UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                 ---------------

                                    FORM 8-K

                                 CURRENT REPORT

     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) December 13, 2005

                                 ---------------

                           PARALLEL TECHNOLOGIES, INC.
                           ---------------------------
               (Exact name of Registrant as specified in charter)

        Nevada                        0-19276                 13-3140715
------------------------       ---------------------        -------------
(State of Incorporation)       (Commission File No.)        (IRS Employer
                                                         Identification Number)

     1 Shuang Qiang Road, Jinzhou, Dalian, People's Republic of China 116100
     -----------------------------------------------------------------------
     (Address of principal executive offices)                  (Zip Code)

Registrant's telephone number, including area code:    (011)-86-411-8770-3333
                                                       ----------------------

                                c/o Glenn Little
                              211 West Wall Street
                              Midland, Texas 79701
                                 (432) 682-1761


          -------------------------------------------------------------
          (Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities
Act(17CFR230.425)

[ ] Soliciting material pursuant to Rule14a-12 under the Exchange Act
(17CFR240.14a-2)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17CFR240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17CFR240.13e-4(c))


<PAGE>

                                TABLE OF CONTENTS

Item No.                Description of Item                             Page No.
-------                 -------------------                             -------

Item 1.01   Entry Into a Material Definitive Agreement.....................4
Item 2.01   Completion of Acquisition or Disposition of Assets............11
Item 3.02   Unregistered Sale of Securities...............................88
Item 3.03   Material Modification of Rights of Securityholders............88
Item 4.01   Changes in Registrant's Certifying Accountant.................92
Item 5.01   Change In Control of Registrant...............................93
Item 5.06   Change in Shell Company Status................................93
Item 9.01   Financial Statements and Exhibits.............................94


<PAGE>

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

      Our disclosure and analysis in this Current Report on Form 8-K contains
some forward-looking statements. Certain of the matters discussed concerning our
operations, cash flows, financial position, economic performance and financial
condition, including, in particular, future sales, product demand, the market
for our products in the PRC, competition, exchange rate fluctuations and the
effect of economic conditions include forward-looking statements within the
meaning of section 27A of the Securities Act and Section 21E of the Exchange
Act.

      Statements that are predictive in nature, that depend upon or refer to
future events or conditions or that include words such as "expects,"
"anticipates," "intends," "plans," "believes," "estimates" and similar
expressions are forward-looking statements. Although we believe that these
statements are based upon reasonable assumptions, including projections of
orders, sales, operating margins, earnings, cash flow, research and development
costs, working capital, capital expenditures and other projections, they are
subject to several risks and uncertainties, and therefore, we can give no
assurance that these statements will be achieved.

      Investors are cautioned that our forward-looking statements are not
guarantees of future performance and the actual results or developments may
differ materially from the expectations expressed in the forward-looking
statements.

      As for the forward-looking statements that relate to future financial
results and other projections, actual results will be different due to the
inherent uncertainty of estimates, forecasts and projections may be better or
worse than projected. Given these uncertainties, you should not place any
reliance on these forward-looking statements. These forward-looking statements
also represent our estimates and assumptions only as of the date that they were
made. We expressly disclaim a duty to provide updates to these forward-looking
statements, and the estimates and assumptions associated with them, after the
date of this filing to reflect events or changes in circumstances or changes in
expectations or the occurrence of anticipated events.

      We undertake no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or otherwise.
You are advised, however, to consult any additional disclosures we make in our
reports on Form 10-KSB, Form 10-QSB, Form 8-K, or their successors. We also note
that we have provided a cautionary discussion of risks and uncertainties under
the caption "Risk Factors" in this Current Report. These are factors that we
think could cause our actual results to differ materially from expected results.
Other factors besides those listed here could also adversely affect us.

      Information regarding market and industry statistics contained in this
Current Report is included based on information available to us which we believe
is accurate. We have not reviewed or included data from all sources, and cannot
assure stockholders of the accuracy or completeness of the data included in this
Current Report. Forecasts and other forward-looking information obtained from
these sources are subject to the same qualifications and the additional
uncertainties accompanying any estimates of future market size, revenue and
market acceptance of products and services. This discussion is provided as
permitted by the Private Securities Litigation Reform Act of 1995.



                                       1
<PAGE>

      Unless otherwise noted, all currency figures in this filing are in U.S.
dollars. References to "yuan" or "RMB" are to the Chinese yuan (also known as
the renminbi). According to Xe.com as of December 11, 2005, $1.00 = 8.07490
yuan.

                                Explanatory Note

      This Current Report on Form 8-K is being filed by Parallel Technologies,
Inc. (the "Company") in connection with a series of restructuring transactions
in which the Company will acquire substantially all of the assets and business
of Dalian Fushi Bimetallic Manufacturing Co., Ltd. ("Dalian Fushi"), a limited
liability company organized under the laws of the People's Republic of China
("PRC"). As part of the transactions, Dalian Fushi acquired a controlling
interest in the Company from Glenn A. Little, who previously held a majority of
our Common Stock. Upon the completion of the restructuring transactions, which
we anticipate will be completed 15 days after date of this Current Report, the
business of Dalian Fushi will be operated by our sole operating subsidiary,
Dalian Diversified Product Inspections Bimetallic Cable Co., Ltd. ("Dalian
DPI"), a wholly foreign-owned entity in the PRC. The business consists of
manufacturing and selling copper clad aluminum and steel wire, both of which are
bimetallic composite wire products that are principally used for network signal
transmission cable, cable television wire, signal transmission cable, cable
television subscriber lines, distribution lines, local area networks, inner
conductor for access networks, telephone subscriber communication lines, patch
cords for electronic components, power system grounding lines, conductor lines
for electric railways and other applications. See "Business" in Item 2.01 of
this Current Report for more information on our acquired business.

      The Company accomplished the acquisition through the following steps.

      1. Dalian Fushi's shareholders and Dalian Fushi's U.S. financial adviser,
Kuhns Brothers, Inc. ("Kuhns Brothers"), formed a Delaware corporation called
Diversified Product Inspections, Inc. ("DPI") and Dalian DPI, a PRC entity.
Dalian DPI is 100% owned by DPI and is a "wholly foreign owned entity" under PRC
law by virtue of its status as a wholly-owned subsidiary of DPI, as a non-PRC
company.

      2. On November 8, 2005, Dalian Fushi entered into a stock purchase
agreement with our former director, chief executive officer and majority
shareholder, Glenn A. Little, which closed on December 13, 2005. Pursuant to
this agreement, as amended, Mr. Little sold his 20,000,000 shares of Company
common stock, par value $.006 per share ("Common Stock"), to Dalian Fushi. As a
result, Dalian Fushi became the majority shareholder of the Company. In
connection with this agreement, and prior to its closing, Mr. Little, as
director and majority shareholder of the Company resigned as a director of the
Company and appointed Li Fu, Yue Mathus Yang and John D. Kuhns as directors of
the Company. Mr. Fu and Mr. Yang are also beneficial shareholders and officers
of Dalian Fushi. The directors of DPI and Dalian DPI will be identical to those
of the Company. Mr. Little also resigned all his officer positions with the
Company effective immediately following the closing of a private placement
offering described in step 5 below. Contemporaneous with Mr. Little's
resignation from his officer positions, the new directors of the Company
appointed new officers with immediate effect. See "Our Directors and Officers"
in Item 2.01 of this Current Report for more information on these persons and
Item 5.01 of this Current Report for more information on the stock purchase
agreement between Dalian Fushi and Mr. Little.



                                       2
<PAGE>

      3. On December 13, 2005, the Company consummated a share exchange
agreement (the "Share Exchange Agreement") with DPI, whereby the Company
exchanged 784,575.16 shares of its newly designated Series A Convertible
Preferred Stock (the "Series A Stock") for all of the issued and outstanding
stock of DPI held by the DPI shareholders. The Series A Stock is convertible
into Common Stock following the reverse stock split described below. As a
result, DPI and Dalian DPI became direct and indirect wholly-owned subsidiaries,
respectfully, of the Company. See Item 1.01 for additional information on the
share exchange with DPI and Item 1.01, Item 3.02 and 3.03 of this Current Report
for more information on the designation and issuance of the Series A Stock.

      4. Immediately following the above transactions, but on the same date,
Dalian DPI consummated a series of agreements with Dalian Fushi to purchase
substantially all of the assets of Dalian Fushi and lease the remaining assets
(collectively, the "Restructuring Agreements"). Under the Restructuring
Agreements, Dalian Fushi's business will be conducted by Dalian DPI. To the
extent that any aspect of Dalian Fushi's business needs to be conducted through
Dalian Fushi in the future, the Restructuring Agreements provide Dalian DPI with
the ability to control Dalian Fushi and any of its remaining assets and
operations. The Restructuring Agreements were utilized, instead of a complete
acquisition of Dalian Fushi's assets, because current PRC law does not
specifically provide for the approval procedures and the detailed implementation
regulations on non-PRC entity's equity to be used as consideration to acquire a
PRC entity's equity or assets, which makes it impossible for a non-PRC entity to
use its equity to acquire a PRC entity. If acquisition of a PRC entity using
foreign equity was possible, the Company could have acquired 100% of the stock
of Dalian Fushi in exchange for Common Stock. While PRC law does allow for the
purchase of equity interests in (or assets of) a PRC entity by a non-PRC entity
for cash, the purchase price must be based on the appraised value of such equity
(or assets). Because the Company did not have sufficient cash to pay the
estimated full value of all of the assets of Dalian Fushi, the Company, through
Dalian DPI, purchased the maximum amount of assets possible with the net
proceeds of the private placement offering described below, and leased the
remainder of Dalian Fushi's assets used in Dalian Fushi's business for nominal
consideration. See Item 1.01 of this Current Report for more information on the
Restructuring Agreements.

      While the acquisition of the assets and business of Dalian Fushi was
effective on December 13, 2005, not all of the transactions contemplated by the
Restructuring Agreements have been consummated and the Company, through Dalian
DPI, has not yet commenced operation of the business. To complete these
transactions, Dalian DPI must complete additional filings and registrations,
including (i) completing a PRC registered capital verification process, (ii)
after such capital verification process, transmitting to Dalian Fushi the full
purchase price for the assets to be purchased by it under the Restructuring
Agreements, (iii) obtaining an environmental report for the assets purchased
from Dalian Fushi, and (iv) obtaining a new business license from the PRC State
Administration for Industry and Commerce in Dalian, PRC to reflect Dalian DPI's
status as an operating company. We anticipate these steps will be completed
within 15 days after the date of this Current Report, at which time Dalian DPI
will commence operations.


                                       3
<PAGE>

      5. The funds used for the consummation of the stock purchase agreement
with Mr. Little and the Restructuring Agreements were provided from the proceeds
of a $11,225,000 private placement offering by the Company which also closed on
December 13, 2005. The investors in this offering purchased 201,511.98 shares of
the Company's newly designated Series B Convertible Preferred Stock (the "Series
B Stock"), warrants to purchase additional shares of Common Stock and rights to
additional issuances of Common Stock based on certain conditions. The Series B
Stock is convertible into Common Stock following the reverse stock split
described below. See Item 1.01, 3.02 and 3.03 of this Current Report for more
information on the designation and issuance of the Series B Stock and warrants.
The net proceeds of the Series B Stock offering will otherwise be used by Dalian
DPI principally for the conduct of its business.

      The Series A Stock and the Series B Stock will not convert into shares of
Common Stock until the Company effects a 245.27 for 1 reverse stock split of its
Common Stock (the "Reverse Split"), as described in Item 3.03 of this Current
Report. The Reverse Split was approved on December 5, 2005 along with a change
in the Company's name to "Fushi International, Inc." The Reverse Split and name
change will occur within 25 days of the Company mailing a definitive Information
Statement on Schedule 14C to its shareholders, and a preliminary Information
Statement is being filed with the Securities and Exchange Commission (the "SEC")
on or about the date of this Current Report.

      As a result of the above transactions, the Company ceased being a shell
company as such term is defined in Rule 12b-2 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). See Item 5.06 of this Current Report.

      Throughout this Current Report, and unless the context otherwise requires,
"we," "our" and "us" refers collectively to the Company and its subsidiaries,
DPI and Dalian DPI.

Item 1.01. Entry into a Material Definitive Agreement.

      The following agreements were entered into in connection with the
acquisition of the business of Dalian Fushi.

The Share Exchange Agreement and the Issuance of Series A Stock

      On December 13, 2005, the Company entered into and consummated the Share
Exchange Agreement with the 14 holders of all of the outstanding capital stock
of DPI, which are Dalian Fushi Enterprise Group Co. Ltd., Yue Mathus Yang,
Xishan Yang, Chunyan Xu, Kuhns Brothers, John Kuhns, Mary Fellows, John Starr,
Jay Gutterman, Kelly Chow, Redwood Capital, Inc., Chris Bickel, Sam Shoen and
Paul Kuhns (collectively, the "DPI Stockholders").


                                       4
<PAGE>

      Of the DPI Stockholders, Dalian Fushi Enterprise Group Co., Ltd. (the
"Fushi Group"), Yue Mathus Yang, Xishan Yang and Chunyan Xu (collectively
referred to in this Current Report as the "Dalian Fushi Shareholders") also are
shareholders of Dalian Fushi, and owned approximately 95.12% of the outstanding
capital stock of DPI. Kuhns Brothers received its shares of DPI common stock for
services rendered in connection with the reorganization of Dalian Fushi's
business described below under "Restructuring Agreements".

      Under the Share Exchange Agreement, we issued an aggregate of 784,575.16
shares of our Series A Stock in exchange for the 15,560 shares of common stock
of DPI held by the DPI Stockholders. Each share of Series A Stock will convert
automatically into 4,838.86 shares of Common Stock before giving effect to the
Reverse Split, as more fully described in Item 3.03. As a result of the Reverse
Split, the Series A Stock will convert into an aggregate of 15,475,594.51 shares
of Common Stock, which will represent 78.45% of our total outstanding Common
Stock.

      As a result of the consummation of the Share Exchange Agreement, DPI is
now a wholly-owned subsidiary of the Company.

Acquisition of Dalian Fushi's Business

      In connection with the closing of the Share Exchange Agreement, on
December 13, 2005, Dalian DPI entered into the Restructuring Agreements, with
Dalian Fushi and the Dalian Fushi Shareholders. Under the Restructuring
Agreements, Dalian DPI purchased and leased substantially all of the assets of
Dalian Fushi. As a result, Dalian Fushi's business will be conducted by Dalian
DPI. To the extent that any aspect of Dalian Fushi's business needs to be
conducted through Dalian Fushi in the future, the Restructuring Agreements
provide Dalian DPI with the ability to control Dalian Fushi and any of its
remaining assets and operations. We anticipate that Dalian Fushi will continue
to be the contracting party under its customer contracts, bank loans and certain
other assets until such time as those may be transferred to Dalian DPI.

      As discussed in the Explanatory Note in the beginning of the Current
Report, while the Restructuring Agreements were entered into and closed on
December 13, 2005, not all of the transactions contemplated by the Restructuring
Agreements have been consummated and the Company is currently conducting its
acquired business out of Dalian Fushi, and upon the completion of transactions
in the Restructuring Agreements, through Dalian DPI. To complete these
transactions, Dalian DPI must complete additional filings and registrations,
including (i) completing a PRC registered capital verification process, (ii)
after such capital verification process, transmitting to Dalian Fushi the full
purchase price for the assets to be purchased by it under the Restructuring
Agreements, (iii) obtaining an environmental report for the assets purchased
from Dalian Fushi, and (iv) obtaining a new business license from the PRC State
Administration for Industry and Commerce in Dalian, PRC to reflect Dalian DPI's
status as an operating company. We anticipate these steps will be completed
within 15 days after the date of this Current Report, at which time Dalian DPI
will commence operations.


                                       5
<PAGE>

      The following is a summary of the material terms of each of the
Restructuring Agreements, the English translation of each of which is annexed as
an exhibit to this Current Report. All references to the Restructuring
Agreements and other agreements in this Current Report are qualified, in their
entirety, by the text of those agreements.

      Purchase Agreement. Under the purchase agreement between Dalian DPI and
Dalian Fushi (the "Purchase Agreement"), Dalian DPI will purchase from Dalian
Fushi (i) substantially all of Dalian Fushi's production equipment for RMB 24
million, (ii) all of Dalian Fushi's patents for RMB 100,000, (iii) Dalian
Fushi's inventory based on its book value as of the purchase date, and (iv)
Dalian Fushi's accounts receivable based on its book value as of the purchase
date. Additionally, Dalian Fushi leased to DPI substantially all of Dalian
Fushi's land (except for certain real property and assets that are currently
being leased to a third party) at an annual fee of RMB 100,000 and the remaining
manufacturing equipment at an annual fee of RMB 50,000. It also will grant a
secondary lien on the leased assets to Dalian DPI.

      Dalian Fushi also agreed to transfer any new patents issued under one PRC
and one international pending patent applications to Dalian DPI for a nominal
fee upon their issuance. Dalian Fushi further agreed to cause Mr. Li Fu, the PRC
registered holder of the "FUSHI" trademark and the holder of a patent, to
authorize the free use of the trademark by Dalian DPI and to transfer his patent
to Dalian DPI for a nominal fee. See "Trademark Authorization" below.

      In connection with these purchases and leases, Dalian Fushi agreed to
transfer its employees to Dalian DPI and provide its supplies, sales channels
and customer contracts to Dalian DPI, to the extent the customer's purchase
orders are assignable. In the event that Dalian Fushi's customers do not agree
to assign their purchase orders and agree to do business directly with Dalian
DPI, Dalian DPI will provide all necessary resources to Dalian Fushi so that it
may continue operations maintaining its existing relationships with these
customers.

      The source of funds for Dalian DPI to make payment under the Restructuring
Agreements were the proceeds of the private placement offering described in
"Series B Stock Financing" below and Item 3.02.

      First Patent Transfer Contract. Under this agreement between Dalian Fushi
and Dalian DPI, Dalian Fushi agreed to transfer to Dalian DPI the four patents
of which it is the registered owner for RMB 100,000.

      Dalian Fushi is in the process of commencing the patent transfer
procedure, which procedure is estimated to take three to five months to
complete. Prior to the effectiveness of the patent transfers, Dalian DPI
(subject to Dalian Fushi's right to use these patents) has the exclusive legal
right, royalty free, to use these patents. Dalian Fushi will execute any license
agreements required by the Company or Dalian DPI that they deem necessary or
advisable.


                                       6
<PAGE>

      Second Patent Transfer Contract. Under this agreement between Mr. Li Fu
and Dalian DPI, Mr. Fu agreed to transfer to Dalian DPI a patent (which is no
longer used in Dalian Fushi's business) of which he is the registered owner, for
RMB 10,000.

      Trademark Authorization. In this authorization statement (the "Trademark
Authorization"), Mr. Li Fu, the PRC registered owner of the "FUSHI" trademark,
authorized Dalian DPI to use this trademark for a perpetual period without any
fee.

      Entrusted Management Agreement. Pursuant to this entrusted management
agreement among Dalian DPI, Dalian Fushi, and the Dalian Fushi Shareholders (the
"Entrusted Management Agreement"), Dalian Fushi and its shareholders agreed to
entrust the business operations of Dalian Fushi and its management to Dalian DPI
until Dalian DPI acquires all of the assets or equity of Dalian Fushi (as more
fully described in the Exclusive Option Agreement below). Prior to the
occurrence of such event, Dalian Fushi will only own those certain assets that
are not sold to Dalian DPI. We anticipate that Dalian Fushi will continue to be
the contracting party under its customer contracts, banks loans and certain
other assets until such time as those may be transferred to Dalian DPI. Under
the Entrusted Management Agreement, Dalian DPI will manage Dalian Fushi's
operations and assets, and control all of Dalian Fushi's cash flow through an
entrusted bank account. In turn, it will be entitled to any of Dalian Fushi's
net profits as a management fee, and will be obligated to pay all Dalian Fushi
payables and loan payments. The Entrusted Management Agreement will remain in
effect until the acquisition of all assets or equity of Dalian Fushi by Dalian
DPI is completed.

      Shareholders' Voting Proxy Agreement. Under the shareholders' voting proxy
agreement among Dalian DPI and the Dalian Fushi Shareholders, the Dalian Fushi
Shareholders irrevocably and exclusively appointed the members of the board of
directors of Dalian DPI as their proxy to vote on all matters that require
Dalian Fushi shareholder approval. The members of the board of directors of
Dalian DPI are identical to those of the Company.

      Exclusive Option Agreement. Under the exclusive option agreement among
Dalian DPI and the Dalian Fushi Shareholders, the Dalian Fushi Shareholders
granted Dalian DPI an irrevocable and exclusive purchase option to acquire
Dalian Fushi's equity and/or remaining assets, but only to the extent that such
purchase does not violate limitations imposed by PRC law. As discussed in the
Explanatory Note in the beginning of this Current Report, current PRC law does
not specifically provides for a non-PRC entity's equity to be used as
consideration for the purchase of a PRC entity's assets or equity. The option is
exercisable when PRC law specifically allows foreign equity to be used as
consideration to acquire a PRC entity's equity interests and/or assets, or when
the Company has sufficient funds to purchase Dalian Fushi's equity or remaining
assets. The consideration for the exercise of the option is the shares of Common
Stock received by the Dalian Fushi Shareholders under the Share Exchange
Agreement.

      Share Pledge Agreement. Under this share pledge agreement among Dalian DPI
and the Dalian Fushi Shareholders (the "Share Pledge Agreement"), the Dalian
Fushi Shareholders pledged all of their equity interests in Dalian Fushi,
including the proceeds thereof, to guarantee all of Dalian DPI's rights and
benefits under the Restructuring Agreements. Prior to termination of this Share
Pledge Agreement, the pledged equity interests cannot be transferred without
Dalian DPI's prior consent.


                                       7
<PAGE>

Series B Stock Financing

      On December 13, 2005, we entered into and consummated a stock purchase
agreement, and amendment thereto (the "Series B Stock Purchase Agreement"), for
the sale of 201,511.98 shares of our Series B Stock, along with warrants and
rights to receive additional shares of Common Stock under certain conditions,
for $11,225,000, as more fully described in Item 3.02. Upon the occurrence of,
and after giving effect to, the Reverse Split discussed in Item 3.03, the
201,511.98 shares of Series B Stock will convert automatically into an aggregate
of approximately 3,975,521 shares of Common Stock (the "Series B Conversion
Shares"), which will then represent approximately 20.15% of our total
outstanding Common Stock. The warrants are exercisable for one-half of the
number of Series B Conversion Shares, approximately an additional 1,987,760
shares of Common Stock at an exercise price of $3.67 per share. The warrants
have a five year term. The Company may force the exercise of the warrants if the
Company signs a binding agreement to make a certain acquisition (provided
certain conditions are met), or if the price of its Common Stock exceeds $10 per
share for 10 consecutive trading days.

      As a condition of the Series B Stock Purchase Agreement, Dalian Fushi has
deposited its 20,000,000 shares of Common Stock acquired from Glenn Little and
our management team, which includes Li Fu, Yue Mathus Yang, Xishan Yang and
Chunyan Xu, has deposited in escrow 746,254 shares of Series A Stock that will
collectively convert into 14,800,000 shares of Common Stock, representing
approximately 75.04% of the then outstanding Common Stock, following the Reverse
Split to secure their indemnity obligations under the Series B Stock Purchase
Agreement and the obligation of the Company to meet the net profit targets for
the fiscal year ending December 31, 2005 as set forth in the Series B Stock
Purchase Agreement.

      The Series B Stock Purchase Agreement requires the Company to take certain
actions after closing, including:

            (a) The American Stock Exchange. Prepare and submit a listing
      application to the American Stock Exchange. We cannot assure you that we
      will qualify for such listing or when or if the American Stock Exchange
      will approve our application.

            (b) Board of Directors. Within 90 days following closing, after
      consultation with the holders of the Series B Stock, nominate a seven
      person Board of Directors of the Company and take all actions and obtain
      all consents, authorizations and approvals which are required to be
      obtained in order to effect the election of such nominees. See "Directors
      and Executive Officers, Promoters and Control Persons - Our Directors and
      Executive Officers" in Item 2.01.


                                       8
<PAGE>

            (c) Board of Advisors. Promptly following the closing, the Company
      will establish a five-member board of advisors consisting of the
      individuals approved in advance by Chinamerica, which approval will not be
      unreasonably withheld. See "Directors and Executive Officers, Promoters
      and Control Persons - Our Directors and Executive Officers" in Item 2.01.

            (d) Chief Financial Officer. Promptly following closing, the Company
      will retain a chief financial officer acceptable to, and after
      consultation with, Chinamerica, which may be Wenbing Chris Wang.

            (e) Name Change; Reverse Stock Split. Promptly following the
      closing, the Company will take all actions and obtain all consents,
      authorizations and approvals which are required to be obtained in order to
      (i) change the name of the Company to Fushi International, Inc., and (ii)
      effect the Reverse Split. Prior to the closing, the Board of Directors
      approved an amendment to the Company's Articles of Incorporation that
      would change the name of the Company to Fushi International, Inc. and
      effect the Reverse Split, and obtained the written consent of the holder
      of a majority of the outstanding shares of voting stock approving the name
      change and the Reverse Split. The Company will file on Schedule 14C a
      Preliminary Information Statement with the SEC in connection with the name
      change and the Reverse Split contemporaneously with this Current Report.
      The Company will file the certificate of amendment to its Articles of
      Incorporation with the Office of the Secretary of State of Nevada not less
      than 20, nor more than 25, days after it mails the Information Statement
      to its shareholders. Under applicable SEC regulations, the Company may not
      file the certificate of amendment until 20 days after the Information
      Statement is distributed to shareholders.


                                       9
<PAGE>

            (f) Employee Stock Ownership Plan. The Company will reserve for
      issuance 20,000,000 shares of Common Stock under an approved and qualified
      employee stock ownership plan, the terms of which will be determined by
      the compensation committee of the Board of Directors of the Company.

            (g) Executive Search. Promptly following the closing, the Company
      will retain one or more independent professional executive search firms,
      each acceptable to Chinamerica and selected from a list of proposed firms
      provided by Chinamerica, to assist in the recruitment for the members to
      be added to the Board of Directors of the Company.

            (h) Employment Agreements. The Company willl use its best efforts to
      promptly enter into employment agreements with Wenbing Chris Wang and the
      other members of management as designated and by, with such terms as are
      acceptable to, Chinamerica.

            (i) Transfer of Dalian Fushi Employees. The Company, Dalian DPI and
      Dalian Fushi willl use their best efforts to promptly transfer the
      employment of all employees of Dalian Fushi to Dalian DFI in accordance
      with applicable laws. Dalian DPI will enter into an employment agreement
      with each such transferred employee and pay all social security,
      insurance, housing and other applicable fees and costs required under
      applicable law.

            (j) Compliance with Law. The shareholder(s) of Dalian DPI will
      comply with Bulletin No. 75 issued by the PRC State Administration of
      Foreign Exchange, including but not limited to, the obligation to file
      disclosure forms with respect to their ownership status in the Company on
      or before March 31, 2006, and the obligation to transfer any dividends or
      profits they received offshore to the PRC within 180 days upon the receipt
      of such dividends or profits.

            (k) Completion of Restructuring. Commencing at the closing, the
      Company, Dalian DPI and Dalian Fushi will use their best efforts to
      complete in all respects the restructuring and related transactions
      contemplated by the Restructuring Agreements, as more fully described in
      Step 4 of the Explanatory Note.

            (l) Filing of Registration Statement. Within five days of the
      closing, the Company will file a registration statement with the SEC under
      the Securities Act for the registration of the Common Stock issuable upon
      conversion of the Series B Stock.

            (m) Company Bylaws. The Company will use its best efforts to obtain
      shareholder approval for, and take all steps necessary to adopt, amended
      and restated bylaws reasonably acceptable to Chinamerica within 60 days
      after the closing, and prepare and file a preliminary Information
      Statement on Schedule 14C relating to the adoption and amendment of the
      Company bylaws within 15 days from the date of the closing.


                                       10
<PAGE>

Item 2.01 Completion of Acquisition or Disposition of Assets.

      As a result of the Company's acquisition of all of the outstanding capital
stock of DPI and the business of Dalian Fushi through Dalian DPI, as discussed
in Item 1.01, the Company ceased being a shell company as such term is defined
in Rule 12b-2 under the Exchange Act. See Item 5.06.

Our Corporate Structure

      As set forth in the following diagram, following the Company's acquisition
of DPI and the business of Dalian Fushi pursuant to the Restructuring
Agreements, DPI is now the Company's direct, wholly-owned subsidiary and Dalian
DPI is a wholly-owned subsidiary of DPI. Dalian DPI has control over Dalian
Fushi's remaining operations and financial affairs through the Restructuring
Agreements. In connection with the above transactions, the Company will file an
Information Statement on Schedule 14C regarding the change in the Company's
corporate name to "Fushi International, Inc." and to effectuate the Reverse
Split. Prior to the closing of the Share Exchange Agreement, holders of the
majority of the Common Stock, at that time the Company's only class of voting
stock, signed a written consent to effect the Reverse Split and change our
corporate name.

--------------------------------------------------------------------------------
<TABLE>
<S>                                            <C>
 ---------------------------
 Parallel Technologies, Inc.
      (to be changed to
 Fushi International, Inc.)  |
 ---------------------------  |
              |                |
              |      ------     |
              |       100%       |
              |      ------       |
              |                    |
 ---------------------------        |
    Diversified Product              |
  Inspections, Inc. (DPI)             |
 ---------------------------           |
              |                         |
              |      ------              |
              |       100%                |
              |      ------                |
              |                             |
 ---------------------------                 |
     Dalian Diversified                       |
    Product Inspections                        |
 Bimetallic Cable Co., Ltd.                     |
        (Dalian DPI)                             |
 ---------------------------                      |
              |                                 ---------------------------
              |                                  Dalian Fushi Bimetallic
              ---------------------------------  Manufacturing Co., Ltd.
                ---------------                       (Dalian Fushi)
                 Restructuring                  ---------------------------
                   Agreements
                ---------------
</TABLE>
--------------------------------------------------------------------------------


                                       11
<PAGE>

                                    BUSINESS

Our History

      The Company was incorporated as a Nevada company on October 6, 1982 under
the name M, Inc. We changed our corporate name to Parallel Technologies, Inc. in
June 1991. We were formed as a "blank check" entity for the purpose of seeking a
merger, acquisition or other business combination transaction with a
privately-owned entity seeking to become a publicly-owned entity. Since the
fiscal year ended December 31, 1995, we had no business operations, assets or
liabilities until December 13, 2005, when we acquired DPI and Dalian DPI, and
the business of Dalian Fushi through a series of transactions contemplated in
the Restructuring Agreements.

Organizational History of DPI and Dalian DPI

      DPI was formed on Septembe 23, 2005 as a Delaware corporation by Dalian
Fushi's shareholders and Kuhns Brothers, Inc.. Upon consummation of the Share
Exchange Agreement, the Company owns 100% of DPI. Until the acquisition of the
business of Dalian Fushi, DPI has had no business operations, assets or
liabilities, apart from organizational expenses and fees.

      Dalian DPI was formed on September 22, 2005 under the laws of the PRC by
Diversified Product Inspections, Inc., a Florida company, which subsequently
transferred its ownership in Dalian Fushi to the Delaware DPI in November 2005.
Dalian DPI is a "wholly foreign owned entity" under PRC law by virtue of its
status as a wholly-owned subsidiary of DPI, as a non-PRC company. Until the
acquisition of the business of Dalian Fushi, Dalian DPI has had no business
operations, assets or liabilities, apart from organizational expenses and fees.

Dalian Fushi Organizational History

      Dalian Fushi was formed as "Dalian Fushi Bimetallic Conductor Wire
Factory" on June 12, 2001. Its initial registered capital was RMB 8 million and
it was owned by Li Fu (62.5%), Yongfa Zhou (25%), and Chunyan Xu (12.5%).

      In July 2001, Dalian Fushi acquired certain aluminum copper clad
manufacturing assets, as well as the related technology and manufacturing
facilities with approximately 2,000 square meters construction area from Dongyi
Company Ltd. ("Dongyi"), a bimetallic wire manufacturer in the PRC, for a total
purchase price of RMB 12 million, in a settlement of a loan dispute.

      On January 16, 2002, Dalian Fushi Bimetallic Conductor Wire Factory
changed its name to "Dalian Fushi Bimetallic Manufacturing Co., Ltd." and
changed its entity form to a limited liability company under PRC law. It
subsequently increased its registered capital to RMB 40 million. Dalian Fushi
was then owned by Dalian Jingzhou Jingdun Trading Co. (the predecessor of Dalian
Fushi Enterprise Group Co., Ltd., 52.5%), Renyou Fu (40%), Chunyan Xu (2.5%),
and Yongfa Zhou (5%).

      Dalian Fushi Enterprise Group Co., Ltd. (the "Fushi Group") is a PRC
holding company controlled by Li Fu (85.71%). The Fushi Group also owns Dalian
Litai Auto Repair Co., Ltd. (of which Fushi Group owns 40%), Dalian Fushi
Yangguang Zhangyie Co., Ltd. (of which the Fushi Group owns 90%), Dalian Fushi
Commerce and Trade Co., Ltd. (of which the Fushi Group owns 75%), and other
non-wholly-owned subsidiaries in the mineral water production and hotel
industries.


                                       12
<PAGE>

      On July 16, 2003, the registered capital of Dalian Fushi was increased to
RMB 160 million. As of March 2, 2005, the shareholders of Dalian Fushi were:
Dalian Fushi Enterprise Group Co., Ltd. (87.73%), Yue Yang (10%), Chunyan Xu
(0.63%) and Xishan Yang (1.64%). The registered capital has been paid in full.

      In 2003, Dalian Fushi commenced construction of a new manufacturing
facility in the industrial development area of Dalian. In June 2005, we
relocated our manufacturing activities to this new facility, occupying 103,605
square meters.

Overview of Our Business

      This section discusses the former business of Dalian Fushi which will be
acquired by the Company. The Company currently operates the business out of
Dalian Fushi until the completion of the transactions contemplated by the
Restructuring Agreements. While the Restructuring Agreements were entered into
and closed on December 13, 2005, not all of the transactions contemplated by the
Restructuring Agreements have been consummated and Dalian DPI has not yet
commenced operation of the business. This section discusses the business as if
it is conducted through Dalian DPI, assuming we will obtain the approvals,
filings and registrations necessary to commence operation of the business
through Dalian DPI. We expect these steps will be completed within 15 days after
the date of this Current Report, at which time Dalian DPI will commence
operations. However, see "Risk Factors - Risks Related to the Restructuring
Agreements - We may not obtain all approvals required to operate the business
acquired pursuant to the Restructuring Agreements."

      We are engaged, through our indirectly wholly-owned operating subsidiary
Dalian DPI in the manufacture and sale of bimetallic composite wire products,
principally copper clad aluminum wires ("CCA") and copper clad steel wires
("CCS"). CCA combines the conductivity and corrosion resistance of copper with
the light weight and relatively low cost of aluminum. It is a cost effective
substitute for single copper wire in a wide variety of applications such as
coaxial cable for cable television (CATV), signal transmission lines for
telecommunication networks, distribution lines for electricity, wire components
for electronic instruments and devices. Similarly, CCS combines the properties
of copper with the strengths of steel and is used where strengths higher than
copper are required, such as power system grounding lines, electricity
distribution lines, conductor lines of electrified railroad tracks, and patch
cords in electronic components.

      Our bimetallic composite wire products are produced using our patented and
proprietary "rolling bond welding" manufacturing technology, which was included
as a research project under the National Torch Program of PRC. Our proprietary
technology allows us to produce high quality products that deliver stable
conductivity performance. We maintain an internal Research and Development
Department to improve our current product features and develop new devices and
technologies to produce new products that will optimize the performance and
structure of bimetallic composite materials. Because of our its research and
development ("R&D") initiatives, we are recognized by the Dalian Municipal
Government as a "new- and high-technology" enterprise and have been receiving
governmental funding or subsidies for our operations and R&D activities.


                                       13
<PAGE>

      We use "FUSHI" as the tradename for all of our composite wire products.
Due to our emphasis on quality control and the high quality of our products, our
CCA products were awarded a "famous products" award in Liaoning Province and our
mark "FUSHI" was awarded a "famous mark" award in Liaoning Province. See "Risk
Factors - Risks Related to Our Business - Our profitability depends on our
success on brand recognition and we could lose our competitive advantage if we
are not able to protect our trademark against infringement, and any related
litigation could be time-consuming and costly."

      We achieved profitability in 2002, shortly after our inception in 2001.
Since 2002, Dalian Fushi has experienced consistent growth. Net sales increased
from $11.96 million in 2003 to $15.66 million in 2004. For the nine months ended
September 30, 2005, net sales were approximately $18.0 million, compared to
approximately $12.46 million for the same period in 2004. The majority of our
sales are made to finished cable manufacturers, which is a fast growing market
for our products.

      We believe we are currently the largest domestic manufacturer and supplier
of bimetallic composite products in the PRC. Our largest customers include the
PRC operations of Andrew Corporation of the U.S., one of the largest
communication cable manufacturers in the world.

The Bimetallic Composite Industry

      We manufacture and sell copper-clad aluminum wire ("CCA") and copper-clad
steel wire ("CCS"), both of which are widely utilized and long established
bimetallic composite products in industry.

      Copper-Clad Aluminum Wire.

      CCA is a bimetallic wire consisting of an aluminum core covered by a
concentric copper cladding. CCA combines the light weight, high flexibility and
low cost of aluminum with the conductivity and corrosion resistance of copper.
It is widely used in applications requiring the conductivity of copper while
retaining the light weight advantages of aluminum. For example, because
television and networks have high frequency transmission signals and the high
frequency signals are transmitted on the surface layer, CCA is an ideal inner
conductor for cable television signal transmission cables and, thus, is used
extensively in overhead coaxial cable for high frequency television signals.

      CCA wire is also widely used in telephone and electrical power
applications, large capacity communication networks, telephone conductor antenna
cables, control signal cables, and other applications. Because of its high
performance, lower production cost, and lighter weight, CCA wire is also
replacing solid copper or aluminum in other applications. For instance, it is
used to replace copper as a grounding conductor on structures and underground
powers lines to combat corrosion and theft problems. It also replaces aluminum
in overhead power lines in corrosive environments.

      According to our internal market surveys based on information provided by
our customers and information collected from our competitors, we believe the
estimated consumption of CCA in the U.S. has averaged approximately 30,000 tons
per year in recent years. According to China Wire & Cable Network, the largest
PRC application markets for CCA products are wireless telecommunication and base
station subsystems, which together have an estimated annual consumption of
20,000 tons per year. According to China Wire & Cable Network, the PRC market is
anticipated to experience a 25% growth rate, primarily due to continuously
rising copper prices and the nature of CCA as a viable and low-cost alternative
to single copper wire.


                                       14
<PAGE>

      Copper-Clad Steel Wire.

      CCS is a composite in which concentric copper cladding metallurgically
bonded to a steel core. CCS combines the strengths of steel with the
conductivity and corrosion resistance of copper. CCS wire is used where
strengths greater than that possessed by copper are required, and some reduction
in conductivity is acceptable. For example, it is widely used in the
telecommunications industry for telephone and coaxial television drop wire, in
the railroad industry for conductor lines, and in the electric utility industry
for grounding conductors.

Our Products

      We currently have large-scale production of both CCA and CCS. Because CCA
has wider applications and has relatively standard specifications, and thus, it
is easier to achieve large-scale production for each specification, CCA is our
principal product, comprising the vast majority of our sales. We commenced
large-scale production of CCS products in 2003, the sales of which represent
only a small portion of our annual total sales. We project that the percentage
of annual sales for our CCA and CCS products will remain constant in the
foreseeable future. The following table sets forth the sales of each of these
two products in the past three full fiscal years:

-----------------------------------------------------------
Year       Product       Sales (US$)         Percentage of
                                             Annual Sales
-----------------------------------------------------------
2002         CCA         4,911,305        100%
             CCS         0                0%
-----------------------------------------------------------
2003         CCA         11,943,102       99.9%
             CCS         12,449           0.1%
-----------------------------------------------------------
2004         CCA         15,657,189       99.97%
             CCS         5,304            0.03%
-----------------------------------------------------------

      Copper Clad Aluminum Wires. Our CCA wire is fabricated by fusing a core of
aluminum wire with an external copper cladding using our proprietary and
patented metallurgical "rolling bond welding" techniques. Measured by the copper
layer thickness, CCA can be divided into two types, 10% and 15%, each of which
has DC resistance of less than 0.02743 mm(2)/m ohms and 0.02676 mm(2)/m ohms,
respectively. The 10% type is primarily used in high frequency signal
transmission, while the 15% type is used in generators and other non-signal
transmission applications.

      Both the 10% and 15% CCA can be made in various diameters. The normal
diameters of our CCA products range from 7.5 mm to 1.66 mm, which are the normal
specifications required by our customers; but we can draw the product to as
small as 0.09 mm, if so requested by our customers. We have 18 manufacturing
lines devoted to the production of CCA wires and our current CCA production
capacity is approximately 10,000 tons per year.

      Measured by the production stage of the manufacturing process, CCA can be
classified into hard-drawn and annealed types of CCA and we manufacture both.
Hard-drawn CCA is used where strength is required, such as electronic
instruments and devices. Some customers buy our CCA at the hard-drawn stage
without final annealing, or at the intermediate annealing stage, for further
processing, such as to draw to a smaller size as they desire. Please see
"Business-Manufacturing Process" for further information on the manufacture of
these two types of CCA.


                                       15
<PAGE>

      Copper Clad Steel Wires. We use the same proprietary and patented
metallurgical "rolling bond welding" techniques to bond the copper cladding to
the steel core. Because of our technology, our CCS products have not experienced
any separation, cracks or peeling even in the stringent destructive testing.

      CCS is commonly produced to specifications of 21 percent, 30 percent, and
40 percent International Annealed Copper Standard (IACS) composite conductivity,
each with copper thickness amounts of 6 percent, 14 percent, and 20 percent, of
the wire radius, respectively, the thicker the copper cladding, the better the
DC conductivity. We produce all three specifications of CCS wires. The steel
core can be adopted in different strengths according to the requirement of
customers and applications. The most common sizes of CCS are 2.5 mm and 0.81 mm.
Similar to CCA, we can draw the CCS to as small as 0.09 mm.

      The profit margin for CCS is close to CCA because our unit price is based
on weight. Although the cost of steel per ton is about one third of the cost of
aluminum per ton, steel is much heavier than aluminum. This allows us to achieve
a profit margin for CCS similar to that of CCA. However, because CCS has more
specifications than CCA and it is more difficult to achieve large scale
production for each specification, we only commenced large volume production of
CCS in 2003.

      Our annual production capacity of CCS is approximately 1,200 tons.
Normally we allocate 2 production lines for CCS manufacturing, and these 2
production lines can also be utilized for CCA production when needed, because we
use the same "rolling bond welding" technique for both products.

      New Product Pipeline. We have developed the following new products:

      o     Copper Clad Aluminum and Magnesium Alloy, Diameter 0.08mm -0.18mm
            (Fine Wires). This product is primarily used in electric shielding
            nets and transformer windings applications. This product has been
            introduced to the market and we have received positive customer
            feedback, indicating potentially strong market demand for this
            product. Because it offers a substantially higher profit margin than
            most of our other products, we are seeking to increase production of
            this product to 10 manufacturing lines and a monthly output of
            approximately 300 tons.

      o     CCA Fine Wires of 0.20 mm and 0.51 mm Diameter. These fine wires can
            be used as enamel-insulated wire to replace electromagnetic wire in
            aviation devices and instruments applications. We anticipate monthly
            output for this new product to be 150 tons, or 1,800 tons annually.
            Like Copper Clad Aluminum and Magnesium Alloy, introduction of CCA
            fine wire is also driven by higher profit margin.

      o     CCS Plated by Tin and CCS Plated by Silver. These products can
            resist high temperature and is largely used in corrosive, hot or
            inclement environments, such as for military use. We are seeking to
            increase the annual output of these products to approximately 100
            tons.

      We have completed the technology development stage for a press cladding
device for CCA and were issued a patent on the technology. This new technology
is to be used for the production of large size CCA and CCS, the diameters of
which exceed 7mm. The manufacturing equipment for large scale production is
still in the development stage.

      We have also submitted an international patent application for the
manufacture of cuponal busbar. We are currently in the stage of developing
production devices for this new product. Cuponal busbar offers economic and
weight saving advantages over solid copper, while retaining the surface
properties of a copper busbar. It is often possible to substitute a copper bar
with a cuponal bar of equal dimensions. Cuponal has wider applications than CCA
and is extensively used in electronic items and household appliances. We project
that we can commence production of cuponal busbar in the second half of 2006.


                                       16
<PAGE>

The PRC Bimetallic Composite Products Market

      Because of the massive infrastructure development and construction in the
PRC, much of which requires wire and cable, the PRC is one of the fastest
growing markets for bimetallic composite products in the world. According to
statistics released by the PRC Ministry of Information Industry and the National
Cable and Wire Industry Association in the PRC, the PRC represented
approximately 7% of the worldwide market for bimetallic composite wires in 2004,
with domestic sales of approximately $104 million, or approximately 25,000 tons.
The PRC domestic market is currently dominated by the Dofasco Tubular Products
division of Dofasco Inc., formerly known as Copperweld. Copperweld maintains an
approximate 70% market share in the PRC, approximately the same proportion as
its share of the worldwide market.

Market Components of CCA Wires.

      Components of domestic demand for CCA conductors are as follows:

      1.    Coaxial Cable for Cable Television and Broadcasting-Domestic
            Consumption. The increase in the demand for cable television has led
            to a significant increase in demand for CCA wire. According to
            statistics issued by the PRC's Wire and Cable Industry Association,
            there are currently over 400 million TV sets and over 100 million
            cable television subscribers in the PRC. In addition, the PRC
            government will further develop the nation's broadcasting networks.
            During the PRC government's Tenth Five-Year Plan period, which is
            from 2001 to 2005, the domestic demand for CATV was estimated to
            generate approximately 700-800 thousand kilometers of cable wire
            every year. According to the PRC Electronic Components Association,
            the use of CCA conductors is expected to increase at an annual rate
            of 8%.

      2.    Coaxial Cable for Cable Television and Broadcasting-Export Sales.
            The PRC domestic wire manufacturers also export their cable
            television wires to foreign markets. According to the PRC Electronic
            Components Association, wires manufactured for export by PRC
            domestic wire manufacturers are almost equivalent to domestic
            demand, resulting in a total of approximately 1,300 to 1,500
            thousand kilometers of cable television wire production per year in
            PRC.

      3.    Mobile Communication (RF Cable). The technologies used in mobile
            communication base stations that comply with international standards
            and all inner conductors of radio frequency cables use CCA
            conductors. We believe that the popularity of the digital wide
            frequency band will mean an increasing demand for CCA bimetallic
            composite conductor. Because of the increased density of mobile
            communication base stations, the radius between base stations has
            been reduced from 9 kilometers to 3 kilometers, which translates
            into a 3 to 4 fold increase in the demand for CCA composite
            conductor (radio frequency cables that use bimetallic composite
            conductors will be used as connecting cables between antennas of
            base stations, transmitters, and receivers). We believe that this
            change in radius between base stations will change the demand for
            CCA composite conductors from the original annual demand of 4,000
            tons to 14,000 tons per year.

      4.    Comprehensive Wiring. The use of CCA wires in comprehensive wiring
            (including connecting wires for automobiles, indoor wideband
            connecting wires, indoor electrical wires, and connecting wires for
            instruments, apparatus, electronic devices and high-frequency
            connecting wire) saves copper in addition to solving the problems of
            greater contact resistance. More wiring companies in PRC now replace
            pure copper conductors with CCA conductors in their wiring projects,
            which we believe has created a large potential market for our
            products. According to the China Electronic Components Association,
            each year the wiring companies consume over 3,000 tons of CCA
            conductor wire.


                                       17
<PAGE>

Market Components for CCS Wires.

      CCS conductor wire is used mainly as an inner conductor for radio
frequency cable in the electronics industry, in the electric light source
industry, television cables, overhead communications, power transmission,
electrified railroads, and patch cords in electronic components.

      The market components for CCS conductors in the PRC can be further
described as follows:

      1.    Electrified Railroads. The Ministry of Railroads of PRC recently
            announced that the Sixth General Speed-up Project is about to be
            launched, in which some of the legacy railroads will be renovated
            and expanded, new roads will be built, and a large number of special
            passenger railroads, intercity railroads and advanced railroad
            networks will be constructed. According to statistics released by
            relevant departments, the total mileage of electrified railroads in
            the PRC will be 20,000 kilometers by 2005 and 26,000 kilometers by
            2010. By that time, the four artery railroads Beijing-Shanghai,
            Beijing-Harbin, Beijing-Guangzhou and Longhai will be completely
            electrified and interconnected, and the first high-speed rail--the
            Beijing-Shanghai line--will be fully launched into construction.
            During the Tenth Five-Year Plan period, it is estimated that more
            than 5,000 kilometers of electric railroad track are planned to be
            laid. The new edition of the `Technological Policies for Railroads'
            requires the maximum speed per hour of passenger trains to be 350
            kilometers. According to the technical requirements, when the speed
            per hour of a passenger train reaches 300 kilometers, the contact
            conductor must be CCS conductor, which translates into an additional
            large potential market for our products. Assuming a conservative
            estimate of the annual construction of electrified railroad mileage
            of 10,000 kilometers/year, the amount of contact conductor wire
            required will be approximately 26,000 tons; therefore, the estimate
            of the total annual demand for CCS bimetallic composite conductor
            wire is above 32,000 tons/year.

      2.    Power Cables. Presently, CCS conductor has replaced pure copper or
            pure aluminum conductors as the inner conductor in the field of
            power cables in most developed countries. This is not yet the case
            in PRC, and therefore, we believe this can be a large potential
            future market.

      3.    Radio Frequency Cables. According to market surveys for the domestic
            wire and cable industry conducted by our marketing and sales
            department, the total demand for CCS conductor in radio frequency
            cable of the electronic industry and the electric light source
            industry in the next five years will be over 6,000 tons per year.


                                       18
<PAGE>

Manufacturing Process

      Overview of Manufacturing Method.

      While the manufacture of bimetallic wire is a well established process,
new techniques are developed continuously. Plating, cladding, drawing, rolling
and press-fitting are all methods for producing bimetallic cable. The first
generation production process for bimetallic wire generally involved plating,
which was the principal method used in the 1960's and 70's. Today, plating is
being replaced by second generation cladding and drawing processes, as well as
rolling and press-fitting processes.

      Cladding and drawing techniques are broadly used in Europe, as well as in
Asia, such as Japan. With cladding and drawing methods, the mechanical assembly
of the product is more difficult while the yield on finished products measured
by produced length is higher. Rolling and press-fitting are more common in the
United States. In rolling and press-fitting, special equipment is utilized as
the copper needs to be heated and the conditions for metallurgy are very strict.

      Manufacturing and utilization of bimetallic wire in the PRC began to take
place in the 1990s. Bimetallic products, especially those utilizing the
"cladding" and "drawing" processes, began replacing solid copper wire in many
applications during this period, and have resulted in widespread use in the PRC
of bimetallic composite products.

      Our Technologies.

      CCA and CCS are produced by cladding rod of aluminum or steel core
material with copper strip, and then drawing the clad rod to the desired wire
diameter. The core technology we currently use in our production is the "Rolling
Bond Welding Method." In this particular method, we insert copper strip and
aluminum or steel bar in a rolling tube, the size of which depends on the
specification of the end product required by the customer. Then we use a special
roller machine to weld and bond the copper strip around the aluminum or steel
rod. Finally, we use an argon arc welding machine to seal the small gap between
the two materials. According to our customers' feedback, our technique yields an
end product with more even copper cladding and better conductivity than other
techniques commonly used in the industry.

      We also hold a patent on the press-cladding method, which is our other
proprietary technology that is designed for production of large size CCA and
CCS. The manufacturing equipment for large scale production using this patent is
still on the development process.

      We have submitted an international patent application for our cuponal
busbar, a special CCA. The manufacturing technology for our cuponal busbar is a
new and special method that is different from our Rolling Bond Welding Method.
Under this method, we put aluminum bar into a copper pipe, then we apply heat
and pressure to clad the two metals together.


                                       19
<PAGE>

      Our Manufacturing Process.

      The manufacturing process of our CCA and CCS wires can be described as
follows:

      |X|   Cleaning: Before cladding or bonding, both the copper and core
            material receive special cleaning to help create a complete
            metallurgical bond.

      |X|   Proprietary Cladding or Bonding: After cleaning, a proprietary
            cladding or bonding process is applied to wrap the copper strip
            around the central core. We use our patented "Rolling Bond Welding"
            process to metallurgically bond copper with aluminum or steel.

      |X|   Breakdown: The bimetallic wire after cladding or bonding is drawn to
            an intermediate diameter, the size of which depends on the physical
            and mechanical properties required to support the customer's
            application. The ratio of copper thickness to core diameter remains
            constant throughout the drawing process so that the conductivities
            of the end products remain constant.

      |X|   Intermediate Annealing. Annealing is the process to release
            mechanical stress through heat and gradual cooling to render copper
            less brittle. This intermediate annealing process is normally
            applied to CCS to give the conductors the pliability and
            malleability required in certain applications, especially electrical
            grounding. Some CCS is sold at this stage, but the majority goes on
            to the finish drawing process.

      |X|   Finish Drawing. The CCA after initial breakdown, or the CCS after
            intermediate annealing, go through a series of draws to its final
            size. Our drawing equipment can take the wire down to sizes as small
            as 0.09 mm. After finish drawing, hard drawn CCA and CCS wires are
            taken up on reels and ready for shipping, while wires to be annealed
            moves on to the final anneal process. CCA and CCS finished at this
            point are call hard-drawn wires.

      |X|   Final Anneal. CCS or CCA that requires stress relief or full
            annealing will go through the furnaces of the final anneal process.
            The resulted CCA and CCS are generally referred to annealed wires.

      Manufacturing Equipment

      We currently have a total of 20 manufacturing lines for our production, of
which 18 were brought during 2004 and 2005, and 3 were acquired from Dongyi in
2002. Each manufacturing line cost approximately $660,000 and consists of a main
rolling, welding and cladding machine and more than 50 different pieces of
accessory machines and equipment, such as a connecting machine, furnace, vacuum
annealing oven, special container, boiler, copper strip slitter, aluminum stake
drawer, and finished goods drawer.

      We purchased our new manufacturing lines from a domestic manufacturer,
which imports the main machines from Japan, and manufactures and assembles the
remaining accessory components for us. We are provided a one-year warranty on
the manufacturing lines. After the warranty period, our Maintenance Department
is responsible for the routine maintenance and minor repair of the machinery.


                                       20
<PAGE>

      The three original manufacturing lines, plus two new manufacturing lines,
are encumbered by a security interest we granted to the PRC Industrial and
Commercial Bank and the Bank of China to secure the payment of our borrowings.
With respect to the 15 new manufacturing lines, we have made full payment and
they are not subject to any security interest or lien.

Quality Control

      Our production process follows strict quality control standards. Before
our raw materials are to be used for production, our Quality Control Department
first examines the raw materials to ensure quality. The manufacturing process is
closely supervised by manufacturing managers and is frequently examined by our
Quality Control Department. Before our product is shipped, our quality control
inspectors use various testing devices to perform a thorough inspection of all
finished products, including full physical and electrical properties, such as
conductivity, tensile strength, and elongation of the products. We enclose a
testing certificate in all shipments of our products. As a result of our strict
quality control standards, our production facility was certified under ISO 9001
quality standards until April 3, 2005. We anticipate that this certification
will be renewed before 2005.

      Every two years we submit our products to third party governmental testing
centers, such as the Quality Test Center of Information Transmittal Wire of the
Ministry of Information Industry of PRC and Dalian Institute of Product Quality
Supervision and Inspection, for full physical and electrical properties tests.
We have passed these tests in the past and the test reports showed that our
products meet and exceed American Society for Testing and Materials ("ASTM")'s
B566-93 standards for copper and bimetallic copper wire. ASTM is a non-profit
industry-wide organization which publishes standards, methods of testing,
recommended practices, definitions and other related materials.

      We allow our largest customers to inspect our production process and test
our end products prior to shipment to ensure our customers' satisfaction on the
product quality and specifications. In some instances, we also submit our sample
products to our customers for testing. In the event that our products fail the
customers' tests, we would allow our customers to cancel the order.
Historically, we have not experienced any cancellation of orders due to product
test failures. We believe our customers' involvement in our quality control
process not only ensures the high quality of our products, but also fosters a
long term and trusting relationship.

Warranties

      We offer warranty coverage for most of our products, although we do not
have a standard warranty program. The terms and conditions of our warranty
coverage depend on our purchase orders with customers. Generally, we guarantee
our customers' satisfaction of our product. If a customer has a complaint about
our products, we will go to the site to examine the product and provide a remedy
that is satisfactory to the customer. Additionally, we agree to compensate our
customers for losses caused by our products' failure under our purchase orders
with customers. In some cases we agree to assume all such losses, while in some
other cases we agree to pay liquidated damages equal to certain percent of our
sales price.


                                       21
<PAGE>

      We have not established any reserve funds for potential customer claims,
because, historically we have not experienced significant customer complaints
about our products and none of our customers has requested damages for any loss
incurred due to product quality problems. However, we intend to establish a
reserve fund as we seek to expand our business internationally. If we were to
experience a significant increase in warranty claims, our gross profits could be
adversely affected. See "Risk Factors - Risks Related to Our Business - We do
not maintain a reserve fund for warranty or defective products claims. Our costs
could substantially increase if we experience a significant number of warranty
claims."

Raw Materials and Suppliers

      Raw materials used in Dalian Fushi's production include copper strip,
aluminum bar, steel wire, plastic bags, corrugated paper, wire rotating machine,
steel ramming stretch oil, petroleum, cleansing agents, engine oil, gear oil,
caustic soda, aluminum drawing oil, copper wiredrawing fluid, various
lubricants, and other industrial materials. The principal raw materials are
aluminum bar and copper strip, each of which historically accounts for more than
40% of our total annual raw materials purchases. No other raw material exceeds
2% of our total annual raw materials purchases. Measured by tonnage, aluminum
bar is our largest raw material purchase, with an annual purchase of
approximately 5,000 tons, as compared to approximately 1,800 tons of copper
strip.

      Our principal raw materials are generally available in the market and we
have not experienced any raw material shortages in the past. Because of the
general availability of these raw materials, we do not believe that we will
experience any raw material shortages in the future. We have in the past relied
on Shanghai Jintai Copper Co. and Harbin Electric Wire Co. for our copper strip
and aluminum bars supplies, respectively. Purchases from these companies
represented approximately 96% of our total raw material purchases in 2004 and
approximately 87% in 2003.

      We have purchased approximately 80% of our copper from Shanghai Jintai
Copper Co. ("Jintai") because it has large production capacity and generally can
meet our purchase needs. We believe we have established good relationship with
Jintai. The remaining copper is purchased from Beijing Copper Co., Luoyang
Copper Co., and Shengyang Copper Co.

      We purchase approximately 95% of our aluminum bars from Harbin Electric
Wire Co. We also purchase aluminum bars from Wuxi Hua Neng Electric Co.


                                       22
<PAGE>

      We do not have formal long-term purchase contracts with our suppliers and,
thus, we are exposed to the risk of fluctuating raw material prices. In the
purchase contracts with our primary suppliers, we typically specify the quantity
of our copper and aluminum purchases for the following 6 to 12 months, based on
our projected manufacturing output determined by the purchase orders we receive.
The raw materials are delivered in installments based on our order flow
throughout the period. We pay for each delivery based on the prevailing market
price at the time of delivery. See "Risk Factors - Risks Related to Our Business
- We do not have any long-term supply contracts with our raw materials
suppliers. Any significant fluctuation in price of our raw materials may have a
material adverse effect on the manufacturing cost of our products."

      In addition to these short-term purchase contracts, we also purchase from
our primary suppliers or other suppliers to satisfy additional raw materials
needs from additional orders we did not previously project. Due to our
dependence on a concentrated number of suppliers for our principal raw
materials, we cannot guarantee that necessary materials will continue to be
procured at the prices currently available or acceptable to us. To the extent
that these suppliers are not able to provide these materials in sufficient
quantity and quality on a timely and cost-efficient basis, our results of
operations could be adversely impacted until we find another qualified supplier.
In the past, we had experienced price increases on our principal raw materials
and we were able to transfer the additional cost to our customers. However,
there can be no assurance that we can transfer all of the additional cost
resulting from the increase in purchase price of raw materials in the future.

      Our suppliers typically make delivery upon receipt of our payment for the
purchase, except for 30-day trade credits extended to approximately 10% of our
total purchase contracts. We normally require our suppliers to purchase freight
insurance to ensure against any risk of loss during the shipping period and any
such loss will be the supplier's responsibility. After we receive the delivered
raw materials, we have three days to raise any dispute regarding the quality and
quantity of the goods.

Customers

      Our products' target markets are manufacturers of finished wire and cable
products. In most cases, our customers incorporate our products in end products
that they subsequently supply to their customers. The products manufactured by
us are used by these end-product makers as standard components, materials or
parts that are built to their specifications.

      We have more than 50 regular customers, both in and outside of the PRC.
Among the 48 PRC domestic customers, 7 are in the southern part of the PRC, 11
are in the southwestern part of the PRC, 18 are in the central part of the PRC,
and 12 are in the eastern part of the PRC. Our customer base includes some of
the global leading brands in the coaxial cable industry, such as Andrew
Corporation, one of the largest communication cable manufacturers in the world.
Because these customers' large purchase orders, we have derived a significant
portion of our sales from a smaller number of customers since we commenced
production in 2002. Sales to our 5 largest customers accounted for 75.37% and
73% of our net sales during the years ended December 31, 2004 and 2003,
respectively. We anticipate that our overall customer composition and the
concentration of our top customers will change as we expand our business and
shift our product portfolio to high-margin products; however, we can not assure
you that this will be the case. See "Risk Factors - Risks Related to the
Restructuring Agreements and Acquisition of the Business of Dalian Fushi-- We
may lose current customers who do not approve of Dalian Fushi's sale of its
business to Dalian DPI and do not agree to make purchases directly from Dalian
DPI or continue to make purchases through Dalian Fushi".


                                       23
<PAGE>

      Sales to customers accounting for 10% or more of our net sales in the year
ended December 31, 2004 or 2003 were as follows:

                                                               Year Ended
                                                               December 31,
                                                        ------------------------
                        Top Customers                    2004               2003
Andrew Corporation                                      21.15%              14%
Zhuhai Hanshen Industrial Co., Ltd.                     19.21%              14%
Jiangxi Lianchuang Photoelectricity Science Co.         16.19%              18%
Draka NK Cables Ltd.                                    10.08%               *
Shantou Jinqiao Cable Co., Ltd.                           *                 17%
Datang Telecom Technologies Co., Ltd                      *                 10%
Total                                                   75.37%              73%

* Less than 10% of our total annual net sales.

Sales Contracts and Customers' Orders

      Our largest customers normally have signed purchase orders with us
providing for the specifications of the products they will purchase and up to
one year's projected purchase for each specified product. Our manufacturing
activities are determined and scheduled based upon this sales information. Under
the purchase orders, customers will place individual orders seven to fifteen
days prior to the delivery date. Sometimes the lead time can be as short as
three days. The sales price is determined at the time of delivery. Some purchase
orders contain a formula to calculate the actual purchase price; some contain a
unit price for each product, to be adjusted according to the market price of
copper and aluminum at the time of delivery.

      Recently, the actual purchases by most of our largest regular customers
has exceeded their annual projections. To meet customers' purchase requirements
beyond projections, we normally maintain an inventory of regular sized CCA to
meet at least 15-day demand of our products. The regular sized CCA inventory can
be easily drawn to the customers' specified size and can be available for
delivery on short notice.


