P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">*Filed herewith</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000"><B>
<font size="2">Item 17. &nbsp;Undertakings</font></B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">The undersigned registrant hereby undertakes to:</font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">File, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to:</font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:-14pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">(a)</font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:72pt; line-height:14pt; color:#000000">
<font size="2">Include any prospectus required by Section 10(a)(3) of the Securities Act, and</font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:-14pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">(b)</font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:72pt; line-height:14pt; color:#000000">
<font size="2">Reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information in the registration statement. &nbsp;Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the
&quot;Calculation of Registration Fee&quot; table in the effective registration statement, and</font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:-14pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">(c)</font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:72pt; line-height:14pt; color:#000000">
<font size="2">Include any additional or changed material information on the plan of distribution.</font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering.</font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; color:#000000">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000" align="center">
<font size="2">II-9</font></P>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:12pt; font-size:10pt; color:#000000">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.</font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:36pt; line-height:14pt; color:#000000">
<font size="2">For determining any liability under the Securities Act, treat each post-effective amendment that contains a form of prospectus as a new registration statement for the securities offered in the registration statement, and that offering of the securities at that time as the initial bona fide offering of those securities.</font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000" align=justify>
<font size="2"><BR></font></P>
<p>
<font size="2">
<BR>
</font>
</p>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000" align="center">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000" align="center">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000" align="center">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000" align="center">&nbsp;</P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000" align="center">
<font size="2">II-10</font></P>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000" align=center><B>
<font size="2">SIGNATURES</font></B></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000">
<font size="2"><BR></font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
<font size="2">Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Shenzhen, China, on the 30th day of April, 2007.</font></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000">
<font size="2"><BR></font></P>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="50%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
    <tr>
      <td><font FACE="Times New Roman" size="2"><b>China Security &amp; Surveillance
      Technology, Inc.</b></font></td>
    </tr>
    <tr>
      <td><font FACE="Times New Roman" size="2">By: /s/ Guoshen Tu</font></td>
    </tr>
    <tr>
      <td><font FACE="Times New Roman" size="2">Guoshen Tu</font></td>
    </tr>
    <tr>
      <td><font FACE="Times New Roman" size="2">Chief Executive Officer and
      President</font></td>
    </tr>
  </table>
</div>
<P style="margin-left:0pt; margin-top:10.05pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
<font size="2">Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. &nbsp;Each person whose signature appears below constitutes and appoints Guoshen Tu and Terence Yap, and each of them individually, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the SEC, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
</font> </P>
<P style="margin-left:0pt; margin-top:8.4pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><BR></P>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=326.4>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">SIGNATURE</font></P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=312>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">TITLE</font></P>
</TD></TR>
<TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=326.4>
  <P style="margin-left:0pt; margin-top:0pt; margin-right:0pt; margin-bottom:-14pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000"><U>
  <font size="2">/s/ Guoshen Tu &nbsp;&nbsp;&nbsp;</font></U></P>
<U><P style="margin:0pt; padding:0pt; text-indent:144pt; color:#000000">
  <font size="2"><BR></font></U></P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
<font size="2">Guoshen Tu</font></P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=312>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Chief Executive Officer, President and Director</font></P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
<font size="2">(Principal Executive Officer)</font></P>
</TD></TR>
<TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=326.4>
  <P style="margin-left:0pt; margin-top:0pt; margin-right:0pt; margin-bottom:-14pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000"><U>
  <font size="2">/s/ Terence Yap</font></U></P>
<P style="margin:0pt; padding:0pt; text-indent:108pt; color:#000000"><U>
<font size="2"><BR></font></U></P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
<font size="2">Terence Yap</font></P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=312>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Vice President and Director</font></P>
</TD></TR>
<TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=326.4>
  <P style="margin-left:0pt; margin-top:0pt; margin-right:0pt; margin-bottom:-14pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000"><U>
  <font size="2">/s/ Shufang Yang</font></U></P>
<P style="margin:0pt; padding:0pt; text-indent:108pt; color:#000000"><U>
<font size="2"><BR></font></U></P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
<font size="2">Shufang Yang</font></P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=312>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Chief Operating Officer and Director</font></P>
</TD></TR>
<TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=326.4>
  <P style="margin-left:0pt; margin-top:0pt; margin-right:0pt; margin-bottom:-14pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000"><U>
  <font size="2">/s/ Jianguo Jiang</font></U></P>
<P style="margin:0pt; padding:0pt; text-indent:108pt; color:#000000"><U>
<font size="2"><BR></font></U></P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
<font size="2">Jianguo Jiang</font></P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=312>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Vice President and Director</font></P>
</TD></TR>
<TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=326.4>
  <P style="margin-left:0pt; margin-top:0pt; margin-right:0pt; margin-bottom:-14pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000"><U>
  <font size="2">/s/ Lingfeng Xiong</font></U></P>
<P style="margin:0pt; padding:0pt; text-indent:108pt; color:#000000"><U>
<font size="2"><BR></font></U></P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
<font size="2">Lingfeng Xiong</font></P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=312>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Vice President, Director and Secretary</font></P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><BR></P>
<p>
<font size="2">
<BR>
</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:12pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000" align=center><B>
<font size="2">EXHIBIT INDEX</font></B></P>
<TABLE style="margin-left:0pt; border-collapse:collapse" width="100%" bordercolor="#111111" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=bottom width=103.667><P style="margin:0pt; padding:0pt; text-indent:0pt; font-size:12pt; color:#000000">&nbsp;</P>
<P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
<b><U>
<font size="2">Exhibit No.</font></U></b></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=bottom width=472.333>
  <P style="margin-left:0pt; margin-top:7pt; margin-right:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <u><B>
  <font size="2">Description</font></B></u></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=103.667 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">5</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=472.333 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Opinion of Thelen Reid Brown Raysman &amp; Steiner LLP</font></P>
</TD></TR>
<TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=103.667>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">21</font></P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=472.333>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">List of subsidiaries</font></P>
</TD></TR>
<TR>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=103.667 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">23.1</font></P>
</TD>
  <TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=472.333 bgcolor="#E6E6E6">
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Consent of GHP Horwath, P.C.</font></P>
</TD></TR>
<TR><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=103.667>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">23.2</font></P>
</TD><TD style="padding-left:7.2pt; padding-top:0pt; padding-right:7.2pt; padding-bottom:0pt" align=left valign=top width=472.333>
  <P style="margin:0pt; padding:0pt; text-indent:0pt; line-height:14pt; color:#000000">
  <font size="2">Consent of Child, Van Wagoner &amp; Bradshaw, PLLC.</font></P>
</TD></TR>
</TABLE>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; color:#000000">
<font size="2"><BR></font></P>
<p>
<font size="2">
<BR>
<BR>
</font>
</p>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><BR></P>
<P style="margin-left:0pt; margin-top:0pt; margin-bottom:0pt; padding:0pt; text-indent:0pt; font-size:10pt; color:#000000"><BR></P>
<hr color="#000000" size="5">

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</html>
[{"type": "S-1", "sequence": "1", "filename": "forms1.htm", "description": "FORM S-1", "secsgml_size_bytes": 1887953}]
{"company-data": {"conformed-name": "CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC.", "cik": "0001260625", "assigned-sic": "8741", "irs-number": "000000000", "state-of-incorporation": "D8", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-142479", "film-number": "07802855"}, "business-address": {"street1": "ROOMS 3505-06, 35TH FLOOR", "street2": "EDINBURGH TOWER, THE LANDMARK", "city": "15 QUEEN'S ROAD CENTRAL", "state": "K3", "zip": "00000", "phone": "852 2736 2111"}, "mail-address": {"street1": "ROOMS 3505-06, 35TH FLOOR", "street2": "EDINBURGH TOWER, THE LANDMARK", "city": "15 QUEEN'S ROAD CENTRAL", "state": "K3", "zip": "00000"}, "former-company": {"former-conformed-name": "APEX WEALTH ENTERPRISES LTD", "date-changed": "20030820"}}
China Security & Surveillance Technology, Inc.: Form S-1 - Prepared by
TNT Filings Inc.
As filed with the Securities and Exchange Commission on April
30, 2007
Registration No. _
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________
FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Delaware
3699
98-0509431
(State or other jurisdiction of
(Primary Standard Industrial
(I.R.S.
    Employer
incorporation or organization)
Classification Code Number)
Identification No.)
13/F, Shenzhen Special Zone Press Tower Shennan Road
Futian District, Shenzhen, China 518034
(86) 755-8351-0888
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
____________________________
Louis A. Bevilacqua, Esq.
Thomas M. Shoesmith, Esq.
Guoshen Tu
Joseph R. Tiano, Jr., Esq.
13/F, Shenzhen Special Zone
    Press Tower Shennan Road,
Thelen Reid Brown Raysman &
    Steiner LLP
Futian District, Zhenzhen,
    China 518034
701 8th Street, N.W.
(86) 755-8351-0888
Washington, D.C. 20001
(202) 508-4000
(Names, addresses, including zip codes, and telephone numbers,
including area codes, of agents for service)
____________________________
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box.
Q
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.
£
If this form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act, check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
£
If this form is a post-effective
amendment filed pursuant to Rule 462(d) under the Securities Act, check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement the same offering.
£
CALCULATION OF REGISTRATION FEE
Proposed maximum
Title of each class of securities to be
Amount to be
Proposed maximum offering
aggregate offering
Amount of
registered
registered(1)(3)
price per share (2)
price(2)
registration fee
Common stock, $0.0001 par value
1,538,462
$16.20
$24,923,085
$766
(1)     In accordance with Rule 416(a), the Registrant is also registering
hereunder an indeterminate number of shares that may be issued and resold
resulting from stock splits, stock dividends or similar transactions.
(2)     Estimated pursuant to Rule 457(c) of the Securities Act of 1933 solely
for the purpose of computing the amount of the registration fee based on the
average of the high and low prices reported on the OTC Bulletin Board on April
26, 2006.
(3)     Represents shares of the Registrant's common stock being registered for
resale that have been issued to the selling stockholders named in this
registration statement.
The registrant hereby amends this registration statement on
such date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that this
registration statement shall hereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting pursuant to such
Section 8(a), may determine.
PROSPECTUS
Subject to completion, dated____ , 2007
The information in this prospectus is not complete and
may be changed. These securities may not be sold until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any jurisdiction where the offer or sale is not
permitted
.
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC.
1,538,462 Shares of Common Stock
This prospectus
relates to 1,538,462 shares of common stock of China Security & Surveillance
Technology, Inc., a Delaware corporation, that may be sold from time to time by
the selling stockholders named in this prospectus. We will not receive any
proceeds from the sales by the selling stockholders.
Common stock of
China Security & Surveillance Technology, Inc. is quoted on the OTC Bulletin
Board maintained by the National Association of Securities Dealers, Inc. under
the symbol "CSCT.OB". The closing sales price for its common stock on April 26,
2007 was $16.20
per share, as reported on the OTC Bulletin Board. You are
urged to obtain current market quotations of our common stock before purchasing
any of the shares being offered for sale pursuant to this prospectus.
Any selling
stockholders who are affiliates of broker-dealers and any participating
broker-dealers are deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended, and any commissions or discounts given to
any such selling stockholders who are affiliates of broker-dealers and any such
broker-dealer may be regarded as underwriting commissions or discounts under the
Securities Act. The selling stockholders have informed us that they do not have
any agreement or understanding, directly or indirectly, with any person to
distribute their common stock.
Investing in the
shares being offered pursuant to this prospectus involves a high degree of risk.
You should carefully read and consider the information set forth in the section
of this prospectus titled "Risk Factors," beginning on page 5, when determining
whether to purchase any of these shares.
Neither the
Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
The date of this Prospectus is
____
, 2007.
TABLE OF CONTENTS
PROSPECTUS SUMMARY
1
RISK FACTORS
5
CAUTIONARY
    STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
15
USE OF PROCEEDS
15
MARKET FOR OUR
    COMMON STOCK AND RELATED STOCKHOLDER MATTERS
16
DESCRIPTION OF
    BUSINESS
36
MANAGEMENT
47
CHANGE IN AND
    DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL
    DISCLOSURE
57
DESCRIPTION OF
    SECURITIES
58
SHARES ELIGIBLE FOR
    FUTURE SALE
59
PLAN OF
    DISTRIBUTION
60
LEGAL MATTERS
62
EXPERTS
62
WHERE YOU CAN FIND
    MORE INFORMATION
62
i
PROSPECTUS SUMMARY
This summary
highlights some information from this prospectus, and it may not contain all of
the information that is important to you. You should read the following summary
together with the more detailed information regarding our company and the common
stock being sold in this offering, including "Risk Factors" and our financial
statements and related notes, included elsewhere in, or incorporated by
reference into, this prospectus.
Except as otherwise
indicated by the context, references in this prospectus to "CSST," "we," "us,"
"our," "our Company," or "the Company" are to China Security & Surveillance
Technology, Inc., a Delaware corporation and its direct and indirect
subsidiaries. Unless the context otherwise requires, all references to (i) "Safetech"
are to China Safetech Holdings Limited, a British Virgin Islands corporation;
(ii) "CSST HK" are to China Security & Surveillance Technology (HK) Ltd., a Hong
Kong corporation; (iii) "CSST China" are to China Security & Surveillance
Technology (PRC) Ltd., a corporation incorporated in the People's Republic of
China; (iv)"Golden" are to Golden Group Corporation (Shenzhen) Limited, a
corporation incorporated in the People's Republic of China; (v) "Cheng Feng" are
to Shanghai Cheng Feng Digital Technology Co. Ltd.; (vi) "Hongtianzhi" are to
Shenzhen Hongtianzhi Electronics Co., Ltd; (vii) "BVI" are to British Virgin
Islands; (viii) "PRC" and "China" are to People's Republic of China; (ix) "U.S.
dollar," "$" and "US$" are to United States dollars; (x) "RMB" are to Yuan
Renminbi of China; (xi) "Securities Act" are to Securities Act of 1933, as
amended; and (xii) "Exchange Act" are to the Securities Exchange Act of 1934, as
amended.
The Company
Overview
We manufacture, distribute, install and service
security and surveillance products and systems and develop security and
surveillance related software in China. Our customers mainly comprise (i)
governmental entities (including customs agencies, courts, public security
bureaus and prisons), (ii) non-profit organizations (including schools, museums,
sports arenas and libraries) and (iii) commercial entities (including airports,
hotels, real estate, banks, mines, railways, supermarkets and entertainment
venues). These account for approximately 40%, 10% and 50% of revenues,
respectively.
A majority of our revenues is derived from the
provision of a packaged security and surveillance solution which includes the
products, installation and after sale service maintenance to our customers.
Because a majority of our revenues is derived from the installation of security
and surveillance systems for our customers which are generally non-recurring,
our revenues are not concentrated within any one customer or group of customers.
Maintenance services in our packaged solution are included for the first year
from the date of completion. Our customers have an option to sign up for our
maintenance program after the first year.
Our subsidiary Golden has 37 branch offices in
provincial cities, Cheng Feng has 22 distribution points and Hongtianzhi has 53
distribution points throughout China as our customers are located across the
country without any particular concentration in any region.
1
Our Background and History
We were incorporated in the BVI on April 8,
2002 under the name "Apex Wealth Enterprises Limited" as a corporation under the
International Business Companies Ordinance of 1984. In February 2006, we changed
our name to China Security and Surveillance Technology Inc. In November 2006, we
changed our domicile from the BVI to Delaware by merging the BVI corporation
into a newly incorporated Delaware corporation. Prior to our reverse acquisition
of Safetech in September 2005, as discussed in more detail below, we were a
development stage enterprise and had not yet generated any revenues. Prior to
the reverse acquisition, we provided business advisory and management consulting
services in greater China, initially concentrating on the Hong Kong market. The
focus of these services was on small to medium size enterprises.
From and after the reverse acquisition, our
business became the business of our indirect, wholly-owned subsidiary, Golden
and the newly acquired subsidiaries Cheng Feng and Hongtianzhi. Golden is a
corporation incorporated in the PRC which is engaged in the business of
manufacturing, distributing, installing and maintaining security and
surveillance systems. Golden was organized in the PRC in January 1995. In 2006,
we acquired Cheng Feng, a corporation incorporated in the PRC which is engaged
in the business of manufacturing, marketing and sales of security and
surveillance related hardware as well as the development and integration of
related software. In April 2007, we acquired Hongtianzhi, a corporation
incorporated in the PRC which is engaged in the business of manufacturing
digital cameras. We are headquartered in Shenzhen, China.
Reverse Acquisition with Safetech
On September 12, 2005, we acquired 50,000
shares of the issued and outstanding capital stock of Safetech, constituting all
of the issued and outstanding capital stock of Safetech. The 50,000 shares of
Safetech were acquired from the individual shareholders of Safetech in a share
exchange transaction in return for the issuance of 8,138,000 shares of our
common stock. As a result of this transaction, Safetech became our wholly-owned
subsidiary, and Golden became our indirect wholly-owned subsidiary. Completion
of the transaction resulted in a change in control of our Company.
For accounting purposes, this transaction was
treated as a reverse acquisition, with Safetech as the acquirer and our Company
as the acquired party. When we refer in this prospectus to business and
financial information for periods prior to the consummation of the reverse
acquisition, we are referring to the business and financial information of our
operating PRC subsidiaries on a consolidated basis unless otherwise specified.
Subsequent Acquisitions
On October 25, 2005, we entered into an
agreement with the equity owners of Shenzhen Yuan Da Wei Shi Technology Limited,
or "Yuan Da," which was subsequently amended in April and May 2006. Pursuant to
the amended agreement, we acquired all of the assets of Yuan Da for RMB 1
million (approximately $0.125 million) and 200,000 shares of our common stock.
Yuan Da is a limited liability company established in Shenzhen, China and was
principally engaged in the sale and development of security and surveillance
systems.
2
In July 2006, we entered into an agreement
with shareholders of Cheng Feng to acquire 100% ownership of Cheng Feng for a
consideration of RMB 120 million (approximately $15 million), consisting of RMB
60 million (approximately $7.5 million) in cash and 1,361,748 shares of our
common stock. The operational control of Cheng Feng passed to the Company in
July 2006, we received the relevant Chinese government approval for such
acquisition in December 2006 and all consideration to Cheng Feng has been paid
off as of the date of this prospectus. Cheng Feng is a company that is engaged
in the business of manufacturing, marketing and sales of security and
surveillance related hardware as well as the development and integration of
related software.
In November 2006, we acquired the security and
surveillance business of Jian Golden An Ke Technology Co. Ltd., or "Jian An Ke,"
Shenzhen Golden Guangdian Technology Co. Ltd., or "Shenzhen Guangdian," Shenyang
Golden Digital Technology Co. Ltd., or "Shenyang Golden," and Jiangxi Golden
Digital Technology Co. Ltd., or "Jiangxi Golden," of which our CEO and director
Guoshen Tu owned 80%, 60%, 42% and 90%, respectively. We refer to these
companies in this prospectus as the Four-Related Companies. Mr. Tu did not
receive any consideration for the acquisition of his interest in the
Four-Related Companies. The minority shareholders of these four companies and
their designees received in aggregate 850,000 shares of our common stock.
Shenzhen Guangdian is engaged in the business of manufacturing and distributing
security and surveillance products. The other three companies are engaged in the
business of distributing security and surveillance products.
On April 2, 2007, we entered into an Equity
Transfer Agreement with Safetech and Zheng Huang, the sole owner of Chain Star
Investments Limited, a Hong Kong Corporation, or "Chain Star," pursuant to which
Safetech purchased 100% ownership of Chain Star from Mr. Huang. Chain Star is a
holding company of Hongtianzhi. Pursuant to the terms of the Equity Transfer
Agreement, we will pay a total consideration of RMB 250 million (approximately
$32.1 million) in exchange for 100% ownership of Chain Star, consisting of RMB
125 million (approximately USD$16 million) in cash and RMB 125 million
(approximately $16 million) in the Company's shares of common stock.
The Offering
Common stock offered
    by selling stockholders
1,538,462 shares
Common stock
    outstanding before the offering
34,941,406
shares
(1)
Common stock
    outstanding after the offering
34,941,406
shares
Proceeds to us
We will not receive
    any proceeds from the sale of common stock
    covered by this prospectus.
Dividend policy
Currently, we do not
    anticipate paying cash dividends.
Risk factors
You should read "Risk
    Factors" for a discussion of factors that you
    should consider carefully before deciding
    whether to purchase shares of our common stock.
(1)    Based on 34,941,406
shares of our common stock
issued and outstanding as of April 26, 2007.
3
Summary Consolidated Financial Data
The following summary consolidated statement of income and
comprehensive income data for the years ended December 31, 2004, 2005 and 2006
and the selected consolidated balance sheet data as of December 31, 2005 and
2006 are derived from our audited consolidated financial statements included
elsewhere in this prospectus. The summary consolidated financial data for the
year ended December 31, 2003 and the summary balance sheet data as of December
31, 2004 are derived from our audited consolidated financial statements not
included in this prospectus. The summary consolidated financial data for the
year ended December 31, 2002 is derived from our unaudited consolidated
financial statements that are not included in this prospectus. The following
summary consolidated financial information should be read in conjunction with
our consolidated financial statements and related notes and the information
contained in "Management's Discussion and Analysis of Financial Condition and
Results of Operations," appearing elsewhere in this prospectus. Our historical
results are not necessarily indicative of our results for any future periods.
( in thousands of U.S. dollars, except per share data)
2006
2005
2004
2003
2002
Statement of Income
    Data
Revenues
$
106,989
$
32,689
$
16,056
$
11,795
$
10,331
Cost of Sales
$
75,976
$
23,473
$
8,796
$
7,581
$
7,030
Operating Expenses
$
5,779
$
1,737
$
1,129
$
952
$
1,097
Income From Operations
$
25,342
$
7,479
$
6,131
$
3,262
$
2,234
Income Taxes
$
3,889
$
780
$
873
$
517
$
335
Net Income
$
22,931
$
7,266
$
5,724
$
2,752
$
1,899
Number of Shares
    Issued and Outstanding
31,824,938
21,558,000
17,000,000
17,000,000
17,000,000
Income from Operations
    Per Share
Basic
$
0.97
$
0.40
$
0.36
$
0.19
$
0.13
Diluted
$
0.94
$
0.40
$
0.36
$
0.19
$
0.13
Weighted Average
    Number of Shares
Outstanding
Basic
26,052,519
18,521,479
17,000,000
17,000,000
17,000,000
Diluted
26,940,215
18,521,479
17,000,000
17,000,000
17,000,000
Net Income Per Share
Basic
$
0.88
$
0.39
$
0.34
$
0.16
$
0.11
Diluted
$
0.85
$
0.39
$
0.34
$
0.16
$
0.11
Balance Sheet Data
Working Capital
$
63,535
$
20,546
$
8,494
$
7,918
$
5,591
4
Total Assets
$
114,527
$
29,117
$
22,009
$
16,977
$
13,582
Total Current
    Liabilities
$
22,604
$
4,505
$
5,208
$
5,900
$
4,126
Net Assets
$
89,820
$
24,612
$
16,801
$
11,077
$
9,455
Total Shareholders'
    Equity
$
89,820
$
24,612
$
16,801
$
11,077
$
8,850
Risk Factors
We face risks in operating our business,
including risks that may prevent us from achieving our business objectives or
that may adversely affect our business, financial condition and operating
results. You should consider these risks before investing in our Company. Risks
relating to our business and industry include, among others: our ability to
attract new customers; our ability to keep pace with technological developments
in the security and surveillance industry, and to develop and commercialize new
products; competition and competitive factors in the markets in which we
compete; and our ability to successfully integrate companies that we have
acquired and to avoid or mitigate potential damages arising from risks
associated with acquired companies and the legal structure utilized to
effectuate acquisitions of these companies. You should carefully consider the
risks discussed in "RISK FACTORS" before deciding to invest in our common stock.
Additional Information
Our corporate headquarters are located at
13/F, Shenzhen Special Zone Press Tower, Shennan Road, Futian District,
Shenzhen, Peoples Republic of China, 518034. Our telephone number is (86)
755-8351-0888. We maintain a website at www.csstf.com that contains information
about our Company, but that information is not a part of this prospectus.
RISK FACTORS
You should carefully consider the following
risks and all of the other information set forth in this prospectus before
deciding to invest in shares of our common stock being offered for resale by the
selling stockholders. If any of the events or developments described below
actually occurs, our business, financial condition, and results of operations
may suffer. In that case, the trading price of our common stock may decline and
you could lose all or part of your investment.
RISKS RELATED TO OUR BUSINESS
DUE TO THE NATURE OF OUR BUSINESS, WE DO NOT
HAVE SIGNIFICANT AMOUNTS OF RECURRING REVENUES FROM OUR EXISTING CUSTOMERS AND
WE ARE HIGHLY DEPENDENT ON NEW BUSINESS DEVELOPMENT.
Most of our revenues derive from the
installation of security and surveillance systems which are generally
non-recurring. Our customers are mainly governmental entities, non-profit
organizations and commercial entities, such as airports, customs agencies,
hotels, real estate developments, banks, mines, railways, supermarkets, and
entertainment enterprises. We manufacture and install security systems for these
customers and generate revenues from the sale of these systems to our customers
and, to a lesser extent, from maintenance of these systems for our customers.
After we have manufactured and installed a system at any particular customer
site, we have generated the majority of revenues from that particular client. We
would not expect to generate significant revenues from any existing client in
future years unless that client has additional installation sites for which our
services might be required. Therefore, in order to maintain a level of revenues
each year that is at or in excess of the level of revenues we generated in prior
years, we must identify and be retained by new clients. If our business
development, marketing and sales techniques do not result in an equal or greater
number of projects of at least comparable size and value for us in a given year
compared to the prior year, then we may be unable to increase our revenues and
earnings or even sustain current levels in the future.
5
IN ORDER TO GROW AT THE PACE EXPECTED BY
MANAGEMENT, WE WILL REQUIRE ADDITIONAL CAPITAL TO SUPPORT OUR LONG-TERM BUSINESS
PLAN. IF WE ARE UNABLE TO OBTAIN ADDITIONAL CAPITAL IN FUTURE YEARS, WE MAY BE
UNABLE TO PROCEED WITH OUR LONG-TERM BUSINESS PLAN AND WE MAY BE FORCED TO
CURTAIL OR CEASE OUR OPERATIONS.
We will require additional working capital to
support our long-term business plan, which includes identifying suitable targets
for horizontal or vertical mergers or acquisitions, so as to enhance the overall
productivity and benefit from economies of scale. Our working capital
requirements and the cash flow provided by future operating activities, if any,
will vary greatly from quarter to quarter, depending on the volume of business
during the period and payment terms with our customers. We may not be able to
obtain adequate levels of additional financing, whether through equity
financing, debt financing or other sources. Additional financings could result
in significant dilution to our earnings per share or the issuance of securities
with rights superior to our current outstanding securities. In addition, we may
grant registration rights to investors purchasing our equity or debt securities
in the future. If we are unable to raise additional financing, we may be unable
to implement our long-term business plan, develop or enhance our products and
services, take advantage of future opportunities or respond to competitive
pressures on a timely basis, if at all. In addition, a lack of additional
financing could force us to substantially curtail or cease operations.
WE SOMETIMES EXTEND CREDIT TO OUR CUSTOMERS.
FAILURE TO COLLECT THE TRADE RECEIVABLES OR UNTIMELY COLLECTION COULD AFFECT OUR
LIQUIDITY.
We extend credit to a large number of our
customers while generally requiring no collateral. Generally, our customers pay
in installments, with a portion of the payment upfront, a portion of the payment
upon receipt of our products by our customers and before the installation, and a
portion of the payment after the installation of our products and upon
satisfaction of our customer. Sometimes, a small portion of the payment will not
be paid until after a certain period following the installation. We perform
ongoing credit evaluations of our customers' financial condition and generally
have no difficulties in collecting our payments. However, if we encounter future
problems collecting amounts due from our clients or if we experience delays in
the collection of amounts due from our clients, our liquidity could be
negatively affected.
IF OUR SUBCONTRACTORS FAIL TO PERFORM THEIR
CONTRACTUAL OBLIGATIONS, OUR ABILITY TO PROVIDE SERVICES AND PRODUCTS TO OUR
CUSTOMERS, AS WELL AS OUR ABILITY TO OBTAIN FUTURE BUSINESS, MAY BE HARMED.
6
Many of our contracts involve subcontracts
with other companies upon which we rely to perform a portion of the services
that we must provide to our customers. There is a risk that we may have disputes
with our subcontractors, including disputes regarding the quality and timeliness
of work performed by those subcontractors. A failure by one or more of our
subcontractors to satisfactorily perform the agreed-upon services may materially
and adversely impact our ability to perform our obligations to our customers,
could expose us to liability and could have a material adverse effect on our
ability to compete for future contracts and orders.
IF WE ARE UNABLE TO ATTRACT AND RETAIN KEY
SENIOR MANAGEMENT AND QUALIFIED TECHNICAL AND SALES PERSONNEL, OUR OPERATIONS,
FINANCIAL CONDITION AND PROSPECTS WILL BE MATERIALLY ADVERSELY AFFECTED.
Our future success depends in part on the
contributions of our management team and key technical and sales personnel and
our ability to attract and retain qualified new personnel. In particular, our
success depends on the continuing employment of our CEO, Mr. Guoshen Tu; our
CFO, Terence Yap; our Chief Technical Officer, Dr. Yong Zhao; our Chief
Operating Officer, Shufang Yang; our Vice President, Jianguo Jiang; and our Vice
President, Lingfeng Xiong. There is significant competition in our industry for
qualified managerial, technical and sales personnel and we cannot assure you
that we will be able to retain our key senior managerial, technical and sales
personnel or that we will be able to attract, integrate and retain other such
personnel that we may require in the future. If we are unable to attract and
retain key personnel in the future, our business, operations, financial
condition, results of operations and prospects could be materially adversely
affected.