                                       24
<PAGE>

      Sales are usually made on a cash basis. In some instances, such as for new
customers, we require up to 80% down payment of the purchase order.
Nevertheless, we extend trade credit to our major customers with established
creditworthiness. These customers are primarily communications equipment
providers that place large orders with us on a regular basis. The credit
normally ranges from 30 to 90 days. As a matter of pricing policy, selling
prices are adjusted upward correspond to the length of credit.

Marketing, Sales and Distribution

      We market and sell all of our products in the PRC through our direct sales
force and internationally through sales agents and distributors.

      PRC Sales. Currently, a vast majority of our sales are made to PRC
customers and we sell our products to customers directly through our Sales and
Marketing Department. The Dalian Fushi Sales and Marketing Department, which
consists of 15 people, each of whom is to be transferred to Dalian DPI pursuant
to the Restructuring Agreements, is responsible for maintaining existing
customer relationships and developing new customers.

      International Sales. Sales to customers located outside of the PRC consist
of only a small percentage of our total annual sales. To expand our
international markets, we have signed letters of intent with foreign independent
agents to market our products overseas.

Product Delivery and Risk of Loss

      For customers in the PRC, we usually deliver the goods to the customers'
place of business, while in some cases customers make their own delivery
arrangements. The Dalian Fushi Transportation Department, the employees of which
are to be transferred to Dalian DPI pursuant to the Restructuring Agreements,
delivers our products to customers. The Transportation Department has four heavy
trucks and eight contracted drivers. We can ship up to 30 tons per day.

      We normally include shipping expenses in the purchase price of our
products and, thus, delivery costs are ultimately borne by our customers. In
addition, some orders require us to purchase freight insurance on behalf of its
customer in which case the cost of such freight insurance is included in the
purchase price of the products.

      For export sales to international customers our typical delivery terms are
free-on-board, or FOB, so that customers are responsible for the cost of
transportation and bear the risk of loss during transportation.

Insurance

      Product Liability Insurance. We currently do not carry any product
liability or other similar insurance. While product liability lawsuits in the
PRC are rare and we have never experienced significant failures of our products,
we cannot make any assurance that we will not have exposure for liability in the
event of the failure of any of our products in the future. This is particularly
true given our plan to significantly expand our sales into international
markets, like the United States, where product liability claims are more
prevalent.


                                       25
<PAGE>

      Property Insurance and Other Insurance. We purchased automobile insurance
with third party liability coverage for our vehicles. In addition, it has
purchased property insurance from China United Property Insurance Company to
cover real property and plant of up to RMB 43,350,000 (approximately
US$5,344,652), and manufacturing machine and equipment of up to RMB 36,750,000
(approximately US$4,541,410). The total coverage of our property and equipment
is approximately US$9,886,062. However, our property and equipment net of
depreciation as of December 31, 2004 was US$33,467,298, and our property
insurance therefore covers only less than a third of the value of our property
and equipment. See "Risk Factors - Risks Related to Our Business - We do not
presently maintain product liability insurance, and our property and equipment
insurance does not cover the full value of our property and equipment, which
leaves us with exposure in the event of loss or damage to our properties or
claims filed against us."

      Except for property and automobile insurance, we do not have other
insurance such as business liability or disruption insurance coverage for our
operations in the PRC. Further, we do not have key man insurance for our
officers and executive managers. Therefore, the loss of one or more of our
officers and executive managers will adversely affect our business and
operations. See "Risk Factors - Risks Related to Our Business - We do not have
key man insurance on our Chairman and CEO, Mr. Fu, on whom we rely for the
management of our business."

Competition

      Competition in the bimetallic industry can be characterized by rapid
growth and a concentration of manufacturers, primarily due to rising copper
prices and accelerated replacement of copper by bimetallic products
applications. The most significant factors that affect our competitive position
are:

      -     the performance and cost effectiveness of our products relative to
            those of our competitors;

      -     our ability to manufacture and deliver products in required volumes,
            on a timely basis and at competitive prices;

      -     the quality and reliability of our products; and

      -     our customer support capabilities.

      Our largest competitor is Dofasco, Inc., which acquired the business of
Copperweld. Our major PRC competitor is Dalian Tongfa New Materials Science and
Technology Co., Ltd. ("Dalian Tongfa"). We believe that we can differentiate
ourselves by offering superior product quality, timely delivery, at attractive
pricing. Our market share, and that of our major competitors is as follows:


                                       26
<PAGE>

--------------------------------------------------------------------------
Name                                    PRC Market Share (by percentage)
--------------------------------------------------------------------------
Dofasco (which acquired the
  business of Copperweld)               70.0%
--------------------------------------------------------------------------
Dalian Fushi                            15.0%
--------------------------------------------------------------------------
Dalian Tongfa                            8.5%
--------------------------------------------------------------------------

See "Risk Factors - Risks Related to Our Business -- We encounter substantial
competition in our business and our failure to compete effectively may adversely
affect our ability to generate revenue."

International Competition

      The PRC relies on imports for over 70% of its bimetallic composite
conductors. The major supplier to the PRC bimetallic composite conductor markets
is Dofasco, Inc., which acquired the business of Copperweld, the largest
bimetallic composite conductor manufacturer in the world.

      All bimetallic composite products imported by the PRC must meet the US
ASTMB566 standard. We currently produce products that meet or exceed the US
ASTMB566 standard.

      Dofasco may have significantly greater financial, technical,
manufacturing, marketing, sales and other resources than we do, but we believe
we offer the following competitive advantages:

      1.    Cost. Our costs are lower than those of Dofasco. Because our
            manufacturing facilities are located in the PRC, we are able to take
            advantage of lower labor costs.

      2.    Patented and Proprietary Technology. We have developed our patented
            technology, Rolling Bond Welding Method, to produce CCA and CCS.
            Based on feedback we received from our customers, we believe this
            technology offers better evenness in finished products and better
            conductivity.

      3.    Government Initiative. In 2003, the PRC government initiated a
            project to standardize the national specifications for production
            and quality of CCS and CCA composite cables for CATV and RF
            applications. This project was headed by our Chief Engineer, Mr.
            Yang Xishan. The project is listed as the "42nd Industrialized and
            Applied Project of Composite Metal Material Preparation Process and
            Equipment in Guidance of Key Field of High Tech Industrialization
            Development" and is governed by the State Development Planning
            Commission and the Ministry of Science and Technology of PRC. This
            project is also listed among the City of Dalian's High-Tech Industry
            Development Projects. The project was granted three years of funding
            from 2003-2005 totaling 2.5 million RMB (US $309,000) by the Dalian
            Municipal Government and the Dalian Technology Bureau. We received a
            total of 800,000 RMB for the past two years.

      4.    Service. We are able to provide products and technical services with
            shorter delivery times to domestic customers.


                                       27
<PAGE>

PRC Competition

      Our primary competitor in the PRC is Dalian Tongfa. We believe Dalian
Tongfa produced approximately 1,800 tons of products in 2004, compared to our
3,600 tons.

      We believe we have the following competitive advantages over our PRC
competitors:

      1.    Patented and Proprietary Technology. We believe our proprietary
            technology allows us to produce a higher percentage of qualified
            products than our competitors.

      2.    Government Initiative. See description under the "International
            Competition" above.

      3.    Production Capacity. We have increased our manufacturing lines from
            3 to 20 in 2005. We believe our new facilities will allow us to
            continue the expansion of our manufacturing capacity and achieve
            economies of scale in production.

      4.    Location in Dalian. The location of our operation in Dalian, the
            leading industrial and commercial center in Northern PRC, offers us
            the benefits of proximity to an extensive supply network, a strong
            research capability, and high quality human resources. In addition,
            the well-developed land and water transportation networks in Dalian
            provide us with easy access to domestic and international markets.
            Finally, the three provinces of North China (Liaoning, Jilin, and
            Heilongjiang) have historically been PRC's base for heavy industrial
            manufacturing, where power equipment and large electro-mechanical
            equipment are readily available.

      5.    Experienced Technical Team. We believe our engineering and technical
            team is well rounded and experienced. The head of our R & D
            department, Chief Engineer Mr. Xishan Yang, has over 40 years of
            experience in the electronic communication industry and is the
            inventor of the CCA and CCS production methodologies using cladding
            techniques in the PRC. Our Vice General Manager, Qingshan Liu, is
            the inventor of several improvements for the production of CCS
            cable. Both Mr. Yang and Mr. Liu are widely published in their
            fields and have numerous technical developments to their credit.


                                       28
<PAGE>

Intellectual Property

      Our principal intellectual property rights are our patents, patent
applications and the trademark "FUSHI." We obtained the right to use the "FUSHI"
trademark from Mr. Li Fu pursuant to the Trademark Authorization.

      PRC Patents and the PRC Patent Law Protections. Dalian Fushi is the
registered owner of four patents issued by the Patent Office of the State
Intellectual Property Office of the PRC which are in the process of being
transferred to Dalian DPI pursuant to the first patent transfer contract
discussed in Item 1.01.

<TABLE>
<CAPTION>
-------------------------- ------------ -------------- ----------------- ---------------- --------------------------
Patent                     Type of      Patent No.     Inventor's Name   Date of          Date of Publication and
                           Patent                                        Application      Term
-------------------------- ------------ -------------- ----------------- ---------------- --------------------------
<S>                        <C>          <C>            <C>               <C>              <C>
1.  Metallurgical          Utility      ZL 2004 2      Mr. Xishan Yang   April 9, 2004    March 30, 2005; term: 10
Rolling and Welding                     0031104.0                                         years from 4/9/2004 to
Device for CCA  and                                                                       4/8/2014
CCS
-------------------------- ------------ -------------- ----------------- ---------------- --------------------------
2.  Polyurethane (PU)      Utility      ZL 2003 2      Mr. Xishan Yang   November 11,     December 8, 2004; term:
Roller                                  0105378.5                        2003             10 years from 11/11/2003
                                                                                          to 11/10/2013
-------------------------- ------------ -------------- ----------------- ---------------- --------------------------
3.  Aluminum Bar           Utility      20032010       Mr. Xishan Yang   November 11,     April 20, 2005; term: 10
Brushing Machine                        5379.X                           2003             years from 11/11/2003 to
                                                                                          11/10/2013
-------------------------- ------------ -------------- ----------------- ---------------- --------------------------
4.  Press Cladding         Utility      ZL 2003 2      Mr. XiShan Yang   November 11,     February 2, 2005; term:
Device for CCA                          0105377.0                        2003             10 years from 11/11/2003
                                                                                          to 11/10/2013
-------------------------- ------------ -------------- ----------------- ---------------- --------------------------
</TABLE>

      Dalian Fushi also has the following pending PRC patent application and has
agreed to change the applicant under the this application to Dalian DPI to the
extent feasible or otherwise transfer the patent issued under this application
to Dalian DPI under the second patent transfer contract discussed in Item 1.01:

<TABLE>
<CAPTION>
-------------------------- ------------ -------------- ----------------- ---------------- --------------------------
Patent Application         Application  Inventor's     Applicant         Date of          Status
                           No.          Name                             Application
-------------------------- ------------ -------------- ----------------- ---------------- --------------------------
<S>                        <C>          <C>            <C>               <C>              <C>
5.  Vertical  Integrated   2003201      Xishan Yang    DaLian FuShi      November 11,     We anticipate receipt of
Drawing Machine for CCA    05380.2                                       2003             the patent certificate
                                                                                          by the end of 2005
-------------------------- ------------ -------------- ----------------- ---------------- --------------------------
</TABLE>


                                       29
<PAGE>

      The issued patents nos. 1 through 3 and the pending patent application
listed above relate to our "Rolling Bond Welding" method for the production of
round-sized CCA and CCS wires, our current products. The patented "Press
Cladding Device for CCA" is to be used for large sized CCA and CCS and required
manufacturing equipment is still under development.

      The PRC Patent Law was adopted by the National People's Congress, the
parliament in PRC, in 1984 and was subsequently amended in 1992 and 2000. The
Patent Law aims to protect and encourage invention, foster applications of
invention and promote the development of science and technology. To be
patentable, invention or unity models must meet three conditions: novelty,
inventiveness and practical applicability. Certain items are not patentable
under the Patent Law, which include scientific discoveries, rules and methods
for intellectual activities, methods used to diagnose or treat diseases, animal
and plant breeds or substances obtained by means of nuclear transformation. The
Patent Office under the State Council is responsible for receiving, examining
and approving patent applications. A patent is valid for a term of twenty years
in the case of an invention and a term of ten years in the case of utility
models and designs. Our patents are all utility models and subject to the ten
years' protection. Any use of patent without consent or a proper license from
the patent owner constitutes an infringement of patent rights.

      We believe a few manufacturers in the PRC have infringed our patents by
using our patented technologies without our prior authorization or paying
license fees. We have not taken any legal action to seek damages or injunction
against these manufacturers because we have always dedicated all of our
available capital to production and expansion. We plan to take appropriate legal
action in due course; however, we can give no assurance that we will be
successful. In addition, litigation is costly and will divert our management's
efforts and resources.

      International Patent Application and the PCT. Dalian Fushi has submitted
an international patent application under the International Patent Cooperation
Treaty ("PCT") on April 28, 2005. This patent application (PCT/CN2005/00585) is
for Bond-Welding Manufacturing Method for Cuponal Busbar and relates to the
production of cuponal busbar. Dalian Fushi has agreed to change the applicant
under the this application to Dalian DPI to the extent feasible or otherwise to
transfer the patent issued under this application to Dalian DPI under the second
patent transfer contract discussed in Item 1.01.

      This patent application was invented by Mr. Xishan Yang, our senior
engineer and Vice President of R&D. A PCT application covers all of the PCT
member countries, which include most major industrialized countries. As of
September 15, 2005, there were 127 member countries. The PRC became a member of
the PCT in 1994.

      There are two phases in a PCT application. The first phase is the
International Phase. Under this Phase, an applicant like Dalian Fushi can file
an application using Chinese language in the PRC. Then it will have one year to
claim the priority of its PRC filing date in other member countries. The main
benefit of filing through PCT instead of directly in the member countries is to
allow an applicant to delay "National Phase" filing in the member countries up
to 30 months from the initial filing, which is 18 months more than it would
normally have when filing directly in foreign countries. During this
International Phase period, an applicant can gather more market information and
have more time to make decisions about where to file patent applications. At the
end of the International Phase period, it will enter the National Phase by
filing national applications in each country in which the applicant will want a
patent. The Trade-Related Aspects of Intellectual Property Rights (the "TRIPS")
determine the term of a patent applied under the PCT in the member countries.


                                       30
<PAGE>

      Trademarks and the PRC Trademark Law Protections. The trademark "FUSHI" is
registered with the Trademark Office of the State Administration for Industry
and Commerce in PRC ("SAIC"). The registered scope of use includes wire products
such as wire cable, electric wire, electric resister, telephone line, and cable
line. The registered owner is Mr. Li Fu, our founder, chairman and chief
executive officer. Mr. Fu has authorized us to use the trademark without any fee
or charge in perpetuity. The registered term is valid from April 28, 2003 to
April 27, 2013. The trademark was recognized as a "Well Known Trademark" in
Dalian city by Dalian Administration of Industry and Commerce for a period
commencing from October, 2004 to October, 2007.

      Under the PRC Trademark Law, which was adopted in 1982 and revised in
2001, registered trademarks are granted a term of ten years protection,
renewable for further terms. Each renewal is limited to ten years term and the
registrant must continue to use the trademark and apply for a renewal within six
months prior to the expiration of the current term.

      Domain Names: Dalian Fushi owns and operates a website under the internet
domain name fushibmc.com. We pay an annual fee to maintain its registration. The
information contained in our website does not form part of this Current Report.
We do not yet make available, on or through our website, our annual report on
Form 10-KSB, quarterly reports on Form 10-QSB, current reports on Form 8-K, and
amendments to those reports after they are electronically filed or furnished to
the Securities and Exchange Commission ("SEC"). To obtain a copy of these
filings, please see the section entitled "Where You Can Find More Information"
in this Item 2.01."

      Other Intellectual Property Rights Protections in the PRC. In addition to
patent, trademark and trade secret protection law in the PRC, we also rely on
contractual confidentiality provisions to protect our intellectual property
rights and our brand. Our research and development personnel and executive
officers are subject to confidentiality agreements to keep our proprietary
information confidential. In addition, they are subject to a one-year covenant
not to compete following the termination of employment with our company.
Further, they agree that any work product belongs to our company.

      Research and Development Activities

      In 2002, we set up a research center headed by Mr. Xishan Yang, who is our
Chief Executive Vice President of Research and Development and Chief Engineer.
The research center consists of 27 full time engineers and research and
development personnel that possess expertise in the areas of metal processing,
machinery design, material science, process control automation and cable
manufacturing. In each of the past three fiscal years, we spent approximately
RMB 500,000 in research and development activities. Most of these expenses were
used to improve product quality, develop more rigorous specifications, and
develop new metal composite including rare non-ferrous metals, precision alloys,
precious metals and aluminum alloys.


                                       31
<PAGE>

      In addition to our own internal initiatives on R&D activities to develop
new products, some of our R&D activities are initiated by our customers, who
convey their needs to us, and we conduct research activities to improve or
enhance our existing products to meet their needs.

      We have also participated in cooperative research and development programs
with local university and research institute. Most recently in May 2005, we have
entered into a Technology Development Contract with Northeast China University
for the research and development of manufacturing equipment for our patented
press cladding device for a fee. These programs have supplemented our internal
R&D department and allow us to utilize the resources and talent pool in these
universities.

      We intend to enhance our Research and Development efforts by expanding our
engineering team.

Government Regulations

      Our patents and trademark are subject to the regulations on intellectual
property rights in the PRC. Please see "Business-Intellectual Property" for more
information regarding the PRC patent and trademark laws. We are also subject to
business license and approval regulations that are required for all corporations
in the PRC. In addition, we are subject to the recent PRC State Administration
of Foreign Exchange ("SAFE") regulations regarding offshore financing activities
by PRC residents. See "Risk Factors -Risks Related to Doing Business in the
PRC."

      Current PRC law does not allow a share exchange between a PRC entity and a
non-PRC entity, or a non-PRC entity's equity to be used as consideration for the
purchase of a PRC entity's assets. As such, we utilized the Restructuring
Agreements, although the Exclusive Option Agreement provides Dalian DPI the
option to purchase Dalian Fushi's equity and/or remaining assets to the extent
such purchase does not violate limitations imposed under PRC law. See the
"Explanatory Note" at the beginning of this Current Report and Item 1.01.

Environmental Compliance

      We are subject to environmental regulations that are generally applicable
to manufacturing companies in the PRC, for example, to complete an environmental
inspection on our new manufacturing facilities. Other than that, to the
knowledge of our management team, neither the production nor the sale of our
products constitute activities, or generate materials in a material manner, that
requires our operation to comply with the PRC environmental laws. See "Risk
Factors - Risks Related to Our Business - Potential environmental liability
could have a material adverse effect on our operations and financial condition."


                                       32
<PAGE>

Employees

      Dalian Fushi currently has185 full time employees, of whom 24 are
managerial, administrative, finance and accounting staff, 27 are engineers and
research and development personnel, 14 are engaged in sales and marketing, and
120 are in manufacturing. Pursuant to the Restructuring Agreements and the
Series B Stock Purchase Agreement, each of the employees is to be transferred to
Dalian DPI. Additionally, Dalian Fushi has approximately 60 interns and interim
staff, from whom we plan to select the qualified people to extend a full time
employment offer upon satisfactory performance during their interim period. Most
of these interns and interim staff will be hired to perform the manufacturing
functions. From time to time, we also hire temporary workers and contractors as
necessary. Currently, Dalian Fushi has 52 temporary staff for product delivery,
cafeteria workers and security guards.

                             DESCRIPTION OF PROPERTY

      Under PRC law, all land in the PRC is owned by the government, which
grants a "land use right" to individual or entity after a purchase price for
such "land use right" is paid to the government. The "land use right" allows the
holder the right to use the land for a specified long-term period of time and
enjoys all the ownership incidents to the land. Dalian Fushi holds land use
rights for one piece of land that was used in its business and which will be
used in Dalian DPI's business pursuant to the leases entered into in connection
with the Restructuring Agreements. In addition, Dalian Fushi has the right to
use another smaller piece of land that is registered under Dongyi's name. Set
forth below is the detailed information regarding these two pieces of land:

<TABLE>
<CAPTION>
----------------- ------------------- -------------- ------------------- ------------------ -------------------
   Registered         Location &          Usage        Square Meters      Construction on   Term of Use Right
 Owner of land      Certificate of                                           the Land
   use right        Land Use Right
                        Number
----------------- ------------------- -------------- ------------------- ------------------ -------------------
<S>               <C>                 <C>            <C>                <C>              <C>
Dalian Fushi      1 Shuang Qiang      Industrial     103,605 Sq. M;      Dalian Fushi's     50 years from
                  Road, Yang Jia      Use                                new facilities     July, 2003
                  Village, Jinzhou
                  District, Dalian,
                  PRC; #0625014
----------------- ------------------- -------------- ------------------- ------------------ -------------------
Dongyi            8 Hai La'er Road,   Industrial     3,569 Sq. M;        Dalian Fushi's     40 years from
                  Dalian              Use                                old facilities     March 4, 1989
                  Development Zone;
                  PRC;
                  #0626006
----------------- ------------------- -------------- ------------------- ------------------ -------------------
</TABLE>


                                       33
<PAGE>

      Dalian Fushi's new facilities, which, pursuant to the Restructuring
Agreements, are now leased to Dalian DPI, primarily consist of manufacturing
plants, multi-purpose office buildings, dormitories, raw materials storage, and
boiler rooms. Dalian Fushi acquired the piece of land ("Dongyi Property")
registered under Dongyi's name in connection with its acquisition of Dongyi in
2001. Dongyi was dissolved after the acquisition. Because of the transfer fees
that would be incurred as a result of change of registered owner, and because
this land is no longer being used in the business, Dalian Fushi has not, and we
do not intend to change the registered owner of this land. Currently, Dalian
Fushi leases the facilities located on the Dongyi Property to a third party.
Dalian Fushi will remain as the landlord after the completion of the
transactions contemplated by the Restructuring Agreements.

      The land registered under Dalian Fushi's name, as well as the buildings
and improvements on the land, are used as mortgage to secure Dalian Fushi bank
loans from Bank of China and Industrial and Commercial Bank.

                                LEGAL PROCEEDINGS

      We know of no material, active, pending or threatened proceeding against
us, DPI, Dalian DPI or Dalian Fushi, nor are we involved as a plaintiff in any
material proceeding or pending litigation.

                                  RISK FACTORS

      An investment in our Common Stock involves a high degree of risk. You
should carefully consider the risks described below and the other information
contained herein before deciding to invest in our Common Stock.

Risks Related to the Restructuring Agreements and Acquisition of the Business of
Dalian Fushi

We may not be able to obtain the approvals required to operate the business
acquired pursuant to the Restructuring Agreements.

      While the Restructuring Agreements were entered into and closed on
December 13, 2005, not all of the transactions contemplated by the Restructuring
Agreements have been consummated and the Company currently operates out of
Dalian Fushi until Dalian DPI can commence operations under PRC law.


                                       34
<PAGE>

      In order to complete the transactions contemplated by the Restructuring
Agreements to commence operations, Dalian DPI must:

      o     complete the registered capital verification process for its
            registered capital;

      o     transmit to Dalian Fushi the full purchase price for the assets to
            be purchased by it under the Restructuring Agreements;

      o     obtain an environmental report for the assets purchased from Dalian
            Fushi;

      o     obtain a new business license from the State Administration for
            Industry and Commerce in Dalian, PRC which reflects Dalian DPI's
            status as an operating company; and

      o     complete other required filings and registrations.

We anticipate expect that these steps will occur within 15 days after the date
of this Current Report, but cannot assure you that Dalian DPI will be able to
obtain a business license or other necessary approvals. In the event that Dalian
DPI fails to obtain a full operational business license or other necessary
approvals, it will be unable to operate its business, which would be materially
and adversely affected.

      In addition, if these approvals, filings and registrations necessary for
Dalian DPI to operate the business are not completed within 15 days from the
date of the closing of the Series B Stock Purchase Agreement, we will be in
breach under that agreement and the holders of our Series B Stock may have
certain indemnification rights against us, Dalian Fushi and members of our
management team which could adversely affect the business. See the Explanatory
Note at the beginning of this Current Report, as well as Items 1.01 and 3.02 of
this Current Report, for more information on the Series B Stock Purchase
Agreement.

We may be unable to compel Dalian Fushi to make the payments due to Dalian DPI
under the Restructuring Agreements.

      To the extent that any significant profits are generated by Dalian Fushi,
our ability to obtain those monies will be dependent upon our ability to control
Dalian Fushi through the Entrusted Management Agreement, as well as our ability
to enforce the Restructuring Agreements. See "Risk Factors Risks Related to the
Restructuring Agreements and Acquisition of the Business of Dalian Fushi -- Our
Restructuring Agreements with Dalian Fushi and its shareholders may not be as
effective in providing control over these entities as direct ownership." In the
event that Dalian Fushi does not pay to Dalian DPI the fees and other payments
owed to Dalian DPI under the Restructuring Agreements, the ability to operate
our business may be severely affected by a lack of working capital and we may be
unable to pay dividends.


                                       35
<PAGE>

Our Restructuring Agreements with Dalian Fushi and its shareholders may not be
as effective in providing control over these entities as direct ownership.

      After the completion of the transactions contemplated by the Restructuring
Agreements, we will operate our business through Dalian DPI, our indirect
wholly-owned subsidiary in the PRC, and rely on the Restructuring Agreements
with Dalian Fushi and its shareholders to control any operations of Dalian
Fushi. While we will own and/or lease substantially all of the manufacturing
assets through Dalian DPI, and to the extent that any aspect of Dalian Fushi's
business needs to be conducted through Dalian Fushi in the future, the
Restructuring Agreements provide Dalian DPI with the legal right and power to
control Dalian Fushi and any of its remaining assets and operations, the
Restructuring Agreements may not be as effective in providing control over
Dalian Fushi as direct ownership. For example, if we had direct ownership of
Dalian Fushi, we would be able to exercise our rights as a shareholder to effect
changes in the board of directors of Dalian Fushi, which in turn could effect
changes, subject to any applicable fiduciary obligations, at the management
level.

      Furthermore, if Dalian Fushi or any of its shareholders fails to perform
its or his respective obligations under the Restructuring Agreements, we may
have to incur substantial costs and resources to enforce those agreements, and
rely on legal remedies under PRC law, including seeking specific performance or
injunctive relief, and claiming damages, which may not be effective. For
example, if the shareholders of Dalian Fushi refuse to transfer their equity
interests in Dalian Fushi to us or our designee when we exercise the purchase
option under the exclusive option agreement, which is part of the Restructuring
Agreements, then we will have to pursue available remedies under PRC law for
them to fulfill their contractual obligations. In addition, we cannot assure you
that Dalian Fushi's shareholders always will act in our best interests. See Item
1.01 for more information on the Restructuring Agreements and the exclusive
option agreement in particular.

      The Restructuring Agreements are governed by PRC law and provide for the
resolution of disputes through arbitration in the PRC. Accordingly, these
agreements would be interpreted in accordance with PRC law and any disputes
would be resolved in accordance with PRC legal procedures. The legal environment
in the PRC is not as developed as in other jurisdictions, such as the United
States. As a result, uncertainties in the PRC legal system could limit our
ability to enforce the Restructuring Agreements. If we are unable to enforce the
Restructuring Agreements, we may not be able to exert effective control over our
operating entities, and our ability to conduct our business may be negatively
affected.

The restructuring conducted pursuant to the Restructuring Agreements may be
subject to scrutiny by the PRC tax authorities and a finding that we owe
additional taxes or are ineligible for our tax exemption, or both, could
substantially increase our taxes owed, and reduce our net income and the value
of your investment.


                                       36
<PAGE>

      Dalian DPI has purchased assets from Dalian Fushi, our affiliated company,
at prices lower than their book value and leased the remaining assets from
Dalian Fushi at nominal amount. Under PRC law, arrangements and transactions
among related parties may be subject to audit or challenge by the PRC tax
authorities. If any of the transactions we have entered into between Dalian DPI
and Dalian Fushi are found not to be on an arm's-length basis, or to result in
an unreasonable reduction in tax under PRC law, the PRC tax authorities have the
authority to disallow our tax savings, adjust the profits and losses of Dalian
DPI and Dalian Fushi, and assess late payment interest and penalties. A finding
by the PRC tax authorities that we are ineligible for the tax savings achieved
in the past, or that Dalian Fushi or Dalian DPI are ineligible for preferential
tax benefits, would substantially increase our taxes owed, reduce our net income
and the value of your investment and materially and adversely affect our
financial condition and results of operations.

The Restructuring Agreements may result in additional transactional costs that
may adversely impact our profitability.

      The asset transfers and leases involving in the restructuring inevitably
will incur costs and expenses, such as taxes, both at central and local level,
filing fees and registration fees with government authority. Our management team
estimated that the transactional costs for the restructuring are manageable.
However, due to the complexity of the tax regime in PRC and the great discretion
the local tax authorities enjoy, we cannot assure you that there are no
unpredictable costs and expenses associate with the restructuring and any such
costs and expenses will not adversely impact our profitability

We may lose current customers who do not approve of Dalian Fushi's sale of its
business to Dalian DPI and do not agree to make purchases directly from Dalian
DPI or continue to make purchases through Dalian Fushi.

      Pursuant to the terms of the Restructuring Agreements and the Series B
Stock Purchase Agreement, Dalian Fushi is required to notify customers that its
business has been sold to, and is being conducted by, Dalian DPI. Dalian Fushi
must use its best efforts to obtain the consent of each customer to transfer the
customer's outstanding purchase orders and other contracts to Dalian DPI. In the
event that a Dalian Fushi customer does not agree to assign its purchase orders
and other contracts to Dalian Fushi and conduct business directly with Dalian
DPI, Dalian DPI will provide all necessary resources to Dalian Fushi so that it
may continue operations to the extent of maintaining its existing relationships
with these customers. However, we cannot give you any assurance that any or all
of Dalian Fushi's customers will approve of the sale of Dalian Fushi's business
to Dalian DPI, agree to make purchases from Dalian DPI or continue to make
purchases through Dalian Fushi. The loss of any significant customer would
materially and adversely affect our business and financial results. See
"Business--Customers" in this Item 2.01.


                                       37
<PAGE>

Suppliers who do not approve of Dalian Fushi's sale of its business to Dalian
DPI may be unwilling to sell directly to Dalian DPI the materials it needs to
manufacture our products, or continue to supply materials through Dalian Fushi.

      We rely on a limited number of suppliers for most of the other raw
materials we use. Pursuant to the terms of the Restructuring Agreements and the
Series B Stock Purchase Agreement, Dalian Fushi is required to notify its
suppliers that its business has been sold to, and is being conducted by, Dalian
DPI. In the event that suppliers of key components to Dalian Fushi are unwilling
to conduct business directly with Dalian DPI, Dalian DPI will provide all
necessary resources to Dalian Fushi so that it may continue operations to the
extent of maintaining its existing relationships with these suppliers. However,
we cannot give you any assurance that any or all of Dalian Fushi's suppliers
will approve of the sale of Dalian Fushi's business to Dalian DPI, agree to sell
supplies directly to Dalian DPI or continue to sell supplies through Dalian
Fushi. The loss of any significant supplier could materially and adversely
affect our business and financial results. See "Business--Raw Materials and
Suppliers" in this Item 2.01 and Risk Factors--Risks Related to our Business--
We depend on a few suppliers for a significant portion of our principal raw
materials. Interruptions of production at our key suppliers may affect our
results of operations and financial performance."

Risks Related to our Business

These risk factors assume the completion of the acquisition of the business
through the Restructuring Agreements.

Our limited operating history may not serve as an adequate basis to judge our
future prospects and results of operations.

      We began the sale of copper clad aluminum wire in 2002 and copper clad
steel wire in 2003. Our limited operating history may not provide a meaningful
basis on which to evaluate our business. Although our revenues have grown
rapidly since inception, we cannot assure you that we will maintain our
profitability or that we will not incur net losses in the future. We expect that
our operating expenses will increase as we expand. Any significant failure to
realize anticipated revenue growth could result in significant operating losses.
We will continue to encounter risks and difficulties frequently experienced by
companies at a similar stage of development, including our potential failure to:

      -     maintain our cutting edge proprietary copper cladding technology for
            the manufacturing of composite wires;

      -     expand our product offerings and maintain the high quality of our
            products;

      -     manage our expanding operations, including the integration of any
            future acquisitions;

      -     obtain sufficient working capital to support our expansion and to
            fill customers' orders in time;

      -     maintain adequate control of our expenses;

      -     implement our product development, marketing, sales, and acquisition
            strategies and adapt and modify them as needed;

      -     anticipate and adapt to changing conditions in the bimetallic
            composite products markets in which we operate as well as the impact
            of any changes in government regulation, mergers and acquisitions
            involving our competitors, technological developments and other
            significant competitive and market dynamics.


                                       38
<PAGE>

      If we are not successful in addressing any or all of these risks, our
business may be materially and adversely affected.

We encounter substantial competition in our business and our failure to compete
effectively may adversely affect our ability to generate revenue.

      Our major PRC-based and international competitor is the Dofasco Tubular
Products division of Dofasco Inc., the business acquired in October 2005 and
formerly known as Copperweld. Copperweld was, and Dofasco is, the largest
bimetallic composite conductor manufacturer in the world with 70% of the PRC
bimetallic composite conductor market in the PRC. Dofasco has substantially
greater assets and financial and marketing resources than us. While we have four
patents and two patent applications relating to our copper-cladding technology,
as well as our processing devices and equipment, we believe our competitors will
continue to improve the design and performance of their products and to
introduce new products with competitive price and performance characteristics.
We expect that we will be required to continue to invest in product development
and productivity improvements to compete effectively in our markets. Our
competitors could develop a more efficient product or undertake more aggressive
and costly marketing campaigns than us, which may adversely affect our marketing
strategies and could have a material adverse effect on our business, results of
operations or financial condition.

      Our major competitors may be better able than us to successfully endure
downturns in our industrial sector. In periods of reduced demand for our
products, we can either choose to maintain market share by reducing our selling
prices to meet competition or maintain selling prices, which would likely
sacrifice market share. Sales and overall profitability would be reduced under
either scenario. In addition, we cannot assure you that additional competitors
will not enter our existing markets, or that we will be able to compete
successfully against existing or new competition.

Our inability to fund our capital expenditure requirements may adversely affect
our growth and profitability.

      Our continued growth is dependent upon our ability to raise capital from
outside sources. We have experienced situations in the past in which working
capital was inadequate to fulfill customer orders. Our ability to obtain
financing will depend upon a number of factors, including:


                                       39
<PAGE>

      -     our financial condition and results of operations,

      -     the condition of the PRC economy and the cable television,
            telecommunications, utilities and electronics industries in the PRC,
            and

      -     conditions in relevant financial markets.

If we are unable to obtain financing, as needed, on a timely basis and on
acceptable terms, our financial position, competitive position, growth and
profitability may be adversely affected.

We may not be able to effectively control and manage our growth.

      If our business and markets grow and develop, it will be necessary for us
to finance and manage expansion in an orderly fashion. In addition, we may face
challenges in managing expanding product offerings and in integrating acquired
businesses with our own. Such eventualities will increase demands on our
existing management, workforce and facilities. Failure to satisfy such increased
demands could interrupt or adversely affect our operations and cause production
backlogs, longer product development time frames and administrative
inefficiencies.

If we are unable to successfully complete and integrate strategic acquisitions
in a timely manner, our growth strategy may be adversely impacted.

      An important element of our growth strategy has been and is expected to
continue to be the pursuit of acquisitions of other businesses that increase our
existing market share and expand our production capacity. However, integrating
businesses involves a number of special risks, including the possibility that
management may be distracted from regular business concerns by the need to
integrate operations, unforeseen difficulties in integrating operations and
systems, problems relating to assimilating and retaining the employees of the
acquired business, accounting issues that arise in connection with the
acquisition, challenges in retaining customers, and potential adverse short-term
effects on operating results. If we are unable to successfully complete and
integrate strategic acquisitions in a timely manner, our growth strategy may be
adversely impacted.

We depend on a concentration of customers.

      Our revenue is dependent, in large part, on significant orders from a
limited number of customers. Sales to our five largest customers accounted for
approximately 75% and 73% of our net sales during the years ended December 31,
2004 and 2003, respectively. Sales to our three largest customers accounted for
approximately 35% of our total net sales during the nine months ended September
30, 2005. We believe that revenue derived from current and future large
customers will continue to represent a significant portion of our total revenue.
Our inability to continue to secure and maintain a sufficient number of large
customers would have a material adverse effect on our business, operating
results and financial condition. See "Risks Related to the Restructuring
Agreements and Acquisition of the Business of Dalian Fushi - We may lose current
customers who do not approve of Dalian Fushi's sale of its business to Dalian
DPI and do not agree to make purchases directly from Dalian DPI or continue to
make purchases through Dalian Fushi." Moreover, our success will depend in part
upon our ability to obtain orders from new customers, as well as the financial
condition and success of our customers and general economic conditions.


                                       40
<PAGE>

We do not have any long-term supply contracts with our raw materials suppliers.
Any significant fluctuation in price of our raw materials may have a material
adverse effect on the manufacturing cost of our products.

      The price of aluminum bars and copper strip, our principal raw materials,
are subject to market conditions and generally we do not, and do not expect to,
have long-term contracts with our suppliers for those items. While these raw
materials are generally available and we have not experienced any raw material
shortage in the past, we cannot assure you that the necessary materials will
continue to be available to us at prices currently in effect or acceptable to
us. The prices for these raw materials have varied significantly and may vary
significantly in the future. For example, the copper industry, which is highly
volatile and cyclical in nature, affects our business both positively and
negatively. Numerous factors, most of which are beyond our control, drive the
cycles of the copper industry and influence copper price. These factors include
general economic conditions, industry capacity utilization, import duties and
other trade restrictions.

      We may not be able to adjust our product prices, especially in the
short-term, to recover the costs of increases in these raw materials. Our future
profitability may be adversely affected to the extent we are unable to pass on
higher raw material costs to our customers.

We depend on a few suppliers for a significant portion of our principal raw
materials. Interruptions of production at our key suppliers may affect our
results of operations and financial performance.

      We rely on a limited number of suppliers for most of the other raw
materials we use. We have in the past relied on Shanghai Jutai Copper Co. and
Harbin Electric Wire Co. for our principal raw materials, copper strip and
aluminum bar supplies, respectively. Purchases from these companies comprised
approximately 96% of our total raw material purchases in 2004 and approximately
87% in 2003. Interruptions or shortages of supplies from our key suppliers of
raw materials could disrupt production or impact our ability to increase
production and sales. We do not have long-term or volume purchase agreements
with most of our suppliers, and may have limited options in the short-term for
alternative supply if these suppliers fail for any reason, including their
business failure or financial difficulties, to continue the supply of materials
or components. Moreover, identifying and accessing alternative sources may
increase our costs.


                                       41
<PAGE>

Our profitability depends on the success of the "FUSHI" brand recognition and we
could lose our competitive advantage if we are not able to protect our FUSHI
trademark against infringement, and any related litigation could be
time-consuming and costly.

      The trademarked brand "FUSHI" registered under PRC law has gained
substantial recognition with customers. However, the protection of intellectual
property rights in the PRC may not be as effective as those in the United States
or other countries. The unauthorized use of the FUSHI brand could enable some
other manufacturers to take unfair advantage, which could harm our business and
competitive position. Moreover, from time to time, we may seek to protect
trademark rights through litigation, which may result in substantial costs and
diversion of resources, including the efforts of management.

      Pursuant to the Trademark Authorization, Mr. Li Fu, the registered owner
of the "FUSHI" trademark, authorized Dalian DPI to use this trademark for a
perpetual period without any fee. In the event this authorization is revoked or
found to be unenforceable, for any reason, we could lose the use of the
trademark, which could materially and adversely affect our business. See "--We
rely on Mr. Fu, our Chairman and CEO, Mr. Fu, for the management of our
business, and the loss of his services may significantly harm our business and
prospects" and "--We do not have key man insurance on Mr. Fu, our CEO, upon whom
we rely primarily for the direction of our business, so that if he dies we do
not have sufficient financial resources to continue operations without
interruption until we are able to replace Mr. Fu our business may be harmed."

We may not be able to prevent others from unauthorized use of Dalian Fushi's
patents, which could harm our business and competitive position.

      Our success depends, in part, on our ability to protect our proprietary
technologies. Dalian Fushi has four patents in China covering its modified
bond-welding technology and related devices and machines and has one additional
patent application pending for a manufacturing machine for copper clad aluminum
wires in the PRC. Dalian Fushi is in the process of commencing the patent
transfer procedure described in the Restructuring Agreements, which procedure is
estimated to take three to five months to complete. Prior to the effectiveness
of the patent transfers, Dalian DPI (subject to Dalian Fushi's right to use
these patents) has the exclusive legal right, royalty free, to use all of these
patents . Dalian Fushi will execute any license agreements required by the
Company or Dalian DPI that they deem necessary or advisable. See Item 1.01 for
more information on the Restructuring Agreements.

      Dalian Fushi also has made one international patent application under the
International Patent Cooperation Treaty, which covers Dalian Fushi's
bond-welding manufacturing method for cuponal busbar. The process of seeking
patent protection can be lengthy and expensive and we cannot assure you that
patent applications will result in patents being issued, or that existing or
future issued patents will be sufficient to provide us with meaningful
protection or commercial advantage.


                                       42
<PAGE>

      We believe that other manufacturers in the PRC have been infringing Dalian
Fushi's patents and using its core technology, but we have not, in the past had
sufficient capital to pursue legal remedies. Although we plan to pursue legal
remedies available in the PRC to protect our patents, we cannot assure you that
the protection afforded under the laws of the PRC is adequate to maintain our
competitive position or that we will be successful in our efforts. Our patents
and patent applications may be challenged, invalidated or circumvented in the
future. We cannot assure you that our current or potential competitors do not
have, and will not obtain, patents that will prevent, limit or interfere with
our ability to make, use or sell our products in either the PRC or other
countries.

      Implementation of PRC intellectual property-related laws has historically
been lacking, primarily because of ambiguities in the PRC laws and difficulties
in enforcement. Accordingly, intellectual property rights and confidentiality
protections in the PRC may not be as effective as in the United States or other
countries. Policing unauthorized use of proprietary technology is difficult and
expensive, and we might need to resort to litigation to enforce or defend
patents issued to us or to determine the enforceability, scope and validity of
our proprietary rights or those of others. Such litigation may require
significant expenditure of cash and management efforts and could harm our
business, financial condition and results of operations. An adverse
determination in any such litigation will impair our intellectual property
rights and may harm our business, competitive position, business prospects and
reputation.

We may be exposed to intellectual property infringement and other claims by
third parties, which, if successful, could cause us to pay significant damage
awards and incur other costs.

      Our success also depends in large part on our ability to use and develop
our technology and know-how without infringing the intellectual property rights
of third parties. As litigation becomes more common in the PRC in resolving
commercial disputes, we face a higher risk of being the subject of intellectual
property infringement claims. The validity and scope of claims relating to
weld-cladding technology and related devices and machine patents involve complex
technical, legal and factual questions and analysis and, therefore, may be
highly uncertain. The defense and prosecution of intellectual property suits,
patent opposition proceedings and related legal and administrative proceedings
can be both costly and time consuming and may significantly divert the efforts
and resources of our technical and management personnel. An adverse
determination in any such litigation or proceedings to which we may become a
party could subject us to significant liability, including damage awards, to
third parties, require us to seek licenses from third parties, to pay ongoing
royalties, or to redesign our products or subject us to injunctions preventing
the manufacture and sale of our products. Protracted litigation could also
result in our customers or potential customers deferring or limiting their
purchase or use of our products until resolution of such litigation.


                                       43
<PAGE>

Potential environmental liability could have a material adverse effect on our
operations and financial condition.

      To the knowledge of our management team, neither the production nor the
sale of our products constitute activities, or generate materials in a material
manner, that requires our operation to comply with the PRC environmental laws.
Although it has not been alleged by PRC government officials that we have
violated any current environmental regulations, we cannot assure you that the
PRC government will not amend the current PRC environmental protection laws and
regulations. Our business and operating results may be materially and adversely
affected if we were to be held liable for violating existing environmental
regulations or if we were to increase expenditures to comply with environmental
regulations affecting our operations.

We rely on Mr. Fu, our Chairman and CEO, Mr. Fu, for the management of our
business, and the loss of his services may significantly harm our business and
prospects.

      We depend, to a large extent, on the abilities and participation of our
current management team, but have a particular reliance upon Li Fu for the
direction of our business. The loss of the services of Mr. Fu, for any reason,
may have a material adverse effect on our business and prospects. We cannot
assure you that the services of Mr. Fu will continue to be available to us, or
that we will be able to find a suitable replacement for Mr. Fu.

We do not have key man insurance on Mr. Fu, our CEO, upon whom we rely primarily
for the direction of our business.

      We rely primarily upon Mr. Fu, our CEO, for the direction of our business.
We do not have key man insurance on Mr. Fu. If Mr. Fu dies and we are unable to
replace Mr. Fu for a prolonged period of time, we may be unable to carry out our
long term business plan and our future prospect for growth, and our business,
may be harmed

We may not be able to hire and retain qualified personnel to support our growth
and if we are unable to retain or hire such personnel in the future, our ability
to improve our products and implement our business objectives could be adversely
affected.

      Our future success depends heavily upon the continuing services of the
members of our senior management team, in particular our chairman and chief
executive officer, Li Fu, our president, Yue Yang, our chief financial officer
Wenbing Wang, our chief engineer Xishan Yang and our manager of domestic sales,
Qingshan Liu. If one or more of our senior executives or other key personnel are
unable or unwilling to continue in their present positions, we may not be able
to replace them easily or at all, and our business may be disrupted and our
financial condition and results of operations may be materially and adversely
affected. Competition for senior management and senior technology personnel is
intense, the pool of qualified candidates is very limited, and we may not be
able to retain the services of our senior executives or senior technology
personnel, or attract and retain high-quality senior executives or senior
technology personnel in the future. Such failure could materially and adversely
affect our future growth and financial condition.


                                       44
<PAGE>

We do not presently maintain product liability insurance, and our property and
equipment insurance does not cover the full value of our property and equipment,
which leaves us with exposure in the event of loss or damage to our properties
or claims filed against us.

      We currently do not carry any product liability or other similar
insurance. We cannot assure you that we would not face liability in the event of
the failure of any of our products. This is particularly true given our plan to
significantly expand our sales into international markets, like the United
States, where product liability claims are more prevalent.

      We have purchased automobile insurance with third party liability coverage
for our vehicles. In addition, we have purchased property insurance from China
United Property Insurance Company to cover real property and plant of up to
RMB43,350,000 (approximately US$5,344,652), and manufacturing machine and
equipment of up to RMB36,750,000 (approximately US$4,541,410). The total
coverage of our property and equipment is approximately US$9,886,062. However,
our property and equipment net of depreciation as of December 31, 2004 was
US$33,467,298, and our property insurance therefore covers only less than
one-third of the value of our property and equipment.

      Except for property and automobile insurance, we do not have other
insurance such as business liability or disruption insurance coverage for our
operations in the PRC.

We do not maintain a reserve fund for warranty or defective products claims. Our
costs could substantially increase if we experience a significant number of
warranty claims.

      Our product warranties against technical defects of our copper clad
aluminum wires and copper clad steel wires vary, depending on our purchase
orders with customers. The warranties require us to replace defective components
and pay for the losses customers incur from defective products or a certain
percentage of the purchase price as liquidated damages for our failure to meet
the specified product specifications and packaging requirements in the purchase
orders. We have not established any reserve funds for potential warranty claims
since historically we have experienced few warranty claims for our products so
that the costs associated with our warranty claims have been low. If we
experience an increase in warranty claims or if our repair and replacement costs
associated with warranty claims increase significantly, it would have a material
adverse effect on our financial condition and results of operations.

We are dependent on the communications industry, including telecommunications
and cable television.


                                       45
<PAGE>

      Substantially all of our revenues in the years ended December 31, 2004 and
2003, respectively, and the subsequent nine month period ended September 30,
2005, came from sales to the communications industry, including the cable
television industry. Demand for these products is subject to rapid technological
change. These markets are dominated by several large manufacturers and operators
who regularly exert significant price pressure on their suppliers, including us,
and the loss of one or more of the large communications manufacturers or
operators could have a material adverse effect on our business. We cannot assure
you that we will be able to continue to compete successfully in our sales to the
communications industry, and our failure to do so could impair our results of
operations.

Risks Related to Doing Business in the PRC.

These risk factors assume the completion of the acquisition of the business
through the Restructuring Agreements.

We face the risk that changes in the policies of the PRC government could have a
significant impact upon the business we may be able to conduct in the PRC and
the profitability of such business.

      The PRC's economy is in a transition from a planned economy to a market
oriented economy subject to five-year and annual plans adopted by the government
that set national economic development goals. Policies of the PRC government can
have significant effects on the economic conditions of the PRC. The PRC
government has confirmed that economic development will follow the model of a
market economy, such as the United States. Under this direction, we believe that
the PRC will continue to strengthen its economic and trading relationships with
foreign countries and business development in the PRC will follow market forces.
While we believe that this trend will continue, we cannot assure you that this
will be the case. Our interests may be adversely affected by changes in policies
by the PRC government, including:

      -     changes in laws, regulations or their interpretation

      -     confiscatory taxation

      -     restrictions on currency conversion, imports or sources of supplies

      -     expropriation or nationalization of private enterprises.

      Although the PRC government has been pursuing economic reform policies for
more than two decades, we cannot assure you that the government will continue to
pursue such policies or that such policies may not be significantly altered,
especially in the event of a change in leadership, social or political
disruption, or other circumstances affecting the PRC's political, economic and
social life.

The PRC laws and regulations governing our current business operations are
sometimes vague and uncertain. Any changes in such PRC laws and regulations may
have a material and adverse effect on our business.


                                       46
<PAGE>

      There are substantial uncertainties regarding the interpretation and
application of PRC laws and regulations, including but not limited to the laws
and regulations governing our business, or the enforcement and performance of
our arrangements with customers in the event of the imposition of statutory
liens, death, bankruptcy and criminal proceedings. We and any future
subsidiaries are considered foreign persons or foreign funded enterprises under
PRC laws, and as a result, we are required to comply with PRC laws and
regulations. These laws and regulations are sometimes vague and may be subject
to future changes, and their official interpretation and enforcement may involve
substantial uncertainty. The effectiveness of newly enacted laws, regulations or
amendments may be delayed, resulting in detrimental reliance by foreign
investors. New laws and regulations that affect existing and proposed future
businesses may also be applied retroactively. We cannot predict what effect the
interpretation of existing or new PRC laws or regulations may have on our
businesses.

A slowdown or other adverse developments in the PRC economy may materially and
adversely affect our customers, demand for our services and our business.

      All of our operations are conducted in the PRC and more than 90% of our
net sales are generated from sales in the PRC. Although the PRC economy has
grown significantly in recent years, we cannot assure you that such growth will
continue. The bimetallic composite wire industry in the PRC is growing, but we
do not know how sensitive we are to a slowdown in economic growth or other
adverse changes in the PRC economy which may affect demand for our products. A
slowdown in overall economic growth, an economic downturn or recession or other
adverse economic developments in the PRC may materially reduce the demand for
our products and materially and adversely affect our business.

Inflation in the PRC could negatively affect our profitability and growth.

      While the PRC economy has experienced rapid growth, such growth has been
uneven among various sectors of the economy and in different geographical areas
of the country. Rapid economic growth can lead to growth in the money supply and
rising inflation. If prices for our products rise at a rate that is insufficient
to compensate for the rise in the costs of supplies, it may have an adverse
effect on profitability. In order to control inflation in the past, the PRC
government has imposed controls on bank credits, limits on loans for fixed
assets and restrictions on state bank lending. The implementation of such
policies may impede economic growth. In October 2004, the People's Bank of
China, the PRC's central bank, raised interest rates for the first time in
nearly a decade and indicated in a statement that the measure was prompted by
inflationary concerns in the Chinese economy. Repeated rises in interest rates
by the central bank would likely slow economic activity in China which could, in
turn, materially increase our costs and also reduce demand for our products.

Dalian DPI and Dalian Fushi are subject to restrictions on paying dividends and
making other payments to us.


                                       47
<PAGE>

      The Company is a holding company incorporated in the State of Nevada and
does not have any assets or conduct any business operations other than
investments in its subsidiaries and affiliates, DPI, Dalian DPI and Dalian
Fushi. As a result of this holding company structure, the Company relies
entirely on dividends payments from Dalian DPI for funds. PRC regulations
currently permit payment of dividends only out of accumulated profits, as
determined in accordance with PRC accounting standards and regulations. Dalian
DPI and Dalian Fushi also are required to set aside a portion of their after-tax
profits according to PRC accounting standards and regulations to fund certain
reserve funds. The PRC government also imposes controls on the conversion of RMB
into foreign currencies and the remittance of currencies out of the PRC. The
Company may experience difficulties in completing the administrative procedures
necessary to obtain and remit foreign currency. Furthermore, if Dalian DPI or
Dalian Fushi incurs debt on its own in the future, the instruments governing the
debt may restrict its ability to pay dividends or make other payments. If the
Company or Dalian DPI is unable to receive all of the revenues from our
operations, we may be unable to pay dividends on our common stock. See "Risk
Factors--Risks Related to an Investment in Our Common Stock--We are unlikely to
pay cash dividends in the foreseeable future." Governmental control of currency
conversion may affect the value of your investment.

      The PRC government imposes controls on the convertibility of renminbi into
foreign currencies and, in certain cases, the remittance of currency out of the
PRC. Dalian DPI receives substantially all of its revenues in renminbi, which is
currently not a freely convertible currency. Shortages in the availability of
foreign currency may restrict our ability to remit sufficient foreign currency
to pay dividends, or otherwise satisfy foreign currency dominated obligations,
to the extent they are incurred in the future. Under existing PRC foreign
exchange regulations, payments of current account items, including profit
distributions, interest payments and expenditures from the transaction, can be
made in foreign currencies without prior approval from the PRC State
Administration of Foreign Exchange by complying with certain procedural
requirements. However, approval from appropriate governmental authorities is
required where renminbi is to be converted into foreign currency and remitted
out of PRC to pay capital expenses such as the repayment of bank loans
denominated in foreign currencies.

      The PRC government also may at its discretion restrict access in the
future to foreign currencies for current account transactions. If the foreign
exchange control system prevents the Company from obtaining foreign currency, we
may be unable to pay dividends or meet obligations that may be incurred in the
future that require payment in foreign currency. See "Risk Factors--Risks
Related to an Investment in Our Common Stock--We are unlikely to pay cash
dividends in the foreseeable future."

The fluctuation of the Renminbi may materially and adversely affect your
investment.

      The value of the renminbi against the U.S. dollar and other currencies may
fluctuate and is affected by, among other things, changes in the PRC's political
and economic conditions. As we rely entirely on revenues earned in the PRC, any
significant revaluation of the renminbi may materially and adversely affect our
cash flows, revenues and financial condition. For example, to the extent that we
need to convert U.S. dollars we receive from an offering of our securities into
renminbi for our operations, appreciation of the renminbi against the U.S.
dollar could have a material adverse effect on our business, financial condition
and results of operations. Conversely, if we decide to convert our renminbi into
U.S. dollars for the purpose of making payments for dividends on our common
stock or for other business purposes and the U.S. dollar appreciates against the
renminbi, the U.S. dollar equivalent of the renminbi we convert would be
reduced. In addition, the depreciation of significant U.S. dollar denominated
assets could result in a charge to our income statement and a reduction in the
value of these assets.


                                       48
<PAGE>

      On July 21, 2005, the PRC government changed its policy of tying the value
of the renminbi to the U.S. dollar. Under the new policy, the renminbi is
permitted to fluctuate within a narrow and managed band against a basket of
certain foreign currencies. This change in policy has resulted in an
approximately 2.0% appreciation of the renminbi against the U.S. dollar. While
the international reaction to the renminbi revaluation generally has been
positive, there remains significant international pressure on the PRC government
to adopt an even more flexible currency policy, which could result in a further
and more significant appreciation of the renminbi against the U.S. dollar.

If PRC laws or local regulations were to phase out the preferential tax benefits
currently being extended to "new or high-technology enterprises", we would have
to pay more taxes in the PRC, which could have a material and adverse effect on
our financial condition and results of operations.

      Currently, Dalian Fushi has preferential tax benefits with 50% deduction
on its income tax according to a notice issued by Dalian Municipal Government in
2000 providing for a series of tax preferential treatments to companies that
qualify as "new or high-tech" enterprise or companies in Dalian City. This
preferential tax treatment will expire on December 31, 2006.

      If the PRC laws and local regulations were to phase out preferential tax
benefits currently granted to "new or high-technology enterprises", we would be
subject to the standard statutory tax rate, which currently is 33%. The loss of
these preferential tax treatments that are currently available to us could have
a material and adverse effect on our financial condition and results of
operations.

We are in the process of applying for preferential tax benefits for Dalian DPI
as a WFOE, the result of which is uncertain.

      Under PRC laws and regulations, a WFOE may receive preferential tax
benefits if it is foreign funded and is a manufacturing enterprise. As a foreign
invested enterprise as well as a manufacturing enterprise, Dalian DPI should be
entitled to a three-year exemption from enterprise income tax beginning from its
first year of operation, a 7.5% enterprise income tax rate for another three
years followed by a 15% tax rate. We are in the process of applying for such
preferential tax benefits for Dalian DPI. We cannot assure you that Dalian DPI
will be granted preferential tax treatment. The failure to obtain this
preferential tax treatment could have a material and adverse effect on our
financial condition and results of operations.


                                       49
<PAGE>

Recent PRC State Administration of Foreign Exchange ("SAFE") Regulations
regarding offshore financing activities by PRC residents have undertaken
continuous changes which may increase the administrative burden we face and
create regulatory uncertainties that could adversely affect the implementation
of our acquisition strategy, and a failure by our shareholders who are PRC
residents to make any required applications and filings pursuant to such
regulations may prevent us from being able to distribute profits and could
expose us and our PRC resident shareholders to liability under PRC law.

      The PRC State Administration of Foreign Exchange, or SAFE, issued a public
notice in January 2005 ("January Notice") requiring registrations with, and
approval from, SAFE on direct or indirect offshore investment activities by PRC
resident individuals. The January Notice states that if an offshore company
directly or indirectly formed by or controlled by PRC resident individuals (a
special purpose company, or SPC, as further defined in the October Notice
described below) intends to acquire a PRC company, such acquisition will be
subject to strict examination by the central SAFE, the SAFE bureau at the
highest level, which requires disclosure by PRC resident individuals regarding
their ownership status with an SPC or any other assets used in connection with
the acquisition transaction.

      In April 2005, SAFE issued another public notice ("April Notice")
clarifying the January Notice. Under the April Notice, if a PRC company is
acquired by an SPC, the PRC resident shareholders are required to submit a
registration form to the local SAFE branch to register his or her respective
ownership interests in the SPC, even if the transaction occurred prior to the
January Notice. The PRC resident also must file amendments if there is a
material event affecting the SPC, including a change to share capital, a
transfer of shares, or if the SPC is involved in a merger and an acquisition or
a spin-off transaction or uses its assets in the PRC to guarantee offshore
obligations. A SAFE certificate will be restrained from issuance if the PRC
residents fail to comply with the foregoing registration requirements. However,
the April Notice does not specify the documentations required completing the
registration, nor does it specify the period during which the retrospective
registration must be completed.

      On October 21, 2005, SAFE issued the third public notice ("October
Notice") effective from November 1, 2005, which superseded the January Notice
and April Notice. It defines "SPC" as an offshore company directly or indirectly
formed by or controlled by PRC resident entities or PRC resident individuals for
the purpose of equity financing (including financing by convertible bonds) using
the assets or interests in a PRC entity. It narrows the scope of registration
requirements to circumstances where PRC residents form or control an SPC. It
clarifies the documentation requirements and the time to complete the
registration procedures. It also clarifies that the registration approval
authority is the local SAFE, instead of the central SAFE, as set forth in the
January Notice.


                                       50
<PAGE>

      Under this October Notice, we and DPI, our wholly-owned subsidiary, are
considered SPCs. Prior to receiving any equity interests in us or DPI, our PRC
residence shareholders, namely, Dalian Fushi Enterprise Group Co., Ltd., Yue
Mathus Yang, Xishan Yang and Chunyan Xu, must complete the registration
regarding their ownership status in us and DPI. Only after compliance with the
registration requirement can dividends and profits from Dalian DPI be
distributed to us or our shareholders. Furthermore, the Dalian Fushi
Shareholders are required to transfer the dividends and profits back to the PRC
within 180 days after receipt.

      Although the October Notice clears up the uncertainties regarding the
disclosure requirement on PRC residents, it is uncertain how it will be
interpreted or implemented regarding specific documentation requirements, for
example, whether the disclosure made by Dalian Fushi Shareholders or other PRC
residence shareholders suffice. We cannot assure you whether our PRC resident
shareholders will comply with the October Notice to register with the local SAFE
and transfer any dividends or profits they received offshore to the PRC within
180 days. The failure of our PRC resident shareholders to comply with the
October Notice may subject us to fines and legal sanctions, restrict our
cross-board investment activities, or limit our Dalian DPI's ability to
distribute dividends to our company.

      In addition, the SAFE certificate of Dalian DPI was issued on September
22, 2005, which was prior to the effective date of the October Notice.
Consequently, we cannot assure you that the SAFE certificate of Dalian DPI will
not be reviewed by the local SAFE, in which case we have to complete additional
administrative procedures as may be instructed by the local SAFE. We cannot
assure you that Dalian DPI will be deemed to have adequately completed the
additional administrative procedures or that a new SAFE certificate can be
obtained. The failure to obtain new SAFE certificate would prevent us from
paying dividends or otherwise remitting funds out of the PRC and could also
prevent funds from outside of the PRC from coming into Dalian DPI, which would
materially and adversely affect our ability to raise capital for future
expansion or acquisitions.

Any recurrence of severe acute respiratory syndrome, or SARS, or another
widespread public health problem, could adversely affect our operations.

      A renewed outbreak of SARS or another widespread public health problem in
the PRC, where all of our revenue is derived, could have an adverse effect on
our operations. Our operations may be impacted by a number of health-related
factors, including quarantines or closures of some of our offices that could
leave us without many employees to conduct our business which would materially
and adversely affect our operations and financial condition.

Because our principal assets are located outside of the United States and nearly
all of our directors and all our officers reside outside of the United States,
it may be difficult for you to enforce your rights based on the United States
federal securities laws against us and our officers and some directors in the
United States or to enforce judgments of United States courts against us or them
in the PRC.


                                       51
<PAGE>

      Two of our three directors and all of our officers reside outside of the
United States. In addition, our operating subsidiary, Dalian DPI, is located in
the PRC and substantially all of its assets are located outside of the United
States. It may therefore be difficult for investors in the United States to
enforce their legal rights based on the civil liability provisions of the United
States Federal securities laws against us in the courts of either the United
States or the PRC and, even if civil judgments are obtained in courts of the
United States, to enforce such judgments in PRC courts. Further, it is unclear
if extradition treaties now in effect between the United States and the PRC
would permit effective enforcement against us or our officers and directors of
criminal penalties, under the United States Federal securities laws or
otherwise.

We may have difficulty establishing adequate management, legal and financial
controls in the PRC.

      PRC companies have historically not adopted a Western style of management
and financial reporting concepts and practices, which includes strong corporate
governance, internal controls and, computer, financial and other control
systems. In addition, we may have difficulty in hiring and retaining a
sufficient number of qualified employees to work in the PRC. As a result of
these factors, we may experience difficulty in establishing management, legal
and financial controls, collecting financial data and preparing financial
statements, books of account and corporate records and instituting business
practices that meet Western standards. Therefore, we may, in turn, experience
difficulties in implementing and maintaining adequate internal controls as
required under Section 404 of the Sarbanes-Oxley Act of 2002. This may result in
significant deficiencies or material weaknesses in our internal controls which
could impact the reliability of our financial statements and prevent us from
complying with SEC rules and regulations and the requirements of the
Sarbanes-Oxley Act of 2002. Any such deficiencies, weaknesses or lack of
compliance could materially adversely affect our business.