OUR GROWTH STRATEGY INCLUDES MAKING
ACQUISITIONS IN THE FUTURE, WHICH COULD SUBJECT US TO SIGNIFICANT RISKS, ANY OF
WHICH COULD HARM OUR BUSINESS.
Our growth strategy includes identifying and
acquiring or investing in suitable candidates on acceptable terms. We recently
acquired the security and surveillance business of the Four-Related Companies
and acquired a 100% ownership interest in Cheng Feng and Hongtianzhi. We also
expect to close the acquisitions of HiEasy Electronic Technology Development
Co., Ltd., or "HiEasy," Changzhou Minking Electronics Inc. Ltd, or "Minking,"
Hangzhou Tsingvision Intelligence System Co. Ltd., or "Tsing," and Shenzhen
Wandaiheng Industry Ltd., or "Wandai," and establish an exclusive cooperation
relationship with Shenzhen Chuang Guan Intelligence Network Technology Co.,
Ltd., or "Chuang Guan," in 2007. In addition, over time, we may acquire or make
investments in other providers of products that complement our business and
other companies in the security industry.
Acquisitions involve a number of risks and
present financial, managerial and operational challenges, including:
diversion of management's attention from running our existing business;
increased expenses, including travel, legal, administrative and compensation
  expenses resulting from newly hired employees;
increased costs to integrate personnel, customer base and business practices
  of the acquired company with our own;
adverse effects
  on our reported operating results due to possible write-down of goodwill
  associated with acquisitions;
potential
  disputes with sellers of acquired businesses, technologies, services, products
  and potential liabilities; and
dilution to our
  earnings per share if we issue common stock in any acquisition.
Moreover, performance problems with an acquired business,
technology, product or service could also have a material adverse impact on our
reputation as a whole. In addition, any acquired business, technology, product
or service could significantly under-perform relative to our expectations, and
we may not achieve the benefits we expect from our acquisitions. For all of
these reasons, our pursuit of an acquisition and investment strategy or any
individual acquisition or investment could have a material adverse effect on our
business, financial condition and results of operations.
OUR LIMITED ABILITY TO PROTECT OUR INTELLECTUAL PROPERTY MAY
ADVERSELY AFFECT OUR ABILITY TO COMPETE.
We rely on a combination of trademarks, copyrights, trade
secret laws, confidentiality procedures and licensing arrangements to protect
our intellectual property rights. A successful challenge to the ownership of our
technology could materially damage our business prospects. Our competitors may
assert that our technologies or products infringe on their patents or
proprietary rights. We may be required to obtain from others licenses that may
not be available on commercially reasonable terms, if at all. Problems with
intellectual property rights could increase the cost of our products or delay or
preclude our new product development and commercialization. If infringement
claims against us are deemed valid, we may not be able to obtain appropriate
licenses on acceptable terms or at all. Litigation could be costly and
time-consuming but may be necessary to protect our technology license positions
or to defend against infringement claims.
SAFETECH IS A BVI COMPANY, WHILE GOLDEN, CHENG FENG AND
HONGTIANZHI ARE PRC COMPANIES, AND ALL OF OUR OFFICERS AND DIRECTORS RESIDE
OUTSIDE THE UNITED STATES. THEREFORE, CERTAIN JUDGMENTS OBTAINED AGAINST OUR
COMPANY BY OUR SHAREHOLDERS MAY NOT BE ENFORCEABLE IN THE BVI OR CHINA.
Safetech is a BVI company and our operating subsidiaries
Golden, Cheng Feng and Hongtianzhi are PRC companies. All of our officers and
directors reside outside of the United States. All or substantially all of our
assets and the assets of these persons are located outside of the United States.
As a result, it may not be possible for investors to effect service of process
within the United States upon our Company or such persons or to enforce against
it or these persons the United States federal securities laws, or to enforce
judgments obtained in United States courts predicated upon the civil liability
provisions of the federal securities laws of the United States, including the
Securities Act and the Exchange Act.
RISKS RELATED TO OUR INDUSTRY
SEASONALITY AFFECTS OUR OPERATING RESULTS.
8
Our sales are affected by seasonality. Our
revenues are usually higher in the second half of the year than in the first
half of the year because fewer projects are undertaken during and around the
Chinese spring festival.
OUR SUCCESS RELIES ON OUR MANAGEMENT'S ABILITY
TO UNDERSTAND THE HIGHLY EVOLVING SURVEILLANCE AND SECURITY INDUSTRY.
The Chinese surveillance and security industry
is nascent and rapidly evolving. Therefore, it is critical that our management
is able to understand industry trends and make good strategic business
decisions. If our management is unable to identify industry trends and act in
response to such trends in a way that is beneficial to us, our business will
suffer.
IF WE ARE UNABLE TO RESPOND TO THE RAPID
CHANGES IN OUR INDUSTRY AND CHANGES IN OUR CUSTOMERS' REQUIREMENTS AND
PREFERENCES, OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS COULD
BE ADVERSELY AFFECTED.
If we are unable, for technological, legal,
financial or other reasons, to adapt in a timely manner to changing market
conditions or customer requirements, we could lose customers and market share.
The electronic security systems industry is characterized by rapid technological
change. Sudden changes in customer requirements and preferences, the frequent
introduction of new products and services embodying new technologies and the
emergence of new industry standards and practices could render our existing
products, services and systems obsolete. The emerging nature of products and
services in the electronic security systems industry and their rapid evolution
will require that we continually improve the performance, features and
reliability of our products and services. Our success will depend, in part, on
our ability to:
enhance our existing products and services;
anticipate changing customer requirements by designing, developing, and
  launching new products and services that address the increasingly
  sophisticated and varied needs of our current and prospective customers; and
respond to technological advances and emerging industry standards and
  practices on a cost-effective and timely basis.
The development of additional products and
services involves significant technological and business risks and requires
substantial expenditures and lead time. If we fail to introduce products with
new technologies in a timely manner, or adapt our products to these new
technologies, our business, financial condition and results of operations could
be adversely affected. We cannot assure you that even if we are able to
introduce new products or adapt our products to new technologies that our
products will gain acceptance among our customers. In addition, from time to
time, we or our competitors may announce new products, product enhancements or
technological innovations that have the potential to replace or shorten the life
cycles of our existing products and that may cause customers to refrain from
purchasing our existing products, resulting in inventory obsolescence.
9
WE MAY NOT BE ABLE TO MAINTAIN OR IMPROVE OUR
COMPETITIVE POSITION BECAUSE OF STRONG COMPETITION IN THE SECURITY AND
SURVEILLANCE INDUSTRY, AND WE EXPECT THIS COMPETITION TO CONTINUE TO INTENSIFY.
The Chinese security and surveillance industry
is highly competitive. There are about 15,000 companies in China that engage in
the business of manufacturing, designing and building surveillance and security
products. In addition, since China joined the World Trade Organization, "WTO,"
we also face competition from international competitors. Some of our
international competitors are larger than us and possess greater name
recognition, assets, personnel, sales and financial resources. These entities
may be able to respond more quickly to changing market conditions by developing
new products and services that meet customer requirements or are otherwise
superior to our products and services and may be able to more effectively market
their products than we can because they have significantly greater financial,
technical and marketing resources than we do. They may also be able to devote
greater resources than we can to the development, promotion and sale of their
products. Increased competition could require us to reduce our prices, result in
our receiving fewer customer orders, and result in our loss of market share. We
cannot assure you that we will be able to distinguish ourselves in a competitive
market. To the extent that we are unable to successfully compete against
existing and future competitors, our business, operating results and financial
condition could be materially adversely affected.
OUR BUSINESS AND REPUTATION AS A MANUFACTURER
OF HIGH QUALITY SECURITY AND SURVEILLANCE PRODUCTS MAY BE ADVERSELY AFFECTED BY
PRODUCT DEFECTS OR SUBSTANDARD PERFORMANCE.
We believe that we offer high quality products
that are reliable and competitively priced. If our products do not perform to
specifications, we might be required to redesign or recall those products or pay
substantial damages. Such an event could result in significant expenses, disrupt
sales and affect our reputation and that of our products. In addition, product
defects could result in substantial product liability. We do not have product
liability insurance. If we face significant liability claims, our business,
financial condition, and results of operations would be adversely affected.
OUR PRODUCT OFFERINGS INVOLVE A LENGTHY SALES
CYCLE AND WE MAY NOT ANTICIPATE SALES LEVELS APPROPRIATELY, WHICH COULD IMPAIR
OUR PROFITABILITY.
Some of our products and services are designed
for medium to large commercial, industrial and government facilities desiring to
protect valuable assets and/or prevent intrusion into high security facilities
in China. Given the nature of our products and the customers that purchase them,
sales cycles can be lengthy as customers conduct intensive investigations and
deliberate between competing technologies and providers. For these and other
reasons, the sales cycle associated with some of our products and services is
typically lengthy and subject to a number of significant risks over which we
have little or no control. If sales in any period fall significantly below
anticipated levels, our financial condition and results of operations could
suffer.
RISKS RELATED TO DOING BUSINESS IN CHINA
ECONOMIC, POLITICAL, LEGAL AND SOCIAL
UNCERTAINTIES IN CHINA COULD HARM OUR FUTURE INTERESTS IN CHINA.
10
All of our future business projects and plans
are expected to be located in China. As a consequence, the economic, political,
legal and social conditions in China could have an adverse effect on our
business, results of operations and financial condition. The legislative trend
in China over the past decade has been to enhance the protection afforded to
foreign investment and to allow for more active control by foreign parties of
foreign invested enterprises. There can be no assurance, however, that
legislation directed towards promoting foreign investment will continue. More
restrictive rules on foreign investment could adversely affect our ability to
expand our operations in China or repatriate any profits earned there. Some of
the changes that could adversely affect us include:
level of government involvement in the economy;
control of foreign exchange;
methods of allocating resources;
balance of payments position;
international trade restrictions; and
international conflict.
The Chinese economy differs from the economies
of most countries belonging to the Organization for Economic Cooperation and
Development, or "OECD," in many ways. As a result of these differences, we may
not develop in the same way or at the same rate as might be expected if the
Chinese economy were similar to those of the OECD member countries.
THE LEGAL ENVIRONMENT IN CHINA IS UNCERTAIN
AND YOUR ABILITY TO LEGALLY PROTECT YOUR INVESTMENT COULD BE LIMITED.
The Chinese legal system is a civil law system
based on written statutes. Unlike common law systems, it is a system in which
precedents set in earlier legal cases are not generally used. The overall effect
of legislation enacted over the past 20 years has been to enhance the
protections afforded to foreign-owned enterprises in China. However, these laws,
regulations and legal requirements are relatively recent and are evolving
rapidly, and their interpretation and enforcement involve uncertainties. For
example, on March 16, 2007, PRC adopted new property and corporate income tax
laws and the implications of these new laws are uncertain as of the date of this
prospectus. These uncertainties could limit the legal protections available to
foreign investors, such as the right of foreign-invested enterprises to hold
licenses and permits such as requisite business licenses. In addition, all of
our executive officers and our directors are residents of China and not of the
United States, and substantially all the assets of these persons are located
outside the United States. As a result, it could be difficult for investors to
effect service of process in the United States, or to enforce a judgment
obtained in the United States against us or any of these persons.
THE CHINESE GOVERNMENT EXERTS SUBSTANTIAL
INFLUENCE OVER THE MANNER IN WHICH WE MUST CONDUCT OUR BUSINESS ACTIVITIES.
China only recently has permitted provincial
and local economic autonomy and private economic activities. The Chinese
government has exercised and continues to exercise substantial control over
virtually every sector of the Chinese economy through regulation and state
ownership. Our ability to operate in China may be harmed by changes in its laws
and regulations, including those relating to taxation, import and export
tariffs, environmental regulations, land use rights, property and other matters.
We believe that our operations in China are in material compliance with all
applicable legal and regulatory requirements. However, the central or local
governments of these jurisdictions may impose new, stricter regulations or
interpretations of existing regulations that would require additional
expenditures and efforts on our part to ensure our compliance with such
regulations or interpretations.
11
Accordingly, government actions in the future,
including any decision not to continue to support recent economic reforms and to
return to a more centrally planned economy, or regional or local variations in
the implementation of economic policies, could have a significant effect on
economic conditions in China or particular regions thereof, and could require us
to divest ourselves of any interest we then hold in Chinese properties or joint
ventures.
FUTURE INFLATION IN CHINA MAY INHIBIT OUR
ACTIVITY TO CONDUCT BUSINESS IN CHINA.
In recent years, the Chinese economy has
experienced periods of rapid expansion and widely fluctuating rates of
inflation. During the past ten years, the rate of inflation in China has been as
high as 20.7% and as low as -2.2%. These factors have led to the adoption by the
Chinese government, from time to time, of various corrective measures designed
to restrict the availability of credit or regulate growth and contain inflation.
High inflation may in the future cause the Chinese government to impose controls
on credit and/or prices, or to take other action, which could inhibit economic
activity in China, and thereby harm the market for our products.
WE MAY BE UNABLE TO COMPLETE A BUSINESS
COMBINATION TRANSACTION EFFECTIVELY OR ON FAVORABLE TERMS DUE TO COMPLICATED
MERGER AND ACQUISITION REGULATIONS IMPLEMENTED ON SEPTEMBER 8, 2006.
On September 8, 2006, the PRC Ministry of
Commerce, or "MOFCOM," together with several other government agencies,
promulgated a comprehensive set of regulations governing the approval process by
which a Chinese company may participate in an acquisition of its assets or its
equity interests and by which a Chinese company may obtain public trading of its
securities on a securities exchange outside of the PRC. Depending on the
structure of the transaction, these regulations will require the Chinese parties
to make a series of applications and supplemental applications to the
governmental agencies. In some instances, the application process may require
the presentation of economic data concerning a transaction, including appraisals
of the target business and evaluations of the acquirer, which are designed to
allow the government to assess the transaction. Governmental approvals will have
expiration dates by which a transaction must be completed and reported to the
governmental agencies. Compliance with the new regulations is likely to be more
time consuming and expensive than in the past and the government now can exert
more control over the combination of two businesses. Accordingly, due to these
new regulations, our ability to engage in business combination transactions has
become significantly more complicated, time consuming and expensive and we may
not be able to negotiate a transaction that is acceptable to our stockholders or
sufficiently protect their interests in a transaction.
12
The new regulations allow PRC government
agencies to assess the economic terms of a business combination transaction.
Parties to a business combination transaction may have to submit to MOFCOM and
the other government agencies an appraisal report, an evaluation report and the
acquisition agreement, all of which form part of the application for approval,
depending on the structure of the transaction. The regulations also prohibit a
transaction at an acquisition price obviously lower than the appraised value of
the Chinese business or assets and in certain transaction structures, require
that consideration must be paid within defined periods, generally not in excess
of a year. The regulations also limit our ability to negotiate various terms of
the acquisition, including aspects of the initial consideration, contingent
consideration, holdback provisions, indemnification provisions and provisions
relating to the assumption and allocation of assets and liabilities. Transaction
structures involving trusts, nominees and similar entities are prohibited.
Therefore, such regulations may impede our ability to negotiate and complete a
business combination transaction on financial terms which satisfy our investors
and protect our stockholders' economic interests and we may not be able to
negotiate a business combination transaction on terms favorable to our
stockholders.
In addition to the above risks, in many
instances, we will seek to structure transactions in a manner that avoids the
need to make applications or a series of applications with Chinese regulatory
authorities under these M&A regulations. If we fail to effectively structure an
acquisition in a manner that avoids the need for such applications or if the
Chinese government interprets the requirements of the M&A regulations in a
manner different from our understanding of such regulations, then acquisitions
that we have effected may be unwound or subject to rescission. Also, if the
Chinese government determines that our structure of any of our acquisitions does
not comply with these new regulations, then we may also be subject to fines and
penalties.
RESTRICTIONS ON CURRENCY EXCHANGE MAY LIMIT
OUR ABILITY TO RECEIVE AND USE OUR REVENUES EFFECTIVELY.
The majority of our revenues will be settled
in RMB, and any future restrictions on currency exchanges may limit our ability
to use revenue generated in RMB to fund any future business activities outside
China or to make dividend or other payments in U.S. dollars. Although the
Chinese government introduced regulations in 1996 to allow greater
convertibility of the RMB for current account transactions, significant
restrictions still remain, including the restriction that foreign-invested
enterprises may only buy, sell or remit foreign currencies after providing valid
commercial documents, and only at those banks in China authorized to conduct
foreign exchange business. In addition, conversion of RMB for capital account
items, including direct investment and loans, is subject to governmental
approval in China, and companies are required to open and maintain separate
foreign exchange accounts for capital account items. We cannot be certain that
the Chinese regulatory authorities will not impose more stringent restrictions
on the convertibility of the RMB.
THE VALUE OF OUR SECURITIES WILL BE AFFECTED
BY THE FOREIGN EXCHANGE RATE BETWEEN THE U.S. DOLLARS AND RENMINBI.
The value of our common stock will be affected
by the foreign exchange rate between U.S. dollars and RMB, and between those
currencies and other currencies in which our sales may be denominated. For
example, to the extent that we need to convert U.S. dollars into RMB for our
operational needs, should the RMB appreciate against the U.S. dollar at that
time, our financial position, the business of our Company, and the price of our
common stock may be harmed. Conversely, if we decide to convert our RMB into
U.S. dollars for the purpose of declaring dividends on our common stock or for
other business purposes, should the U.S. dollar appreciate against the RMB, the
U.S. dollar equivalent of our earnings from our subsidiaries in China would be
reduced.
13
ACCOUNTING LAWS IN CHINA MANDATE ACCOUNTING
PRACTICES WHICH MAY NOT BE CONSISTENT WITH U.S. GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES AND THEREFORE OUR FINANCIALS AND THEIR INTERPRETATION INVOLVE
UNCERTAINTIES.
The PRC accounting laws require an annual
"statutory audit" to be performed in accordance with PRC accounting standards
and the books of foreign invested enterprises to be maintained in accordance
with Chinese accounting laws. These Chinese accounting practices which may not
be consistent with U.S. generally accepted accounting principles. Article 14 of
the PRC 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. Noncompliance with such requirements
may cause revocation of our business license. The translation of the financial
statements from the requirements of the PRC to US GAAP, requires interpretation
and exercise of judgment.
RISKS RELATED TO OUR COMMON STOCK AND THIS
OFFERING
OUR COMMON STOCK IS CURRENTLY QUOTED ONLY ON
THE OTC BULLETIN BOARD, WHICH MAY HAVE AN UNFAVORABLE IMPACT ON STOCK PRICE AND
LIQUIDITY.
Our common stock is quoted only on the OTCBB.
The OTCBB is a significantly more limited market than the New York Stock
Exchange or NASDAQ system. The quotation of our shares on the OTCBB may result
in a less liquid market available for existing and potential stockholders to
trade shares of the common stock, could depress the trading price of the common
stock and could have a long-term adverse impact on our ability to raise capital
in the future.
PROVISIONS IN OUR CERTIFICATE OF INCORPORATION
AND BYLAWS OR DELAWARE LAW MIGHT DISCOURAGE, DELAY OR PREVENT A CHANGE OF
CONTROL OF OUR COMPANY OR CHANGES IN ITS MANAGEMENT AND, THEREFORE DEPRESS THE
TRADING PRICE OF THE COMMON STOCK.
Delaware corporate law and our certificate of
incorporation and bylaws contain provisions that could discourage, delay or
prevent a change in control of our Company or changes in its management that our
stockholders may deem advantageous. These provisions:
deny holders of our common stock cumulative voting rights in the election of
  directors, meaning that stockholders owning a majority of our outstanding
  shares of common stock will be able to elect all of our directors;
any stockholder wishing to properly bring a matter before a meeting of
  stockholders must comply with specified procedural and advance notice
  requirements; and
any vacancy on the Board of Directors, however the vacancy occurs, may only be
  filled by the directors.
In addition, Section 203 of the Delaware
General Corporation Law generally limits our ability to engage in any business
combination with certain persons who own 15% or more of our outstanding voting
stock or any of our associates or affiliates who at any time in the past three
years have owned 15% or more of our outstanding voting stock. These provisions
may have the effect of entrenching our management team and may deprive you of
the opportunity to sell your shares to potential acquirors at a premium over
prevailing prices. This potential inability to obtain a control premium could
reduce the price of our common stock.
14
THE PRICE OF OUR COMMON STOCK MAY BE VOLATILE
AND MAY BE AFFECTED BY MARKET CONDITIONS BEYOND OUR CONTROL.
Our share price is likely to fluctuate in the
future because of the volatility of the stock market in general and a variety of
factors, many of which are beyond our control, including:
quarterly variations in actual or
  anticipated results of our operations;
changes in financial estimates by
  securities analysts;
actions or announcements by us or our
  competitors;
regulatory actions;
litigation;
additions or departures of key
  personnel; and
future sales of our common stock.
Market fluctuations could result in volatility
in the price of shares of our common stock, which could cause a decline in the
value of your investment. In addition, if our operating results fail to meet the
expectations of stock analysts or investors, we may experience an immediate and
significant decline in the trading price of our common stock.
WE DO NOT INTEND TO PAY DIVIDENDS FOR THE
FORESEEABLE FUTURE.
For the foreseeable future, we intend to
retain any earnings to finance the development and expansion of our business,
and we do not anticipate paying any cash dividends on our common stock.
Accordingly, investors must be prepared to rely on sales of their common stock
after price appreciation to earn an investment return, which may never occur.
Investors seeking cash dividends should not purchase our common stock. Any
determination to pay dividends in the future will be made at the discretion of
our board of directors and will depend on our results of operations, financial
condition, contractual restrictions, restrictions imposed by applicable law and
other factors our board deems relevant. See "Dividend Policy."
SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS
We have made statements under the captions
"Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and "Business" and in other
sections of this prospectus that are forward-looking statements. In some cases,
you can identify these statements by forward-looking words such as "may,"
"might," "will," "should," "expect," "plan," "anticipate," "believe,"
"estimate," "predict," "potential," or "continue," the negative of these terms,
and other comparable terminology, although not all forward-looking statements
contain these identifying words. These forward-looking statements, which are
subject to risks, uncertainties, and assumptions, may include projections of our
future financial performance based on our growth strategies and anticipated
trends in our business. These statements are only predictions based on our
current expectations and projections about future events. There are important
factors that could cause our actual results, level of activity, performance, or
achievements to differ materially from the results, level of activity,
performance, or achievements expressed or implied by the forward-looking
statements. Those factors include, but are not limited to, our ability to
attract new customers, changes in demand for our products and services, changes
in the security and surveillance industry, our ability to develop new products
and services, competitive pressures, risks associated with the integration of
acquisitions, changes in laws and regulations governing our business and the
other factors discussed under the caption "Risk Factors."
15
Although we believe the expectations reflected
in the forward-looking statements are reasonable, we cannot guarantee future
results, level of activity, performance, or achievements. Moreover, neither we
nor any other person assumes responsibility for the accuracy or completeness of
any of these forward-looking statements. You should not rely upon
forward-looking statements as predictions of future events. We are under no duty
to update any of these forward-looking statements after the date of this
prospectus to conform our prior statements to actual results or revised
expectations.
USE OF PROCEEDS
The proceeds from the sale of the shares of
our common stock being offered by the selling stockholders pursuant to this
prospectus will belong to the selling stockholders. We will not receive proceeds
from the sales of our common stock by the selling stockholders.
DETERMINATION OF OFFERING PRICE
The selling stockholders will determine at
what price they may sell the offered shares, and such sales may be made at
prevailing market prices or at privately negotiated prices.
DIVIDEND POLICY
We have never declared or paid cash dividends.
Any future decisions regarding dividends will be made by our Board of Directors.
We currently intend to retain and use any future earnings for the development
and expansion of our business and do not anticipate paying any cash dividends in
the foreseeable future.
MARKET FOR OUR COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
Our common stock has been quoted on the OTCBB
since June 2005 and currently trades under the symbol "CSCT.OB." The CUSIP
number is 16942J105.
The following table sets forth the quarterly
high and low bid prices of a share of our common stock as reported by the OTCBB
for the periods indicated. The quotations listed below reflect inter-dealer
prices, without retail mark-ups, mark-downs or commissions and may not
necessarily represent actual transactions.
16
Closing Bid Prices
(1)
High
Low
Year Ending December 31, 2007
1st Quarter
$16.50
$11.75
2nd Quarter (as of April 26, 2007)
17.90
16.20
Year Ended December 31, 2006
1st Quarter
4.40
3.50
2nd Quarter
8.10
3.60
3rd Quarter
6.70
4.00
4th Quarter
12.10
7.05
Year Ended December 31, 2005
1st Quarter
N/A
N/A
2nd Quarter
0.25
0.05
3rd Quarter
4.50
0.05
4th Quarter
3.00
1.85
__________________
(1) The above tables set forth the range of
high and low closing bid prices per share of our common stock as reported by
www.quotemedia.com for the periods indicated.
Approximate Number of Holders of Our Common
Stock
On April 26, 2007, there were approximately
1518
stockholders of record of our common stock. This number excludes
shares of our common stock owned by stockholders holding stock under nominee
security position listings.
Reports to Stockholders
We plan to furnish our stockholders with an
annual report for each fiscal year ending December 31 containing financial
statements audited by our independent certified public accountants.
Additionally, we may, in our sole discretion, issue unaudited quarterly or other
interim reports to our stockholders when we deem appropriate. We intend to
maintain compliance with the periodic reporting requirements of the Exchange
Act.
DILUTION
Our net tangible book value as of December 31,
2006 was $2.84 per share of common stock. Net tangible book value is determined
by dividing our tangible book value (total assets less intangible assets
including know-how, trademarks and patents and
less
total
liabilities) by the number of outstanding shares of our common stock. Since this
offering is being made solely by the selling stockholders and none of the
proceeds will be paid to us, our net tangible book value will be unaffected by
this offering.
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial
data should be read in conjunction with our consolidated financial statements
and the related notes, and with "Management's Discussion and Analysis of
Financial Condition and Results of Operations," included elsewhere in this
prospectus. The statement of operations data for the years ended December 31,
2004, 2005 and 2006, and the balance sheet data as of December 31, 2004, 2005
and 2006, are derived from, and are qualified by reference to, our audited
consolidated financial statements that have been audited by GHP Horwath, P.C.
and Child, Van Wagoner & Bradshaw, PLLC., independent registered public
accounting firms, and that are included in this prospectus. The statement of
operations data for the fiscal years ended December 31, 2003 and the balance
sheet data as of December 31, 2003 are derived from our audited consolidated
financial statements that are not included in this prospectus. The statement of
operations data for the fiscal years ended December 31, 2002 and the balance
sheet data as of December 31, 2002 are derived from our unaudited consolidated
financial statements that are not included in this prospectus.
17
The unaudited consolidated financial statements include all
adjustments, consisting only of normal recurring adjustments, that we consider
necessary for the fair presentation of our financial position and results of
operations for these periods. Historical results are not necessarily indicative
of the results to be expected in the future.
Year Ended
    December 31,
2006
2005
2004
2003
2002
(in thousands,
    except per share data)
Statement of
    operations data:
Revenue
$
106,989
$
32,688
$
16,056
$
11,795
$
10,331
Cost of Sales
75,976
23,473
8,796
7,581
7,030
Gross profit
31,013
9,215
7,260
4,214
3,301
Other income
1,586
568
466
7
30
Operating expenses:
5,779
1,737
1,129
952
1,097
Income from continuing operations before
    taxes
26,820
8,046
6,597
3,269
2,234
Income taxes
3,889
780
873
517
335
Net income
22,931
7,266
5,724
2,752
1,899
Earnings per share -
    basic
$
0.88
$
0.39
0.34
$
0.16
$
0.11
Earnings per share -
    diluted
0.85
0.39
0.34
0.16
0.11
Weighted average
    number of shares outstanding —
    basic
26,052
18,521
17,000
17,000
17,000
Weighted average
    number of shares outstanding
    —diluted
26,940
18,521
17,000
17,000
17,000
Cash dividend declared
    per common share
-
-
-
-
-
Cash flows data:
Net cash flows
    provided by operating activities
$
2,984
$
799
684
$
1,019
$
(13)
Net cash flows used in
    investing activities
(11,168)
(79)
(110)
(676)
(2,673)
Net cash flows used in
    financing activities
35,912
1,063
(1,056)
72
(1,629)
18
December 31,
2006
2005
2004
2003
2002
(in thousands)
Balance sheet data:
Cash and cash
    equivalents
$
30,980
$
2,277
$
33
$
515
$
100
Working capital
63,535
20,546
8,494
7,918
5,591
Total assets
114,527
29,116
22,009
16,977
13,582
Total current
    liabilities
22,604
4,505
5,209
5,900
4,126
Long term liability
2,010
-
-
-
-
Total liabilities
24,614
4,505
5,209
5,900
4,126
Total stockholders'
    equity
89,819
24,611
16,800
11,077
8,850
The following table sets forth certain
unaudited financial information for each of the eight quarters ended December
31, 2006. The consolidated financial statements for each of these quarters have
been prepared on the same basis as the audited consolidated financial statements
included in this report and, in the opinion of management, include all
adjustments necessary for the fair presentation of the results of operations for
these periods. This information should be read together with our audited
consolidated financial statements and the related notes included elsewhere in
this report.
All amounts in thousands of U.S. dollars,
except per share data
First
Second
Third
Fourth
2006
Quarter
Quarter
Quarter
Quarter
Total
Revenue
$
14,594
$
8,015
$
43,448
$
40,932
$
106,989
Gross profit
$
4,397
$
3,037
$
12,862
$
10,717
$
31,013
Income before income
    taxes and minority interest
$
4,121
$
2,858
$
11,025
$
8,807
$
26,811
Net income
$
3,500
$
2,536
$
10,262
$
6,633
$
22,931
Basic income per share
$
0.16
$
0.10
$
0.40
$
0.22
$
0.88
Diluted income per
    share
$
0.16
$
0.10
$
0.39
$
0.20
$
0.85
2005
Revenues
$
7,252
$
5,477
$
12,536
$
7,423
$
32,688
Gross profit
$
1,542
$
1,338
$
4,298
$
2,037
$
9,215
Income before income
    taxes and minority interest
$
1,716
$
967
$
4,148
$
1,216
$
8,046
Net income
$
2,618
$
1,210
$
3,365
$
73
$
7,266
Basic income per share
$
0.15
$
0.07
$
0.16
$
0.01
$
0.39
Diluted income per
    share
$
0.15
$
0.07
$
0.16
$
0.01
$
0.39
19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Overview
We manufacture, distribute, install and
service security and surveillance products and systems and develop security and
surveillance related software in China. Our customers mainly comprise (i)
governmental entities (including customs agencies, courts, public security
bureaus and prisons), (ii) non-profit organizations (including schools, museums,
sports arenas and libraries) and (iii) commercial entities (including airports,
hotels, real estate, banks, mines, railways, supermarkets and entertainment
venues). These account for approximately 40%, 10% and 50% of revenues,
respectively.
A majority of our revenue is derived from the
provision of a packaged solution which includes the products, installation and
after sale service maintenance to our customers. Because a majority of our
revenues is derived from the installation of security and surveillance systems
for our customers which are generally non-recurring, our revenues are not
concentrated within any one customer or group of customers. Maintenance services
in our packaged solution are included for the first year from the date of
completion. Our customers have an option to sign up for our maintenance program
after the first year.
Our subsidiary Golden has 37 branch offices in
provincial cities, Cheng Feng has 22 distribution points and Hongtianzhi has 53
distribution points throughout China as our customers are located across the
country without any particular concentration in any region.
Our Background and History
We were incorporated in the BVI on April 8,
2002 under the name "Apex Wealth Enterprises Limited" as a corporation under the
International Business Companies Ordinance of 1984. In February 2006, we changed
our name to China Security and Surveillance Technology Inc. In November 2006, we
changed our domicile from the BVI to Delaware by merging the BVI corporation
into a newly incorporated Delaware corporation. Prior to our reverse acquisition
of Safetech in September 2005, we were a development stage enterprise and had
not yet generated any revenues. Prior to the reverse acquisition, we provided
business advisory and management consulting services in greater China, initially
concentrating on the Hong Kong market. The focus of these services was on small
to medium size enterprises.
20
From and after the reverse acquisition, our business became
the business of our indirect, wholly-owned subsidiary, Golden and the newly
acquired subsidiaries Cheng Feng and Hongtianzhi. Golden is a corporation
incorporated in the PRC which is engaged in the business of manufacturing,
distributing, installing and maintaining security and surveillance systems.
Golden was organized in the PRC in January 1995. In 2006, we acquired Cheng Feng,
a corporation incorporated in the PRC which is engaged in the business of
manufacturing,
marketing and sales of security and surveillance related
hardware as well as the development and integration of related software. In
April 2007, we acquired Hongtianzhi, a corporation incorporated in the PRC which
is engaged in the business of manufacturing digital cameras. We are
headquartered in Shenzhen, China.
Reverse Acquisition with Safetech
On September 12, 2005, we acquired 50,000
shares of the issued and outstanding capital stock of Safetech, constituting all
of the issued and outstanding capital stock of Safetech. The 50,000 shares of
Safetech were acquired from the individual shareholders of Safetech in a share
exchange transaction in return for the issuance of 8,138,000 shares of our
common stock. As a result of this transaction, Safetech became our wholly-owned
subsidiary, and Golden became our indirect wholly-owned subsidiary. Completion
of the transaction resulted in a change in control of our Company.
For accounting purposes, this transaction was
treated as a reverse acquisition, with Safetech as the acquirer and our Company
as the acquired party.
Subsequent Acquisitions
On October 25, 2005, we entered into an
agreement with the equity owners of Yuan Da, which was subsequently amended in
April and May 2006. Pursuant to the amended agreement, we acquired all of the
assets of Yuan Da for RMB 1 million (approximately $0.125 million) and 200,000
shares of our common stock. Yuan Da is a limited liability company established
in Shenzhen, China and was principally engaged in the sale and development of
security and surveillance systems.
In July 2006, we entered into an agreement
with shareholders of Cheng Feng to acquire 100% ownership of Cheng Feng for a
consideration of RMB 120 million (approximately $15 million), consisting of RMB
60 million (approximately $7.5 million) in cash and 1,361,748 shares of our
common stock. The operational control of Cheng Feng passed to the Company in
July 2006, we received the relevant Chinese government approval for such
acquisition in December 2006 and all consideration has been paid off as of the
date of this prospectus. Cheng Feng is a company that is engaged in the business
of manufacturing, marketing and sales of security and surveillance related
hardware as well as the development and integration of related software.
In November 2006, we acquired the security and
surveillance business of the Four-Related Companies, of which our CEO and
director Guoshen Tu owned 80%, 60%, 42% and 90%, respectively. Mr. Tu did not
receive any consideration for the acquisition of his interest in the
Four-Related Companies. The minority shareholders of these four companies and
their designees received in aggregate 850,000 shares of our common stock.
Shenzhen Guangdian is engaged in the business of manufacturing and distributing
security and surveillance products. The other three companies are engaged in the
business of distributing security and surveillance products.
Recent Development
On February 5, 2007, we entered into a Notes
Purchase Agreement with Citadel Equity Fund Ltd., or "Citadel," pursuant to
which, on February 8, 2007, we offered and sold to Citadel a $60 million Senior
Notes due February 16, 2007. Such notes were paid off on February 16, 2007.
21
On February 16, 2007, we completed a Notes
Purchase Agreement with Citadel for a $60 million guaranteed senior unsecured
convertible notes financing. This financing replaced the bridge financing
discussed in the immediate above paragraph. The notes bear an annual interest
rate of 1% and are due in 2012. The notes carry an initial conversion price of
$18 per share. If the notes are not converted before its maturity, the notes
will be redeemed by the Company on the maturity date at a redemption price equal
to 100% of the principal amount of the notes then outstanding plus an additional
amount such that the total amount represents to the holders thereof a gross
yield (including the paid or any accrued and unpaid interest) of 15.0% per
annum, calculated on a quarterly compounded basis, plus any accrued and unpaid
interest. The net proceeds will be used for our working capital and acquisition
plan. Please see our current report on Form 8-K filed on February 16, 2007 for
more details.
Effective February 7, 2007, our Board of
Directors adopted our 2007 Equity Incentive Plan. The plan provides for grants
of stock options, stock appreciation rights, performance units, restricted
stock, restricted stock units and performance shares. A total of 8,000,000
shares of our common stock may be issued under the plan. The plan has a 5-year
term. On February 27, 2007, we granted an aggregate of 1,052,100 shares of
restricted stock pursuant to the plan to 383 employees and consultants of the
Company. These shares will vest with respect to each of the 383 employees and
consultants over a period of four years. Please see our current reports on Form
8-K filed on February 13, 2007 and March 8, 2007 for more details.
On April 2, 2007, we entered into an Equity
Transfer Agreement with Safetech and Zheng Huang, the sole owner of Chain Star,
pursuant to which Safetech purchased 100% ownership of Chain Star from Mr.
Huang. Chain Star is a holding company of Hongtianzhi. Pursuant to the terms of
the Equity Transfer Agreement, we will pay total consideration of RMB 250
million (approximately $32.32 million) in exchange for 100% ownership of Chain
Star, consisting of RMB 125 million (approximately USD$16.16 million) in cash
and RMB 125 million (approximately $16.16 million) in the Company's shares of
common stock. Hongtianzhi is engaged in the business of manufacturing digital
cameras. Please see our current report on Form 8-K filed on April 2, 2007 for
more details.
On April 24, 2007, we completed a Notes
Purchase Agreement with Citadel for a $50 million guaranteed senior unsecured
convertible notes financing. The notes bear an annual interest rate of 1% and
are due in 2012. The notes carry an initial conversion price of $23.6 per share.
If the notes are not converted before their maturity, the notes will be redeemed
by the Company on the maturity date at a redemption price equal to 100% of the
principal amount of the notes then outstanding plus an additional amount such
that the total amount represents to the holders thereof a gross yield (including
the paid or any accrued and unpaid interest) of 15.0% per annum, calculated on a
quarterly compounded basis, plus any accrued and unpaid interest. The net
proceeds will be used for our working capital and acquisition plan. Please see
our current report on Form 8-K filed on April 25, 2007 for more details.
Material Opportunities and Challenges
Regulations promulgated by governmental
agencies in China relating to security and surveillance industry often create
opportunities for us. Currently, there are a number of formal and planned
regulatory drivers which the Company believes offer significant growth
opportunities. These include the estimated $6 billion to $12 billion that the
Chinese government expects to spend for security infrastructure in preparation
for the 2008 Olympics, along with the planned investment by Shanghai for the
2010 Worlds Fair. In addition, several ordinances have been passed by the Chinese government which require security
surveillance systems to be installed in: (1) 660 cities throughout China for
street surveillance as part of the Safe City Project "Plan 3111"; (2) all
entertainment locations starting from March 1, 2006; (3) all Justice Departments
and Courts; and (4) all coal mines in China (currently estimated at 24,000) from
the beginning of 2008.
22
We are actively pursuing near-term acquisition
prospects and other strategic opportunities. In the past twelve months, we
successfully acquired Cheng Feng and Hongtianzhi and the security and
surveillance business of the Four-Related Companies. In addition, we have
established an exclusive cooperation relationship with Chuang Guan in 2007 under
which, among other things, Chuang Guan will subcontract or assign certain of its
businesses to our Company to the extent permitted by the applicable PRC laws and
regulations. We also expect to close the acquisitions of HiEasy, Mingking, Tsing,
and Wandai in 2007.
We have a government policy monitoring group
within the Company that regularly monitors changes in governmental regulations
affecting the security and surveillance industry in China. If we determine that
a new regulation or a change to an existing regulation presents an opportunity
for us, we will actively pursue such opportunity. As a result, we act promptly
on policy changes and are able to turn them into business opportunities.
We also face the long-term challenge of
maintaining our rapid growth. In addition to maintaining the growth of our
existing businesses, we will employ an acquisition strategy. In addition, to
promote the continued growth of the group, we plan to explore others areas
related to the security and surveillance industry (including, but not limited
to, the fire and alarm sectors, access control, and related security and
surveillance services) and recurring revenue business models within our existing
business sectors.
Results of Operations
The following table summarizes the results of
the Company's operations during the fiscal years ended December 31, 2006 and
2005 and provides information regarding the dollar and percentage increase or
(decrease) from the 2005 fiscal period to the 2006 fiscal period:
All amounts, other than percentages, in
millions of U.S. dollars
Years Ended December 31,
Increase
% Increase
Item
2006
2005
(Decrease)
(% Decrease)
Revenue
$106.99
$32.69
74.30
227.29 %
Cost of
    Goods Sold
75.98
23.47
52.51
223.73
    %
Gross
    Profit
31.01
9.22
21.79
236.33
    %
Operating
    Expenses
5.67
1.74
3.93
225.86
    %
Other
    Income
(expense)
1.48
0.57
0.91
159.65
    %
Provision
    for Taxes
3.89
0.78
3.11
398.72
    %
Net
    income
22.93
7.27
15.66
215.41
    %
23
The following table summarizes the results of
the Company's operations during the fiscal years ended December 31, 2005 and
2004 and provides information regarding the dollar and percentage increase or
(decrease) from the 2004 fiscal period to the 2005 fiscal period:
All amounts, other than percentages, in
millions of U.S. dollars
Years Ended December 31,
Increase
% Increase
Item
2005
2004
(Decrease)
(% Decrease)
Revenue
$32.69
$16.06
16.63
103.55%
Cost of Goods Sold
23.47
8.80
14.67
166.70%
Gross Profit
9.22
7.26
1.96
27.00%
Operating Expenses
1.74
1.14
0.60
52.63%
Other Income
(expense)
0.57
0.47
0.10
21.28%
Provision for Taxes
0.78
0.87
(0.09)
(10.34)%
Net income
7.27
5.72
1.55
27.10%
Revenue
Revenue for the year ended December 31, 2006
increased by 227.29% to $106.99 million as compared to $32.69 million for 2005.
Such increase was mainly due to the following factors: First, the population in
China in general has became wealthier, as a result, the demand for security and
surveillance products has also grown. Demand within various industries and
organizations has also been increasing dramatically. Second, the Chinese
government initiated several programs and regulatory drivers, such as the State
Ordinance 458 and the "3111" program, that require many public places, including
city-wide surveillance systems, traffic surveillance systems, critical
government locations, cyber cafés, bars and discotheques, to install security
systems. Third, our strategic efforts to increase our distribution channels
during 2004 and 2005 turned out to be a highly successful way to capture the
wave of growth in market demand in 2006. Fourth, we have been successful in
raising sufficient working capital to facilitate expansion in the China market.
Finally, our increased brand recognition in 2006 also contributed significantly
to the growth in sales revenue. Management expects growth in 2007 to remain
strong due to (i) continued strong growth in the security and surveillance
market both within the corporate and government sectors, (ii) better
capitalization of the Company to fuel the growth, (iii) significantly enhanced
branding and profiling in China, and (iv) acquisition strategy intended to boost
our market share and competitiveness.
Revenue for the year ended December 31, 2005
increased by 103.55% to $32.69 million against $16.06 million for 2004. Such
increase was mainly due to the growth of the Chinese security and surveillance
market and the public's increased awareness of the importance of having security
and surveillance systems.
Components of Revenue
The following table shows the different
components comprising our total revenue over each of the past three fiscal
years.
24
All amounts in millions of U.S. dollars
Revenue
2006
2005
2004
Project income from supply and
    installation of security and surveillance equipment
$94.16
$30.56
$15.53
Outright sale of security and
    surveillance equipment
12.83
2.13
0.53
Income from installation projects contributed
approximately 88% of total revenue in 2006 and was approximately 90% in each of
2004 and 2005. The main reason for the increase in outright sales revenue was
due to the acquisition of Cheng Feng, which generates most of its revenues from
the sales of security and surveillance equipment. Management believes that
revenues from the installation projects will continue to be the Company's major
revenue source in the next a few years. With the Company putting more resources
into research and development, the acquisition of Cheng Feng, Hongtianzhi and
the planned acquisitions as discussed above, management believes that the
percentage of revenue from the outright sale of products will increase in the
future.
Cost of Goods Sold
Cost of goods sold for the year ended December
31, 2006 increased by 223.73% to $75.98 million as compared to $23.47 million
for the prior year. Such increase was mainly attributable to the increase of
sales revenue.
Cost of goods sold for the year ended December
31, 2005 increased by 166.70% to $23.47 million as compared to $8.80 million in
2004. The increase was generally in line with the revenue increase.
The following table illustrates the items
constituting our cost of goods sold.
All amounts, other than percentages, in
millions of U.S. dollars
Cost Item
2006
2005
2004
Purchases
$74.43
$22.38
$7.79
(of raw
    material)
Percentage
97.96%
95.36%
88.52%
Salary
1.55
1.09
1.01
Percentage
2.04%
4.64%
11.48%
Total Percentage
100%
100%
100%
25
Gross Profit Margin
Our gross profit margin increased slightly
from 28.20% for the year ended December 31, 2005 to 28.99% for the year ended
December 31, 2006. Such increase was mainly attributable to our efforts in price
stabilization and cost controls.
Our gross profit margin decreased from 45.21%
for the year ended December 31, 2004 to 28.20% for the year ended December 31,
2005. This was mainly attributable to the increase in competition in the
security and surveillance business and our strategic decision in taking some
projects that had a lower profit margin, but were important for gaining market
share.
Selling and Marketing Expenses
Selling and marketing expenses were $1.51
million for the year ended December 31, 2006, a $1.22 million increase as
compared to $0.29 million for the year ended December 31, 2005. This was mainly
attributable to the increase of our sales revenue and our increased marketing
and advertising campaigns to improve our brand awareness and market penetration.
Selling and marketing expenses were $0.29
million for the year ended December 31, 2005 as compared to $0.39 million for
the year ended December 31, 2004. The $0.10 million decrease in selling and
marketing expenses was mainly attributable to large costs incurred in connection
with the initial setting up of branches in 2004. All of our branch offices were
set up by the end of 2004. As a result, selling and marketing expenses decreased
in 2005.
Depreciation and Amortization
Depreciation and amortization expenses were
$1.12 million for the year ended December 31, 2006, a $0.86 million increase as
compared to $0.26 million for the year ended December 31, 2005. Such increase
was mainly attributed to the acquisition of Cheng Feng and the security and
surveillance business of the Four-Related Companies. The amortization of
intangible assets increased as a result of these acquisitions. In addition, the
Company acquired more than $5.00 million of property, plant and equipment during
2006, including new business premises and equipment to improve the production
capacity of the Company.
Depreciation and amortization expenses were
$0.26 million for the year ended December 31, 2005 as compared to $0.22 million
for the year ended December 31, 2004. Such slight increase was mainly
attributable the acquisition of new equipments.
General and Administrative Expenses
General and administrative expenses were $3.04
million for the year ended December 31, 2006, a $1.85 million increase as
compared to $1.19 million for the year ended December 31, 2005. Such increase
was primarily due to the hiring of additional staff, increased property tax,
research and development costs, and professional expenses incurred in connection
with being a public reporting company. The number of our employees increased
from approximately 400 in 2005 to approximately 580 in 2006. We believe such
increase was generally in line with the increase in our revenue. We are now
working on improving our internal control system to ensure the compliance with
Sarbanes Oxley Act Section 404. As a result, we expect that our administrative
expenses will continue to increase until we fully implement our new accounting
system and implement Sarbanes Oxley Act Section 404. In addition, as we continue
our acquisition strategy, costs related to professional fees will continue to
increase.
26
General and administrative expenses were $1.19 million for the
year ended December 31, 2005 as compared to $0.51 million for the year ended
December 31, 2004.  Such increase was mainly attributable to the increase in
daily office expenses resulted from the expansion of our business and profession
fees related to being a public reporting company.
Interest Expense
In 2006, we borrowed funds under 2 short- term loans and a long-
term loan from local Chinese banks and incurred a total interest expense of
$0.11 million. We did not incur any finance costs in 2004 and 2005, as we had no
bank loans during these periods.
Income Tax Expenses
We incurred income tax expenses of $3.89 million for the year
ended December 31, 2006, an increase of 398.72% against $0.78 million for the
year ended December 31, 2005.  Such increase was mainly attributable to the
increase of sales revenue and profits.
We incurred income tax expenses of $0.78 million for the year
ended December 31, 2005, a decrease of 10.34% from the $0.87 million for the
year ended December 31, 2004. The provision for corporate income tax payable was
$1.37 million in fiscal year 2005 due to higher revenue and profit.  However, a
net deferred tax asset of $0.59 million was recognized.  As a result, the income
tax expense was reduced to $0.78 million.
In accordance with the relevant tax laws and regulations of the
People's Republic of China for the Shenzhen Special Economic Zone, our Chinese
subsidiary Golden is subject to the Chinese enterprise income tax ("EIT") rate
of 15% for the fiscal years 2006, 2005, and 2004.  Cheng Feng is subject to an
EIT rate of 7.5% due to its software and high technology company status.  We
anticipate that our effective tax rate will change from the current 15% in 2007
because the companies we acquired and intend to acquire are located in different
cities and may have different tax rates.
On March 16, 2007, the National People's Congress of the PRC
determined to adopt a new corporate income tax law in its fifth plenary session.
The new corporate income tax law unifies the application scope, tax rate, tax
deduction and preferential policy for both domestic and foreign-invested
enterprises.  The new corporate income tax law will be effective on January 1,
2008.  According to the new corporate income tax law, the applicable income tax
rate for our operating subsidiaries may be subject to change.  As the
implementation detail has not yet been announced, we cannot be sure of the
potential impact of such new corporate income tax law on our financial position
and operating results.
Net Income
We earned a net income of $22.93 million for the year ended
December 31, 2006, an increase of 215.41% against $7.27 million for the year
ended December 31, 2005. Such increase was mainly attributable to the increase
in revenue.
We earned a net income of $7.27 million for the year ended
December 31, 2005, an increase of 27.10% from $5.72 million for the year ended
December 31, 2004. Such increase was mainly attributable to the increase in
revenue.
27
Net Income Margin
Net income margin for the year ended December 31, 2006 was
21.43%, slightly decreased from the 22.23% for the year ended December 31, 2005.
The main reason for the decrease was the increase in general and administrative
expenses in 2006. Management believes that our future net income margin may
continue to decrease slightly due to the increase of costs associated with being
a public company.
Net income margin for the year ended December 31, 2005 was
22.23%, decreased from the 35.62% of the year ended December 31, 2004. The
decrease was mainly due to the increase in general and administrative expenses
related to the process of becoming a public company.
Amount Due From/(to) Directors
In the past, we made advances to our directors which were
non-interest bearing and repayable upon demand.  The balances due were $1
million on December 31, 2004 all of which were repaid during 2005.  Since our
reverse acquisition of Safetech in September 2005, we have adopted a policy of
not making any loans to our officers, directors or affiliates in order to comply
with the requirements of the Sarbanes-Oxley Act of 2002.
We also received advances from our director to facilitate our
operations during the years ended December 31, 2005 and 2004.  Such loans were
non-interest bearing and were payable upon demand.  In 2006, we successfully
raised funds from the capital market and the need for directors to inject
capital to facilitate the operations of the Company no longer existed. The
balances due at December 31, 2006 and 2005 were $0.08 million and $0.07 million,
respectively.  The balance at the end of 2006 is expected to be paid off by the
first quarter of 2007.
Inflation
We believe our operations have not been materially adversely
affected by inflation or changing prices.
Foreign Currency Translation Gains
Our operating subsidiaries are located in China.  The operating
subsidiaries purchase all products and render services in China, and receive
payment from customers in China using RMB as the functional currency.  We do not
engage in currency hedging.
We incurred a foreign currency translation gain of $1.66 million
for the year ended December 31, 2006 as compared with the foreign currency
translation gain of $0.55 million for the year ended December 31, 2005. On July
21, 2005, China reformed its foreign currency exchange policy, revalued RMB by
2.1 percent and allowed the RMB to appreciate as much as 0.3 percent per day
against the U.S. dollar. As a result, we implemented different exchange rates in
translating RMB into U.S. dollars in our financial statements for fiscal year
2006. In 2006, the exchange rates of 7.80, 7.97 and 8.07 were implemented in
calculating the assets and liabilities, revenue and expenses, and shareholders'
equity, respectively, which results in a $1.66 million foreign currency
translation gain in fiscal 2006.
28
Liquidity and Capital Resources
As of December 31, 2006, we had cash and cash equivalents of
$30.98
million.  The following table provides detailed information
about our net cash flow for all financial statement periods presented in this
prospectus.
Cash Flow
(in millions of U.S. dollars)
Years Ended December 31,
2006
2005
2004
Net cash provided by operating activities
$2.98
$0.80
$0.68
Net cash  used in investing activities
(11.17)
(0.08)
(0.11)
Net cash provided by (used in) financing
activities
35.91
1.06
(1.05)
Net cash flow
27.72
1.78
(0.48)
Operating Activities:
Net cash provided by operating activities was $2.98 million
for the year ended December 31, 2006 which is an increase of $2.18 million
from the $0.80 million
net cash provided by operating activities for
the same period in 2005.  The increase was mainly due to an increase in net
income.
Net cash provided by operating activities in 2005 totaled $0.80
million, which is an increase of $0.12 million from net cash provided by
operating activities of $0.68 million in 2004. The increase was mainly due to an
increase in current liabilities.
Investing Activities:
Our main uses of cash for investing activities during 2006 were
payments for the acquisition of property, plant and equipment and businesses.
Net cash used for investing activities in the year ended December
31, 2006 was $11.17 million, which is an increase of $11.09 million
from
net cash used for investing activities of $0.08 million
in the same
period of 2005 due to the increased acquisition of property, plant, equipment
and businesses in 2006.
Net cash used for investing activities in the year 2005 was $0.08
million, which is a decrease of $0.03 million from net cash used for investing
activities of $0.11 million in 2004. Such decrease was primarily the result of
the decrease in purchases of fixed assets.
Financing Activities:
Net cash provided by financing activities in the year ended
December 31, 2006 totaled $35.91 million
as compared to $1.06 million
provided by financing activities in 2005.  The increase of cash provided by
financing activities was mainly attributable to the issuance of common shares in
connection with several financing transactions closed in 2006.
29
Net cash provided by financing activities was $1.06 million in
2005, an increase of $2.11 million as compared to $1.05 million used for
financing activities in 2004. Such increase was mainly attributable to the cash
advance made to the Company by one of the directors in 2005.
In 2006, we completed several private placement transactions.  In
April 2006, we completed a private placement whereby we raised $8.00 million in
gross proceeds, which left us with approximately $7.35 million in net proceeds
after the deduction of approximately $0.65 million of offering expenses.  In
July 2006, we completed another private placement of our common shares and
raised $16.2 million in gross proceeds, which left us with approximately $14.9
million in net proceeds after the deduction of offering expenses in the amount
of approximately $1.3 million. A majority of the net proceeds of these two
private placement transactions was used for the acquisition of Cheng Feng. In
November 2006, we sold an aggregate of 1,538,462 shares of our common stock for
a consideration of $10 million at a price of $6.50 per share, raising a total of
$10 million in net proceeds. The proceeds were used primarily to finance our
working capital.
In addition, we have several loan agreements outstanding with
various banks.  Long term liabilities are long term loans from banks. As of
December 31, 2006, our total long term liabilities were approximately $2.23
million, consisting of a 10-year loan from China Construction Bank for the
purposes of purchasing new office premises in Shenzhen. This loan was granted on
September 27, 2006.  It matures on September 26, 2016 and has an annual interest
rate of 7.524%.
On August 16, 2006, we entered into a loan agreement with a
Chinese bank. We borrowed RMB 10 million (approximately $1.28 million) with an
annual interest rate of 5.94%. The loan is due on February 16, 2007, and the
interest is payable at the end of each month. The loan agreement requires us to
use the loan proceeds only for our operations. The bank has the right to
increase the interest rate and demand repayment of the entire loan principal and
unpaid interest if we use the loan for purpose other than our operations.  The
loan is guaranteed by Mr. Tu, our CEO.
On October 3, 2006, we signed a banking facility agreement with
China Construction Bank, or "CCB," under which CCB agreed to provide a new
receivable based facility to support our efforts in securing new contracts from
the Safe City Project initiative named "Plan 3111." This facility will provide 3
possible financing options: (1) the government takes a loan from CCB to finance
the project; (2) we sell the account receivables to CCB. 85% of total account
receivables value will be paid by CCB to the Company and the remaining 15% will
be collected by CCB from the government. CCB will, in turn, retain the finance
charges before paying the Company; and (3) we take a loan from CCB to finance
the project. As part of this agreement, we will make periodic deposits with CCB,
which, depending upon the specific project, will provide a maximum factoring
capacity of five to ten times the amount deposited. None of the facility has
been drawn down as of the date of this prospectus.
On November 1, 2005, Cheng Feng entered into a loan agreement
with a Chinese bank in its amount of RMB 6 million (approximately $0.77 million)
with an annual interest rate of 5.76%. The loan is due on November 7, 2007, and
the interest is payable at the end of each quarter. The loan agreement requires
us to use the loan proceeds only for our operations. The bank has the right to
increase the interest rate and demand repayment of the entire loan principal and
unpaid interest if we use the loan for purpose other than operations.
30
We have no material commitments for capital expenditures as of
December 31, 2006.  In order to facilitate our business expansion, we plan to
acquire an industrial park within Shenzhen. We expect to close the transaction
by the end of 2007.  We believe that our currently available working capital,
after receiving the aggregate proceeds of the capital raising activities and
bank loans referred to above, should be adequate to sustain our operations at
our current levels through at least the next twelve months.
Contractual Obligations
Below is a table which sets forth our contractual obligations as
of December 31, 2006:
(In thousands)
Payments due by period
Less than 1
More than
Total
year
1-3 years
3-5 years
5 years
Long-term debt obligations
$
2,232
$
222
$
670
$
510
$
829
Operating lease obligations
66
66
-
-
-
$
Total
2,298
$
288
$
670
$
510
$
829
Critical Accounting Policies
The preparation of financial statements, in conformity with
accounting principles generally accepted in the United States, requires our
management to make assumptions, estimates and judgments that affect the amounts
reported in the financial statements, including the notes thereto, and related
disclosures of commitments and contingencies, if any. We consider our critical
accounting policies to be those that require the more significant judgments and
estimates in the preparation of financial statements, including the following:
•
Basis of Consolidation
- The
consolidated financial statements of the Company and its subsidiaries are
prepared in accordance with accounting principles generally accepted in the
United States of America and include the accounts of the Company and its
subsidiaries. All material inter-company accounts and transactions have been
eliminated in the consolidation.
•
Intangible Assets –
Intangible
assets represent surveillance recording systems acquired from Yuan Da, the
acquisition of Cheng Feng and the businesses of the Four-Related Companies. The
value of a surveillance recording system was established by an independent
accounting firm. The valuations and allocation of intangible assets for the
acquisition of Cheng Feng and the businesses of the Four-Related Companies were
determined by a third party appraisal firm. The value of the recording system is
to be amortized as the following policies and rates: using the straight-line
method over its estimated useful life of five years. The values of the
intangible assets of the acquisition of Cheng Feng and the businesses of the
Four-Related Companies are to be amortized as the following policies and rates:
using straight-line and accelerated method over its estimated useful life of two
months to five years.
•
Goodwill
– Goodwill represents the
excess of the purchase price over the net of the fair value of the identifiable
tangible and intangible assets acquired and the fair value of liabilities
assumed in acquisitions. SFAS No: 142, "Goodwill and Other Intangible Assets"
("SFAS142") requires the testing of goodwill and indefinite-lived intangible
assets for impairment at least annually.  We test goodwill for impairment in the
fourth quarter each year.