Risks Related to an Investment in our Common Stock.

Our officers, directors and affiliates control us through their positions and
stock ownership and their interests may differ from other stockholders. In
addition, holders of our Series B Stock have certain voting rights that can
affect our operations.

      Our officers, directors and affiliates beneficially own approximately 77%
of the Company's voting stock by virtue of their ownership of Series A Stock,
which has voting rights and is convertible into shares of Common Stock upon the
Reverse Split. Li Fu, our Chairman and Chief Executive Officer, beneficially
owns approximately 65% of the Company's voting stock. As a result, Mr. Fu is
able to influence the outcome of stockholder votes on various matters, including
the election of directors and extraordinary corporate transactions, including
business combinations. Mr. Fu's interests may differ from other stockholders.


                                       52
<PAGE>

The holders of our Series B Stock may obtain complete control and majority
ownership of the Company if the Reverse Split does not occur within specified
time limits.

      Dalian Fushi and the Dalian Fushi Shareholders own approximately 75.0% of
our voting stock and control our company. Holders of our Series B Stock invested
in our company with the understanding that they would own 20.15% of the
outstanding Common Stock after the Reverse Split. Pursuant to the Series B
Certificate of Designations, filed with the Nevada Secretary of State, if by
April 11, 2005 the Reverse Split has not occurred, the holders of the Series B
Stock will receive as a forfeiture, out of escrow, pro rata, each at their
option, 125,000 additional shares of Common Stock or that number of shares of
Series A Stock that may be converted into 125,000 shares of Common Stock
("Penalty Shares"), owned by Dalian Fushi and the Dalian Fushi Shareholders, and
shall receive additional Penalty Shares every 30 days thereafter that the (a)
the Reverse Split has not been effected, or (b) the holders of the shares of
Series B Stock do not otherwise acquire, in the aggregate, 20.15% of the
outstanding shares of Common Stock.

      If by December 13, 2006, the Reverse Split has not occurred, or the
holders of the Series B Stock do not then own in the aggregate 20.15% of our
outstanding voting stock, and if by January 11, 2007, we do not repurchase all
of the outstanding Series B shares at the written request of Chinamerica, for a
total purchase price of $11,225,000 then thereafter and until the Reverse Split
is effected, the shares of Series B Stock will carry an aggregate number of
votes equal to 66 2/3% of the then outstanding voting power of all our voting
securities, or such larger percentage of votes required to approve any action
by, or submitted to, the shareholders. In addition, if by January 11, 2007, the
Reverse Split has not occurred, or the holders of the Series B Stock do not then
own in the aggregate 20.15% of our outstanding voting securities and we do not
repurchase all of the outstanding Series B shares at the written request of
Chinamerica, for a total purchase price of $11,225,000 then the holders of the
then outstanding shares of Series B Stock may purchase the shares of Common
Stock and Series A Stock owned by Dalian Fushi and the Dalian Fushi
Shareholders, held in escrow, at a price per share of $.001.

      The failure to effect the Reverse Split may result in a change in control
of our company.

      We are unlikely to pay cash dividends in the foreseeable future.

      We currently intend to retain any future earnings for use in the operation
and expansion of our business. We do not expect to pay any cash dividends in the
foreseeable future but will review this policy as circumstances dictate. Should
we decide in the future to do so, as a holding company, our ability to pay
dividends and meet other obligations depends upon the receipt of dividends or
other payments from our operating subsidiary. In addition, our operating
subsidiary, from time to time, may be subject to restrictions on its ability to
make distributions to us, including as a result of restrictions on the
conversion of local currency into U.S. dollars or other hard currency and other
regulatory restrictions. See, "Risk Factors-Risks Related to Doing Business in
the PRC-- Dalian DPI and Dalian Fushi are subject to restrictions on paying
dividends and making other payments to us", Risk Factors-Risks Related to Doing
Business in the PRC-- Governmental control of currency conversion may affect the
value of your investment" and "Market for our Common Stock-- Dividends."


                                       53
<PAGE>

There is currently a very limited trading market for our common stock.

      Our Common Stock has been quoted on the over-the-counter Bulletin Board
since July 2005, with little or no trading activity. Because the Company was
formerly a shell company, our bid and asked quotations have not regularly
appeared on the OTC Bulletin Board for any consistent period of time. There is
no established trading market for our common stock and our common stock may
never be included for trading on any stock exchange or through any other
quotation system (including, without limitation, the NASDAQ Stock Market). You
may not be able to sell your shares due to the absence of an established trading
market.

      Our common stock is, and will continue to be, subject to the SEC's "penny
stock" rules to the extent that the price remains less than $5.00. Those rules,
which require delivery of a schedule explaining the penny stock market and the
associated risks before any sale, may further limit your ability to sell your
shares. See "Market for our Common Stock-- Penny Stock Regulations."

Our common stock is illiquid and subject to price volatility unrelated to our
operations.

      The market price of our common stock could fluctuate substantially due to
a variety of factors, including market perception of our ability to achieve our
planned growth, quarterly operating results of other companies in the same
industry, trading volume in our common stock, changes in general conditions in
the economy and the financial markets or other developments affecting our
competitors or us. In addition, the stock market is subject to extreme price and
volume fluctuations. This volatility has had a significant effect on the market
price of securities issued by many companies for reasons unrelated to their
operating performance and could have the same effect on our common stock.

A large number of shares of Common Stock will be issuable for future sale which
will dilute the ownership percentage of our holders of Common Stock. We are
required to register for public sale a significant portion of these shares of
Common Stock and this may depress our stock price.

      Following the Reverse Split, all outstanding shares of Series A Stock and
Series B Stock will be automatically converted into approximately shares of
Common Stock upon the Reverse Split contemplated by the Company. In addition, we
have outstanding warrants that may also be exercised for shares of Common Stock.
As a result of these conversions and exercises, up to 19,566,640 additional
shares of Common Stock (on a post-Reverse Split basis) may be issued. As a
result of these additional issuances of Common Stock, the ownership percentage
held by our holders of Common Stock will be significantly reduced. See Items
3.02 and 3.03 for more information on the Reverse Split and the Series A Stock,
Series B Stock and warrants.


                                       54
<PAGE>

      In addition, we are required to register with the SEC for public sale the
shares of Common Stock issuable upon conversion of the Series B Stock and the
exercise of the warrants issued in connection with the Series B Stock private
placement offering as well as the warrant issued to Glenn A. Little. See Item
1.01 and 3.02 of this Current Report for more information on the Series B Stock
and these warrants. After giving effect to the Reverse Split, we could have up
to 4,145,836 shares that are freely tradable. As a result, there will be a
significant number of new shares of Common Stock on the market in addition to
the current public float. Sales of substantial amounts of Common Stock, or the
perception that such sales could occur, and the existence of options or warrants
to purchase shares of Common Stock at prices that may be below the then current
market price of the Common Stock, could adversely affect the market price of our
Common Stock and could impair our ability to raise capital through the sale of
our equity securities.

In connection with the Reverse Split and in anticipation of applying for the
listing of Common Stock on the American Stock Exchange, we may issue additional
shares of Common Stock to certain round lot shareholders and these shareholders
may incur a tax liability as a result from the receipt of these additional
shares.

         In connection with the Reverse Split and in order to create a
sufficient number of round lot holders (holders of at least 100 shares of Common
Stock) to satisfy one of the criteria for the listing of the Common Stock on the
American Stock Exchange, we are authorized to issue to each shareholder holding
24,500 or fewer shares of Common Stock, but at least 12,250 shares of Common
Stock on the record date for the Reverse Split such additional number of shares
of Common Stock so that each such shareholder, after giving effect to the
Reverse Split and the issuance to such shareholder of additional shares, shall
hold 100 shares of Common Stock. These shareholders may incur a tax liability as
a result from the receipt of these additional shares and, as such, this
shareholder should consult with their individual financial and tax advisors
regarding any tax implications.


                                       55
<PAGE>

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

      The following discussion and analysis of the consolidated financial
condition and results of operations should be read in conjunction with the
consolidated financial statements and related notes of Dalian Fushi, appearing
elsewhere in this Current Report. This discussion and analysis contains
forward-looking statements that involve risks, uncertainties and assumptions.
The actual results may differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including, but not
limited to, those set forth under "Risk Factors" and elsewhere in this Current
Report.

Overview

      On December 13, 2005 the Company entered into a series of restructuring
transactions through which the Company will acquire substantially all of the
assets and business of Dalian Fushi, a limited liability company organized under
the laws of the People's Republic of China. As part of the transactions, Dalian
Fushi acquired a controlling interest in the Company from Glenn A. Little, who
previously held a majority of our Common Stock. Upon the completion of the
restructuring transactions, which we anticipate will be completed 15 days after
date of this Current Report, the business of Dalian Fushi will be operated by
our sole operating subsidiary, Dalian DPI, a wholly foreign-owned entity in the
PRC. The business consists of manufacturing and selling copper clad aluminum and
steel wire, both of which are bimetallic composite wire products that are
principally used for network signal transmission cable, cable television wire,
signal transmission cable, cable television subscriber lines, distribution
lines, local area networks, inner conductor for access networks, telephone
subscriber communication lines, patch cords for electronic components, power
system grounding lines, conductor lines for electric railways and other
applications. See "Business" for more information on our acquired business.

      The Company accomplished the acquisition through the following steps.

      1. Dalian Fushi's shareholders and Dalian Fushi's U.S. financial adviser,
Kuhns Brothers, formed DPI and Dalian DPI. Dalian DPI is 100% owned by DPI and
is a "wholly foreign owned entity" under PRC law by virtue of its status as a
wholly-owned subsidiary of DPI, as a non-PRC company.

      2. On November 8, 2005, Dalian Fushi entered into a stock purchase
agreement with our former director, chief executive officer and majority
shareholder, Glenn A. Little, which closed on December 13, 2005. Pursuant to
this agreement, as amended, Mr. Little sold his 20,000,000 shares of Common
Stock, to Dalian Fushi. As a result, Dalian Fushi became the majority
shareholder of the Company. In connection with this agreement, and prior to its
closing, Mr. Little, as director and majority shareholder of the Company
resigned as the director of the Company and appointed Li Fu, Yue Mathus Yang and
John D. Kuhns as directors of the Company. Mr. Fu and Mr. Yang are also
beneficial shareholders and officers of Dalian Fushi. Immediately after the
closing of a private placement offering, Mr. Little also resigned from all his
officer positions with the Company. Contemporaneous with his resignation, the
new directors of the Company appointed new officers with immediate effect. The
directors of DPI and Dalian DPI will be similar to those of the Company. See
"Our Directors and Officers" for more information on these persons and Item 5.01
of this Current Report for more information on this stock purchase agreement.


                                       56
<PAGE>

      3. On December 13, 2005, the Company consummated a share exchange
agreement with DPI, whereby the Company exchanged 784,575.16 shares of its newly
designated Series A Stock for all of the issued and outstanding stock of DPI
held by the DPI shareholders. The Series A Stock is convertible into Common
Stock following the reverse stock split described below. As a result, DPI and
Dalian DPI became direct and indirect wholly-owned subsidiaries, respectfully,
of the Company. See Item 1.01 for additional information on the share exchange
with DPI and Item 1.01, Item 3.02 and 3.03 of this Current Report for more
information on the designation and issuance of the Series A Stock.

      4. Immediately following the above transactions, but on the same date,
Dalian DPI entered into and closed the Restructuring Agreement with Dalian Fushi
to purchase substantially all of the assets of Dalian Fushi and lease the
remaining assets. Under the Restructuring Agreements, Dalian Fushi's business
will be conducted by Dalian DPI. To the extent that any aspect of Dalian Fushi's
business needs to be conducted through Dalian Fushi in the future, the
Restructuring Agreements provide Dalian DPI with the ability to control Dalian
Fushi and any of its remaining assets and operations. The Restructuring
Agreements were utilized, instead of a complete acquisition of Dalian Fushi's
assets, because current PRC law does not specifically provide for the approval
procedures and the detailed implementation regulations on non-PRC entity's
equity to be used as consideration to acquire a PRC entity's equity or assets,
which makes it impossible for a non-PRC entity to use its equity to acquire a
PRC entity. If acquisition of a PRC entity using foreign equity was possible,
the Company could have acquired 100% of the stock of Dalian Fushi in exchange
for Common Stock. While PRC law does allow for the purchase of equity interests
in (or assets of) a PRC entity by a non-PRC entity for cash, the purchase price
must be based on the appraised value of such equity (or assets). Because the
Company did not have sufficient cash to pay the estimated full value of all of
the assets of Dalian Fushi, the Company, through Dalian DPI, purchased the
maximum amount of assets possible with the net proceeds of the private placement
offering described below, and leased the remainder of Dalian Fushi's assets used
in Dalian Fushi's business for nominal consideration. See Item 1.01 of this
Current Report for more information on the Restructuring Agreements.

      While the Restructuring Agreements were entered into and closed on
December 13, 2005, not all of the transactions contemplated by the Restructuring
Agreements have been consummated and the Company, through Dalian DPI, has not
yet commenced operation of the business. To complete these transactions, Dalian
DPI must complete additional filings and registrations, including (i) completing
a PRC registered capital verification process, (ii) after such capital
verification process, transmitting to Dalian Fushi the full purchase price for
the assets to be purchased by it under the Restructuring Agreements, (iii)
obtaining an environmental report for the assets purchased from Dalian Fushi,
and (iv) obtaining a new business license from the PRC State Administration for
Industry and Commerce in Dalian, PRC to reflect Dalian DPI's status as an
operating company. We anticipate these steps will be completed within 15 days
after the date of this Current Report, at which time Dalian DPI will commence
operations.


                                       57
<PAGE>

      5. The funds used for the consummation of the stock purchase agreement
with Mr. Little and the Restructuring Agreements were provided from the proceeds
of a $11,225,000 private placement offering by the Company which also closed on
December 13, 2005. The investors in this offering purchased 201,511.98 shares of
the Company's newly designated Series B Stock, along with warrants to purchase
additional shares of Common Stock and rights to additional issuances of Common
Stock based on certain conditions. The Series B Stock is convertible into Common
Stock following the reverse stock split described below. See Item 1.01, 3.02 and
3.03 of this Current Report for more information on the designation and issuance
of the Series B Stock and warrants. The net proceeds of the Series B Stock
offering will otherwise be used by Dalian DPI principally for the conduct of the
business.

      The Series A Stock and the Series B Stock will not convert into shares of
Common Stock until the Company effects a 245.27 for 1 reverse stock split of its
Common Stock (the "Reverse Split"), as described in Item 3.03 of this Current
Report. The Reverse Split was approved on December 5, 2005, along with a change
in the Company's name to "Fushi International, Inc." The Reverse Split and name
change will occur within 25 days of the Company mailing an Information Statement
on Schedule 14C to its shareholders. A preliminary Information Statement will be
filed with the SEC on or about the date of this Current Report.

      As a result of the above transactions, the Company ceased being a shell
company as such term is defined in Rule 12b-2 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). See Item 5.06 of this Current Report.

--------------------------------------------------------------------------------
<TABLE>
<S>                                            <C>
 ---------------------------
 Parallel Technologies, Inc.
      (to be changed to
 Fushi International, Inc.)  |
 ---------------------------  |
              |                |
              |      ------     |
              |       100%       |
              |      ------       |
              |                    |
 ---------------------------        |
    Diversified Product              |
  Inspections, Inc. (DPI)             |
 ---------------------------           |
              |                         |
              |      ------              |
              |       100%                |
              |      ------                |
              |                             |
 ---------------------------                 |
     Dalian Diversified                       |
    Product Inspections                        |
 Bimetallic Cable Co., Ltd.                     |
        (Dalian DPI)                             |
 ---------------------------                      |
              |                                 ---------------------------
              |                                  Dalian Fushi Bimetallic
              ---------------------------------  Manufacturing Co., Ltd.
                ---------------                       (Dalian Fushi)
                 Restructuring                  ---------------------------
                   Agreements
                ---------------
</TABLE>
--------------------------------------------------------------------------------


                                       58
<PAGE>

Recent Trends and Developments

      As set forth in the following table, during the nine-months ended
September 30, 2005, and during fiscal 2005, to date, Dalian Fushi, as it existed
prior to the restructuring, has had an increasing flow of orders for its
products which generally has resulted in higher net sales and net income, as
compared to prior years:

                           Increase/           30-Sep-05           30-Sep-04
                           (Decrease)
Net Sales                      31%            $18,072,468         $12,463,520
Gross Profit                   31%            $7,853,026          $5,435,018
Operating Income               32%            $6,189,216          $4,187,357
Net Income                     31%            $4,894,588          $3,376,010
Gross Margins               (0.36)%             43.45%              43.61%

      Dalian Fushi's increasing orders continue to follow a trend which began in
2003. In 2003, Dalian Fushi had only five production lines and lacked the
manufacturing capacity to fill all customer orders. During the fiscal year ended
December 31, 2004, Dalian Fushi added an additional 15 production lines,
enabling it to fill more orders and generate additional revenues. While Dalian
Fushi currently has the production capacity to fulfill all orders, until the
closing of the private placement offering, it lacked sufficient working capital
to purchase necessary raw materials to fulfill all orders. Our lack of working
capital was a function of increased accounts payable to accommodate purchases to
support expanded production and increased accounts receivable pending collection
and which relate to recently produced items. Because Dalian Fushi's management
did not wish to incur additional bank debt to make up the working capital
deficiency, Dalian Fushi sought equity investment which resulted in the
transactions and private placement offering described above.

      With the net proceeds from the financing, management plans to:

      i.    purchase additional new production lines, primarily for the
            production of "fine" wire products, as well as raw materials to
            allow Dalian DPI to meet existing customer orders;

      ii.   increase marketing efforts and create additional capacity to meet
            increased customer orders;

      iii.  develop, expand and strengthen our distribution and sales network
            and capabilities outside of the PRC. Presently, we have eight
            non-Chinese customers for our products. We are looking to actively
            pursue placing comprehensive distribution throughout North America,
            Asia Pacific, and Europe, utilizing exclusive distributors that are
            active in the markets we service. In the US market in particular, we
            plan to set up direct offices and employ direct staff to manage the
            distribution of our products in North and South America; and

      iv.   implement upgraded information technology, financial reporting and
            other management systems to improve revenue performance, asset
            utilization, operating efficiency and profitability.


                                       59
<PAGE>

      During the quarter ended September 30, 2005, Dalian Fushi started to
manufacture and market "fine" wire products, which are bimetallic wires with a
smaller than typical diameter. These products can be sold at higher prices and
result in substantially higher gross margins which are up to 45% higher than the
gross margins for standard bimetallic wire products.

      Dalian Fushi has completed the development of a new technology for a press
cladding device to be used for larger sized bimetallic wires, which also
typically have higher gross margins. We anticipate that testing and the
development of required equipment will continue into early 2006 before we can
implement the technology. In addition, Dalian Fushi has also submitted an
international patent application for the manufacture of cuponal busbar for which
production machinery is also being developed. Cuponal busbar, which is another
high margin product, has wider applications than copper clad wire and is
extensively used in electronic items and household appliances. It is anticipated
that production of this product can commence in the second half of 2006.

      Dalian Fushi's operating results in any given time period are driven by
several key factors, including: the volume of orders, product produced and
shipped, the cost of copper, aluminum and other raw materials, the competitive
pricing environment in the bimetallic wire industry and the resulting influence
on gross margins and the efficiency with which our plant operates during the
period.

Nine Months Ended September 30, 2005 and September 30, 2004

Net Sales

      During the second and third quarter of the fiscal year ending December 31,
2005, we expanded our operations into a new manufacturing facility with over
500,000 square feet of factory space, which is 25 times the size of our original
facility. The move resulted in a temporary disruption of manufacturing during
the months of June and July. Nevertheless, net sales increased to $18.07 million
for the nine months ended September 30, 2005 as compared to $12.46 million for
the nine months ended September 30, 2004, an increase of approximately $5.6
million or 45.00%. This increase primarily resulted from increased customer
orders and increasing prices for copper which we were able to pass on to
customers. During the quarter ended September 30, 2005, Dalian Fushi completed
the installation and testing of 15 additional manufacturing lines. While these
manufacturing lines will allow us to address some of Dalian Fushi's order
backlog, we will need additional capital to address working capital requirements
for raw materials purchases.

      Sales by our top three customers by percentage to our total sales as of
September 30, 2005 are as follows:

Top Three Customers                                        Percentage of Sales
Andrew Corporation                                         14%
Zhuhai Hansheng Industrial Co., Ltd.                       11%
Jiangxi Lianchuang Photoelectricity Science Co.            10%

Total                                                      35%


                                       60
<PAGE>

      Our top three customers accounted for 56.55% and 35% of Dalian Fushi's net
sales for the year ended December 31, 2004 and nine months ended September 30,
2005, respectively. As Dalian Fushi has expanded its business, it has been able
to do so with orders from new customers thereby decreasing its concentration of
customers. We plan to continue this trend by expanding marketing efforts to
obtain more new customers.

      Geographically, a substantial portion of Dalian Fushi's customers is based
in the PRC. We anticipate that most of Dalian Fushi"s revenue will continue to
be derived from sale to customers in the PRC. However, we believe that a
significantly larger portion of sales will start to come from outside of PRC as
we expand international marketing and distribution efforts.

Cost of Sales

      Cost of sales increased by 45.4% to approximately $10.22 million for the
nine months ended September 30, 2005 (approximately 56.55% of net sales), from
approximately $7.03 million (approximately 56.39% of net sales) in the
corresponding period of the prior year. The increase in cost of sales was
primarily due to an increase in our sales volume and the associated costs to
manufacture and deliver our products, including rising copper prices, rising
energy costs, higher manufacturing costs consisting of a substantially increased
depreciation, and higher fixed costs attributable to the transition from the old
to the new factory. Cost of sales as a percentage of net sales remained
relatively unchanged.

Gross Profit

      Gross profit for the nine months ended September 30, 2005 was
approximately $ 7.85 million, or 43.45% of net sales, as compared to gross
profit of approximately $5.45 million or 43.61% of net sales for the same period
in the prior year. This increase was principally the result of aggressive
expansion of our business, particularly an increase in sales of our
recently-introduced "fine wire" products with significantly higher margins when
compared to our other CCA and CCS products, which effectively offset the impact
of higher copper, energy, and fixed costs. In addition, we were able to pass on
some of the increased costs to our customers in final selling prices. As a
result, gross profit in terms of percentage of net sales remained almost
unchanged.

Operating Expenses

      Operating expenses increased to $1.66 million for the nine months ended
September 30, 2005, as compared to approximately $1.25 million for the same
period during the prior year, an increase of $416,149, or about 33.4%. The
increase in operating expenses was primarily the result of higher general and
administrative expenses due to our move into a new facility and higher
depreciation and amortization relating to a larger asset base. This increase was
offset by significantly decreased selling expenses. Operating expenses overall
as a percentage of net sales dropped to 9.21%, or 0.80%, for the nine months
ended September 30, 2005 from 10.01% for the same period of prior year. The
following table sets forth the components of our operating expenses both in
amount and as a percentage of total net sales for the nine months ended
September 30, 2005 and 2004, respectively.

                                       61
<PAGE>

<TABLE>
<CAPTION>
Items                                          Nine Months Ended September 30,
                                --------------------------------------------------------------
                                       2005 (unaudited)                 2004 (unaudited)
                                ----------------------------     -----------------------------
                                    US$                 %            US$                 %
                                ----------------------------     -----------------------------
<S>                             <C>                  <C>         <C>                  <C>
Total Net Sales                 18,072,468           100.00%     12,463,520           100.00%
Selling expense                    168,910             0.93%        478,958             3.84%
General and
administrative expenses            815,133             4.51%        460,653             3.70%
Depreciation and
amortization                       679,767             3.76%        308,050             2.47%
Total Operating Expenses         1,663,810             9.21%      1,247,661            10.01%
</TABLE>

      Selling expenses decreased to approximately $168,910 for the nine months
ended September 30, 2005 from approximately $478,958 for the same period during
the prior year, a decrease of approximately $310,048, or 64.7%. The decrease
primarily resulted from decreased marketing and sales efforts corresponding to
an increase in demand for our products, with a substantial portion of our net
sales derived from long-term customers as repeat orders.

      General and administrative expenses increased by $354,480, or 76.95%, from
$460,653 in the first nine months of 2004, to $815,133 in the same period of
2005. Most of the increase in general and administrative expenses resulted from
additional administrative expenses relating to our move to our new facilities.

      Depreciation and amortization increased by $371,717, or approximately
120.67%, to $679,767 for the nine months ended September 30, 2005, from $
308,050 for the same period of prior year. The increase in depreciation and
amortization was primarily due to a larger fixed asset base.

      In the future, we anticipate that our operating expenses will increase due
to: increased research and development spending to add new and higher margin
products to our product line, increases in sales and marketing expenses, new
hires, and costs associated with being a reporting public company. At the same
time, we plan to implement a series of measures to control costs, enhance
operational management, improve efficiency, and lower administrative expenses.
For example, we are in the process of engaging accounting consultants to
implement and overhaul our financial reporting and financial management systems
to ensure timely generation of financial information.

Operating Income

      Operating income totaled approximately $6.19 million for the nine months
ended September 30, 2005, as compared to operating income of approximately $4.19
million for the nine months ended September 30, 2004, an increase of
approximately $2.0 million or approximately 47.8%.


                                       62
<PAGE>

      As a percentage of net sales, operating income was approximately 34.25% in
the first nine months of 2005 as compared to approximately 33.60% for the same
period of prior year.

Income Taxes

      Our sole operating business consisted of Dalian Fushi during the nine
month period ended September 30, 2005. Thus, we were not subject to any U.S.
income taxes. The amount of taxes paid by Dalian Fushi for the nine months ended
September 30, 2005 and 2004 were $852,904 and $595,766, respectively.

      Dalian Fushi has been approved as a "high-tech" company by the Dalian
Municipal Government since it changed its form of entity to a limited liability
company in 2002. Pursuant to the "Several Provisions on Further Support High-
and New- Technology Industries Development" issued by the Dalian Municipal
Government in 2000, Dalian Fushi, as a high-tech company, is entitled to an
exemption from the PRC enterprise income tax for two years commencing from its
first profitable year and thereafter for three years, a 50% relief from the PRC
enterprise income tax. Dalian Fushi has been receiving the tax exemption since
fiscal 2002.

      Following the private placement offering and upon the completion of the
restructuring contemplated in the Restructuring Agreements, we will conduct our
business out of Dalian DPI. Dalian DPI is a wholly foreign-owned enterprise, or
WFOE, under the PRC law by virtue of its status as a subsidiary of DPI. Pursuant
to the relevant laws and regulations in the PRC, Dalian DPI, as a WFOE, is
entitled to an exemption from the PRC enterprise income tax for two years
commencing from its first profitable year, and thereafter for three years, a 50%
reduction from the PRC enterprise income tax. In addition, we are in the process
of seeking to have Dalian DPI approved as a "high tech" company, which will
afford the same tax benefits to Dalian DPI. However, we have yet received any
notices or confirmation as to Dalian DPI's tax status.

Net Income

      Net income increased to approximately $4.89 million in the nine months
ended September 30, 2005, or approximately 44.67%, from approximately $3.38
million in the nine months ended September 30, 2004. The increase in net income
resulted principally from lower costs and increased sales at higher margins.

Liquidity and Capital Resources

      Historically, Dalian Fushi has financed its operations and capital
expenditures through cash flows from operations and bank loans. However, neither
cash flows from operations, or bank loans have been sufficient to keep pace with
the growth of its business and provide sufficient working capital to meet
increased new orders, acquire raw materials and purchase necessary new equipment
to expand production. As a result, we entered into the Restructuring Agreements
and consummated the transactions resulting in the acquisition and/or lease of
substantially all of Dalian Fushi's assets to Dalian DPI, and raised $11,225,000
million through a private placement offering. We believe that the approximately
$9.85 million in net proceeds from the offering will be sufficient to purchase
enough new equipment to meet existing orders and to provide additional capacity
for further expansion. In addition, our management plans to use net proceeds of
the offering to increase marketing activities to further expand our business.


                                       63
<PAGE>

      We believe that the net proceeds of the Series B Stock private placement
offering, together with cash flows, have provided sufficient working capital for
the next 12 months of operations.

      Net cash used in operating activities for the nine months ended September
30, 2005 was ($1.8) million, compared to $10.8 million in cash provided by
operating activities for the same period last year. Significant factors
comprising the cash used in operating activities include: a significant increase
in accounts receivable due to increased sales, an increase in prepaid expenses
and an increase in due from related companies.

      Net cash provided by financing activities of $5.2 million for the nine
months ended September 30, 2005, was a result of drawing from bank lines of
credit to pay for new equipment and provide working capital to meet new orders.

      Net cash used in investing activities of ($3.0) million was primarily the
result of expenditures on new equipment, as well as capital investment in motor
vehicles and office equipment as part of our expansion.

      As of September 30, 2005, Dalian Fushi had the following long-term bank
loans outstanding with the following terms:

<TABLE>
<CAPTION>
---------------------------- -------------------------- -------------------------- --------------------------
Lender                       Terms                      Amount Due                 Interest Rate
---------------------------- -------------------------- -------------------------- --------------------------
<S>                          <C>                           <C>                     <C>
Industrial  and  Commercial  5-year                        $9,675,859              5.58% per annum
Bank
---------------------------- -------------------------- -------------------------- --------------------------
Bank of China                Revolving  Credit Line of  RMB 70,000,000             Floating  rate  currently
                             RMB   100,000,000  to  be                             at 6.38%
                             used   within   one  year
                             commencing  from July 15,
                             2005 for working  capital
                             purposes  and  each  draw
                             down   must   be   repaid
                             within one year
---------------------------- -------------------------- -------------------------- --------------------------
</TABLE>


                                       64
<PAGE>

      As of September 30, 2005, Dalian Fushi rolled over short-term working
capital loans that became due in April and May 2005, in the amounts of
$4,475,084 and $604,741, respectively, and assumed additional working capital
loans in the amount of $5,195,680. Maturities for the working capital financing
range from three to twelve months. We intend to roll these loans over again when
they become due.

      Dalian Fushi incurred $425,752 in interest expense from bank loans during
the nine months ended September 30, 2005, as compared to $233,859 in the same
period last year. The change in interest expenses was due to increase in
interest payment for short term working capital financing.

Cash

      Cash and cash equivalents decreased from $2,612,282 as of December 31,
2004 to $2,844,904 as of September 30, 2005, primarily as a result of net cash
used by operating activities of $1,793,450, net cash used by investing
activities of $3,029,881 in the form of capital expenditures, and net cash
providing by financing activities of $5,195,680.

Accounts Receivable

      Accounts receivable was $1,736,396 at December 31, 2004, as compared to
$5,332,718 at September 30, 2005. The increase in accounts receivable is
primarily attributable to a substantial increase in sales volume and extended
payment terms we offered to attract and retain large customers.

      Accounts receivable related to the Company's top three customers comprised
43% all accounts receivables as of September 30, 2005, compared to the Company's
top five customers accounting for 53% of all accounts receivables as of December
31, 2004.

      Our trading terms with our customers are principally on a cash basis. We
generally collect payments from smaller customers shortly before delivering our
products. However, we extend 30-day, 60-day, or 90-day unsecured trade credit to
major customers. Because the major customers are all well-established
businesses, we have not experienced any significant write-off of accounts
receivable. Consequently, we did not provide an allowance for doubtful accounts
and considered all accounts receivable collectible.

Due from related companies

      For the nine months ended September 30, 2005, Dalian Fushi loaned
$1,694,919 to three related companies, namely Li Tai Auto Repair, Sunshine
Zhangyie, and Fushi Commerce and Trade. These are short term, unsecured loans,
free of interest and repayable on demand. For the fiscal year ended December 31,
2004, due from related companies totaled $456,527.


                                       65
<PAGE>

Prepaid Expenses and other current assets

      Prepaid expenses and other current assets were $2,857,416 as of December
31, 2004 as compared to $4,608,296 as of September 30, 2005, an increase of
$1,750,880, or approximately 61.27%. The increase was primarily due to increase
in other current assets. Other current assets principally consist of other
receivables due from directors and employees representing unsecured advances
made to those parties from time to time. These amounts are interest free and
repayable on demand. In accordance with generally accepted accounting principles
in the U.S., Dalian Fushi conducted assessment of the recoverability of these
other receivables on regular basis and make appropriate provisions based on the
results. The general provision for doubtful accounts on other receivables was
$70,000 for the nine months ended September 30, 2005.

Inventory

      Inventories consisted of the following as at September 30, 2005 and
December 31, 2004. The increase at September 30, 2005 is a result of greater
sales volume and demand for Dalian Fushi's products:

                    December 31, 2004      September 30, 2005
                    -----------------      ------------------
                       (audited)               (unaudited)

Raw materials           $  862,806              $1,305,160
Work-in-progress            93,392                 597,506
Finished goods           1,094,058                 402,587
                        ----------              ----------
Totals                  $2,050,256              $2,305,252


Accounts payable

      Accounts payable amounted to $1,311,371 and $1,560,437 at September 30,
2005 and December 31, 2004, respectively. These amounts were primarily generated
from the purchases of raw materials.

      Dalian Fushi relied on two suppliers for most of its raw materials
purchases during the nine-months ended September 30, 2005, each accounting for
45% and 51% of total purchases, respectively. As of September 30, 2005, accounts
payable to those two suppliers totaled $601,588.

Due to related companies

      Dalian Fushi has amounts classified as due to related companies in the
amount of $328,611 and $153,519 at September 30, 2005 and December 31, 2004,
respectively. These amounts arose from cash advances from related parties, loans
due to related parties and various non-operational transactions incurred with
related parties.


                                       66
<PAGE>

Fiscal Years Ended December 31, 2004 and December 31, 2003.

Net Sales

      Net sales increased to approximately $15.66 million for the year ended
December 31, 2004 as compared to approximately $ 11.96 million for the year
ended December 31, 2003. Dalian Fushi's year over year net sales increase was
approximately $ 3.7 million, or 31%. This increase was primarily due to the
continuously strong demand for Dalian Fushi's products in both CCA and CCS
segments and substantial expansion of its production capacity from three to five
manufacturing lines to meet demand.

      During the fiscal years ended December 31, 2004 and 2003, Dalian Fushi had
a substantial concentration of customers. In 2004, approximately 75.37% of sales
were made to its top five customers, representing 21.15%, 19.21%, 16.19%,
10.08%, and 8.74% of net sales respectively. In 2003, approximately 73% of net
sales were made to its top five customers.

      The dollar amount and the percentage of net sales made to major customers
that account for 10% or more of Dalian Fushi's net sales in 2004 and 2003 are as
follows:

                                             (AUDITED) FISCAL YEAR ENDED
                                                     DECEMBER 31,
                                             ---------------------------
                                                  2004           2003
                                                 US$'000        US$'000
Sales to major customers in dollar amount        10,436          8,728
Percentage of annual sales                        66.63%            73%
Number of customers                                   4              5

      The geographic and product breakdown of our revenues as of December 31,
2003 and 2004 are as follows:

                                              As of             As of
Sales Volume (by Geographic Areas)          12/31/2003       12/31/2004

Non-PRC Sales                                 0.20%              9.00%
PRC Sales                                    99.80%             91.00%

Cost of Sales

      Cost of sales increased by 27.9%, to approximately $8.95 million, for the
fiscal year ended December 31, 2004 (approximately 57% of net sales), from
approximately $7 million (approximately 58.6% of net sales) in the prior year.
Cost of sales primarily consists of cost of raw materials, labor, utility,
manufacturing costs, and other fixed costs. The increase in cost of sales was
largely driven by the significant revenue growth resulting from an expansion in
the scale of Dalian Fushi's business, and to a lesser extent, an increase in raw
material costs, principally the price of copper. Cost of sales measured by
percentage of net sales, however, fell by more than 1% primarily because Dalian
Fushi was able to pass on increased raw material cost to customers by raising
selling prices.


                                       67
<PAGE>

      Dalian Fushi relies on two suppliers for the procurement of its two most
important raw materials, copper strip and aluminum bar. Dalian Fushi had a
substantial concentration of suppliers during the fiscal years ended December
31, 2003 and December 31, 2004, as set forth in the following table:

                                                   (AUDITED) FISCAL YEAR ENDED
                                                           DECEMBER 31,
                                                   ---------------------------
                                                        2004           2003
                                                       US$'000        US$'000

Purchases from major suppliers in dollar amount      8,166,769       4,865,239
Percentage of total annual purchases                      94.5%           94.1%
Number of Suppliers                                          2               2

Gross Profit

      Gross profit for the fiscal year ended December 31, 2004 was approximately
$6.7 million, or 42.9% of net sales, as compared to gross profit of
approximately $4.95 million or 41.4% of net sales for the fiscal year ended
December 31, 2003. The improved profitability largely resulted from economies of
scale achieved in connection with raw material purchases, greater ability to set
prices with customers resulting from increasing demand for products, and reduced
manufacturing costs.

Operating Expenses

      Operating expenses increased to $1.997 million for the fiscal year ended
December 31, 2004 as compared to approximately $1.302 million for the prior
year, an increase of $ 695,840 or about 53.5%. The increase of operating
expenses is primarily due to hiring of additional staff, and an increase of
general and administrative expenses resulting from expanded business operations.
The increase of general and administrative expenses was offset by lower selling
expenses, which decreased despite increases in net sales due to established
relationships with customers.

      Because Dalian Fushi has operated and managed its business as a single
segment, it does not allocate operating expenses among its products.

      The following table sets forth the components of Dalian Fushi's operating
expenses both in amount and as a percentage of total net sales for the fiscal
years ended December 31, 2004 and 2003.

<TABLE>
<CAPTION>
Items                                          Fiscal Year Ended December, 31
                                --------------------------------------------------------------
                                           2004                               2003
                                ----------------------------     -----------------------------
                                    US$                 %            US$                 %
                                ----------------------------     -----------------------------
<S>                             <C>                  <C>         <C>                  <C>
Total Net Sales                 15,662,493             100        11,955,551             100
Selling expense                    578,031             3.7           530,463             4.4
General and
administrative expenses            724,893             4.6           450,780             3.8
Depreciation and
amortization                       694,522             4.4           320,363             2.7
Total Operating Expenses         1,997,446            12.8         1,301,606            10.9
</TABLE>


                                       68
<PAGE>

      Among the increase of operating expenses, selling expenses increased to
approximately $578,031 from approximately $530,463 for the prior year, an
increase of approximately $47,568, or 9%. Selling and marketing expenses
primarily consist of salaries, benefits and commissions for sales and marketing
personnel, and promotional and marketing expenses.

      General and administrative expenses increased by $274,113, or 60.8%, from
$450,780 in 2003 to $724,893 in 2004. General and administrative expenses
primarily consist of salaries and benefits for general and administrative
personnel, and various administrative expenses including fees and expenses for
legal, accounting and other professional services.

      Depreciation and amortization increased by $374,159, or 117%, to $694,522
for the fiscal year ended December 31, 2004 from $320,363 for the prior year,
with accumulated amortization on patents totaling $240,952 and $365,661 in 2003
and 2004, respectively. The increase in depreciation and amortization was
primarily due to a substantially increased fixed asset base.

Income from Operations

      Operating income totaled approximately $4.72 million for the fiscal year
ended December 31, 2004 as compared to operating income of approximately $3.65
million for the year ended December 31, 2003, an increase of approximately $1.07
million or 29%.

      As a percentage of net sales, operating income was approximately 30% in
2004 as compared to approximately 30.5% for the prior year. Operating income as
a percentage of net sales was stable due to slightly improved gross margin and
higher general and administrative expenses and depreciation offset by lower
selling expense.

Income Taxes

      Dalian Fushi did not carry on any business or maintain any branch office
in the United States during the year ended December 31, 2004 or the year ended
December 31, 2003. Therefore, no provision for U.S. federal income taxes or tax
benefits on its undistributed earnings and/or losses has been made.


                                       69
<PAGE>

      During the fiscal years ended December 31, 2004 and 2003, Dalian Fushi's
operations were solely in the PRC and governed by the PRC Enterprise Income Tax
Laws. PRC enterprise income tax is calculated based on taxable income determined
under PRC GAAP. In accordance with the Income Tax Laws, a PRC domestic company
is subject to enterprise income tax at the rate of 33%, value added tax at the
rate of 17% for most of the goods sold, and business tax on services at a rate
ranging from 3% to 5% annually. A PRC domestic company is also subject to local
taxes. However, the Income Tax Laws provide certain favorable tax treatment to a
company that qualifies as a "new or high-technology enterprise". Additionally,
the governments at the provincial, municipal and local levels can provide many
tax incentives and abatements based on a number of programs at each level.
Dalian Municipal Government has issued a notice in 2000 providing for a series
of tax preferential treatments to companies that qualify as "new or high-tech"
companies in Dalian City.

      Dalian Fushi's bimetallic composite conductor wire product was approved by
Dalian City as a "high-tech" project. As a result, Dalian Fushi is a business
entity that is qualified as a "new or high-technology enterprise," and is
entitled to a two-year full exemption from the PRC enterprise income tax
starting from its first year of operation (which expired on December 31, 2003)
followed by a 50% reduction and other favorable tax treatment for the succeeding
three years (which will expire on December 31, 2006). The effective tax rate for
the fiscal year ended December 31, 2004, is 15%. We expect the effective tax
rate for the fiscal year ended December 31, 2005 and 2006, to more or less
remain 15%. After December 31, 2006, we will consider available options under
applicable law that would enable us to qualify for further preferential tax
treatment.

      The amount of taxes paid by Dalian Fushi for the fiscal years ended
December 31, 2004 and 2003 were $666,995 and $0 respectively.

Net Income

      Net income increased to approximately $3.8 million in the fiscal year
ended December 31, 2004, or approximately 5.6% from approximately $3.6 million
in the fiscal year ended December 31, 2003 principally because of increasing
demand and orders for products.

Liquidity and Capital Resources

      Since Dalian Fushi's inception, we have generally financed our operations
and met capital expenditure requirements through capital contributions from its
shareholders, cash flows generated internally from operating activities, bank
loans and credit lines.

      As of December 31, 2004, Dalian Fushi had current assets of $9,737,067 and
current liabilities of $12,466,426. Current assets are comprised of cash and
cash equivalents of $2,612,282, accounts receivable of $1,760,586, due from
related companies of $456,527, inventories of $2,050,256, prepaid and other
current assets of 2,857,416. Current liabilities are comprised of accounts
payable of $1,560,437, other payables and accruals of $610,245, taxes payable of
3,248,176, due to related companies of 153,519, and debts maturing within one
year of $6,894,049.


                                       70
<PAGE>

      As of December 31, 2004, cash, bank balances, and bank borrowings were all
denominated in Renminbi ("RMB"). Revenues and expenses, assets and liabilities
are mainly denominated in RMB. In light of the recent change taken place to
China's foreign exchange regime, namely pegging RMB to a basket of currencies
and allowing movement flexibility in a 2% trading band, we expect RMB to slowly
appreciate to reflect its true value, and benefit us in the translation from
RMB-denominated profit to USD-denominated profit.

      As of December 31, 2004, Dalian Fushi's contractual obligations were as
follows:

<TABLE>
<CAPTION>
                                                                  Payment Due by Period
----------------------------------------------------------------------------------------------------------------------
               (in USD)                      Total        Less than 1    1-3 years     3-5 years       More than 5
                                                              year                                        years
----------------------------------------------------------------------------------------------------------------------
<S>                                     <C>              <C>             <C>           <C>              <C>
Long-Term Debt Obligations              9,675,859        0               0              9,675,859        0
Line of Credit                          8,750,000        8,750,000
Capital Lease Obligations               0
Operating Lease Obligations             0
Purchase Obligations(1)                 0
Other Long-Term Liabilities Reflected   0
  on the Balance Sheet
                                        ----------
Total                                   18,425,859
----------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Purchase obligations-an agreement to purchase goods or services that is
enforceable and legally binding on the registrant that specifies all significant
terms, including quantities, price, and timing of the transaction.

      As of December 31, 2004, Dalian Fushi's principal amounts outstanding
under its banks loans and credit facilities from local banks in the PRC were as
follows:

<TABLE>
<CAPTION>
---------------------------- -------------------------- -------------------------- --------------------------
Lender                       Terms                      Amount Due                 Interest Rate
---------------------------- -------------------------- -------------------------- --------------------------
<S>                          <C>                           <C>                     <C>
Industrial  and  Commercial  5-year                        $9,675,859              5.58% per annum
Bank
---------------------------- -------------------------- -------------------------- --------------------------
Bank of China                Revolving  Credit Line of  RMB 70,000,000             6.38% floating rate
                             RMB   100,000,000  to  be
                             used   within   one  year
                             commencing  from July 15,
                             2005 for working  capital
                             purposes  and  each  draw
                             down   must   be   repaid
                             within one year
---------------------------- -------------------------- -------------------------- --------------------------
</TABLE>


                                       71
<PAGE>

      Dalian Fushi paid interest in 2004 and 2003 in the amount of $721,427 and
$253,240, respectively, of which $342,839 and $199,484 were capitalized in 2004
and 2003 respectively, resulting in interest expense of $378,588 and $53,756 in
2004 and 2003 respectively. The significant increase in interest paid and
interest expense were due to five short-term loans we took out from the local
banks to finance working capital needs for expansion of business operations.

Cash

      Dalian Fushi's principal use of cash for the two years ended December 31,
2004 was to fund the acquisition of land and machinery, construction of
manufacturing facilities, and its working capital requirements. As of December
31, 2004, Dalian Fushi had $2.61 million in cash. Cash used to purchase property
and equipment, land use rights, and intangible assets was reduced by $7 million
from $19 million in 2003 to $12 million in 2004. However, cash received from
financing activities such as issuance of common stock and notes was reduced by
$7.27 million from $15 million in 2003 to $7.8 million in 2004. The decrease of
cash used in investing activities was off-set by the decrease of cash received
from financing activities. As a result, the increase of $2.4 million in cash is
primarily attributable to improvement of cash provided by operating activities,
particularly quicker turnover of accounts receivables and significant increase
in such non-cash items as depreciation which affects net income, not dalian
Fushi's cash position.

Accounts Receivable

      Dalian Fushi's trading terms with customers are principally on a cash
basis. It generally collect payments from smaller customers shortly before
delivering products. However, we extend 30-day, 60-day, or 90-day unsecured
trade credit to major customers. Because the major customers are all
well-established businesses, Dalian Fushi has not experienced any significant
write-off of accounts receivable. Consequently, it did not provide an allowance
for doubtful accounts and considered all accounts receivable collectible.
Accounts receivable decreased from $1.95 million at December 31, 2003 to $1.76
million at December 31, 2004. We have seen a short accounts receivable turnover
period from 2003 to 2004, primarily due to enhanced collection efforts, and
better payment terms which reflect customers' desire to secure supply from
Dalian Fushi.

A/R aging table 12/31/04
----------------------------------------------------
0-30 days      30-60 days     60-90 days   > 90 days
----------     ----------     ----------   ---------
$6,886         $1,300,522     $433,507     0
----------------------------------------------------

      Dalian Fushi relied on two suppliers for approximately 96% of total raw
material purchases in year 2004, and two suppliers for approximately 87% of
total raw material purchase in year 2003. At December 31, 2004 and 2003,
accounts payable to these two suppliers totaled $126,939 and $157,377,
respectively.


                                       72
<PAGE>

Prepaid Expenses and Other Current Assets

      Prepaid expenses and other current assets at December 31, 2004 and 2003
consisted of the following:

                                2004              2003
                             ----------        ----------
Prepaid expenses             $  111,030        $2,735,342

Advances to suppliers           402,137           629,585
Other current assets          2,344,249           676,405
                             ----------        ----------
                             $2,857,416        $4,041,332

      Prepaid Expenses.

      Prepaid expenses were $111,030 as of December 31, 2004 as compared to
$2,735,342 as of December 31, 2003, a decrease of $2,624,312, or approximately
2364%. The decrease was primarily due to a portion of capital expenditure on the
construction of the new manufacturing facilities in the fiscal year 2003 was
classified as prepaid. In the period of fiscal year 2004, a substantial portion
of this capital investment was transferred to Property and Equipment.

      Advances to Suppliers.

      Advances to suppliers were decreased from $629,585 at December 31, 2003 to
$402,137 at December 31, 2004. The decrease resulted from better payment terms
negotiated with our suppliers.

      Other Current Assets.

      The total of other current assets as of December 31, 2004 was $2,344,249,
and $676,405 as of December 31, 2003. Other current assets primarily consist of
subsidies and grants allocated from the local government's initiatives and
incentive programs to promote development of "new or high technology
enterprises," and amounts due from directors and employees representing
unsecured advances made to these persons from time to time, which are interest
free and repayable on demand. In 2003, the subsidy Dalian Fushi received from
local government as research and development expenses was RMB 200,000. In 2004,
Dalian Fushi received RMB 600,000 interest subsidy from local government due to
its "new and high technology enterprise" status.

Inventory

      Inventories consisted of the following as at December 31, 2004 and
December 31, 2003:

                    December 31, 2004          December 31, 2003
                    -----------------          -----------------
[in US$]
Raw materials             862,806                   252,640
Work-in-progress           93,392                    57,583
Finished goods          1,094,058                   157,913
                        ---------                 ---------
Totals                  2,050,256                   468,136


                                       73
<PAGE>

      Inventories of raw materials, inventories of work-in-progress and finished
goods all increased during the same period. As a result and during the course of
expansion of our business, Dalian Fushi needed to maintain a significant level
of inventory to support the substantial increase in sales.

Other Payables and Accrued Liabilities

      Other payables decreased significantly from $1,348,574 as of December 31,
2003 to $271,977 as of December 31, 2004. The reason for this decline is that
increases in advances from customers were offset by large payments to sundry
creditors.

      Accrued liabilities include accrued welfare benefits and other accruals.
Accrued liabilities increased from $96,813 as of December 31, 2003 to $338,268
as of December 31, 2004. The increase is primarily due to a large increase in
accrued welfare relating to hiring of additional personnel.

Critical Accounting Policies

      Management's discussion and analysis of its financial condition and
results of operations is based upon Dalian Fushi's consolidated financial
statements, which have been prepared in accordance with United States generally
accepted accounting principles. Dalian Fushi's financial statements reflect the
selection and application of accounting policies which require management to
make significant estimates and judgments. See note 1 to Dalian Fushi's
consolidated financial statements, "Summary of Significant Accounting Policies
and Organization". Management bases its estimates on historical experience and
on various other assumptions that are believed to be reasonable under the
circumstances. Actual results may differ from these estimates under different
assumptions or conditions. Dalian Fushi believes that the following reflect the
more critical accounting policies that currently affect Dalian Fushi's financial
condition and results of operations:

Revenue recognition

      Product sales are recognized when the products are shipped and title has
passed. Sales revenue represents the invoiced value of goods, net of a VAT. All
of the Company's products that are sold in the PRC are subject to a Chinese
value-added tax at a rate of 17% of the gross sales price. This VAT may be
offset by VAT paid by the Company on raw materials and other materials included
in the cost of producing its finished products.

      Although most of Dalian Fushi's products are covered by its warranty
programs, the terms and conditions vary depending on the customers and the
product sold. Because Dalian Fushi has not experienced any significant warranty
claims in the past, it has not established any reserve fund for warranty claims
or defective products.


                                       74
<PAGE>

Property, Plant and Equipment

      Building, plant and equipment are recorded at cost less accumulated
depreciation and amortization. Depreciation and amortization are recorded
utilizing the straight-line method over the estimated original useful lives of
the assets. Amortization of leasehold improvements is calculated on a
straight-line basis over the life of the asset or the term of the lease,
whichever is shorter. Major renewals and betterments are capitalized and
depreciated; maintenance and repairs that do not extend the life of the
respective assets are charged to expense as incurred. Upon disposal of assets,
the cost and related accumulated depreciation are removed from the accounts and
any gain or loss is included in income. Depreciation related to property and
equipment used in production is reported in cost of sales.

      Long-term assets are reviewed annually as to whether their carrying value
has become impaired.

Bad debts

      Dalian Fushi's business operations are conducted principally in the
People's Republic of China. Dalian Fushi extends unsecured credit to its
relatively large customers with good credit history. Management reviews its
accounts receivable on a regular basis to determine if the bad debt allowance is
adequate at each year-end. Because Dalian Fushi extends trade credits to its
largest customers, who tend to be well-established and large sized businesses,
and Dalian Fushi has not experienced any write-off of accounts receivable in the
past, historically it has not provided for any bad debt allowance and considered
all accounts receivable collectible.

Capitalization of Interest

      Dalian Fushi capitalizes interest on borrowings during the active
construction period of major capital projects. Capitalized interest is added to
the cost of the underlying assets and will be depreciated over the useful lives
of the assets. Dalian Fushi capitalized approximately $422,784 during the nine
month period ended September 30, 2005 in connection with its construction and
capital improvements of its new facility.

Off-Balance Sheet Arrangements

      Dalian Fushi has not engaged in any off-balance sheet transactions since
its inception.


                                       75
<PAGE>

                    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                              OWNERS AND MANAGEMENT

      The following table sets forth certain information with respect to the
beneficial ownership of each class of our voting securities following the change
in control of our company by (i) any person or group owning more than 5% of each
class of the Company's voting securities, (ii) each director, (iii) our chief
executive officer and each other executive officer whose cash compensation for
the most recent fiscal year exceeded $100,000 and (iv) all executive officers
and directors as a group. The table reflects the ownership of our Common Stock
by the foregoing individuals before and after the Reverse Split.

      As of December 13, 2005, we had outstanding 39,243,659 shares of Common
Stock, 784,575 shares of Series A Stock which were issued in exchange for all
the outstanding shares of DPI, and 201,511.98 shares of Series B Stock which
were issued in the Series B Stock private placement completed on that date. Each
share of Series A and Series B Stock will convert automatically into
approximately 19.73 shares of Common Stock upon the effectiveness of the Reverse
Split.

      Shares of Series A and Series B Stock vote together with shares of Common
Stock on all matters upon which stockholders are entitled to vote, except to the
extent a class vote is required under Nevada law or as otherwise provided in the
certificate of designation creating such series. On those matters upon which the
preferred stock votes together with the Common Stock as a single class prior to
the Reverse Split, each share of Series A or Series B Stock counts as 4,838.86
votes, as if converted prior to the effectiveness of the Reverse Stock Split,
while each share of Common Stock only counts as one vote. See Item 3.03 of this
Current Report for a more detailed description of the rights, preferences and
limitations of the Series A and Series B Stock.

      In determining beneficial ownership of the Common Stock after the Reverse
Split, the number of shares shown includes shares which the beneficial owner may
acquire upon exercise of warrants or options which may be acquired within 60
days. In determining the percent of Common Stock owned by a person on December
13, 2005, (a) the numerator is the number of shares of the class beneficially
owned by such person, including shares which the beneficial ownership may
acquire within 60 days upon conversion of the Series A or Series B Stock or
exercise of the warrants, and (b) the denominator is the sum of (i) the total
shares of that class outstanding on December 13, 2005, and (ii) the total number
of shares that the beneficial owner may acquire upon conversion of the Series A
or Series B Stock or exercise of the warrants. Unless otherwise stated, each
beneficial owner has sole power to vote and dispose of the shares.

<TABLE>
<CAPTION>
Name of Beneficial Owner           Amount and Nature of
------------------------           Beneficial Ownership
                                   -----------------------                      Percent of Class              Common Stock
                                   Preferred  Stock                             Preferred Stock               After Reverse Split
                                   ----------------              Common         ---------------     Common    -------------------
                                   Series A       Series B       Stock          Series A  Series B  Stock     Shares        Percent
                                   --------       --------       -----          --------  --------  -----     ------        -------
<S>                                <C>            <C>            <C>             <C>       <C>       <C>      <C>            <C>
Owner of More than 5% of Class

Dalian Fushi Enterprise Group
Company, Ltd. ("Fushi Group")          654,689(1)               17,546,000(1)(2)  83.45%              44.71%   12,986,553     65.84%

Pope Asset Management LLC
5100 Poplar Avenue, Suite 512
Memphis, TN 38137                                      62,832(3)                           31.18%              1,859,375(3)    8.61%

Chinamerica Fund LLP
2909 St. Andrews
Richardson, TX 75082                                   30,519                              15.14%                903,125      4.38%

Chinamerica Dalian Fushi
Acquisition Fund LLP
2909 St. Andrews
Richardson, TX 75082                                   17,952(4)                            8.91%                531,250      2.62%

Directors and Executive Officers

Li Fu (through Fushi Group)
Chairman of Board, Director,
President                              654,689(1)               17,546,000(1)(2)  83.45%              44.71%   12,986,553     65.84%

Mathus Yue Yang
Director and President                  74,625(1)                2,000,000(1)(2)     10%               5.10%    1,480,398      7.50%

John D. Kuhns
Director
The Farm House
558 Lime Rock Road
Lakeville, CT 06039                     16,167(4)                                  2.06%                          558,280(4)   2.83%

Xishan Yang
Director
Head of R&D of Dalian Fushi             12,239(1)                  326,000(1)(2)   1.56%                  *       242,777      1.23%

Chunyan Xu
Director

Executive Vice President of
Research and Development of
Dalian Fushi                             4,701(1)                  128,000(1)(2)      *                   *        93,273         *

Chris Wang                                   0                                                                         0
Chief Financial Officer

All Directors and Executive
Officers as a group (6)                762,421              0     20,000,000     96.58%              49.81%   15,361,281     77.88%
</TABLE>

----------
* Less than 1%

(1) As a condition of the Series B Stock Purchase Agreement, Dalian Fushi has
deposited its 20,000,000 shares of Common Stock acquired from Glenn Little and
our management team, which includes Li Fu, Yu Mathus Yang, Xishan Yang and
Chunyan Xu, has deposited in escrow 746,254 shares of Series A Stock that will
collectively convert into 14,800,000 shares of Common Stock, representing
approximately 75.04% of the then outstanding Common Stock, following the Reverse
Split to secure their indemnity obligations under the Series B Stock Purchase
Agreement and the obligation of the Company to meet the net profit targets for
the fiscal year ending December 31, 2005 as set forth in the Series B Stock
Purchase Agreement.


                                       76
<PAGE>

(2) On December 13, 2005, Dalian Fushi Bimetallic Manufacturing Company, Ltd., a
company owned by Li Fu, Chunyan Xu, Yue Yang and Xishan Yang, acquired
20,000,000 pre-split shares of our Common Stock from Glenn A. Little. Under SEC
rules, each of those persons is deemed to have acquired beneficial ownership of
all of those shares. For purpose of Section 13(d)(3) of the Exchange Act, they
may be considered collectively as a "group", and thus each is deemed to be the
beneficial owner of the entire 20,000,000 pre-split shares. The percentage of
ownership of voting stock of the group as a whole is 75.04%.

(3) Pope Asset Management LLC acquired these shares for the accounts of 139 of
its clients and has sole voting power over these shares, but shares dispositive
power with its clients over the shares in their respective accounts.

(4) Includes 10,116.78 shares of Series A Stock and warrants to purchase 398,050
shares of Common Stock issued to Kuhns Brothers and its designees in connection
with the private placement. Each warrant entitles the holder to purchase one
share of our Common Stock at $3.1064 per share any time within the 5 year period
commencing from December 13, 2005. Mr. Kuhns, one of our Directors, is the
Chairman and 45% shareholder of Kuhns Brothers.

                   DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS
                               AND CONTROL PERSONS

Our Directors and Executive Officers

      In connection with the change of control of the Company described in Item
5.01 of this Current Report, the following persons were appointed executive
officers and directors of the Company. Glenn A. Little, our former director and
chief executive, first resigned as the sole director of the Company and
immediately following the closing of the Series B Stock private placement
offering, resigned from all his positions with the Company. Except for John D.
Kuhns, each of our current executive officers and Directors is a resident of the
PRC. The same persons have also been elected as directors of DPI and Dalian DPI
and hold similar positions with each of these entities. As a result, it may be
difficult for investors to effect service of process within the United States
upon them or to enforce court judgments obtained against them in the United
States courts.

Directors and Executive Officers            Position/Title                Age
--------------------------------            --------------                ---
Li Fu                                       Chairman of Board and         39
                                            President
Yue Mathus Yang                             Vice-President, Director      37
John D. Kuhns                               Secretary, Director           55
Wenbing Chris Wang                          Treasurer                     34


                                       77
<PAGE>

      There are no family relationships among our directors or executive
officers.

      All our directors hold office until the next annual meeting of
shareholders of the Company, and until their successors have been qualified
after being elected or appointed. Officers serve at the discretion of our Board
of Directors.

      Pursuant to the terms of the Stock Purchase Agreement, within 90 days of
the closing of the Series B Stock Purchase Agreement and after consultation with
the parties to that agreement, we are required to nominate a seven person Board
of Directors of the Company and take all actions and obtain all consents,
authorizations and approvals which are required to be obtained in order to
effect the election of such persons. Of such seven-member Board of Directors,
(i) two members will be members of the current management of Dalian Fushi, which
we expect will continue to be Mr. Fu and Mr. Yang, (ii) one member will
represent Kuhns Brothers, which we expect will continue to be Mr. Kuhn, (iii)
and at least four members will be independent directors as determined pursuant
to the American Stock Exchange Company Guide, which may be waived if the Company
is unable to obtain a listing on that exchange within a certain amount of time.

The Stock Purchase Agreement also requires that the Company establish a
five-member board of advisors.

Directors and Executive Officers of Dalian Fushi

      Dalian Fushi's current executive officers and Directors are as follows:

Directors and Executive Officers      Position/Title                     Age
--------------------------------      --------------                     ---
Li Fu                                 Executive Director                 39
Yue Yang                              General Manager                    37
Wenbing Chris Wang                    Chief Financial Officer            34
Xishan Yang                           Chief Engineer and                 67
                                      Executive Vice President of R&D
Chunyan Xu                            Supervisor Director                49

      Under Dalian Fushi's Articles of Association, Dalian Fushi's corporate
governance consists of one Executive Director, one Supervisor Director and one
General Manager. The Executive Director is elected and appointed by the
shareholders for a term of three years and can be re-elected for consecutive
terms. During the terms of his service, the shareholders cannot discharge the
Executive Director without cause. The appointment and termination of the General
Manager is determined by the Executive Director. The Supervisor Director is
elected by the shareholders for a term of three years and can be re-elected for
consecutive terms.


                                       78
<PAGE>

      The following is a description of the business experience for the last
five years for each of the above named directors and executive officers of the
Company, DPI, Dalian DPI and Dalian Fushi.

Mr. Li Fu was appointed Chairman and Chief Executive Officer of the Company in
October, 2005. Mr. Fu is a founder of Dalian Fushi and has been the Executive
Director of Dalian Fushi since he founded the company in 2001. Prior to founding
Dalian Fushi and focusing his time on Dalian Fushi's management and operations,
Mr. Fu had founded and managed Dalian Fushi Enterprise Group Co., Ltd., a
holding company owning various subsidiaries in the hotel, process control
instrumentation, international trade, automobile maintenance and education
businesses. Mr. Fu graduated from PLA University of Science and Technology with
a degree in Engineering

Mr. Yue Yang was appointed President and director of the Company in October
2005. He has served as the General Manager of Dalian Fushi since November 2004.
Mr. Yang is the founder of Forward Investment Co., Ltd and has served as its
Chairman since 2000. Prior to that, Mr. Yang worked for Liaoning Province
Economic & Trade Collaboration Enterprise Group as an Executive VP from 1994 to
1998 and the Export Department of Liaoning Province Chemicals Import & Export
Corporation as a Business Manager from 1990 to 1994. Mr. Yang graduated from
Shenyang Finance University with a Bachelor's Degree in International Trade.