31
•
Inventories
- Inventories are stated
at the lower of cost, determined on a weighted average basis, and net realizable
value. Net realizable value is the estimated selling price in the ordinary
course of business less the estimated cost of completion and the estimated costs
necessary to make the sale.
When inventories are sold, their carrying amount is charged to
expense in the year in which the revenue is recognized. Write-downs for declines
in net realizable value or for losses of inventories are recognized as an
expense in the year the impairment or loss occurs.
•
Revenue Recognition -
The Company
derives the bulk of its revenue from the supply and installation of security and
surveillance equipment and the two deliverables do not meet the separation
criteria under EITF issue 00-21. The installation is not considered to be
essential to the functionality of the equipment having regard to the following
criteria as set out in SAB 104:
(i)  The security and surveillance equipment is a standard
product with minor modifications according to customers' specifications;
(ii)  Installation does not significantly alter the security and
surveillance equipment's capabilities; and
(iii)  Other companies which possess the relevant licenses are
available to perform the installation services.
In early 2006, the Company began performing much larger security
installation contracts than it had been doing previously. As a marketing
approach, the Company prepared standard contracts with its new larger customers,
whereby 90% of the contract amount was due when installation was complete and
payment of the remaining 10% was deferred for one year. Because of the newness
of the larger contracts and the inability to immediately determine the amount of
warranty work that would be required, the Company deferred recognizing the 10%
of the contract amount as revenue until empirical information was available to
revise the estimate. During the second and third quarters of 2006, the Company
carefully monitored the warranty work requested by its customers, and determined
that very little warranty work had been required to be performed.
Consequently, effective October 1, 2006, the Company reduced its
estimate of future warranty requirements to approximately 1% of contract
installation revenue. The fourth quarter reflects this change in the estimated
warranty expenses.
Revenue from the outright sale of security and surveillance
equipment is recognized when delivery occurs and risk of ownership passes to the
customers.
•
Foreign Currency Translation
- The
functional currency of the Company is RMB and RMB is not freely convertible into
foreign currencies. The Company maintains its financial statements in the
functional currency. Monetary assets and liabilities denominated in currencies
other than the functional currency are translated into the functional currency
at rates of exchange prevailing at the balance sheet date. Transactions
denominated in currencies other than the functional currency are translated into
the functional currency at the exchange rates prevailing at the dates of the
transactions. Exchange gains or losses arising from foreign currency
transactions are included in the determination of net income for the respective
periods.
32
For financial reporting purposes, the financial statements of the
Company which are prepared using the functional currency have been translated
into United States dollars. Assets and liabilities are translated at exchange
rates at the balance sheet dates and revenue and expenses are translated at the
average exchange rates and shareholders' equity is translated at historical
exchange rates. Any translation adjustments resulting are not included in
determining net income but are included in foreign exchange adjustment to other
comprehensive income, a component of shareholders' equity. The exchange rates
adopted are as follows:
2006
2005
2004
Year end RMB: exchange rate
7.80
8.07
8.28
Average yearly RMB: exchange rate
7.97
8.19
8.28
No representation is made that the RMB amounts could have been,
or could be, converted into U.S. dollars at the rates used in translation.
•
Use of Estimates -
The preparation
of the financial statements in conformity with generally accepted accounting
principles in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Management makes these estimates using the best information
available at the time the estimates are made; however actual results could
differ materially from those estimates.
•
Income Taxes -
Income tax expense is
based on reported income before income taxes. Deferred income taxes reflect the
effect of temporary differences between assets and liabilities that are
recognized for financial reporting purposes and the amounts that are recognized
for income tax purposes. In accordance with Statement of Financial Accounting
Standard (SFAS) No. 109, "Accounting for Income Taxes," these deferred taxes are
measured by applying currently enacted tax laws.
•
Recent Accounting Pronouncements-
In
September 2005, the Emerging Issues Task Force (EITF) ratified EITF 04-13 (EITF
04-13), "Accounting for Purchases and Sales of Inventory with the Same
Counterparty." This issue addresses the circumstances under which two or more
inventory purchase and sales transactions with the same counterparty should be
viewed as a single exchange transaction and whether there are circumstances
under which such non-monetary exchanges should be accounted for at fair value. 
The adoption of EITF 04-13 is effective for new or modified agreements for
fiscal periods beginning after March 15, 2006. It is not expected that the
adoption of EITF 04-13 will have a material effect on our financial position or
results of operations.
33
In November 2005, FASB Staff Position (FSP) 115-1 The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments was
issued. The FSP addresses the determination as to when an investment is
considered impaired, whether that impairment is other-than-temporary, and the
measurement of an impairment loss. This FSP also includes accounting
considerations subsequent to the recognition of an other-than-temporary
impairment and requires certain disclosures about unrealized losses that have
not been recognized as other-than-temporary impairments. The guidance in this
FSP amends FASB Statement No. 115, Accounting for Certain Investments in Debt
and Equity Securities and APB Opinion No. 18, The Equity Method of Accounting
for Investments in Common Stock. The FSP applies to investments in debt and
equity securities and cost-method investments. The application guidance within
the FSP includes items to consider in determining whether an investment  is
impaired, in evaluating if an impairment is other-than-temporary and recognizing
impairment losses equal to the difference between the investment's cost and its
fair value when an impairment is determined. The FSP is required for all
reporting periods beginning after December 15, 2005. Earlier application is
permitted. We do not anticipate the amendment will have a material effect on our
financial position or results of operations.
In February 2006, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments." SFAS
No. 155 amends SFAS No. 133 and 140. The statement applies to certain hybrid
financial instruments, which are instruments that contain embedded derivatives.
The new standard establishes a requirement to evaluate beneficial interests in
securitized financial assets to determine if the interests represent
freestanding derivatives or are hybrid financial instruments containing embedded
derivatives requiring bifurcation. This new standard also permits an election
for fair value re-measurement of any hybrid financial instrument containing an
embedded derivative that otherwise would require bifurcation under SFAS No. 133.
The fair value election can be applied on an instrument-by-instrument basis to
existing instruments at the date of adoption and can be applied to new
instruments on a prospective basis. SFAS No. 155 shall be effective for all
financial instruments acquired, issued, or subject to a remeasurment (new basis)
event occurring after the beginning of first fiscal year that begins after
September 15, 2006. It is not expected that SFAS No. 155 will have a material
effect on the Company's financial position or results of operations.
In June 2006, the FASB issued FASB Interpretation Number 48 (FIN
48), "Accounting for Uncertainty in Income Taxes--an interpretation of FASB
Statement No. 109." This interpretation contains a two step approach to
recognizing and measuring uncertain tax positions accounted for in accordance
with SFAS No. 109. The first step is to evaluate the tax position for
recognition by determining if the weight of available evidence indicates it is
more likely than not that the position will be sustained on audit, including
resolution of related appeals or litigation processes, if any. The second step
is to measure the tax benefit as the largest amount which is more than 50%
likely of being realized upon ultimate settlement. The provisions are effective
for fiscal years beginning after December 15, 2006. It is not expected that FIN
48 will have a material effect on the Company's financial position or results of
operations.
In September 2006, the FASB issued SFAS No. 157 "Fair Value
Measurements" which defines fair value, establishes a framework for measuring
fair value in generally accepted accounting principles and expands disclosure
about fair value measurements. The statement clarifies that the exchange price
is the price in an orderly transaction between market participants to sell the
asset or transfer the liability in the market in which the reporting entity
would transact for the asset or liability, that is, the principal or most
advantageous market for the asset or liability. It also emphasizes that fair
value is a market-based measurement, not an entity-specific measurement, and
that market participant assumptions include assumptions about risk and effect of
a restriction on the sale or use of an asset. The provisions are effective for
fiscal years beginning after November 15, 2007. The Company is currently
assessing the impact of the statement.
34
In February 2007, the FASB issued Statement No. 159, "
The Fair
Value Option for Financial Assets and Financial Liabilities - Including an
amendment to FASB Statement No. 115".
This statement permits companies to
choose to measure many financial instruments and other items at fair value. The
objective is to improve financial reporting by providing entities with the
opportunity to mitigate volatility in reported earnings caused by measuring
related assets and liabilities differently without having to apply complex hedge
accounting provisions. This Statement is expected to expand the use of fair
value measurement of accounting for financial instruments. This statement
applies to all entities, including not for profit.
The fair value option established by this statement permits all
entities to measure eligible items at fair value at specified election dates.
This statement is effective as of the beginning of an entity's first fiscal year
that begins after November 15, 2007.
The Company is currently assessing the impact adoption of SFAS
No. 159 will have on its consolidated financial statements.
Seasonality
Our operating results and operating cash flows historically have
been subject to seasonal variations. Our revenues are usually higher in the
second half of the year than in the first half of the year because fewer
projects are undertaken during and around the Chinese spring festival.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Interest Rate Risk
The Company deposits surplus funds with Chinese banks earning
daily interest. The Company does not invest in any instruments for trading
purposes. The Company's operations are not sensitive to fluctuations in interest
rates.
Foreign Exchange Risk
While our reporting currency is the U.S. Dollar, all of our
consolidated revenues and consolidated costs and expenses are denominated in RMB.
All of our assets are denominated in RMB except for cash. As a result, we are
exposed to foreign exchange risk as our revenues and results of operations may
be affected by fluctuations in the exchange rate between U.S. Dollars and RMB.
If the RMB depreciates against the U.S. Dollar, the value of our RMB revenues,
earnings and assets as expressed in our U.S. Dollar financial statements will
decline. We have not entered into any hedging transactions in an effort to
reduce our exposure to foreign exchange risk.
35
Inflation
Inflationary factors such as increases in the cost of our product
and overhead costs may adversely affect our operating results. Although we do
not believe that inflation has had a material impact on our financial position
or results of operations to date, a high rate of inflation in the future may
have an adverse effect on our ability to maintain current levels of gross margin
and selling, general and administrative expenses as a percentage of net revenues
if the selling prices of our products do not increase with these increased
costs.
DESCRIPTION OF BUSINESS
Overview
We are a holding company that owns two direct subsidiaries,
Safetech and CSST China.  Safetech is a holding company that owns Golden, CSST
HK and Chain Star.  CSST HK in turn owns Cheng Feng, and Chain Star owns
Hongtianzhi.  Our primary business operations are conducted through our indirect
subsidiaries Golden, Cheng Feng and Hongtianzhi.  Golden's business is focused
on manufacturing, distributing, installing and maintaining security and
surveillance systems in China.  Cheng Feng's business is focused on the
manufacturing, marketing and sales of security and surveillance related hardware
as well as the development and integration of software.  Hongtianzhi's business
is focused on the manufacture of digital cameras.  Until our acquisition of
Safetech in September 2005, our business strategy and ownership changed over the
years as a result of several acquisitions of our stock that are discussed in the
section below entitled "Our Background and History."
The chart below demonstrates our corporate structure:
36
Our Background and History
We were incorporated in the BVI on April 8, 2002 under the name "Apex Wealth Enterprises Limited" as a corporation under the International
Business Companies Ordinance of 1984.  In February 2006, we changed our name to
China Security and Surveillance Technology Inc.  In November 2006, we changed
our domicile from the BVI to Delaware by merging the BVI corporation into a
newly incorporated Delaware corporation China Security & Surveillance
Technology, Inc.  The main reasons for the change of domicile were to comply
with the covenants of a stock purchase agreement that we entered into on April
4, 2006 in connection with a financing transaction, as well as to take advantage
of the benefits of being a Delaware corporation, including the enhanced
credibility, greater flexibility in corporate law and attractiveness for
directors and officers.
Prior to our reverse acquisition of Safetech, which was
consummated on September 12, 2005 and is discussed in more detail below, we were
a development stage enterprise and had not yet generated any revenues.  Prior to
the reverse acquisition, we provided business advisory and management consulting
services in greater China, initially concentrating on the Hong Kong market.  The
focus of these services was on small to medium size enterprises.
From and after the reverse acquisition, our business became the
business of our indirect, wholly-owned subsidiary, Golden and the newly acquired
subsidiaries Cheng Feng and Hongtianzhi.  Golden is a corporation incorporated
in the PRC which is engaged in the business of manufacturing, distributing,
installing and maintaining security and surveillance systems.  Golden was
organized in the PRC in January 1995.  In 2006, we acquired Cheng Feng, a
corporation incorporated in the PRC which is engaged in the business of
manufacturing, marketing and sales of security and surveillance related hardware
as well as the development and integration of software.  In April 2007, we
acquired Hongtianzhi, a corporation incorporated in the PRC and a manufacturer
of digital cameras.  We are headquartered in Shenzhen, China.
37
Reverse Acquisition with Safetech
On September 12, 2005, we acquired 50,000 shares of the issued
and outstanding capital stock of Safetech, constituting all of the issued and
outstanding capital stock of Safetech.  The 50,000 shares of Safetech were
acquired from the individual shareholders of Safetech in a share exchange
transaction in return for the issuance of 8,138,000 shares of our common stock.
 As a result of this transaction, Safetech became our wholly-owned subsidiary,
and Golden became our indirect wholly-owned subsidiary.  Completion of the
transaction resulted in a change in control of our Company.   After the
transaction, we were no longer a shell company.  The contracts relating to this
transaction have been filed as exhibits to our current report on Form 6-K that
was filed with the SEC on July 22, 2005 and is incorporated herein by reference.
For accounting purposes, this transaction was treated as a
reverse acquisition, with Safetech as the acquirer and our Company as the
acquired party.  When we refer in this report to business and financial
information for periods prior to the consummation of the reverse acquisition, we
are referring to the business and financial information of Safetech and its
subsidiaries on a consolidated basis unless otherwise specified.
Subsequent Acquisitions
On October 25, 2005, we entered into an agreement with the equity
owners of Yuan Da, which was subsequently amended in April and May 2006.
 Pursuant to the amended agreement, we acquired all of the assets of Yuan Da for
RMB 1 million (approximately $0.125 million) and 200,000 shares of our common
stock.  Yuan Da is a limited liability company established in Shenzhen, China
and was principally engaged in the sale and development of security and
surveillance systems.
In July 2006, we entered into an agreement with shareholders of
Cheng Feng to acquire 100% ownership of Cheng Feng for a consideration of RMB
120 million (approximately $15 million), consisting of RMB 60 million
(approximately $7.5 million) in cash and 1,361,748 shares of our common stock.
 The operational control of Cheng Feng passed to the Company in July 2006, we
received the relevant Chinese government approval for such acquisition in
December 2006 and all consideration has been paid off as of the date of this
prospectus.  Cheng Feng is a company that is engaged in the business of
manufacturing, marketing and sales of security and surveillance related hardware
as well as the development and integration of related software.
In November 2006, we acquired the security and surveillance
business of the Four-Related Companies.  Mr. Tu did not receive any
consideration for the acquisition of his interest in the Four-Related Companies.
 The minority shareholders of these four companies and their designees received
in aggregate 850,000 shares of our common stock.  Shenzhen Guangdian is engaged
in the business of manufacturing and distributing security and surveillance
products. The other three companies are engaged in the business of distributing
security and surveillance products.
On April 2, 2007, we entered into an Equity Transfer Agreement
with Safetech and Zheng Huang, the sole owner of Chain Star, pursuant to which
Safetech purchased 100% ownership of Chain Star from Mr. Huang.  Chain Star is a
holding company of Hongtianzhi.  Pursuant to the terms of the Equity Transfer
Agreement, we will pay total consideration of RMB 250 million (approximately
$32.32 million) in exchange for 100% ownership of Chain Star, consisting of RMB
125 million (approximately USD$16.16 million) in cash and RMB 125 million
(approximately $16.16 million) in the Company's shares of common stock.
38
Industry Background and Our Principal Market
The Chinese surveillance and security industry was established at
the beginning of the 1980s and the surveillance and security products were used
primarily by government agencies, financial institutions, transportation and
mega-size companies. Since then, the industry has experienced significant growth
and is growing at an annual rate of approximately 40%, according to the China
Public Security Guide published by the Chinese Security and Protection
Association, which also predicts that the industry will grow by over 20%
annually in the near future and the Chinese market for security and surveillance
products and services will reach approximately $160 billion by 2010.
In 2006, the Chinese government promulgated Ordinance 458 which
requires all entertainment locations to install surveillance systems. In
addition, the booming Chinese real estate market and the increasing focus on the
security of the Chinese mining industry provide great opportunities for the
surveillance and security industry.  The Chinese security and surveillance
industry is also expected to benefit from the expected spending of an estimated
$6 billion to $12 billion for security infrastructure by the Chinese government
in preparation for the 2008 Beijing Olympics, along with the planned investment
by the city of Shanghai for the 2010 World's Fair.  Further, several other
ordinances have been passed by the Chinese government which require security
surveillance systems to be installed in: (1) 660 cities throughout China for
street surveillance as part of the Safe City Project "Plan 3111"; (2) all
Justice Departments and Courts; and (3) all coal mines in China (currently
estimated at 24,000) for gas detection and worker safety from the beginning of
2008.  The Safe City Project is a nationwide initiative to enhance general
security in China's cities, which include the implementation of new surveillance
cameras in highly trafficked areas throughout a total of approximately 660
cities. Majority of the "Plan 3111" projects are expected to begin in 2007 and
continue to ramp into 2008 in preparation for the Beijing Summer Olympics. We
have been chosen as one of the government approved "Plan 3111" vendors.  We
estimate that there are approximately 6000 courts and Departments of Justice
throughout the China that will be required to install security surveillance
equipment and the revenue of each installation is between $200,000 to $250,000.
At present, video surveillance is estimated to have a market of
about RMB 60 billion (approximately $7.5 billion) and accounts for about 40%
market share of the surveillance and security market. It is expected that the
video surveillance market share will increase to approximately 60% of the whole
industry, according to the China Public Security Guide published by the China
Security and Protection Association.
There are many companies in China that engage in the business of
manufacturing, selling, installing and maintaining of security and surveillance
products.  Due to the high growth of the industry and the fact that it is still
in the early stage of development, the Chinese security and surveillance market
is highly fragmented and there is no apparent market leader.
Principal Products and Services
Through our subsidiaries Golden, Cheng Feng and Hongtianzhi, we
engage in the business of manufacturing, distributing, installing and
maintaining surveillance and security products, as well as the development and
integration of related software in China.  We generate revenues primarily
through the installation of security and surveillance systems and sales of
security and surveillance products.
39
Installation Services
In 2006, we derived approximately 88% of our revenues from the
supply and installation of security and surveillance systems for various
projects involving railways, schools, banks, highways, commercial buildings, and
public security and government entities, among others. Generally, our
installation projects involve the following steps:
•
Bidding
We receive most of our installation projects through a bidding
process. In a typical bidding process, our potential client will send us and our
competitors a request for proposal that outlines the work to be performed and
the specifications of the equipment to be installed. We then prepare and submit
our bid and the potential client chooses the winning contractor from among all
the bids submitted. On some projects, we also act as a subcontractor where a
third party has submitted a winning bid.
•
System Design
Upon winning a project, we provide the final project design for
approval. System design is generally conducted through the joint efforts of our
research and development personnel, sales department, project service department
and quality control department.
•
Manufacture and Purchase of Security and Surveillance Products
The major products used in our installation projects include
computer accessories, decoders, video capture cards, recorders and computer
cases. We use equipment manufactured by us in most of the installation projects,
but also use products from other manufacturers. Generally, approximately 60% of
the equipment used in any given project is equipment we have manufactured.
•
Installation
We have a project service department that performs installations.
We use subcontractors for non-technical, labor intensive work. We usually assign
a project group with 5-10 members who are in charge of the technical components
of the project and manage the progress of each project.
•
System Software Design and Integration
System software design and integration services are usually
conducted by our technical department. We design software for our customers'
security and surveillance systems in accordance with our customers'
specifications. We generally test the software on our own computer system before
integrating it into our customers' computer system. We then assign our
technicians to the site of each project to assist in the integration of the
security and surveillance system with our customers' computer system.
40
•
Testing
Upon integration, our technical department will test and examine
the system to ensure the proper functioning of the installed security and
surveillance system.
Our Products
In 2006, we derived approximately 12% of our revenues from sales
of our products, excluding products sold in connection with the installation
projects described above.  The recent acquisition of Cheng Feng and Hongtianzhi
and the security and surveillance businesses of Shenzhen Guangdian improved and
will continue to enhance our manufacturing capacity of our products.  Cheng
Feng's Security Resources Integrated Management ("SRIM") software platform will
enhance the functionality and management control of our key products.   SRIM
software platform is essential to and facilitates coordination among systems
such as DVRs, building automation systems, access control systems, intruder
alarm systems and air-conditioning systems.  Hongtianzhi's high quality and
reputable range of digital cameras will enhance the suite of comprehensive
products and services that we can offer to our customers.  Hongtianzhi's digital
cameras will allow better quality capture of digital video during the day and
night.   Hongtianzhi's digital cameras will allow our customers to enjoy better
quality video results.
We manufacture the key components of the security and
surveillance products and rely on third party general electronic components.  We
assemble the final products utilizing our technology.  The final products are
sold under our brand names. Our main products include standalone digital video
recorders, embedded digital video recorders, mobile digital video recorders,
digital cameras and auxiliary apparatus.
•
Standalone digital video recorders (Standalone DVR)
The Standalone DVR stores digital images captured via the
security cameras. It also controls the recording functions of the cameras and
manages the storage of the data. This product has a pre-installed surveillance
software system developed by us, which enables it to perform access control and
recording functions. It also has an upgradable hard drive which allows clients
to customize the digital storage capacity, network server functions which allow
the clients to access the digital images via Internet, MPEG-4 video compression
which allows a more efficient compression of the images and higher image
quality, and 4-16 signal input channels which allows 4 to 16 cameras to be
connected to the Standalone DVR. This product has the competitive features of
small size, low cost and high reliability. The primary markets for this product
are small to medium size businesses, non-profit organizations and home use. It
is generally used for small sized security and surveillance needs.
•
Embedded digital video recorders (Embedded DVR)
Similar to the Standalone DVR, the Embedded DVR provides
recording and compression functions. It has a pre-installed surveillance
software system developed by us, upgradable hard drive, network server function,
MPEG-4 Video compression and 4-36 signal input channels, and uses the Windows
operating system. The main difference is that the Embedded DVR has expanded
capacity to accommodate recording functions for a greater number of cameras
compared to the Standalone DVR. In addition, it is operated via Microsoft's
Windows Operating System. The primary markets for these products are large
projects and community security projects.
41
•
Mobile digital video recorders (Mobile DVR)
Similar to the Standalone DVR, the Mobile DVR is smaller in size
and has a maximum of 4 ports. The Mobile DVR, which can be installed in a
vehicle, enables recording of digital video images within the cabin. This
product is easily installed, supports GPS/GPRS and has 1 to 4 signal input
channels and MPEG-4 video compression. The primary markets for this product are
the transportation industry and governmental agencies.
•
Digital Cameras
Digital cameras can be easily installed in most locations on a
customer's site. The range of cameras that we produce and sell includes high
speed dome cameras, color Charge Coupled Device ("CCD") cameras, indoor color
CCD dome cameras, color/black and white CCD flying saucer cameras, Infra Red CCD
multi-function cameras, mini digital signal processing cameras, indoor stand
alone sphere CCD cameras and network high speed sphere CCD cameras.
•
Auxiliary apparatus
Auxiliary apparatus includes DVR compression cards, video capture
cards, digital light processing monitors, decoders, alarm notification switches,
digital video fiber optics systems and matrix switch/control systems.
Raw Materials and Our Principal Suppliers
We use manufactured electronic components in our products. The
main components of our products include camcorders, monitors, frames, decoders,
lenses and outdoor hoods.
Shenzhen is one of the biggest and most concentrated bases for
electronic products in China. As a result, there are numerous suppliers and
vendors of the components that are needed for our products. Because of the high
level of competition among the suppliers, the prices of our principal components
are relatively stable and we are able to purchase these raw materials at
reasonable prices. We have entered into written contracts with several major
suppliers and vendors. The main suppliers to Golden are Shenzhen Ronghen Co.
Ltd., Shenzhen Dongxun Shidai Technology Co. Ltd., Shenzhen Kerui Electronic Co.
Ltd., Shenzhen Huichuang Computer Technology Co. Ltd. and Shenzhen Jingfeiya
Electronic Co. Ltd.  The main suppliers to Cheng Feng are Hangzhou Hengsheng
Shiji Co., Ltd., Wuhan Hengyi Electronics Technology Development Co., Ltd.,
Shanghai Dongyang Electronics System Co., Ltd., Jiaenbi Electronics (Shenzhen)
Co., Ltd. and Fushan Yongxinlong Electronics Parts Co., Ltd.   The main
suppliers to Hongtianzhi are  Jian Jie Electronics Co., Ltd, Shenzhen Tian Yun
Electronic Co., Ltd, Changzhou Wei Duo Video Technology Co., Ltd, Shenzhen Hua
Qaing Electronic World Co., Ltd, Xing Xing Group Zhejiang Crystal
Photoelectricity Technology Co., Ltd. We believe we are not dependent on any of
these suppliers and will be able to replace them, if necessary, without material
difficulties.
Our Distribution, Marketing, Customers and Customer
Programs
Our customers are mainly government entities, non-profit
organizations and commercial entities throughout China, such as airports,
customs agencies, hotels, real estate developments, banks, mines, railways,
supermarkets, and entertainment enterprises.  Because a large percentage of our
revenues derive from the installation of security and surveillance systems which
are generally non-recurring, we do not rely on one single or a small group of
customers.  Not one single customer accounted for more than 10% of our total
revenue in 2006.  We generally do not generate significant revenues from any
existing client after the installation project is completed unless that client
has additional installation sites for which our services might be required.
42
We have developed a multi-tiered marketing plan, allowing us to
effectively market products and services to our clients. We sell most of our
products and services through our own distribution network. Our distribution
network covers all of China.
We have approximately 630 engineers and sales personnel. We
divide our market into 9 geographic regions.  Each region is managed by a
regional manager who is responsible for technical support and management within
the region as well as client relations.  Golden has 37 branch offices in
provincial capital cities, Cheng Feng has 22 distribution points and Hongtianzhi
has 53 distribution points throughout China.
In addition to our own branch offices and employees, we cooperate
with independent sales agents and have established close relationships with
these sales agents in order to take advantage of their regional resources and
provide products and services that are tailored to the needs of our customers in
those regions.
Through this distribution and marketing network, we believe we
can continue to promote our brand recognition, strengthen the management of our
distribution network and improve our sales revenue and market share.
We have also been marketing and promoting our products through
the following means:
participating in various industrial shows to display our products;
advertising in industrial magazines and periodicals to introduce and
promote our products;
publishing our own magazine which is distributed to our suppliers and sales
agents so that they can better understand our Company and strengthen their
confidence in us; and
utilizing the internet to promote our products, such as the public safety
network, Chinese Security Association network and HuiChong Network.
Competition
There are many companies in China engaged in the business of
manufacturing surveillance and security products and designing and installing
security and surveillance systems. The surveillance and security industry in
China is still nascent and no company has monopolized it.  In addition, it is
difficult in the surveillance and security industry for very large companies to
reap benefits from their size, because most of the projects require the product
to be specially tailored to meet customers' individual requirements.
In the security and surveillance industry, competition is based
on price, product quality, ability to distribute products, and ability to
provide after sales service.
Our major competitor in China is Hangzhou Haikang Weishi Digital
Technology Co. Ltd. which focuses on the development of video and audio decoding
technology and the development and manufacture of digital video compression
cards.  Its most successful product is a digital video compression card which we
believe has a significant market share of such products in China.
Shenzhen Xiang Fei Technology Co., Ltd and Samsung Electronics
(China) Co., Ltd. which focus on the development of IR cameras and color box
cameras are major competitors to our subsidiary Hongtianzhi. The most successful
products are IR cameras and color box cameras which we believe has a significant
market share of such products in China.
43
Additional competition comes from international companies, such
as General Electric and Honeywell.  Some of our international competitors are
larger than we are and possess greater name recognition, assets, personnel,
sales and financial resources. However, these competitors generally have higher
prices for their products, and most of them do not have distribution networks in
China that are as developed as ours.
We believe that the range of our product and service offerings,
our brand recognition by the market, our capital resource, our relatively low
labor cost and our extensive distribution channels enable us to compete
favorably in the market for the security and surveillance products and services
that we offer in China.
Intellectual Property
We have registered with the Trademark office of the State
Administration for Industry and Commerce of China the following trademarks:
Trademark No./
Name
Application No.
Type
Expiration Date
Status
Word
1
Golden Group
4108508
(Chinese)
July 2014
Approved
2
DVR
4108509
Word
July 2014
Approved
Word and
3
4108511
Logo
July 2014
Approved
4
4108510
Logo
July 2014
Approved
5
威勒
3814725
Word and logo
December 2013
Approved
6
JDR
N/A
Word
N/A
Pending
Word and
7
小保安
4142706
Logo
September 2016
Approved
8
chenova
4207147
Word
December 2016
Approved
9
4207148
Logo
December 2016
Approved
10
IT
DVR
4289504
Word
N/A
Pending
Word and
11
AUNIQUE
5205739
Logo
N/A
Pending
Word and
12
ANK
5205738
Logo
N/A
Pending
44
13
chenovation
4514946
Word
N/A
Pending
14
4142705
Logo
N/A
Pending
Word
    and
15
IT
VS
4514947
Logo
N/A
Pending
Word
    and
16
奥尼克
5205737
Logo
N/A
Pending
17
GAINY
3997890
Word
N/A
Approved
18
HANEYE
3997888
Word
N/A
Approved
19
HTS SECURITY
3859686
Word
N/A
Approved
20
HTSTECH
3997889
Word
N/A
Approved
21
HTS
3473088
Word
N/A
Approved
22
TOPSCOUT
3997871
Word
N/A
Approved
23
Viewse
848022
Word
N/A
Approved
24
宏天视
4142511
Word
N/A
Approved
25
Viewse
1414474
Word
N/A
Approved
We have registered the domain name
www.csstf.com
. In
addition, our subsidiaries, Golden, Cheng Feng and Hongtianzhi have registered
the domain names
www.goldengroup.cn
,
www.cf1688.com
,
www.viewse.com
and
www.hts.cn
, respectively.