Mr. John D. Kuhns was appointed director of the Company in October 2005. Mr.
Kuhns has been a 45% shareholder, a director and chairman of Kuhns Brothers,
Inc., a holding company founded in 1987 for its 100% subsidiary, Kuhns Bros. &
Co., Inc., an investment banking firm specializing in providing financing for
power technology ventures, and, more recently, manufacturing operations within
the PRC. Additionally, Kuhns Brothers, Inc. owns 100% of Kuhns Brothers
Securities Corporation, a broker dealer, registered with the Securities and
Exchange Commission, in which Mr. Kuhns is the Chairman. Since March 2005, Mr.
Kuhns has been a director and chairman of Deli Solar (USA), Inc., a U.S.
reporting company with solar hot water heaters manufacturing operation in the
PRC. Since 2002 Mr. Kuhns has been a director and chairman of Distributed Power,
Inc., a public company that owns electric generating projects. Mr. Kuhns is also
a director of China Sciences Conservational Power Limited, a company listed on
the Hong Kong Stock Exchange. Neither of the foregoing Kuhns companies, nor Deli
Solar (USA), Inc., Distributed Power, Inc. or China Sciences Conservational
Power Limited are affiliated with the Company. Mr. Kuhns holds a bachelors
degree in sociology and fine arts from Georgetown University, a master's degree
in fine arts from the University of Chicago and an MBA degree from the Harvard
Business School.

Mr. Chris Wenbing Wang has served as the Chief Financial Officer of the Company
since March 2005. Prior to joining the Company, Mr. Wang served as an Executive
Vice President of Redwood Capital, Inc. from November 2004 to March 2005, with
specific focus on providing strategic and financial advisory services to China
based clients seeking access to the U.S. capital markets. Mr. Wang previously
served as Assistant VP of Portfolio Management at China Century Investment
Corporation from October 2002 to September 2004. Mr. Wang began his investment
banking career at Credit Suisse First Boston (HK) Ltd in 2001. From 1999 to
2000, Mr. Wang worked for VCChina as Management Analyst. Fluent in both English
and Chinese, Mr. Wang holds an MBA from Simon Business School of University of
Rochester and is a Level III candidate of the Chartered Financial Analyst (CFA)
Program.


                                       79
<PAGE>

Mr. Xishan Yang has served as the Executive Vice President of R & D and Chief
Engineer of Dalian Fushi since its inception in 2001. Mr. Yang has more than 40
years of working experience in the communication electronics industry. He had
held executive management positions with a number of electronic enterprises
prior to joining the Company. During his career, Mr. Yang has focused on the
development, design, and processes of metallic and bimetallic cable production.
He holds several patents for the design of the modified Cladding and Drawing
processes for CCA and CCS production used by Dalian Fushi and has extensive
experience in production management. Mr. Yang graduated from Harbin Industrial
University with a graduate degree in engineering.

Ms. Chunyan Xu has served as the Supervisor Director of Dalian Fushi since 2001.
She previously served as the Chief Accountant at the Dalian Personnel Bureau and
served as a Finance Manager of a Chinese public company. Ms. Xu has many years
of experience in industrial accounting, public company accounting and accounting
management.

      To our knowledge, during the last five years, none of our directors and
executive officers (including those of our subsidiaries) has

      o     Had a bankruptcy petition filed by or against any business of which
            such person was a general partner or executive officer either at the
            time of the bankruptcy or within two years prior to that time.

      o     Been convicted in a criminal proceeding or been subject to a pending
            criminal proceeding, excluding traffic violations and other minor
            offenses.

      o     Been subject to any order, judgment or decree, not subsequently
            reversed, suspended or vacated, of any court of competent
            jurisdiction, permanently or temporarily enjoining, barring,
            suspending or otherwise limiting his involvement in any type of
            business, securities or banking activities.

      o     Been found by a court of competent jurisdiction (in a civil action),
            the SEC, or the Commodities Futures Trading Commission to have
            violated a federal or state securities or commodities law, and the
            judgment has not been reversed, suspended or vacated.

AUDIT COMMITTEE FINANCIAL EXPERT

      Our board of directors currently acts as our audit committee. Because we
only recently consummated the Restructuring Agreements and appointed the current
members of our board of directors, our board of directors has not yet determined
whether we have a member who qualifies as an "audit committee financial expert"
as defined in Item 401(e) of Regulation S-B, and is "independent" as the term is
used in Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act. Our board of
directors is in the process of searching for a suitable candidate for this
position.


                                       80
<PAGE>

AUDIT COMMITTEE

      We have not yet appointed an audit committee, and our board of directors
currently acts as our audit committee. At the present time, we believe that the
members of board of directors are collectively capable of analyzing and
evaluating our financial statements and understanding internal controls and
procedures for financial reporting. Our company, however, recognizes the
importance of good corporate governance and intends to appoint an audit
committee comprised entirely of independent directors, including at least one
financial expert, during our 2006 fiscal year.

Executive Compensation

      During the last three fiscal years, the sole director and officer of the
Company did not receive any compensation. The following is a summary of the
compensation paid by Dalian Fushi to its CEO and executive officers for the
three years ended December 31, 2004, 2003 and 2002, respectively. Mr. Fu and Mr.
Yang are currently directors and executive officers of the Company, DPI and
Dalian DPI. See "Our Directors and Executive Officers" in this Item 2.01. No
executive officers of Dalian Fushi received compensation in excess of $100,000
for any of these three years.

<TABLE>
<CAPTION>
                           ANNUAL COMPENSATION                                          LONG TERM COMPENSATION
                           -------------------                                          ----------------------
                                                                                    Awards               Payouts
                                                                             ----------------------  ----------------------
                                                                  Other      Restricted  Securities
                                                                 Annual        Stock     Underlying                All
                                 Year                            Compen-       Awards     Options/     LTIP       Other
     Name         Position       Ended    Salary($)  Bonus($)   sation($)        $          SARS     Payouts   Compensation
     ----         --------       -----    ---------  --------   ---------    ----------  ----------  -------   ------------
<S>              <C>          <C>         <C>        <C>        <C>          <C>           <C>       <C>         <C>
Li Fu (1)           CEO       12/31/2004                 0          0            0            0         0           0
                    CEO       12/31/2003                 0          0            0            0         0           0
                    CEO       12/31/2002                 0          0            0            0         0           0

Yue Yang (2)     President    12/31/2004                 0          0            0            0         0           0
                 President    12/31/2003     N/A         0          0            0            0         0           0
                 President    12/31/2002     N/A         0          0            0            0         0           0

Chris Wengbing      CFO       12/31/2004     N/A         0          0            0            0         0           0
Wang (3)            CFO       12/31/2003     N/A         0          0            0            0         0           0
                    CFO       12/31/2002     N/A         0          0            0            0         0           0

Xishan Yang      VP of R&D    12/31/2004    7,490        0          0            0            0         0           0
                 VP of R&D    12/31/2003   14,981        0          0            0            0         0           0
                 VP of R&D    12/31/2002   22,472        0          0            0            0         0           0

Chunyan Xu       Supervisor   12/31/2004    5,992        0          0            0            0         0           0
                  Director
                 Supervisor   12/31/2003   11,985        0          0            0            0         0           0
                  Director
                 Supervisor   12/31/2002   17,976        0          0            0            0         0           0
                  Director
</TABLE>


                                       81
<PAGE>

      (1)   Mr. Fu's annual salary in 2005 is $240,000, starting from December
            2005.

      (2)   Mr. Yang joined Dalian Fushi in November 2004. Starting from
            December 2005, his annual salary in 2005 is $180,000.

      (3)   Mr. Wenbing Chris Wang joined Dalian Fushi in March 2005. Starting
            from December 2005, his annual salary in 2005 is $120,000.

      Although the Company does not have any equity compensation plans, under
the Series B Stock Purchase Agreement we must reserve for issuance 20,000,000
shares of Common Stock under an approved and qualified employee stock ownership
plan, the terms of which will be determined by the compensation committee of the
Board of Directors of the Company.

Certain Relationships and Related Transactions

Restructuring Agreements with Dalian Fushi

      We entered into and consummated the Restructuring Agreements with Dalian
Fushi and the Dalian Fushi Shareholders in December 2005. For a description of
the Restructuring Agreements, see Item 1.01 of this Current Report.

Dalian Fushi's Related Company Transactions

      In 2003, 2004 and 2005, Dalian Fushi had loaned funds to certain related
companies as unsecured loans free of interest payment and repayable on demand.
It had also borrowed funds from two related parties for short-term unsecured
advances free of interest and repayable on demand.

      Amounts due from related companies.

      As of December 31, 2004, the outstanding balance of loans to related
companies, totaling US$456,527.10, are as follows: RMB 39,720.72 to Dalian Litai
Auto Repair Co., Ltd. (of which Fushi Group owns 40%), RMB 629,721.25 to Dalian
Fushi Yangguang Zhangyie Co., Ltd. (of which Fushi Group owns 90%), and RMB
3,105,124.12 to Dalian Fushi Commerce and Trade Co., Ltd. (of which Fushi Group
owns 75%). Fushi Group is a holding company controlled by Mr. Li Fu, our
Chairman and Chief Executive Office.

      As of September 30, 2005, the outstanding balance of loans to related
companies, totaling US$2,712,587.28, is as follows: RMB 5,125,697.27 to Dalian
Litai Auto Repair Co., Ltd. (of which Fushi Group owns 40%), RMB 100,440 to
Dalian Fushi Yangguang Zhangyie Co., Ltd. (of which Fushi Group owns 90%), and
RMB 16,772,945.56 to Dalian Fushi Commerce and Trade Co., Ltd. (of which Fushi
Group owns 75%). Fushi Group is a holding company controlled by Mr. Li Fu, our
Chairman and Chief Executive Office.


                                       82
<PAGE>

      Each of the foregoing loans immediately became repayable to Dalian Fushi
upon the closing held under the Series B Stock Purchase Agreement.

      Amounts due to related companies.

      As of the end of 2004, the amounts due to related parties, totaling
US$153,518.74, are as follows: RMB 377,804.27 borrowed from Fushi Group and RMB
891,488.65 from Mr. Li Fu.

      As of September 30, 2005, the amounts due to related parties, totaling
US$328,610.72, are as follows: RMB 880,907.71 borrowed from Fushi Group and RMB
1,784,125.25 from Mr. Li Fu.

Share Exchange Agreement and Issuance of Series A Stock to Dalian Fushi
Shareholders

      On December 13, 2005, the Company entered into and consummated the Share
Exchange Agreement with DPI Stockholders. Of the DPI Stockholders, Dalian Fushi
Enterprise Group Co., Ltd., Yue Mathus Yang, Xishan Yang and Chunyan Xu also are
shareholders of Dalian Fushi, and owned approximately 95.12% of the outstanding
capital stock of DPI. Kuhns Brothers received its shares of DPI common stock for
services rendered in connection with the reorganization of Dalian Fushi's
business. For additional concerning the reorganization, see Item 1.01 of this
Current Report.

      Under the Share Exchange Agreement, we issued an aggregate of 784,575
shares of our Series A Stock in exchange for the 15,560 shares of common stock
of DPI held by the DPI Stockholders. Each share of Series A Stock will convert
automatically into 4,838.86 shares of Common Stock before giving effect to the
Reverse Split, as more fully described in Item 3.03. As a result of the Reverse
Split, the Series A Stock will convert into an aggregate of 15,475,595 shares of
Common Stock, which will represent approximately 78% of our total outstanding
Common Stock. See Item 1.01 of this Current Report for information concerning
the acquisition of DPI under the Share Exchange Agreement.

Private Placement Offering of Series B Stock

      On December 13, 2005, we sold 201,511.99 shares of our Series B Stock,
along with warrants, for $11,225,000. The Common Stock and warrants were sold by
us in a private placement through Kuhns Brothers, Inc., and its wholly-owned
subsidiary, Kuhns Brothers Securities Corporation, an NASD and SEC registered
broker-dealer, in reliance upon the exemption provided by Rule 506 of Regulation
D under the Securities Act. Please see Item 1.01 of this Current Report for
further information on the terms of the Series B Stock private placement
offering.


                                       83
<PAGE>

      In connection with the placement of our Series B Stock and related
warrants, Kuhns Brothers, Inc.received the following compensation: (i) $200,000
cash as signing fee, documentation fee and purchase fee, (ii) 10% of the total
cash paid for the Series B Stock and warrants, (iii) 38,000 shares of Series A
Stock, which will convert into approximately 760,000 shares of our common stock,
and (iv) a warrant to purchase 424,929 shares of common stock after a reverse
stock split at $3.1064 per share. In addition, Kuhns Brothers, Inc. is to
receive 10% of the proceeds of any exercise of the warrants sold to investors of
the Series B Stock. See Item 1.01 of this Current Report for information
concerning the private placement offering of our Series B Stock.

Indemnification of Our Directors and Officers

      Although Nevada law allows us to indemnify our directors, officers,
employees, and agents, under certain circumstances, against attorney's fees and
other expenses incurred by them in any litigation to which they become a party
arising from their association with or activities on our behalf, and under
certain circumstances to advance the expenses of such litigation upon securing
their promise to repay us if it is ultimately determined that indemnification
will not be allowed to an individual in that litigation, neither our articles of
incorporation or bylaws impose an indemnity obligation upon us. In addition, we
have not entered into any agreements under which we have assumed such an
indemnity obligation.

                            DESCRIPTION OF SECURITIES

      Our authorized capital stock consists of 100,000,000 shares of Common
Stock par value $0.006 per share, of which there are 39,243,659 shares of issued
and outstanding, and 5,000,000 shares of Preferred Stock, par value $0.01 per
share. We have two series of preferred stock: Series A convertible preferred
stock, of which 216,000 shares have been authorized and 201,511.98 shares are
issued and outstanding: and Series B convertible preferred stock, of which
785,000 shares have been authorized and 784,575 shares are issued and
outstanding.

      The following is a summary of the material terms of our capital stock.
This summary is subject to and qualified in its entirety by our Articles of
Incorporation, as amended, the Certificate of Designations for our series A and
series B convertible preferred stock, our By-laws and by the applicable
provisions of Nevada law.


                                       84
<PAGE>

      Common Stock

      Holders of shares of Common Stock are entitled to one vote for each share
on all matters to be voted on by the stockholders. According to our charter
documents, holders of our Common Stock do not have preemptive rights, and are
not entitled to cumulative voting rights. There are no conversion or redemption
rights or sinking fund provided for holders of Common Stock. Shares of Common
Stock share ratably, together with holders of Series A Stock and Series B Stock
on an as converted basis, in dividends, if any, as may be declared from time to
time by the Board of Directors in its discretion from funds legally available
for distribution as dividends. In the event of a liquidation, dissolution or
winding up of the Company, subject to the rights of holders of the Series B
Stock, the holders of Common Stock are entitled to share pro rata all assets
remaining after payment in full of all liabilities. All of the outstanding
shares of Common Stock are fully paid and non-assessable.

      Preferred Stock

      Our Board of Directors is authorized under the Restated Articles of
Incorporation to provide for the issuance of shares of preferred stock, by
resolution or resolutions for the issuance of such stock, and, by filing a
certificate of designations under Nevada law, to fix the designation, powers,
preferences and rights of the shares of each such series and the qualifications,
limitations or restrictions thereof without any further vote or action by the
shareholders. Any shares of preferred stock so issued are likely to have
priority over our common stock with respect to dividend or liquidation rights.

      The issuance of shares of preferred stock, or the issuance of rights to
purchase such shares, could be used to discourage an unsolicited acquisition
proposal. For instance, the issuance of a series of preferred stock might impede
a business combination by including class voting rights that would enable the
holder to block such a transaction, or facilitate a business combination by
including voting rights that would provide a required percentage vote of the
stockholders. In addition, under certain circumstances, the issuance of
preferred stock could adversely affect the voting power of the holders of the
common stock. Although the Board of Directors is required to make any
determination to issue such stock based on its judgment as to the best interests
of our stockholders, the Board of Directors could act in a manner that would
discourage an acquisition attempt or other transaction that some, or a majority,
of the stockholders might believe to be in their best interests or in which
stockholders might receive a premium for their stock over the then market price
of such stock. The Board of Directors does not at present intend to seek
stockholder approval prior to any issuance of currently authorized preferred
stock, unless otherwise required by law.

      On December 5, 2005, our Board of Directors designated 216,000 shares of
our authorized $0.001 par value per share preferred stock as Series A Stock and
785,000 shares of our preferred stock as Series B Preferred Stock. On December
8, 2005, we filed Certificates of Designations for the Series A and Series B
Stock with the Office of the Secretary of State of Nevada. For a description of
the terms of the Series A and B Stock, see Item 3.03 of this Current Report.


                                       85
<PAGE>

      Warrants

      We currently have warrants outstanding, which, upon the occurrence of the
Reverse Split, will be exercisable at $3.67 par share to purchase a total of
1,987,760 shares of our Common Stock. The warrants have a five year term. The
Company may force the exercise of the warrants if the Company signs a binding
agreement to make a certain acquisition (provided certain conditions are met),
or if the price of its Common Stock exceeds $10 per share for 10 consecutive
trading days.

      We have granted warrants to Kuhns Brothers and its designees to purchase
398,050 shares of common stock after the Reverse Split at the exercise price of
$3.1064 per share. We issued these warrants for advisory services connection
with the reorganization of our company and the acquisition of DPI.

      We also have issued to Glenn A. Little a warrant to purchasea number of
shares of Common Stock equal to 0.4% of the post-Reverse Split shares of Common
Stock in return for certain consulting services to be rendered by Mr. Little
pursuant to a consulting agreement between Mr. Little and the Company. These
warrants may be exercised after the occurrence of the Reverse Split. The
exercise price is $0.01 per share.

                           MARKET FOR OUR COMMON STOCK

      Bid and ask quotations for our common stock appear on the NASD's
over-the-counter Bulletin Board under the symbol PLLK.OB. As of the date of
filing of this Current Report, there is no active trading market for our common
stock, and there has been no regular, established trading market for our common
stock since the completion of the Company's public offering in 1993. The high
and low bid prices for our common stock as reported by Yahoo Finance on December
9, 2005 were: $0.041 and $0.042. These over-the-counter market high and low bid
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commissions and may not necessarily represent actual transactions. Our common
stock is held by approximately 450 holders of record.

Penny Stock Regulations

      The SEC has adopted regulations which generally define "penny stock" to be
an equity security that has a market price of less than $5.00 per share. Our
common stock, when and if a trading market develops, may fall within the
definition of penny stock and subject to rules that impose additional sales
practice requirements on broker-dealers who sell such securities to persons
other than established customers and accredited investors (generally those with
assets in excess of $1,000,000, or annual incomes exceeding $200,000 or
$300,000, together with their spouse).


                                       86
<PAGE>

      For transactions covered by these rules, the broker-dealer must make a
special suitability determination for the purchase of such securities and have
received the purchaser's prior written consent to the transaction. Additionally,
for any transaction, other than exempt transactions, involving a penny stock,
the rules require the delivery, prior to the transaction, of a risk disclosure
document mandated by the Commission relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and, if the broker-dealer is the sole market-maker, the broker-dealer
must disclose this fact and the broker-dealer's presumed control over the
market. Finally, monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks. Consequently, the "penny stock" rules may
restrict the ability of broker-dealers to sell the our Common Stock and may
affect the ability of investors to sell their Common Stock in the secondary
market.

Dividends

      Our board of directors has not declared a dividend on our Common Stock
during the last two fiscal years or the subsequent interim period and we do not
anticipate the payments of dividends in the near future as we intend to reinvest
our profits to grow operations. See "Risk Factors - Risks Related to an
Investment in our Common Stock - We are unlikely to pay cash dividends in the
foreseeable future" in this Item 2.01. We rely entirely on dividends from Dalian
DPI for our funds and PRC regulations may limit the amount of funds distributed
to the Company from Dalian DPI, which will affect our ability to declare any
dividends. See "Risk Factors - Risks Related to Doing Business in the PRC -
Dalian DPI and Dalian Fushi are subject to restrictions on paying dividends and
making other payments to us" and "- Governmental control of currency conversion
may affect the value of your investment" in this Item 2.01. Also see
"Description of Securities - Common Stock."

                       WHERE YOU CAN FIND MORE INFORMATION

      We have filed with the U.S. Securities and Exchange Commission (the
"SEC"), reports, statements and other information as required under the
Securities Exchange Act of 1934. These reports, statements and other information
may be read and copied at the SEC's Public Reference Room at 100 F Street NE,
Washington, D.C. 20549. The public may obtain information on the operation of
the Public Reference Room at 1-800-SEC-0330.

      The SEC maintains a web site (HTTP://WWW.SEC.GOV.) that contains the
registration statements, reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC such as
us. You may access our SEC filings electronically at this SEC website. These SEC
filings are also available to the public from commercial document retrieval
services.


                                       87
<PAGE>

Item 3.02 Unregistered Sales of Equity Securities.

Issuance of Series A Stock in Acquisition of DPI

      On December 13, 2005, we issued 784,575 shares of our Series A Stock in
exchange for 15,560 shares of common stock of our now wholly-owned subsidiary,
DPI, under the Share Exchange Agreement. The issuance of shares of our Series A
Stock in the share exchange was exempt from registration in reliance upon
Regulation S and Rule 506 of Regulation D under Section 4(2) of the Securities
Act. Each of the DPI Stockholders who is not a U.S. person, as defined in Rule
902(k) of Regulation S, is either an accredited investor or has such knowledge
and experience in financial and business matters that he is capable of
evaluating the merits and risks of an investment in our securities. For a
description of the terms of the Series A Stock, see Item 3.03 of this Current
Report.

Issuance of Series B Stock and Redeemable Warrants in Private Placement

      On December 13, 2005, we sold 201,511.98 shares of our Series B Preferred
Stock, together with warrants, for $11,225,000 under the Series B Purchase
Agreement. The Series B Stock is convertible automatically into approximately
3,975,520 shares of our Common Stock upon the occurrence of the Reverse Split.
In addition to the Series B Stock, each investor received one warrant for every
two shares of our Common Stock that it will acquire upon the automatic
conversion of the Series B Stock. For a more complete description of the terms
of the Series B Stock, see Item 3.03 of this Current Report.

      We sold the Series B Stock, together with the Warrants, in a private
placement (the "Private Placement") through Kuhns Brothers Securities
Corporation ("Kuhns Brothers Securities"), an NASD and SEC registered
broker-dealer, Kuhns Brothers Securities is a subsidiary of Kuhns Brothers, Inc.
The sale of the shares of Series B Stock and the Warrants was exempt from
registration under Rule 506 of Regulation D under the Securities Act. All of the
investors were "accredited investors" within the meaning of Rule 501(c) of
Regulation D.

      Under the Stock Purchase Agreement, we are required to register for resale
each share of common stock into which the Series B Stock is convertible, as well
as each share of common stock that may be acquired upon the exercise of each
Warrant.

      In connection with the placement of our Series B Stock and Warrants, Kuhns
Brothers Securities, as placement agent, received the following compensation:
(i) $200,000 cash as signing fee, documentation fee and purchase fee, (ii) 10%
of the total cash paid for the Series B Stock and warrants, (iii) 38,321 shares
of Series A Stock, which will convert automatically into approximately 760,000
shares of our common stock, and (iv) a warrant to purchase 424,929 shares of
common stock after the Reverse Split at the exercise price of $3.1064 per share,
exercisable within 5 years of the date of issue. In addition, Kuhns Brothers
Securities is to receive 10% of the proceeds from the exercise of the warrants
issued to the investors.


                                       88
<PAGE>

Issuance of Warrant to Glenn A. Little

      On December 13, 2005, we issued to Glenn A. Little, the former holder of a
majority of our outstanding ommon stock and former director and executive
officer, a warrant for the purchase of such number of shares representing 0.4%
of our outstanding common stock after giving effect to the Reverse Split (the
"Little Warrant"). The warrant may be exercised only after the Reverse Split and
has a term of five years. The exercise price of the warrant is $0.01 per share.
We issued the warrant to Mr. Little in consideration for his agreement to
provide us with consulting services under a consulting agreement. The issuance
of the Little Warrant was exempt from registration under Section 4(2) of the
Securities Act. Mr. Little is a sophisticated investor who has such knowledge
and experience in financial and business matters that he is capable of
evaluating the merits and risks of an investment in our securities. We have
granted piggy-back registration rights to Mr. Little for the public resale of
the shares of common stock that he may acquire upon the exercise of the warrant.

Item 3.03 Material Modification to Rights of Securityholders.

Designations, Preferences and Rights of Newly Issued Series A and B Stock

      On December 5, 2005, our Board of Directors designated 216,000 shares of
our authorized $0.01 par value per share preferred stock as Series A Stock and
785,000 shares of our preferred stock as Series B Preferred Stock. On December
8, 2005, we filed Certificates of Designation for the Series A and Series B
Stock with the Office of the Secretary of State of Nevada. Our Board of
Directors created the Series A Stock to allow us to consummate the Share
Exchange Agreement with DPI and the Series B Stock in connection with the
Private Placement, although in each case we do not have sufficient unissued
authorized common stock to allow for a complete conversion. Each share of the
Series A Stock and Series B Stock will convert automatically into 19.73 shares
of our Common Stock after giving effect to the Reverse Split.

      The following are the material designations, preferences and rights of the
Series A Stock and the Series B Stock which are substantially the same, except
as stated below, with respect to liquidation preference and special rights of
the Series B Stock:

      Conversion:

      Each share of Series A Stock and Series B Stock will convert automatically
into 4,838.86 pre-split shares of our fully paid and non-assessable $0.006 par
value per share common stock at such time as we file an amendment to our
Articles of Incorporation with the Secretary of State of the State of Nevada
effecting an approximate 1 for 245.27 Reverse Split of our common stock.


                                       89
<PAGE>

      Liquidation Preference and Redemption:

      The Series A Stock has no liquidation or redemption rights.

      The Series B Stock will, in respect of the right to participate in
distribution or payments in the event of any liquidation, dissolution or winding
up, voluntary or involuntary, of the Company (including certain sales of assets
and mergers, a "Liquidation Event"), rank (a) senior to the Common Stock, Series
A Stock and to any other class or series of stock issued by the Company not
designated as ranking senior to the Series B Stock in respect of the right to
participate in distributions or payments upon a Liquidation Event; (b) pari
passu with any other class or series shall rank pari passu with the Series B
Stock in respect of the right to participate in distributions or payments upon a
Liquidation Event; and (c) junior to any other class or series of stock of the
Company, the terms of which specifically provide that such class or series shall
rank senior to the Series B Stock in respect of the right to participate in
distributions or payments upon a Liquidation Event. The Series B Stock may not
be redeemed by the Company without the express written consent (provided or
withheld in their sole discretion) of the holders of a majority of the
then-outstanding Series B Stock and any such redemption approved by a majority
shall compel redemption with respect to all outstanding holders of Series B
Stock.

      Voting:

      Each share of Series A Stock and Series B Stock shall have the right to
vote together with the holders of the Common Stock, as a single class, upon all
matters submitted to holders of common stock for a vote, except as to matters
which require a class vote under the Certificate of Designations or by Nevada
law. Each share of Series A Stock and Series B Stock will carry a number of
votes equal to the number of shares of common stock that the holder may acquire
upon conversion. If the automatic conversion of the Series B Stock has not
occurred by the first anniversary of the initial issuance of the Series B and we
do repurchase all of the outstanding Series B shares as contemplated under
"Special Rights of Series B Stock" below, then until the automatic conversion
off the Series B Stock occurs, the shares of Series B Stock will carry an
aggregate number of votes equal to 66 2/3% of the then outstanding voting power
of all our voting securities, or such larger percentage of votes required to
approve any action by, or submitted to the shareholders, with each share of
Series B carrying the pro rata number of votes necessary to equal this aggregate
percentage at any given time.

      Dividends:

      Holders of the Series A Stock and the Series B Stock will not be entitled
to dividends unless the Company pays cash dividends or dividends in other
property to holders of outstanding shares of our Common Stock, in which event,
each outstanding share of the Series A Stock and Series B Stock will be entitled
to receive dividends of cash or property out of any assets legally available for
the payment of dividends, in an amount or value equal to the conversion rate
multiplied by the amount paid in respect of one share of Common Stock (as
adjusted for any stock dividends, combinations, splits or similar
recapitalization events) prior and in preference to any declaration or payment
of any dividend (payable other than in shares of Common Stock or other
securities and rights convertible into or entitling the holder thereof to
receive, directly or indirectly, additional shares of Common Stock) on the
Common Stock.


                                       90
<PAGE>

      Special Rights of Series B Stock

      Forfeiture Penalty; (a) If by 120 days after the first anniversary of the
initial issuance date of the Series B Stock (the "Reverse Split Deadline"), (a)
the Reverse Split is not effected, or (b) the holders of the shares of Series B
Stock do not otherwise acquire, in the aggregate, 20.15% (as adjusted under a
comtemplated amendment to the Certificate of Designation for the Series B Stock)
of the outstanding shares of Common Stock ((a) and (b) together, the
"Conditions", then Dalian Fushi and the Dalian Fushi Shareholders will forfeit
out of escrow to the holders of the then outstanding shares of Series B Stock,
pro rata, each at their option, a number of shares of Common Stock equal to, or
shares of Series A, that are convertible into 125,000 shares of Common Stock,
for no additional consideration other than the purchase price of the Series B
Stock (the "Penalty Shares"), upon the terms of that certain escrow agreement,
dated on or about December 13, 2005, between the holders of the shares of Series
B Stock, the holders of certain outstanding shares of Common Stock, Series A
Stock and certain other persons (the "Escrow Agreement"). In addition, if the
Conditions are not met 30 days after the Reverse Split Deadline and every thirty
days thereafter, on which the Conditions are not satisfied, then the Dalian
Fushi and the Dalian Fushi Shareholders will forfeit out of escrow to the
holders of the then outstanding shares of Series B Stock, pro rata, each at
their option, an additional 125,000 Penalty Shares under the terms of the Escrow
Agreement.

      Company Repurchase Option: If the conditions are not satisfied by the
first anniversary of the date upon which the Series B Stock was first issued,
then Chinamerica Fund, LP, as the representative of the holders of the then
outstanding shares of Series B Stock may offer to sell all of the outstanding
shares of Series B Stock, upon written notice by fifteen (15) days after the
first anniversary of the date the Series B Stock was first issued, to the
Company for a total purchase price to be $11,225,000 in cash.

      Series B Purchase Right: If the Company fails or refuses to accept the
offer and does not purchase all of the outstanding shares of Series B Stock by
the 30th day after the first anniversary of the date the Series B Stock was
first issued, the holders of the then outstanding shares of Series B Stock may
purchase the shares of Common Stock and Series A. Stock, as held in escrow, at a
price per share of $0.01, upon the terms of the Escrow Agreement.


                                       91
<PAGE>

Reverse Stock Split

      On December 5, 2005, our sole director adopted a resolution to amend the
Company's Articles of Incorporation to effect a 245.27 for 1 reverse stock split
of its Common Stock (the "Reverse Split") and to change the Company's name to
"Fushi International, Inc." The Company has obtained the written consent of the
holder of a majority of its then outstanding shares of voting stock approving
the Reverse Split and the name change. The Reverse Split and name change will
occur upon the filing of a certificate of amendment to the Articles of
Incorporation with the Office of the Secretary of State of Nevada, not less than
20 days after, but within 25 days of, the Company's mailing of an Information
Statement on Schedule 14C to the Company's shareholders. A preliminary
Information Statement is being filed with the Securities and Exchange Commission
on or about the date of this Current Report. Upon the filing of the certificate
of amendment:

      o     the 784,575.16 outstanding shares of Series A Stock will be
            converted automatically into approximately 15,475,595 shares of
            Common Stock, without any action on the part of shareholders

      o     the 201,511.98 outstanding shares of Series B Stock will be
            converted automatically into approximately 3,975,520 shares of
            Common Stock, without any action on the part of shareholders

      o     the 39,243,659 outstanding shares of Common Stock will be converted
            automatically into approximately 160,000 shares of Common Stock,
            without any action on the part of shareholders. Of these shares,
            81,543 shares will be owned by Dalian Fushi, with the other existing
            shareholders owning in the aggregate only approximately 78,458
            shares.

      For a description of our capital stock generally, see "Description of Our
Securities" in Item 2.01 0f this Current Report.

Item 4.01 Changes in Registrant's Certifying Accountant.

      On December 13, 2005, concurrent with the change in control of our company
reported in Item 5.01 of this Current Report, our Board of Directors approved
the dismissal of S. W. Hatfield, CPA ("Hatfield") as our registered independent
certified public accounting firm. Concurrent with this action, our Board of
Directors appointed Jimmy C.H. Cheung & Co. ("Cheung") as our new registered
independent certified public accounting firm. Cheung is located at 1697 Dominion
Center, 43 Queen's Road East, Wanchai, Hong Kong.

      Hatfield had been previously engaged as our independent auditing firm to
audit our financial statements. As a result of the change in control, our
operating businesses have previously been audited by Cheung and management
elected to continue this existing relationship.

      No accountant's report on the financial statements, issued by Hatfield,
for either of the past two years contained an adverse opinion or a disclaimer of
opinion or was qualified or modified as to uncertainty, audit scope or
accounting principles, except for a going concern opinion expressing substantial
doubt about the ability of the Company to continue as a going concern.


                                       92
<PAGE>

      During the Company's two most recent fiscal years (ended December 31, 2004
and 2003) and from January 1, 2005 to the date of this Report, there were no
disagreements with Hatfield 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-B, during the
Company's two most recent fiscal years (ended December 31, 2004 and 2003) and
from January 1, 2005 to the date of this Current Report.

Item 5.01 Changes in Control of Registrant

      On December 13, 2005, Dalian Fushi purchased the 20,000,000 shares of our
common stock owned by Glenn A. Little, representing 50.96% issued and
outstanding shares of our Common Stock, under a stock purchase agreement dated
as November 8, 2005 (the "Little Stock Purchase Agreement"). The purchase price
was $550,000, which was provided from investor funds in the Private Placement
and the payment of the purchase price was deferred until the closing of the
financing in the Private Placement.

      In connection with the sale, we entered into a consulting agreement with
Mr. Little, dated as of November 8, 2005 (the "Consulting Agreement"). Under the
terms of the Consulting Agreement, we retained Glenn Little as a consultant to
provide certain consulting services, information and materials to us and our
advisors relating to our past operations and filings. As consideration, we
issued to Mr. Little a warrant for the purchase of such number of shares of our
Common Stock equals to 0.4% of our outstanding common stock after giving effect
to the Reverse Split. The warrant may be exercised upon the occurrence of the
Reverse Split and has a term of five years. The exercise price of the warrant is
$0.01 per share. We have granted piggy-back registration rights to Mr. Little
for the public resale of the shares of common stock that he may acquire upon the
exercise of the warrant.

      By virtue of the acquisition of a majority of our voting securities under
the Little Stock Purchase Agreement, Dalian Fushi acquired from Mr. Little
control of our company on December 13, 2005. Under the terms of the Little Stock
Purchase Agreement, at closing, Mr. Little, the sole director of our company,
appointed Messrs. Li Fu, Yue Mathus Yang and John D. Kuhns as directors of our
company, and resigned as an officer and director immediately after the closing
of the Private Placement. Mr. Li Fu is the controlling shareholder, chief
executive officer and director of the Dalian Fushi.

      On November 14, 2005, we filed an information statement with the SEC
relating to the change in control of our Board of Directors containing the
information required under Rule 14f-1 of the Exchange Act and on or about
November 21, 2005; we distributed that information statement to all holders of
record of our Common Stock.

Item. 5.06 Change in Shell Company Status.

      As a result of its acquisition of all of the outstanding capital stock of
DPI and the Restructuring Agreements, as described in Item 2.01, which
description is in its entirety incorporated by reference in this Item 5.06 of
this Current Report, we ceased being a shell company as such term is defined in
Rule 12b-2 under the Exchange Act.


                                       93
<PAGE>

Item 9.01 Financial Statements and Exhibits.

      (a)   The financial statements of Dalian Fushi (PRC) are appended to this
            Current Report beginning on page F-1.

      (b)   The following exhibits are filed with this Current Report:

Exhibit No.       Description of Exhibit

3.1               Articles of Incorporation, as amended.

3.2               Bylaws.

3.3               Specimen of Common Stock certificate.

3.4               Certificate of Designations authorizing the Series A
                  Convertible Preferred Stock.

3.5               Certificate of Designations authorizing the Series B
                  Convertible Preferred Stock.

4.1               Stock Purchase Agreement, dated as of December 13, 2005 by and
                  among Parallel Technologies, Inc., Dalian Fushi, the
                  management of Dalian Fushi, Chinamerica Fund, LP, and the
                  other investors named therein.

4.2               Form of Warrant.

4.3               Form of Warrant issued to Glenn A. Little.

4.4               Amendment No. 1 to Stock Purchase Agreement, dated as
                  of December 13, 2005 by and among Parallel Technologies, Inc.,
                  Dalian Fushi, the management of Dalian Fushi, Chinamerica
                  Fund, LP, and the other investors named therein.

10.1              Share Exchange Agreement dated as of December 13, 2005 between
                  Parallel Technologies, Inc. and Diversified Product
                  Inspections, Inc.

10.2              Translation of Purchase Agreement, dated as of December 13,
                  2005, between Dalian DPI and Dalian Fushi .

10.3              Translation of Entrusted Management Agreement, dated as of
                  December 13, 2005, by and among Dalian DPI, Dalian Fushi,
                  Dalian Fushi Enterprise Group Co., Ltd., Yue Yang, Xishan
                  Yang, and Chunyan Xu.


                                       94
<PAGE>

10.4              Translation of First Patents Transfer Contract, dated as of
                  December 13, 2005, by and between Dalian DPI and Dalian Fushi.

10.5              Translation of Second Patent Transfer Contract, dated as of
                  December 13, 2005, by and between Dalian DPI and Li Fu.

10.6              Translation of Voting Proxy Agreement, dated as of December
                  13, 2005, by and among Dalian DPI, Dalian Fushi Enterprise
                  Group Co., Ltd., Yue Yang, Xishan Yang, and Chunyan Xu.

10.7              Translation of Exclusive Option Agreement, dated as of
                  December 13, 2005, by and among Dalian DPI, Dalian Fushi,
                  Dalian Fushi Enterprise Group Co., Ltd., Yue Yang, Xishan
                  Yang, and Chunyan Xu.

10.8              Translation of Shares Pledge Agreement, dated as of December
                  13, 2005, by and among Dalian DPI, Dalian Fushi Enterprise
                  Group Co., Ltd., Yue Yang, Xishan Yang, and Chunyan Xu.

10.10             Form of Stock Purchase Agreement dated as of November 8, 2005
                  between Glenn A. Little and Dalian Fushi.

10.11             Form of Consulting Agreement dated as of December 13, 2005
                  between Parallel Technologies, Inc. and Glenn A. Little.

10.12             Form of Engagement Letter dated May 27, 2005 between Dalian
                  Fushi and Kuhns Brothers, Inc.

10.13             Form of Amendment No. 1 to Agreement for Purchase of Common
                  Stock between Glenn A. Little and Dalian Fushi dated December
                  8, 2005.

16.1              Letter dated December 13, 2005 from Parallel Technologies,
                  Inc. to S.W. Hatfield, CPA

16.2              Letter dated December 13, 2005 from S.W. Hatfield, CPA to the
                  Securities and Exchange Commission.

21.1              List of Subsidiaries


                                       95
<PAGE>









           DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED

                              FINANCIAL STATEMENTS
                        AS OF DECEMBER 31, 2004 AND 2003











<PAGE>

           DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED

                                    CONTENTS

                                                                           PAGES

--------------------------------------------------------------------------------

Report of Independent Registered Public Accounting Firm                        1
--------------------------------------------------------------------------------

Balance Sheets as of December 31, 2004 and 2003                                2
--------------------------------------------------------------------------------

Statements of Operations for the years ended December 31, 2004 and 2003        3

--------------------------------------------------------------------------------

Statements of Stockholders' Equity for the years ended December 31, 2004
and 2003                                                                       4
--------------------------------------------------------------------------------

Statements of Cash Flows for the years ended December 31, 2004 and 2003        5
--------------------------------------------------------------------------------

Notes to Financial Statements                                             6 - 11
--------------------------------------------------------------------------------



<PAGE>

JIMMY C.H. CHEUNG & CO
Certified Public Accountants
(A member of Kreston International)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of:
Dalian Fushi Bimetallic Manufacturing Company Limited

We have  audited the  accompanying  balance  sheets of Dalian  Fushi  Bimetallic
Manufacturing Company Limited, as of December 31, 2004 and 2003, and the related
statements of operations, changes in stockholders' equity and cash flows for the
years ended  December  31, 2004 and 2003.  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 of the financial
statements provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position  of Dalian  Fushi  Bimetallic
Manufacturing Company Limited, as of December 31, 2004 and 2003, and the results
of its  operations  and its cash flows for the years ended December 31, 2004 and
2003, in conformity with accounting  principles generally accepted in the United
States of America.

JIMMY C.H. CHEUNG & CO
Certified Public Accountants

Hong Kong

Date: May 20, 2005







         1607 Dominion Centre, 43 Queen's Road East, Wanchai, Hong Kong
 Tel: (852) 25295500 Fax: (852) 28651067 Email: jchc@krestoninternational.com.hk
                      Website: http://www.jimmycheungco.com

                                                                             F-1
<PAGE>

              DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                                 BALANCE SHEETS
                        AS OF DECEMBER 31, 2004 AND 2003


                                        ASSETS

                                             Note        2004           2003
                                                    -------------  -------------
CURRENT ASSETS
   Cash and cash equivalents                        $  2,612,282   $    260,281
   Accounts receivable, net                   2        1,760,586      1,951,621
   Due from related companies                 12         456,527      1,396,575
   Inventories, net                           3        2,050,256        468,136
   Prepaid expenses and other current assets  4        2,857,416      4,041,332
                                                    -------------  -------------
      Total Current Assets                             9,737,067      8,117,945

PROPERTY AND EQUIPMENT, NET                   5       33,467,298     22,367,442

OTHER ASSETS
   Intangible assets, net                     6          938,161      1,062,870
   Land use rights, net                       7        4,691,638      4,788,540
                                                    -------------  -------------
TOTAL ASSETS                                        $  48,834,164  $  36,336,797
                                                    =============  =============

                        LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable                                 $  1,560,437   $    935,359
   Other payables and accrued liabilities     8          610,245      1,445,387
   Notes payable - current maturities         9        6,894,049              -
   Value added tax and other taxes payable             2,581,181      1,293,741
   Income tax payable                                    666,995              -
   Due to a related company                   12         153,519         99,379
                                                    -------------  -------------
      Total Current Liabilities                       12,466,426      3,773,866

LONG-TERM LIABILITIES
   Notes payable - long term                  9        9,675,859      9,675,859
                                                    -------------  -------------
TOTAL LIABILITIES                                     22,142,285     13,449,725
                                                    -------------  -------------

COMMITMENTS AND CONTINGENCIES                 10               -              -

STOCKHOLDERS' EQUITY
   Registered capital of $19,351,717 fully paid       19,351,717     19,351,717
   Retained earnings
     Unappropriated                                    6,119,998      2,885,912
     Appropriated                                      1,220,164        649,443
                                                    -------------  -------------
      Total Stockholders' Equity                      26,691,879     22,887,072
                                                    -------------  -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY          $  48,834,164   $ 36,336,797
                                                    =============  =============

 The accompanying notes are an integral part of these financial statements

                                                                             F-2
<PAGE>

           DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                            STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003


                                                  2004             2003
                                             --------------  ---------------
NET SALES                                    $  15,662,493   $   11,955,551

COST OF SALES                                   (8,947,365)      (7,006,099)
                                             --------------  ---------------

GROSS PROFIT                                     6,715,128        4,949,452
                                             --------------  ---------------

OPERATING EXPENSES
   Selling expenses                                578,031          530,463
   General and administrative expenses             724,893          450,780
   Depreciation and amortization                   694,522          439,025
                                             --------------  ---------------
        Total Operating Expenses                 1,997,446        1,420,268
                                             --------------  ---------------

INCOME FROM OPERATIONS                           4,717,682        3,529,184

OTHER INCOME (EXPENSES)
   Interest income                                  23,122            5,415
   Interest expense                               (378,588)         (53,756)
   Other income                                    109,586                -
                                             --------------  ---------------
        Total Other Expenses                      (245,880)         (48,341)

INCOME FROM OPERATIONS BEFORE TAXES              4,471,802        3,480,843

INCOME TAX EXPENSE                                (666,995)               -
                                             --------------  ---------------

NET INCOME                                   $   3,804,807   $    3,480,843
                                             ==============  ===============







 The accompanying notes are an integral part of these financial statements

                                                                             F-3


<PAGE>

              DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                        Unappropriate Appropriated
                                               Registered    retained     retained
                                                  capital    earnings     earnings       Total
                                               ----------- -----------  ----------- -----------
<S>                          <C>               <C>         <C>          <C>         <C>
Balance brought forward from 2002              $ 4,837,929 $  721,460   $  127,317  $ 5,686,706

Capital contribution from stockholders                              -            -           -
   Land use rights                               4,761,732
   Paid in cash                                  9,752,056

Net income for the year                                 -   3,480,843            -    3,480,843

Dividends paid                                          -    (794,265)           -     (794,265)

Transfer from retained earnings to
   statutory and staff welfare reserves                 -    (522,126)     522,126           -
                                               ----------- -----------  ----------- -----------
Balance at December 31, 2003                    19,351,717   2,885,912      649,443   8,373,284

Net income for the year                                 -    3,804,807            -   3,804,807

Transfer from retained earnings to
   statutory and staff welfare reserves                 -    (570,721)      570,721           -
                                               ----------- -----------  ----------- -----------
Balance at December 31, 2004                   $19,351,717 $ 6,119,998  $ 1,220,164 $12,178,091
                                               ----------- -----------  ----------- -----------
</TABLE>


 The accompanying notes are an integral part of these financial statements


                                                                             F-4

<PAGE>

              DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                            STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                2004             2003
                                                            ------------     ------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                         <C>              <C>
 Net income                                                 $  3,804,807     $  3,480,843
 Adjusted to reconcile net income to cash provided
  by operating activities:
  Depreciation and amortization - cost of sales                  298,142          176,712
  Depreciation                                                   472,912          141,547
  Amortization of land use rights                                 96,901           56,526
  Amortization of intangbile assets                              124,709          240,952
Changes in operating assets and liabilities
(Increase)decrease in:
  Accounts receivable                                            191,035         (813,021)
  Prepaid expenses and other current assets                    1,183,916       (3,107,477)
  Inventories                                                 (1,582,120)          63,577
Increase (decrease) in:
  Accounts payable                                               625,078          683,079
  Other payables and accrued liabilities                        (835,141)       1,415,564
  Value add tax and other taxes payable                        1,287,440        1,293,741
  Income tax payable                                             666,995               --
                                                            ------------     ------------
  Net cash provided by operating activities                    6,334,674        3,632,043
                                                            ------------     ------------

CASH FLOWS FROM INVESTING ACTIVITIES
 Purchase of property and equipment                          (11,870,910)     (17,469,013)
 Purchase of land use rights                                          --          (83,333)
 Purchase of intangible assets                                        --       (1,303,822)
                                                            ------------     ------------
  Net cash used in investing activities                      (11,870,910)     (18,856,168)
                                                            ------------     ------------

CASH FLOWS FROM FINANCING ACTIVITIES
 Proceeds from issuance of common stock                               --        9,752,056
 Dividends paid                                                       --         (794,265)
 Proceeds from notes payable                                   7,172,229        9,675,859
 Payment on notes payable                                       (278,180)      (2,177,067)
 Due from related companies                                      940,048       (1,396,575)
 Due to a related company                                         54,140           99,379
                                                            ------------     ------------
  Net cash provided by financial activities                    7,888,237       15,159,387
                                                            ------------     ------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS           2,352,001          (64,738)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                   260,281          325,019
                                                            ------------     ------------

CASH AND CASH EQUIVALENTS AT END OF YEAR                    $  2,612,282     $    260,281
                                                            ============     ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid for interest expense                              $    721,427     $    253,240
                                                            ============     ============

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES

Increase in registered capital for land use rights          $         --     $  4,761,732
                                                            ============     ============
</TABLE>


 The accompanying notes are an integral part of these financial statements

                                                                             F-5


<PAGE>

              DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                        NOTES TO THE FINANCIAL STATEMENTS
                        AS OF DECEMBER 31, 2004 AND 2003

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

      (A)   Organization

            Dalian  Fushi  Bimetallic  Manufacturing  Company  Limited  ("Dalian
            Fushi")  was  incorporated  on  January  16,  2002  in the  People's
            Republic of China  ("PRC") as a limited  liability  company.  On the
            date of incorporation, the registered capital was $4,837,929 and was
            increased to $19,351,717 on July 16, 2003.

            Dalian Fushi is principally engaged in the manufacturing and sale of
            complex wires and its principal place of business is Dalian, PRC.

      (B)   Use of estimates

            The  preparation  of the financial  statements  in  conformity  with
            generally accepted accounting principles requires management to make
            estimates and assumptions  that affect the reported amount 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  period.  Actual results
            could differ from those estimates.

      (C)   Cash and cash equivalents

            For  purpose  of  the  statements  of  cash  flows,  cash  and  cash
            equivalents  include  cash on hand and demand  deposits  with a bank
            with maturities of less than three months.

      (D)   Accounts receivable

            The  Company  extends  unsecured  credit  to  its  customers  in the
            ordinary  course of business but mitigates the  associated  risks by
            performing credit checks and actively pursuing past due accounts. An
            allowance for doubtful accounts is established and recorded based on
            managements'  assessment of the credit history with the customer and
            current  relationships  with them. As of December 31, 2004 and 2003,
            the Company considers all its accounts  receivable to be collectable
            and  no  provision  for  doubtful  accounts  has  been  made  in the
            financial statements.

      (E)   Inventories

            Inventories are stated at lower of cost or market value,  cost being
            determined  on a  weighted  average  method.  The  Company  provided
            inventory  allowances  based  on  excess  and  obsolete  inventories
            determined principally by customer demand.

      (F)   Property and equipment

            Property  and  equipment  are  stated  at  cost,  less   accumulated
            depreciation.   Expenditures  for  additions,   major  renewals  and
            betterments  are capitalized  and  expenditures  for maintenance and
            repairs are charged to expense as incurred.

            Depreciation  is provided on a straight-line  basis,  less estimated
            residual  value  over  the  assets'   estimated  useful  lives.  The
            estimated useful lives are as follows:

            Buildings                                 20 Years
            Plant and machinery                       10 Years
            Motor vehicles                             5 Years
            Furniture, fixtures and equipment          5 Years

            Land use rights are stated at cost,  less  accumulated  amortization
            and are amortized  over the term of the relevant  rights of 50 years
            from the date of  acquisition.  Amortization  of land use rights for
            the years ended  December  31, 2004 and 2003 was $96,901 and $56,526
            respectively.

                                                                             F-6
<PAGE>

              DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                        NOTES TO THE FINANCIAL STATEMENTS
                        AS OF DECEMBER 31, 2004 AND 2003

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION (CONTINUED)

      (G)   Long-lived assets

            In accordance with Statement of Financial  Accounting  Standards No.
            144,  "Accounting  for the  impairment  or  disposal  of  Long-Lived
            Assets",  long-lived  assets  and  certain  identifiable  intangible
            assets  held and used by the  Company are  reviewed  for  impairment
            whenever  events  or  changes  in  circumstances  indicate  that the
            carrying amount of an asset may not be recoverable.  For purposes of
            evaluating   the    recoverability   of   long-lived   assets,   the
            recoverability  test is performed using  undiscounted net cash flows
            related to the long- lived assets.  The Company  reviews  long-lived
            assets to determine that carrying values are not impaired.

      (H)   Fair value of financial instruments

            Statement of Financial  Accounting  Standards  No. 107,  "Disclosure
            About  Fair  Value  of  Financial   Instruments,"  requires  certain
            disclosures regarding the fair value of financial instruments. Trade
            accounts  receivable,  accounts payable, and accrued liabilities are
            reflected in the  financial  statements at fair value because of the
            short-term maturity of the instruments.

      (I)   Revenue recognition

            The  Company  recognizes  revenue  upon  delivery or shipment of the
            products,  at which time title passes to the customer provided that:
            there are no uncertainties regarding customer acceptance; persuasive
            evidence  of an  arrangement  exists;  the sales  price is fixed and
            determinable; and collectability is deemed probable.

      (J)   Income taxes

            The Company is organized  in the  People's  Republic of China and no
            tax benefit is expected from the tax credits in the future.

            PRC  income  tax is  computed  according  to the  relevant  laws and
            regulations  in the PRC.  The Company is entitled to full  exemption
            from income tax for two years  beginning  from 2002,  the first year
            the Company  becomes  profitable  and a 50% income tax reduction for
            the  subsequent  three  years.  The  Company  is  entitled  to  full
            exemption  from  income  tax in 2003  which is the  second  year the
            Company  becomes  profitable.  The income tax  expense  for 2004 was
            $666,995.

      (K)   Foreign currency translation

            The  functional  currency  of the  Company is the  Chinese  Renminbi
            ("RMB").  Transactions  denominated in currencies other than RMB are
            translated  into United  States  dollars  using  period end exchange
            rates as to assets and liabilities and average  exchange rates as to
            revenues and  expenses.  Capital  accounts are  translated  at their
            historical exchange rates when the capital transaction occurred. Net
            gains and losses  resulting from foreign  exchange  translations are
            included in the statements of operations and stockholder's equity as
            other comprehensive income (loss).

      (L)   Segments

            The  Company  operates  in  only  one  segment,  thereafter  segment
            disclosure is not presented.

      (M)   Recent Accounting Pronouncements

            Statement  of  Financial  Accounting  Standards  ("SFAS")  No.  151,
            "Inventory  Costs - an amendment  of ARB No. 43,  Chapter 4 SFAS No.
            152,  "Accounting  for Real Estate  Time-Sharing  Transactions  - an
            amendment  of  FASB  Statements  No.  66  and  67,"  SFAS  No.  153,
            "Exchanges of Non-monetary  Assets - an amendment of APB Opinion No.
            29,", SFAS No. 123 (revised 2004),  "Share-Based  Payment," and SFAS
            No. 154  "Accounting  Changes and Error  Corrections"  were recently
            issued.  SFAS No. 151, 152, 153, 154 and 123 (revised  2004) have no
            current  applicability  to the  Company  and have no  effect  on the
            financial statements.

                                                                             F-7

<PAGE>

              DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                        NOTES TO THE FINANCIAL STATEMENTS
                        AS OF DECEMBER 31, 2004 AND 2003

2.    ACCOUNTS RECEIVABLE

      Accounts  receivable  at  December  31,  2004  and 2003  consisted  of the
      following:
                                                    2004            2003
                                               ------------   -------------
      Accounts receivable                      $  1,760,586       1,951,621
      Less: allowance for doubtful accounts              -               -
                                               ------------   -------------
      Accounts receivable, net                 $  1,760,586   $   1,951,621
                                               ------------   -------------

      As of December  31, 2004 and 2003,  the Company  considered  all  accounts
      receivable  collectable  and has not  recorded a  provision  for  doubtful
      accounts.

3.    INVENTORIES

      Inventories at December 31, 2004 and 2003 consisted of the following:

                                                   2004            2003
                                               ------------   -------------
      Raw materials                            $   862,806    $    252,640
      Work-in-progress                              93,392          57,583
      Finished goods                             1,094,058         157,913
                                               ------------   -------------
                                                 2,050,256         468,136
      Less: provision of obsolescence                    -               -
                                               ------------   -------------
      Inventories, net                         $ 2,050,256    $    468,136
                                               ------------   -------------

      For the years ended  December 31, 2004 and 2003, no provision for obsolete
      inventories was recorded by the Company.

4.    PREPAID EXPENSES AND OTHER CURRENT ASSTES

      Prepaid  expenses and other  current  assets at December 31, 2004 and 2003
      consisted of the following:

                                                      2004            2003
                                               ------------   -------------
      Prepaid expenses                         $   111,030    $  2,735,342
      Advances to suppliers                        402,137         629,585
      Advances to staff                            239,732          99,897
      Other receivables                          2,104,517         576,508
                                               ------------   -------------
                                               $ 2,857,416    $  4,041,332
                                               ------------   -------------

5.    PROPERTY AND EQUIPMENT

      The following is a summary of property and equipment at December 31:

                                                    2004            2003
                                               -------------   -------------
      Buildings                                $ 13,209,090    $    656,749
      Plant and machinery                         9,026,944       7,828,781
      Office equipment                              130,007          81,120
      Motor vehicles                                823,715         614,907
      Construction in progress                   11,514,743      13,652,032
                                               -------------   -------------
                                                 34,704,499      22,833,589
      Less: accumulated depreciation             (1,237,201)       (466,147)
                                               -------------   -------------
      Property and equipment, net              $ 33,467,298    $ 22,367,442
                                               -------------   -------------

      Depreciation  expense for the years ended  December  31, 2004 and 2003 was
      $771,054 and $318,259 respectively.

                                                                             F-8
<PAGE>

              DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                        NOTES TO THE FINANCIAL STATEMENTS
                        AS OF DECEMBER 31, 2004 AND 2003

6.    INTANGIBLE ASSETS

      Intangible  assets related to two registered patent rights acquired by the
      Company from third parties:-

                                                   2004            2003
                                               ------------   -------------
      Patents                                  $ 1,303,822    $  1,303,822
      Less: accumulated amortization               365,661         240,952
                                               ------------   -------------
      Intangible assets, net                   $   938,161    $  1,062,870
                                               ------------   -------------

      Intangible  assets are stated at cost, less  accumulated  amortization and
      are amortized on a straight line basis over 7 years and 15 years from date
      of acquisition to the date of expiry of the registration.  Amortization of
      patents for the years ended and  December  31, 2004 and 2003 was  $124,709
      and $240,952 respectively.

7.    LAND USE RIGHTS

      Land use rights at December 31, 2004 and 2003 consisted of the following:-

                                                   2004            2003
                                               ------------   -------------
      Rights to use land                       $ 4,845,065    $  4,845,065
      Less: accumulated amortization               153,427          56,525
                                               ------------   -------------
      Land use rights, net                     $ 4,691,638    $  4,788,540
                                               ------------   -------------

      Land use rights are stated at cost, less accumulated  amortization and are
      amortized  over the term of the relevant  rights of 50 years from the date
      of  acquisition.  Amortization  of land use  rights  for the  years  ended
      December 31, 2004 and 2003 was $96,901 and $56,526 respectively.

8.    OTHER PAYABLES AND ACCRUED LIABILITIES

      Other  payables  and accrued  liabilities  at  December  31, 2004 and 2003
      consisted of the following:

                                                    2004           2003
                                               -------------   ------------
      Other payables                           $    271,977    $ 1,348,574
      Accrued liabilities                           338,268         96,813
                                               -------------   ------------
                                               $    610,245    $ 1,445,387
                                               -------------   ------------

                                                                             F-9
<PAGE>

              DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                        NOTES TO THE FINANCIAL STATEMENTS
                        AS OF DECEMBER 31, 2004 AND 2003

9.    NOTES PAYABLE

      Balance at December 31, 2004 and 2003:

<TABLE>
<CAPTION>
                                                                   2004          2003
                                                               ------------   -----------
<S>                                                           <C>            <C>
Note payable to a bank, interest rate of 5.58% per annum,      $  4,837,929   $ 4,837,929
    collateralized by buildings and plant and machinery of
    the Company and related parties, due October 2008

Note payable to a bank, interest rate of 5.58% per annum,         4,837,930     4,837,930
    guaranteed by a related company, due October 2008

Note payable to a bank, interest rate of 5.544% per annum,        3,628,447          -
    collateralized by buildings of the Company, due April 2005

Note payable to a bank, interest rate of 5.544% per annum,          241,896          -
    collateralized by buildings of the Company, due April 2005

Note payable to a bank, interest rate of 5.544% per annum,          604,741          -
    collateralized by buildings of the Company, due April 2005

Note payable to a bank, interest rate of 6.138% per annum,        1,814,224          -
    collateralized by buildings of the Company, due
    September 2005

Note payable to a bank, interest rate of 5.742% per annum,          604,741          -
    collateralized by buildings of the Company, due May 2005
                                                               ------------   -----------
                                                                 16,569,908     9,675,859

Less: current maturities                                          6,894,049      -
                                                               ------------   -----------
                                                               $  9,675,859   $  9,675,859
                                                               ------------   -----------
</TABLE>

    Maturities are as follows:

       For the year ending December 31,
       2005                                 $   6,894,049  $          -
       2006                                            -              -
       2007                                            -              -
       2008                                     9,675,859      9,675,859
                                            -------------  -------------
                                            $  16,569,908  $   9,675,859
                                            -------------  -------------

      Interest paid in 2004 and 2003 was $721,427 and $253,240  respectively  of
      which   $342,839  and  $199,484   were   capitalized   in  2004  and  2003
      respectively.

10.   COMMITMENTS AND CONTINGENCIES

      (A)   Employee benefits

            The full time  employees  of the  Company  are  entitled to employee
            benefits  including medical care,  welfare  subsidies,  unemployment
            insurance and pension benefits through a Chinese government mandated
            multi-employer defined contribution plan. The Company is required to
            accrue for those benefits  based on 14% of the employees'  salaries.
            The  total  provision  for such  employee  benefits  was  $86,367and
            $30,398   for  the  years   ended   December   31,  2004  and  2003,
            respectively.  The Company is required to make  contributions to the
            plans out of the amounts  accrued for medical and pension  benefits.
            The  contributions  for the year ended  December  31,  2004 and 2003
            amounted to $35,400 and $11,475 respectively. The Chinese government
            is responsible for the medical benefits and the pension liability to
            be paid to these employees.

      (B)   Commitments

            As at December 31, 2004,  the Company had firm purchase  commitments
            for capital projects in progress of $216,876.

                                                                            F-10
<PAGE>

              DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                        NOTES TO THE FINANCIAL STATEMENTS
                        AS OF DECEMBER 31, 2004 AND 2003

11.   SHAREHOLDERS' EQUITY

      (A)   REGISTERED CAPITAL

            In accordance  with the Articles of Association of the Company,  the
            registered capital of the Company of $4,837,929  (RMB40,000,000) was
            fully paid on  December  12, 2001 in cash by the  stockholders.  The
            registered  capital of the  Company  was  increased  by  $14,513,788
            (RMB120,000,000)  to $19,351,717  (RMB160,000,000) on July 16, 2003.
            The increase in registered  capital was paid  $9,752,056 for in cash
            and land use rights of $4,761,732 were transferred to the Company at
            its historical cost by the stockholders.

      (B)   APPROPRIATED RETAINED EARNINGS

            The Company is required to make  appropriations  to reserves  funds,
            comprising the statutory  surplus reserve,  statutory public welfare
            fund and  discretionary  surplus  reserve,  based on  after-tax  net
            income determined in accordance with generally  accepted  accounting
            principles  of the  People's  Republic  of China  (the "PRC  GAAP").
            Appropriation  to the statutory  surplus  reserve should be at least
            10% of the after tax net income  determined in  accordance  with the
            PRC  GAAP  until  the  reserve  is  equal  to 50%  of the  entities'
            registered  capital.  Appropriations to the statutory public welfare
            fund are at 5% to 10% of the  after  tax net  income  determined  in
            accordance  with the PRC GAAP. The statutory  public welfare fund is
            established  for the purpose of providing  employee  facilities  and
            other collective benefits to the employees and is  non-distributable
            other  than  in  liquidation.  Appropriations  to the  discretionary
            surplus  reserve  are  made  at  the  discretion  of  the  Board  of
            Directors.

            During  2004  and  2003,  the  Company  appropriated   $570,721  and
            $522,126, respectively to the reserves funds based on its net income
            under PRC GAAP.

      12.   RELATED PARTY TRANSACTIONS

            The Company loaned $456,527 to three related  companies as unsecured
            loans free of interest payment and repayable on demand.

            The Company owed a related company $153,519 for short-term unsecured
            advances free of interest and repayable on demand.