We hold no patents under our own name.  We protect our trade
secrets through confidentiality provisions of the employment contracts we enter
into with our employees. In addition, our engineers are generally divided into
different project groups, each of which generally handles only a portion of the
project. As a result, no one engineer generally has access to the entire design
process and documentation for a particular product.
Employees
We have approximately 1,300 full-time employees. Approximately
168 of them are administrative and accounting staff, approximately 95 of them
are research and development staff and approximately 630 of them are engineers
and sales staff.
Approximately 645 employees are located in Shenzhen, and the rest
of the employees are located in various branches throughout China.
Approximately 80% of our employees have bachelor degrees, and
most of those majored in computer sciences.
45
Our employees are members in trade unions which protect
employees' rights, aim to assist in the fulfillment of our economic objectives,
encourage employee participation in management decisions and assist in mediating
disputes between us and union members.  We believe that we maintain
a satisfactory working relationship with our employees and we have not
experienced any significant labor disputes or any difficulty in recruiting staff
for our operations.
As required by applicable Chinese law, we have entered into
employment contracts with all of our officers, managers and employees.  Our
employees in China participate in a state pension plan organized by Chinese
municipal and provincial governments.  We are required to contribute monthly to
the plan at the rate of 23% of the average monthly salary.  As of the date of
this report, we have complied with the regulation and have paid the state
pension plan as required by law.
In addition, we are required by Chinese law to cover employees in
China with various types of social insurance. We have purchased social insurance
for some of our employees. For those whom we have not purchased social
insurance, the premium has been added into their salary so that they can
purchase social insurance in their individual capacity at the location of their
recorded residences.
With the expansion of our business operations and several
anticipated acquisitions, we expect that the number of our employees will
increase in the next 12 months.
Research and Development
Currently, we have approximately 95 employees devoted to our
research and development efforts, which are aimed at finding new varieties of
products, improving existing products, improving overall product quality and
reducing production costs.  We have established a strategic partnership with
Beijing University through which we will provide funds to Beijing University for
the research and development of video surveillance and security products.  Our
research and development efforts are led by Dr. Yong Zhao, who worked for the
research and development department of a large international surveillance and
security company and has extensive research experience.  Under the partnership
agreement with Beijing University, we have agreed to provide Beijing University
up to RMB 2 million (approximately $250,000) for their research and development
efforts.  We paid RMB 500,000 (approximately $62,500) under the agreement in
2006.
Government Regulation
All security and surveillance products produced in China must
satisfy testing by the China Public Security Bureau, and manufacturers of such
products must receive the Security Technology Protection Product Manufacturing
Permit from the provincial agency.  Our subsidiary Golden satisfactorily
completed this testing in 2002 and also received a permit from Guangdong
province in May 2003. In addition, Golden a license from the Guangdong province
for the design, installation and repair of security protection systems.  Hongtianzhi
received a permit from China National Accreditation of Laboratories in Sept,
2005.  Cheng Feng received a permit from China National Accreditation of
Laboratories in Oct 2002.  As Hongtianzhi and Cheng Feng do not participate in
the design, installation and repair of security protection systems, no other
licenses are required.
46
Because our operating subsidiaries Golden, Cheng Feng and
Hongtianzhi are located in PRC, we are regulated by the national and local laws
of PRC.
There is no private ownership of land in China and all land
ownership is held by the government of the PRC, its agencies and collectives.
Land use rights can be obtained from the government for a period up to 70 years,
and are typically renewable. Land use rights can be transferred upon approval by
the land administrative authorities of the PRC (State Land Administration
Bureau) upon payment of the required land transfer fee. We have received the
necessary land use right certificate for the properties described under "Item 2
– Description of Property."  See "Item 2 – Description of Property" for more
details.
In addition, we are also subject to PRC's foreign currency
regulations. The PRC government has control over RMB reserves through, among
other things, direct regulation of the conversion or RMB into other foreign
currencies. Although foreign currencies which are required for "current account"
transactions can be bought freely at authorized Chinese banks, the proper
procedural requirements prescribed by Chinese law must be met. At the same time,
Chinese companies are also required to sell their foreign exchange earnings to
authorized Chinese banks and the purchase of foreign currencies for capital
account transactions still requires prior approval of the Chinese government.
We believe that we are in material compliance with all
registrations and requirements for the issuance and maintenance of all licenses
required by the governing bodies, and that all license fees and filings are
current
.
Legal Proceedings
From time to time, we have disputes that arise in the ordinary
course of its business.  Currently, there are no material legal proceedings to
which we are a party, or to which any of our property is subject, that we expect
to have a material adverse effect on our financial condition.
MANAGEMENT
Directors and Executive Officers
The following sets forth the name and position of each of our
current executive officers and directors.
NAME
AGE
POSITION
Guoshen Tu
42
CEO and Chairman of
    the Board
Terence Yap
36
CFO, Vice Chairman of
    the Board
Shufang Yang
37
COO and Director
Jianguo Jiang
41
Vice President and
    Director
Lingfeng Xiong
55
Vice President and
    Director
Yong Zhao
44
Chief Technology
    Officer
Guoshen Tu
.  Mr. Tu has been our
Chief Executive Officer and a director since September 2005.  He has extensive
experience in surveillance and technology.  From 2001 to 2005, Mr. Tu was the
Chief Executive Officer and Secretary of Golden Group Corporation (Shenzhen)
Limited.  From 1999 to 2001, he served as Chief Executive Officer of Zhongshan
Golden Grains Industry Limited and as President of Jiangxi Golden Group Limited.
 Mr. Tu currently serves as the Chairman of Jiangxi Golden Motuo Che Zhizhao Co.
Ltd., but is not involved in the daily management of these companies.
47
Terence Yap
.  Mr. Yap has served as
our Chief Financial Officer since January 2007, and our director since March
2006.  Mr. Yap was the President, CEO and a director of Digital Network Alliance
International, Inc., a Delaware company which is engaged in the business of
providing satellite Internet connections to customers in the Asia Pacific
region, including Hong Kong, Singapore, Indonesia, Bangladesh, Pakistan and
Mongolia, and the business of providing managed broadband services to commercial
office buildings and apartment buildings in Singapore and Hong Kong.  Digital
Network Alliance International, Inc., is a reporting company with the U.S.
Securities and Exchange Commission.  Mr. Yap has been affiliated with Digital
Network Alliance International, Inc. and its affiliated entities since January
2002.  From April 2000 to December 2002, he was the Director of Business
Development for Skyhub Asia Co., Ltd., where he was responsible for the
development of partnerships and alliances with various partners in Hong Kong and
within the region.  Skyhub Asia's main line of business was the provision of
satellite services within the Asia Pacific region.  From June, 1999 to April,
2000, he served as the Business Development Manager of MCI WorldCom Asia
Pacific, Ltd., where he was part of the business development team in the Asia
Pacific region and was involved in mergers and acquisitions of licensed
telecommunications companies, building of physical points of presence and
negotiations with incumbent telecommunications operators.  MCI WorldCom's main
line of business was the provision of global data communication services.  From
June 1998 to June 1999, he served as the distribution manager for Tele Media
International H.K. Ltd ("TMI"), where he was responsible for distribution and
sale of the company's products and services within various countries in the Asia
Pacific region.  TMI's main line of business was the provision of data
communication services within Europe and the Asia Pacific region.  From January
1996 to June 1998, he was employed by Hutchison Corporate Access (HK) Ltd. and
Hutchison Corporate Access Pte. Ltd (HCA), first as a senior market development
executive and later as a business development manager.  HCA's main line of
business is the provision of satellite data network services within the Asia
Pacific region.  From June 1995 to January 1996, he was employed by Pacific
Century Corporate Access Pte. Ltd. ("PCCA") as a project engineer.  PCCA's main
line of business was the provision of satellite data networking services in the
Asia Pacific region.
Shufang Yang.
Mr. Yang has served
as our Chief Operating Officer and director since August 17, 2006.  Mr. Yang
worked for Zhejiang Yin Cheng Electronic Ltd. as the general manager from July
1998 to April 2001 and has served as the President and CEO of Chengfeng since
April 2001.  Mr. Yang has extensive experience in the security and surveillance
industry and received an EMBA from China Europe International Business School.
Jianguo Jiang.
Mr. Jiang has
served as our Vice President since August 2006
and our director since
January 2006.  From 1999 to 2003, Mr. Jiang worked for Shenzhen Shi Xun Tong
Electronics Ltd as a general manager.  He was responsible for supervising daily
operations and marketing activities.  From 2003 to 2005, Mr. Jiang served as the
president in Yuan Da Wei Shi Technology Limited.  He is responsible for
strategic decision-making and market expansion of our Company.
Lingfeng Xiong
.  Mr. Xiong has been
our Vice President and our director since September 2005.  He has served as the
Vice President of Golden since 2001.  He supervises many aspects of our Company
and our products.
48
Yong Zhao
. Dr. Zhao has been our
Chief Technology Officer since February 2006.  From 2000 to 2004, Dr. Zhao
worked as a technology consultant for Honeywell Corporation, Ottawa, Canada,
which is one of the 30 biggest companies listed on the Dow Jones index.  During
his service, Dr. Zhao was responsible for the development of core technology and
for supervising research and development activities.  From 2004 to present, Dr.
Zhao has been a director of Mobile Video Networking Lab and an associate
professor of Shenzhen Graduate School of Peking University.  His major
responsibilities include supervising the research and development activities in
the lab and providing valuable advice and instructions in key projects.  Dr.
Zhao spends about 60% of his business time on our affairs and approximately 40%
of his business time on the affairs of Mobile Video Networking Lab and Shenzhen
Graduate School of Peking University.
Board Composition and Meetings of the Board of Directors
Our board of the directors is currently composed of five members:
Goshen Tu , Terence Yap, Shufang Yang, Jianguo Jiang and Lingfeng Xiong.  All
board action requires the approval of a majority of the directors in attendance
at a meeting at which a quorum is present.  During 2006, our Board of Directors
met in person more than times and acted by unanimous written consent more than
10 times.
Committees and Audit Committee Financial Expert
We do not have a standing audit, nominating or compensation
committee or any committee performing a similar function, although we may form
such committees in the near future.  Since we do not currently have an audit
committee, we have no audit committee financial expert.  Our entire Board of
Directors handles the functions that would otherwise be handled by an audit
committee.
In the future, we may search for a qualified independent expert
who would be willing to serve on our Board of Directors and who would be willing
to act as an audit committee financial expert.  Before retaining any such
expert, our Board of Directors would make a determination as to whether such
person is both qualified and independent.
Independent Directors
No member of our Board of Directors qualifies as an "independent
director" under the listing standards of The Nasdaq Stock Market, New York Stock
Exchange or American Stock Exchange.
During our 2007 fiscal year, we plan to identify directors who
qualify as "independent directors," establish board committees on which such
independent directors may serve and adopt written board committee charters, as
appropriate, to assist in corporate governance. We expect that before the end of
our 2007 fiscal year, our Board will be comprised of a majority of independent
directors.  We may add independent directors to our Board by expanding the size
of our board and having the incoming independent directors fill the vacancies
created by such increase or we may request that existing directors resign to
create a vacancy that can be filled by independent directors that are selected
by our board during the 2007 fiscal year.
49
Policy Regarding Board Attendance
Our directors are expected to attend board meetings as frequently
as necessary to properly discharge their responsibilities and to spend the time
needed to prepare for each such meeting.  Our directors are expected to attend
annual meetings of stockholders, but we do not have a formal policy requiring
them to do so.
Director Compensation
No cash compensation or other compensation was paid to any member
of our Board of Directors for services as a director during the fiscal year
ended December 31, 2006 and we have no standard arrangement pursuant to which
any director is compensated for his or her services in such capacity.  When
independent directors are appointed to our Board, we will likely compensate them
for their services as independent directors through a combination of equity
incentives and cash payments.  Our Board has not yet established the
compensation levels for independent directors as we do not yet have any
independent directors.
The Board may award special remuneration to any director
undertaking any special services on our behalf other than those services
ordinarily required of a director.  In 2006, no such special remuneration was
paid to any of our directors.
All authorized out-of-pocket expenses incurred by a director on
our behalf will be subject to reimbursement upon our receipt of required
supporting documentation of such expenses.
Family Relationships
There are no family relationships among our directors or
officers.
Code of Ethics
On June 9, 2006, our Board of Directors adopted a Code of Ethics
that applies to all of our directors, officers and employees, including our
principal executive officer, principal financial officer and principal
accounting officer.  The Code of Ethics addresses, among other things, honesty
and ethical conduct, conflicts of interest, compliance with laws, regulations
and policies, including disclosure requirements under the federal securities
laws, confidentiality, trading on inside information and reporting violations of
the code.  We are in the process of making our Code of Conduct available on our
website, which is located at
www.csstf.com
.  Once it is available on our
website, any amendments or waivers to the Code of Conduct will be posted on our
website within four business days of such amendment or waiver.  Until such time,
however, any amendments or waivers to our Code of Conduct will be filed with the
SEC in a Current Report on Form 8-K.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Background and Compensation Philosophy
We are a holding company that owns two direct subsidiaries,
Safetech and CSST China.  Safetech is a holding company that owns Golden, CSST
HK and Chain Star.  CSST HK in turn owns Cheng Feng, and Chain Star owns
Hongtianzhi.  Our primary business operations are conducted through our indirect
subsidiaries Golden, Cheng Feng and Hongtianzhi.  Golden's business is focused
on manufacturing, distributing, installing and maintaining security and
surveillance systems in China.  Cheng Feng's business is focused on the
manufacturing, marketing and sales of security and surveillance related hardware
as well as the development and integration of software.  Hongtianzhi's business
is focused on the manufacture and selling of digital cameras.  We employ
approximately 1,300 people and had revenues of approximately $107 million in
2006.  Our compensation structure reflects our business.  The overall
compensation offered is designed to attract and retain executives with the
appropriate amount of experience.
50
We currently have two named executive officers, Goshen Tu, our
Chief Executive Officer and President, and Terence Yap, our Chief Financial
Officer and Vice President.  Our named executives do not have employment
agreements, severance or change-of-control agreements, and the Company is not
obligated to pay severance or other enhanced benefits to executive officers upon
termination of their employment.  Our named executives serve at the will of the
Board.
Our Board of Directors, on which each of Messrs. Tu and Yap
serve, has historically determined the compensation to be paid to the Company's
executive officers based on the Company's financial and operating performance
and prospects, the level of compensation paid to similarly situated executives
in comparably sized companies and the contributions made by each of the
executive officers to the success of the Company.
Our Board of Directors has not adopted or established a formal
policy or procedure for determining the amount of compensation paid to our
executive officers.  No pre-established, objective performance goals or metrics
have been used by the Board of Directors in determining the compensation of our
executive officers.  Mr. Tu and Mr. Yap are involved in the Board's
deliberations regarding executive compensation and provide recommendations with
respect to their and the other executive officers' compensation.
No cash compensation or other compensation was paid to any member
of our Board of Directors for services as a director during the fiscal year
ended December 31, 2006 and we have no standard arrangement pursuant to which
any director is compensated for his or her services in such capacity.
As our executive leadership and Board of Directors grows, our
Board of Directors may decide to form a compensation committee charged with the
oversight of executive compensation plans, policies and programs, but we have no
current plans to establish a compensation committee.
Elements of Compensation
We provide our executive officers with a base salary,
discretionary bonuses and equity incentives to compensate them for services
rendered during the year.  Our policy of compensating our executives in this way
has served the Company well.
Base Salary
.  The base salary paid
to each of our named executive officers during 2006 was approximately $15,000.
 All such amounts were paid in cash.  The amount of the base salary for each
individual is set at the sole discretion of the Board of Directors.
51
Discretionary Bonus
.  Historically,
we have not paid bonus compensation to our executive officers and no bonus
compensation was paid to our executive officers in 2006.  If the Board of
Directors determines to do so in the future, it will be on an ad hoc basis to
recognize superior performance by executive officers as determined in the sole
discretion of the Board of Directors.
Equity Incentives
.  As of December
31, 2006, we did not have a stock option or other equity incentive plan.
We granted stock options on an ad hoc basis in 2006 to encourage
performance and retention by providing additional incentives for executives to
further our growth, development and financial success by personally benefiting
through the ownership of our common shares.
The exercise price of each stock option awarded to our executives
is the closing price of stock on the date of grant.  We have no program, plan or
practice of granting equity awards that coincide with the release by the Company
of material non-public information.
On February 7, 2007, our Board of Directors adopted the Company's
2007 Equity Incentive Plan, or the "2007 Plan," to provide for grants of stock
options, stock appreciation rights, performance units, restricted stock,
restricted stock units and performance shares.  The exercise price per share for
the shares to be issued pursuant to an exercise of a stock option will be no
less than the fair market value per share on the grant date, except in the case
of an incentive stock option granted to a 10% owner, where the exercise price
will be no less than 110% of the fair market value per share on the grant date.
No more than an aggregate of 2,500,000 shares (or for awards denominated in
cash, the fair market value of 2,500,000 shares on the grant date) may be
subject to awards under the 2007 Plan to any individual participant in any one
fiscal year of the Company.  No awards may be granted under the 2007 Plan after
February 7, 2012, except that any award granted before then may extend beyond
that date.
Retirement Benefits.
Our executive
officers are not presently entitled to company-sponsored retirement benefits.
 Our executive officers do, however, participate in a state pension plan
organized by Chinese municipal and provincial governments.  The Company is
required to contribute monthly to the plan at the rate of 23% of the average
monthly salary.  As of the date of this prospectus, we have complied with the
regulation and have paid the executives' state pension plan as required by the
law.
Perquisites.
We have not provided
our executive officers with any material perquisites and other personal benefits
and, therefore, we do not view perquisites as a significant or necessary element
of our executive's compensation.
Deferred Compensation.
We do not
provide our executives the opportunity to defer receipt of annual compensation.
The following table sets forth information concerning all cash
and non-cash compensation awarded to, earned by or paid to our Chief Executive
Officer and our Chief Financial Officer for services performed for us and our
subsidiaries during 2006 in all capacities.  No executive officer, other than
Mr. Yap, received compensation of $100,000 or more in 2006.
52
SUMMARY COMPENSATION TABLE
Name and Principal
Year
Salary
Stock
Total
Position
($)
Awards
($)
($)
Guoshen Tu, CEO,
2006
15,000
15,000
President, and Director
Terence Yap, CFO, Vice
2006
15,000
350,000
(3)
365,000
President and Director
(1)
Jinxu Wu, Former CFO
(2)
2006
15,000
15,000
(1)
Mr. Yap has served as our CFO since January 2007, Vice President since May 2006
and director since March 2006.
(2)
Mr. Wu served as our CFO from January 2005 to January 2007.
(3)
Mr. Yap received 100,000 shares of our common stock valued at $350,000 in March
2006 in connection with a consulting agreement between the Company and Mr. Yap,
dated as of February 8, 2006, as amended on June 27, 2006.
Compensation Committee Interlocks and Insider Participation
During the last fiscal year we did not have a standing
compensation committee.  Our Board of Directors was responsible for the
functions that would otherwise be handled by the compensation committee.
TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN
CONTROL PERSONS
Transactions with Related Persons
The following includes a summary of transactions since the
beginning of the last fiscal year, or any currently proposed transaction, in
which we were or are to be a participant and the amount involved exceeded or
exceeds $120,000, and in which any related person had or will have a direct or
indirect material interest (other than compensation described under "Executive
Compensation").  We believe the terms obtained or consideration that we paid or
received, as applicable, in connection with the transactions described below
were comparable to terms available or the amounts that would be paid or
received, as applicable, in arm's-length transactions.
•
On September 5, 2006, we entered into agreements to purchase the
security and surveillance business of the Four-Related Companies, of which our
CEO and director Guoshen Tu is the Chairman and a shareholder.  Mr. Tu received
no consideration for the acquisition of his interest in these companies, however
his wife Zhiqun Li who owns 20% of Jian An Ke and her designees received 100,000
shares of our Common Stock as part of the transaction.  Our director and Vice
President Lingfeng Xiong, as the 10% shareholder of Jiangxi Golden, and his
designees received 50,000 shares of our Common Stock.  Our director and Vice
President Jianguo Jiang, as the 40% shareholder of Shenzhen Guangdian, and his
designees received 550,000 shares of our Common Stock.
•
In July 6, 2006, we entered into a stock purchase agreement with
the shareholders of Cheng Feng pursuant to which we paid the shareholders of
Cheng Feng consideration of RMB 120 million (approximately $15 million) in
exchange for 100% ownership of Chengfeng.  Our newly appointed Chief Operating
Officer and director Shufang Yang owns 46.26% of Cheng Feng.
53
•
We have leased property to Jiangxi Golden, Jian An Ke and Jiangxi
Golden Motuo Che Zhizhao Co. Ltd. of which Guoshen Tu, our CEO and director, is
the Chairman and a shareholder.  The aggregated annual rental was $0.50 million,
$0.44 million and $0.48 million in 2006, 2005 and 2004, respectively.  The
leases expire on December 31, 2007.
•
We entered into a consulting service agreement with Terence Yap,
our CFO and director, on February 8, 2006, which was later amended on June 27,
2006.  Pursuant to the agreement, as amended, we issued 100,000 shares of our
common stock to Terence Yap on March 1, 2006 in exchange for his consulting
services valued at $350,000, which are to be provided to our Company from
February 8, 2006 to February 7, 2009.
Policies and Procedures for Review, Approval or
Ratification of Transactions with Related Persons
We are in the process of adopting a written related-person
transactions policy that sets forth our policies and procedures regarding the
identification, review, consideration and approval or ratification of
"related-persons transactions."  For purposes of our policy only, a "related-person transaction" will be a transaction, arrangement or relationship
(or any series of similar transactions, arrangements or relationships) in which
we and any "related person" are participants involving an amount that exceeds
$50,000.  Transactions involving compensation for services provided to us as an
employee, director, consultant or similar capacity by a related person will not
be covered by this policy.  A related person will be any executive officer,
director or a holder of more than five percent of our common stock, including
any of their immediate family members and any entity owned or controlled by such
persons.
Under the policy, where a transaction has been identified as a
related-person transaction, management must present information regarding the
proposed related-person transaction to our Board for consideration and approval
or ratification.  The presentation must include a description of, among other
things, the material facts, the direct and indirect interests of the related
persons, the benefits of the transaction to us and whether any alternative
transactions are available.  To identify related-person transactions in advance,
we will rely on information supplied by our executive officers, directors and
certain significant stockholders. In considering related-person transactions,
our Board of Directors will take into account the relevant available facts and
circumstances including, but not limited to:
•
the risks, costs and benefits to us;
•
the impact on a director's independence in the event the related
person is a director, immediate family member of a director or an entity with
which a director is affiliated;
•
the terms of the transaction;
•
the availability of other sources for comparable services or
products; and
•
the terms available to or from, as the case may be, unrelated
third parties or to or from our employees generally.
54
In the event a director has an interest in the proposed
transaction, the director must excuse himself or herself form the deliberations
and approval.  Our policy will require that, in determining whether to approve,
ratify or reject a related-person transaction, our Board, and if we establish an
audit committee, our audit committee, must consider, in light of known
circumstances, whether the transaction is in, or is not inconsistent with, the
best interests of our Company and our stockholders, as our board or audit
committee, as applicable, determines in the good faith exercise of its
discretion. We did not previously have a formal policy concerning transactions
with related persons..
Promoters and Certain Control Persons
We did not have any promoters at any time during the past five
fiscal years.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding beneficial
ownership of our common stock as of as of April 25, 2007 (i) by each person who
is known by us to beneficially own more than 5% of our common stock; (ii) by
each of our officers and directors; and (iii) by all of our officers and
directors as a group.
Unless otherwise specified, the address of each of the persons
set forth below is in care of China Security & Surveillance Technology, Inc.,
13/F, Shenzhen Special Zone Press Tower, Shennan Road, Futian District, Zhenzhen,
China, 518034.
Name and Address
Number
    of Shares
Beneficially Owned
Percent of Class
(3)
Guoshen Tu
(1)
13,627,500
(2)
39.0%
Lingfeng Xiong
(1)
120,000
*
Yong Zhao
(1)
20,000
*
Terence Yap
(1)
160,000
*
Shufang Yang
(1)
928,531
*
Jianguo Jiang
(1)
260,000
*
All Current Officers
    and Directors as a Group
15,116,031
43.3%
(7 in number)
Whitehorse Technology Ltd.
11,000,000
31.5%
Li Zhi Qun
(4)
13,627,500
39.0%
Jayhawk China Fund (Cayman) Ltd.
(5)
1,871,270
5.3%
c/o Jayhawk Capital Management, LLC
8201 Mission Road, Suite 110
Prairie Village, Kansas 66208
The Pinnacle Fund, L.P.
(6)
1,674,167
4.8%
4965 Preston Park Blvd., Suite 240
Plano, Texas 75093
The Pinnacle China Fund, L.P.
(7)
1,674,167
4.8%
4965 Preston Park Blvd., Suite 240
Plano, Texas 75093
Citadel Equity Fund Ltd.
(8)
5,451,977
13.5%
18/F Chater House, 8 Connaught Road,
Central, Hong Kong
55
* Less than 1%.
(1)
The person is an officer, a director or both.
(2)
Includes 11,000,000 shares owned by Whitehorse Technology
Limited.  Mr. Tu is the sole owner of Whitehorse and may be deemed the
beneficial owner of these shares.  The total also includes the 2,627,500 shares
owned by Zhiqun Li, who is Mr. Tu's wife.  Mr. Tu may be deemed the beneficial
owner of these shares as well.
(3)
A total of 34,941,406 shares of our common stock are considered
to be outstanding pursuant to SEC Rule 13d-3(d)(1).  For each beneficial owner
above, any options exercisable within 60 days have been included in the
denominator.
(4)
Includes 11,000,000 shares owned by Whitehorse Technology Limited
of which Zhiqun Li's husband Guoshen Tu is the sole owner.
(5)
Includes 228,000 shares underlying the warrant to purchase shares
of our common stock.
(6)
Pinnacle Advisers, L.P. ("
Advisers
") is the general
partner of The Pinnacle Fund, L.P. ("
Pinnacle
"),  Pinnacle Fund
Management, LLC ("
Management
") is the general partner of Advisers.  Mr.
Barry Kitt is the sole member of Management.  Mr. Kitt may be deemed to be the
beneficial owner of the shares of Common Stock beneficially owned by Pinnacle.
Mr. Kitt expressly disclaims beneficial ownership of all shares of Common Stock
beneficially owned by Pinnacle.
(7)
Pinnacle China Advisers, L.P. ("
China Advisers
") is the
general partner of The Pinnacle China Fund, L.P. ("
Pinnacle China
").
 Pinnacle China Management, LLC ("
China Management
") is the general
partner of China Advisers.  Kitt China Management, LLC ("
China Manager
")
is the manager of China Management.  Mr. Barry Kitt is the manager of China
Management.  Mr. Kitt may be deemed to be the beneficial owner of the shares of
Common Stock beneficially owned by Pinnacle China. Mr. Kitt expressly disclaims
beneficial ownership of all shares of Common Stock beneficially owned by
Pinnacle China.
(8)
Includes 5,451,977 shares of our common stock that may be
acquired upon conversion of $110,000,000 in principal amount of the Company's
convertible notes.
SELLING STOCKHOLDERS
This prospectus relates to the resale by the selling stockholders
named below from time to time of up to a total of 1,538,462 shares of our common
stock, which were issued to the selling stockholders in connection with a
private placement transaction in November 2006.
The following table sets forth certain information regarding the
selling stockholders and the shares offered by them in this prospectus.
 Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission, or SEC.  In computing the number of shares
beneficially owned by a selling stockholder and the percentage of ownership of
that selling stockholder, shares of common stock underlying shares of options or
warrants held by that selling stockholder that are convertible or exercisable,
as the case may be, within 60 days of April 25, 2007 are included.  Those
shares, however, are not deemed outstanding for the purpose of computing the
percentage ownership of any other selling stockholder.  Each selling
stockholder's percentage of ownership in the following table is based upon
34,941,406
shares of common stock outstanding as of April 25, 2007.
56
Except as specifically set forth in the
footnotes to the table, none of the selling stockholders has held a position as
an officer or director of our, nor has any selling stockholder had any material
relationship of any kind with us or any of our affiliates. All information with
respect to share ownership has been furnished by the selling stockholders. The
shares being offered are being registered to permit public secondary trading of
the shares and each selling stockholder may offer all or part of the shares
owned for resale from time to time. In addition, none of the selling
stockholders has any family relationships with our officers, directors or
controlling stockholders. Furthermore, except as specifically set forth in the
footnote to the table below, no selling stockholder is a registered
broker-dealer or an affiliate of a registered broker-dealer.
For additional information, refer to "SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" above.
The term "selling stockholders" also includes
any transferees, pledges, donees, or other successors in interest to the selling
stockholders named in the table below. To our knowledge, subject to applicable
community property laws, each person named in the table has sole voting and
investment power with respect to the shares of common stock set forth opposite
such person's name. We will file a supplement to this prospectus (or ,if
required by applicable law, a post-effective amendment) to name successors to
any named selling stockholders who are able to use this prospectus to resell the
securities registered hereby.
Percentage
Shares of
of
Common
Common
Beneficial
Stock
Beneficial
Stock
Before
Included
Ownership
Owned
the
in
After the
After
Name and Address
Offering
Prospectus
Offering
(1)
Offering
(1)
JLF Partners I, LP
(2)
630,820
630,820
0
*
JLF Partners II, LP
(2)
49,205
49,205
0
*
JLF Offshore Fund, Ltd.
(2)
858,437
858,437
0
*
*Less than 1%
(1)
Assuming that all securities offered are sold.
(2)
Jeffrey Feinberg has investment discretion over these securities by
virtue of Jeffrey Feinberg's position in the investment manager of these Funds.
Mr. Feinberg disclaims beneficial ownership over these securities except to the
extent of his pecuniary interest therein.
We will not receive any of the proceeds from
the sale of any shares by the selling stockholders. We have agreed to bear
expenses incurred by the selling stockholders that relate to the registration of
the shares being offered and sold by the selling stockholders, including the SEC
registration fee and legal, accounting, printing and other expenses of this
offering.
CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Prior to our reverse acquisition of Safetech,
our independent registered public accounting firm was PKF Certified Public
Accountants ("PKF") while Golden's independent registered public accounting firm
was Child, Van Wagoner & Bradshaw, PLLC, formerly known as Child, Sullivan &
Company, ("Child Van Wagoner"). On February 2, 2006, in connection with the
change of control resulted from the reverse acquisition, our Board of Directors
elected to appoint GHP Horwath, P.C. as our independent registered public
accounting firm and approved the dismissal of PKF and Child, Van Wagoner.
57
No accountant's report issued by Child, Van
Wagoner & Bradshaw, PLLC. or PKF on the financial statements for either of the
past two (2) years contained an adverse opinion or a disclaimer of opinion or
was qualified or modified as to uncertainty, audit scope or accounting
principles.
During our fiscal years ended December 31,
2005 and 2004 and from January 1, 2006 to the date of this prospectus, there
were no disagreements with Child, Van Wagoner or PKF on any matter of accounting
principles or practices, financial disclosure, or auditing scope or procedure.
There were no reportable events, as described in Item 304(a)(1)(iv)(B) of
Regulation S-K, during our fiscal years ended December 31, 2005 and 2004 and
from January 1, 2006 to the date of this prospectus.
We furnished a copy of this disclosure to
Child, Van Wagoner and PKF and requested Child, Van Wagoner and PKF to furnish
us with a letter addressed to the SEC stating whether they agree with the
statements made by us herein in response to Item 304(a) of Regulation S-K and,
if not, stating the respect in which it does not agree. A copy of the letter was
filed by us as Exhibits 16.1 and 16.2 to our current report on Form 6-K, filed
March 27, 2006.
DESCRIPTION OF SECURITIES
General
Our authorized capital stock consists of 100,000,000 shares
of common stock, par value $0.0001 per share. As of April 25, 2007, 34,941,406
shares of our common stock were issued and outstanding.
Common Stock
Each outstanding share of our common stock
entitles the holder thereof to one vote per share on all matters. Our bylaws
provide that the persons receiving the greatest number of votes shall be the
directors. Stockholders do not have preemptive rights to purchase shares in any
future issuance of our common stock. Upon our liquidation, dissolution or
winding up, and after payment of creditors, our assets will be divided pro rata
on a share-for-share basis among the holders of the shares of common stock.
The holders of shares of our common stock are
entitled to dividends out of funds legally available when and as declared by our
Board of Directors. Our Board of Directors has never declared a dividend and
does not anticipate declaring a dividend in the foreseeable future. Should we
decide in the future to pay dividends, as a holding company, our ability to do
so and meet other obligations depends upon the receipt of dividends or other
payments from its operating subsidiaries and other holdings and investments. In
addition, our operating subsidiaries, from time to time, may be subject to
restrictions on their ability to make distributions to us, including as a result
of restrictive covenants in loan agreements, restrictions on the conversion of
local currency into U.S. dollars or other hard currency and other regulatory
restrictions.
58
All of the issued and outstanding shares of our common stock are duly
authorized, validly issued, fully paid and non-assessable. To the extent that
additional shares of our common stock are issued, the relative interests of its
existing stockholders will be diluted.
Transfer Agent and Registrar
Our independent stock transfer agent is American Stock
Transfer Company. Their mailing address is 6201 15
th
Avenue,
Brooklyn, NY, 11219. Their phone number is 718.921.8210.
SHARES ELIGIBLE FOR FUTURE SALE
As of April 25, 2007, 34,941,406 shares of our common stock
were issued and outstanding.
Shares Covered by this Prospectus
All of the 1,538,462 shares being registered in this offering may be sold
without restriction under the Securities Act.
Rule 144
The resale of shares that are held by our
affiliates and the resale of shares that are held by non-affiliates for a period
of less than two years are governed by the following requirements of Rule 144 of
the Securities Act.
In general, under Rule 144 as currently in effect, a person
(or persons whose shares are aggregated) who has beneficially owned shares of
our common stock for at least one year, including any person who may be deemed
to be an "affiliate" (as the term "affiliate" is defined under the Securities
Act of 1933), would be entitled to sell, within any three-month period, a number
of shares that does not exceed the greater of:
1% of the number of shares of common
  stock then outstanding, which as of April 25, 2007 equaled approximately
  349,414; or
the average weekly trading volume of
  our common stock during the four calendar weeks preceding the filing of a
  notice on Form 144 with respect to such sale.
Sales under Rule 144 are also governed by
other requirements regarding the manner of sale, notice filing and the
availability of current public information about us. Under Rule 144, however, a
person who is not, and for the three months prior to the sale of such shares has
not been, an affiliate of the issuer is free to sell shares that are "restricted
securities" which have been held for at least two years without regard to the
limitations contained in Rule 144. The selling shareholders will not be governed
by the foregoing restrictions when selling their shares pursuant to this
prospectus.
We believe that none of our outstanding shares
may currently be sold in reliance on Rule 144. However, shares held by our
officers and directors that were registered under a separate registration
statement on Form S-4 which was declared effective in November 2006 are
considered Rule 145 shares under the Securities Act. There shares are subject to
the same limitations on the volume of shares that can be re-sold by such
affiliates as would be applicable under Rule 144 as discussed above. There are a
total of 14,916,031 Rule 145 shares held by our
affiliates, not including the shares being
registered for the account of the selling stockholders named in this prospectus.
59
Rule 144(k)
Under Rule 144(k), a person who is not deemed
to have been one of our affiliates at any time during the three months preceding
a sale, and who has beneficially owned the shares proposed to be sold for at
least two years, including the holding period of any prior owner other than an
affiliate, is entitled to sell such shares without complying with the manner of
sale, notice filing, volume limitation or notice provisions of Rule 144.
We believe that none of our outstanding shares
may currently be sold in reliance on Rule 144(k).
PLAN OF DISTRIBUTION
The selling stockholders, may, from time to
time, sell, transfer or otherwise dispose of any or all of their shares of our
common stock or interests in shares of our common stock on any stock exchange,
market or trading facility on which the shares are traded or in private
transactions. These dispositions may be at fixed prices, at prevailing market
prices at the time of sale, at prices related to the prevailing market price, at
varying prices determined at the time of sale, or at negotiated prices.
The selling stockholders may use any one or
more of the following methods when disposing of shares or interests therein:
- ordinary brokerage
transactions and transactions in which the broker-dealer solicits purchasers;
- block trades in
which the broker-dealer will attempt to sell the shares as agent, but may
position and resell a portion of the block as principal to facilitate the
transaction;
- purchases by a
broker-dealer as principal and resale by the broker-dealer for its account;
- an exchange
distribution in accordance with the rules of the applicable exchange;
- privately
negotiated transactions;
- short sales
effected after the date the registration statement of which this prospectus is a
part is declared effective by the SEC;
- through the
writing or settlement of options or other hedging transactions, whether through
an options exchange or otherwise;
- broker-dealers may
agree with the selling stockholders to sell a specified number of such shares at
a stipulated price per share; and
- a combination of
any such methods of sale.
The selling stockholders may, from time to
time, pledge or grant a security interest in some or all of the shares of our
common stock owned by them and, if they default in the performance of their
secured obligations, the pledgees or secured parties may offer and sell the
shares of our common stock, from time to time, under this prospectus, or under
an amendment to this prospectus under Rule 424(b)(3) or other applicable
provision of the Securities Act amending the list of selling stockholders to
include the pledgee, transferee or other successors in interest as selling
stockholders under this prospectus. The selling stockholders also may transfer
the shares of our common stock in other circumstances, in which case the
transferees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus.
60
In connection with the sale of our common
stock or interests therein, the selling stockholders may enter into hedging
transactions with broker-dealers or other financial institutions, which may in
turn engage in short sales of our common stock in the course of hedging the
positions they assume. The selling stockholders may also sell shares of our
common stock short and deliver these securities to close out their short
positions, or loan or pledge the shares of our common stock to broker-dealers
that in turn may sell these securities. The selling stockholders may also enter
into option or other transactions with broker-dealers or other financial
institutions or the creation of one or more derivative securities which require
the delivery to such broker-dealer or other financial institution of shares
offered by this prospectus, which shares such broker-dealer or other financial
institution may resell pursuant to this prospectus (as supplemented or amended
to reflect such transaction).
The aggregate proceeds to the selling
stockholders from the sale of shares of our common stock offered by them will be
the purchase price of the common stock less discounts or commissions, if any.
Each of the selling stockholders reserves the right to accept and, together with
their agents from time to time, to reject, in whole or in part, any proposed
purchase of our common stock to be made directly or through agents. We will not
receive any of the proceeds from this offering. Broker-dealers engaged by the
selling stockholders may arrange for other broker-dealers to participate in
sales.
Broker-dealers may receive commissions or
discounts from the selling stockholders (or, if any broker-dealer acts as agent
for the purchase of shares, from the purchaser) in amounts to be negotiated.
The selling stockholders do not expect these
commissions and discounts to exceed what is customary in the types of
transactions involved. The selling stockholders also may resell all or a portion
of the shares in open market transactions in reliance upon Rule 144 under the
Securities Act, provided that they meet the criteria and conform to the
requirements of that rule.
The selling stockholders and any underwriters,
broker-dealers or agents that participate in the sale of our common stock or
interests therein are "underwriters" within the meaning of Section 2(11) of the
Securities Act. Any discounts, commissions, concessions or profit they earn on
any resale of the shares may be underwriting discounts and commissions under the
Securities Act. Selling stockholders who are "underwriters" within the meaning
of Section 2(11) of the Securities Act will be subject to the prospectus
delivery requirements of the Securities Act. We know of no existing arrangements
between any of the selling stockholders and any other stockholder, broker,
dealer, underwriter, or agent relating to the sale or distribution of the
shares, nor can we presently estimate the amount, if any, of such compensation.
See "Selling Stockholders" for description of any material relationship that a
stockholder has with us and the description of such relationship.
To the extent required, the shares of our
common stock to be sold, the names of the selling stockholders, the respective
purchase prices and public offering prices, the names of any agents, dealers or
underwriters, any applicable commissions or discounts with respect to a
particular offer will be set forth in an accompanying prospectus supplement or,
if appropriate, a post-effective amendment to the registration statement that
includes this prospectus.
61
In order to comply with the securities laws of
some states, if applicable, the shares of our common stock may be sold in these
jurisdictions only through registered or licensed brokers or dealers. In
addition, in some states the common stock may not be sold unless it has been
registered or qualified for sale or an exemption from registration or
qualification requirements is available and is complied with.
We have advised the selling stockholders that
the anti-manipulation rules of Regulation M under the Exchange Act may apply to
sales of shares in the market and to the activities of the selling stockholders
and their affiliates. In addition, we will make copies of this prospectus (as it
may be supplemented or amended from time to time) available to the selling
stockholders for the purpose of satisfying the prospectus delivery requirements
of the Securities Act. The selling stockholders may indemnify any broker-dealer
that participates in transactions involving the sale of the shares against
certain liabilities, including liabilities arising under the Securities Act.
We have agreed to pay certain fees and
expenses incurred by us incident to the registration of the shares. Such fees
and expenses are estimated to be $65,757. We have agreed to indemnify the
selling stockholders against liabilities, including liabilities under the
Securities Act and state securities laws, relating to the registration of the
shares offered by this prospectus.
We have agreed with the selling stockholders
to keep the registration statement of which this prospectus constitutes a part
effective until the earlier of (1) such time as all of the shares covered by
this prospectus have been disposed of pursuant to and in accordance with the
registration statement or (2) the date on which the shares may be sold pursuant
to Rule 144(k) of the Securities Act.
LEGAL MATTERS
The validity of the common stock offered by
this prospectus will be passed upon for us by Thelen Reid Brown Raysman &
Steiner, LLP, Washington, D.C.
EXPERTS
The consolidated financial statements of the
Company for the year ended December 31, 2004 included in this prospectus and in
the registration statement have been audited by the accounting firm of Child,
Van Wagoner & Bradshaw, PLLC, independent registered public accounting firm, and
are included in reliance upon their report dated September 1, 2005, given upon
such firm's authority as experts in auditing and accounting.
The consolidated financial statements of the
Company for the years ended December 31, 2006 and 2005 included in this
prospectus have been audited by the accounting firm of GHP Horwath, P.C.,
independent registered public accounting firm, and are included in reliance upon
their report dated March 21, 2007, given upon such firm's authority as experts
in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration
statement on Form S-1 under the Securities Act with respect to the common stock
offered in this offering. This prospectus does not contain all of the
information set forth in the registration
statement. For further information with respect to us and the common stock
offered in this offering, we refer you to the registration statement and to the
attached exhibits. With respect to each such document filed as an exhibit to the
registration statement, we refer you to the exhibit for a more complete
description of the matters involved.
62
You may inspect our registration statement and the attached
exhibits and schedules without charge at the public reference facilities
maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may
obtain copies of all or any part of our registration statement from the SEC upon
payment of prescribed fees. You may obtain information on the operation of the
public reference room by calling the SEC at 1-800-SEC-0330.
Our SEC filings, including the registration statement and the
exhibits filed with the registration statement, are also available from the
SEC's website at www.sec.gov, which contains reports, proxy and information
statements and other information regarding issuers that file electronically with
the SEC.
63
FINANCIAL STATEMENTS
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 2006, 2005 AND 2004
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC.
AND SUBSIDIARIES
TABLE OF CONTENTS
Pages
Reports of Independent Registered Public Accounting Firms
F2 - F3
Consolidated Balance Sheets as of December 31, 2006 and 2005
F4
Consolidated Statements of Income and Comprehensive Income for the
years ended December 31, 2006, 2005 and 2004
F5
Consolidated Statements of Changes in Shareholders' Equity for the
years ended December 31, 2006, 2005 and 2004
F6
Consolidated Statements of Cash Flows for the years ended December 31,
2006, 2005 and 2004
F7 - F8
Notes to Consolidated Financial Statements for the years ended December 31, 2006, 2005 and 2004
F9 - F27
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders
China Security & Surveillance Technology, Inc.
We have audited the accompanying consolidated balance sheets of China Security & Surveillance Technology, Inc. and subsidiaries as of December 31, 2006 and 2005 and the related consolidated statements of income and comprehensive income, changes in shareholders' equity and cash flows for each of the years in the two-year period ended December 31, 2006. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of China Security & Surveillance Technology, Inc. and subsidiaries as of December 31, 2006 and 2005, and the results of their operations and their cash flows for each of the years in the two-year period ended December 31, 2006 in conformity with accounting principles generally accepted in the United States of America.
/s/ GHP Horwath, P.C.
GHP Horwath, P.C.
Denver, Colorado
March 21, 2007
F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To The Board of Directors and Stockholders
China Security & Surveillance Technology, Inc.
We have audited the accompanying consolidated statements of income and comprehensive income, changes in shareholders' equity and cash flows of Golden Group Corporation (Shenzhen) Ltd. (predecessor to China Security & Surveillance Technology, Inc.) for the year ended December 31, 2004. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company was not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting, as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of Golden Group Corporation (Shenzhen) Ltd. (predecessor to China Security & Surveillance Technology, Inc.) for the year ended December 31, 2004, in conformity with accounting principles generally accepted in the United States of America.
/s/ Child, Van Wagoner & Bradshaw, PLLC
Child, Van Wagoner & Bradshaw, PLLC
Salt Lake City, Utah
September 1, 2005
F-3
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2006 AND 2005
Expressed in thousands of U.S. dollars
(Except for share and per share amounts)
ASSETS
December 31,
2006
December 31,
2005
CURRENT ASSETS
Cash and cash equivalents
$
30,980
$
2,277
Accounts receivable, net
26,754
11,643
Related party receivables
440
3,783
Inventories, net
19,721
5,311
Prepayment and deposits
3,533
--
Advances to suppliers
2,889
1,493
Other receivables
1,697
415
Deferred tax assets - current portion
125
129
Total current assets
86,139
25,051
Plant and equipment, net
8,339
1,952
Land use rights, net
1,152
1,142
Intangible assets
9,997
511
Investment, at cost
12
--
Goodwill
8,426
--
Deferred tax assets - non-current portion
462
460
TOTAL ASSETS
$
114,527
$
29,116
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable - short term
$
2,272
$
--
Accounts payable
4,000
1,077
Accrued expenses
749
763
Advances from customer
5,432
--
Taxes payable
1,660
1,115
Payable for acquisition of business
7,500
593
Deferred income
831
887
Due to director
76
70
Deferred tax liabilities
84
--
Total current liabilities
22,604
4,505
LONG TERM LIABILITIES
Notes payable - long term
2,010
--
Total liabilities
24,614
4,505
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES
94
--
SHAREHOLDERS' EQUITY
Common stock, $0.0001 par value; 100,000,000 shares authorized 31,824,938 (2006) and 21,558,000 (2005) shares issued and outstanding
3
2
Additional paid-in capital
45,320
4,708
Retained earnings
41,483
18,552
Statutory surplus reserve fund
804
804
Accumulated other comprehensive income
2,209
545
Total shareholders' equity
89,819
24,611
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
114,527
$
29,116
See accompanying notes to the consolidated financial statements.
F-4
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
Expressed in thousands of U.S. dollars
(Except for share and per share amounts)
2006
2005
2004
Revenues
$
106,989
$
32,688
$
16,056
Cost of goods sold
75,976
23,473
8,796
Gross profit
31,013
9,215
7,260
Selling and marketing
1,511
288
391
General and administrative
3,036
1,189
513
Depreciation and amortization
1,124
260
225
Income from operations
25,342
7,478
6,131
Rental income from related parties
496
439
478
Other income (expense), net
711
120
(25)
Interest income
63
9
13
Interest expense
(108)
--
--
Gain on sale of affiliated company
307
--
--
Income before income taxes and minority interest
26,811
8,046
6,597
Minority interest in income of consolidated subsidiaries
9
--
--
Income taxes
(3,889)
(780)
(873)
Net income
22,931
7,266
5,724
Foreign currency translation gain
1,664
545
--
COMPREHENSIVE INCOME
$
24,595
$
7,811
$
5,724
NET INCOME PER SHARE
BASIC
$
0.88
$
0.39
$
0.34
DILUTED
$
0.85
$
0.39
$
0.34
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
BASIC
26,052,519
18,521,479
17,000,000
DILUTED
26,940,215
18,521,479
17,000,000
See accompanying notes to the consolidated financial statements.
F-5
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
Expressed in thousands of U.S. dollars
(Except for share and per share amounts)
Common Stock Shares
Par Value
Additional
Paid-in Capital
Retained Earnings
Accumulated
Other
Comprehensive Income
Statutory
Surplus Reserve Fund
Total
BALANCE AT JANUARY 1, 2004
17,000,000
$
1
$
4,709
$
6,366
$
--
$
--
$
11,076
Net income for the year
--
--
--
5,724
--
--
5,724
BALANCE AT DECEMBER 31, 2004
17,000,000
1
4,709
12,090
--
--
16,800
Common stock issued for consulting services
1,420,000
--
--
--
--
--
--
Common stock issued to previous Apex
shareholders (Note 1)
3,138,000
1
(1)
--
--
--
--
Foreign currency translation
--
--
--
--
545
--
545
Net income for the year
--
--
--
7,266
--
--
7,266
Transfer
--
--
--
(804)
--
804
--
BALANCE AT DECEMBER 31, 2005
21,558,000
2
4,708
18,552
545
804
24,611
Warrants granted for consulting services
--
--
185
--
--
--
185
Common stock issued for consulting services
100,000
--
350
--
--
--
350
Common stock issued for acquisition of Yuan Da
200,000
--
500
--
--
--
500
Common stock issued under securities purchase agreements
7,301,259
1
22,284
--
--
--
22,285
Common stock issued for acquisition of businesses of four related companies
850,000
--
6,970
--
--
--
6,970
Common stock issued for investor relations services
50,000
--
200
200
Common stock issued for private placement
1,538,462
--
10,000
--
--
--
10,000
Warrants exercised (cashless) per Securities Purchase Agreement
123,750
--
--
--
--
--
--
Warrants exercised for cash per Securities Purchase Agreement
25,714
--
123
--
--
--
123
Warrants exercised (cashless) per investor relation service agreement
77,753
--
--
--
--
--
--
Foreign currency translation
--
--
--
--
1,664
--
1,664
Net income for the year
--
--
--
22,931
--
--
22,931
BALANCE AT DECEMBER 31, 2006
31,824,938
$
3
$
45,320
$
41,483
$
2,209
$
804
$
89,819
See accompanying notes to the consolidated financial statements.
F-6
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
Expressed in thousands of U.S. dollars
(Except for share and per share amounts)
2006
2005
2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
22,931
$
7,266
$
5,724
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
1,124
260
225
Allowance for doubtful accounts
113
--
239
Provision for obsolete inventories
230
--
--
Deferred income taxes
107
(590)
--
Amortization of loan origination fees
37
--
--
Common stock issued for services
250
--
--
Gain on disposal of plant and equipment
(15)
--
--
Issue of warrants for investor relation services
185
--
--
Gain on sale of the affiliated company
(307)
--
--
Minority interest
(9)
--
--
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable
(13,992)
(7,270)
526
Related party receivables
3,768
369
(888)
Other receivables
(401)
(337)
(78)
Inventories
(13,328)
771
(4,537)
Advances to suppliers
(1,323)
1,780
114
Prepayment & deposits
(3,233)
--
--
(Decrease) increase in:
Accounts payable, accrued expenses and advance from customers
6,300
(3,630)
(393)
Payable for acquisition of business
--
593
--
Deferred income
(26)
887
--
Customer deposit
--
--
(540)
Taxes payable
582
700
292
Related party payable
(9)
--
--
Net cash provided by operating activities
2,984
799
684
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to plant and equipment
(5,114)
(49)
(110)
Additions to intangible assets, other than through business acquisition
(107)
--
--
Proceeds from dispositions of non current assets
592
--
--
Net cash outflow on acquisition of net assets of businesses acquired (net of cash acquired)
(6,539)
(30)
--
Net cash used in investing activities
(11,168)
(79)
(110)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash received from (advanced to) directors
9
1,063
(1,056)
Proceeds from bank borrowings
3,495
--
--
Warrants exercised
123
--
--
Issue of common stock, net of issuing expenses
32,285
--
--
Net cash provided by (used in) financing activities
35,912
1,063
(1,056)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
27,728
1,783
(482)
Effect of exchange rate changes on cash
975
461
--
Cash and cash equivalents, beginning of year
2,277
33
515
CASH AND CASH EQUIVALENTS, END OF YEAR
$
30,980
$
2,277
$
33
Continued
F-7
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
Expressed in thousands of U.S. dollars
(Except for share and per share amounts)
SUPPLEMENTARY CASH FLOW INFORMATION:
Interest paid
$
103
$
--
$
--
Income taxes paid
$
3,166
$
1,404
$
621
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
(a)
The Company purchased net assets of Yuan Da Wei Shi Technology Limited ("Yuan Da") for $630 as detailed in note 1. In conjunction with the acquisition, liabilities were assumed as follows:-
Fair value of net assets acquired
$
630
Cash paid
37
Amount owed at December 31, 2005
$
593
(b)
1,420,000 shares of common stock were issued to consultants for services provided to the Company during 2005 in connection with the acquisition of Safetech by Apex (Note 1).
(c)
850,000 shares of common stock were issued for acquisition of businesses of the Four-Related Companies during 2006. (Note 3)
(d)
1,361,748 shares of common stock issuable in satisfaction of the equity portion of the purchase price of approximately $7,500 in the acquisition of Shanghai Cheng Feng Digital High-tech Co., Ltd., ("Cheng Feng"), which were issued in the first quarter of 2007. (Note 3)
(e)
200,000 shares of common stock were issued for acquisition of Yuan Da during 2006. (Note 1)
See accompanying notes to the consolidated financial statements.
F-8
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
Expressed in thousands of U.S. dollars
(Except for share and per share amounts)
1.    ORGANIZATION AND PRINCIPAL ACTIVITIES
Apex Wealth Enterprises Limited ("Apex" or the
"Company") was incorporated in the British Virgin Islands in April 2002 with an authorized capital of $50 divided into 50,000 shares of common stock at $1 par value and operated as a corporation under the International Business Companies Ordinance of 1984. On August 1, 2002, the authorized capital was subdivided into 5,000,000 shares of common stock at $0.0001 par value. On May 12, 2003, the authorized capital was increased to $1,000, which was divided into 100,000,000 shares of common stock at $0.0001 par value. Apex was a development stage company whose significant activities consist of organization, the registering and offering of shares, and forming a subsidiary company in the People's Republic of China ("PRC"or
"China") to apply for a consultancy license, and business development.
On July 23, 2005, Apex executed a Stock Purchase Agreement and an Agreement for Share Exchange. Both agreements closed on September 12, 2005. Under the Stock Purchase Agreement, Whitehorse Technology Ltd. ("Whitehorse", purchased a total of 8,862,000 shares, or approximately 66.04% of the issued and outstanding common stock of Apex, from First Asia International Holdings Ltd. Whitehorse is the largest shareholder of China Safetech Holdings Limited ("Safetech"), a British Virgin Islands corporation. Safetech is the investment holding vehicle of the entire equity interest of Golden Group Corporation (Shenzhen) Ltd. ("Golden"). Golden is a corporation in the PRC engaged in the business of the manufacturing and distribution of security and surveillance systems, which integrates development, manufacturing, marketing, and maintenance of digital video surveillance and network communication together.
Simultaneously with the closing under the Stock Purchase Agreement, Apex issued a total of 8,138,000 shares of its common stock to the shareholders of Safetech under the Agreement for Share Exchange. Through the share exchange, Apex acquired 50,000 shares of the issued and outstanding stock of Safetech, which constituted 100% of its issued and outstanding stock from the individual shareholders of Safetech. As a result of the transaction, Safetech and Golden became wholly-owned subsidiaries of Apex.
The acquisition of Safetech by Apex has been recorded as a reverse acquisition based on factors demonstrating that Safetech represents the accounting acquirer. The shareholders of Safetech received 17,000,000 shares (or approximately 78.86%) of the post-acquisition common stock of Apex. In addition, post-acquisition management personnel and the board members of the Company now consist of individuals previously holding position with Safetech. The historical shareholders' equity of Safetech prior to the exchange has been retroactively restated (a recapitalization) for the equivalent number of shares received in the exchange after giving effect to any differences in the par value of the Apex and Safetech common stock, with an offset to additional paid-in capital. The restated consolidated retained earnings of the accounting acquirer (Safetech) have been carried forward after the exchange.
On October 25, 2005, the Company entered into an agreement with the equity owners of Yuan Da, which was subsequently amended in April and May 2006. Pursuant to the agreement, the Company acquired all of the assets of Yuan Da. Yuan Da is a limited liability company established in Shenzhen, China and was principally engaged in the sales and development of security and surveillance systems. Under the agreement with Yuan Da, as amended, the purchase price consisted of (i) a cash payment of RMB1,000 (approximately $125) and (ii) the issuance of 200,000 unregistered shares of the Company's common stock valued at $500 (based upon the average closing market price during the twenty days before the date of the agreement). The shares of common stock were issued on March 10, 2006.
On February 8, 2006, Apex changed its name to China Security & Surveillance Technology Inc. ("CSST" or the
"Company"). The Company's Board of Directors authorized changing its fiscal year from that used in its most recent filing. The new fiscal year will be December 31, and the Company filed an annual report on Form 20-F for the year ended December 31, 2005.
The Company entered into a consulting service agreement on February 8, 2006. Pursuant to the agreement, the Company issued 100,000 shares of its common stock to the consultant on March 1, 2006 in exchange for consulting services valued at $350, which were to be provided to the Company from February 8, 2006 to October 31, 2006. The agreement was amended in June 2006 and the service period was extended to February 2009.
On April 4, 2006, the Company entered into a Securities Purchase Agreement (the
"Agreement") with certain investors (the "Investors") for the sale of 2,666,667 shares (the
"Shares") of the Company's common stock at a price of $3.00 per share. Net proceeds to the Company from the sale of all of the common stock were approximately $7,400.
F-9
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
Expressed in thousands of U.S. dollars
(Except for share and per share amounts)
1.    ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)
Pursuant to this Agreement, the Company also issued warrants to a private placement agent to purchase 416,667 shares of its common stock as commission for its services in connection with the private placement. A total of 150,000 of the warrants are exercisable at a price of $3.80 per share, which is the closing bid price for the Company's stock as of the date of closing under the Agreement, and a total of 266,667 of the warrants are exercisable at a price of $3.00 per share. All of the warrants have a term of 5 years and include a cashless exercise feature. On October 16, 2006, 150,000 warrants were exercised using the cashless exercise feature and 82,500 shares of its common stock were issued.
On July 6, 2006, the Company entered into a definitive Securities Purchase agreement (the
"Securities Purchase Agreement") with certain accredited investors relating to the private placement of 2,675,794 units for an aggregate gross cash purchase price of $12,041.
Each unit consists of one share of the Company's common stock and a warrant to purchase one-fifth of one share of common stock. The exercise price for each whole warrant was originally $5.40. The warrants have a term of five years and include a cashless exercise feature. The units were to be sold under the Securities Purchase Agreement at a price of $4.50 per unit. Under the terms of the Securities Purchase Agreement, all of such funds were required to be placed into escrow by the investors by July 7, 2006.