      13.   CONCENTRATIONS AND RISKS

            During 2004 and 2003,  100% of the Company's  assets were located in
            China.

            The Company  relied on five  customers and sales to those  customers
            for the year ended December 31, 2004 and 2003 are as follows:

<TABLE>
<CAPTION>
                      Customer A  Customer B Customer C  Customer D   Customer E
<S>                    <C>        <C>        <C>         <C>           <C>
    For the year ended
    December 31, 2004        21%         19%        16%          8%          10%
    December 31, 2003        14%         15%        18%         17%           0%
</TABLE>

            At  December  31,  2004 and 2003,  accounts  receivable  from  those
            customers totaled $937,862 and $1,020,012 respectively.

            The  Company  relied  on two  suppliers  and  purchases  from  those
            suppliers  for the  year  ended  December  31,  2004 and 2003 are as
            follows:
<TABLE>
<CAPTION>
                                                         Supplier A  Supplier B
<S>                                                      <C>        <C>
    For the year ended
    December 31, 2004                                           37%          59%
    December 31, 2003                                           43%          44%
</TABLE>

            At  December  31,  2004 and  2003,  accounts  payable  to those  two
            suppliers totaled $126,939 and $157,377 respectively.


                                                                            F-11

<PAGE>

              DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED

                              FINANCIAL STATEMENTS
                      AS OF SEPTEMBER 30, 2005 (UNAUDITED)

<PAGE>

              DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED

                                    CONTENTS

<TABLE>
<CAPTION>
                                                                                                        Pages
<S>                                                                                                     <C>
-------------------------------------------------------------------------------------------------------------

Condensed Balance Sheet as of September 30, 2005 (unaudited)                                                1
-------------------------------------------------------------------------------------------------------------

Condensed Statements of Operations for the three and nine months ended September 30, 2005 and
2004 (unaudited)                                                                                            2
-------------------------------------------------------------------------------------------------------------

Condensed Statements of Cash Flows for the nine months ended September 30, 2005 and 2004                    3
-------------------------------------------------------------------------------------------------------------

Notes to Condensed Financial Statements as of September 30, 2005 (unaudited)                            4 - 6
-------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

             DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                             CONDENSED BALANCE SHEET
                      AS OF SEPTEMBER 30, 2005 (UNAUDITED)

                                     ASSETS

CURRENT ASSETS
    Cash and cash equivalents                                   $    2,844,904
    Accounts receivable, net                                         5,332,718
    Due from related companies                                       2,712,587
    Inventories, net                                                 2,302,410
    Prepayments and other receivables, net                           4,608,296
                                                                --------------
        Total Current Assets                                        17,800,915

PROPERTY AND EQUIPMENT, NET                                         35,606,114

OTHER ASSETS
    Intangible assets, net                                             849,164
    Land use rights, net                                             4,618,962
                                                                --------------
TOTAL ASSETS                                                    $   58,875,155
                                                                ==============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Accounts payable                                            $    1,311,371
    Other payables and accrued liabilities                             667,972
    Notes payable - current maturities                              12,089,729
    Value added tax and other taxes payable                          1,834,972
    Income tax payable                                               1,519,899
    Due to a related company                                           328,611
                                                                --------------
        Total Current Liabilities                                   17,752,554

LONG-TERM LIABILITIES
    Notes payable - long term                                        9,675,859
                                                                --------------
TOTAL LIABILITIES                                                   27,428,413
                                                                --------------

COMMITMENTS AND CONTINGENCIES                                               --

STOCKHOLDERS' EQUITY
    Registered capital of $19,351,717 fully paid                    19,351,717
    Retained earnings
        Unappropriated                                              11,014,586
        Appropriated                                                 1,220,164
    Accumulated other comprehsive loss                                (139,725)
                                                                --------------
        Total Stockholders' Equity                                  31,446,742
                                                                --------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                      $   58,875,155
                                                                ==============

    The accompanying notes are an integral part of these financial statements


                                                                             F-1
<PAGE>

              DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
            CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE
              MONTHS ENDED SEPTEMBER 30, 2005 AND 2004 (UNAUDITED)

<TABLE>
<CAPTION>
                                                 For the three          For the three           For the nine           For the nine
                                                  months ended           months ended           months ended           months ended
                                            September 30, 2005     September 30, 2004     September 30, 2005     September 30, 2004
                                            ------------------     ------------------     ------------------     ------------------
<S>                                         <C>                    <C>                    <C>                    <C>
NET SALES                                   $        8,521,006     $        4,542,923     $       18,072,468     $       12,463,520

COST OF SALES                                       (4,626,276)            (2,660,559)           (10,219,442)            (7,028,502)
                                            ------------------     ------------------     ------------------     ------------------

GROSS PROFIT                                         3,894,730              1,882,364              7,853,026              5,435,018
                                            ------------------     ------------------     ------------------     ------------------

OPERATING EXPENSES
    Selling expenses                                    77,112                144,755                168,910                478,958
    General and administrative expenses                456,245                243,825                815,133                460,653
    Depreciation and amortization                      370,585                103,263                679,767                308,050
                                            ------------------     ------------------     ------------------     ------------------
           Total Operating Expenses                    903,942                491,843              1,663,810              1,247,661
                                            ------------------     ------------------     ------------------     ------------------

INCOME FROM OPERATIONS                               2,990,788              1,390,521              6,189,216              4,187,357

OTHER INCOME (EXPENSES)
    Provision for doubtful debts on other
    receivables                                        (70,000)                    --                (70,000)                    --
    Other income                                            89                     --                     89                     --
    Other expense                                       (4,105)                    --                 (4,105)                    --
    Interest income                                     44,509                  1,366                 58,044                 18,278
    Interest expense                                  (191,436)              (177,609)              (425,752)              (233,859)
                                            ------------------     ------------------     ------------------     ------------------
           Total Other Expenses                       (220,943)              (176,243)              (441,724)              (215,581)

INCOME FROM OPERATIONS BEFORE TAXES                  2,769,845              1,214,278              5,747,492              3,971,776

INCOME TAX EXPENSE                                    (406,256)              (182,141)              (852,904)              (595,766)
                                            ------------------     ------------------     ------------------     ------------------

NET INCOME                                  $        2,363,589     $        1,032,137     $        4,894,588     $        3,376,010
                                            ==================     ==================     ==================     ==================

OTHER COMPREHENSIVE LOSS
    Foregin currency translation loss                 (139,725)                    --               (139,725)                    --
                                            ------------------     ------------------     ------------------     ------------------

COMPREHENSIVE INCOME                        $        2,223,864     $        1,032,137     $        4,754,863     $        3,376,010
                                            ==================     ==================     ==================     ==================
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                                                             F-2
<PAGE>

              DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                       CONDENSED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                   For the nine months          For the nine months
                                                                              ended September 30, 2005     ended September 30, 2004
                                                                              ------------------------     ------------------------
<S>                                                                           <C>                          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                                                                $              4,894,588     $              3,376,010
    Adjusted to reconcile net income to cash (used in) provided
       by operating activities:
       Depreciation and amortization - cost of sales                                           372,970                      223,295
       Depreciation                                                                            518,095                      141,842
       Amortization of land use rights                                                          88,997                       78,724
       Amortization of intangible assets                                                        72,676                       93,532
       Provision for doubtful debts on other receivables                                        70,000                           --
    Changes in operating assets and liabilities (Increase) decrease in:
       Accounts receivable                                                                  (3,572,132)                     248,910
       Prepaid expenses and other current assets                                            (1,820,879)                   1,068,039
       Inventories                                                                            (252,154)                    (451,967)
       Due from related companies                                                           (2,256,060)                      15,658
    Increase (decrease) in:
       Accounts payable                                                                       (249,066)                   5,566,439
       Other payables and accrued liabilities                                                   57,726                   (1,198,963)
       Value added tax and other taxes payable                                                 106,697                    1,487,613
       Due to related companies                                                                175,092                      112,159
                                                                              ------------------------     ------------------------
       Net cash (used in) provided by operating activities                                  (1,793,450)                  10,761,291
                                                                              ------------------------     ------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Purchase of property and equipment                                                      (3,029,881)                  (9,506,078)
                                                                              ------------------------     ------------------------
       Net cash used in investing activities                                                (3,029,881)                  (9,506,078)
                                                                              ------------------------     ------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds from the issuance of notes payable                                             21,281,795                    1,487,663
    Payment on notes payable                                                               (16,086,115)                    (278,181)
                                                                              ------------------------     ------------------------
       Net cash provided by financial activities                                             5,195,680                    1,209,482
                                                                              ------------------------     ------------------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                                      372,349                    2,464,695

EFFECT OF EXCHANGE RATE ON CASH                                                               (139,727)                          --

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD                                         2,612,282                      260,281
                                                                              ------------------------     ------------------------

CASH AND CASH EQUIVALENTS AT END OF THE PERIOD                                $              2,844,904     $              2,724,976
                                                                              ========================     ========================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid for interest expense                                                $                848,536     $                617,532
                                                                              ========================     ========================
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                                                             F-3
<PAGE>

              DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                   NOTES TO THE CONDENSED FINANCIAL STATEMENTS
                      AS OF SEPTEMBER 30, 2005 (UNAUDITED)

NOTE 1      ORGANIZATION

            Dalian Fushi Bimetallic Manufacturing Company Limited ("Dalian
            Fushi") was incorporated on January 16, 2002 in the People's
            Republic of China ("PRC") as a limited liability company. On the
            date of incorporation, the registered capital was $4,837,929 and was
            increased to $19,351,717 on July 16, 2003.

            Dalian Fushi is principally engaged in the manufacturing and sale of
            complex wires and its principal place of business is Dalian, PRC.

NOTE 2      BASIS OF PREPARATION

            The accompanying unaudited condensed financial statements have been
            prepared in accordance with accounting principles generally accepted
            in the United States of America for interim financial information
            and pursuant to the rules and regulations of the Securities and
            Exchange Commission. Accordingly, they do not include all of the
            information and footnotes required by generally accepted accounting
            principles for complete financial statements.

            In the opinion of management, the unaudited condensed financial
            statements contain all adjustments consisting only of normal
            recurring accruals considered necessary to present fairly the
            Company's financial position at September 30, 2005, the results of
            operations for the three months and nine months ended September 30,
            2005 and 2004, and cash flows for the nine months ended September
            30, 2005 and 2004. The results for the nine months ended September
            30, 2005 are not necessarily indicative of the results to be
            expected for the entire fiscal year ending December 31, 2005.

            For further information, refer to the financial statements and
            footnotes of the company for the year ended December 31, 2004 and
            2003.

NOTE 3      USE OF ESTIMATES

                  The preparation of the financial statements in conformity with
            generally accepted accounting principles requires management to make
            estimates and assumptions that affect the reported amount 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 period. Actual results
            could differ from those estimates.

NOTE 4      SEGMENTS

            The Company operates in only one segment, thereafter segment
            disclosure is not presented.

NOTE 5      PREPAYMENTS AND OTHER RECEIVABLES

            Prepayments and other receivables at September 30, 2005 consisted of
            the following:

<TABLE>
<S>                                                                                <C>
            Prepaid expenses                                                       $   111,591
            Advances to suppliers                                                    1,243,240
            Other receivables                                                        3,323,465
                                                                                   -----------
                                                                                     4,678,296
            Less: general provision for doubtful debts on other receivables            (70,000)
                                                                                   -----------

            Prepayments and other receivables, net                                 $ 4,608,296
                                                                                   ===========
</TABLE>


                                                                             F-4
<PAGE>

              DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                   NOTES TO THE CONDENSED FINANCIAL STATEMENTS
                      AS OF SEPTEMBER 30, 2005 (UNAUDITED)

NOTE 6      NOTES PAYABLE

            Balance at September 30, 2005:

<TABLE>
<S>                                                                             <C>
            Note payable to a bank, interest rate of 5.58% per annum,           $ 4,837,929
                  secured by buildings and plant and machinery of
                  the Company and related parties, due April 2008

            Note payable to a bank, interest rate of 5.58% per annum,             4,837,930
                  guaranteed by a related company, due April 2008

            Note payable to a bank, interest rate of 6.14% per annum,             1,849,568
                  secured by buildings of the Company, due June 2006

            Note payable to a bank, interest rate of 4.875% per annum,            1,233,046
                  secured by buildings of the Company, due March 2006

            Note payable to a bank, interest rate of 5.742% per annum,            1,849,568
                  secured by buildings of the Company, due April 2006

            Note payable to a bank, interest rate of 6.138% per annum,            1,171,393
                  secured by buildings of the Company, due April 2006

            Note payable to a bank, interest rate of 6.138% per annum,              986,437
                  secured by buildings of the Company, due March 2006

            Note payable to a bank, interest rate of 5.742% per annum,              616,523
                  secured by buildings of the Company, due January 2006

            Note payable to a bank, interest rate of 5.742% per annum,              560,752
                  secured by buildings of the Company, due January 2006

            Note payable to a bank, interest rate of 5.742% per annum,              369,914
                  secured by buildings of the Company, due January 2006

            Note payable to a bank, interest rate of 5.742% per annum,              863,132
                  secured by buildings of the Company, due December 2005

            Note payable to a bank, interest rate of 4.35% per annum,               739,827
                  secured by buildings of the Company, due February 2006

            Note payable to a bank, interest rate of 6.138% per annum,            1,849,569
                  secured by buildings of the Company, due February 2006
                                                                                -----------
                                                                                 21,765,588
            Less: current maturities                                             12,089,729
                                                                                -----------
                                                                                $ 9,675,859
                                                                                ===========
</TABLE>

            Maturities are as follows:

<TABLE>
<S>                                                                             <C>
            For the period ending September 30,
            2006                                                                 12,089,729
            2007                                                                         --
            2008                                                                  9,675,859
                                                                                -----------
                                                                                $21,765,588
                                                                                ===========
</TABLE>


                                                                             F-5
<PAGE>

              DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                   NOTES TO THE CONDENSED FINANCIAL STATEMENTS
                      AS OF SEPTEMBER 30, 2005 (UNAUDITED)

NOTE 7      RELATED PARTY TRANSACTIONS

            The Company loaned $2,712,587 to three related companies as
            unsecured loans free of interest payment and repayable on demand.

            The Company owed a related company $328,611 for short-term unsecured
            advances free of interest and repayable on demand.

NOTE 9      CONCENTRATIONS AND RISKS

            During the nine months ended September 30, 2005, 100% of the
            Company's assets were located in China.

            The Company relied on three customers in the PRC and sales to those
            customers for the period ended September 30, 2005 are as follows:

                                     Customer A     Customer B     Customer C
            For the period ended
            September 30, 2005              14%            10%            11%

            At September 30, 2005, accounts receivable from those customers
            totaled $2,291,928.

            The Company relied on two suppliers in the PRC and purchases from
            those suppliers for the period ended September 30, 2005 are as
            follows:

                                                    Supplier A     Supplier B
            For the period ended
            September 30, 2005                             45%            51%

            At September 30, 2005, accounts payable to those two suppliers
            totaled $601,588.


                                                                             F-6
<PAGE>

                                   SIGNATURES

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

Date: December 13, 2005

                                        Parallel Technologies, Inc.
                                        (Registrant)


                                        By: /s/ Li Fu
                                           ------------------------
                                           Li Fu
                                           President
{"company-data": {"conformed-name": "PARALLEL TECHNOLOGIES INC", "cik": "0000710846", "assigned-sic": "6770", "irs-number": "133140715", "state-of-incorporation": "NV", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-19276", "film-number": "051264141"}, "business-address": {"street1": "211 WEST WALL", "city": "MIDLAND", "state": "TX", "zip": "79701", "phone": "4326821761"}, "former-company": {"former-conformed-name": "M INC", "date-changed": "19910613"}}
UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                 ---------------

                                    FORM 8-K

                                 CURRENT REPORT

     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) December 13, 2005

                                 ---------------

                           PARALLEL TECHNOLOGIES, INC.
                           ---------------------------
               (Exact name of Registrant as specified in charter)

        Nevada                        0-19276                 13-3140715
------------------------       ---------------------        -------------
(State of Incorporation)       (Commission File No.)        (IRS Employer
                                                         Identification Number)

     1 Shuang Qiang Road, Jinzhou, Dalian, People's Republic of China 116100
     -----------------------------------------------------------------------
     (Address of principal executive offices)                  (Zip Code)

Registrant's telephone number, including area code:    (011)-86-411-8770-3333
                                                       ----------------------

                                c/o Glenn Little
                              211 West Wall Street
                              Midland, Texas 79701
                                 (432) 682-1761

          -------------------------------------------------------------
          (Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities
Act(17CFR230.425)

[ ] Soliciting material pursuant to Rule14a-12 under the Exchange Act
(17CFR240.14a-2)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17CFR240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17CFR240.13e-4(c))
TABLE OF CONTENTS

Item No.                Description of Item                             Page No.
-------                 -------------------                             -------

Item 1.01   Entry Into a Material Definitive Agreement.....................4
Item 2.01   Completion of Acquisition or Disposition of Assets............11
Item 3.02   Unregistered Sale of Securities...............................88
Item 3.03   Material Modification of Rights of Securityholders............88
Item 4.01   Changes in Registrant's Certifying Accountant.................92
Item 5.01   Change In Control of Registrant...............................93
Item 5.06   Change in Shell Company Status................................93
Item 9.01   Financial Statements and Exhibits.............................94
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

      Our disclosure and analysis in this Current Report on Form 8-K contains
some forward-looking statements. Certain of the matters discussed concerning our
operations, cash flows, financial position, economic performance and financial
condition, including, in particular, future sales, product demand, the market
for our products in the PRC, competition, exchange rate fluctuations and the
effect of economic conditions include forward-looking statements within the
meaning of section 27A of the Securities Act and Section 21E of the Exchange
Act.

      Statements that are predictive in nature, that depend upon or refer to
future events or conditions or that include words such as "expects,"
"anticipates," "intends," "plans," "believes," "estimates" and similar
expressions are forward-looking statements. Although we believe that these
statements are based upon reasonable assumptions, including projections of
orders, sales, operating margins, earnings, cash flow, research and development
costs, working capital, capital expenditures and other projections, they are
subject to several risks and uncertainties, and therefore, we can give no
assurance that these statements will be achieved.

      Investors are cautioned that our forward-looking statements are not
guarantees of future performance and the actual results or developments may
differ materially from the expectations expressed in the forward-looking
statements.

      As for the forward-looking statements that relate to future financial
results and other projections, actual results will be different due to the
inherent uncertainty of estimates, forecasts and projections may be better or
worse than projected. Given these uncertainties, you should not place any
reliance on these forward-looking statements. These forward-looking statements
also represent our estimates and assumptions only as of the date that they were
made. We expressly disclaim a duty to provide updates to these forward-looking
statements, and the estimates and assumptions associated with them, after the
date of this filing to reflect events or changes in circumstances or changes in
expectations or the occurrence of anticipated events.

      We undertake no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or otherwise.
You are advised, however, to consult any additional disclosures we make in our
reports on Form 10-KSB, Form 10-QSB, Form 8-K, or their successors. We also note
that we have provided a cautionary discussion of risks and uncertainties under
the caption "Risk Factors" in this Current Report. These are factors that we
think could cause our actual results to differ materially from expected results.
Other factors besides those listed here could also adversely affect us.

      Information regarding market and industry statistics contained in this
Current Report is included based on information available to us which we believe
is accurate. We have not reviewed or included data from all sources, and cannot
assure stockholders of the accuracy or completeness of the data included in this
Current Report. Forecasts and other forward-looking information obtained from
these sources are subject to the same qualifications and the additional
uncertainties accompanying any estimates of future market size, revenue and
market acceptance of products and services. This discussion is provided as
permitted by the Private Securities Litigation Reform Act of 1995.

                                       1
Unless otherwise noted, all currency figures in this filing are in U.S.
dollars. References to "yuan" or "RMB" are to the Chinese yuan (also known as
the renminbi). According to Xe.com as of December 11, 2005, $1.00 = 8.07490
yuan.

                                Explanatory Note

      This Current Report on Form 8-K is being filed by Parallel Technologies,
Inc. (the "Company") in connection with a series of restructuring transactions
in which the Company will acquire substantially all of the assets and business
of Dalian Fushi Bimetallic Manufacturing Co., Ltd. ("Dalian Fushi"), a limited
liability company organized under the laws of the People's Republic of China
("PRC"). As part of the transactions, Dalian Fushi acquired a controlling
interest in the Company from Glenn A. Little, who previously held a majority of
our Common Stock. Upon the completion of the restructuring transactions, which
we anticipate will be completed 15 days after date of this Current Report, the
business of Dalian Fushi will be operated by our sole operating subsidiary,
Dalian Diversified Product Inspections Bimetallic Cable Co., Ltd. ("Dalian
DPI"), a wholly foreign-owned entity in the PRC. The business consists of
manufacturing and selling copper clad aluminum and steel wire, both of which are
bimetallic composite wire products that are principally used for network signal
transmission cable, cable television wire, signal transmission cable, cable
television subscriber lines, distribution lines, local area networks, inner
conductor for access networks, telephone subscriber communication lines, patch
cords for electronic components, power system grounding lines, conductor lines
for electric railways and other applications. See "Business" in Item 2.01 of
this Current Report for more information on our acquired business.

      The Company accomplished the acquisition through the following steps.

      1. Dalian Fushi's shareholders and Dalian Fushi's U.S. financial adviser,
Kuhns Brothers, Inc. ("Kuhns Brothers"), formed a Delaware corporation called
Diversified Product Inspections, Inc. ("DPI") and Dalian DPI, a PRC entity.
Dalian DPI is 100% owned by DPI and is a "wholly foreign owned entity" under PRC
law by virtue of its status as a wholly-owned subsidiary of DPI, as a non-PRC
company.

      2. On November 8, 2005, Dalian Fushi entered into a stock purchase
agreement with our former director, chief executive officer and majority
shareholder, Glenn A. Little, which closed on December 13, 2005. Pursuant to
this agreement, as amended, Mr. Little sold his 20,000,000 shares of Company
common stock, par value $.006 per share ("Common Stock"), to Dalian Fushi. As a
result, Dalian Fushi became the majority shareholder of the Company. In
connection with this agreement, and prior to its closing, Mr. Little, as
director and majority shareholder of the Company resigned as a director of the
Company and appointed Li Fu, Yue Mathus Yang and John D. Kuhns as directors of
the Company. Mr. Fu and Mr. Yang are also beneficial shareholders and officers
of Dalian Fushi. The directors of DPI and Dalian DPI will be identical to those
of the Company. Mr. Little also resigned all his officer positions with the
Company effective immediately following the closing of a private placement
offering described in step 5 below. Contemporaneous with Mr. Little's
resignation from his officer positions, the new directors of the Company
appointed new officers with immediate effect. See "Our Directors and Officers"
in Item 2.01 of this Current Report for more information on these persons and
Item 5.01 of this Current Report for more information on the stock purchase
agreement between Dalian Fushi and Mr. Little.

                                       2
3. On December 13, 2005, the Company consummated a share exchange
agreement (the "Share Exchange Agreement") with DPI, whereby the Company
exchanged 784,575.16 shares of its newly designated Series A Convertible
Preferred Stock (the "Series A Stock") for all of the issued and outstanding
stock of DPI held by the DPI shareholders. The Series A Stock is convertible
into Common Stock following the reverse stock split described below. As a
result, DPI and Dalian DPI became direct and indirect wholly-owned subsidiaries,
respectfully, of the Company. See Item 1.01 for additional information on the
share exchange with DPI and Item 1.01, Item 3.02 and 3.03 of this Current Report
for more information on the designation and issuance of the Series A Stock.

      4. Immediately following the above transactions, but on the same date,
Dalian DPI consummated a series of agreements with Dalian Fushi to purchase
substantially all of the assets of Dalian Fushi and lease the remaining assets
(collectively, the "Restructuring Agreements"). Under the Restructuring
Agreements, Dalian Fushi's business will be conducted by Dalian DPI. To the
extent that any aspect of Dalian Fushi's business needs to be conducted through
Dalian Fushi in the future, the Restructuring Agreements provide Dalian DPI with
the ability to control Dalian Fushi and any of its remaining assets and
operations. The Restructuring Agreements were utilized, instead of a complete
acquisition of Dalian Fushi's assets, because current PRC law does not
specifically provide for the approval procedures and the detailed implementation
regulations on non-PRC entity's equity to be used as consideration to acquire a
PRC entity's equity or assets, which makes it impossible for a non-PRC entity to
use its equity to acquire a PRC entity. If acquisition of a PRC entity using
foreign equity was possible, the Company could have acquired 100% of the stock
of Dalian Fushi in exchange for Common Stock. While PRC law does allow for the
purchase of equity interests in (or assets of) a PRC entity by a non-PRC entity
for cash, the purchase price must be based on the appraised value of such equity
(or assets). Because the Company did not have sufficient cash to pay the
estimated full value of all of the assets of Dalian Fushi, the Company, through
Dalian DPI, purchased the maximum amount of assets possible with the net
proceeds of the private placement offering described below, and leased the
remainder of Dalian Fushi's assets used in Dalian Fushi's business for nominal
consideration. See Item 1.01 of this Current Report for more information on the
Restructuring Agreements.

      While the acquisition of the assets and business of Dalian Fushi was
effective on December 13, 2005, not all of the transactions contemplated by the
Restructuring Agreements have been consummated and the Company, through Dalian
DPI, has not yet commenced operation of the business. To complete these
transactions, Dalian DPI must complete additional filings and registrations,
including (i) completing a PRC registered capital verification process, (ii)
after such capital verification process, transmitting to Dalian Fushi the full
purchase price for the assets to be purchased by it under the Restructuring
Agreements, (iii) obtaining an environmental report for the assets purchased
from Dalian Fushi, and (iv) obtaining a new business license from the PRC State
Administration for Industry and Commerce in Dalian, PRC to reflect Dalian DPI's
status as an operating company. We anticipate these steps will be completed
within 15 days after the date of this Current Report, at which time Dalian DPI
will commence operations.

                                       3
5. The funds used for the consummation of the stock purchase agreement
with Mr. Little and the Restructuring Agreements were provided from the proceeds
of a $11,225,000 private placement offering by the Company which also closed on
December 13, 2005. The investors in this offering purchased 201,511.98 shares of
the Company's newly designated Series B Convertible Preferred Stock (the "Series
B Stock"), warrants to purchase additional shares of Common Stock and rights to
additional issuances of Common Stock based on certain conditions. The Series B
Stock is convertible into Common Stock following the reverse stock split
described below. See Item 1.01, 3.02 and 3.03 of this Current Report for more
information on the designation and issuance of the Series B Stock and warrants.
The net proceeds of the Series B Stock offering will otherwise be used by Dalian
DPI principally for the conduct of its business.

      The Series A Stock and the Series B Stock will not convert into shares of
Common Stock until the Company effects a 245.27 for 1 reverse stock split of its
Common Stock (the "Reverse Split"), as described in Item 3.03 of this Current
Report. The Reverse Split was approved on December 5, 2005 along with a change
in the Company's name to "Fushi International, Inc." The Reverse Split and name
change will occur within 25 days of the Company mailing a definitive Information
Statement on Schedule 14C to its shareholders, and a preliminary Information
Statement is being filed with the Securities and Exchange Commission (the "SEC")
on or about the date of this Current Report.

      As a result of the above transactions, the Company ceased being a shell
company as such term is defined in Rule 12b-2 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). See Item 5.06 of this Current Report.

      Throughout this Current Report, and unless the context otherwise requires,
"we," "our" and "us" refers collectively to the Company and its subsidiaries,
DPI and Dalian DPI.

Item 1.01. Entry into a Material Definitive Agreement.

      The following agreements were entered into in connection with the
acquisition of the business of Dalian Fushi.

The Share Exchange Agreement and the Issuance of Series A Stock

      On December 13, 2005, the Company entered into and consummated the Share
Exchange Agreement with the 14 holders of all of the outstanding capital stock
of DPI, which are Dalian Fushi Enterprise Group Co. Ltd., Yue Mathus Yang,
Xishan Yang, Chunyan Xu, Kuhns Brothers, John Kuhns, Mary Fellows, John Starr,
Jay Gutterman, Kelly Chow, Redwood Capital, Inc., Chris Bickel, Sam Shoen and
Paul Kuhns (collectively, the "DPI Stockholders").

                                       4
Of the DPI Stockholders, Dalian Fushi Enterprise Group Co., Ltd. (the
"Fushi Group"), Yue Mathus Yang, Xishan Yang and Chunyan Xu (collectively
referred to in this Current Report as the "Dalian Fushi Shareholders") also are
shareholders of Dalian Fushi, and owned approximately 95.12% of the outstanding
capital stock of DPI. Kuhns Brothers received its shares of DPI common stock for
services rendered in connection with the reorganization of Dalian Fushi's
business described below under "Restructuring Agreements".

      Under the Share Exchange Agreement, we issued an aggregate of 784,575.16
shares of our Series A Stock in exchange for the 15,560 shares of common stock
of DPI held by the DPI Stockholders. Each share of Series A Stock will convert
automatically into 4,838.86 shares of Common Stock before giving effect to the
Reverse Split, as more fully described in Item 3.03. As a result of the Reverse
Split, the Series A Stock will convert into an aggregate of 15,475,594.51 shares
of Common Stock, which will represent 78.45% of our total outstanding Common
Stock.

      As a result of the consummation of the Share Exchange Agreement, DPI is
now a wholly-owned subsidiary of the Company.

Acquisition of Dalian Fushi's Business

      In connection with the closing of the Share Exchange Agreement, on
December 13, 2005, Dalian DPI entered into the Restructuring Agreements, with
Dalian Fushi and the Dalian Fushi Shareholders. Under the Restructuring
Agreements, Dalian DPI purchased and leased substantially all of the assets of
Dalian Fushi. As a result, Dalian Fushi's business will be conducted by Dalian
DPI. To the extent that any aspect of Dalian Fushi's business needs to be
conducted through Dalian Fushi in the future, the Restructuring Agreements
provide Dalian DPI with the ability to control Dalian Fushi and any of its
remaining assets and operations. We anticipate that Dalian Fushi will continue
to be the contracting party under its customer contracts, bank loans and certain
other assets until such time as those may be transferred to Dalian DPI.

      As discussed in the Explanatory Note in the beginning of the Current
Report, while the Restructuring Agreements were entered into and closed on
December 13, 2005, not all of the transactions contemplated by the Restructuring
Agreements have been consummated and the Company is currently conducting its
acquired business out of Dalian Fushi, and upon the completion of transactions
in the Restructuring Agreements, through Dalian DPI. To complete these
transactions, Dalian DPI must complete additional filings and registrations,
including (i) completing a PRC registered capital verification process, (ii)
after such capital verification process, transmitting to Dalian Fushi the full
purchase price for the assets to be purchased by it under the Restructuring
Agreements, (iii) obtaining an environmental report for the assets purchased
from Dalian Fushi, and (iv) obtaining a new business license from the PRC State
Administration for Industry and Commerce in Dalian, PRC to reflect Dalian DPI's
status as an operating company. We anticipate these steps will be completed
within 15 days after the date of this Current Report, at which time Dalian DPI
will commence operations.

                                       5
The following is a summary of the material terms of each of the
Restructuring Agreements, the English translation of each of which is annexed as
an exhibit to this Current Report. All references to the Restructuring
Agreements and other agreements in this Current Report are qualified, in their
entirety, by the text of those agreements.

      Purchase Agreement. Under the purchase agreement between Dalian DPI and
Dalian Fushi (the "Purchase Agreement"), Dalian DPI will purchase from Dalian
Fushi (i) substantially all of Dalian Fushi's production equipment for RMB 24
million, (ii) all of Dalian Fushi's patents for RMB 100,000, (iii) Dalian
Fushi's inventory based on its book value as of the purchase date, and (iv)
Dalian Fushi's accounts receivable based on its book value as of the purchase
date. Additionally, Dalian Fushi leased to DPI substantially all of Dalian
Fushi's land (except for certain real property and assets that are currently
being leased to a third party) at an annual fee of RMB 100,000 and the remaining
manufacturing equipment at an annual fee of RMB 50,000. It also will grant a
secondary lien on the leased assets to Dalian DPI.

      Dalian Fushi also agreed to transfer any new patents issued under one PRC
and one international pending patent applications to Dalian DPI for a nominal
fee upon their issuance. Dalian Fushi further agreed to cause Mr. Li Fu, the PRC
registered holder of the "FUSHI" trademark and the holder of a patent, to
authorize the free use of the trademark by Dalian DPI and to transfer his patent
to Dalian DPI for a nominal fee. See "Trademark Authorization" below.

      In connection with these purchases and leases, Dalian Fushi agreed to
transfer its employees to Dalian DPI and provide its supplies, sales channels
and customer contracts to Dalian DPI, to the extent the customer's purchase
orders are assignable. In the event that Dalian Fushi's customers do not agree
to assign their purchase orders and agree to do business directly with Dalian
DPI, Dalian DPI will provide all necessary resources to Dalian Fushi so that it
may continue operations maintaining its existing relationships with these
customers.

      The source of funds for Dalian DPI to make payment under the Restructuring
Agreements were the proceeds of the private placement offering described in
"Series B Stock Financing" below and Item 3.02.

      First Patent Transfer Contract. Under this agreement between Dalian Fushi
and Dalian DPI, Dalian Fushi agreed to transfer to Dalian DPI the four patents
of which it is the registered owner for RMB 100,000.

      Dalian Fushi is in the process of commencing the patent transfer
procedure, which procedure is estimated to take three to five months to
complete. Prior to the effectiveness of the patent transfers, Dalian DPI
(subject to Dalian Fushi's right to use these patents) has the exclusive legal
right, royalty free, to use these patents. Dalian Fushi will execute any license
agreements required by the Company or Dalian DPI that they deem necessary or
advisable.

                                       6
Second Patent Transfer Contract. Under this agreement between Mr. Li Fu
and Dalian DPI, Mr. Fu agreed to transfer to Dalian DPI a patent (which is no
longer used in Dalian Fushi's business) of which he is the registered owner, for
RMB 10,000.

      Trademark Authorization. In this authorization statement (the "Trademark
Authorization"), Mr. Li Fu, the PRC registered owner of the "FUSHI" trademark,
authorized Dalian DPI to use this trademark for a perpetual period without any
fee.

      Entrusted Management Agreement. Pursuant to this entrusted management
agreement among Dalian DPI, Dalian Fushi, and the Dalian Fushi Shareholders (the
"Entrusted Management Agreement"), Dalian Fushi and its shareholders agreed to
entrust the business operations of Dalian Fushi and its management to Dalian DPI
until Dalian DPI acquires all of the assets or equity of Dalian Fushi (as more
fully described in the Exclusive Option Agreement below). Prior to the
occurrence of such event, Dalian Fushi will only own those certain assets that
are not sold to Dalian DPI. We anticipate that Dalian Fushi will continue to be
the contracting party under its customer contracts, banks loans and certain
other assets until such time as those may be transferred to Dalian DPI. Under
the Entrusted Management Agreement, Dalian DPI will manage Dalian Fushi's
operations and assets, and control all of Dalian Fushi's cash flow through an
entrusted bank account. In turn, it will be entitled to any of Dalian Fushi's
net profits as a management fee, and will be obligated to pay all Dalian Fushi
payables and loan payments. The Entrusted Management Agreement will remain in
effect until the acquisition of all assets or equity of Dalian Fushi by Dalian
DPI is completed.

      Shareholders' Voting Proxy Agreement. Under the shareholders' voting proxy
agreement among Dalian DPI and the Dalian Fushi Shareholders, the Dalian Fushi
Shareholders irrevocably and exclusively appointed the members of the board of
directors of Dalian DPI as their proxy to vote on all matters that require
Dalian Fushi shareholder approval. The members of the board of directors of
Dalian DPI are identical to those of the Company.

      Exclusive Option Agreement. Under the exclusive option agreement among
Dalian DPI and the Dalian Fushi Shareholders, the Dalian Fushi Shareholders
granted Dalian DPI an irrevocable and exclusive purchase option to acquire
Dalian Fushi's equity and/or remaining assets, but only to the extent that such
purchase does not violate limitations imposed by PRC law. As discussed in the
Explanatory Note in the beginning of this Current Report, current PRC law does
not specifically provides for a non-PRC entity's equity to be used as
consideration for the purchase of a PRC entity's assets or equity. The option is
exercisable when PRC law specifically allows foreign equity to be used as
consideration to acquire a PRC entity's equity interests and/or assets, or when
the Company has sufficient funds to purchase Dalian Fushi's equity or remaining
assets. The consideration for the exercise of the option is the shares of Common
Stock received by the Dalian Fushi Shareholders under the Share Exchange
Agreement.

      Share Pledge Agreement. Under this share pledge agreement among Dalian DPI
and the Dalian Fushi Shareholders (the "Share Pledge Agreement"), the Dalian
Fushi Shareholders pledged all of their equity interests in Dalian Fushi,
including the proceeds thereof, to guarantee all of Dalian DPI's rights and
benefits under the Restructuring Agreements. Prior to termination of this Share
Pledge Agreement, the pledged equity interests cannot be transferred without
Dalian DPI's prior consent.

                                       7
Series B Stock Financing

      On December 13, 2005, we entered into and consummated a stock purchase
agreement, and amendment thereto (the "Series B Stock Purchase Agreement"), for
the sale of 201,511.98 shares of our Series B Stock, along with warrants and
rights to receive additional shares of Common Stock under certain conditions,
for $11,225,000, as more fully described in Item 3.02. Upon the occurrence of,
and after giving effect to, the Reverse Split discussed in Item 3.03, the
201,511.98 shares of Series B Stock will convert automatically into an aggregate
of approximately 3,975,521 shares of Common Stock (the "Series B Conversion
Shares"), which will then represent approximately 20.15% of our total
outstanding Common Stock. The warrants are exercisable for one-half of the
number of Series B Conversion Shares, approximately an additional 1,987,760
shares of Common Stock at an exercise price of $3.67 per share. The warrants
have a five year term. The Company may force the exercise of the warrants if the
Company signs a binding agreement to make a certain acquisition (provided
certain conditions are met), or if the price of its Common Stock exceeds $10 per
share for 10 consecutive trading days.

      As a condition of the Series B Stock Purchase Agreement, Dalian Fushi has
deposited its 20,000,000 shares of Common Stock acquired from Glenn Little and
our management team, which includes Li Fu, Yue Mathus Yang, Xishan Yang and
Chunyan Xu, has deposited in escrow 746,254 shares of Series A Stock that will
collectively convert into 14,800,000 shares of Common Stock, representing
approximately 75.04% of the then outstanding Common Stock, following the Reverse
Split to secure their indemnity obligations under the Series B Stock Purchase
Agreement and the obligation of the Company to meet the net profit targets for
the fiscal year ending December 31, 2005 as set forth in the Series B Stock
Purchase Agreement.

      The Series B Stock Purchase Agreement requires the Company to take certain
actions after closing, including:

            (a) The American Stock Exchange. Prepare and submit a listing
      application to the American Stock Exchange. We cannot assure you that we
      will qualify for such listing or when or if the American Stock Exchange
      will approve our application.

            (b) Board of Directors. Within 90 days following closing, after
      consultation with the holders of the Series B Stock, nominate a seven
      person Board of Directors of the Company and take all actions and obtain
      all consents, authorizations and approvals which are required to be
      obtained in order to effect the election of such nominees. See "Directors
      and Executive Officers, Promoters and Control Persons - Our Directors and
      Executive Officers" in Item 2.01.

                                       8
(c) Board of Advisors. Promptly following the closing, the Company
      will establish a five-member board of advisors consisting of the
      individuals approved in advance by Chinamerica, which approval will not be
      unreasonably withheld. See "Directors and Executive Officers, Promoters
      and Control Persons - Our Directors and Executive Officers" in Item 2.01.

            (d) Chief Financial Officer. Promptly following closing, the Company
      will retain a chief financial officer acceptable to, and after
      consultation with, Chinamerica, which may be Wenbing Chris Wang.

            (e) Name Change; Reverse Stock Split. Promptly following the
      closing, the Company will take all actions and obtain all consents,
      authorizations and approvals which are required to be obtained in order to
      (i) change the name of the Company to Fushi International, Inc., and (ii)
      effect the Reverse Split. Prior to the closing, the Board of Directors
      approved an amendment to the Company's Articles of Incorporation that
      would change the name of the Company to Fushi International, Inc. and
      effect the Reverse Split, and obtained the written consent of the holder
      of a majority of the outstanding shares of voting stock approving the name
      change and the Reverse Split. The Company will file on Schedule 14C a
      Preliminary Information Statement with the SEC in connection with the name
      change and the Reverse Split contemporaneously with this Current Report.
      The Company will file the certificate of amendment to its Articles of
      Incorporation with the Office of the Secretary of State of Nevada not less
      than 20, nor more than 25, days after it mails the Information Statement
      to its shareholders. Under applicable SEC regulations, the Company may not
      file the certificate of amendment until 20 days after the Information
      Statement is distributed to shareholders.

                                       9
(f) Employee Stock Ownership Plan. The Company will reserve for
      issuance 20,000,000 shares of Common Stock under an approved and qualified
      employee stock ownership plan, the terms of which will be determined by
      the compensation committee of the Board of Directors of the Company.

            (g) Executive Search. Promptly following the closing, the Company
      will retain one or more independent professional executive search firms,
      each acceptable to Chinamerica and selected from a list of proposed firms
      provided by Chinamerica, to assist in the recruitment for the members to
      be added to the Board of Directors of the Company.

            (h) Employment Agreements. The Company willl use its best efforts to
      promptly enter into employment agreements with Wenbing Chris Wang and the
      other members of management as designated and by, with such terms as are
      acceptable to, Chinamerica.

            (i) Transfer of Dalian Fushi Employees. The Company, Dalian DPI and
      Dalian Fushi willl use their best efforts to promptly transfer the
      employment of all employees of Dalian Fushi to Dalian DFI in accordance
      with applicable laws. Dalian DPI will enter into an employment agreement
      with each such transferred employee and pay all social security,
      insurance, housing and other applicable fees and costs required under
      applicable law.

            (j) Compliance with Law. The shareholder(s) of Dalian DPI will
      comply with Bulletin No. 75 issued by the PRC State Administration of
      Foreign Exchange, including but not limited to, the obligation to file
      disclosure forms with respect to their ownership status in the Company on
      or before March 31, 2006, and the obligation to transfer any dividends or
      profits they received offshore to the PRC within 180 days upon the receipt
      of such dividends or profits.

            (k) Completion of Restructuring. Commencing at the closing, the
      Company, Dalian DPI and Dalian Fushi will use their best efforts to
      complete in all respects the restructuring and related transactions
      contemplated by the Restructuring Agreements, as more fully described in
      Step 4 of the Explanatory Note.

            (l) Filing of Registration Statement. Within five days of the
      closing, the Company will file a registration statement with the SEC under
      the Securities Act for the registration of the Common Stock issuable upon
      conversion of the Series B Stock.

            (m) Company Bylaws. The Company will use its best efforts to obtain
      shareholder approval for, and take all steps necessary to adopt, amended
      and restated bylaws reasonably acceptable to Chinamerica within 60 days
      after the closing, and prepare and file a preliminary Information
      Statement on Schedule 14C relating to the adoption and amendment of the
      Company bylaws within 15 days from the date of the closing.

                                       10
Item 2.01 Completion of Acquisition or Disposition of Assets.

      As a result of the Company's acquisition of all of the outstanding capital
stock of DPI and the business of Dalian Fushi through Dalian DPI, as discussed
in Item 1.01, the Company ceased being a shell company as such term is defined
in Rule 12b-2 under the Exchange Act. See Item 5.06.

Our Corporate Structure

      As set forth in the following diagram, following the Company's acquisition
of DPI and the business of Dalian Fushi pursuant to the Restructuring
Agreements, DPI is now the Company's direct, wholly-owned subsidiary and Dalian
DPI is a wholly-owned subsidiary of DPI. Dalian DPI has control over Dalian
Fushi's remaining operations and financial affairs through the Restructuring
Agreements. In connection with the above transactions, the Company will file an
Information Statement on Schedule 14C regarding the change in the Company's
corporate name to "Fushi International, Inc." and to effectuate the Reverse
Split. Prior to the closing of the Share Exchange Agreement, holders of the
majority of the Common Stock, at that time the Company's only class of voting
stock, signed a written consent to effect the Reverse Split and change our
corporate name.

--------------------------------------------------------------------------------
---------------------------
 Parallel Technologies, Inc.
      (to be changed to
 Fushi International, Inc.)  |
 ---------------------------  |
              |                |
              |      ------     |
              |       100%       |
              |      ------       |
              |                    |
 ---------------------------        |
    Diversified Product              |
  Inspections, Inc. (DPI)             |
 ---------------------------           |
              |                         |
              |      ------              |
              |       100%                |
              |      ------                |
              |                             |
 ---------------------------                 |
     Dalian Diversified                       |
    Product Inspections                        |
 Bimetallic Cable Co., Ltd.                     |
        (Dalian DPI)                             |
 ---------------------------                      |
              |                                 ---------------------------
              |                                  Dalian Fushi Bimetallic
              ---------------------------------  Manufacturing Co., Ltd.
                ---------------                       (Dalian Fushi)
                 Restructuring                  ---------------------------
                   Agreements
                ---------------
--------------------------------------------------------------------------------

                                       11
BUSINESS

Our History

      The Company was incorporated as a Nevada company on October 6, 1982 under
the name M, Inc. We changed our corporate name to Parallel Technologies, Inc. in
June 1991. We were formed as a "blank check" entity for the purpose of seeking a
merger, acquisition or other business combination transaction with a
privately-owned entity seeking to become a publicly-owned entity. Since the
fiscal year ended December 31, 1995, we had no business operations, assets or
liabilities until December 13, 2005, when we acquired DPI and Dalian DPI, and
the business of Dalian Fushi through a series of transactions contemplated in
the Restructuring Agreements.

Organizational History of DPI and Dalian DPI

      DPI was formed on Septembe 23, 2005 as a Delaware corporation by Dalian
Fushi's shareholders and Kuhns Brothers, Inc.. Upon consummation of the Share
Exchange Agreement, the Company owns 100% of DPI. Until the acquisition of the
business of Dalian Fushi, DPI has had no business operations, assets or
liabilities, apart from organizational expenses and fees.

      Dalian DPI was formed on September 22, 2005 under the laws of the PRC by
Diversified Product Inspections, Inc., a Florida company, which subsequently
transferred its ownership in Dalian Fushi to the Delaware DPI in November 2005.
Dalian DPI is a "wholly foreign owned entity" under PRC law by virtue of its
status as a wholly-owned subsidiary of DPI, as a non-PRC company. Until the
acquisition of the business of Dalian Fushi, Dalian DPI has had no business
operations, assets or liabilities, apart from organizational expenses and fees.

Dalian Fushi Organizational History

      Dalian Fushi was formed as "Dalian Fushi Bimetallic Conductor Wire
Factory" on June 12, 2001. Its initial registered capital was RMB 8 million and
it was owned by Li Fu (62.5%), Yongfa Zhou (25%), and Chunyan Xu (12.5%).

      In July 2001, Dalian Fushi acquired certain aluminum copper clad
manufacturing assets, as well as the related technology and manufacturing
facilities with approximately 2,000 square meters construction area from Dongyi
Company Ltd. ("Dongyi"), a bimetallic wire manufacturer in the PRC, for a total
purchase price of RMB 12 million, in a settlement of a loan dispute.

      On January 16, 2002, Dalian Fushi Bimetallic Conductor Wire Factory
changed its name to "Dalian Fushi Bimetallic Manufacturing Co., Ltd." and
changed its entity form to a limited liability company under PRC law. It
subsequently increased its registered capital to RMB 40 million. Dalian Fushi
was then owned by Dalian Jingzhou Jingdun Trading Co. (the predecessor of Dalian
Fushi Enterprise Group Co., Ltd., 52.5%), Renyou Fu (40%), Chunyan Xu (2.5%),
and Yongfa Zhou (5%).

      Dalian Fushi Enterprise Group Co., Ltd. (the "Fushi Group") is a PRC
holding company controlled by Li Fu (85.71%). The Fushi Group also owns Dalian
Litai Auto Repair Co., Ltd. (of which Fushi Group owns 40%), Dalian Fushi
Yangguang Zhangyie Co., Ltd. (of which the Fushi Group owns 90%), Dalian Fushi
Commerce and Trade Co., Ltd. (of which the Fushi Group owns 75%), and other
non-wholly-owned subsidiaries in the mineral water production and hotel
industries.

                                       12
On July 16, 2003, the registered capital of Dalian Fushi was increased to
RMB 160 million. As of March 2, 2005, the shareholders of Dalian Fushi were:
Dalian Fushi Enterprise Group Co., Ltd. (87.73%), Yue Yang (10%), Chunyan Xu
(0.63%) and Xishan Yang (1.64%). The registered capital has been paid in full.

      In 2003, Dalian Fushi commenced construction of a new manufacturing
facility in the industrial development area of Dalian. In June 2005, we
relocated our manufacturing activities to this new facility, occupying 103,605
square meters.

Overview of Our Business

      This section discusses the former business of Dalian Fushi which will be
acquired by the Company. The Company currently operates the business out of
Dalian Fushi until the completion of the transactions contemplated by the
Restructuring Agreements. While the Restructuring Agreements were entered into
and closed on December 13, 2005, not all of the transactions contemplated by the
Restructuring Agreements have been consummated and Dalian DPI has not yet
commenced operation of the business. This section discusses the business as if
it is conducted through Dalian DPI, assuming we will obtain the approvals,
filings and registrations necessary to commence operation of the business
through Dalian DPI. We expect these steps will be completed within 15 days after
the date of this Current Report, at which time Dalian DPI will commence
operations. However, see "Risk Factors - Risks Related to the Restructuring
Agreements - We may not obtain all approvals required to operate the business
acquired pursuant to the Restructuring Agreements."

      We are engaged, through our indirectly wholly-owned operating subsidiary
Dalian DPI in the manufacture and sale of bimetallic composite wire products,
principally copper clad aluminum wires ("CCA") and copper clad steel wires
("CCS"). CCA combines the conductivity and corrosion resistance of copper with
the light weight and relatively low cost of aluminum. It is a cost effective
substitute for single copper wire in a wide variety of applications such as
coaxial cable for cable television (CATV), signal transmission lines for
telecommunication networks, distribution lines for electricity, wire components
for electronic instruments and devices. Similarly, CCS combines the properties
of copper with the strengths of steel and is used where strengths higher than
copper are required, such as power system grounding lines, electricity
distribution lines, conductor lines of electrified railroad tracks, and patch
cords in electronic components.

      Our bimetallic composite wire products are produced using our patented and
proprietary "rolling bond welding" manufacturing technology, which was included
as a research project under the National Torch Program of PRC. Our proprietary
technology allows us to produce high quality products that deliver stable
conductivity performance. We maintain an internal Research and Development
Department to improve our current product features and develop new devices and
technologies to produce new products that will optimize the performance and
structure of bimetallic composite materials. Because of our its research and
development ("R&D") initiatives, we are recognized by the Dalian Municipal
Government as a "new- and high-technology" enterprise and have been receiving
governmental funding or subsidies for our operations and R&D activities.

                                       13
We use "FUSHI" as the tradename for all of our composite wire products.
Due to our emphasis on quality control and the high quality of our products, our
CCA products were awarded a "famous products" award in Liaoning Province and our
mark "FUSHI" was awarded a "famous mark" award in Liaoning Province. See "Risk
Factors - Risks Related to Our Business - Our profitability depends on our
success on brand recognition and we could lose our competitive advantage if we
are not able to protect our trademark against infringement, and any related
litigation could be time-consuming and costly."

      We achieved profitability in 2002, shortly after our inception in 2001.
Since 2002, Dalian Fushi has experienced consistent growth. Net sales increased
from $11.96 million in 2003 to $15.66 million in 2004. For the nine months ended
September 30, 2005, net sales were approximately $18.0 million, compared to
approximately $12.46 million for the same period in 2004. The majority of our
sales are made to finished cable manufacturers, which is a fast growing market
for our products.

      We believe we are currently the largest domestic manufacturer and supplier
of bimetallic composite products in the PRC. Our largest customers include the
PRC operations of Andrew Corporation of the U.S., one of the largest
communication cable manufacturers in the world.

The Bimetallic Composite Industry

      We manufacture and sell copper-clad aluminum wire ("CCA") and copper-clad
steel wire ("CCS"), both of which are widely utilized and long established
bimetallic composite products in industry.

      Copper-Clad Aluminum Wire.

      CCA is a bimetallic wire consisting of an aluminum core covered by a
concentric copper cladding. CCA combines the light weight, high flexibility and
low cost of aluminum with the conductivity and corrosion resistance of copper.
It is widely used in applications requiring the conductivity of copper while
retaining the light weight advantages of aluminum. For example, because
television and networks have high frequency transmission signals and the high
frequency signals are transmitted on the surface layer, CCA is an ideal inner
conductor for cable television signal transmission cables and, thus, is used
extensively in overhead coaxial cable for high frequency television signals.

      CCA wire is also widely used in telephone and electrical power
applications, large capacity communication networks, telephone conductor antenna
cables, control signal cables, and other applications. Because of its high
performance, lower production cost, and lighter weight, CCA wire is also
replacing solid copper or aluminum in other applications. For instance, it is
used to replace copper as a grounding conductor on structures and underground
powers lines to combat corrosion and theft problems. It also replaces aluminum
in overhead power lines in corrosive environments.

      According to our internal market surveys based on information provided by
our customers and information collected from our competitors, we believe the
estimated consumption of CCA in the U.S. has averaged approximately 30,000 tons
per year in recent years. According to China Wire & Cable Network, the largest
PRC application markets for CCA products are wireless telecommunication and base
station subsystems, which together have an estimated annual consumption of
20,000 tons per year. According to China Wire & Cable Network, the PRC market is
anticipated to experience a 25% growth rate, primarily due to continuously
rising copper prices and the nature of CCA as a viable and low-cost alternative
to single copper wire.

                                       14
Copper-Clad Steel Wire.

      CCS is a composite in which concentric copper cladding metallurgically
bonded to a steel core. CCS combines the strengths of steel with the
conductivity and corrosion resistance of copper. CCS wire is used where
strengths greater than that possessed by copper are required, and some reduction
in conductivity is acceptable. For example, it is widely used in the
telecommunications industry for telephone and coaxial television drop wire, in
the railroad industry for conductor lines, and in the electric utility industry
for grounding conductors.

Our Products

      We currently have large-scale production of both CCA and CCS. Because CCA
has wider applications and has relatively standard specifications, and thus, it
is easier to achieve large-scale production for each specification, CCA is our
principal product, comprising the vast majority of our sales. We commenced
large-scale production of CCS products in 2003, the sales of which represent
only a small portion of our annual total sales. We project that the percentage
of annual sales for our CCA and CCS products will remain constant in the
foreseeable future. The following table sets forth the sales of each of these
two products in the past three full fiscal years:

-----------------------------------------------------------
Year       Product       Sales (US$)         Percentage of
                                             Annual Sales
-----------------------------------------------------------
2002         CCA         4,911,305        100%
             CCS         0                0%
-----------------------------------------------------------
2003         CCA         11,943,102       99.9%
             CCS         12,449           0.1%
-----------------------------------------------------------
2004         CCA         15,657,189       99.97%
             CCS         5,304            0.03%
-----------------------------------------------------------

      Copper Clad Aluminum Wires. Our CCA wire is fabricated by fusing a core of
aluminum wire with an external copper cladding using our proprietary and
patented metallurgical "rolling bond welding" techniques. Measured by the copper
layer thickness, CCA can be divided into two types, 10% and 15%, each of which
has DC resistance of less than 0.02743 mm(2)/m ohms and 0.02676 mm(2)/m ohms,
respectively. The 10% type is primarily used in high frequency signal
transmission, while the 15% type is used in generators and other non-signal
transmission applications.

      Both the 10% and 15% CCA can be made in various diameters. The normal
diameters of our CCA products range from 7.5 mm to 1.66 mm, which are the normal
specifications required by our customers; but we can draw the product to as
small as 0.09 mm, if so requested by our customers. We have 18 manufacturing
lines devoted to the production of CCA wires and our current CCA production
capacity is approximately 10,000 tons per year.

      Measured by the production stage of the manufacturing process, CCA can be
classified into hard-drawn and annealed types of CCA and we manufacture both.
Hard-drawn CCA is used where strength is required, such as electronic
instruments and devices. Some customers buy our CCA at the hard-drawn stage
without final annealing, or at the intermediate annealing stage, for further
processing, such as to draw to a smaller size as they desire. Please see
"Business-Manufacturing Process" for further information on the manufacture of
these two types of CCA.

                                       15
Copper Clad Steel Wires. We use the same proprietary and patented
metallurgical "rolling bond welding" techniques to bond the copper cladding to
the steel core. Because of our technology, our CCS products have not experienced
any separation, cracks or peeling even in the stringent destructive testing.

      CCS is commonly produced to specifications of 21 percent, 30 percent, and
40 percent International Annealed Copper Standard (IACS) composite conductivity,
each with copper thickness amounts of 6 percent, 14 percent, and 20 percent, of
the wire radius, respectively, the thicker the copper cladding, the better the
DC conductivity. We produce all three specifications of CCS wires. The steel
core can be adopted in different strengths according to the requirement of
customers and applications. The most common sizes of CCS are 2.5 mm and 0.81 mm.
Similar to CCA, we can draw the CCS to as small as 0.09 mm.

      The profit margin for CCS is close to CCA because our unit price is based
on weight. Although the cost of steel per ton is about one third of the cost of
aluminum per ton, steel is much heavier than aluminum. This allows us to achieve
a profit margin for CCS similar to that of CCA. However, because CCS has more
specifications than CCA and it is more difficult to achieve large scale
production for each specification, we only commenced large volume production of
CCS in 2003.

      Our annual production capacity of CCS is approximately 1,200 tons.
Normally we allocate 2 production lines for CCS manufacturing, and these 2
production lines can also be utilized for CCA production when needed, because we
use the same "rolling bond welding" technique for both products.

      New Product Pipeline. We have developed the following new products:

      o     Copper Clad Aluminum and Magnesium Alloy, Diameter 0.08mm -0.18mm
            (Fine Wires). This product is primarily used in electric shielding
            nets and transformer windings applications. This product has been
            introduced to the market and we have received positive customer
            feedback, indicating potentially strong market demand for this
            product. Because it offers a substantially higher profit margin than
            most of our other products, we are seeking to increase production of
            this product to 10 manufacturing lines and a monthly output of
            approximately 300 tons.

      o     CCA Fine Wires of 0.20 mm and 0.51 mm Diameter. These fine wires can
            be used as enamel-insulated wire to replace electromagnetic wire in
            aviation devices and instruments applications. We anticipate monthly
            output for this new product to be 150 tons, or 1,800 tons annually.
            Like Copper Clad Aluminum and Magnesium Alloy, introduction of CCA
            fine wire is also driven by higher profit margin.

      o     CCS Plated by Tin and CCS Plated by Silver. These products can
            resist high temperature and is largely used in corrosive, hot or
            inclement environments, such as for military use. We are seeking to
            increase the annual output of these products to approximately 100
            tons.

      We have completed the technology development stage for a press cladding
device for CCA and were issued a patent on the technology. This new technology
is to be used for the production of large size CCA and CCS, the diameters of
which exceed 7mm. The manufacturing equipment for large scale production is
still in the development stage.

      We have also submitted an international patent application for the
manufacture of cuponal busbar. We are currently in the stage of developing
production devices for this new product. Cuponal busbar offers economic and
weight saving advantages over solid copper, while retaining the surface
properties of a copper busbar. It is often possible to substitute a copper bar
with a cuponal bar of equal dimensions. Cuponal has wider applications than CCA
and is extensively used in electronic items and household appliances. We project
that we can commence production of cuponal busbar in the second half of 2006.

                                       16
The PRC Bimetallic Composite Products Market

      Because of the massive infrastructure development and construction in the
PRC, much of which requires wire and cable, the PRC is one of the fastest
growing markets for bimetallic composite products in the world. According to
statistics released by the PRC Ministry of Information Industry and the National
Cable and Wire Industry Association in the PRC, the PRC represented
approximately 7% of the worldwide market for bimetallic composite wires in 2004,
with domestic sales of approximately $104 million, or approximately 25,000 tons.
The PRC domestic market is currently dominated by the Dofasco Tubular Products
division of Dofasco Inc., formerly known as Copperweld. Copperweld maintains an
approximate 70% market share in the PRC, approximately the same proportion as
its share of the worldwide market.

Market Components of CCA Wires.

      Components of domestic demand for CCA conductors are as follows:

      1.    Coaxial Cable for Cable Television and Broadcasting-Domestic
            Consumption. The increase in the demand for cable television has led
            to a significant increase in demand for CCA wire. According to
            statistics issued by the PRC's Wire and Cable Industry Association,
            there are currently over 400 million TV sets and over 100 million
            cable television subscribers in the PRC. In addition, the PRC
            government will further develop the nation's broadcasting networks.
            During the PRC government's Tenth Five-Year Plan period, which is
            from 2001 to 2005, the domestic demand for CATV was estimated to
            generate approximately 700-800 thousand kilometers of cable wire
            every year. According to the PRC Electronic Components Association,
            the use of CCA conductors is expected to increase at an annual rate
            of 8%.

      2.    Coaxial Cable for Cable Television and Broadcasting-Export Sales.
            The PRC domestic wire manufacturers also export their cable
            television wires to foreign markets. According to the PRC Electronic
            Components Association, wires manufactured for export by PRC
            domestic wire manufacturers are almost equivalent to domestic
            demand, resulting in a total of approximately 1,300 to 1,500
            thousand kilometers of cable television wire production per year in
            PRC.

      3.    Mobile Communication (RF Cable). The technologies used in mobile
            communication base stations that comply with international standards
            and all inner conductors of radio frequency cables use CCA
            conductors. We believe that the popularity of the digital wide
            frequency band will mean an increasing demand for CCA bimetallic
            composite conductor. Because of the increased density of mobile
            communication base stations, the radius between base stations has
            been reduced from 9 kilometers to 3 kilometers, which translates
            into a 3 to 4 fold increase in the demand for CCA composite
            conductor (radio frequency cables that use bimetallic composite
            conductors will be used as connecting cables between antennas of
            base stations, transmitters, and receivers). We believe that this
            change in radius between base stations will change the demand for
            CCA composite conductors from the original annual demand of 4,000
            tons to 14,000 tons per year.

      4.    Comprehensive Wiring. The use of CCA wires in comprehensive wiring
            (including connecting wires for automobiles, indoor wideband
            connecting wires, indoor electrical wires, and connecting wires for
            instruments, apparatus, electronic devices and high-frequency
            connecting wire) saves copper in addition to solving the problems of
            greater contact resistance. More wiring companies in PRC now replace
            pure copper conductors with CCA conductors in their wiring projects,
            which we believe has created a large potential market for our
            products. According to the China Electronic Components Association,
            each year the wiring companies consume over 3,000 tons of CCA
            conductor wire.

                                       17
Market Components for CCS Wires.

      CCS conductor wire is used mainly as an inner conductor for radio
frequency cable in the electronics industry, in the electric light source
industry, television cables, overhead communications, power transmission,
electrified railroads, and patch cords in electronic components.

      The market components for CCS conductors in the PRC can be further
described as follows:

      1.    Electrified Railroads. The Ministry of Railroads of PRC recently
            announced that the Sixth General Speed-up Project is about to be
            launched, in which some of the legacy railroads will be renovated
            and expanded, new roads will be built, and a large number of special
            passenger railroads, intercity railroads and advanced railroad
            networks will be constructed. According to statistics released by
            relevant departments, the total mileage of electrified railroads in
            the PRC will be 20,000 kilometers by 2005 and 26,000 kilometers by
            2010. By that time, the four artery railroads Beijing-Shanghai,
            Beijing-Harbin, Beijing-Guangzhou and Longhai will be completely
            electrified and interconnected, and the first high-speed rail--the
            Beijing-Shanghai line--will be fully launched into construction.
            During the Tenth Five-Year Plan period, it is estimated that more
            than 5,000 kilometers of electric railroad track are planned to be
            laid. The new edition of the `Technological Policies for Railroads'
            requires the maximum speed per hour of passenger trains to be 350
            kilometers. According to the technical requirements, when the speed
            per hour of a passenger train reaches 300 kilometers, the contact
            conductor must be CCS conductor, which translates into an additional
            large potential market for our products. Assuming a conservative
            estimate of the annual construction of electrified railroad mileage
            of 10,000 kilometers/year, the amount of contact conductor wire
            required will be approximately 26,000 tons; therefore, the estimate
            of the total annual demand for CCS bimetallic composite conductor
            wire is above 32,000 tons/year.

      2.    Power Cables. Presently, CCS conductor has replaced pure copper or
            pure aluminum conductors as the inner conductor in the field of
            power cables in most developed countries. This is not yet the case
            in PRC, and therefore, we believe this can be a large potential
            future market.

      3.    Radio Frequency Cables. According to market surveys for the domestic
            wire and cable industry conducted by our marketing and sales
            department, the total demand for CCS conductor in radio frequency
            cable of the electronic industry and the electric light source
            industry in the next five years will be over 6,000 tons per year.

                                       18
Manufacturing Process

      Overview of Manufacturing Method.

      While the manufacture of bimetallic wire is a well established process,
new techniques are developed continuously. Plating, cladding, drawing, rolling
and press-fitting are all methods for producing bimetallic cable. The first
generation production process for bimetallic wire generally involved plating,
which was the principal method used in the 1960's and 70's. Today, plating is
being replaced by second generation cladding and drawing processes, as well as
rolling and press-fitting processes.

      Cladding and drawing techniques are broadly used in Europe, as well as in
Asia, such as Japan. With cladding and drawing methods, the mechanical assembly
of the product is more difficult while the yield on finished products measured
by produced length is higher. Rolling and press-fitting are more common in the
United States. In rolling and press-fitting, special equipment is utilized as
the copper needs to be heated and the conditions for metallurgy are very strict.

      Manufacturing and utilization of bimetallic wire in the PRC began to take
place in the 1990s. Bimetallic products, especially those utilizing the
"cladding" and "drawing" processes, began replacing solid copper wire in many
applications during this period, and have resulted in widespread use in the PRC
of bimetallic composite products.

      Our Technologies.

      CCA and CCS are produced by cladding rod of aluminum or steel core
material with copper strip, and then drawing the clad rod to the desired wire
diameter. The core technology we currently use in our production is the "Rolling
Bond Welding Method." In this particular method, we insert copper strip and
aluminum or steel bar in a rolling tube, the size of which depends on the
specification of the end product required by the customer. Then we use a special
roller machine to weld and bond the copper strip around the aluminum or steel
rod. Finally, we use an argon arc welding machine to seal the small gap between
the two materials. According to our customers' feedback, our technique yields an
end product with more even copper cladding and better conductivity than other
techniques commonly used in the industry.

      We also hold a patent on the press-cladding method, which is our other
proprietary technology that is designed for production of large size CCA and
CCS. The manufacturing equipment for large scale production using this patent is
still on the development process.

      We have submitted an international patent application for our cuponal
busbar, a special CCA. The manufacturing technology for our cuponal busbar is a
new and special method that is different from our Rolling Bond Welding Method.
Under this method, we put aluminum bar into a copper pipe, then we apply heat
and pressure to clad the two metals together.

                                       19
Our Manufacturing Process.

      The manufacturing process of our CCA and CCS wires can be described as
follows:

      |X|   Cleaning: Before cladding or bonding, both the copper and core
            material receive special cleaning to help create a complete
            metallurgical bond.

      |X|   Proprietary Cladding or Bonding: After cleaning, a proprietary
            cladding or bonding process is applied to wrap the copper strip
            around the central core. We use our patented "Rolling Bond Welding"
            process to metallurgically bond copper with aluminum or steel.

      |X|   Breakdown: The bimetallic wire after cladding or bonding is drawn to
            an intermediate diameter, the size of which depends on the physical
            and mechanical properties required to support the customer's
            application. The ratio of copper thickness to core diameter remains
            constant throughout the drawing process so that the conductivities
            of the end products remain constant.

      |X|   Intermediate Annealing. Annealing is the process to release
            mechanical stress through heat and gradual cooling to render copper
            less brittle. This intermediate annealing process is normally
            applied to CCS to give the conductors the pliability and
            malleability required in certain applications, especially electrical
            grounding. Some CCS is sold at this stage, but the majority goes on
            to the finish drawing process.

      |X|   Finish Drawing. The CCA after initial breakdown, or the CCS after
            intermediate annealing, go through a series of draws to its final
            size. Our drawing equipment can take the wire down to sizes as small
            as 0.09 mm. After finish drawing, hard drawn CCA and CCS wires are
            taken up on reels and ready for shipping, while wires to be annealed
            moves on to the final anneal process. CCA and CCS finished at this
            point are call hard-drawn wires.

      |X|   Final Anneal. CCS or CCA that requires stress relief or full
            annealing will go through the furnaces of the final anneal process.
            The resulted CCA and CCS are generally referred to annealed wires.

      Manufacturing Equipment

      We currently have a total of 20 manufacturing lines for our production, of
which 18 were brought during 2004 and 2005, and 3 were acquired from Dongyi in
2002. Each manufacturing line cost approximately $660,000 and consists of a main
rolling, welding and cladding machine and more than 50 different pieces of
accessory machines and equipment, such as a connecting machine, furnace, vacuum
annealing oven, special container, boiler, copper strip slitter, aluminum stake
drawer, and finished goods drawer.

      We purchased our new manufacturing lines from a domestic manufacturer,
which imports the main machines from Japan, and manufactures and assembles the
remaining accessory components for us. We are provided a one-year warranty on
the manufacturing lines. After the warranty period, our Maintenance Department
is responsible for the routine maintenance and minor repair of the machinery.

                                       20
The three original manufacturing lines, plus two new manufacturing lines,
are encumbered by a security interest we granted to the PRC Industrial and
Commercial Bank and the Bank of China to secure the payment of our borrowings.
With respect to the 15 new manufacturing lines, we have made full payment and
they are not subject to any security interest or lien.

Quality Control

      Our production process follows strict quality control standards. Before
our raw materials are to be used for production, our Quality Control Department
first examines the raw materials to ensure quality. The manufacturing process is
closely supervised by manufacturing managers and is frequently examined by our
Quality Control Department. Before our product is shipped, our quality control
inspectors use various testing devices to perform a thorough inspection of all
finished products, including full physical and electrical properties, such as
conductivity, tensile strength, and elongation of the products. We enclose a
testing certificate in all shipments of our products. As a result of our strict
quality control standards, our production facility was certified under ISO 9001
quality standards until April 3, 2005. We anticipate that this certification
will be renewed before 2005.

      Every two years we submit our products to third party governmental testing
centers, such as the Quality Test Center of Information Transmittal Wire of the
Ministry of Information Industry of PRC and Dalian Institute of Product Quality
Supervision and Inspection, for full physical and electrical properties tests.
We have passed these tests in the past and the test reports showed that our
products meet and exceed American Society for Testing and Materials ("ASTM")'s
B566-93 standards for copper and bimetallic copper wire. ASTM is a non-profit
industry-wide organization which publishes standards, methods of testing,
recommended practices, definitions and other related materials.

      We allow our largest customers to inspect our production process and test
our end products prior to shipment to ensure our customers' satisfaction on the
product quality and specifications. In some instances, we also submit our sample
products to our customers for testing. In the event that our products fail the
customers' tests, we would allow our customers to cancel the order.
Historically, we have not experienced any cancellation of orders due to product
test failures. We believe our customers' involvement in our quality control
process not only ensures the high quality of our products, but also fosters a
long term and trusting relationship.

Warranties

      We offer warranty coverage for most of our products, although we do not
have a standard warranty program. The terms and conditions of our warranty
coverage depend on our purchase orders with customers. Generally, we guarantee
our customers' satisfaction of our product. If a customer has a complaint about
our products, we will go to the site to examine the product and provide a remedy
that is satisfactory to the customer. Additionally, we agree to compensate our
customers for losses caused by our products' failure under our purchase orders
with customers. In some cases we agree to assume all such losses, while in some
other cases we agree to pay liquidated damages equal to certain percent of our
sales price.

                                       21
We have not established any reserve funds for potential customer claims,
because, historically we have not experienced significant customer complaints
about our products and none of our customers has requested damages for any loss
incurred due to product quality problems. However, we intend to establish a
reserve fund as we seek to expand our business internationally. If we were to
experience a significant increase in warranty claims, our gross profits could be
adversely affected. See "Risk Factors - Risks Related to Our Business - We do
not maintain a reserve fund for warranty or defective products claims. Our costs
could substantially increase if we experience a significant number of warranty
claims."

Raw Materials and Suppliers

      Raw materials used in Dalian Fushi's production include copper strip,
aluminum bar, steel wire, plastic bags, corrugated paper, wire rotating machine,
steel ramming stretch oil, petroleum, cleansing agents, engine oil, gear oil,
caustic soda, aluminum drawing oil, copper wiredrawing fluid, various
lubricants, and other industrial materials. The principal raw materials are
aluminum bar and copper strip, each of which historically accounts for more than
40% of our total annual raw materials purchases. No other raw material exceeds
2% of our total annual raw materials purchases. Measured by tonnage, aluminum
bar is our largest raw material purchase, with an annual purchase of
approximately 5,000 tons, as compared to approximately 1,800 tons of copper
strip.

      Our principal raw materials are generally available in the market and we
have not experienced any raw material shortages in the past. Because of the
general availability of these raw materials, we do not believe that we will
experience any raw material shortages in the future. We have in the past relied
on Shanghai Jintai Copper Co. and Harbin Electric Wire Co. for our copper strip
and aluminum bars supplies, respectively. Purchases from these companies
represented approximately 96% of our total raw material purchases in 2004 and
approximately 87% in 2003.

      We have purchased approximately 80% of our copper from Shanghai Jintai
Copper Co. ("Jintai") because it has large production capacity and generally can
meet our purchase needs. We believe we have established good relationship with
Jintai. The remaining copper is purchased from Beijing Copper Co., Luoyang
Copper Co., and Shengyang Copper Co.

      We purchase approximately 95% of our aluminum bars from Harbin Electric
Wire Co. We also purchase aluminum bars from Wuxi Hua Neng Electric Co.

                                       22
We do not have formal long-term purchase contracts with our suppliers and,
thus, we are exposed to the risk of fluctuating raw material prices. In the
purchase contracts with our primary suppliers, we typically specify the quantity
of our copper and aluminum purchases for the following 6 to 12 months, based on
our projected manufacturing output determined by the purchase orders we receive.
The raw materials are delivered in installments based on our order flow
throughout the period. We pay for each delivery based on the prevailing market
price at the time of delivery. See "Risk Factors - Risks Related to Our Business
- We do not have any long-term supply contracts with our raw materials
suppliers. Any significant fluctuation in price of our raw materials may have a
material adverse effect on the manufacturing cost of our products."

      In addition to these short-term purchase contracts, we also purchase from
our primary suppliers or other suppliers to satisfy additional raw materials
needs from additional orders we did not previously project. Due to our
dependence on a concentrated number of suppliers for our principal raw
materials, we cannot guarantee that necessary materials will continue to be
procured at the prices currently available or acceptable to us. To the extent
that these suppliers are not able to provide these materials in sufficient
quantity and quality on a timely and cost-efficient basis, our results of
operations could be adversely impacted until we find another qualified supplier.
In the past, we had experienced price increases on our principal raw materials
and we were able to transfer the additional cost to our customers. However,
there can be no assurance that we can transfer all of the additional cost
resulting from the increase in purchase price of raw materials in the future.

      Our suppliers typically make delivery upon receipt of our payment for the
purchase, except for 30-day trade credits extended to approximately 10% of our
total purchase contracts. We normally require our suppliers to purchase freight
insurance to ensure against any risk of loss during the shipping period and any
such loss will be the supplier's responsibility. After we receive the delivered
raw materials, we have three days to raise any dispute regarding the quality and
quantity of the goods.

Customers

      Our products' target markets are manufacturers of finished wire and cable
products. In most cases, our customers incorporate our products in end products
that they subsequently supply to their customers. The products manufactured by
us are used by these end-product makers as standard components, materials or
parts that are built to their specifications.

      We have more than 50 regular customers, both in and outside of the PRC.
Among the 48 PRC domestic customers, 7 are in the southern part of the PRC, 11
are in the southwestern part of the PRC, 18 are in the central part of the PRC,
and 12 are in the eastern part of the PRC. Our customer base includes some of
the global leading brands in the coaxial cable industry, such as Andrew
Corporation, one of the largest communication cable manufacturers in the world.
Because these customers' large purchase orders, we have derived a significant
portion of our sales from a smaller number of customers since we commenced
production in 2002. Sales to our 5 largest customers accounted for 75.37% and
73% of our net sales during the years ended December 31, 2004 and 2003,
respectively. We anticipate that our overall customer composition and the
concentration of our top customers will change as we expand our business and
shift our product portfolio to high-margin products; however, we can not assure
you that this will be the case. See "Risk Factors - Risks Related to the
Restructuring Agreements and Acquisition of the Business of Dalian Fushi-- We
may lose current customers who do not approve of Dalian Fushi's sale of its
business to Dalian DPI and do not agree to make purchases directly from Dalian
DPI or continue to make purchases through Dalian Fushi".

                                       23
Sales to customers accounting for 10% or more of our net sales in the year
ended December 31, 2004 or 2003 were as follows:

                                                               Year Ended
                                                               December 31,
                                                        ------------------------
                        Top Customers                    2004               2003
Andrew Corporation                                      21.15%              14%
Zhuhai Hanshen Industrial Co., Ltd.                     19.21%              14%
Jiangxi Lianchuang Photoelectricity Science Co.         16.19%              18%
Draka NK Cables Ltd.                                    10.08%               *
Shantou Jinqiao Cable Co., Ltd.                           *                 17%
Datang Telecom Technologies Co., Ltd                      *                 10%
Total                                                   75.37%              73%

* Less than 10% of our total annual net sales.

Sales Contracts and Customers' Orders

      Our largest customers normally have signed purchase orders with us
providing for the specifications of the products they will purchase and up to
one year's projected purchase for each specified product. Our manufacturing
activities are determined and scheduled based upon this sales information. Under
the purchase orders, customers will place individual orders seven to fifteen
days prior to the delivery date. Sometimes the lead time can be as short as
three days. The sales price is determined at the time of delivery. Some purchase
orders contain a formula to calculate the actual purchase price; some contain a
unit price for each product, to be adjusted according to the market price of
copper and aluminum at the time of delivery.

      Recently, the actual purchases by most of our largest regular customers
has exceeded their annual projections. To meet customers' purchase requirements
beyond projections, we normally maintain an inventory of regular sized CCA to
meet at least 15-day demand of our products. The regular sized CCA inventory can
be easily drawn to the customers' specified size and can be available for
delivery on short notice.

                                       24
Sales are usually made on a cash basis. In some instances, such as for new
customers, we require up to 80% down payment of the purchase order.
Nevertheless, we extend trade credit to our major customers with established
creditworthiness. These customers are primarily communications equipment
providers that place large orders with us on a regular basis. The credit
normally ranges from 30 to 90 days. As a matter of pricing policy, selling
prices are adjusted upward correspond to the length of credit.

Marketing, Sales and Distribution

      We market and sell all of our products in the PRC through our direct sales
force and internationally through sales agents and distributors.

      PRC Sales. Currently, a vast majority of our sales are made to PRC
customers and we sell our products to customers directly through our Sales and
Marketing Department. The Dalian Fushi Sales and Marketing Department, which
consists of 15 people, each of whom is to be transferred to Dalian DPI pursuant
to the Restructuring Agreements, is responsible for maintaining existing
customer relationships and developing new customers.

      International Sales. Sales to customers located outside of the PRC consist
of only a small percentage of our total annual sales. To expand our
international markets, we have signed letters of intent with foreign independent
agents to market our products overseas.

Product Delivery and Risk of Loss

      For customers in the PRC, we usually deliver the goods to the customers'
place of business, while in some cases customers make their own delivery
arrangements. The Dalian Fushi Transportation Department, the employees of which
are to be transferred to Dalian DPI pursuant to the Restructuring Agreements,
delivers our products to customers. The Transportation Department has four heavy
trucks and eight contracted drivers. We can ship up to 30 tons per day.

      We normally include shipping expenses in the purchase price of our
products and, thus, delivery costs are ultimately borne by our customers. In
addition, some orders require us to purchase freight insurance on behalf of its
customer in which case the cost of such freight insurance is included in the
purchase price of the products.

      For export sales to international customers our typical delivery terms are
free-on-board, or FOB, so that customers are responsible for the cost of
transportation and bear the risk of loss during transportation.

Insurance

      Product Liability Insurance. We currently do not carry any product
liability or other similar insurance. While product liability lawsuits in the
PRC are rare and we have never experienced significant failures of our products,
we cannot make any assurance that we will not have exposure for liability in the
event of the failure of any of our products in the future. This is particularly
true given our plan to significantly expand our sales into international
markets, like the United States, where product liability claims are more
prevalent.

                                       25
Property Insurance and Other Insurance. We purchased automobile insurance
with third party liability coverage for our vehicles. In addition, it has
purchased property insurance from China United Property Insurance Company to
cover real property and plant of up to RMB 43,350,000 (approximately
US$5,344,652), and manufacturing machine and equipment of up to RMB 36,750,000
(approximately US$4,541,410). The total coverage of our property and equipment
is approximately US$9,886,062. However, our property and equipment net of
depreciation as of December 31, 2004 was US$33,467,298, and our property
insurance therefore covers only less than a third of the value of our property
and equipment. See "Risk Factors - Risks Related to Our Business - We do not
presently maintain product liability insurance, and our property and equipment
insurance does not cover the full value of our property and equipment, which
leaves us with exposure in the event of loss or damage to our properties or
claims filed against us."

      Except for property and automobile insurance, we do not have other
insurance such as business liability or disruption insurance coverage for our
operations in the PRC. Further, we do not have key man insurance for our
officers and executive managers. Therefore, the loss of one or more of our
officers and executive managers will adversely affect our business and
operations. See "Risk Factors - Risks Related to Our Business - We do not have
key man insurance on our Chairman and CEO, Mr. Fu, on whom we rely for the
management of our business."

Competition

      Competition in the bimetallic industry can be characterized by rapid
growth and a concentration of manufacturers, primarily due to rising copper
prices and accelerated replacement of copper by bimetallic products
applications. The most significant factors that affect our competitive position
are:

      -     the performance and cost effectiveness of our products relative to
            those of our competitors;

      -     our ability to manufacture and deliver products in required volumes,
            on a timely basis and at competitive prices;

      -     the quality and reliability of our products; and

      -     our customer support capabilities.

      Our largest competitor is Dofasco, Inc., which acquired the business of
Copperweld. Our major PRC competitor is Dalian Tongfa New Materials Science and
Technology Co., Ltd. ("Dalian Tongfa"). We believe that we can differentiate
ourselves by offering superior product quality, timely delivery, at attractive
pricing. Our market share, and that of our major competitors is as follows:

                                       26
--------------------------------------------------------------------------
Name                                    PRC Market Share (by percentage)
--------------------------------------------------------------------------
Dofasco (which acquired the
  business of Copperweld)               70.0%
--------------------------------------------------------------------------
Dalian Fushi                            15.0%
--------------------------------------------------------------------------
Dalian Tongfa                            8.5%
--------------------------------------------------------------------------

See "Risk Factors - Risks Related to Our Business -- We encounter substantial
competition in our business and our failure to compete effectively may adversely
affect our ability to generate revenue."

International Competition

      The PRC relies on imports for over 70% of its bimetallic composite
conductors. The major supplier to the PRC bimetallic composite conductor markets
is Dofasco, Inc., which acquired the business of Copperweld, the largest
bimetallic composite conductor manufacturer in the world.

      All bimetallic composite products imported by the PRC must meet the US
ASTMB566 standard. We currently produce products that meet or exceed the US
ASTMB566 standard.

      Dofasco may have significantly greater financial, technical,
manufacturing, marketing, sales and other resources than we do, but we believe
we offer the following competitive advantages:

      1.    Cost. Our costs are lower than those of Dofasco. Because our
            manufacturing facilities are located in the PRC, we are able to take
            advantage of lower labor costs.

      2.    Patented and Proprietary Technology. We have developed our patented
            technology, Rolling Bond Welding Method, to produce CCA and CCS.
            Based on feedback we received from our customers, we believe this
            technology offers better evenness in finished products and better
            conductivity.

      3.    Government Initiative. In 2003, the PRC government initiated a
            project to standardize the national specifications for production
            and quality of CCS and CCA composite cables for CATV and RF
            applications. This project was headed by our Chief Engineer, Mr.
            Yang Xishan. The project is listed as the "42nd Industrialized and
            Applied Project of Composite Metal Material Preparation Process and
            Equipment in Guidance of Key Field of High Tech Industrialization
            Development" and is governed by the State Development Planning
            Commission and the Ministry of Science and Technology of PRC. This
            project is also listed among the City of Dalian's High-Tech Industry
            Development Projects. The project was granted three years of funding
            from 2003-2005 totaling 2.5 million RMB (US $309,000) by the Dalian
            Municipal Government and the Dalian Technology Bureau. We received a
            total of 800,000 RMB for the past two years.

      4.    Service. We are able to provide products and technical services with
            shorter delivery times to domestic customers.

                                       27
PRC Competition

      Our primary competitor in the PRC is Dalian Tongfa. We believe Dalian
Tongfa produced approximately 1,800 tons of products in 2004, compared to our
3,600 tons.

      We believe we have the following competitive advantages over our PRC
competitors:

      1.    Patented and Proprietary Technology. We believe our proprietary
            technology allows us to produce a higher percentage of qualified
            products than our competitors.

      2.    Government Initiative. See description under the "International
            Competition" above.

      3.    Production Capacity. We have increased our manufacturing lines from
            3 to 20 in 2005. We believe our new facilities will allow us to
            continue the expansion of our manufacturing capacity and achieve
            economies of scale in production.

      4.    Location in Dalian. The location of our operation in Dalian, the
            leading industrial and commercial center in Northern PRC, offers us
            the benefits of proximity to an extensive supply network, a strong
            research capability, and high quality human resources. In addition,
            the well-developed land and water transportation networks in Dalian
            provide us with easy access to domestic and international markets.
            Finally, the three provinces of North China (Liaoning, Jilin, and
            Heilongjiang) have historically been PRC's base for heavy industrial
            manufacturing, where power equipment and large electro-mechanical
            equipment are readily available.

      5.    Experienced Technical Team. We believe our engineering and technical
            team is well rounded and experienced. The head of our R & D
            department, Chief Engineer Mr. Xishan Yang, has over 40 years of
            experience in the electronic communication industry and is the
            inventor of the CCA and CCS production methodologies using cladding
            techniques in the PRC. Our Vice General Manager, Qingshan Liu, is
            the inventor of several improvements for the production of CCS
            cable. Both Mr. Yang and Mr. Liu are widely published in their
            fields and have numerous technical developments to their credit.

                                       28
Intellectual Property

      Our principal intellectual property rights are our patents, patent
applications and the trademark "FUSHI." We obtained the right to use the "FUSHI"
trademark from Mr. Li Fu pursuant to the Trademark Authorization.

      PRC Patents and the PRC Patent Law Protections. Dalian Fushi is the
registered owner of four patents issued by the Patent Office of the State
Intellectual Property Office of the PRC which are in the process of being
transferred to Dalian DPI pursuant to the first patent transfer contract
discussed in Item 1.01.
-------------------------- ------------ -------------- ----------------- ---------------- --------------------------
Patent                     Type of      Patent No.     Inventor's Name   Date of          Date of Publication and
                           Patent                                        Application      Term
-------------------------- ------------ -------------- ----------------- ---------------- --------------------------
1.  Metallurgical          Utility      ZL 2004 2      Mr. Xishan Yang   April 9, 2004    March 30, 2005; term: 10
Rolling and Welding                     0031104.0                                         years from 4/9/2004 to
Device for CCA  and                                                                       4/8/2014
CCS
-------------------------- ------------ -------------- ----------------- ---------------- --------------------------
2.  Polyurethane (PU)      Utility      ZL 2003 2      Mr. Xishan Yang   November 11,     December 8, 2004; term:
Roller                                  0105378.5                        2003             10 years from 11/11/2003
                                                                                          to 11/10/2013
-------------------------- ------------ -------------- ----------------- ---------------- --------------------------
3.  Aluminum Bar           Utility      20032010       Mr. Xishan Yang   November 11,     April 20, 2005; term: 10
Brushing Machine                        5379.X                           2003             years from 11/11/2003 to
                                                                                          11/10/2013
-------------------------- ------------ -------------- ----------------- ---------------- --------------------------
4.  Press Cladding         Utility      ZL 2003 2      Mr. XiShan Yang   November 11,     February 2, 2005; term:
Device for CCA                          0105377.0                        2003             10 years from 11/11/2003
                                                                                          to 11/10/2013
-------------------------- ------------ -------------- ----------------- ---------------- --------------------------
Dalian Fushi also has the following pending PRC patent application and has
agreed to change the applicant under the this application to Dalian DPI to the
extent feasible or otherwise transfer the patent issued under this application
to Dalian DPI under the second patent transfer contract discussed in Item 1.01:
-------------------------- ------------ -------------- ----------------- ---------------- --------------------------
Patent Application         Application  Inventor's     Applicant         Date of          Status
                           No.          Name                             Application
-------------------------- ------------ -------------- ----------------- ---------------- --------------------------
5.  Vertical  Integrated   2003201      Xishan Yang    DaLian FuShi      November 11,     We anticipate receipt of
Drawing Machine for CCA    05380.2                                       2003             the patent certificate
                                                                                          by the end of 2005
-------------------------- ------------ -------------- ----------------- ---------------- --------------------------
29
The issued patents nos. 1 through 3 and the pending patent application
listed above relate to our "Rolling Bond Welding" method for the production of
round-sized CCA and CCS wires, our current products. The patented "Press
Cladding Device for CCA" is to be used for large sized CCA and CCS and required
manufacturing equipment is still under development.

      The PRC Patent Law was adopted by the National People's Congress, the
parliament in PRC, in 1984 and was subsequently amended in 1992 and 2000. The
Patent Law aims to protect and encourage invention, foster applications of
invention and promote the development of science and technology. To be
patentable, invention or unity models must meet three conditions: novelty,
inventiveness and practical applicability. Certain items are not patentable
under the Patent Law, which include scientific discoveries, rules and methods
for intellectual activities, methods used to diagnose or treat diseases, animal
and plant breeds or substances obtained by means of nuclear transformation. The
Patent Office under the State Council is responsible for receiving, examining
and approving patent applications. A patent is valid for a term of twenty years
in the case of an invention and a term of ten years in the case of utility
models and designs. Our patents are all utility models and subject to the ten
years' protection. Any use of patent without consent or a proper license from
the patent owner constitutes an infringement of patent rights.

      We believe a few manufacturers in the PRC have infringed our patents by
using our patented technologies without our prior authorization or paying
license fees. We have not taken any legal action to seek damages or injunction
against these manufacturers because we have always dedicated all of our
available capital to production and expansion. We plan to take appropriate legal
action in due course; however, we can give no assurance that we will be
successful. In addition, litigation is costly and will divert our management's
efforts and resources.

      International Patent Application and the PCT. Dalian Fushi has submitted
an international patent application under the International Patent Cooperation
Treaty ("PCT") on April 28, 2005. This patent application (PCT/CN2005/00585) is
for Bond-Welding Manufacturing Method for Cuponal Busbar and relates to the
production of cuponal busbar. Dalian Fushi has agreed to change the applicant
under the this application to Dalian DPI to the extent feasible or otherwise to
transfer the patent issued under this application to Dalian DPI under the second
patent transfer contract discussed in Item 1.01.

      This patent application was invented by Mr. Xishan Yang, our senior
engineer and Vice President of R&D. A PCT application covers all of the PCT
member countries, which include most major industrialized countries. As of
September 15, 2005, there were 127 member countries. The PRC became a member of
the PCT in 1994.

      There are two phases in a PCT application. The first phase is the
International Phase. Under this Phase, an applicant like Dalian Fushi can file
an application using Chinese language in the PRC. Then it will have one year to
claim the priority of its PRC filing date in other member countries. The main
benefit of filing through PCT instead of directly in the member countries is to
allow an applicant to delay "National Phase" filing in the member countries up
to 30 months from the initial filing, which is 18 months more than it would
normally have when filing directly in foreign countries. During this
International Phase period, an applicant can gather more market information and
have more time to make decisions about where to file patent applications. At the
end of the International Phase period, it will enter the National Phase by
filing national applications in each country in which the applicant will want a
patent. The Trade-Related Aspects of Intellectual Property Rights (the "TRIPS")
determine the term of a patent applied under the PCT in the member countries.

                                       30
Trademarks and the PRC Trademark Law Protections. The trademark "FUSHI" is
registered with the Trademark Office of the State Administration for Industry
and Commerce in PRC ("SAIC"). The registered scope of use includes wire products
such as wire cable, electric wire, electric resister, telephone line, and cable
line. The registered owner is Mr. Li Fu, our founder, chairman and chief
executive officer. Mr. Fu has authorized us to use the trademark without any fee
or charge in perpetuity. The registered term is valid from April 28, 2003 to
April 27, 2013. The trademark was recognized as a "Well Known Trademark" in
Dalian city by Dalian Administration of Industry and Commerce for a period
commencing from October, 2004 to October, 2007.

      Under the PRC Trademark Law, which was adopted in 1982 and revised in
2001, registered trademarks are granted a term of ten years protection,
renewable for further terms. Each renewal is limited to ten years term and the
registrant must continue to use the trademark and apply for a renewal within six
months prior to the expiration of the current term.

      Domain Names: Dalian Fushi owns and operates a website under the internet
domain name fushibmc.com. We pay an annual fee to maintain its registration. The
information contained in our website does not form part of this Current Report.
We do not yet make available, on or through our website, our annual report on
Form 10-KSB, quarterly reports on Form 10-QSB, current reports on Form 8-K, and
amendments to those reports after they are electronically filed or furnished to
the Securities and Exchange Commission ("SEC"). To obtain a copy of these
filings, please see the section entitled "Where You Can Find More Information"
in this Item 2.01."

      Other Intellectual Property Rights Protections in the PRC. In addition to
patent, trademark and trade secret protection law in the PRC, we also rely on
contractual confidentiality provisions to protect our intellectual property
rights and our brand. Our research and development personnel and executive
officers are subject to confidentiality agreements to keep our proprietary
information confidential. In addition, they are subject to a one-year covenant
not to compete following the termination of employment with our company.
Further, they agree that any work product belongs to our company.

      Research and Development Activities

      In 2002, we set up a research center headed by Mr. Xishan Yang, who is our
Chief Executive Vice President of Research and Development and Chief Engineer.
The research center consists of 27 full time engineers and research and
development personnel that possess expertise in the areas of metal processing,
machinery design, material science, process control automation and cable
manufacturing. In each of the past three fiscal years, we spent approximately
RMB 500,000 in research and development activities. Most of these expenses were
used to improve product quality, develop more rigorous specifications, and
develop new metal composite including rare non-ferrous metals, precision alloys,
precious metals and aluminum alloys.

                                       31
In addition to our own internal initiatives on R&D activities to develop
new products, some of our R&D activities are initiated by our customers, who
convey their needs to us, and we conduct research activities to improve or
enhance our existing products to meet their needs.

      We have also participated in cooperative research and development programs
with local university and research institute. Most recently in May 2005, we have
entered into a Technology Development Contract with Northeast China University
for the research and development of manufacturing equipment for our patented
press cladding device for a fee. These programs have supplemented our internal
R&D department and allow us to utilize the resources and talent pool in these
universities.

      We intend to enhance our Research and Development efforts by expanding our
engineering team.

Government Regulations

      Our patents and trademark are subject to the regulations on intellectual
property rights in the PRC. Please see "Business-Intellectual Property" for more
information regarding the PRC patent and trademark laws. We are also subject to
business license and approval regulations that are required for all corporations
in the PRC. In addition, we are subject to the recent PRC State Administration
of Foreign Exchange ("SAFE") regulations regarding offshore financing activities
by PRC residents. See "Risk Factors -Risks Related to Doing Business in the
PRC."

      Current PRC law does not allow a share exchange between a PRC entity and a
non-PRC entity, or a non-PRC entity's equity to be used as consideration for the
purchase of a PRC entity's assets. As such, we utilized the Restructuring
Agreements, although the Exclusive Option Agreement provides Dalian DPI the
option to purchase Dalian Fushi's equity and/or remaining assets to the extent
such purchase does not violate limitations imposed under PRC law. See the
"Explanatory Note" at the beginning of this Current Report and Item 1.01.

Environmental Compliance

      We are subject to environmental regulations that are generally applicable
to manufacturing companies in the PRC, for example, to complete an environmental
inspection on our new manufacturing facilities. Other than that, to the
knowledge of our management team, neither the production nor the sale of our
products constitute activities, or generate materials in a material manner, that
requires our operation to comply with the PRC environmental laws. See "Risk
Factors - Risks Related to Our Business - Potential environmental liability
could have a material adverse effect on our operations and financial condition."

                                       32
Employees

      Dalian Fushi currently has185 full time employees, of whom 24 are
managerial, administrative, finance and accounting staff, 27 are engineers and
research and development personnel, 14 are engaged in sales and marketing, and
120 are in manufacturing. Pursuant to the Restructuring Agreements and the
Series B Stock Purchase Agreement, each of the employees is to be transferred to
Dalian DPI. Additionally, Dalian Fushi has approximately 60 interns and interim
staff, from whom we plan to select the qualified people to extend a full time
employment offer upon satisfactory performance during their interim period. Most
of these interns and interim staff will be hired to perform the manufacturing
functions. From time to time, we also hire temporary workers and contractors as
necessary. Currently, Dalian Fushi has 52 temporary staff for product delivery,
cafeteria workers and security guards.

                             DESCRIPTION OF PROPERTY

      Under PRC law, all land in the PRC is owned by the government, which
grants a "land use right" to individual or entity after a purchase price for
such "land use right" is paid to the government. The "land use right" allows the
holder the right to use the land for a specified long-term period of time and
enjoys all the ownership incidents to the land. Dalian Fushi holds land use
rights for one piece of land that was used in its business and which will be
used in Dalian DPI's business pursuant to the leases entered into in connection
with the Restructuring Agreements. In addition, Dalian Fushi has the right to
use another smaller piece of land that is registered under Dongyi's name. Set
forth below is the detailed information regarding these two pieces of land:
----------------- ------------------- -------------- ------------------- ------------------ -------------------
   Registered         Location &          Usage        Square Meters      Construction on   Term of Use Right
 Owner of land      Certificate of                                           the Land
   use right        Land Use Right
                        Number
----------------- ------------------- -------------- ------------------- ------------------ -------------------
Dalian Fushi      1 Shuang Qiang      Industrial     103,605 Sq. M;      Dalian Fushi's     50 years from
                  Road, Yang Jia      Use                                new facilities     July, 2003
                  Village, Jinzhou
                  District, Dalian,
                  PRC; #0625014
----------------- ------------------- -------------- ------------------- ------------------ -------------------
Dongyi            8 Hai La'er Road,   Industrial     3,569 Sq. M;        Dalian Fushi's     40 years from
                  Dalian              Use                                old facilities     March 4, 1989
                  Development Zone;
                  PRC;
                  #0626006
----------------- ------------------- -------------- ------------------- ------------------ -------------------
33
Dalian Fushi's new facilities, which, pursuant to the Restructuring
Agreements, are now leased to Dalian DPI, primarily consist of manufacturing
plants, multi-purpose office buildings, dormitories, raw materials storage, and
boiler rooms. Dalian Fushi acquired the piece of land ("Dongyi Property")
registered under Dongyi's name in connection with its acquisition of Dongyi in
2001. Dongyi was dissolved after the acquisition. Because of the transfer fees
that would be incurred as a result of change of registered owner, and because
this land is no longer being used in the business, Dalian Fushi has not, and we
do not intend to change the registered owner of this land. Currently, Dalian
Fushi leases the facilities located on the Dongyi Property to a third party.
Dalian Fushi will remain as the landlord after the completion of the
transactions contemplated by the Restructuring Agreements.

      The land registered under Dalian Fushi's name, as well as the buildings
and improvements on the land, are used as mortgage to secure Dalian Fushi bank
loans from Bank of China and Industrial and Commercial Bank.

                                LEGAL PROCEEDINGS

      We know of no material, active, pending or threatened proceeding against
us, DPI, Dalian DPI or Dalian Fushi, nor are we involved as a plaintiff in any
material proceeding or pending litigation.

                                  RISK FACTORS

      An investment in our Common Stock involves a high degree of risk. You
should carefully consider the risks described below and the other information
contained herein before deciding to invest in our Common Stock.

Risks Related to the Restructuring Agreements and Acquisition of the Business of
Dalian Fushi

We may not be able to obtain the approvals required to operate the business
acquired pursuant to the Restructuring Agreements.

      While the Restructuring Agreements were entered into and closed on
December 13, 2005, not all of the transactions contemplated by the Restructuring
Agreements have been consummated and the Company currently operates out of
Dalian Fushi until Dalian DPI can commence operations under PRC law.

                                       34
In order to complete the transactions contemplated by the Restructuring
Agreements to commence operations, Dalian DPI must:

      o     complete the registered capital verification process for its
            registered capital;

      o     transmit to Dalian Fushi the full purchase price for the assets to
            be purchased by it under the Restructuring Agreements;

      o     obtain an environmental report for the assets purchased from Dalian
            Fushi;

      o     obtain a new business license from the State Administration for
            Industry and Commerce in Dalian, PRC which reflects Dalian DPI's
            status as an operating company; and

      o     complete other required filings and registrations.

We anticipate expect that these steps will occur within 15 days after the date
of this Current Report, but cannot assure you that Dalian DPI will be able to
obtain a business license or other necessary approvals. In the event that Dalian
DPI fails to obtain a full operational business license or other necessary
approvals, it will be unable to operate its business, which would be materially
and adversely affected.

      In addition, if these approvals, filings and registrations necessary for
Dalian DPI to operate the business are not completed within 15 days from the
date of the closing of the Series B Stock Purchase Agreement, we will be in
breach under that agreement and the holders of our Series B Stock may have
certain indemnification rights against us, Dalian Fushi and members of our
management team which could adversely affect the business. See the Explanatory
Note at the beginning of this Current Report, as well as Items 1.01 and 3.02 of
this Current Report, for more information on the Series B Stock Purchase
Agreement.

We may be unable to compel Dalian Fushi to make the payments due to Dalian DPI
under the Restructuring Agreements.

      To the extent that any significant profits are generated by Dalian Fushi,
our ability to obtain those monies will be dependent upon our ability to control
Dalian Fushi through the Entrusted Management Agreement, as well as our ability
to enforce the Restructuring Agreements. See "Risk Factors Risks Related to the
Restructuring Agreements and Acquisition of the Business of Dalian Fushi -- Our
Restructuring Agreements with Dalian Fushi and its shareholders may not be as
effective in providing control over these entities as direct ownership." In the
event that Dalian Fushi does not pay to Dalian DPI the fees and other payments
owed to Dalian DPI under the Restructuring Agreements, the ability to operate
our business may be severely affected by a lack of working capital and we may be
unable to pay dividends.

                                       35
Our Restructuring Agreements with Dalian Fushi and its shareholders may not be
as effective in providing control over these entities as direct ownership.

      After the completion of the transactions contemplated by the Restructuring
Agreements, we will operate our business through Dalian DPI, our indirect
wholly-owned subsidiary in the PRC, and rely on the Restructuring Agreements
with Dalian Fushi and its shareholders to control any operations of Dalian
Fushi. While we will own and/or lease substantially all of the manufacturing
assets through Dalian DPI, and to the extent that any aspect of Dalian Fushi's
business needs to be conducted through Dalian Fushi in the future, the
Restructuring Agreements provide Dalian DPI with the legal right and power to
control Dalian Fushi and any of its remaining assets and operations, the
Restructuring Agreements may not be as effective in providing control over
Dalian Fushi as direct ownership. For example, if we had direct ownership of
Dalian Fushi, we would be able to exercise our rights as a shareholder to effect
changes in the board of directors of Dalian Fushi, which in turn could effect
changes, subject to any applicable fiduciary obligations, at the management
level.

      Furthermore, if Dalian Fushi or any of its shareholders fails to perform
its or his respective obligations under the Restructuring Agreements, we may
have to incur substantial costs and resources to enforce those agreements, and
rely on legal remedies under PRC law, including seeking specific performance or
injunctive relief, and claiming damages, which may not be effective. For
example, if the shareholders of Dalian Fushi refuse to transfer their equity
interests in Dalian Fushi to us or our designee when we exercise the purchase
option under the exclusive option agreement, which is part of the Restructuring
Agreements, then we will have to pursue available remedies under PRC law for
them to fulfill their contractual obligations. In addition, we cannot assure you
that Dalian Fushi's shareholders always will act in our best interests. See Item
1.01 for more information on the Restructuring Agreements and the exclusive
option agreement in particular.

      The Restructuring Agreements are governed by PRC law and provide for the
resolution of disputes through arbitration in the PRC. Accordingly, these
agreements would be interpreted in accordance with PRC law and any disputes
would be resolved in accordance with PRC legal procedures. The legal environment
in the PRC is not as developed as in other jurisdictions, such as the United
States. As a result, uncertainties in the PRC legal system could limit our
ability to enforce the Restructuring Agreements. If we are unable to enforce the
Restructuring Agreements, we may not be able to exert effective control over our
operating entities, and our ability to conduct our business may be negatively
affected.

The restructuring conducted pursuant to the Restructuring Agreements may be
subject to scrutiny by the PRC tax authorities and a finding that we owe
additional taxes or are ineligible for our tax exemption, or both, could
substantially increase our taxes owed, and reduce our net income and the value
of your investment.

                                       36
Dalian DPI has purchased assets from Dalian Fushi, our affiliated company,
at prices lower than their book value and leased the remaining assets from
Dalian Fushi at nominal amount. Under PRC law, arrangements and transactions
among related parties may be subject to audit or challenge by the PRC tax
authorities. If any of the transactions we have entered into between Dalian DPI
and Dalian Fushi are found not to be on an arm's-length basis, or to result in
an unreasonable reduction in tax under PRC law, the PRC tax authorities have the
authority to disallow our tax savings, adjust the profits and losses of Dalian
DPI and Dalian Fushi, and assess late payment interest and penalties. A finding
by the PRC tax authorities that we are ineligible for the tax savings achieved
in the past, or that Dalian Fushi or Dalian DPI are ineligible for preferential
tax benefits, would substantially increase our taxes owed, reduce our net income
and the value of your investment and materially and adversely affect our
financial condition and results of operations.

The Restructuring Agreements may result in additional transactional costs that
may adversely impact our profitability.

      The asset transfers and leases involving in the restructuring inevitably
will incur costs and expenses, such as taxes, both at central and local level,
filing fees and registration fees with government authority. Our management team
estimated that the transactional costs for the restructuring are manageable.
However, due to the complexity of the tax regime in PRC and the great discretion
the local tax authorities enjoy, we cannot assure you that there are no
unpredictable costs and expenses associate with the restructuring and any such
costs and expenses will not adversely impact our profitability

We may lose current customers who do not approve of Dalian Fushi's sale of its
business to Dalian DPI and do not agree to make purchases directly from Dalian
DPI or continue to make purchases through Dalian Fushi.

      Pursuant to the terms of the Restructuring Agreements and the Series B
Stock Purchase Agreement, Dalian Fushi is required to notify customers that its
business has been sold to, and is being conducted by, Dalian DPI. Dalian Fushi
must use its best efforts to obtain the consent of each customer to transfer the
customer's outstanding purchase orders and other contracts to Dalian DPI. In the
event that a Dalian Fushi customer does not agree to assign its purchase orders
and other contracts to Dalian Fushi and conduct business directly with Dalian
DPI, Dalian DPI will provide all necessary resources to Dalian Fushi so that it
may continue operations to the extent of maintaining its existing relationships
with these customers. However, we cannot give you any assurance that any or all
of Dalian Fushi's customers will approve of the sale of Dalian Fushi's business
to Dalian DPI, agree to make purchases from Dalian DPI or continue to make
purchases through Dalian Fushi. The loss of any significant customer would
materially and adversely affect our business and financial results. See
"Business--Customers" in this Item 2.01.

                                       37
Suppliers who do not approve of Dalian Fushi's sale of its business to Dalian
DPI may be unwilling to sell directly to Dalian DPI the materials it needs to
manufacture our products, or continue to supply materials through Dalian Fushi.

      We rely on a limited number of suppliers for most of the other raw
materials we use. Pursuant to the terms of the Restructuring Agreements and the
Series B Stock Purchase Agreement, Dalian Fushi is required to notify its
suppliers that its business has been sold to, and is being conducted by, Dalian
DPI. In the event that suppliers of key components to Dalian Fushi are unwilling
to conduct business directly with Dalian DPI, Dalian DPI will provide all
necessary resources to Dalian Fushi so that it may continue operations to the
extent of maintaining its existing relationships with these suppliers. However,
we cannot give you any assurance that any or all of Dalian Fushi's suppliers
will approve of the sale of Dalian Fushi's business to Dalian DPI, agree to sell
supplies directly to Dalian DPI or continue to sell supplies through Dalian
Fushi. The loss of any significant supplier could materially and adversely
affect our business and financial results. See "Business--Raw Materials and
Suppliers" in this Item 2.01 and Risk Factors--Risks Related to our Business--
We depend on a few suppliers for a significant portion of our principal raw
materials. Interruptions of production at our key suppliers may affect our
results of operations and financial performance."

Risks Related to our Business

These risk factors assume the completion of the acquisition of the business
through the Restructuring Agreements.

Our limited operating history may not serve as an adequate basis to judge our
future prospects and results of operations.

      We began the sale of copper clad aluminum wire in 2002 and copper clad
steel wire in 2003. Our limited operating history may not provide a meaningful
basis on which to evaluate our business. Although our revenues have grown
rapidly since inception, we cannot assure you that we will maintain our
profitability or that we will not incur net losses in the future. We expect that
our operating expenses will increase as we expand. Any significant failure to
realize anticipated revenue growth could result in significant operating losses.
We will continue to encounter risks and difficulties frequently experienced by
companies at a similar stage of development, including our potential failure to:

      -     maintain our cutting edge proprietary copper cladding technology for
            the manufacturing of composite wires;

      -     expand our product offerings and maintain the high quality of our
            products;

      -     manage our expanding operations, including the integration of any
            future acquisitions;

      -     obtain sufficient working capital to support our expansion and to
            fill customers' orders in time;

      -     maintain adequate control of our expenses;

      -     implement our product development, marketing, sales, and acquisition
            strategies and adapt and modify them as needed;

      -     anticipate and adapt to changing conditions in the bimetallic
            composite products markets in which we operate as well as the impact
            of any changes in government regulation, mergers and acquisitions
            involving our competitors, technological developments and other
            significant competitive and market dynamics.

                                       38
If we are not successful in addressing any or all of these risks, our
business may be materially and adversely affected.

We encounter substantial competition in our business and our failure to compete
effectively may adversely affect our ability to generate revenue.

      Our major PRC-based and international competitor is the Dofasco Tubular
Products division of Dofasco Inc., the business acquired in October 2005 and
formerly known as Copperweld. Copperweld was, and Dofasco is, the largest
bimetallic composite conductor manufacturer in the world with 70% of the PRC
bimetallic composite conductor market in the PRC. Dofasco has substantially
greater assets and financial and marketing resources than us. While we have four
patents and two patent applications relating to our copper-cladding technology,
as well as our processing devices and equipment, we believe our competitors will
continue to improve the design and performance of their products and to
introduce new products with competitive price and performance characteristics.
We expect that we will be required to continue to invest in product development
and productivity improvements to compete effectively in our markets. Our
competitors could develop a more efficient product or undertake more aggressive
and costly marketing campaigns than us, which may adversely affect our marketing
strategies and could have a material adverse effect on our business, results of
operations or financial condition.

      Our major competitors may be better able than us to successfully endure
downturns in our industrial sector. In periods of reduced demand for our
products, we can either choose to maintain market share by reducing our selling
prices to meet competition or maintain selling prices, which would likely
sacrifice market share. Sales and overall profitability would be reduced under
either scenario. In addition, we cannot assure you that additional competitors
will not enter our existing markets, or that we will be able to compete
successfully against existing or new competition.

Our inability to fund our capital expenditure requirements may adversely affect
our growth and profitability.

      Our continued growth is dependent upon our ability to raise capital from
outside sources. We have experienced situations in the past in which working
capital was inadequate to fulfill customer orders. Our ability to obtain
financing will depend upon a number of factors, including:

                                       39
-     our financial condition and results of operations,

      -     the condition of the PRC economy and the cable television,
            telecommunications, utilities and electronics industries in the PRC,
            and

      -     conditions in relevant financial markets.

If we are unable to obtain financing, as needed, on a timely basis and on
acceptable terms, our financial position, competitive position, growth and
profitability may be adversely affected.

We may not be able to effectively control and manage our growth.

      If our business and markets grow and develop, it will be necessary for us
to finance and manage expansion in an orderly fashion. In addition, we may face
challenges in managing expanding product offerings and in integrating acquired
businesses with our own. Such eventualities will increase demands on our
existing management, workforce and facilities. Failure to satisfy such increased
demands could interrupt or adversely affect our operations and cause production
backlogs, longer product development time frames and administrative
inefficiencies.

If we are unable to successfully complete and integrate strategic acquisitions
in a timely manner, our growth strategy may be adversely impacted.

      An important element of our growth strategy has been and is expected to
continue to be the pursuit of acquisitions of other businesses that increase our
existing market share and expand our production capacity. However, integrating
businesses involves a number of special risks, including the possibility that
management may be distracted from regular business concerns by the need to
integrate operations, unforeseen difficulties in integrating operations and
systems, problems relating to assimilating and retaining the employees of the
acquired business, accounting issues that arise in connection with the
acquisition, challenges in retaining customers, and potential adverse short-term
effects on operating results. If we are unable to successfully complete and
integrate strategic acquisitions in a timely manner, our growth strategy may be
adversely impacted.

We depend on a concentration of customers.

      Our revenue is dependent, in large part, on significant orders from a
limited number of customers. Sales to our five largest customers accounted for
approximately 75% and 73% of our net sales during the years ended December 31,
2004 and 2003, respectively. Sales to our three largest customers accounted for
approximately 35% of our total net sales during the nine months ended September
30, 2005. We believe that revenue derived from current and future large
customers will continue to represent a significant portion of our total revenue.
Our inability to continue to secure and maintain a sufficient number of large
customers would have a material adverse effect on our business, operating
results and financial condition. See "Risks Related to the Restructuring
Agreements and Acquisition of the Business of Dalian Fushi - We may lose current
customers who do not approve of Dalian Fushi's sale of its business to Dalian
DPI and do not agree to make purchases directly from Dalian DPI or continue to
make purchases through Dalian Fushi." Moreover, our success will depend in part
upon our ability to obtain orders from new customers, as well as the financial
condition and success of our customers and general economic conditions.

                                       40
We do not have any long-term supply contracts with our raw materials suppliers.
Any significant fluctuation in price of our raw materials may have a material
adverse effect on the manufacturing cost of our products.

      The price of aluminum bars and copper strip, our principal raw materials,
are subject to market conditions and generally we do not, and do not expect to,
have long-term contracts with our suppliers for those items. While these raw
materials are generally available and we have not experienced any raw material
shortage in the past, we cannot assure you that the necessary materials will
continue to be available to us at prices currently in effect or acceptable to
us. The prices for these raw materials have varied significantly and may vary
significantly in the future. For example, the copper industry, which is highly
volatile and cyclical in nature, affects our business both positively and
negatively. Numerous factors, most of which are beyond our control, drive the
cycles of the copper industry and influence copper price. These factors include
general economic conditions, industry capacity utilization, import duties and
other trade restrictions.

      We may not be able to adjust our product prices, especially in the
short-term, to recover the costs of increases in these raw materials. Our future
profitability may be adversely affected to the extent we are unable to pass on
higher raw material costs to our customers.

We depend on a few suppliers for a significant portion of our principal raw
materials. Interruptions of production at our key suppliers may affect our
results of operations and financial performance.

      We rely on a limited number of suppliers for most of the other raw
materials we use. We have in the past relied on Shanghai Jutai Copper Co. and
Harbin Electric Wire Co. for our principal raw materials, copper strip and
aluminum bar supplies, respectively. Purchases from these companies comprised
approximately 96% of our total raw material purchases in 2004 and approximately
87% in 2003. Interruptions or shortages of supplies from our key suppliers of
raw materials could disrupt production or impact our ability to increase
production and sales. We do not have long-term or volume purchase agreements
with most of our suppliers, and may have limited options in the short-term for
alternative supply if these suppliers fail for any reason, including their
business failure or financial difficulties, to continue the supply of materials
or components. Moreover, identifying and accessing alternative sources may
increase our costs.

                                       41
Our profitability depends on the success of the "FUSHI" brand recognition and we
could lose our competitive advantage if we are not able to protect our FUSHI
trademark against infringement, and any related litigation could be
time-consuming and costly.

      The trademarked brand "FUSHI" registered under PRC law has gained
substantial recognition with customers. However, the protection of intellectual
property rights in the PRC may not be as effective as those in the United States
or other countries. The unauthorized use of the FUSHI brand could enable some
other manufacturers to take unfair advantage, which could harm our business and
competitive position. Moreover, from time to time, we may seek to protect
trademark rights through litigation, which may result in substantial costs and
diversion of resources, including the efforts of management.

      Pursuant to the Trademark Authorization, Mr. Li Fu, the registered owner
of the "FUSHI" trademark, authorized Dalian DPI to use this trademark for a
perpetual period without any fee. In the event this authorization is revoked or
found to be unenforceable, for any reason, we could lose the use of the
trademark, which could materially and adversely affect our business. See "--We
rely on Mr. Fu, our Chairman and CEO, Mr. Fu, for the management of our
business, and the loss of his services may significantly harm our business and
prospects" and "--We do not have key man insurance on Mr. Fu, our CEO, upon whom
we rely primarily for the direction of our business, so that if he dies we do
not have sufficient financial resources to continue operations without
interruption until we are able to replace Mr. Fu our business may be harmed."

We may not be able to prevent others from unauthorized use of Dalian Fushi's
patents, which could harm our business and competitive position.

      Our success depends, in part, on our ability to protect our proprietary
technologies. Dalian Fushi has four patents in China covering its modified
bond-welding technology and related devices and machines and has one additional
patent application pending for a manufacturing machine for copper clad aluminum
wires in the PRC. Dalian Fushi is in the process of commencing the patent
transfer procedure described in the Restructuring Agreements, which procedure is
estimated to take three to five months to complete. Prior to the effectiveness
of the patent transfers, Dalian DPI (subject to Dalian Fushi's right to use
these patents) has the exclusive legal right, royalty free, to use all of these
patents . Dalian Fushi will execute any license agreements required by the
Company or Dalian DPI that they deem necessary or advisable. See Item 1.01 for
more information on the Restructuring Agreements.

      Dalian Fushi also has made one international patent application under the
International Patent Cooperation Treaty, which covers Dalian Fushi's
bond-welding manufacturing method for cuponal busbar. The process of seeking
patent protection can be lengthy and expensive and we cannot assure you that
patent applications will result in patents being issued, or that existing or
future issued patents will be sufficient to provide us with meaningful
protection or commercial advantage.

                                       42
We believe that other manufacturers in the PRC have been infringing Dalian
Fushi's patents and using its core technology, but we have not, in the past had
sufficient capital to pursue legal remedies. Although we plan to pursue legal
remedies available in the PRC to protect our patents, we cannot assure you that
the protection afforded under the laws of the PRC is adequate to maintain our
competitive position or that we will be successful in our efforts. Our patents
and patent applications may be challenged, invalidated or circumvented in the
future. We cannot assure you that our current or potential competitors do not
have, and will not obtain, patents that will prevent, limit or interfere with
our ability to make, use or sell our products in either the PRC or other
countries.

      Implementation of PRC intellectual property-related laws has historically
been lacking, primarily because of ambiguities in the PRC laws and difficulties
in enforcement. Accordingly, intellectual property rights and confidentiality
protections in the PRC may not be as effective as in the United States or other
countries. Policing unauthorized use of proprietary technology is difficult and
expensive, and we might need to resort to litigation to enforce or defend
patents issued to us or to determine the enforceability, scope and validity of
our proprietary rights or those of others. Such litigation may require
significant expenditure of cash and management efforts and could harm our
business, financial condition and results of operations. An adverse
determination in any such litigation will impair our intellectual property
rights and may harm our business, competitive position, business prospects and
reputation.

We may be exposed to intellectual property infringement and other claims by
third parties, which, if successful, could cause us to pay significant damage
awards and incur other costs.

      Our success also depends in large part on our ability to use and develop
our technology and know-how without infringing the intellectual property rights
of third parties. As litigation becomes more common in the PRC in resolving
commercial disputes, we face a higher risk of being the subject of intellectual
property infringement claims. The validity and scope of claims relating to
weld-cladding technology and related devices and machine patents involve complex
technical, legal and factual questions and analysis and, therefore, may be
highly uncertain. The defense and prosecution of intellectual property suits,
patent opposition proceedings and related legal and administrative proceedings
can be both costly and time consuming and may significantly divert the efforts
and resources of our technical and management personnel. An adverse
determination in any such litigation or proceedings to which we may become a
party could subject us to significant liability, including damage awards, to
third parties, require us to seek licenses from third parties, to pay ongoing
royalties, or to redesign our products or subject us to injunctions preventing
the manufacture and sale of our products. Protracted litigation could also
result in our customers or potential customers deferring or limiting their
purchase or use of our products until resolution of such litigation.

                                       43
Potential environmental liability could have a material adverse effect on our
operations and financial condition.

      To the knowledge of our management team, neither the production nor the
sale of our products constitute activities, or generate materials in a material
manner, that requires our operation to comply with the PRC environmental laws.
Although it has not been alleged by PRC government officials that we have
violated any current environmental regulations, we cannot assure you that the
PRC government will not amend the current PRC environmental protection laws and
regulations. Our business and operating results may be materially and adversely
affected if we were to be held liable for violating existing environmental
regulations or if we were to increase expenditures to comply with environmental
regulations affecting our operations.

We rely on Mr. Fu, our Chairman and CEO, Mr. Fu, for the management of our
business, and the loss of his services may significantly harm our business and
prospects.

      We depend, to a large extent, on the abilities and participation of our
current management team, but have a particular reliance upon Li Fu for the
direction of our business. The loss of the services of Mr. Fu, for any reason,
may have a material adverse effect on our business and prospects. We cannot
assure you that the services of Mr. Fu will continue to be available to us, or
that we will be able to find a suitable replacement for Mr. Fu.

We do not have key man insurance on Mr. Fu, our CEO, upon whom we rely primarily
for the direction of our business.

      We rely primarily upon Mr. Fu, our CEO, for the direction of our business.
We do not have key man insurance on Mr. Fu. If Mr. Fu dies and we are unable to
replace Mr. Fu for a prolonged period of time, we may be unable to carry out our
long term business plan and our future prospect for growth, and our business,
may be harmed

We may not be able to hire and retain qualified personnel to support our growth
and if we are unable to retain or hire such personnel in the future, our ability
to improve our products and implement our business objectives could be adversely
affected.

      Our future success depends heavily upon the continuing services of the
members of our senior management team, in particular our chairman and chief
executive officer, Li Fu, our president, Yue Yang, our chief financial officer
Wenbing Wang, our chief engineer Xishan Yang and our manager of domestic sales,
Qingshan Liu. If one or more of our senior executives or other key personnel are
unable or unwilling to continue in their present positions, we may not be able
to replace them easily or at all, and our business may be disrupted and our
financial condition and results of operations may be materially and adversely
affected. Competition for senior management and senior technology personnel is
intense, the pool of qualified candidates is very limited, and we may not be
able to retain the services of our senior executives or senior technology
personnel, or attract and retain high-quality senior executives or senior
technology personnel in the future. Such failure could materially and adversely
affect our future growth and financial condition.

                                       44
We do not presently maintain product liability insurance, and our property and
equipment insurance does not cover the full value of our property and equipment,
which leaves us with exposure in the event of loss or damage to our properties
or claims filed against us.

      We currently do not carry any product liability or other similar
insurance. We cannot assure you that we would not face liability in the event of
the failure of any of our products. This is particularly true given our plan to
significantly expand our sales into international markets, like the United
States, where product liability claims are more prevalent.

      We have purchased automobile insurance with third party liability coverage
for our vehicles. In addition, we have purchased property insurance from China
United Property Insurance Company to cover real property and plant of up to
RMB43,350,000 (approximately US$5,344,652), and manufacturing machine and
equipment of up to RMB36,750,000 (approximately US$4,541,410). The total
coverage of our property and equipment is approximately US$9,886,062. However,
our property and equipment net of depreciation as of December 31, 2004 was
US$33,467,298, and our property insurance therefore covers only less than
one-third of the value of our property and equipment.

      Except for property and automobile insurance, we do not have other
insurance such as business liability or disruption insurance coverage for our
operations in the PRC.

We do not maintain a reserve fund for warranty or defective products claims. Our
costs could substantially increase if we experience a significant number of
warranty claims.

      Our product warranties against technical defects of our copper clad
aluminum wires and copper clad steel wires vary, depending on our purchase
orders with customers. The warranties require us to replace defective components
and pay for the losses customers incur from defective products or a certain
percentage of the purchase price as liquidated damages for our failure to meet
the specified product specifications and packaging requirements in the purchase
orders. We have not established any reserve funds for potential warranty claims
since historically we have experienced few warranty claims for our products so
that the costs associated with our warranty claims have been low. If we
experience an increase in warranty claims or if our repair and replacement costs
associated with warranty claims increase significantly, it would have a material
adverse effect on our financial condition and results of operations.

We are dependent on the communications industry, including telecommunications
and cable television.

                                       45
Substantially all of our revenues in the years ended December 31, 2004 and
2003, respectively, and the subsequent nine month period ended September 30,
2005, came from sales to the communications industry, including the cable
television industry. Demand for these products is subject to rapid technological
change. These markets are dominated by several large manufacturers and operators
who regularly exert significant price pressure on their suppliers, including us,
and the loss of one or more of the large communications manufacturers or
operators could have a material adverse effect on our business. We cannot assure
you that we will be able to continue to compete successfully in our sales to the
communications industry, and our failure to do so could impair our results of
operations.

Risks Related to Doing Business in the PRC.

These risk factors assume the completion of the acquisition of the business
through the Restructuring Agreements.

We face the risk that changes in the policies of the PRC government could have a
significant impact upon the business we may be able to conduct in the PRC and
the profitability of such business.

      The PRC's economy is in a transition from a planned economy to a market
oriented economy subject to five-year and annual plans adopted by the government
that set national economic development goals. Policies of the PRC government can
have significant effects on the economic conditions of the PRC. The PRC
government has confirmed that economic development will follow the model of a
market economy, such as the United States. Under this direction, we believe that
the PRC will continue to strengthen its economic and trading relationships with
foreign countries and business development in the PRC will follow market forces.
While we believe that this trend will continue, we cannot assure you that this
will be the case. Our interests may be adversely affected by changes in policies
by the PRC government, including:

      -     changes in laws, regulations or their interpretation

      -     confiscatory taxation

      -     restrictions on currency conversion, imports or sources of supplies

      -     expropriation or nationalization of private enterprises.

      Although the PRC government has been pursuing economic reform policies for
more than two decades, we cannot assure you that the government will continue to
pursue such policies or that such policies may not be significantly altered,
especially in the event of a change in leadership, social or political
disruption, or other circumstances affecting the PRC's political, economic and
social life.