The Securities Purchase Agreement was amended on July 30, 2006 and July 31, 2006 and closing under the amended agreement occurred July 31, 2006. The major amendments to the Securities Purchase Agreement include the waiver of a closing condition which permitted the Company to break escrow notwithstanding the fact that the acquisition of Cheng Feng would not be fully consummated until certain governmental approvals were obtained, the reduction of the purchase price of each unit from $4.50 to $3.50 and the exercise price for each whole warrant from $5.40 to $4.80, and the grant of a put right by the Company to all of the investors which allowed the investors to require the Company to repurchase all, but not less than all, of the securities issued under the Securities Purchase Agreement if the Company failed to obtain the necessary governmental approval to consummate the Acquisition on or before December 31, 2006. Necessary governmental approvals were obtained before December 31, 2006.
Pursuant to the amended Securities Purchase Agreement, the Company sold 4,634,592 units to certain accredited investors for $16,200. Each unit consists of one share of common stock and a warrant to purchase one- fifth of one share of common stock. The exercise price for each whole warrant is $4.80. The warrants have a term of five years and include a cashless exercise feature. The units were sold under the Securities Purchase Agreement at a price of $3.50 per unit. Net proceeds to the Company from the sale of all of the units are approximately $14,900. In November 2006, 25,714 warrants were exercised at $4.80 per share.
In conjunction with execution of the Securities Purchase Agreement, the Company also executed a Registration Rights Agreement under which it is obligated to file a registration statement on Form S-4 and S-1, or other available form, to register the shares and the shares underlying the warrants for resale, within 45 days and 55 days after the closing date, respectively. The Company was obligated to use its best efforts to cause the registration statement to be declared effective within 180 days of the closing date, and was liable for payment of penalties to the purchasers in the event the registration statement has not declared effective within the 180-day period. The Company filed an S-4 on October 2, 2006, which was 12 days later than the required filing date. Therefore, liquidated damages totaling approximately $65 were incurred.
The Company also issued warrants to purchase 324,421 shares of its common stock with an exercise price of $4.20 to two private placement agents as commission for their services in connection with the private placement. On October 16, 2006, 75,000 warrants were exercised using the cashless exercise feature and 41,250 shares of its common stock was issued.
F-10
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
Expressed in thousands of U.S. dollars
(Except for share and per share amounts)
1.    ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)
In October 2006, the Company issued 50,000 shares of its common stock to an investor relations firm as a payment for their services rendered pursuant to a consulting agreement dated February 9, 2006. The fair value of the common stock issued was $200 and is being expensed over the one year contract term.
In November 2006, we changed our domicile from the BVI to Delaware through merging the BVI company into its recently-formed wholly owned Delaware subsidiary. The main reasons for the change of domicile were to comply with the covenants of a stock purchase agreement that we entered into on April 4, 2006 in connection with a financing transaction, as well as to take advantage of the benefits of being a Delaware corporation, including the enhanced credibility, greater flexibility in corporate law and attractiveness for directors and officers.
In connection with the change of domicile, the par value of the Company's common
stock then changed from $0.01 per share to $0.0001 per share.
On November 27, 2006, the Company entered into an agreement with three accredited investors (the
"buyers"), two of whom are qualified institutional buyers as defined in Rule 144A under the Securities Act of 1933. (the
"Securities Act").The Company issued an aggregate of 1,538,462 shares of its common stock for a consideration of $10,000 at a price of $6.50 per share.
The Company agreed to pay RMB 120,000 (approximately $15,000) in exchange for 100% ownership of Shanghai Cheng Feng Digital High-Tech Co. Ltd. ("Cheng Feng"), consisting of RMB 60,000 (approximately $7,500) in cash and RMB 60,000 in the Company's restricted stock. RMB 2,000 (approximately $250) of the purchase price was paid as a deposit on May 18, 2006. An additional RMB 8,000 (approximately $1,000) was paid in August 2006. The balance of the cash portion of the purchase price, RMB 50,000 (approximately $6,250), was paid in December 2006. The number of shares issuable in satisfaction of the equity portion of the purchase price is 1,361,748, which were issued in the first quarter of 2007.
In November 2006, we acquired the security and surveillance business of Jian Golden An Ke Technology Co. Ltd., or
"Jian An Ke," Shenzhen Golden Guangdian Technology Co. Ltd., or "Shenzhen Guangdian," Shenyang Golden Digital Technology Co. Ltd., or
"Shenyang Golden," and Jiangxi Golden Digital Technology Co. Ltd., or "Jiangxi Golden," of which our CEO and director Guoshen Tu owned 80%, 60%, 42% and 90%, respectively. We refer to these companies in these financial statements as the Four-Related Companies. Mr. Tu did not receive any consideration for the acquisition of his interest in the Four-Related Companies.  The minority shareholders of these four companies received in aggregate 850,000 shares of the Company's common stock, which was valued at $6,970 by an independent appraisal firm. Shenzhen Guangdian is engaged in the business of manufacturing and distributing security and surveillance products. The other three companies are engaged in the business of distributing security and surveillance products.
In September 2005, the Company entered into an investor relation service agreement and granted a warrant to purchase 100,000 shares of its common stock at $1.85 per share in exchange for the services for a two-year period. The fair value of $185 was estimated at the date of grant using the Black-Scholes option pricing model and the following assumptions: 4.18% risk free interest rate, zero dividend yield, 2-year service contract term and 400% expected volatility. This fair value was allocated to the 2-year service period and the remaining fair value of the service fee was charged to income when the service agreement was terminated by the Company in February 2006.
F-11
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
Expressed in thousands of U.S. dollars
(Except for share and per share amounts)
1.    ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)
A summary of the status of the Company's stock warrants granted in 2006 and 2005 and the changes during the years then ended is presented below:
2006
2005
Weighted Average Exercise
Weighted Average Exercise
Shares
Prices
Shares
Prices
Outstanding at beginning of year
100,000
$
1.85
Granted
1,668,006
4.31
100,000
$
1.85
Exercised
(350,714)
(3.23)
Outstanding at end of year
1,417,292
$
4.40
100,000
$
1.85
Warrants exercisable at end of year
1,417,292
100,000
2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)    Basis of Consolidation
The consolidated financial statements of the Company and its subsidiaries are prepared in accordance with accounting principles generally accepted in the United States of America and include the accounts of the Company and its subsidiaries. All material inter-company accounts and transactions have been eliminated in consolidation.
(b)    Economic and Political Risks
The Company's operations are conducted in the PRC. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy.
The Company's operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation.
(c)    Plant and Equipment
Plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided over the assets' estimated useful lives, using the straight-line method. Estimated useful lives of the plant and equipment are as follows:
Building
20 years
Leasehold improvements
10 years
Plant and equipment
5 years
Electronics equipment
5 years
Motor vehicles
5 years
The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of income. The cost of maintenance and repairs is charged to the statement of income as incurred, whereas significant renewals and betterments are capitalized.
F-12
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
Expressed in thousands of U.S. dollars
(Except for share and per share amounts)
2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(d)    Intangible Assets
Intangible assets represent a surveillance recording system, surveillance software, customer relationship and contracts, acquired from Yuan Da, Cheng Feng and the Four-Related Companies (see notes 3 and 9).
The value of intangible assets was acquired from Yuan Da was established by an independent accounting firm. The valuation and allocation in intangible assets of the acquisition of Cheng Feng and the businesses of the Four-Related Companies were determined by an independent appraisal firm.
The values of the intangible assets are being amortized using the following amortization methods and estimated useful lives:
Nature
Amortization method
Useful lives
Acquisition of Yuan Da
Straight-line method
5 years
Acquisition of Cheng Feng
Straight-line and accelerated method
5 years
Acquisition of the businesses of the Four-Related Companies
Straight-line and accelerated method
2 months to 5 years
(e)    Accounting for the Impairment of Long-Lived Assets
The long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technology or other industry changes. Determination of recoverability of assets to be held and used is by comparing the carrying amount of an asset to future net undiscounted cash flows to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
There was no impairment of long-lived assets as of December 31, 2006 and 2005.
(f)    Goodwill
Goodwill represents the excess of the purchase price over the net of the fair value of the identifiable tangible and intangible assets acquired and the fair value of liabilities assumed in acquisitions. SFAS No; 142,
"Goodwill and Other Intangible Assets" ("SFAS142") requires the testing of goodwill and indefinite-lived intangible assets for impairment at least annually. We test goodwill for impairment in the fourth quarter each year.
With the acquisition of Cheng Feng in July 2006, we recorded goodwill of $8,426. Goodwill impairment is computed using the expected present value of associated future cash flows.
There was no impairment of goodwill as of December 31, 2006.
F-13
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
Expressed in thousands of U.S. dollars
(Except for share and per share amounts)
2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(g)    Accounting for Computer Software To Be Sold, Leased or Otherwise Marketed
The Company accounts for software development costs in accordance with Statement of Financial Accounting Standards ("SFAS") No. 86,
"Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed". Costs related to establishing the technological feasibility of a software product are expensed as incurred as a part of research and development in general and administrative expenses. Costs that are incurred to produce the finished product after technological feasibility is established are capitalized and amortized over the estimated economic life of 5 years. The Company performs periodic reviews to ensure that unamortized program costs remain recoverable from future revenue.
At December 31, 2006 and 2005, unamortized computer software costs were $267 and $0, respectively. During 2006, $39 amortization expense was charged to income.
(h)    Deferred Income
Deferred income represents amounts billed for contracts for supply and installation of security and surveillance equipment which have not been fully completed at the balance sheet date in accordance with accounting policy note 2(o).
(i)    Inventories
Inventories are stated at the lower of cost, determined on a weighted average basis, or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated costs necessary to make the sale.
When inventories are sold, their carrying amount is charged to expense in the year in which the revenue is recognized. Write-downs for declines in net realizable value or for losses of inventories are recognized as an expense in the year the impairment or loss occurs. Declines in net realizable value of inventory for the years ended December 31, 2006, 2005 and 2004 amounted to $0, $0 and $42.
During the years ended December 31, 2006, 2005, and 2004 approximately 92%, 89%, and 88%, of total inventory purchases were from five suppliers, respectively.
(j)    Accounts Receivable
Trade receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An estimate for doubtful accounts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.
No trade receivable due from one individual customer exceeds 10% of total accounts receivable at December 31, 2006 and 2005.
(k)    Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.
(l)    Advances to Suppliers
Advances to suppliers represent the cash paid in advance for purchasing of inventory items from suppliers.
F-14
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
Expressed in thousands of U.S. dollars
(Except for share and per share amounts)
2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(m)    Land Use Rights
According to the laws of China, the government owns all the land in China. Companies or individuals are authorized to possess and use the land only through land use rights granted by the Chinese government. Land use rights are being amortized using the straight-line method over the lease term of the rights.
The Company paid in advance for the lease of three parcels of land for 48 to 50 year time periods, consisting of approximately $1,445. The lease periods began in 1997 and expire during 2045 and 2047. The amount is being amortized and recorded as expense over the 48-50 year terms of the leases. The Company adopted the provisions of SFAS No. 142, Goodwill and Other Intangible Assets ("SFAS 142"), effective January 1, 2002. Under SFAS 142, finite lived intangible assets are amortized over their lives, and are reviewed annually for impairment, or more frequently, if indications of possible impairment exist. The Company has performed the requisite annual transitional impairment tests on intangible assets and determined that no impairment adjustments were necessary.
(n)    Fair Value of Financial Instruments
The Company's financial instruments include cash and cash equivalents, accounts receivable, related party receivables, advances to suppliers, other receivables, taxes payable, accounts payable and notes payable. Management estimates that the carrying amounts of the non related party financial instruments approximate their fair values due to their short-term nature. The fair value of the related party receivables is not practicable to estimate due to the related party nature of the underlying transactions.
(o)    Revenue Recognition
The Company derives the bulk of its revenue from the supply and installation of security and surveillance equipment and the two deliverables do not meet the separation criteria under EITF issue 00-21. The installation is not considered to be essential to the functionality of the equipment having regard to the following criteria as set out in SAB 104:
(i)    The security and surveillance equipment is a standard product with minor modifications according to customers' specifications;
(ii)    Installation does not significantly alter the security and surveillance equipment's capabilities; and
(iii)    Other companies which possess the relevant licenses are available to perform the installation services.
In early 2006, the Company began performing much larger security installation contracts than it had been doing previously. As a marketing approach, the Company prepared standard contracts with its new larger customers, whereby 90% of the contract amount was due when installation was complete and payment of the remaining 10% was deferred for one year. Because of the newness of the larger contracts and the inability to immediately determine the amount of warranty work that would be required, the Company initially deferred recognizing the 10% of the contract amount as revenue and amortized this amount to income over the one year period. During the second and third quarters of 2006, the Company carefully monitored the warranty work requested by its customers, and determined that very little warranty work had been required to be performed.
Consequently, effective October 1, 2006, the Company reduced its estimate of future warranty requirements to approximately 1% of contract installation revenue. The fourth quarter reflects this change in the estimated warranty expenses and this fourth quarter adjustment increased revenue, tax expense and net income, by $3,557, $534 and $3,023, respectively.
Revenue from the outright sale of security and surveillance equipment is recognized when delivery occurs and risk of ownership passes to the customers.
F-15
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
Expressed in thousands of U.S. dollars
(Except for share and per share amounts)
2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(p)    Research and Development Costs
Research and development costs are expensed as incurred. Research and development costs included in general and administrative expenses for the years ended December 31, 2006, 2005 and 2004 amounted to $209, $0 and $0, respectively.
(q)    Advertising Costs
The Company expenses advertising costs as incurred or the first time advertising takes place. During the years ended 2006, 2005 and 2004, the Company incurred approximately $134, $7, and $10, respectively.
(r)    Foreign Currency Translation
The functional currency of the Company is Renminbi ("RMB") and the RMB is not freely convertible into foreign currencies. The Company maintains its financial statements in the functional currency. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet date. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. Exchange gains or losses arising from foreign currency transactions, which are not material, are included in the determination of net income for the respective periods.
For financial reporting purposes, the financial statements of the Company which are prepared using the functional currency have been translated into United States dollars. Assets and liabilities are translated at exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates and shareholders' equity is translated at historical exchange rates. Any translation adjustments resulting are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component of shareholders' equity. The exchange rates adopted are as follows:-
2006
2005
2004
Year end RMB exchange rate
7.80
8.07
8.28
Average yearly RMB exchange rate
7.97
8.19
8.28
No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation
(s)    Retirement Benefits
Retirement benefits in the form of contributions under defined contribution retirement plans to the relevant authorities are charged to the consolidated statements of income as incurred. The retirement benefit expenses for 2006, 2005 and 2004 were $68, $35 and $31, respectively and are included in general and administrative expenses.
(t)    Use of Estimates
The preparation of the financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made; however actual results could differ materially from those estimates.
F-16
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
Expressed in thousands of U.S. dollars
(Except for share and per share amounts)
2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(u)    Income Taxes
Income tax expense is based on reported income before income taxes. Deferred income taxes reflect the effect of temporary differences between assets and liabilities that are recognized for financial reporting purposes and the amounts that are recognized for income tax purposes. In accordance with Statement of Financial Accounting Standard ("SFAS") No. 109,
"Accounting for Income Taxes," these deferred taxes are measured by applying currently enacted tax laws.
(v)    Earnings Per Share
SFAS No. 128, Earnings Per Share, requires dual presentation of basic and diluted earnings per share ("EPS) with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation.  Basic EPS excludes dilution.  Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.  There were no dilutive securities outstanding during 2005 or 2004.
Earning per basic share of common stock is based on the weighted average number of shares of common stock outstanding during each respective period.  Earnings per diluted share of common stock adds to basic weighted shares the weighted average number of shares issuable under convertible securities, contingent issuances, stock options and warrants outstanding during each respective period, using the if-converted or treasury-stock methods.
The calculation of diluted earnings per share for 2006 has been calculated using the treasury stock method based on the weighted average number of dilutive securities outstanding during 2006.  The 1,361,748 shares of common stock which were contingently issuable in the acquisition of Cheng Feng have been included in dilutive securities from July 2006 through December 31, 2006. At December 31, 2006, warrants were outstanding to acquire 1,417,292 shares of common stock.
(w)    Reclassifications
Certain amounts reported in the 2005 and 2004 financial statements have been reclassified to conform to the 2006 presentation.
(x)    Recent Accounting Pronouncements
In September 2005, the Emerging Issues Task Force (EITF) ratified EITF 04-13 (EITF 04-13),
"Accounting for Purchases and Sales of Inventory with the Same Counterparty." This issue addresses the circumstances under which two or more inventory purchase and sales transactions with the same counterparty should be viewed as a single exchange transaction and whether there are circumstances under which such non-monetary exchanges should be accounted for at fair value.  The adoption of EITF 04-13 is effective for new or modified agreements for fiscal periods beginning after March 15, 2006. It is not expected that the adoption of EITF 04-13 will have a material effect on our financial position or results of operations.
In November 2005, FASB Staff Position (FSP) 115-1 The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments was issued. The FSP addresses the determination as to when an investment is considered impaired, whether that impairment is other-than-temporary, and the measurement of an impairment loss. This FSP also includes accounting considerations subsequent to the recognition of an other-than-temporary impairment and requires certain disclosures about unrealized losses that have not been recognized as other-than-temporary impairments. The guidance in this FSP amends FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities and APB Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock. The FSP applies to investments in debt and equity securities and cost-method investments. The application guidance within the FSP includes items to consider in determining whether an investment
F-17
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
Expressed in thousands of U.S. dollars
(Except for share and per share amounts)
2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(x)    Recent Accounting Pronouncements (continued)
is impaired, in evaluating if an impairment is other-than-temporary and recognizing impairment losses equal to the difference between the investment's cost and its fair value when an impairment is determined. The FSP is required for all reporting periods beginning after December 15, 2005. Earlier application is permitted. We do not anticipate the amendment will have a material effect on our financial position or results of operations.
In February 2006, the Financial Accounting Standards Board ("FASB") issued SFAS No. 155,
"Accounting for Certain Hybrid Financial Instruments." SFAS No. 155 amends SFAS No. 133 and 140. The statement applies to certain hybrid financial instruments, which are instruments that contain embedded derivatives. The new standard establishes a requirement to evaluate beneficial interests in securitized financial assets to determine if the interests represent freestanding derivatives or are hybrid financial instruments containing embedded derivatives requiring bifurcation. This new standard also permits an election for fair value re-measurement of any hybrid financial instrument containing an embedded derivative that otherwise would require bifurcation under SFAS No. 133. The fair value election can be applied on an instrument-by-instrument basis to existing instruments at the date of adoption and can be applied to new instruments on a prospective basis. SFAS No. 155 shall be effective for all financial instruments acquired, issued, or subject to a remeasurment (new basis) event occurring after the beginning of first fiscal year that begins after September 15, 2006. It is not expected that SFAS No. 155 will have a material effect on the Company's financial position or results of operations.
In June 2006, the FASB issued FASB Interpretation Number 48 (FIN 48),
"Accounting for Uncertainty in Income Taxes--an interpretation of FASB Statement No. 109." This interpretation contains a two step approach to recognizing and measuring uncertain tax positions accounted for in accordance with SFAS No. 109. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. The provisions are effective for fiscal years beginning after December 15, 2006. It is not expected that FIN 48 will have a material effect on the Company's financial position or results of operations.
In September 2006, the FASB issued SFAS No. 157
"Fair Value Measurements" which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosure about fair value measurements. The statement clarifies that the exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability in the market in which the reporting entity would transact for the asset or liability, that is, the principal or most advantageous market for the asset or liability. It also emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and that market participant assumptions include assumptions about risk and effect of a restriction on the sale or use of an asset. The provisions are effective for fiscal years beginning after November 15, 2007. The Company is currently assessing the impact of the statement.
In February 2007, the FASB issued Statement No. 159, "
The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment to FASB Statement No. 115".
This statement permits companies to choose to measure many financial instruments and other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement of accounting for financial instruments. This statement applies to all entities, including not for profit.
The fair value option established by this statement permits all entities to measure eligible items at fair value at specified election dates. This statement is effective as of the beginning of an entity's first fiscal year that begins after November 15, 2007.
The Company is currently assessing the impact adoption of SFAS No. 159 will have on its consolidated financial statements.
F-18
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
Expressed in thousands of U.S. dollars
(Except for share and per share amounts)
3.    ACQUISITION OF SHANGHAI CHENG FENG DIGITAL HIGH-TECH CO. LTD AND THE BUSINESS OF 4 RELATED COMPANIES
On July 6, 2006, the Company entered into a Stock Transfer Agreement (the
"agreement") relating to the acquisition of 100 percent of the equity of Cheng Feng. The acquisition was financed with proceeds from the Company's private placement of common stock. The results of operations of Cheng Feng are included in our consolidated financial statements beginning on July 6, 2006.
The Company agreed to pay RMB 120,000 (approximately $15,000) in exchange for 100% ownership of Cheng Feng, consisting of RMB 60,000 (approximately $7,500) in cash and RMB 60,000 in the Company's restricted stock. RMB 2,000 (approximately $250) of the purchase price was paid as a deposit on May 18, 2006. An additional RMB 8,000 (approximately $1,000) was paid in August 2006. The balance of the cash portion of the purchase price, RMB 50,000 (approximately $6,250), was paid in December 2006. The number of shares issuable in satisfaction of the equity portion of the purchase price is 1,361,748, which were issued in the first quarter of 2007.
The operational control of Cheng Feng passed to the Company and all the assets of Cheng Feng were acquired by the Company effective July 6, 2006. Government approval to consummate the acquisition was subsequently received. The results of Cheng Feng's operations from July 6, 2006 through December 31, 2006 are included in the Company's consolidated statement of income and comprehensive income.
The following represents the purchase price allocation at the date of the Cheng Feng acquisition:
Cash and cash equivalents
$
1,143
Other current assets
3,118
Property and equipment
1,680
Other assets
598
Goodwill
8,426
Intangible assets
3,088
Current liabilities
(2,113)
Long-term liabilities
(717)
Minority interest in consolidated subsidiaries
(127)
Exchange differences
(96)
Total purchase price
$
15,000
The purchase price allocation was considered final as of December 31, 2006. As a result of the goodwill impairment test we completed in the fourth quarter of 2006 in accordance with SFAS 142, we determined there were no impairment loss of goodwill during 2006.
The following table shows supplemental information of the results of operations on a pro forma basis for the years ended December 31, 2006 and 2005 as though the Cheng Feng acquisition had been completed at the beginning of 2006 and 2005:
F-19
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
Expressed in thousands of U.S. dollars
(Except for share and per share amounts)
3.    ACQUISITION OF SHANGHAI CHENG FENG DIGITAL HIGH-TECH CO. LTD AND THE BUSINESS OF 4 RELATED COMPANIES (CONTINUED)
For the year ended December 31, 2006 (Unaudited)
Historical
Pro Forma
CSST
Cheng Feng
Adjustments
PRO FORMA
Revenues
$
100,286
$
10,258
$
110,544
Income From Operations
$
25,521
$
1,547
$
(449)
$
26,619
Net Income
$
21,649
$
2,087
$
(449)
$
23,287
Net Income Per Share
Basic
$
0.83
$
0.87
Diluted
$
0.82
$
0.86
For the year ended December 31, 2005 (Unaudited)
Historical
Pro Forma
Pro Forma
CSST
Cheng Feng
Adjustments
Revenues
$
32,688
$
8,189
$
40,877
Income From Operations
$
7,478
$
795
$
(439)
$
7,834
Net Income
$
7,266
$
937
$
(439)
$
7,764
Net Income Per Share
Basic
$
0.39
$
0.32
Diluted
$
0.39
$
0.32
In November 2006, the Company acquired the security and surveillance business of Jian An Ke, Shenzhen Guangdian, Shenyang Golden, and Jiangxi Golden, of which our CEO and director Guoshen Tu owned 80%, 60%, 42% and 90%, respectively. Mr. Tu
did not receive any consideration for the acquisition of his interest in the
Four-Related Companies.  The minority shareholders of these four companies, received in aggregate 850,000 shares of our common stock.
Shenzhen Guangdian is engaged in the business of manufacturing and distributing security and surveillance products. The other three companies are engaged in the business of distributing security and surveillance products. The Company did not acquire any of the assets or liabilities of the four related companies, and the entire purchase price was allocated to intangible assets, consisting of contracts in process, non-competition agreements and the customer base.
Total intangible assets acquired by the Company amounted to $6,970. Amortization expense for the year ended December 31, 2006 was $107.
F-20
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
Expressed in thousands of U.S. dollars
(Except for share and per share amounts)
4.    ACCOUNTS RECEIVABLE
The Company provides an allowance for doubtful accounts related to its receivables. The receivables and allowance balances at December 31, 2006 and 2005 are as follows:
2006
2005
Accounts receivable
$
26,877
$
11,653
Less: allowance for doubtful accounts
(123)
(10)
Accounts receivable, net
$
26,754
$
11,643
2006
2005
Provision for doubtful accounts, January 1
$
10
$
10
Add: allowance for doubtful accounts
113
--
Provision for doubtful accounts, December 31
$
123
$
10
5.    RELATED PARTY RECEIVABLES
The Company has receivables from several companies whose directors and shareholders are common with the Company. All receivables arise from advances made prior to the date of the reverse merger of September 22, 2005 as detailed in note 1 and from the rental of real estate properties. The receivables are classified as related party receivables on the balance sheets. The balances as of December 31, 2006 and 2005 are as follows:
2006
2005
Related party receivables
$
440
$
4,019
Less: allowance for doubtful accounts
--
(236)
Related party receivables, net
$
440
$
3,783
2006
2005
Provision for doubtful accounts, January 1
$
236
$
236
Less: bad debt recovered
(236)
--
Provision for doubtful accounts, December 31
$
--
$
236
The Company has leased offices to three related parties since January 1, 2004. The leases expire on December 31, 2007 and annual rental income for all periods is RMB3,960 ($507). Rental income was $496, $439 and $478 in 2006, 2005 and 2004, respectively. The rental income from the related parties was included in other income.
F-21
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
Expressed in thousands of U.S. dollars
(Except for share and per share amounts)
6.    INVENTORIES
Inventories consist of the following as of December 31, 2006 and 2005:
2006
2005
Inventories
$
19,994
$
5,354
Less: allowance for obsolete inventories
(273)
(43)
Inventories, net
$
19,721
$
5,311
2006
2005
Provision for obsolete inventories , January 1
$
43
$
43
Add: allowance for obsolete inventories
230
--
Provision for obsolete inventories, December 31
$
273
$
43
7.    ADVANCE PAYMENTS
The Company has made payments to unrelated suppliers in advance of receiving merchandize. The advance payments are meant to ensure preferential pricing and delivery. The amounts advanced under such arrangements totaled $2,889 and $1,493 as of December 31, 2006 and 2005, respectively.
8.    PLANT AND EQUIPMENT
At December 31, 2006 and 2005, plant and equipment, at cost, consist of
2006
2005
Buildings
$
7,450
$
2,202
Leasehold improvements
888
694
Plant and equipment
267
55
Electronic equipment
669
137
Motor vehicles
938
49
10,212
3,137
Less: accumulated depreciation
(1,873)
(1,185)
Plant and equipment, net
$
8,339
$
1,952
Depreciation expense for the years ended December 31, 2006, 2005 and 2004 was $397, $232 and $197, respectively.
F-22
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
Expressed in thousands of U.S. dollars
(Except for share and per share amounts)
9.    LAND USE RIGHTS
Land use rights consist of the following as of December 31, 2006 and 2005
2006
2005
Cost of land use rights
$
1,445
$
1,397
Less: accumulated amortization
(293)
(255
Land use rights, net
$
1,152
$
1,142
Amortization expense for the years ended December 31, 2006, 2005 and 2004 was $29, $28 and $28, respectively.
Estimated amortization expense for the next five years and thereafter is as follows:
2007
$
29
2008
29
2009
29
2010
29
2011
30
Thereafter
1,006
Total
$
1,152
10.    INTANGIBLE ASSETS
2006
2005
Acquired customer base from the Four-Related Companies (life of 5 years)
$
5,840
$
--
Acquired contracts in progress from the Four-Related Companies (life of 2 months)
177
--
Acquired non-competition contracts from the Four-Related Companies (life of 5 years)
953
--
Acquired surveillance software and patents from Cheng Feng (life of 5 years)
3,159
--
Acquired surveillance recording system from Yuan Da (life of 5 years)
511
511
Less: accumulated amortization
(643)
--
Intangible assets, net
$
9,997
$
511
The Company acquired Cheng Feng and businesses of the Four-Related Companies during 2006. The valuations and allocation of the intangible assets was determined by a third party appraisal firm.
The Company's intangible assets from Yuan Da represent the value determined by an independent accounting firm for the intellectual property pertaining to a surveillance recording system developed by Yuan Da which was acquired by the Company on December 31, 2005.
Amortization expense for the years ended December 31, 2006, 2005 and 2004 was $643, $0 and $0, respectively.
Estimated amortization expense for the next five years and thereafter is as follows:
2007
$
1,706
2008
1,987
2009
2,784
2010
2,145
2011
1,145
Thereafter
230
Total
$
9,997
F-23
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
Expressed in thousands of U.S. dollars
(Except for share and per share amounts)
11.    EQUITY IN AFFILIATED COMPANIES
Prior to the acquisition by the Company, Cheng Feng owned 36.5% of Shanghai Yiruida, a non-public Chinese entity. The investment balance in Shanghai Yiruida at June 30, 2006 was $7. Shanghai Yiruida was sold to a third party for approximately $320 in November 2006 and a gain of $307 on the sale was recorded in other income.
12.    NOTES PAYABLE
The following is a summary of our short-term and long-term notes payable as of December 31, 2006 and 2005:
2006
2005
Bank loans
$
4,282
$
--
Less: current portion
(2,272)
--
Long-term portion
$
2,010
$
--
Long-term notes
Short-term notes
Total
2007
$
222
$
2,050
$
2,272
2008
212
--
212
2009
223
--
223
2010
236
--
236
2011
248
--
248
Thereafter
1,091
--
1,091
Total
$
2,232
$
2,050
$
4,282
On August 16, 2006, the Company entered into a loan agreement with a Chinese bank. The Company borrowed RMB 10,000 (approximately $1,281) with an annual interest rate of 5.94%. The loan is due on February 16, 2007, and the interest is payable at the end of each month. The loan agreement requires the Company to use the loan proceeds only for the Company's operations. The bank has the right to increase the interest rate and demand repayment of the entire loan principal and unpaid interest if the Company uses the loan for purpose other than operations. The loan is guaranteed by the CEO of the Company.