The PRC laws and regulations governing our current business operations are
sometimes vague and uncertain. Any changes in such PRC laws and regulations may
have a material and adverse effect on our business.

                                       46
There are substantial uncertainties regarding the interpretation and
application of PRC laws and regulations, including but not limited to the laws
and regulations governing our business, or the enforcement and performance of
our arrangements with customers in the event of the imposition of statutory
liens, death, bankruptcy and criminal proceedings. We and any future
subsidiaries are considered foreign persons or foreign funded enterprises under
PRC laws, and as a result, we are required to comply with PRC laws and
regulations. These laws and regulations are sometimes vague and may be subject
to future changes, and their official interpretation and enforcement may involve
substantial uncertainty. The effectiveness of newly enacted laws, regulations or
amendments may be delayed, resulting in detrimental reliance by foreign
investors. New laws and regulations that affect existing and proposed future
businesses may also be applied retroactively. We cannot predict what effect the
interpretation of existing or new PRC laws or regulations may have on our
businesses.

A slowdown or other adverse developments in the PRC economy may materially and
adversely affect our customers, demand for our services and our business.

      All of our operations are conducted in the PRC and more than 90% of our
net sales are generated from sales in the PRC. Although the PRC economy has
grown significantly in recent years, we cannot assure you that such growth will
continue. The bimetallic composite wire industry in the PRC is growing, but we
do not know how sensitive we are to a slowdown in economic growth or other
adverse changes in the PRC economy which may affect demand for our products. A
slowdown in overall economic growth, an economic downturn or recession or other
adverse economic developments in the PRC may materially reduce the demand for
our products and materially and adversely affect our business.

Inflation in the PRC could negatively affect our profitability and growth.

      While the PRC economy has experienced rapid growth, such growth has been
uneven among various sectors of the economy and in different geographical areas
of the country. Rapid economic growth can lead to growth in the money supply and
rising inflation. If prices for our products rise at a rate that is insufficient
to compensate for the rise in the costs of supplies, it may have an adverse
effect on profitability. In order to control inflation in the past, the PRC
government has imposed controls on bank credits, limits on loans for fixed
assets and restrictions on state bank lending. The implementation of such
policies may impede economic growth. In October 2004, the People's Bank of
China, the PRC's central bank, raised interest rates for the first time in
nearly a decade and indicated in a statement that the measure was prompted by
inflationary concerns in the Chinese economy. Repeated rises in interest rates
by the central bank would likely slow economic activity in China which could, in
turn, materially increase our costs and also reduce demand for our products.

Dalian DPI and Dalian Fushi are subject to restrictions on paying dividends and
making other payments to us.

                                       47
The Company is a holding company incorporated in the State of Nevada and
does not have any assets or conduct any business operations other than
investments in its subsidiaries and affiliates, DPI, Dalian DPI and Dalian
Fushi. As a result of this holding company structure, the Company relies
entirely on dividends payments from Dalian DPI for funds. PRC regulations
currently permit payment of dividends only out of accumulated profits, as
determined in accordance with PRC accounting standards and regulations. Dalian
DPI and Dalian Fushi also are required to set aside a portion of their after-tax
profits according to PRC accounting standards and regulations to fund certain
reserve funds. The PRC government also imposes controls on the conversion of RMB
into foreign currencies and the remittance of currencies out of the PRC. The
Company may experience difficulties in completing the administrative procedures
necessary to obtain and remit foreign currency. Furthermore, if Dalian DPI or
Dalian Fushi incurs debt on its own in the future, the instruments governing the
debt may restrict its ability to pay dividends or make other payments. If the
Company or Dalian DPI is unable to receive all of the revenues from our
operations, we may be unable to pay dividends on our common stock. See "Risk
Factors--Risks Related to an Investment in Our Common Stock--We are unlikely to
pay cash dividends in the foreseeable future." Governmental control of currency
conversion may affect the value of your investment.

      The PRC government imposes controls on the convertibility of renminbi into
foreign currencies and, in certain cases, the remittance of currency out of the
PRC. Dalian DPI receives substantially all of its revenues in renminbi, which is
currently not a freely convertible currency. Shortages in the availability of
foreign currency may restrict our ability to remit sufficient foreign currency
to pay dividends, or otherwise satisfy foreign currency dominated obligations,
to the extent they are incurred in the future. Under existing PRC foreign
exchange regulations, payments of current account items, including profit
distributions, interest payments and expenditures from the transaction, can be
made in foreign currencies without prior approval from the PRC State
Administration of Foreign Exchange by complying with certain procedural
requirements. However, approval from appropriate governmental authorities is
required where renminbi is to be converted into foreign currency and remitted
out of PRC to pay capital expenses such as the repayment of bank loans
denominated in foreign currencies.

      The PRC government also may at its discretion restrict access in the
future to foreign currencies for current account transactions. If the foreign
exchange control system prevents the Company from obtaining foreign currency, we
may be unable to pay dividends or meet obligations that may be incurred in the
future that require payment in foreign currency. See "Risk Factors--Risks
Related to an Investment in Our Common Stock--We are unlikely to pay cash
dividends in the foreseeable future."

The fluctuation of the Renminbi may materially and adversely affect your
investment.

      The value of the renminbi against the U.S. dollar and other currencies may
fluctuate and is affected by, among other things, changes in the PRC's political
and economic conditions. As we rely entirely on revenues earned in the PRC, any
significant revaluation of the renminbi may materially and adversely affect our
cash flows, revenues and financial condition. For example, to the extent that we
need to convert U.S. dollars we receive from an offering of our securities into
renminbi for our operations, appreciation of the renminbi against the U.S.
dollar could have a material adverse effect on our business, financial condition
and results of operations. Conversely, if we decide to convert our renminbi into
U.S. dollars for the purpose of making payments for dividends on our common
stock or for other business purposes and the U.S. dollar appreciates against the
renminbi, the U.S. dollar equivalent of the renminbi we convert would be
reduced. In addition, the depreciation of significant U.S. dollar denominated
assets could result in a charge to our income statement and a reduction in the
value of these assets.

                                       48
On July 21, 2005, the PRC government changed its policy of tying the value
of the renminbi to the U.S. dollar. Under the new policy, the renminbi is
permitted to fluctuate within a narrow and managed band against a basket of
certain foreign currencies. This change in policy has resulted in an
approximately 2.0% appreciation of the renminbi against the U.S. dollar. While
the international reaction to the renminbi revaluation generally has been
positive, there remains significant international pressure on the PRC government
to adopt an even more flexible currency policy, which could result in a further
and more significant appreciation of the renminbi against the U.S. dollar.

If PRC laws or local regulations were to phase out the preferential tax benefits
currently being extended to "new or high-technology enterprises", we would have
to pay more taxes in the PRC, which could have a material and adverse effect on
our financial condition and results of operations.

      Currently, Dalian Fushi has preferential tax benefits with 50% deduction
on its income tax according to a notice issued by Dalian Municipal Government in
2000 providing for a series of tax preferential treatments to companies that
qualify as "new or high-tech" enterprise or companies in Dalian City. This
preferential tax treatment will expire on December 31, 2006.

      If the PRC laws and local regulations were to phase out preferential tax
benefits currently granted to "new or high-technology enterprises", we would be
subject to the standard statutory tax rate, which currently is 33%. The loss of
these preferential tax treatments that are currently available to us could have
a material and adverse effect on our financial condition and results of
operations.

We are in the process of applying for preferential tax benefits for Dalian DPI
as a WFOE, the result of which is uncertain.

      Under PRC laws and regulations, a WFOE may receive preferential tax
benefits if it is foreign funded and is a manufacturing enterprise. As a foreign
invested enterprise as well as a manufacturing enterprise, Dalian DPI should be
entitled to a three-year exemption from enterprise income tax beginning from its
first year of operation, a 7.5% enterprise income tax rate for another three
years followed by a 15% tax rate. We are in the process of applying for such
preferential tax benefits for Dalian DPI. We cannot assure you that Dalian DPI
will be granted preferential tax treatment. The failure to obtain this
preferential tax treatment could have a material and adverse effect on our
financial condition and results of operations.

                                       49
Recent PRC State Administration of Foreign Exchange ("SAFE") Regulations
regarding offshore financing activities by PRC residents have undertaken
continuous changes which may increase the administrative burden we face and
create regulatory uncertainties that could adversely affect the implementation
of our acquisition strategy, and a failure by our shareholders who are PRC
residents to make any required applications and filings pursuant to such
regulations may prevent us from being able to distribute profits and could
expose us and our PRC resident shareholders to liability under PRC law.

      The PRC State Administration of Foreign Exchange, or SAFE, issued a public
notice in January 2005 ("January Notice") requiring registrations with, and
approval from, SAFE on direct or indirect offshore investment activities by PRC
resident individuals. The January Notice states that if an offshore company
directly or indirectly formed by or controlled by PRC resident individuals (a
special purpose company, or SPC, as further defined in the October Notice
described below) intends to acquire a PRC company, such acquisition will be
subject to strict examination by the central SAFE, the SAFE bureau at the
highest level, which requires disclosure by PRC resident individuals regarding
their ownership status with an SPC or any other assets used in connection with
the acquisition transaction.

      In April 2005, SAFE issued another public notice ("April Notice")
clarifying the January Notice. Under the April Notice, if a PRC company is
acquired by an SPC, the PRC resident shareholders are required to submit a
registration form to the local SAFE branch to register his or her respective
ownership interests in the SPC, even if the transaction occurred prior to the
January Notice. The PRC resident also must file amendments if there is a
material event affecting the SPC, including a change to share capital, a
transfer of shares, or if the SPC is involved in a merger and an acquisition or
a spin-off transaction or uses its assets in the PRC to guarantee offshore
obligations. A SAFE certificate will be restrained from issuance if the PRC
residents fail to comply with the foregoing registration requirements. However,
the April Notice does not specify the documentations required completing the
registration, nor does it specify the period during which the retrospective
registration must be completed.

      On October 21, 2005, SAFE issued the third public notice ("October
Notice") effective from November 1, 2005, which superseded the January Notice
and April Notice. It defines "SPC" as an offshore company directly or indirectly
formed by or controlled by PRC resident entities or PRC resident individuals for
the purpose of equity financing (including financing by convertible bonds) using
the assets or interests in a PRC entity. It narrows the scope of registration
requirements to circumstances where PRC residents form or control an SPC. It
clarifies the documentation requirements and the time to complete the
registration procedures. It also clarifies that the registration approval
authority is the local SAFE, instead of the central SAFE, as set forth in the
January Notice.

                                       50
Under this October Notice, we and DPI, our wholly-owned subsidiary, are
considered SPCs. Prior to receiving any equity interests in us or DPI, our PRC
residence shareholders, namely, Dalian Fushi Enterprise Group Co., Ltd., Yue
Mathus Yang, Xishan Yang and Chunyan Xu, must complete the registration
regarding their ownership status in us and DPI. Only after compliance with the
registration requirement can dividends and profits from Dalian DPI be
distributed to us or our shareholders. Furthermore, the Dalian Fushi
Shareholders are required to transfer the dividends and profits back to the PRC
within 180 days after receipt.

      Although the October Notice clears up the uncertainties regarding the
disclosure requirement on PRC residents, it is uncertain how it will be
interpreted or implemented regarding specific documentation requirements, for
example, whether the disclosure made by Dalian Fushi Shareholders or other PRC
residence shareholders suffice. We cannot assure you whether our PRC resident
shareholders will comply with the October Notice to register with the local SAFE
and transfer any dividends or profits they received offshore to the PRC within
180 days. The failure of our PRC resident shareholders to comply with the
October Notice may subject us to fines and legal sanctions, restrict our
cross-board investment activities, or limit our Dalian DPI's ability to
distribute dividends to our company.

      In addition, the SAFE certificate of Dalian DPI was issued on September
22, 2005, which was prior to the effective date of the October Notice.
Consequently, we cannot assure you that the SAFE certificate of Dalian DPI will
not be reviewed by the local SAFE, in which case we have to complete additional
administrative procedures as may be instructed by the local SAFE. We cannot
assure you that Dalian DPI will be deemed to have adequately completed the
additional administrative procedures or that a new SAFE certificate can be
obtained. The failure to obtain new SAFE certificate would prevent us from
paying dividends or otherwise remitting funds out of the PRC and could also
prevent funds from outside of the PRC from coming into Dalian DPI, which would
materially and adversely affect our ability to raise capital for future
expansion or acquisitions.

Any recurrence of severe acute respiratory syndrome, or SARS, or another
widespread public health problem, could adversely affect our operations.

      A renewed outbreak of SARS or another widespread public health problem in
the PRC, where all of our revenue is derived, could have an adverse effect on
our operations. Our operations may be impacted by a number of health-related
factors, including quarantines or closures of some of our offices that could
leave us without many employees to conduct our business which would materially
and adversely affect our operations and financial condition.

Because our principal assets are located outside of the United States and nearly
all of our directors and all our officers reside outside of the United States,
it may be difficult for you to enforce your rights based on the United States
federal securities laws against us and our officers and some directors in the
United States or to enforce judgments of United States courts against us or them
in the PRC.

                                       51
Two of our three directors and all of our officers reside outside of the
United States. In addition, our operating subsidiary, Dalian DPI, is located in
the PRC and substantially all of its assets are located outside of the United
States. It may therefore be difficult for investors in the United States to
enforce their legal rights based on the civil liability provisions of the United
States Federal securities laws against us in the courts of either the United
States or the PRC and, even if civil judgments are obtained in courts of the
United States, to enforce such judgments in PRC courts. Further, it is unclear
if extradition treaties now in effect between the United States and the PRC
would permit effective enforcement against us or our officers and directors of
criminal penalties, under the United States Federal securities laws or
otherwise.

We may have difficulty establishing adequate management, legal and financial
controls in the PRC.

      PRC companies have historically not adopted a Western style of management
and financial reporting concepts and practices, which includes strong corporate
governance, internal controls and, computer, financial and other control
systems. In addition, we may have difficulty in hiring and retaining a
sufficient number of qualified employees to work in the PRC. As a result of
these factors, we may experience difficulty in establishing management, legal
and financial controls, collecting financial data and preparing financial
statements, books of account and corporate records and instituting business
practices that meet Western standards. Therefore, we may, in turn, experience
difficulties in implementing and maintaining adequate internal controls as
required under Section 404 of the Sarbanes-Oxley Act of 2002. This may result in
significant deficiencies or material weaknesses in our internal controls which
could impact the reliability of our financial statements and prevent us from
complying with SEC rules and regulations and the requirements of the
Sarbanes-Oxley Act of 2002. Any such deficiencies, weaknesses or lack of
compliance could materially adversely affect our business.

Risks Related to an Investment in our Common Stock.

Our officers, directors and affiliates control us through their positions and
stock ownership and their interests may differ from other stockholders. In
addition, holders of our Series B Stock have certain voting rights that can
affect our operations.

      Our officers, directors and affiliates beneficially own approximately 77%
of the Company's voting stock by virtue of their ownership of Series A Stock,
which has voting rights and is convertible into shares of Common Stock upon the
Reverse Split. Li Fu, our Chairman and Chief Executive Officer, beneficially
owns approximately 65% of the Company's voting stock. As a result, Mr. Fu is
able to influence the outcome of stockholder votes on various matters, including
the election of directors and extraordinary corporate transactions, including
business combinations. Mr. Fu's interests may differ from other stockholders.

                                       52
The holders of our Series B Stock may obtain complete control and majority
ownership of the Company if the Reverse Split does not occur within specified
time limits.

      Dalian Fushi and the Dalian Fushi Shareholders own approximately 75.0% of
our voting stock and control our company. Holders of our Series B Stock invested
in our company with the understanding that they would own 20.15% of the
outstanding Common Stock after the Reverse Split. Pursuant to the Series B
Certificate of Designations, filed with the Nevada Secretary of State, if by
April 11, 2005 the Reverse Split has not occurred, the holders of the Series B
Stock will receive as a forfeiture, out of escrow, pro rata, each at their
option, 125,000 additional shares of Common Stock or that number of shares of
Series A Stock that may be converted into 125,000 shares of Common Stock
("Penalty Shares"), owned by Dalian Fushi and the Dalian Fushi Shareholders, and
shall receive additional Penalty Shares every 30 days thereafter that the (a)
the Reverse Split has not been effected, or (b) the holders of the shares of
Series B Stock do not otherwise acquire, in the aggregate, 20.15% of the
outstanding shares of Common Stock.

      If by December 13, 2006, the Reverse Split has not occurred, or the
holders of the Series B Stock do not then own in the aggregate 20.15% of our
outstanding voting stock, and if by January 11, 2007, we do not repurchase all
of the outstanding Series B shares at the written request of Chinamerica, for a
total purchase price of $11,225,000 then thereafter and until the Reverse Split
is effected, the shares of Series B Stock will carry an aggregate number of
votes equal to 66 2/3% of the then outstanding voting power of all our voting
securities, or such larger percentage of votes required to approve any action
by, or submitted to, the shareholders. In addition, if by January 11, 2007, the
Reverse Split has not occurred, or the holders of the Series B Stock do not then
own in the aggregate 20.15% of our outstanding voting securities and we do not
repurchase all of the outstanding Series B shares at the written request of
Chinamerica, for a total purchase price of $11,225,000 then the holders of the
then outstanding shares of Series B Stock may purchase the shares of Common
Stock and Series A Stock owned by Dalian Fushi and the Dalian Fushi
Shareholders, held in escrow, at a price per share of $.001.

      The failure to effect the Reverse Split may result in a change in control
of our company.

      We are unlikely to pay cash dividends in the foreseeable future.

      We currently intend to retain any future earnings for use in the operation
and expansion of our business. We do not expect to pay any cash dividends in the
foreseeable future but will review this policy as circumstances dictate. Should
we decide in the future to do so, as a holding company, our ability to pay
dividends and meet other obligations depends upon the receipt of dividends or
other payments from our operating subsidiary. In addition, our operating
subsidiary, from time to time, may be subject to restrictions on its ability to
make distributions to us, including as a result of restrictions on the
conversion of local currency into U.S. dollars or other hard currency and other
regulatory restrictions. See, "Risk Factors-Risks Related to Doing Business in
the PRC-- Dalian DPI and Dalian Fushi are subject to restrictions on paying
dividends and making other payments to us", Risk Factors-Risks Related to Doing
Business in the PRC-- Governmental control of currency conversion may affect the
value of your investment" and "Market for our Common Stock-- Dividends."

                                       53
There is currently a very limited trading market for our common stock.

      Our Common Stock has been quoted on the over-the-counter Bulletin Board
since July 2005, with little or no trading activity. Because the Company was
formerly a shell company, our bid and asked quotations have not regularly
appeared on the OTC Bulletin Board for any consistent period of time. There is
no established trading market for our common stock and our common stock may
never be included for trading on any stock exchange or through any other
quotation system (including, without limitation, the NASDAQ Stock Market). You
may not be able to sell your shares due to the absence of an established trading
market.

      Our common stock is, and will continue to be, subject to the SEC's "penny
stock" rules to the extent that the price remains less than $5.00. Those rules,
which require delivery of a schedule explaining the penny stock market and the
associated risks before any sale, may further limit your ability to sell your
shares. See "Market for our Common Stock-- Penny Stock Regulations."

Our common stock is illiquid and subject to price volatility unrelated to our
operations.

      The market price of our common stock could fluctuate substantially due to
a variety of factors, including market perception of our ability to achieve our
planned growth, quarterly operating results of other companies in the same
industry, trading volume in our common stock, changes in general conditions in
the economy and the financial markets or other developments affecting our
competitors or us. In addition, the stock market is subject to extreme price and
volume fluctuations. This volatility has had a significant effect on the market
price of securities issued by many companies for reasons unrelated to their
operating performance and could have the same effect on our common stock.

A large number of shares of Common Stock will be issuable for future sale which
will dilute the ownership percentage of our holders of Common Stock. We are
required to register for public sale a significant portion of these shares of
Common Stock and this may depress our stock price.

      Following the Reverse Split, all outstanding shares of Series A Stock and
Series B Stock will be automatically converted into approximately shares of
Common Stock upon the Reverse Split contemplated by the Company. In addition, we
have outstanding warrants that may also be exercised for shares of Common Stock.
As a result of these conversions and exercises, up to 19,566,640 additional
shares of Common Stock (on a post-Reverse Split basis) may be issued. As a
result of these additional issuances of Common Stock, the ownership percentage
held by our holders of Common Stock will be significantly reduced. See Items
3.02 and 3.03 for more information on the Reverse Split and the Series A Stock,
Series B Stock and warrants.

                                       54
In addition, we are required to register with the SEC for public sale the
shares of Common Stock issuable upon conversion of the Series B Stock and the
exercise of the warrants issued in connection with the Series B Stock private
placement offering as well as the warrant issued to Glenn A. Little. See Item
1.01 and 3.02 of this Current Report for more information on the Series B Stock
and these warrants. After giving effect to the Reverse Split, we could have up
to 4,145,836 shares that are freely tradable. As a result, there will be a
significant number of new shares of Common Stock on the market in addition to
the current public float. Sales of substantial amounts of Common Stock, or the
perception that such sales could occur, and the existence of options or warrants
to purchase shares of Common Stock at prices that may be below the then current
market price of the Common Stock, could adversely affect the market price of our
Common Stock and could impair our ability to raise capital through the sale of
our equity securities.

In connection with the Reverse Split and in anticipation of applying for the
listing of Common Stock on the American Stock Exchange, we may issue additional
shares of Common Stock to certain round lot shareholders and these shareholders
may incur a tax liability as a result from the receipt of these additional
shares.

         In connection with the Reverse Split and in order to create a
sufficient number of round lot holders (holders of at least 100 shares of Common
Stock) to satisfy one of the criteria for the listing of the Common Stock on the
American Stock Exchange, we are authorized to issue to each shareholder holding
24,500 or fewer shares of Common Stock, but at least 12,250 shares of Common
Stock on the record date for the Reverse Split such additional number of shares
of Common Stock so that each such shareholder, after giving effect to the
Reverse Split and the issuance to such shareholder of additional shares, shall
hold 100 shares of Common Stock. These shareholders may incur a tax liability as
a result from the receipt of these additional shares and, as such, this
shareholder should consult with their individual financial and tax advisors
regarding any tax implications.

                                       55
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

      The following discussion and analysis of the consolidated financial
condition and results of operations should be read in conjunction with the
consolidated financial statements and related notes of Dalian Fushi, appearing
elsewhere in this Current Report. This discussion and analysis contains
forward-looking statements that involve risks, uncertainties and assumptions.
The actual results may differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including, but not
limited to, those set forth under "Risk Factors" and elsewhere in this Current
Report.

Overview

      On December 13, 2005 the Company entered into a series of restructuring
transactions through which the Company will acquire substantially all of the
assets and business of Dalian Fushi, a limited liability company organized under
the laws of the People's Republic of China. As part of the transactions, Dalian
Fushi acquired a controlling interest in the Company from Glenn A. Little, who
previously held a majority of our Common Stock. Upon the completion of the
restructuring transactions, which we anticipate will be completed 15 days after
date of this Current Report, the business of Dalian Fushi will be operated by
our sole operating subsidiary, Dalian DPI, a wholly foreign-owned entity in the
PRC. The business consists of manufacturing and selling copper clad aluminum and
steel wire, both of which are bimetallic composite wire products that are
principally used for network signal transmission cable, cable television wire,
signal transmission cable, cable television subscriber lines, distribution
lines, local area networks, inner conductor for access networks, telephone
subscriber communication lines, patch cords for electronic components, power
system grounding lines, conductor lines for electric railways and other
applications. See "Business" for more information on our acquired business.

      The Company accomplished the acquisition through the following steps.

      1. Dalian Fushi's shareholders and Dalian Fushi's U.S. financial adviser,
Kuhns Brothers, formed DPI and Dalian DPI. Dalian DPI is 100% owned by DPI and
is a "wholly foreign owned entity" under PRC law by virtue of its status as a
wholly-owned subsidiary of DPI, as a non-PRC company.

      2. On November 8, 2005, Dalian Fushi entered into a stock purchase
agreement with our former director, chief executive officer and majority
shareholder, Glenn A. Little, which closed on December 13, 2005. Pursuant to
this agreement, as amended, Mr. Little sold his 20,000,000 shares of Common
Stock, to Dalian Fushi. As a result, Dalian Fushi became the majority
shareholder of the Company. In connection with this agreement, and prior to its
closing, Mr. Little, as director and majority shareholder of the Company
resigned as the director of the Company and appointed Li Fu, Yue Mathus Yang and
John D. Kuhns as directors of the Company. Mr. Fu and Mr. Yang are also
beneficial shareholders and officers of Dalian Fushi. Immediately after the
closing of a private placement offering, Mr. Little also resigned from all his
officer positions with the Company. Contemporaneous with his resignation, the
new directors of the Company appointed new officers with immediate effect. The
directors of DPI and Dalian DPI will be similar to those of the Company. See
"Our Directors and Officers" for more information on these persons and Item 5.01
of this Current Report for more information on this stock purchase agreement.

                                       56
3. On December 13, 2005, the Company consummated a share exchange
agreement with DPI, whereby the Company exchanged 784,575.16 shares of its newly
designated Series A Stock for all of the issued and outstanding stock of DPI
held by the DPI shareholders. The Series A Stock is convertible into Common
Stock following the reverse stock split described below. As a result, DPI and
Dalian DPI became direct and indirect wholly-owned subsidiaries, respectfully,
of the Company. See Item 1.01 for additional information on the share exchange
with DPI and Item 1.01, Item 3.02 and 3.03 of this Current Report for more
information on the designation and issuance of the Series A Stock.

      4. Immediately following the above transactions, but on the same date,
Dalian DPI entered into and closed the Restructuring Agreement with Dalian Fushi
to purchase substantially all of the assets of Dalian Fushi and lease the
remaining assets. Under the Restructuring Agreements, Dalian Fushi's business
will be conducted by Dalian DPI. To the extent that any aspect of Dalian Fushi's
business needs to be conducted through Dalian Fushi in the future, the
Restructuring Agreements provide Dalian DPI with the ability to control Dalian
Fushi and any of its remaining assets and operations. The Restructuring
Agreements were utilized, instead of a complete acquisition of Dalian Fushi's
assets, because current PRC law does not specifically provide for the approval
procedures and the detailed implementation regulations on non-PRC entity's
equity to be used as consideration to acquire a PRC entity's equity or assets,
which makes it impossible for a non-PRC entity to use its equity to acquire a
PRC entity. If acquisition of a PRC entity using foreign equity was possible,
the Company could have acquired 100% of the stock of Dalian Fushi in exchange
for Common Stock. While PRC law does allow for the purchase of equity interests
in (or assets of) a PRC entity by a non-PRC entity for cash, the purchase price
must be based on the appraised value of such equity (or assets). Because the
Company did not have sufficient cash to pay the estimated full value of all of
the assets of Dalian Fushi, the Company, through Dalian DPI, purchased the
maximum amount of assets possible with the net proceeds of the private placement
offering described below, and leased the remainder of Dalian Fushi's assets used
in Dalian Fushi's business for nominal consideration. See Item 1.01 of this
Current Report for more information on the Restructuring Agreements.

      While the Restructuring Agreements were entered into and closed on
December 13, 2005, not all of the transactions contemplated by the Restructuring
Agreements have been consummated and the Company, through Dalian DPI, has not
yet commenced operation of the business. To complete these transactions, Dalian
DPI must complete additional filings and registrations, including (i) completing
a PRC registered capital verification process, (ii) after such capital
verification process, transmitting to Dalian Fushi the full purchase price for
the assets to be purchased by it under the Restructuring Agreements, (iii)
obtaining an environmental report for the assets purchased from Dalian Fushi,
and (iv) obtaining a new business license from the PRC State Administration for
Industry and Commerce in Dalian, PRC to reflect Dalian DPI's status as an
operating company. We anticipate these steps will be completed within 15 days
after the date of this Current Report, at which time Dalian DPI will commence
operations.

                                       57
5. The funds used for the consummation of the stock purchase agreement
with Mr. Little and the Restructuring Agreements were provided from the proceeds
of a $11,225,000 private placement offering by the Company which also closed on
December 13, 2005. The investors in this offering purchased 201,511.98 shares of
the Company's newly designated Series B Stock, along with warrants to purchase
additional shares of Common Stock and rights to additional issuances of Common
Stock based on certain conditions. The Series B Stock is convertible into Common
Stock following the reverse stock split described below. See Item 1.01, 3.02 and
3.03 of this Current Report for more information on the designation and issuance
of the Series B Stock and warrants. The net proceeds of the Series B Stock
offering will otherwise be used by Dalian DPI principally for the conduct of the
business.

      The Series A Stock and the Series B Stock will not convert into shares of
Common Stock until the Company effects a 245.27 for 1 reverse stock split of its
Common Stock (the "Reverse Split"), as described in Item 3.03 of this Current
Report. The Reverse Split was approved on December 5, 2005, along with a change
in the Company's name to "Fushi International, Inc." The Reverse Split and name
change will occur within 25 days of the Company mailing an Information Statement
on Schedule 14C to its shareholders. A preliminary Information Statement will be
filed with the SEC on or about the date of this Current Report.

      As a result of the above transactions, the Company ceased being a shell
company as such term is defined in Rule 12b-2 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). See Item 5.06 of this Current Report.

--------------------------------------------------------------------------------
---------------------------
 Parallel Technologies, Inc.
      (to be changed to
 Fushi International, Inc.)  |
 ---------------------------  |
              |                |
              |      ------     |
              |       100%       |
              |      ------       |
              |                    |
 ---------------------------        |
    Diversified Product              |
  Inspections, Inc. (DPI)             |
 ---------------------------           |
              |                         |
              |      ------              |
              |       100%                |
              |      ------                |
              |                             |
 ---------------------------                 |
     Dalian Diversified                       |
    Product Inspections                        |
 Bimetallic Cable Co., Ltd.                     |
        (Dalian DPI)                             |
 ---------------------------                      |
              |                                 ---------------------------
              |                                  Dalian Fushi Bimetallic
              ---------------------------------  Manufacturing Co., Ltd.
                ---------------                       (Dalian Fushi)
                 Restructuring                  ---------------------------
                   Agreements
                ---------------
--------------------------------------------------------------------------------

                                       58
Recent Trends and Developments

      As set forth in the following table, during the nine-months ended
September 30, 2005, and during fiscal 2005, to date, Dalian Fushi, as it existed
prior to the restructuring, has had an increasing flow of orders for its
products which generally has resulted in higher net sales and net income, as
compared to prior years:

                           Increase/           30-Sep-05           30-Sep-04
                           (Decrease)
Net Sales                      31%            $18,072,468         $12,463,520
Gross Profit                   31%            $7,853,026          $5,435,018
Operating Income               32%            $6,189,216          $4,187,357
Net Income                     31%            $4,894,588          $3,376,010
Gross Margins               (0.36)%             43.45%              43.61%

      Dalian Fushi's increasing orders continue to follow a trend which began in
2003. In 2003, Dalian Fushi had only five production lines and lacked the
manufacturing capacity to fill all customer orders. During the fiscal year ended
December 31, 2004, Dalian Fushi added an additional 15 production lines,
enabling it to fill more orders and generate additional revenues. While Dalian
Fushi currently has the production capacity to fulfill all orders, until the
closing of the private placement offering, it lacked sufficient working capital
to purchase necessary raw materials to fulfill all orders. Our lack of working
capital was a function of increased accounts payable to accommodate purchases to
support expanded production and increased accounts receivable pending collection
and which relate to recently produced items. Because Dalian Fushi's management
did not wish to incur additional bank debt to make up the working capital
deficiency, Dalian Fushi sought equity investment which resulted in the
transactions and private placement offering described above.

      With the net proceeds from the financing, management plans to:

      i.    purchase additional new production lines, primarily for the
            production of "fine" wire products, as well as raw materials to
            allow Dalian DPI to meet existing customer orders;

      ii.   increase marketing efforts and create additional capacity to meet
            increased customer orders;

      iii.  develop, expand and strengthen our distribution and sales network
            and capabilities outside of the PRC. Presently, we have eight
            non-Chinese customers for our products. We are looking to actively
            pursue placing comprehensive distribution throughout North America,
            Asia Pacific, and Europe, utilizing exclusive distributors that are
            active in the markets we service. In the US market in particular, we
            plan to set up direct offices and employ direct staff to manage the
            distribution of our products in North and South America; and

      iv.   implement upgraded information technology, financial reporting and
            other management systems to improve revenue performance, asset
            utilization, operating efficiency and profitability.

                                       59
During the quarter ended September 30, 2005, Dalian Fushi started to
manufacture and market "fine" wire products, which are bimetallic wires with a
smaller than typical diameter. These products can be sold at higher prices and
result in substantially higher gross margins which are up to 45% higher than the
gross margins for standard bimetallic wire products.

      Dalian Fushi has completed the development of a new technology for a press
cladding device to be used for larger sized bimetallic wires, which also
typically have higher gross margins. We anticipate that testing and the
development of required equipment will continue into early 2006 before we can
implement the technology. In addition, Dalian Fushi has also submitted an
international patent application for the manufacture of cuponal busbar for which
production machinery is also being developed. Cuponal busbar, which is another
high margin product, has wider applications than copper clad wire and is
extensively used in electronic items and household appliances. It is anticipated
that production of this product can commence in the second half of 2006.

      Dalian Fushi's operating results in any given time period are driven by
several key factors, including: the volume of orders, product produced and
shipped, the cost of copper, aluminum and other raw materials, the competitive
pricing environment in the bimetallic wire industry and the resulting influence
on gross margins and the efficiency with which our plant operates during the
period.

Nine Months Ended September 30, 2005 and September 30, 2004

Net Sales

      During the second and third quarter of the fiscal year ending December 31,
2005, we expanded our operations into a new manufacturing facility with over
500,000 square feet of factory space, which is 25 times the size of our original
facility. The move resulted in a temporary disruption of manufacturing during
the months of June and July. Nevertheless, net sales increased to $18.07 million
for the nine months ended September 30, 2005 as compared to $12.46 million for
the nine months ended September 30, 2004, an increase of approximately $5.6
million or 45.00%. This increase primarily resulted from increased customer
orders and increasing prices for copper which we were able to pass on to
customers. During the quarter ended September 30, 2005, Dalian Fushi completed
the installation and testing of 15 additional manufacturing lines. While these
manufacturing lines will allow us to address some of Dalian Fushi's order
backlog, we will need additional capital to address working capital requirements
for raw materials purchases.

      Sales by our top three customers by percentage to our total sales as of
September 30, 2005 are as follows:

Top Three Customers                                        Percentage of Sales
Andrew Corporation                                         14%
Zhuhai Hansheng Industrial Co., Ltd.                       11%
Jiangxi Lianchuang Photoelectricity Science Co.            10%

Total                                                      35%

                                       60
Our top three customers accounted for 56.55% and 35% of Dalian Fushi's net
sales for the year ended December 31, 2004 and nine months ended September 30,
2005, respectively. As Dalian Fushi has expanded its business, it has been able
to do so with orders from new customers thereby decreasing its concentration of
customers. We plan to continue this trend by expanding marketing efforts to
obtain more new customers.

      Geographically, a substantial portion of Dalian Fushi's customers is based
in the PRC. We anticipate that most of Dalian Fushi"s revenue will continue to
be derived from sale to customers in the PRC. However, we believe that a
significantly larger portion of sales will start to come from outside of PRC as
we expand international marketing and distribution efforts.

Cost of Sales

      Cost of sales increased by 45.4% to approximately $10.22 million for the
nine months ended September 30, 2005 (approximately 56.55% of net sales), from
approximately $7.03 million (approximately 56.39% of net sales) in the
corresponding period of the prior year. The increase in cost of sales was
primarily due to an increase in our sales volume and the associated costs to
manufacture and deliver our products, including rising copper prices, rising
energy costs, higher manufacturing costs consisting of a substantially increased
depreciation, and higher fixed costs attributable to the transition from the old
to the new factory. Cost of sales as a percentage of net sales remained
relatively unchanged.

Gross Profit

      Gross profit for the nine months ended September 30, 2005 was
approximately $ 7.85 million, or 43.45% of net sales, as compared to gross
profit of approximately $5.45 million or 43.61% of net sales for the same period
in the prior year. This increase was principally the result of aggressive
expansion of our business, particularly an increase in sales of our
recently-introduced "fine wire" products with significantly higher margins when
compared to our other CCA and CCS products, which effectively offset the impact
of higher copper, energy, and fixed costs. In addition, we were able to pass on
some of the increased costs to our customers in final selling prices. As a
result, gross profit in terms of percentage of net sales remained almost
unchanged.

Operating Expenses

      Operating expenses increased to $1.66 million for the nine months ended
September 30, 2005, as compared to approximately $1.25 million for the same
period during the prior year, an increase of $416,149, or about 33.4%. The
increase in operating expenses was primarily the result of higher general and
administrative expenses due to our move into a new facility and higher
depreciation and amortization relating to a larger asset base. This increase was
offset by significantly decreased selling expenses. Operating expenses overall
as a percentage of net sales dropped to 9.21%, or 0.80%, for the nine months
ended September 30, 2005 from 10.01% for the same period of prior year. The
following table sets forth the components of our operating expenses both in
amount and as a percentage of total net sales for the nine months ended
September 30, 2005 and 2004, respectively.

                                       61
Items                                          Nine Months Ended September 30,
                                --------------------------------------------------------------
                                       2005 (unaudited)                 2004 (unaudited)
                                ----------------------------     -----------------------------
                                    US$                 %            US$                 %
                                ----------------------------     -----------------------------
Total Net Sales                 18,072,468           100.00%     12,463,520           100.00%
Selling expense                    168,910             0.93%        478,958             3.84%
General and
administrative expenses            815,133             4.51%        460,653             3.70%
Depreciation and
amortization                       679,767             3.76%        308,050             2.47%
Total Operating Expenses         1,663,810             9.21%      1,247,661            10.01%
Selling expenses decreased to approximately $168,910 for the nine months
ended September 30, 2005 from approximately $478,958 for the same period during
the prior year, a decrease of approximately $310,048, or 64.7%. The decrease
primarily resulted from decreased marketing and sales efforts corresponding to
an increase in demand for our products, with a substantial portion of our net
sales derived from long-term customers as repeat orders.

      General and administrative expenses increased by $354,480, or 76.95%, from
$460,653 in the first nine months of 2004, to $815,133 in the same period of
2005. Most of the increase in general and administrative expenses resulted from
additional administrative expenses relating to our move to our new facilities.

      Depreciation and amortization increased by $371,717, or approximately
120.67%, to $679,767 for the nine months ended September 30, 2005, from $
308,050 for the same period of prior year. The increase in depreciation and
amortization was primarily due to a larger fixed asset base.

      In the future, we anticipate that our operating expenses will increase due
to: increased research and development spending to add new and higher margin
products to our product line, increases in sales and marketing expenses, new
hires, and costs associated with being a reporting public company. At the same
time, we plan to implement a series of measures to control costs, enhance
operational management, improve efficiency, and lower administrative expenses.
For example, we are in the process of engaging accounting consultants to
implement and overhaul our financial reporting and financial management systems
to ensure timely generation of financial information.

Operating Income

      Operating income totaled approximately $6.19 million for the nine months
ended September 30, 2005, as compared to operating income of approximately $4.19
million for the nine months ended September 30, 2004, an increase of
approximately $2.0 million or approximately 47.8%.

                                       62
As a percentage of net sales, operating income was approximately 34.25% in
the first nine months of 2005 as compared to approximately 33.60% for the same
period of prior year.

Income Taxes

      Our sole operating business consisted of Dalian Fushi during the nine
month period ended September 30, 2005. Thus, we were not subject to any U.S.
income taxes. The amount of taxes paid by Dalian Fushi for the nine months ended
September 30, 2005 and 2004 were $852,904 and $595,766, respectively.

      Dalian Fushi has been approved as a "high-tech" company by the Dalian
Municipal Government since it changed its form of entity to a limited liability
company in 2002. Pursuant to the "Several Provisions on Further Support High-
and New- Technology Industries Development" issued by the Dalian Municipal
Government in 2000, Dalian Fushi, as a high-tech company, is entitled to an
exemption from the PRC enterprise income tax for two years commencing from its
first profitable year and thereafter for three years, a 50% relief from the PRC
enterprise income tax. Dalian Fushi has been receiving the tax exemption since
fiscal 2002.

      Following the private placement offering and upon the completion of the
restructuring contemplated in the Restructuring Agreements, we will conduct our
business out of Dalian DPI. Dalian DPI is a wholly foreign-owned enterprise, or
WFOE, under the PRC law by virtue of its status as a subsidiary of DPI. Pursuant
to the relevant laws and regulations in the PRC, Dalian DPI, as a WFOE, is
entitled to an exemption from the PRC enterprise income tax for two years
commencing from its first profitable year, and thereafter for three years, a 50%
reduction from the PRC enterprise income tax. In addition, we are in the process
of seeking to have Dalian DPI approved as a "high tech" company, which will
afford the same tax benefits to Dalian DPI. However, we have yet received any
notices or confirmation as to Dalian DPI's tax status.

Net Income

      Net income increased to approximately $4.89 million in the nine months
ended September 30, 2005, or approximately 44.67%, from approximately $3.38
million in the nine months ended September 30, 2004. The increase in net income
resulted principally from lower costs and increased sales at higher margins.

Liquidity and Capital Resources

      Historically, Dalian Fushi has financed its operations and capital
expenditures through cash flows from operations and bank loans. However, neither
cash flows from operations, or bank loans have been sufficient to keep pace with
the growth of its business and provide sufficient working capital to meet
increased new orders, acquire raw materials and purchase necessary new equipment
to expand production. As a result, we entered into the Restructuring Agreements
and consummated the transactions resulting in the acquisition and/or lease of
substantially all of Dalian Fushi's assets to Dalian DPI, and raised $11,225,000
million through a private placement offering. We believe that the approximately
$9.85 million in net proceeds from the offering will be sufficient to purchase
enough new equipment to meet existing orders and to provide additional capacity
for further expansion. In addition, our management plans to use net proceeds of
the offering to increase marketing activities to further expand our business.

                                       63
We believe that the net proceeds of the Series B Stock private placement
offering, together with cash flows, have provided sufficient working capital for
the next 12 months of operations.

      Net cash used in operating activities for the nine months ended September
30, 2005 was ($1.8) million, compared to $10.8 million in cash provided by
operating activities for the same period last year. Significant factors
comprising the cash used in operating activities include: a significant increase
in accounts receivable due to increased sales, an increase in prepaid expenses
and an increase in due from related companies.

      Net cash provided by financing activities of $5.2 million for the nine
months ended September 30, 2005, was a result of drawing from bank lines of
credit to pay for new equipment and provide working capital to meet new orders.

      Net cash used in investing activities of ($3.0) million was primarily the
result of expenditures on new equipment, as well as capital investment in motor
vehicles and office equipment as part of our expansion.

      As of September 30, 2005, Dalian Fushi had the following long-term bank
loans outstanding with the following terms:
---------------------------- -------------------------- -------------------------- --------------------------
Lender                       Terms                      Amount Due                 Interest Rate
---------------------------- -------------------------- -------------------------- --------------------------
Industrial  and  Commercial  5-year                        $9,675,859              5.58% per annum
Bank
---------------------------- -------------------------- -------------------------- --------------------------
Bank of China                Revolving  Credit Line of  RMB 70,000,000             Floating  rate  currently
                             RMB   100,000,000  to  be                             at 6.38%
                             used   within   one  year
                             commencing  from July 15,
                             2005 for working  capital
                             purposes  and  each  draw
                             down   must   be   repaid
                             within one year
---------------------------- -------------------------- -------------------------- --------------------------
64
As of September 30, 2005, Dalian Fushi rolled over short-term working
capital loans that became due in April and May 2005, in the amounts of
$4,475,084 and $604,741, respectively, and assumed additional working capital
loans in the amount of $5,195,680. Maturities for the working capital financing
range from three to twelve months. We intend to roll these loans over again when
they become due.

      Dalian Fushi incurred $425,752 in interest expense from bank loans during
the nine months ended September 30, 2005, as compared to $233,859 in the same
period last year. The change in interest expenses was due to increase in
interest payment for short term working capital financing.

Cash

      Cash and cash equivalents decreased from $2,612,282 as of December 31,
2004 to $2,844,904 as of September 30, 2005, primarily as a result of net cash
used by operating activities of $1,793,450, net cash used by investing
activities of $3,029,881 in the form of capital expenditures, and net cash
providing by financing activities of $5,195,680.

Accounts Receivable

      Accounts receivable was $1,736,396 at December 31, 2004, as compared to
$5,332,718 at September 30, 2005. The increase in accounts receivable is
primarily attributable to a substantial increase in sales volume and extended
payment terms we offered to attract and retain large customers.

      Accounts receivable related to the Company's top three customers comprised
43% all accounts receivables as of September 30, 2005, compared to the Company's
top five customers accounting for 53% of all accounts receivables as of December
31, 2004.

      Our trading terms with our customers are principally on a cash basis. We
generally collect payments from smaller customers shortly before delivering our
products. However, we extend 30-day, 60-day, or 90-day unsecured trade credit to
major customers. Because the major customers are all well-established
businesses, we have not experienced any significant write-off of accounts
receivable. Consequently, we did not provide an allowance for doubtful accounts
and considered all accounts receivable collectible.

Due from related companies

      For the nine months ended September 30, 2005, Dalian Fushi loaned
$1,694,919 to three related companies, namely Li Tai Auto Repair, Sunshine
Zhangyie, and Fushi Commerce and Trade. These are short term, unsecured loans,
free of interest and repayable on demand. For the fiscal year ended December 31,
2004, due from related companies totaled $456,527.

                                       65
Prepaid Expenses and other current assets

      Prepaid expenses and other current assets were $2,857,416 as of December
31, 2004 as compared to $4,608,296 as of September 30, 2005, an increase of
$1,750,880, or approximately 61.27%. The increase was primarily due to increase
in other current assets. Other current assets principally consist of other
receivables due from directors and employees representing unsecured advances
made to those parties from time to time. These amounts are interest free and
repayable on demand. In accordance with generally accepted accounting principles
in the U.S., Dalian Fushi conducted assessment of the recoverability of these
other receivables on regular basis and make appropriate provisions based on the
results. The general provision for doubtful accounts on other receivables was
$70,000 for the nine months ended September 30, 2005.

Inventory

      Inventories consisted of the following as at September 30, 2005 and
December 31, 2004. The increase at September 30, 2005 is a result of greater
sales volume and demand for Dalian Fushi's products:

                    December 31, 2004      September 30, 2005
                    -----------------      ------------------
                       (audited)               (unaudited)

Raw materials           $  862,806              $1,305,160
Work-in-progress            93,392                 597,506
Finished goods           1,094,058                 402,587
                        ----------              ----------
Totals                  $2,050,256              $2,305,252

Accounts payable

      Accounts payable amounted to $1,311,371 and $1,560,437 at September 30,
2005 and December 31, 2004, respectively. These amounts were primarily generated
from the purchases of raw materials.

      Dalian Fushi relied on two suppliers for most of its raw materials
purchases during the nine-months ended September 30, 2005, each accounting for
45% and 51% of total purchases, respectively. As of September 30, 2005, accounts
payable to those two suppliers totaled $601,588.

Due to related companies

      Dalian Fushi has amounts classified as due to related companies in the
amount of $328,611 and $153,519 at September 30, 2005 and December 31, 2004,
respectively. These amounts arose from cash advances from related parties, loans
due to related parties and various non-operational transactions incurred with
related parties.

                                       66
Fiscal Years Ended December 31, 2004 and December 31, 2003.

Net Sales

      Net sales increased to approximately $15.66 million for the year ended
December 31, 2004 as compared to approximately $ 11.96 million for the year
ended December 31, 2003. Dalian Fushi's year over year net sales increase was
approximately $ 3.7 million, or 31%. This increase was primarily due to the
continuously strong demand for Dalian Fushi's products in both CCA and CCS
segments and substantial expansion of its production capacity from three to five
manufacturing lines to meet demand.

      During the fiscal years ended December 31, 2004 and 2003, Dalian Fushi had
a substantial concentration of customers. In 2004, approximately 75.37% of sales
were made to its top five customers, representing 21.15%, 19.21%, 16.19%,
10.08%, and 8.74% of net sales respectively. In 2003, approximately 73% of net
sales were made to its top five customers.

      The dollar amount and the percentage of net sales made to major customers
that account for 10% or more of Dalian Fushi's net sales in 2004 and 2003 are as
follows:

                                             (AUDITED) FISCAL YEAR ENDED
                                                     DECEMBER 31,
                                             ---------------------------
                                                  2004           2003
                                                 US$'000        US$'000
Sales to major customers in dollar amount        10,436          8,728
Percentage of annual sales                        66.63%            73%
Number of customers                                   4              5

      The geographic and product breakdown of our revenues as of December 31,
2003 and 2004 are as follows:

                                              As of             As of
Sales Volume (by Geographic Areas)          12/31/2003       12/31/2004

Non-PRC Sales                                 0.20%              9.00%
PRC Sales                                    99.80%             91.00%

Cost of Sales

      Cost of sales increased by 27.9%, to approximately $8.95 million, for the
fiscal year ended December 31, 2004 (approximately 57% of net sales), from
approximately $7 million (approximately 58.6% of net sales) in the prior year.
Cost of sales primarily consists of cost of raw materials, labor, utility,
manufacturing costs, and other fixed costs. The increase in cost of sales was
largely driven by the significant revenue growth resulting from an expansion in
the scale of Dalian Fushi's business, and to a lesser extent, an increase in raw
material costs, principally the price of copper. Cost of sales measured by
percentage of net sales, however, fell by more than 1% primarily because Dalian
Fushi was able to pass on increased raw material cost to customers by raising
selling prices.

                                       67
Dalian Fushi relies on two suppliers for the procurement of its two most
important raw materials, copper strip and aluminum bar. Dalian Fushi had a
substantial concentration of suppliers during the fiscal years ended December
31, 2003 and December 31, 2004, as set forth in the following table:

                                                   (AUDITED) FISCAL YEAR ENDED
                                                           DECEMBER 31,
                                                   ---------------------------
                                                        2004           2003
                                                       US$'000        US$'000

Purchases from major suppliers in dollar amount      8,166,769       4,865,239
Percentage of total annual purchases                      94.5%           94.1%
Number of Suppliers                                          2               2

Gross Profit

      Gross profit for the fiscal year ended December 31, 2004 was approximately
$6.7 million, or 42.9% of net sales, as compared to gross profit of
approximately $4.95 million or 41.4% of net sales for the fiscal year ended
December 31, 2003. The improved profitability largely resulted from economies of
scale achieved in connection with raw material purchases, greater ability to set
prices with customers resulting from increasing demand for products, and reduced
manufacturing costs.

Operating Expenses

      Operating expenses increased to $1.997 million for the fiscal year ended
December 31, 2004 as compared to approximately $1.302 million for the prior
year, an increase of $ 695,840 or about 53.5%. The increase of operating
expenses is primarily due to hiring of additional staff, and an increase of
general and administrative expenses resulting from expanded business operations.
The increase of general and administrative expenses was offset by lower selling
expenses, which decreased despite increases in net sales due to established
relationships with customers.

      Because Dalian Fushi has operated and managed its business as a single
segment, it does not allocate operating expenses among its products.

      The following table sets forth the components of Dalian Fushi's operating
expenses both in amount and as a percentage of total net sales for the fiscal
years ended December 31, 2004 and 2003.
Items                                          Fiscal Year Ended December, 31
                                --------------------------------------------------------------
                                           2004                               2003
                                ----------------------------     -----------------------------
                                    US$                 %            US$                 %
                                ----------------------------     -----------------------------
Total Net Sales                 15,662,493             100        11,955,551             100
Selling expense                    578,031             3.7           530,463             4.4
General and
administrative expenses            724,893             4.6           450,780             3.8
Depreciation and
amortization                       694,522             4.4           320,363             2.7
Total Operating Expenses         1,997,446            12.8         1,301,606            10.9
68
Among the increase of operating expenses, selling expenses increased to
approximately $578,031 from approximately $530,463 for the prior year, an
increase of approximately $47,568, or 9%. Selling and marketing expenses
primarily consist of salaries, benefits and commissions for sales and marketing
personnel, and promotional and marketing expenses.

      General and administrative expenses increased by $274,113, or 60.8%, from
$450,780 in 2003 to $724,893 in 2004. General and administrative expenses
primarily consist of salaries and benefits for general and administrative
personnel, and various administrative expenses including fees and expenses for
legal, accounting and other professional services.

      Depreciation and amortization increased by $374,159, or 117%, to $694,522
for the fiscal year ended December 31, 2004 from $320,363 for the prior year,
with accumulated amortization on patents totaling $240,952 and $365,661 in 2003
and 2004, respectively. The increase in depreciation and amortization was
primarily due to a substantially increased fixed asset base.

Income from Operations

      Operating income totaled approximately $4.72 million for the fiscal year
ended December 31, 2004 as compared to operating income of approximately $3.65
million for the year ended December 31, 2003, an increase of approximately $1.07
million or 29%.

      As a percentage of net sales, operating income was approximately 30% in
2004 as compared to approximately 30.5% for the prior year. Operating income as
a percentage of net sales was stable due to slightly improved gross margin and
higher general and administrative expenses and depreciation offset by lower
selling expense.

Income Taxes

      Dalian Fushi did not carry on any business or maintain any branch office
in the United States during the year ended December 31, 2004 or the year ended
December 31, 2003. Therefore, no provision for U.S. federal income taxes or tax
benefits on its undistributed earnings and/or losses has been made.

                                       69
During the fiscal years ended December 31, 2004 and 2003, Dalian Fushi's
operations were solely in the PRC and governed by the PRC Enterprise Income Tax
Laws. PRC enterprise income tax is calculated based on taxable income determined
under PRC GAAP. In accordance with the Income Tax Laws, a PRC domestic company
is subject to enterprise income tax at the rate of 33%, value added tax at the
rate of 17% for most of the goods sold, and business tax on services at a rate
ranging from 3% to 5% annually. A PRC domestic company is also subject to local
taxes. However, the Income Tax Laws provide certain favorable tax treatment to a
company that qualifies as a "new or high-technology enterprise". Additionally,
the governments at the provincial, municipal and local levels can provide many
tax incentives and abatements based on a number of programs at each level.
Dalian Municipal Government has issued a notice in 2000 providing for a series
of tax preferential treatments to companies that qualify as "new or high-tech"
companies in Dalian City.

      Dalian Fushi's bimetallic composite conductor wire product was approved by
Dalian City as a "high-tech" project. As a result, Dalian Fushi is a business
entity that is qualified as a "new or high-technology enterprise," and is
entitled to a two-year full exemption from the PRC enterprise income tax
starting from its first year of operation (which expired on December 31, 2003)
followed by a 50% reduction and other favorable tax treatment for the succeeding
three years (which will expire on December 31, 2006). The effective tax rate for
the fiscal year ended December 31, 2004, is 15%. We expect the effective tax
rate for the fiscal year ended December 31, 2005 and 2006, to more or less
remain 15%. After December 31, 2006, we will consider available options under
applicable law that would enable us to qualify for further preferential tax
treatment.

      The amount of taxes paid by Dalian Fushi for the fiscal years ended
December 31, 2004 and 2003 were $666,995 and $0 respectively.

Net Income

      Net income increased to approximately $3.8 million in the fiscal year
ended December 31, 2004, or approximately 5.6% from approximately $3.6 million
in the fiscal year ended December 31, 2003 principally because of increasing
demand and orders for products.

Liquidity and Capital Resources

      Since Dalian Fushi's inception, we have generally financed our operations
and met capital expenditure requirements through capital contributions from its
shareholders, cash flows generated internally from operating activities, bank
loans and credit lines.

      As of December 31, 2004, Dalian Fushi had current assets of $9,737,067 and
current liabilities of $12,466,426. Current assets are comprised of cash and
cash equivalents of $2,612,282, accounts receivable of $1,760,586, due from
related companies of $456,527, inventories of $2,050,256, prepaid and other
current assets of 2,857,416. Current liabilities are comprised of accounts
payable of $1,560,437, other payables and accruals of $610,245, taxes payable of
3,248,176, due to related companies of 153,519, and debts maturing within one
year of $6,894,049.

                                       70
As of December 31, 2004, cash, bank balances, and bank borrowings were all
denominated in Renminbi ("RMB"). Revenues and expenses, assets and liabilities
are mainly denominated in RMB. In light of the recent change taken place to
China's foreign exchange regime, namely pegging RMB to a basket of currencies
and allowing movement flexibility in a 2% trading band, we expect RMB to slowly
appreciate to reflect its true value, and benefit us in the translation from
RMB-denominated profit to USD-denominated profit.

      As of December 31, 2004, Dalian Fushi's contractual obligations were as
follows:
Payment Due by Period
----------------------------------------------------------------------------------------------------------------------
               (in USD)                      Total        Less than 1    1-3 years     3-5 years       More than 5
                                                              year                                        years
----------------------------------------------------------------------------------------------------------------------
Long-Term Debt Obligations              9,675,859        0               0              9,675,859        0
Line of Credit                          8,750,000        8,750,000
Capital Lease Obligations               0
Operating Lease Obligations             0
Purchase Obligations(1)                 0
Other Long-Term Liabilities Reflected   0
  on the Balance Sheet
                                        ----------
Total                                   18,425,859
----------------------------------------------------------------------------------------------------------------------
(1) Purchase obligations-an agreement to purchase goods or services that is
enforceable and legally binding on the registrant that specifies all significant
terms, including quantities, price, and timing of the transaction.

      As of December 31, 2004, Dalian Fushi's principal amounts outstanding
under its banks loans and credit facilities from local banks in the PRC were as
follows:
---------------------------- -------------------------- -------------------------- --------------------------
Lender                       Terms                      Amount Due                 Interest Rate
---------------------------- -------------------------- -------------------------- --------------------------
Industrial  and  Commercial  5-year                        $9,675,859              5.58% per annum
Bank
---------------------------- -------------------------- -------------------------- --------------------------
Bank of China                Revolving  Credit Line of  RMB 70,000,000             6.38% floating rate
                             RMB   100,000,000  to  be
                             used   within   one  year
                             commencing  from July 15,
                             2005 for working  capital
                             purposes  and  each  draw
                             down   must   be   repaid
                             within one year
---------------------------- -------------------------- -------------------------- --------------------------
71
Dalian Fushi paid interest in 2004 and 2003 in the amount of $721,427 and
$253,240, respectively, of which $342,839 and $199,484 were capitalized in 2004
and 2003 respectively, resulting in interest expense of $378,588 and $53,756 in
2004 and 2003 respectively. The significant increase in interest paid and
interest expense were due to five short-term loans we took out from the local
banks to finance working capital needs for expansion of business operations.

Cash

      Dalian Fushi's principal use of cash for the two years ended December 31,
2004 was to fund the acquisition of land and machinery, construction of
manufacturing facilities, and its working capital requirements. As of December
31, 2004, Dalian Fushi had $2.61 million in cash. Cash used to purchase property
and equipment, land use rights, and intangible assets was reduced by $7 million
from $19 million in 2003 to $12 million in 2004. However, cash received from
financing activities such as issuance of common stock and notes was reduced by
$7.27 million from $15 million in 2003 to $7.8 million in 2004. The decrease of
cash used in investing activities was off-set by the decrease of cash received
from financing activities. As a result, the increase of $2.4 million in cash is
primarily attributable to improvement of cash provided by operating activities,
particularly quicker turnover of accounts receivables and significant increase
in such non-cash items as depreciation which affects net income, not dalian
Fushi's cash position.

Accounts Receivable

      Dalian Fushi's trading terms with customers are principally on a cash
basis. It generally collect payments from smaller customers shortly before
delivering products. However, we extend 30-day, 60-day, or 90-day unsecured
trade credit to major customers. Because the major customers are all
well-established businesses, Dalian Fushi has not experienced any significant
write-off of accounts receivable. Consequently, it did not provide an allowance
for doubtful accounts and considered all accounts receivable collectible.
Accounts receivable decreased from $1.95 million at December 31, 2003 to $1.76
million at December 31, 2004. We have seen a short accounts receivable turnover
period from 2003 to 2004, primarily due to enhanced collection efforts, and
better payment terms which reflect customers' desire to secure supply from
Dalian Fushi.

A/R aging table 12/31/04
----------------------------------------------------
0-30 days      30-60 days     60-90 days   > 90 days
----------     ----------     ----------   ---------
$6,886         $1,300,522     $433,507     0
----------------------------------------------------

      Dalian Fushi relied on two suppliers for approximately 96% of total raw
material purchases in year 2004, and two suppliers for approximately 87% of
total raw material purchase in year 2003. At December 31, 2004 and 2003,
accounts payable to these two suppliers totaled $126,939 and $157,377,
respectively.

                                       72
Prepaid Expenses and Other Current Assets

      Prepaid expenses and other current assets at December 31, 2004 and 2003
consisted of the following:

                                2004              2003
                             ----------        ----------
Prepaid expenses             $  111,030        $2,735,342

Advances to suppliers           402,137           629,585
Other current assets          2,344,249           676,405
                             ----------        ----------
                             $2,857,416        $4,041,332

      Prepaid Expenses.

      Prepaid expenses were $111,030 as of December 31, 2004 as compared to
$2,735,342 as of December 31, 2003, a decrease of $2,624,312, or approximately
2364%. The decrease was primarily due to a portion of capital expenditure on the
construction of the new manufacturing facilities in the fiscal year 2003 was
classified as prepaid. In the period of fiscal year 2004, a substantial portion
of this capital investment was transferred to Property and Equipment.

      Advances to Suppliers.

      Advances to suppliers were decreased from $629,585 at December 31, 2003 to
$402,137 at December 31, 2004. The decrease resulted from better payment terms
negotiated with our suppliers.

      Other Current Assets.

      The total of other current assets as of December 31, 2004 was $2,344,249,
and $676,405 as of December 31, 2003. Other current assets primarily consist of
subsidies and grants allocated from the local government's initiatives and
incentive programs to promote development of "new or high technology
enterprises," and amounts due from directors and employees representing
unsecured advances made to these persons from time to time, which are interest
free and repayable on demand. In 2003, the subsidy Dalian Fushi received from
local government as research and development expenses was RMB 200,000. In 2004,
Dalian Fushi received RMB 600,000 interest subsidy from local government due to
its "new and high technology enterprise" status.

Inventory

      Inventories consisted of the following as at December 31, 2004 and
December 31, 2003:

                    December 31, 2004          December 31, 2003
                    -----------------          -----------------
[in US$]
Raw materials             862,806                   252,640
Work-in-progress           93,392                    57,583
Finished goods          1,094,058                   157,913
                        ---------                 ---------
Totals                  2,050,256                   468,136

                                       73
Inventories of raw materials, inventories of work-in-progress and finished
goods all increased during the same period. As a result and during the course of
expansion of our business, Dalian Fushi needed to maintain a significant level
of inventory to support the substantial increase in sales.

Other Payables and Accrued Liabilities

      Other payables decreased significantly from $1,348,574 as of December 31,
2003 to $271,977 as of December 31, 2004. The reason for this decline is that
increases in advances from customers were offset by large payments to sundry
creditors.

      Accrued liabilities include accrued welfare benefits and other accruals.
Accrued liabilities increased from $96,813 as of December 31, 2003 to $338,268
as of December 31, 2004. The increase is primarily due to a large increase in
accrued welfare relating to hiring of additional personnel.

Critical Accounting Policies

      Management's discussion and analysis of its financial condition and
results of operations is based upon Dalian Fushi's consolidated financial
statements, which have been prepared in accordance with United States generally
accepted accounting principles. Dalian Fushi's financial statements reflect the
selection and application of accounting policies which require management to
make significant estimates and judgments. See note 1 to Dalian Fushi's
consolidated financial statements, "Summary of Significant Accounting Policies
and Organization". Management bases its estimates on historical experience and
on various other assumptions that are believed to be reasonable under the
circumstances. Actual results may differ from these estimates under different
assumptions or conditions. Dalian Fushi believes that the following reflect the
more critical accounting policies that currently affect Dalian Fushi's financial
condition and results of operations:

Revenue recognition

      Product sales are recognized when the products are shipped and title has
passed. Sales revenue represents the invoiced value of goods, net of a VAT. All
of the Company's products that are sold in the PRC are subject to a Chinese
value-added tax at a rate of 17% of the gross sales price. This VAT may be
offset by VAT paid by the Company on raw materials and other materials included
in the cost of producing its finished products.