Long term liabilities are long term loans from banks. As of December 31, 2006, total long term liabilities were $2,232, is a 10-year loan borrowed from China Construction Bank for the purposes of purchasing new office premises in Shenzhen. This loan was granted on September 27, 2006, maturing on September 26, 2016, with an annual interest rate of 7.524%.
On November 1, 2005, Cheng Feng entered into a loan agreement with a Chinese bank in its amount of RMB 6,000 (approximately $769) with an annual interest rate of 5.76%. The loan is due on November 7, 2007, and the interest is payable at the end of each quarter. The loan agreement requires the Company to use the loan proceeds only for the Company's operations. The bank has the right to increase the interest rate and demand repayment of the entire loan principal and unpaid interest if the Company uses the loan for purpose other than operations.
The loan is guaranteed by two third-party companies. According to the guaranty and security agreement, the loan is also collateralized by the office building owned by the Company and the personal assets of Chief Executive Officer of Cheng Feng. The Company is also required to pay the guarantors a loan default fee equal to 20% of the loan amount plus interest at 10.7% if the loan is in default.
The Company is required to pay the guarantors an annual guaranty fee equal to 2.5% of the loan principal amount and an annual management and security fee equal to 3% of the loan principal. The Company prepaid these fees in November 2005 and amortizes the fees throughout the loan term.
F-24
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
Expressed in thousands of U.S. dollars
(Except for share and per share amounts)
13.    DEFERRED INCOME
Deferred income balances as of December 31, 2006 and 2005 were $831 and $887 respectively, and represented amounts invoiced but deferred as revenue as an estimated warranty reserve in accordance with the accounting policy in note 2(o).
14.    DUE TO DIRECTOR
The Company has received advances from a director. The advances are non-interest bearing and are repayable upon demand. The balances due to the director were $76 and $70, at December 31, 2006 and 2005, respectively.
15.    INCOME TAXES
(a)
Corporation Income Tax ("CIT")
CSST is governed by the Income Tax Laws of the PRC. The PRC federal statutory tax rate is 30% and the local tax rate is 3%. CSST's operating companies, Golden Group and Cheng Feng enjoyed the following preferential tax benefits:
Golden Group is located in the Shenzhen Special Economic Zone and its corporate income tax rate is 15% for the years ended December 31, 2006, 2005, 2004 and future years.
Cheng Feng is located in Shanghai and its corporate tax rate ranges from 7.5% to 15% as it receives lower tax rates as a high-tech company. As a software company, it is exempt from local taxes.
The reconciliation of income taxes/(tax benefit) computed at the PRC federal and local statutory tax rate applicable to software and high-tech enterprises operating in Shanghai and in the Shenzhen Special Economic Zone in the PRC, to income tax expense is as follows:
2006
2005
2004
PRC Federal and local statutory tax rate
33%
33%
33%
Computed expected expense
$
8,848
$
2,655
$
2,186
Temporary differences
37
(529)
(62)
Non-deductible items
489
135
10)
Non-taxable items
(107)
(2)
(28)
Tax losses not recognized
30
--
--
Difference arising from differential tax rates
11
--
--
Others
(9)
--
(41)
Over/(under) provision
(92)
(31)
--
Preferential tax treatment
(5,318)
(1,448)
(1,192)
Income tax expense
$
3,889
$
$780
$
873
F-25
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
Expressed in thousands of U.S. dollars
(Except for share and per share amounts)
15.    INCOME TAXES (CONTINUED)
The provision for income taxes for each of the three years ended December 31, 2006, 2005, and 2004 are summarized as follows:
2006
2005
2004
Current
$
3,802
$
1,370
$
873
Deferred
87
(590)
--
$
3,889
$
780
$
873
The tax effects of temporary differences that give rise to the Company's net deferred tax assets and liabilities as of December 31, 2006 and 2005 are as follows:
2006
2005
Deferred income tax assets:
Deferred income
$
125
$
133
Depreciation
462
474
Deferred income tax liability:
Provision for doubtful debt
(84)
(17)
Net deferred tax assets
$
503
$
590
Deferred income tax assets:
Current portion
$
125
$
130
Non-current portion
462
460
587
590
Less: Deferred income tax liability -current portion
(84)
--
$
503
$
590
(b)
Value Added Tax ("VAT")
In accordance with the relevant taxation laws in the PRC, the normal VAT rate for domestic sales is 17%, which is levied on the invoiced value of sales and is payable by the purchaser. For companies in the Shenzhen Special Economic Zone, the VAT rate is 4%, which is levied on the invoiced value of sales and is payable by the purchaser. The Company is required to remit the VAT it collects to the tax authority.
For software sales that are inter-company transactions which have been eliminated in consolidation, the applicable VAT rate is 3% under the relevant tax concession for
"high-tech" corporations. The Company needs to pay the full amount of VAT calculated at 17% of the invoiced value of sales as required and subsequently receives a refund on 14% of the invoiced value of sales.
The VAT refundable balance was $23 at December 31, 2006 and VAT payable balance was $63 at December 31, 2005.
F-26
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
Expressed in thousands of U.S. dollars
(Except for share and per share amounts)
16.    COMMITMENTS AND CONTINGENCIES
(a)
Leases
During 2006, 2005 and 2004, the Company's branches leased offices in various cities in the PRC. The lease agreements expire on various dates through October 15, 2007. Rent expense for the years ended December 31, 2006, 2005 and 2004 was approximately $118, $53 and $22, respectively.
Future minimum lease payments for these office leases for the year ending December 31, 2007 amount to $66.
(b)
Warranty commitments
The Company issues a one year warranty with the sales of its surveillance and security systems. See note 2(o) for the calculation of this commitment.
(c)
Research and Development Commitment
The Company has established a strategic partnership with Beijing University under which the Company will provide funds to Beijing University for the research and development of video surveillance and security products. Under the agreement, the Company has agreed to provide Beijing University a maximum amount of RMB 2,000 ($256). The Company has paid RMB500 ($63) during 2006.
17.    SUBSEQUENT EVENTS
Notes Purchase Agreement
On February 20, 2007, the Company completed a Notes Purchase Agreement with Citadel Equity Fund Ltd. for a $60,000 guaranteed senior unsecured convertible notes financing. This financing replaced the existing bridge financing that was closed on February 8, 2007 in which the Company issued to Citadel $60,000 aggregate principal amount of Senior Notes. The notes will bear interest at a rate of 1% and are due in 2012. The notes carry an initial conversion price of $18 per share. The net proceeds will be used for the Company's working capital and acquisition plan.
Equity Incentive Plan
On February 7, 2007, the Board of Directors of adopted the 2007 Equity Incentive Plan, which provides for grants of stock options, stock appreciation rights, performance units, restricted stock, restricted stock units and performance shares (collectively, the
"Awards"). Thereafter, on February 16, 2007, the Company filed a registration statement on Form S-8 registering the shares issuable pursuant to the 2007 Plan.
On February 27, 2007, the Company granted an aggregate of 1,052,100 shares of restricted stock pursuant to the 2007 Plan to 383 employees and consultants of the company. These shares will vest with respect to each of the 383 employees and consultants over a period of four years.
F-27
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC.
1,538,462  shares of common stock
PROSPECTUS
_______ , 2007
Dealer Prospectus delivery obligation
----------------------------------------------
Until 90 days from the date of this prospectus, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus.  This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 13.  Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses, other than underwriting discounts and commissions, payable by us in connection with the sale of common stock being registered.  All amounts, other than the SEC registration fee, are estimates.  We will pay all these expenses.
Amount to be
Paid
SEC Registration Fee
$
766
Printing Fees and Expenses
5,000
Legal Fees and Expenses
10,000
Accounting Fees and Expenses
10,000
Blue Sky Fees and Expenses
1,000
Transfer Agent and Registrar Fees
500
Miscellaneous
5,000
Total
$
32,266
Item 14.  Indemnification of Directors and Officers
Our bylaws provide for the indemnification of our present and prior directors and officers or any person who may have served at our request as a director or officer of another corporation in which we own shares of capital stock or of which we are a creditor, against expenses actually and necessarily incurred by them in connection with the defense of any actions, suits or proceedings in which they, or any of them, are made parties, or a party, by reason of being or having been director(s) or officer(s) of us or of such other corporation, in the absence of negligence or misconduct in the performance of their duties.  This indemnification policy could result in substantial expenditure by us, which we may be unable to recoup.
Insofar as indemnification by us for liabilities arising under the Securities Act may be permitted to our directors, officers and  controlling persons pursuant to provisions of the Articles of Incorporation and Bylaws, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy and is, therefore, unenforceable.  In the event that a claim for indemnification by such director, officer or controlling person of us in the successful defense of any action, suit or proceeding is asserted by such director, officer or controlling person in connection with the securities being offered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
At the present time, there is no pending litigation or proceeding involving a director, officer, employee or other agent of ours in which indemnification would be required or permitted.  We are not aware of any threatened litigation or proceeding which may result in a claim for such indemnification.
II-1
Item 15.  Recent Sales of Unregistered Securities
On April 24, 2007, we entered into a Notes Purchase Agreement
with Citadel pursuant to which the Company issued and sold to Citadel $50 million Guaranteed Senior Unsecured Convertible Notes due 2012.  The notes carry an initial conversion price of $23.6 per share.  If the notes are not converted before its maturity, the notes will be redeemed by the Company on the maturity date at a redemption price equal to 100% of the principal amount of the notes then outstanding plus an additional amount such that the total amount represents to the holders thereof a gross yield (including the paid or any accrued and unpaid interest) of 15.0% per annum, calculated on a quarterly compounded basis, plus any accrued and unpaid interest.  The offer and sale of the Notes were made in an offshore transaction pursuant to Regulation S under the Securities Act.
On February 16, 2007, we entered into a Notes Purchase Agreement with Citadel pursuant to which the Company issued and sold to Citadel $60 million Guaranteed Senior Unsecured Convertible Notes due 2012.  The notes carry an initial conversion price of $18 per share.  If the notes are not converted before its maturity, the notes will be redeemed by the Company on the maturity date at a redemption price equal to 100% of the principal amount of the notes then outstanding plus an additional amount such that the total amount represents to the holders thereof a gross yield (including the paid or any accrued and unpaid interest) of 15.0% per annum, calculated on a quarterly compounded basis, plus any accrued and unpaid interest.  The offer and sale of the Notes were made in an offshore transaction pursuant to Regulation S under the Securities Act.
On December 19, 2006, we issued 1,361,748 shares of our common stock to the former owners of all of the issued and outstanding common stock of Cheng Feng in connection with our acquisition of Chen Feng.  Prior to the acquisition of Cheng Feng,
no material relationship existed between the Company and the Sellers and/or their affiliates, directors, officers or any associate of an officer or director.  These stock issuances were made in an offshore transaction pursuant to Regulation S under the Securities Act.
On November 27, 2006, we entered into an agreement with three accredited investors, two of whom are qualified institutional buyers as defined in Rule 144A under the Securities Act of 1933, whereby we agreed to sell an aggregate of 1,538,462 shares of our common stock for a consideration of $10 million at a price of $6.50 per share.  There was no general solicitation or advertising for securities issued in reliance upon Regulation D.
In November 2006, we issued an aggregate of 850,000 shares of our common stock to the minority shareholders of the Four-Related Companies pursuant to our acquisition of the Four-Related Companies.  These stock issuances were made in an offshore transaction pursuant to Regulation S under the Securities Act.
In October 2006, we issued 50,000 shares of our common stock to Hayden Communications, Inc. as payment for their investor relationship services rendered pursuant to a consulting agreement dated February 9, 2006.  These stock issuances were exempt from registration pursuant to Section 4(2) of the Securities Act.
On July 31, 2006, we issued
4,634,592 units to 26 accredited investors for an aggregate gross cash purchase price of $16,221,093 at a price of $3.50 per share.  Each unit consists of one share of our common stock and a warrant to purchase one-fifth of one share of our common stock.  We also issued warrants to purchase 324,421 shares of our common stock with an exercise price of $4.20 to two placement agents as compensation for their services in connection with the private placement.  The issuance of our shares to these individuals was made in reliance on the exemption provided by Section 4(2) of the Securities Act for the offer and sale of securities not involving a public offering and regulation D promulgated thereunder.
II-2
On April 4, 2006, we completed a private placement in which we sold 2,666,667 shares of our common stock at a price of $3.00 per share for aggregate gross proceeds of $800,000 to certain accredited investors.  We also issued warrants to purchase 416,667 shares of our common stock to certain entities as compensation for their services in connection with the private placement, 150,000 of which have an exercise price of $3.80 per share, while the remaining 266,667 are exercisable at a price of $3.00 per share.  The issuance of our shares to these individuals was made in reliance on the exemption provided by Section 4(2) of the Securities Act for the offer and sale of securities not involving a public offering and Regulation D promulgated thereunder.
In March 2006, we issued 100,000 shares of common stock to Terence Yap as payment for his services rendered.  The value attributed to these shares was $350,000 ($3.50 per share). These stock issuances were exempt from registration pursuant to Section 4(2) of the Securities Act.
In October 2005, we issued 200,000 shares of common stock to shareholders of Yuanda in connection with our acquisition of Yuanda.  The value attributed to these shares was $500,000 ($2.50 per share).  These stock issuances were exempt from registration pursuant to Section 4(2) of the Securities Act.
In September 2005, we granted warrants to purchase 100,000 shares of our common stock to Rubenstein Investor Relations, Inc. and its officers with an exercise price of $1.85 as payment for the investor relationship services rendered.  These stock issuances were exempt from registration pursuant to Section 4(2) of the Securities Act.
In September 2005, we issued 8,138,000 shares of our common stock to stockholders of Safetech.  The total consideration for the 8,138,000 shares of our common stock is 50,000 shares of capital stock of Safetech, which is all the issued and outstanding capital stock of Safetech.  We did not receive any cash consideration in connection with the share exchange.  The number of our shares issued to the stockholders of Safetech was determined based on an arms-length negotiation.  The issuance of our shares to these individuals was made in reliance on the exemption provided by Section 4(2) of the Securities Act for the offer and sale of securities not involving a public offering.
In instances described above where we issued securities in reliance upon Regulation D, we relied upon Rule 506 of Regulation D under the Securities Act.  These stockholders who received the securities in such instances made representations that (a) the stockholder is acquiring the securities for his, her or its own account for investment and not for the account of any other person and not with a view to or for distribution, assignment or resale in connection with any distribution within the meaning of the Securities Act, (b) the stockholder agrees not to sell or otherwise transfer the purchased shares unless they are registered under the Securities Act and any applicable state securities laws, or an exemption or exemptions from such registration are available, (c) the stockholder has knowledge and experience in financial and business matters such that he, she or it is capable of evaluating the merits and risks of an investment in us, (d) the stockholder had access to all of our documents, records, and books pertaining to the investment and was provided the opportunity ask questions and receive answers regarding the terms and conditions of the offering and to obtain any additional information which we possessed or were able to acquire without unreasonable effort and expense, and (e) the stockholder has no need for the liquidity in its investment in us and could afford the complete loss of such investment.  Management made the determination that the investors in instances where we relied on Regulation D are Accredited Investors (as defined in Regulation D) based upon management's inquiry into their sophistication and net worth.  In addition, there was no general solicitation or advertising for securities issued in reliance upon Regulation D.
II-3
In instances described above where we indicate that we relied upon Regulation S promulgated under the Securities Act in issuing securities, our reliance was based upon the following factors (a) each subscriber was neither a U.S. person nor acquiring the shares for the account or benefit of any U.S. person, (b) each subscriber agreed not to offer or sell the shares (including any pre-arrangement for a purchase by a U.S. person or other person in the United States) directly or indirectly, in the United States or to any natural person who is a resident of the United States or to any other U.S. person as defined in Regulation S unless registered under the Securities Act and all applicable state laws or an exemption from the registration requirements of the Securities Act and similar state laws is available, (c) each subscriber made his, her or its subscription from the subscriber's residence or offices at an address outside of the United States and (d) each subscriber or the subscriber's advisor has such knowledge and experience in financial and business matters that the subscriber is capable of evaluating the merits and risks of, and protecting his interests in connection with an investment in us.
In instances described above where we indicate that we relied upon Section 4(2) of the Securities Act in issuing securities, our reliance was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there were only a limited number of offerees; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d) the securities were not broken down into smaller denominations; and (e) the negotiations for the sale of the stock took place directly between the offeree and us.
Item 16. Exhibits and Financial Statement Schedules
The following exhibits are included as part of this Form S-1.
Exhibit Number
Description
2.1
Plan of Merger by and between China Security & Surveillance Technology, Inc., a BVI corporation, and China Security & Surveillance Technology, Inc., a Delaware corporation, dated September 30, 2006 (herein incorporated by reference from the registrant's registration statement on Form S-4 filed with the Securities and Exchange Commission on October 4, 2006).
2.2
Share Exchange Agreement, dated as of July 22, 2005, between the registrant and China Safetech Holdings Limited (herein incorporated by reference from the registrant's current report on Form 6-K filed with the Securities and Exchange Commission on July 22, 2005).
II-4
3.1
Certificate of Incorporation of the registrant (herein incorporated by reference from the registrant's registration statement on Form S-4 filed with the Securities and Exchange Commission on October 4, 2006).
3.2
By-laws of the registrant (herein incorporated by reference from the registrant's registration statement on Form S-4 filed with the Securities and Exchange Commission on October 4, 2006).
4.1
Notes Purchase Agreement, dated February 5, 2007, by and between the registrant and Citadel Equity Fund Ltd. (herein incorporated by reference from the registrant's report on Form 8-K filed with the Securities and Exchange Commission on February 9, 2007).
4.2
Share Pledge Agreement, dated February 8, 2007, by and among Citadel Equity Fund Ltd., The Bank of New York, Guoshen Tu, Zhiqun Li and Whitehorse Technology Limited (herein incorporated by reference from the registrant's report on Form 8-K filed with the Securities and Exchange Commission on February 9, 2007).
4.3
Form of the Notes (herein incorporated by reference from the registrant's report on Form 8-K filed with the Securities and Exchange Commission on February 9, 2007).
4.4
Notes Purchase Agreement, dated February 16, 2007, by and among the registrant, Safetech, CSST HK, CSST PRC, Golden, Cheng Feng and Citadel Equity Fund Ltd. (herein incorporated by reference from the registrant's report on Form 8-K filed with the Securities and Exchange Commission on February 16, 2007).
4.5
Indenture, dated February 16, 2007, among the registrant, Safetech, CSST HK and The Bank of New York (herein incorporated by reference from the registrant's report on Form 8-K filed with the Securities and Exchange Commission on February 16, 2007).
4.6
Investor Rights Agreement, dated February 16, 2007, among the registrant, Safetech, CSST HK, CSST PRC, Golden, Cheng Feng, Guoshen Tu, Zhiqun Li, Whitehorse Technology Limited and Citadel Equity Fund Ltd. (herein incorporated by reference from the registrant's report on Form 8-K filed with the Securities and Exchange Commission on February 16, 2007).
4.7
Supplemental Indenture, dated March 29, 2007, among the Company, Safetech, CSST-HK and The Bank of New York (herein incorporated by reference from the registrant's report on Form 8-K filed with the Securities and Exchange Commission on April 2, 2007).
4.8
Amendment to the Investor Rights Agreement, dated March 29, 2007, among the Company, Safetech, CSST-HK, CSST-PRC, Golden, Cheng Feng, Mr. Tu, Ms. Li, Whitehorse and Citadel (herein incorporated by reference from the registrant's report on Form 8-K filed with the Securities and Exchange Commission on April 2, 2007).
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4.9
Notes Purchase Agreement by and among the Company, Chain Star, Safetech, CSST HK, CSST PRC, Golden, Cheng Feng, Cheng Feng Equipment, Cheng Feng Public Safety, Hongtianzhi, Shixing, Tongxing and Citadel, dated April 24, 2007 (herein incorporated by reference from the registrant's report on Form 8-K filed with the Securities and Exchange Commission on April 25, 2007).
4.10
Indenture by and among the Company, Chain Star, Safetech, CSST HK and The Bank of New York, dated April 24, 2007 (herein incorporated by reference from the registrant's report on Form 8-K filed with the Securities and Exchange Commission on April 25, 2007).
4.11
Amended and Restated Investor Rights Agreement by and among the Company, Chain Star, Safetech, CSST HK, CSST PRC, Golden, Cheng Feng, Cheng Feng Equipment, Cheng Feng Public Safety, Hongtianzhi, Shixing, Tongxing, Mr. Tu, Ms. Li, Whitehorse and Citadel, dated April 24, 2007 (herein incorporated by reference from the registrant's report on Form 8-K filed with the Securities and Exchange Commission on April 25, 2007).
4.12
Second Supplemental Indenture by and among the Company, Chain Star, Safetech, CSST HK and The Bank of New York, dated April 24, 2007 (herein incorporated by reference from the registrant's report on Form 8-K filed with the Securities and Exchange Commission on April 25, 2007).
5
Opinion of Thelen Reid Brown Raysman & Steiner LLP*
10.1
Share Purchase Agreement, dated as of July 22, 2005, by and among the registrant, Whitehorse Technology Limited and First Asia International Holdings Limited (herein incorporated by reference from the registrant's report on Form 6-K filed with the Securities and Exchange Commission on July 22, 2005).
10.2
Equity Transfer Agreement, dated as of October 25, 2005, by and among the registrant, Golden Group Corporation (Shenzhen) Limited, Shenzhen Yuan Da Wei Shi Technology Limited and its stockholders Jianguo Jiang and Jing Li (herein incorporated by reference from the registrant's report on Form 20-F filed with the Securities and Exchange Commission on June 14, 2006). (English Summary)
10.3
Amendment No. 1 to the Equity Transfer Agreement, dated as of April 28, 2006, by and among the registrant, Golden Group Corporation (Shenzhen) Limited, Shenzhen Yuan Da Wei Shi Technology Limited and its stockholders Jianguo Jiang and Jing Li (herein incorporated by reference from the registrant's report on Form 20-F filed with the Securities and Exchange Commission on June 14, 2006). (English Summary)
10.4
Amendment No. 2 to the Equity Transfer Agreement, dated as of May 25, 2006, by and among the registrant, Golden Group Corporation (Shenzhen) Limited, Shenzhen Yuan Da Wei Shi Technology Limited and its stockholders Jianguo Jiang and Jing Li. (herein incorporated by reference from the registrant's report on Form 20-F filed with the Securities and Exchange Commission on June 14, 2006). (English Summary)
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10.5
Securities Purchase Agreement, dated as of April 4, 2006, among the registrant and certain investors (herein incorporated by reference from the registrant's current report on Form 6-K filed with the Securities and Exchange Commission on April 5, 2006).
10.6
Registration Rights Agreement, dated as of April 4, 2006, among the registrant and certain investors (herein incorporated by reference from the registrant's current report on Form 6-K filed with the Securities and Exchange Commission on April 5, 2006).
10.7
Cooperation Agreement, dated as of February 17, 2006, by and between Golden Group Corporation (Shenzhen) Limited and Graduate School (Shenzhen) of Beijing University (herein incorporated by reference from the registrant's report on Form 20-F filed with the Securities and Exchange Commission on June 14, 2006). (English Summary)
10.8
Consulting Agreement, dated as of February 8, 2006, by and between the registrant and Terence Yap (herein incorporated by reference from the registrant's report on Form 20-F filed with the Securities and Exchange Commission on June 14, 2006).
10.9
Amendment No. 1 to Consulting Agreement, dated as of June 27, 2006, by and between the registrant and Terence Yap (herein incorporated by reference from the registrant's annual report on Form 20-F filed with the Securities and Exchange Commission on June 28, 2006).
10.10
Form of Securities Purchase Agreement, dated as July 6, 2006, by and among CSST BVI and certain investors (herein incorporated by reference from the registrant's current report on Form 6-K filed with the Securities and Exchange Commission on July 6, 2006).
10.11
Form of Registration Rights Agreement, dated as July 6, 2006, by and among CSST BVI and certain investors (herein incorporated by reference from the registrant's current report on Form 6-K filed with the Securities and Exchange Commission on July 6, 2006).
10.12
Form of Warrant (herein incorporated by reference from the registrant's current report on Form 6-K filed with the Securities and Exchange Commission on July 6, 2006).
10.13
Form of Escrow Agreement, dated July 6, 2006, by and among the registrant, certain investors and Thelen Reid & Priest LLP (herein incorporated by reference from the registrant's current report on Form 6-K filed with the Securities and Exchange Commission on July 6, 2006).
10.14
Framework Agreement, dated July 6, 2006, by and among the registrant, China Safetech Holdings Limited and shareholders of Shanghai Cheng Feng Digital Technology Co., Ltd (herein incorporated by reference from the registrant's current report on Form 6-K filed with the Securities and Exchange Commission on July 7, 2006). (English Summary)
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10.15
Form of Waiver and Amendment to Securities Purchase Agreement, dated July 26, 2006, by and among the registrant and certain investors (herein incorporated by reference from the registrant's current report on Form 6-K filed with the Securities and Exchange Commission on July 31, 2006).
10.16
Form of Second Waiver and Amendment, dated July 27, 2006, by and among the registrant and certain investors (herein incorporated by reference from the registrant's current report on Form 6-K filed with the Securities and Exchange Commission on July 31, 2006).
10.17
Asset Purchase Agreement, dated September 5, 2006, by and among the registrant, Golden Group Corporation (Shenzhen) Limited and Jian Golden An Ke Technology Co. Ltd. (English Summary) (herein incorporated by reference from the registrant's registration statement on Form S-1 filed with the Securities and Exchange Commission on October 23, 2006).
10.18
Asset Purchase Agreement, dated September 5, 2006, by and among the registrant, Golden Group Corporation (Shenzhen) Limited and Shenzhen Golden Guangdian Technology Co. Ltd. (English Summary) (herein incorporated by reference from the registrant's registration statement on Form S-1 filed with the Securities and Exchange Commission on October 23, 2006).
10.19
Asset Purchase Agreement, dated September 5, 2006, by and among the registrant, Golden Group Corporation (Shenzhen) Limited and Shenyang Golden Digital Technology Co. Ltd. (English Summary) (herein incorporated by reference from the registrant's registration statement on Form S-1 filed with the Securities and Exchange Commission on October 23, 2006).
10.20
Asset Purchase Agreement, dated September 5, 2006, by and among the registrant, Golden Group Corporation (Shenzhen) Limited and Jiangxi Golden Digital Technology Co. Ltd. (English Summary) (herein incorporated by reference from the registrant's registration statement on Form S-1 filed with the Securities and Exchange Commission on October 23, 2006).
10.21
China Security & Surveillance Technology, Inc. 2007 Equity Incentive Plan (herein incorporated by reference from the registrant's current report on Form 8-K filed with the Securities and Exchange Commission on February 13, 2007).
10.22
Letter Agreement Regarding Stock Purchase, dated as of November 27, 2006, by and among the registrant and certain investors (herein incorporated by reference from the registrant's current report on Form 8-K filed with the Securities and Exchange Commission on November 19, 2006).
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10.23
Strategic Cooperation Agreement, dated September 28, 2006, by and between the registrant and China Construction Bank. (English Translation) (herein incorporated by reference from the registrant's annual report on Form 10-K filed with the Securities and Exchange Commission on March 21, 2007).
14
Code of Ethics (herein incorporated by reference from the registrant's annual report on Form 20-F filed with the Securities and Exchange Commission on June 28, 2006).
21
List of Subsidiaries *
23.1
Consent of GHP Horwath, P.C. *
23.2
Consent of Child, Van Wagoner & Bradshaw, PLLC. *
24
Power of Attorney (included on signature page).
99.1
Form of Restricted Stock Grant Agreement (herein incorporated by reference from the registrant's current report on Form 8-K filed with the Securities and Exchange Commission on March 8, 2007).
99.2
Real Property Trust Agreement, dated August 21, 2006, by and between Zhiqun Li and Golden Group Corporation (Shenzhen) Limited (English Translation) (herein incorporated by reference from the registrant's annual report on Form 10-K filed with the Securities and Exchange Commission on March 21, 2007).
*Filed herewith
Item 17.  Undertakings
The undersigned registrant hereby undertakes to:
File, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to:
(a)
Include any prospectus required by Section 10(a)(3) of the Securities Act, and
(b)
Reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information in the registration statement.  Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement, and
(c)
Include any additional or changed material information on the plan of distribution.
For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering.
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File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.
For determining any liability under the Securities Act, treat each post-effective amendment that contains a form of prospectus as a new registration statement for the securities offered in the registration statement, and that offering of the securities at that time as the initial bona fide offering of those securities.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Shenzhen, China, on the 30th day of April, 2007.
China Security & Surveillance
      Technology, Inc.
By: /s/ Guoshen Tu
Guoshen Tu
Chief Executive Officer and
      President
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.  Each person whose signature appears below constitutes and appoints Guoshen Tu and Terence Yap, and each of them individually, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the SEC, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
SIGNATURE
TITLE
/s/ Guoshen Tu
Guoshen Tu
Chief Executive Officer, President and Director
(Principal Executive Officer)
/s/ Terence Yap
Terence Yap
Vice President and Director
/s/ Shufang Yang
Shufang Yang
Chief Operating Officer and Director
/s/ Jianguo Jiang
Jianguo Jiang
Vice President and Director
/s/ Lingfeng Xiong
Lingfeng Xiong
Vice President, Director and Secretary
EXHIBIT INDEX
Exhibit No.
Description
5
Opinion of Thelen Reid Brown Raysman & Steiner LLP
21
List of subsidiaries
23.1
Consent of GHP Horwath, P.C.
23.2
Consent of Child, Van Wagoner & Bradshaw, PLLC.