      Although most of Dalian Fushi's products are covered by its warranty
programs, the terms and conditions vary depending on the customers and the
product sold. Because Dalian Fushi has not experienced any significant warranty
claims in the past, it has not established any reserve fund for warranty claims
or defective products.

                                       74
Property, Plant and Equipment

      Building, plant and equipment are recorded at cost less accumulated
depreciation and amortization. Depreciation and amortization are recorded
utilizing the straight-line method over the estimated original useful lives of
the assets. Amortization of leasehold improvements is calculated on a
straight-line basis over the life of the asset or the term of the lease,
whichever is shorter. Major renewals and betterments are capitalized and
depreciated; maintenance and repairs that do not extend the life of the
respective assets are charged to expense as incurred. Upon disposal of assets,
the cost and related accumulated depreciation are removed from the accounts and
any gain or loss is included in income. Depreciation related to property and
equipment used in production is reported in cost of sales.

      Long-term assets are reviewed annually as to whether their carrying value
has become impaired.

Bad debts

      Dalian Fushi's business operations are conducted principally in the
People's Republic of China. Dalian Fushi extends unsecured credit to its
relatively large customers with good credit history. Management reviews its
accounts receivable on a regular basis to determine if the bad debt allowance is
adequate at each year-end. Because Dalian Fushi extends trade credits to its
largest customers, who tend to be well-established and large sized businesses,
and Dalian Fushi has not experienced any write-off of accounts receivable in the
past, historically it has not provided for any bad debt allowance and considered
all accounts receivable collectible.

Capitalization of Interest

      Dalian Fushi capitalizes interest on borrowings during the active
construction period of major capital projects. Capitalized interest is added to
the cost of the underlying assets and will be depreciated over the useful lives
of the assets. Dalian Fushi capitalized approximately $422,784 during the nine
month period ended September 30, 2005 in connection with its construction and
capital improvements of its new facility.

Off-Balance Sheet Arrangements

      Dalian Fushi has not engaged in any off-balance sheet transactions since
its inception.

                                       75
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                              OWNERS AND MANAGEMENT

      The following table sets forth certain information with respect to the
beneficial ownership of each class of our voting securities following the change
in control of our company by (i) any person or group owning more than 5% of each
class of the Company's voting securities, (ii) each director, (iii) our chief
executive officer and each other executive officer whose cash compensation for
the most recent fiscal year exceeded $100,000 and (iv) all executive officers
and directors as a group. The table reflects the ownership of our Common Stock
by the foregoing individuals before and after the Reverse Split.

      As of December 13, 2005, we had outstanding 39,243,659 shares of Common
Stock, 784,575 shares of Series A Stock which were issued in exchange for all
the outstanding shares of DPI, and 201,511.98 shares of Series B Stock which
were issued in the Series B Stock private placement completed on that date. Each
share of Series A and Series B Stock will convert automatically into
approximately 19.73 shares of Common Stock upon the effectiveness of the Reverse
Split.

      Shares of Series A and Series B Stock vote together with shares of Common
Stock on all matters upon which stockholders are entitled to vote, except to the
extent a class vote is required under Nevada law or as otherwise provided in the
certificate of designation creating such series. On those matters upon which the
preferred stock votes together with the Common Stock as a single class prior to
the Reverse Split, each share of Series A or Series B Stock counts as 4,838.86
votes, as if converted prior to the effectiveness of the Reverse Stock Split,
while each share of Common Stock only counts as one vote. See Item 3.03 of this
Current Report for a more detailed description of the rights, preferences and
limitations of the Series A and Series B Stock.

      In determining beneficial ownership of the Common Stock after the Reverse
Split, the number of shares shown includes shares which the beneficial owner may
acquire upon exercise of warrants or options which may be acquired within 60
days. In determining the percent of Common Stock owned by a person on December
13, 2005, (a) the numerator is the number of shares of the class beneficially
owned by such person, including shares which the beneficial ownership may
acquire within 60 days upon conversion of the Series A or Series B Stock or
exercise of the warrants, and (b) the denominator is the sum of (i) the total
shares of that class outstanding on December 13, 2005, and (ii) the total number
of shares that the beneficial owner may acquire upon conversion of the Series A
or Series B Stock or exercise of the warrants. Unless otherwise stated, each
beneficial owner has sole power to vote and dispose of the shares.
Name of Beneficial Owner           Amount and Nature of
------------------------           Beneficial Ownership
                                   -----------------------                      Percent of Class              Common Stock
                                   Preferred  Stock                             Preferred Stock               After Reverse Split
                                   ----------------              Common         ---------------     Common    -------------------
                                   Series A       Series B       Stock          Series A  Series B  Stock     Shares        Percent
                                   --------       --------       -----          --------  --------  -----     ------        -------
Owner of More than 5% of Class

Dalian Fushi Enterprise Group
Company, Ltd. ("Fushi Group")          654,689(1)               17,546,000(1)(2)  83.45%              44.71%   12,986,553     65.84%

Pope Asset Management LLC
5100 Poplar Avenue, Suite 512
Memphis, TN 38137                                      62,832(3)                           31.18%              1,859,375(3)    8.61%

Chinamerica Fund LLP
2909 St. Andrews
Richardson, TX 75082                                   30,519                              15.14%                903,125      4.38%

Chinamerica Dalian Fushi
Acquisition Fund LLP
2909 St. Andrews
Richardson, TX 75082                                   17,952(4)                            8.91%                531,250      2.62%

Directors and Executive Officers

Li Fu (through Fushi Group)
Chairman of Board, Director,
President                              654,689(1)               17,546,000(1)(2)  83.45%              44.71%   12,986,553     65.84%

Mathus Yue Yang
Director and President                  74,625(1)                2,000,000(1)(2)     10%               5.10%    1,480,398      7.50%

John D. Kuhns
Director
The Farm House
558 Lime Rock Road
Lakeville, CT 06039                     16,167(4)                                  2.06%                          558,280(4)   2.83%

Xishan Yang
Director
Head of R&D of Dalian Fushi             12,239(1)                  326,000(1)(2)   1.56%                  *       242,777      1.23%

Chunyan Xu
Director

Executive Vice President of
Research and Development of
Dalian Fushi                             4,701(1)                  128,000(1)(2)      *                   *        93,273         *

Chris Wang                                   0                                                                         0
Chief Financial Officer

All Directors and Executive
Officers as a group (6)                762,421              0     20,000,000     96.58%              49.81%   15,361,281     77.88%
----------
* Less than 1%

(1) As a condition of the Series B Stock Purchase Agreement, Dalian Fushi has
deposited its 20,000,000 shares of Common Stock acquired from Glenn Little and
our management team, which includes Li Fu, Yu Mathus Yang, Xishan Yang and
Chunyan Xu, has deposited in escrow 746,254 shares of Series A Stock that will
collectively convert into 14,800,000 shares of Common Stock, representing
approximately 75.04% of the then outstanding Common Stock, following the Reverse
Split to secure their indemnity obligations under the Series B Stock Purchase
Agreement and the obligation of the Company to meet the net profit targets for
the fiscal year ending December 31, 2005 as set forth in the Series B Stock
Purchase Agreement.

                                       76
(2) On December 13, 2005, Dalian Fushi Bimetallic Manufacturing Company, Ltd., a
company owned by Li Fu, Chunyan Xu, Yue Yang and Xishan Yang, acquired
20,000,000 pre-split shares of our Common Stock from Glenn A. Little. Under SEC
rules, each of those persons is deemed to have acquired beneficial ownership of
all of those shares. For purpose of Section 13(d)(3) of the Exchange Act, they
may be considered collectively as a "group", and thus each is deemed to be the
beneficial owner of the entire 20,000,000 pre-split shares. The percentage of
ownership of voting stock of the group as a whole is 75.04%.

(3) Pope Asset Management LLC acquired these shares for the accounts of 139 of
its clients and has sole voting power over these shares, but shares dispositive
power with its clients over the shares in their respective accounts.

(4) Includes 10,116.78 shares of Series A Stock and warrants to purchase 398,050
shares of Common Stock issued to Kuhns Brothers and its designees in connection
with the private placement. Each warrant entitles the holder to purchase one
share of our Common Stock at $3.1064 per share any time within the 5 year period
commencing from December 13, 2005. Mr. Kuhns, one of our Directors, is the
Chairman and 45% shareholder of Kuhns Brothers.

                   DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS
                               AND CONTROL PERSONS

Our Directors and Executive Officers

      In connection with the change of control of the Company described in Item
5.01 of this Current Report, the following persons were appointed executive
officers and directors of the Company. Glenn A. Little, our former director and
chief executive, first resigned as the sole director of the Company and
immediately following the closing of the Series B Stock private placement
offering, resigned from all his positions with the Company. Except for John D.
Kuhns, each of our current executive officers and Directors is a resident of the
PRC. The same persons have also been elected as directors of DPI and Dalian DPI
and hold similar positions with each of these entities. As a result, it may be
difficult for investors to effect service of process within the United States
upon them or to enforce court judgments obtained against them in the United
States courts.

Directors and Executive Officers            Position/Title                Age
--------------------------------            --------------                ---
Li Fu                                       Chairman of Board and         39
                                            President
Yue Mathus Yang                             Vice-President, Director      37
John D. Kuhns                               Secretary, Director           55
Wenbing Chris Wang                          Treasurer                     34

                                       77
There are no family relationships among our directors or executive
officers.

      All our directors hold office until the next annual meeting of
shareholders of the Company, and until their successors have been qualified
after being elected or appointed. Officers serve at the discretion of our Board
of Directors.

      Pursuant to the terms of the Stock Purchase Agreement, within 90 days of
the closing of the Series B Stock Purchase Agreement and after consultation with
the parties to that agreement, we are required to nominate a seven person Board
of Directors of the Company and take all actions and obtain all consents,
authorizations and approvals which are required to be obtained in order to
effect the election of such persons. Of such seven-member Board of Directors,
(i) two members will be members of the current management of Dalian Fushi, which
we expect will continue to be Mr. Fu and Mr. Yang, (ii) one member will
represent Kuhns Brothers, which we expect will continue to be Mr. Kuhn, (iii)
and at least four members will be independent directors as determined pursuant
to the American Stock Exchange Company Guide, which may be waived if the Company
is unable to obtain a listing on that exchange within a certain amount of time.

The Stock Purchase Agreement also requires that the Company establish a
five-member board of advisors.

Directors and Executive Officers of Dalian Fushi

      Dalian Fushi's current executive officers and Directors are as follows:

Directors and Executive Officers      Position/Title                     Age
--------------------------------      --------------                     ---
Li Fu                                 Executive Director                 39
Yue Yang                              General Manager                    37
Wenbing Chris Wang                    Chief Financial Officer            34
Xishan Yang                           Chief Engineer and                 67
                                      Executive Vice President of R&D
Chunyan Xu                            Supervisor Director                49

      Under Dalian Fushi's Articles of Association, Dalian Fushi's corporate
governance consists of one Executive Director, one Supervisor Director and one
General Manager. The Executive Director is elected and appointed by the
shareholders for a term of three years and can be re-elected for consecutive
terms. During the terms of his service, the shareholders cannot discharge the
Executive Director without cause. The appointment and termination of the General
Manager is determined by the Executive Director. The Supervisor Director is
elected by the shareholders for a term of three years and can be re-elected for
consecutive terms.

                                       78
The following is a description of the business experience for the last
five years for each of the above named directors and executive officers of the
Company, DPI, Dalian DPI and Dalian Fushi.

Mr. Li Fu was appointed Chairman and Chief Executive Officer of the Company in
October, 2005. Mr. Fu is a founder of Dalian Fushi and has been the Executive
Director of Dalian Fushi since he founded the company in 2001. Prior to founding
Dalian Fushi and focusing his time on Dalian Fushi's management and operations,
Mr. Fu had founded and managed Dalian Fushi Enterprise Group Co., Ltd., a
holding company owning various subsidiaries in the hotel, process control
instrumentation, international trade, automobile maintenance and education
businesses. Mr. Fu graduated from PLA University of Science and Technology with
a degree in Engineering

Mr. Yue Yang was appointed President and director of the Company in October
2005. He has served as the General Manager of Dalian Fushi since November 2004.
Mr. Yang is the founder of Forward Investment Co., Ltd and has served as its
Chairman since 2000. Prior to that, Mr. Yang worked for Liaoning Province
Economic & Trade Collaboration Enterprise Group as an Executive VP from 1994 to
1998 and the Export Department of Liaoning Province Chemicals Import & Export
Corporation as a Business Manager from 1990 to 1994. Mr. Yang graduated from
Shenyang Finance University with a Bachelor's Degree in International Trade.

Mr. John D. Kuhns was appointed director of the Company in October 2005. Mr.
Kuhns has been a 45% shareholder, a director and chairman of Kuhns Brothers,
Inc., a holding company founded in 1987 for its 100% subsidiary, Kuhns Bros. &
Co., Inc., an investment banking firm specializing in providing financing for
power technology ventures, and, more recently, manufacturing operations within
the PRC. Additionally, Kuhns Brothers, Inc. owns 100% of Kuhns Brothers
Securities Corporation, a broker dealer, registered with the Securities and
Exchange Commission, in which Mr. Kuhns is the Chairman. Since March 2005, Mr.
Kuhns has been a director and chairman of Deli Solar (USA), Inc., a U.S.
reporting company with solar hot water heaters manufacturing operation in the
PRC. Since 2002 Mr. Kuhns has been a director and chairman of Distributed Power,
Inc., a public company that owns electric generating projects. Mr. Kuhns is also
a director of China Sciences Conservational Power Limited, a company listed on
the Hong Kong Stock Exchange. Neither of the foregoing Kuhns companies, nor Deli
Solar (USA), Inc., Distributed Power, Inc. or China Sciences Conservational
Power Limited are affiliated with the Company. Mr. Kuhns holds a bachelors
degree in sociology and fine arts from Georgetown University, a master's degree
in fine arts from the University of Chicago and an MBA degree from the Harvard
Business School.

Mr. Chris Wenbing Wang has served as the Chief Financial Officer of the Company
since March 2005. Prior to joining the Company, Mr. Wang served as an Executive
Vice President of Redwood Capital, Inc. from November 2004 to March 2005, with
specific focus on providing strategic and financial advisory services to China
based clients seeking access to the U.S. capital markets. Mr. Wang previously
served as Assistant VP of Portfolio Management at China Century Investment
Corporation from October 2002 to September 2004. Mr. Wang began his investment
banking career at Credit Suisse First Boston (HK) Ltd in 2001. From 1999 to
2000, Mr. Wang worked for VCChina as Management Analyst. Fluent in both English
and Chinese, Mr. Wang holds an MBA from Simon Business School of University of
Rochester and is a Level III candidate of the Chartered Financial Analyst (CFA)
Program.

                                       79
Mr. Xishan Yang has served as the Executive Vice President of R & D and Chief
Engineer of Dalian Fushi since its inception in 2001. Mr. Yang has more than 40
years of working experience in the communication electronics industry. He had
held executive management positions with a number of electronic enterprises
prior to joining the Company. During his career, Mr. Yang has focused on the
development, design, and processes of metallic and bimetallic cable production.
He holds several patents for the design of the modified Cladding and Drawing
processes for CCA and CCS production used by Dalian Fushi and has extensive
experience in production management. Mr. Yang graduated from Harbin Industrial
University with a graduate degree in engineering.

Ms. Chunyan Xu has served as the Supervisor Director of Dalian Fushi since 2001.
She previously served as the Chief Accountant at the Dalian Personnel Bureau and
served as a Finance Manager of a Chinese public company. Ms. Xu has many years
of experience in industrial accounting, public company accounting and accounting
management.

      To our knowledge, during the last five years, none of our directors and
executive officers (including those of our subsidiaries) has

      o     Had a bankruptcy petition filed by or against any business of which
            such person was a general partner or executive officer either at the
            time of the bankruptcy or within two years prior to that time.

      o     Been convicted in a criminal proceeding or been subject to a pending
            criminal proceeding, excluding traffic violations and other minor
            offenses.

      o     Been subject to any order, judgment or decree, not subsequently
            reversed, suspended or vacated, of any court of competent
            jurisdiction, permanently or temporarily enjoining, barring,
            suspending or otherwise limiting his involvement in any type of
            business, securities or banking activities.

      o     Been found by a court of competent jurisdiction (in a civil action),
            the SEC, or the Commodities Futures Trading Commission to have
            violated a federal or state securities or commodities law, and the
            judgment has not been reversed, suspended or vacated.

AUDIT COMMITTEE FINANCIAL EXPERT

      Our board of directors currently acts as our audit committee. Because we
only recently consummated the Restructuring Agreements and appointed the current
members of our board of directors, our board of directors has not yet determined
whether we have a member who qualifies as an "audit committee financial expert"
as defined in Item 401(e) of Regulation S-B, and is "independent" as the term is
used in Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act. Our board of
directors is in the process of searching for a suitable candidate for this
position.

                                       80
AUDIT COMMITTEE

      We have not yet appointed an audit committee, and our board of directors
currently acts as our audit committee. At the present time, we believe that the
members of board of directors are collectively capable of analyzing and
evaluating our financial statements and understanding internal controls and
procedures for financial reporting. Our company, however, recognizes the
importance of good corporate governance and intends to appoint an audit
committee comprised entirely of independent directors, including at least one
financial expert, during our 2006 fiscal year.

Executive Compensation

      During the last three fiscal years, the sole director and officer of the
Company did not receive any compensation. The following is a summary of the
compensation paid by Dalian Fushi to its CEO and executive officers for the
three years ended December 31, 2004, 2003 and 2002, respectively. Mr. Fu and Mr.
Yang are currently directors and executive officers of the Company, DPI and
Dalian DPI. See "Our Directors and Executive Officers" in this Item 2.01. No
executive officers of Dalian Fushi received compensation in excess of $100,000
for any of these three years.
ANNUAL COMPENSATION                                          LONG TERM COMPENSATION
                           -------------------                                          ----------------------
                                                                                    Awards               Payouts
                                                                             ----------------------  ----------------------
                                                                  Other      Restricted  Securities
                                                                 Annual        Stock     Underlying                All
                                 Year                            Compen-       Awards     Options/     LTIP       Other
     Name         Position       Ended    Salary($)  Bonus($)   sation($)        $          SARS     Payouts   Compensation
     ----         --------       -----    ---------  --------   ---------    ----------  ----------  -------   ------------
Li Fu (1)           CEO       12/31/2004                 0          0            0            0         0           0
                    CEO       12/31/2003                 0          0            0            0         0           0
                    CEO       12/31/2002                 0          0            0            0         0           0

Yue Yang (2)     President    12/31/2004                 0          0            0            0         0           0
                 President    12/31/2003     N/A         0          0            0            0         0           0
                 President    12/31/2002     N/A         0          0            0            0         0           0

Chris Wengbing      CFO       12/31/2004     N/A         0          0            0            0         0           0
Wang (3)            CFO       12/31/2003     N/A         0          0            0            0         0           0
                    CFO       12/31/2002     N/A         0          0            0            0         0           0

Xishan Yang      VP of R&D    12/31/2004    7,490        0          0            0            0         0           0
                 VP of R&D    12/31/2003   14,981        0          0            0            0         0           0
                 VP of R&D    12/31/2002   22,472        0          0            0            0         0           0

Chunyan Xu       Supervisor   12/31/2004    5,992        0          0            0            0         0           0
                  Director
                 Supervisor   12/31/2003   11,985        0          0            0            0         0           0
                  Director
                 Supervisor   12/31/2002   17,976        0          0            0            0         0           0
                  Director
81
(1)   Mr. Fu's annual salary in 2005 is $240,000, starting from December
            2005.

      (2)   Mr. Yang joined Dalian Fushi in November 2004. Starting from
            December 2005, his annual salary in 2005 is $180,000.

      (3)   Mr. Wenbing Chris Wang joined Dalian Fushi in March 2005. Starting
            from December 2005, his annual salary in 2005 is $120,000.

      Although the Company does not have any equity compensation plans, under
the Series B Stock Purchase Agreement we must reserve for issuance 20,000,000
shares of Common Stock under an approved and qualified employee stock ownership
plan, the terms of which will be determined by the compensation committee of the
Board of Directors of the Company.

Certain Relationships and Related Transactions

Restructuring Agreements with Dalian Fushi

      We entered into and consummated the Restructuring Agreements with Dalian
Fushi and the Dalian Fushi Shareholders in December 2005. For a description of
the Restructuring Agreements, see Item 1.01 of this Current Report.

Dalian Fushi's Related Company Transactions

      In 2003, 2004 and 2005, Dalian Fushi had loaned funds to certain related
companies as unsecured loans free of interest payment and repayable on demand.
It had also borrowed funds from two related parties for short-term unsecured
advances free of interest and repayable on demand.

      Amounts due from related companies.

      As of December 31, 2004, the outstanding balance of loans to related
companies, totaling US$456,527.10, are as follows: RMB 39,720.72 to Dalian Litai
Auto Repair Co., Ltd. (of which Fushi Group owns 40%), RMB 629,721.25 to Dalian
Fushi Yangguang Zhangyie Co., Ltd. (of which Fushi Group owns 90%), and RMB
3,105,124.12 to Dalian Fushi Commerce and Trade Co., Ltd. (of which Fushi Group
owns 75%). Fushi Group is a holding company controlled by Mr. Li Fu, our
Chairman and Chief Executive Office.

      As of September 30, 2005, the outstanding balance of loans to related
companies, totaling US$2,712,587.28, is as follows: RMB 5,125,697.27 to Dalian
Litai Auto Repair Co., Ltd. (of which Fushi Group owns 40%), RMB 100,440 to
Dalian Fushi Yangguang Zhangyie Co., Ltd. (of which Fushi Group owns 90%), and
RMB 16,772,945.56 to Dalian Fushi Commerce and Trade Co., Ltd. (of which Fushi
Group owns 75%). Fushi Group is a holding company controlled by Mr. Li Fu, our
Chairman and Chief Executive Office.

                                       82
Each of the foregoing loans immediately became repayable to Dalian Fushi
upon the closing held under the Series B Stock Purchase Agreement.

      Amounts due to related companies.

      As of the end of 2004, the amounts due to related parties, totaling
US$153,518.74, are as follows: RMB 377,804.27 borrowed from Fushi Group and RMB
891,488.65 from Mr. Li Fu.

      As of September 30, 2005, the amounts due to related parties, totaling
US$328,610.72, are as follows: RMB 880,907.71 borrowed from Fushi Group and RMB
1,784,125.25 from Mr. Li Fu.

Share Exchange Agreement and Issuance of Series A Stock to Dalian Fushi
Shareholders

      On December 13, 2005, the Company entered into and consummated the Share
Exchange Agreement with DPI Stockholders. Of the DPI Stockholders, Dalian Fushi
Enterprise Group Co., Ltd., Yue Mathus Yang, Xishan Yang and Chunyan Xu also are
shareholders of Dalian Fushi, and owned approximately 95.12% of the outstanding
capital stock of DPI. Kuhns Brothers received its shares of DPI common stock for
services rendered in connection with the reorganization of Dalian Fushi's
business. For additional concerning the reorganization, see Item 1.01 of this
Current Report.

      Under the Share Exchange Agreement, we issued an aggregate of 784,575
shares of our Series A Stock in exchange for the 15,560 shares of common stock
of DPI held by the DPI Stockholders. Each share of Series A Stock will convert
automatically into 4,838.86 shares of Common Stock before giving effect to the
Reverse Split, as more fully described in Item 3.03. As a result of the Reverse
Split, the Series A Stock will convert into an aggregate of 15,475,595 shares of
Common Stock, which will represent approximately 78% of our total outstanding
Common Stock. See Item 1.01 of this Current Report for information concerning
the acquisition of DPI under the Share Exchange Agreement.

Private Placement Offering of Series B Stock

      On December 13, 2005, we sold 201,511.99 shares of our Series B Stock,
along with warrants, for $11,225,000. The Common Stock and warrants were sold by
us in a private placement through Kuhns Brothers, Inc., and its wholly-owned
subsidiary, Kuhns Brothers Securities Corporation, an NASD and SEC registered
broker-dealer, in reliance upon the exemption provided by Rule 506 of Regulation
D under the Securities Act. Please see Item 1.01 of this Current Report for
further information on the terms of the Series B Stock private placement
offering.

                                       83
In connection with the placement of our Series B Stock and related
warrants, Kuhns Brothers, Inc.received the following compensation: (i) $200,000
cash as signing fee, documentation fee and purchase fee, (ii) 10% of the total
cash paid for the Series B Stock and warrants, (iii) 38,000 shares of Series A
Stock, which will convert into approximately 760,000 shares of our common stock,
and (iv) a warrant to purchase 424,929 shares of common stock after a reverse
stock split at $3.1064 per share. In addition, Kuhns Brothers, Inc. is to
receive 10% of the proceeds of any exercise of the warrants sold to investors of
the Series B Stock. See Item 1.01 of this Current Report for information
concerning the private placement offering of our Series B Stock.

Indemnification of Our Directors and Officers

      Although Nevada law allows us to indemnify our directors, officers,
employees, and agents, under certain circumstances, against attorney's fees and
other expenses incurred by them in any litigation to which they become a party
arising from their association with or activities on our behalf, and under
certain circumstances to advance the expenses of such litigation upon securing
their promise to repay us if it is ultimately determined that indemnification
will not be allowed to an individual in that litigation, neither our articles of
incorporation or bylaws impose an indemnity obligation upon us. In addition, we
have not entered into any agreements under which we have assumed such an
indemnity obligation.

                            DESCRIPTION OF SECURITIES

      Our authorized capital stock consists of 100,000,000 shares of Common
Stock par value $0.006 per share, of which there are 39,243,659 shares of issued
and outstanding, and 5,000,000 shares of Preferred Stock, par value $0.01 per
share. We have two series of preferred stock: Series A convertible preferred
stock, of which 216,000 shares have been authorized and 201,511.98 shares are
issued and outstanding: and Series B convertible preferred stock, of which
785,000 shares have been authorized and 784,575 shares are issued and
outstanding.

      The following is a summary of the material terms of our capital stock.
This summary is subject to and qualified in its entirety by our Articles of
Incorporation, as amended, the Certificate of Designations for our series A and
series B convertible preferred stock, our By-laws and by the applicable
provisions of Nevada law.

                                       84
Common Stock

      Holders of shares of Common Stock are entitled to one vote for each share
on all matters to be voted on by the stockholders. According to our charter
documents, holders of our Common Stock do not have preemptive rights, and are
not entitled to cumulative voting rights. There are no conversion or redemption
rights or sinking fund provided for holders of Common Stock. Shares of Common
Stock share ratably, together with holders of Series A Stock and Series B Stock
on an as converted basis, in dividends, if any, as may be declared from time to
time by the Board of Directors in its discretion from funds legally available
for distribution as dividends. In the event of a liquidation, dissolution or
winding up of the Company, subject to the rights of holders of the Series B
Stock, the holders of Common Stock are entitled to share pro rata all assets
remaining after payment in full of all liabilities. All of the outstanding
shares of Common Stock are fully paid and non-assessable.

      Preferred Stock

      Our Board of Directors is authorized under the Restated Articles of
Incorporation to provide for the issuance of shares of preferred stock, by
resolution or resolutions for the issuance of such stock, and, by filing a
certificate of designations under Nevada law, to fix the designation, powers,
preferences and rights of the shares of each such series and the qualifications,
limitations or restrictions thereof without any further vote or action by the
shareholders. Any shares of preferred stock so issued are likely to have
priority over our common stock with respect to dividend or liquidation rights.

      The issuance of shares of preferred stock, or the issuance of rights to
purchase such shares, could be used to discourage an unsolicited acquisition
proposal. For instance, the issuance of a series of preferred stock might impede
a business combination by including class voting rights that would enable the
holder to block such a transaction, or facilitate a business combination by
including voting rights that would provide a required percentage vote of the
stockholders. In addition, under certain circumstances, the issuance of
preferred stock could adversely affect the voting power of the holders of the
common stock. Although the Board of Directors is required to make any
determination to issue such stock based on its judgment as to the best interests
of our stockholders, the Board of Directors could act in a manner that would
discourage an acquisition attempt or other transaction that some, or a majority,
of the stockholders might believe to be in their best interests or in which
stockholders might receive a premium for their stock over the then market price
of such stock. The Board of Directors does not at present intend to seek
stockholder approval prior to any issuance of currently authorized preferred
stock, unless otherwise required by law.

      On December 5, 2005, our Board of Directors designated 216,000 shares of
our authorized $0.001 par value per share preferred stock as Series A Stock and
785,000 shares of our preferred stock as Series B Preferred Stock. On December
8, 2005, we filed Certificates of Designations for the Series A and Series B
Stock with the Office of the Secretary of State of Nevada. For a description of
the terms of the Series A and B Stock, see Item 3.03 of this Current Report.

                                       85
Warrants

      We currently have warrants outstanding, which, upon the occurrence of the
Reverse Split, will be exercisable at $3.67 par share to purchase a total of
1,987,760 shares of our Common Stock. The warrants have a five year term. The
Company may force the exercise of the warrants if the Company signs a binding
agreement to make a certain acquisition (provided certain conditions are met),
or if the price of its Common Stock exceeds $10 per share for 10 consecutive
trading days.

      We have granted warrants to Kuhns Brothers and its designees to purchase
398,050 shares of common stock after the Reverse Split at the exercise price of
$3.1064 per share. We issued these warrants for advisory services connection
with the reorganization of our company and the acquisition of DPI.

      We also have issued to Glenn A. Little a warrant to purchasea number of
shares of Common Stock equal to 0.4% of the post-Reverse Split shares of Common
Stock in return for certain consulting services to be rendered by Mr. Little
pursuant to a consulting agreement between Mr. Little and the Company. These
warrants may be exercised after the occurrence of the Reverse Split. The
exercise price is $0.01 per share.

                           MARKET FOR OUR COMMON STOCK

      Bid and ask quotations for our common stock appear on the NASD's
over-the-counter Bulletin Board under the symbol PLLK.OB. As of the date of
filing of this Current Report, there is no active trading market for our common
stock, and there has been no regular, established trading market for our common
stock since the completion of the Company's public offering in 1993. The high
and low bid prices for our common stock as reported by Yahoo Finance on December
9, 2005 were: $0.041 and $0.042. These over-the-counter market high and low bid
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commissions and may not necessarily represent actual transactions. Our common
stock is held by approximately 450 holders of record.

Penny Stock Regulations

      The SEC has adopted regulations which generally define "penny stock" to be
an equity security that has a market price of less than $5.00 per share. Our
common stock, when and if a trading market develops, may fall within the
definition of penny stock and subject to rules that impose additional sales
practice requirements on broker-dealers who sell such securities to persons
other than established customers and accredited investors (generally those with
assets in excess of $1,000,000, or annual incomes exceeding $200,000 or
$300,000, together with their spouse).

                                       86
For transactions covered by these rules, the broker-dealer must make a
special suitability determination for the purchase of such securities and have
received the purchaser's prior written consent to the transaction. Additionally,
for any transaction, other than exempt transactions, involving a penny stock,
the rules require the delivery, prior to the transaction, of a risk disclosure
document mandated by the Commission relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and, if the broker-dealer is the sole market-maker, the broker-dealer
must disclose this fact and the broker-dealer's presumed control over the
market. Finally, monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks. Consequently, the "penny stock" rules may
restrict the ability of broker-dealers to sell the our Common Stock and may
affect the ability of investors to sell their Common Stock in the secondary
market.

Dividends

      Our board of directors has not declared a dividend on our Common Stock
during the last two fiscal years or the subsequent interim period and we do not
anticipate the payments of dividends in the near future as we intend to reinvest
our profits to grow operations. See "Risk Factors - Risks Related to an
Investment in our Common Stock - We are unlikely to pay cash dividends in the
foreseeable future" in this Item 2.01. We rely entirely on dividends from Dalian
DPI for our funds and PRC regulations may limit the amount of funds distributed
to the Company from Dalian DPI, which will affect our ability to declare any
dividends. See "Risk Factors - Risks Related to Doing Business in the PRC -
Dalian DPI and Dalian Fushi are subject to restrictions on paying dividends and
making other payments to us" and "- Governmental control of currency conversion
may affect the value of your investment" in this Item 2.01. Also see
"Description of Securities - Common Stock."

                       WHERE YOU CAN FIND MORE INFORMATION

      We have filed with the U.S. Securities and Exchange Commission (the
"SEC"), reports, statements and other information as required under the
Securities Exchange Act of 1934. These reports, statements and other information
may be read and copied at the SEC's Public Reference Room at 100 F Street NE,
Washington, D.C. 20549. The public may obtain information on the operation of
the Public Reference Room at 1-800-SEC-0330.

      The SEC maintains a web site (HTTP://WWW.SEC.GOV.) that contains the
registration statements, reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC such as
us. You may access our SEC filings electronically at this SEC website. These SEC
filings are also available to the public from commercial document retrieval
services.

                                       87
Item 3.02 Unregistered Sales of Equity Securities.

Issuance of Series A Stock in Acquisition of DPI

      On December 13, 2005, we issued 784,575 shares of our Series A Stock in
exchange for 15,560 shares of common stock of our now wholly-owned subsidiary,
DPI, under the Share Exchange Agreement. The issuance of shares of our Series A
Stock in the share exchange was exempt from registration in reliance upon
Regulation S and Rule 506 of Regulation D under Section 4(2) of the Securities
Act. Each of the DPI Stockholders who is not a U.S. person, as defined in Rule
902(k) of Regulation S, is either an accredited investor or has such knowledge
and experience in financial and business matters that he is capable of
evaluating the merits and risks of an investment in our securities. For a
description of the terms of the Series A Stock, see Item 3.03 of this Current
Report.

Issuance of Series B Stock and Redeemable Warrants in Private Placement

      On December 13, 2005, we sold 201,511.98 shares of our Series B Preferred
Stock, together with warrants, for $11,225,000 under the Series B Purchase
Agreement. The Series B Stock is convertible automatically into approximately
3,975,520 shares of our Common Stock upon the occurrence of the Reverse Split.
In addition to the Series B Stock, each investor received one warrant for every
two shares of our Common Stock that it will acquire upon the automatic
conversion of the Series B Stock. For a more complete description of the terms
of the Series B Stock, see Item 3.03 of this Current Report.

      We sold the Series B Stock, together with the Warrants, in a private
placement (the "Private Placement") through Kuhns Brothers Securities
Corporation ("Kuhns Brothers Securities"), an NASD and SEC registered
broker-dealer, Kuhns Brothers Securities is a subsidiary of Kuhns Brothers, Inc.
The sale of the shares of Series B Stock and the Warrants was exempt from
registration under Rule 506 of Regulation D under the Securities Act. All of the
investors were "accredited investors" within the meaning of Rule 501(c) of
Regulation D.

      Under the Stock Purchase Agreement, we are required to register for resale
each share of common stock into which the Series B Stock is convertible, as well
as each share of common stock that may be acquired upon the exercise of each
Warrant.

      In connection with the placement of our Series B Stock and Warrants, Kuhns
Brothers Securities, as placement agent, received the following compensation:
(i) $200,000 cash as signing fee, documentation fee and purchase fee, (ii) 10%
of the total cash paid for the Series B Stock and warrants, (iii) 38,321 shares
of Series A Stock, which will convert automatically into approximately 760,000
shares of our common stock, and (iv) a warrant to purchase 424,929 shares of
common stock after the Reverse Split at the exercise price of $3.1064 per share,
exercisable within 5 years of the date of issue. In addition, Kuhns Brothers
Securities is to receive 10% of the proceeds from the exercise of the warrants
issued to the investors.

                                       88
Issuance of Warrant to Glenn A. Little

      On December 13, 2005, we issued to Glenn A. Little, the former holder of a
majority of our outstanding ommon stock and former director and executive
officer, a warrant for the purchase of such number of shares representing 0.4%
of our outstanding common stock after giving effect to the Reverse Split (the
"Little Warrant"). The warrant may be exercised only after the Reverse Split and
has a term of five years. The exercise price of the warrant is $0.01 per share.
We issued the warrant to Mr. Little in consideration for his agreement to
provide us with consulting services under a consulting agreement. The issuance
of the Little Warrant was exempt from registration under Section 4(2) of the
Securities Act. Mr. Little is a sophisticated investor who has such knowledge
and experience in financial and business matters that he is capable of
evaluating the merits and risks of an investment in our securities. We have
granted piggy-back registration rights to Mr. Little for the public resale of
the shares of common stock that he may acquire upon the exercise of the warrant.

Item 3.03 Material Modification to Rights of Securityholders.

Designations, Preferences and Rights of Newly Issued Series A and B Stock

      On December 5, 2005, our Board of Directors designated 216,000 shares of
our authorized $0.01 par value per share preferred stock as Series A Stock and
785,000 shares of our preferred stock as Series B Preferred Stock. On December
8, 2005, we filed Certificates of Designation for the Series A and Series B
Stock with the Office of the Secretary of State of Nevada. Our Board of
Directors created the Series A Stock to allow us to consummate the Share
Exchange Agreement with DPI and the Series B Stock in connection with the
Private Placement, although in each case we do not have sufficient unissued
authorized common stock to allow for a complete conversion. Each share of the
Series A Stock and Series B Stock will convert automatically into 19.73 shares
of our Common Stock after giving effect to the Reverse Split.

      The following are the material designations, preferences and rights of the
Series A Stock and the Series B Stock which are substantially the same, except
as stated below, with respect to liquidation preference and special rights of
the Series B Stock:

      Conversion:

      Each share of Series A Stock and Series B Stock will convert automatically
into 4,838.86 pre-split shares of our fully paid and non-assessable $0.006 par
value per share common stock at such time as we file an amendment to our
Articles of Incorporation with the Secretary of State of the State of Nevada
effecting an approximate 1 for 245.27 Reverse Split of our common stock.

                                       89
Liquidation Preference and Redemption:

      The Series A Stock has no liquidation or redemption rights.

      The Series B Stock will, in respect of the right to participate in
distribution or payments in the event of any liquidation, dissolution or winding
up, voluntary or involuntary, of the Company (including certain sales of assets
and mergers, a "Liquidation Event"), rank (a) senior to the Common Stock, Series
A Stock and to any other class or series of stock issued by the Company not
designated as ranking senior to the Series B Stock in respect of the right to
participate in distributions or payments upon a Liquidation Event; (b) pari
passu with any other class or series shall rank pari passu with the Series B
Stock in respect of the right to participate in distributions or payments upon a
Liquidation Event; and (c) junior to any other class or series of stock of the
Company, the terms of which specifically provide that such class or series shall
rank senior to the Series B Stock in respect of the right to participate in
distributions or payments upon a Liquidation Event. The Series B Stock may not
be redeemed by the Company without the express written consent (provided or
withheld in their sole discretion) of the holders of a majority of the
then-outstanding Series B Stock and any such redemption approved by a majority
shall compel redemption with respect to all outstanding holders of Series B
Stock.

      Voting:

      Each share of Series A Stock and Series B Stock shall have the right to
vote together with the holders of the Common Stock, as a single class, upon all
matters submitted to holders of common stock for a vote, except as to matters
which require a class vote under the Certificate of Designations or by Nevada
law. Each share of Series A Stock and Series B Stock will carry a number of
votes equal to the number of shares of common stock that the holder may acquire
upon conversion. If the automatic conversion of the Series B Stock has not
occurred by the first anniversary of the initial issuance of the Series B and we
do repurchase all of the outstanding Series B shares as contemplated under
"Special Rights of Series B Stock" below, then until the automatic conversion
off the Series B Stock occurs, the shares of Series B Stock will carry an
aggregate number of votes equal to 66 2/3% of the then outstanding voting power
of all our voting securities, or such larger percentage of votes required to
approve any action by, or submitted to the shareholders, with each share of
Series B carrying the pro rata number of votes necessary to equal this aggregate
percentage at any given time.

      Dividends:

      Holders of the Series A Stock and the Series B Stock will not be entitled
to dividends unless the Company pays cash dividends or dividends in other
property to holders of outstanding shares of our Common Stock, in which event,
each outstanding share of the Series A Stock and Series B Stock will be entitled
to receive dividends of cash or property out of any assets legally available for
the payment of dividends, in an amount or value equal to the conversion rate
multiplied by the amount paid in respect of one share of Common Stock (as
adjusted for any stock dividends, combinations, splits or similar
recapitalization events) prior and in preference to any declaration or payment
of any dividend (payable other than in shares of Common Stock or other
securities and rights convertible into or entitling the holder thereof to
receive, directly or indirectly, additional shares of Common Stock) on the
Common Stock.

                                       90
Special Rights of Series B Stock

      Forfeiture Penalty; (a) If by 120 days after the first anniversary of the
initial issuance date of the Series B Stock (the "Reverse Split Deadline"), (a)
the Reverse Split is not effected, or (b) the holders of the shares of Series B
Stock do not otherwise acquire, in the aggregate, 20.15% (as adjusted under a
comtemplated amendment to the Certificate of Designation for the Series B Stock)
of the outstanding shares of Common Stock ((a) and (b) together, the
"Conditions", then Dalian Fushi and the Dalian Fushi Shareholders will forfeit
out of escrow to the holders of the then outstanding shares of Series B Stock,
pro rata, each at their option, a number of shares of Common Stock equal to, or
shares of Series A, that are convertible into 125,000 shares of Common Stock,
for no additional consideration other than the purchase price of the Series B
Stock (the "Penalty Shares"), upon the terms of that certain escrow agreement,
dated on or about December 13, 2005, between the holders of the shares of Series
B Stock, the holders of certain outstanding shares of Common Stock, Series A
Stock and certain other persons (the "Escrow Agreement"). In addition, if the
Conditions are not met 30 days after the Reverse Split Deadline and every thirty
days thereafter, on which the Conditions are not satisfied, then the Dalian
Fushi and the Dalian Fushi Shareholders will forfeit out of escrow to the
holders of the then outstanding shares of Series B Stock, pro rata, each at
their option, an additional 125,000 Penalty Shares under the terms of the Escrow
Agreement.

      Company Repurchase Option: If the conditions are not satisfied by the
first anniversary of the date upon which the Series B Stock was first issued,
then Chinamerica Fund, LP, as the representative of the holders of the then
outstanding shares of Series B Stock may offer to sell all of the outstanding
shares of Series B Stock, upon written notice by fifteen (15) days after the
first anniversary of the date the Series B Stock was first issued, to the
Company for a total purchase price to be $11,225,000 in cash.

      Series B Purchase Right: If the Company fails or refuses to accept the
offer and does not purchase all of the outstanding shares of Series B Stock by
the 30th day after the first anniversary of the date the Series B Stock was
first issued, the holders of the then outstanding shares of Series B Stock may
purchase the shares of Common Stock and Series A. Stock, as held in escrow, at a
price per share of $0.01, upon the terms of the Escrow Agreement.

                                       91
Reverse Stock Split

      On December 5, 2005, our sole director adopted a resolution to amend the
Company's Articles of Incorporation to effect a 245.27 for 1 reverse stock split
of its Common Stock (the "Reverse Split") and to change the Company's name to
"Fushi International, Inc." The Company has obtained the written consent of the
holder of a majority of its then outstanding shares of voting stock approving
the Reverse Split and the name change. The Reverse Split and name change will
occur upon the filing of a certificate of amendment to the Articles of
Incorporation with the Office of the Secretary of State of Nevada, not less than
20 days after, but within 25 days of, the Company's mailing of an Information
Statement on Schedule 14C to the Company's shareholders. A preliminary
Information Statement is being filed with the Securities and Exchange Commission
on or about the date of this Current Report. Upon the filing of the certificate
of amendment:

      o     the 784,575.16 outstanding shares of Series A Stock will be
            converted automatically into approximately 15,475,595 shares of
            Common Stock, without any action on the part of shareholders

      o     the 201,511.98 outstanding shares of Series B Stock will be
            converted automatically into approximately 3,975,520 shares of
            Common Stock, without any action on the part of shareholders

      o     the 39,243,659 outstanding shares of Common Stock will be converted
            automatically into approximately 160,000 shares of Common Stock,
            without any action on the part of shareholders. Of these shares,
            81,543 shares will be owned by Dalian Fushi, with the other existing
            shareholders owning in the aggregate only approximately 78,458
            shares.

      For a description of our capital stock generally, see "Description of Our
Securities" in Item 2.01 0f this Current Report.

Item 4.01 Changes in Registrant's Certifying Accountant.

      On December 13, 2005, concurrent with the change in control of our company
reported in Item 5.01 of this Current Report, our Board of Directors approved
the dismissal of S. W. Hatfield, CPA ("Hatfield") as our registered independent
certified public accounting firm. Concurrent with this action, our Board of
Directors appointed Jimmy C.H. Cheung & Co. ("Cheung") as our new registered
independent certified public accounting firm. Cheung is located at 1697 Dominion
Center, 43 Queen's Road East, Wanchai, Hong Kong.

      Hatfield had been previously engaged as our independent auditing firm to
audit our financial statements. As a result of the change in control, our
operating businesses have previously been audited by Cheung and management
elected to continue this existing relationship.

      No accountant's report on the financial statements, issued by Hatfield,
for either of the past two years contained an adverse opinion or a disclaimer of
opinion or was qualified or modified as to uncertainty, audit scope or
accounting principles, except for a going concern opinion expressing substantial
doubt about the ability of the Company to continue as a going concern.

                                       92
During the Company's two most recent fiscal years (ended December 31, 2004
and 2003) and from January 1, 2005 to the date of this Report, there were no
disagreements with Hatfield 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-B, during the
Company's two most recent fiscal years (ended December 31, 2004 and 2003) and
from January 1, 2005 to the date of this Current Report.

Item 5.01 Changes in Control of Registrant

      On December 13, 2005, Dalian Fushi purchased the 20,000,000 shares of our
common stock owned by Glenn A. Little, representing 50.96% issued and
outstanding shares of our Common Stock, under a stock purchase agreement dated
as November 8, 2005 (the "Little Stock Purchase Agreement"). The purchase price
was $550,000, which was provided from investor funds in the Private Placement
and the payment of the purchase price was deferred until the closing of the
financing in the Private Placement.

      In connection with the sale, we entered into a consulting agreement with
Mr. Little, dated as of November 8, 2005 (the "Consulting Agreement"). Under the
terms of the Consulting Agreement, we retained Glenn Little as a consultant to
provide certain consulting services, information and materials to us and our
advisors relating to our past operations and filings. As consideration, we
issued to Mr. Little a warrant for the purchase of such number of shares of our
Common Stock equals to 0.4% of our outstanding common stock after giving effect
to the Reverse Split. The warrant may be exercised upon the occurrence of the
Reverse Split and has a term of five years. The exercise price of the warrant is
$0.01 per share. We have granted piggy-back registration rights to Mr. Little
for the public resale of the shares of common stock that he may acquire upon the
exercise of the warrant.

      By virtue of the acquisition of a majority of our voting securities under
the Little Stock Purchase Agreement, Dalian Fushi acquired from Mr. Little
control of our company on December 13, 2005. Under the terms of the Little Stock
Purchase Agreement, at closing, Mr. Little, the sole director of our company,
appointed Messrs. Li Fu, Yue Mathus Yang and John D. Kuhns as directors of our
company, and resigned as an officer and director immediately after the closing
of the Private Placement. Mr. Li Fu is the controlling shareholder, chief
executive officer and director of the Dalian Fushi.

      On November 14, 2005, we filed an information statement with the SEC
relating to the change in control of our Board of Directors containing the
information required under Rule 14f-1 of the Exchange Act and on or about
November 21, 2005; we distributed that information statement to all holders of
record of our Common Stock.

Item. 5.06 Change in Shell Company Status.

      As a result of its acquisition of all of the outstanding capital stock of
DPI and the Restructuring Agreements, as described in Item 2.01, which
description is in its entirety incorporated by reference in this Item 5.06 of
this Current Report, we ceased being a shell company as such term is defined in
Rule 12b-2 under the Exchange Act.

                                       93
Item 9.01 Financial Statements and Exhibits.

      (a)   The financial statements of Dalian Fushi (PRC) are appended to this
            Current Report beginning on page F-1.

      (b)   The following exhibits are filed with this Current Report:

Exhibit No.       Description of Exhibit

3.1               Articles of Incorporation, as amended.

3.2               Bylaws.

3.3               Specimen of Common Stock certificate.

3.4               Certificate of Designations authorizing the Series A
                  Convertible Preferred Stock.

3.5               Certificate of Designations authorizing the Series B
                  Convertible Preferred Stock.

4.1               Stock Purchase Agreement, dated as of December 13, 2005 by and
                  among Parallel Technologies, Inc., Dalian Fushi, the
                  management of Dalian Fushi, Chinamerica Fund, LP, and the
                  other investors named therein.

4.2               Form of Warrant.

4.3               Form of Warrant issued to Glenn A. Little.

4.4               Amendment No. 1 to Stock Purchase Agreement, dated as
                  of December 13, 2005 by and among Parallel Technologies, Inc.,
                  Dalian Fushi, the management of Dalian Fushi, Chinamerica
                  Fund, LP, and the other investors named therein.

10.1              Share Exchange Agreement dated as of December 13, 2005 between
                  Parallel Technologies, Inc. and Diversified Product
                  Inspections, Inc.

10.2              Translation of Purchase Agreement, dated as of December 13,
                  2005, between Dalian DPI and Dalian Fushi .

10.3              Translation of Entrusted Management Agreement, dated as of
                  December 13, 2005, by and among Dalian DPI, Dalian Fushi,
                  Dalian Fushi Enterprise Group Co., Ltd., Yue Yang, Xishan
                  Yang, and Chunyan Xu.

                                       94
10.4              Translation of First Patents Transfer Contract, dated as of
                  December 13, 2005, by and between Dalian DPI and Dalian Fushi.

10.5              Translation of Second Patent Transfer Contract, dated as of
                  December 13, 2005, by and between Dalian DPI and Li Fu.

10.6              Translation of Voting Proxy Agreement, dated as of December
                  13, 2005, by and among Dalian DPI, Dalian Fushi Enterprise
                  Group Co., Ltd., Yue Yang, Xishan Yang, and Chunyan Xu.

10.7              Translation of Exclusive Option Agreement, dated as of
                  December 13, 2005, by and among Dalian DPI, Dalian Fushi,
                  Dalian Fushi Enterprise Group Co., Ltd., Yue Yang, Xishan
                  Yang, and Chunyan Xu.

10.8              Translation of Shares Pledge Agreement, dated as of December
                  13, 2005, by and among Dalian DPI, Dalian Fushi Enterprise
                  Group Co., Ltd., Yue Yang, Xishan Yang, and Chunyan Xu.

10.10             Form of Stock Purchase Agreement dated as of November 8, 2005
                  between Glenn A. Little and Dalian Fushi.

10.11             Form of Consulting Agreement dated as of December 13, 2005
                  between Parallel Technologies, Inc. and Glenn A. Little.

10.12             Form of Engagement Letter dated May 27, 2005 between Dalian
                  Fushi and Kuhns Brothers, Inc.

10.13             Form of Amendment No. 1 to Agreement for Purchase of Common
                  Stock between Glenn A. Little and Dalian Fushi dated December
                  8, 2005.

16.1              Letter dated December 13, 2005 from Parallel Technologies,
                  Inc. to S.W. Hatfield, CPA

16.2              Letter dated December 13, 2005 from S.W. Hatfield, CPA to the
                  Securities and Exchange Commission.

21.1              List of Subsidiaries

                                       95
DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED

                              FINANCIAL STATEMENTS
                        AS OF DECEMBER 31, 2004 AND 2003
DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED

                                    CONTENTS

                                                                           PAGES

--------------------------------------------------------------------------------

Report of Independent Registered Public Accounting Firm                        1
--------------------------------------------------------------------------------

Balance Sheets as of December 31, 2004 and 2003                                2
--------------------------------------------------------------------------------

Statements of Operations for the years ended December 31, 2004 and 2003        3

--------------------------------------------------------------------------------

Statements of Stockholders' Equity for the years ended December 31, 2004
and 2003                                                                       4
--------------------------------------------------------------------------------

Statements of Cash Flows for the years ended December 31, 2004 and 2003        5
--------------------------------------------------------------------------------

Notes to Financial Statements                                             6 - 11
--------------------------------------------------------------------------------
JIMMY C.H. CHEUNG & CO
Certified Public Accountants
(A member of Kreston International)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of:
Dalian Fushi Bimetallic Manufacturing Company Limited

We have  audited the  accompanying  balance  sheets of Dalian  Fushi  Bimetallic
Manufacturing Company Limited, as of December 31, 2004 and 2003, and the related
statements of operations, changes in stockholders' equity and cash flows for the
years ended  December  31, 2004 and 2003.  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 of the financial
statements provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position  of Dalian  Fushi  Bimetallic
Manufacturing Company Limited, as of December 31, 2004 and 2003, and the results
of its  operations  and its cash flows for the years ended December 31, 2004 and
2003, in conformity with accounting  principles generally accepted in the United
States of America.

JIMMY C.H. CHEUNG & CO
Certified Public Accountants

Hong Kong

Date: May 20, 2005

         1607 Dominion Centre, 43 Queen's Road East, Wanchai, Hong Kong
 Tel: (852) 25295500 Fax: (852) 28651067 Email: jchc@krestoninternational.com.hk
                      Website: http://www.jimmycheungco.com

                                                                             F-1
DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                                 BALANCE SHEETS
                        AS OF DECEMBER 31, 2004 AND 2003

                                        ASSETS

                                             Note        2004           2003
                                                    -------------  -------------
CURRENT ASSETS
   Cash and cash equivalents                        $  2,612,282   $    260,281
   Accounts receivable, net                   2        1,760,586      1,951,621
   Due from related companies                 12         456,527      1,396,575
   Inventories, net                           3        2,050,256        468,136
   Prepaid expenses and other current assets  4        2,857,416      4,041,332
                                                    -------------  -------------
      Total Current Assets                             9,737,067      8,117,945

PROPERTY AND EQUIPMENT, NET                   5       33,467,298     22,367,442

OTHER ASSETS
   Intangible assets, net                     6          938,161      1,062,870
   Land use rights, net                       7        4,691,638      4,788,540
                                                    -------------  -------------
TOTAL ASSETS                                        $  48,834,164  $  36,336,797
                                                    =============  =============

                        LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable                                 $  1,560,437   $    935,359
   Other payables and accrued liabilities     8          610,245      1,445,387
   Notes payable - current maturities         9        6,894,049              -
   Value added tax and other taxes payable             2,581,181      1,293,741
   Income tax payable                                    666,995              -
   Due to a related company                   12         153,519         99,379
                                                    -------------  -------------
      Total Current Liabilities                       12,466,426      3,773,866

LONG-TERM LIABILITIES
   Notes payable - long term                  9        9,675,859      9,675,859
                                                    -------------  -------------
TOTAL LIABILITIES                                     22,142,285     13,449,725
                                                    -------------  -------------

COMMITMENTS AND CONTINGENCIES                 10               -              -

STOCKHOLDERS' EQUITY
   Registered capital of $19,351,717 fully paid       19,351,717     19,351,717
   Retained earnings
     Unappropriated                                    6,119,998      2,885,912
     Appropriated                                      1,220,164        649,443
                                                    -------------  -------------
      Total Stockholders' Equity                      26,691,879     22,887,072
                                                    -------------  -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY          $  48,834,164   $ 36,336,797
                                                    =============  =============

 The accompanying notes are an integral part of these financial statements

                                                                             F-2
DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                            STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

                                                  2004             2003
                                             --------------  ---------------
NET SALES                                    $  15,662,493   $   11,955,551

COST OF SALES                                   (8,947,365)      (7,006,099)
                                             --------------  ---------------

GROSS PROFIT                                     6,715,128        4,949,452
                                             --------------  ---------------

OPERATING EXPENSES
   Selling expenses                                578,031          530,463
   General and administrative expenses             724,893          450,780
   Depreciation and amortization                   694,522          439,025
                                             --------------  ---------------
        Total Operating Expenses                 1,997,446        1,420,268
                                             --------------  ---------------

INCOME FROM OPERATIONS                           4,717,682        3,529,184

OTHER INCOME (EXPENSES)
   Interest income                                  23,122            5,415
   Interest expense                               (378,588)         (53,756)
   Other income                                    109,586                -
                                             --------------  ---------------
        Total Other Expenses                      (245,880)         (48,341)

INCOME FROM OPERATIONS BEFORE TAXES              4,471,802        3,480,843

INCOME TAX EXPENSE                                (666,995)               -
                                             --------------  ---------------

NET INCOME                                   $   3,804,807   $    3,480,843
                                             ==============  ===============

 The accompanying notes are an integral part of these financial statements

                                                                             F-3
DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
Unappropriate Appropriated
                                               Registered    retained     retained
                                                  capital    earnings     earnings       Total
                                               ----------- -----------  ----------- -----------
Balance brought forward from 2002              $ 4,837,929 $  721,460   $  127,317  $ 5,686,706

Capital contribution from stockholders                              -            -           -
   Land use rights                               4,761,732
   Paid in cash                                  9,752,056

Net income for the year                                 -   3,480,843            -    3,480,843

Dividends paid                                          -    (794,265)           -     (794,265)

Transfer from retained earnings to
   statutory and staff welfare reserves                 -    (522,126)     522,126           -
                                               ----------- -----------  ----------- -----------
Balance at December 31, 2003                    19,351,717   2,885,912      649,443   8,373,284

Net income for the year                                 -    3,804,807            -   3,804,807

Transfer from retained earnings to
   statutory and staff welfare reserves                 -    (570,721)      570,721           -
                                               ----------- -----------  ----------- -----------
Balance at December 31, 2004                   $19,351,717 $ 6,119,998  $ 1,220,164 $12,178,091
                                               ----------- -----------  ----------- -----------
The accompanying notes are an integral part of these financial statements

                                                                             F-4
DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                            STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
2004             2003
                                                            ------------     ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                 $  3,804,807     $  3,480,843
 Adjusted to reconcile net income to cash provided
  by operating activities:
  Depreciation and amortization - cost of sales                  298,142          176,712
  Depreciation                                                   472,912          141,547
  Amortization of land use rights                                 96,901           56,526
  Amortization of intangbile assets                              124,709          240,952
Changes in operating assets and liabilities
(Increase)decrease in:
  Accounts receivable                                            191,035         (813,021)
  Prepaid expenses and other current assets                    1,183,916       (3,107,477)
  Inventories                                                 (1,582,120)          63,577
Increase (decrease) in:
  Accounts payable                                               625,078          683,079
  Other payables and accrued liabilities                        (835,141)       1,415,564
  Value add tax and other taxes payable                        1,287,440        1,293,741
  Income tax payable                                             666,995               --
                                                            ------------     ------------
  Net cash provided by operating activities                    6,334,674        3,632,043
                                                            ------------     ------------

CASH FLOWS FROM INVESTING ACTIVITIES
 Purchase of property and equipment                          (11,870,910)     (17,469,013)
 Purchase of land use rights                                          --          (83,333)
 Purchase of intangible assets                                        --       (1,303,822)
                                                            ------------     ------------
  Net cash used in investing activities                      (11,870,910)     (18,856,168)
                                                            ------------     ------------

CASH FLOWS FROM FINANCING ACTIVITIES
 Proceeds from issuance of common stock                               --        9,752,056
 Dividends paid                                                       --         (794,265)
 Proceeds from notes payable                                   7,172,229        9,675,859
 Payment on notes payable                                       (278,180)      (2,177,067)
 Due from related companies                                      940,048       (1,396,575)
 Due to a related company                                         54,140           99,379
                                                            ------------     ------------
  Net cash provided by financial activities                    7,888,237       15,159,387
                                                            ------------     ------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS           2,352,001          (64,738)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                   260,281          325,019
                                                            ------------     ------------

CASH AND CASH EQUIVALENTS AT END OF YEAR                    $  2,612,282     $    260,281
                                                            ============     ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid for interest expense                              $    721,427     $    253,240
                                                            ============     ============

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES

Increase in registered capital for land use rights          $         --     $  4,761,732
                                                            ============     ============
The accompanying notes are an integral part of these financial statements

                                                                             F-5
DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                        NOTES TO THE FINANCIAL STATEMENTS
                        AS OF DECEMBER 31, 2004 AND 2003

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

      (A)   Organization

            Dalian  Fushi  Bimetallic  Manufacturing  Company  Limited  ("Dalian
            Fushi")  was  incorporated  on  January  16,  2002  in the  People's
            Republic of China  ("PRC") as a limited  liability  company.  On the
            date of incorporation, the registered capital was $4,837,929 and was
            increased to $19,351,717 on July 16, 2003.

            Dalian Fushi is principally engaged in the manufacturing and sale of
            complex wires and its principal place of business is Dalian, PRC.

      (B)   Use of estimates

            The  preparation  of the financial  statements  in  conformity  with
            generally accepted accounting principles requires management to make
            estimates and assumptions  that affect the reported amount 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  period.  Actual results
            could differ from those estimates.

      (C)   Cash and cash equivalents

            For  purpose  of  the  statements  of  cash  flows,  cash  and  cash
            equivalents  include  cash on hand and demand  deposits  with a bank
            with maturities of less than three months.

      (D)   Accounts receivable

            The  Company  extends  unsecured  credit  to  its  customers  in the
            ordinary  course of business but mitigates the  associated  risks by
            performing credit checks and actively pursuing past due accounts. An
            allowance for doubtful accounts is established and recorded based on
            managements'  assessment of the credit history with the customer and
            current  relationships  with them. As of December 31, 2004 and 2003,
            the Company considers all its accounts  receivable to be collectable
            and  no  provision  for  doubtful  accounts  has  been  made  in the
            financial statements.

      (E)   Inventories

            Inventories are stated at lower of cost or market value,  cost being
            determined  on a  weighted  average  method.  The  Company  provided
            inventory  allowances  based  on  excess  and  obsolete  inventories
            determined principally by customer demand.

      (F)   Property and equipment

            Property  and  equipment  are  stated  at  cost,  less   accumulated
            depreciation.   Expenditures  for  additions,   major  renewals  and
            betterments  are capitalized  and  expenditures  for maintenance and
            repairs are charged to expense as incurred.

            Depreciation  is provided on a straight-line  basis,  less estimated
            residual  value  over  the  assets'   estimated  useful  lives.  The
            estimated useful lives are as follows:

            Buildings                                 20 Years
            Plant and machinery                       10 Years
            Motor vehicles                             5 Years
            Furniture, fixtures and equipment          5 Years

            Land use rights are stated at cost,  less  accumulated  amortization
            and are amortized  over the term of the relevant  rights of 50 years
            from the date of  acquisition.  Amortization  of land use rights for
            the years ended  December  31, 2004 and 2003 was $96,901 and $56,526
            respectively.

                                                                             F-6
DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                        NOTES TO THE FINANCIAL STATEMENTS
                        AS OF DECEMBER 31, 2004 AND 2003

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION (CONTINUED)

      (G)   Long-lived assets

            In accordance with Statement of Financial  Accounting  Standards No.
            144,  "Accounting  for the  impairment  or  disposal  of  Long-Lived
            Assets",  long-lived  assets  and  certain  identifiable  intangible
            assets  held and used by the  Company are  reviewed  for  impairment
            whenever  events  or  changes  in  circumstances  indicate  that the
            carrying amount of an asset may not be recoverable.  For purposes of
            evaluating   the    recoverability   of   long-lived   assets,   the
            recoverability  test is performed using  undiscounted net cash flows
            related to the long- lived assets.  The Company  reviews  long-lived
            assets to determine that carrying values are not impaired.

      (H)   Fair value of financial instruments

            Statement of Financial  Accounting  Standards  No. 107,  "Disclosure
            About  Fair  Value  of  Financial   Instruments,"  requires  certain
            disclosures regarding the fair value of financial instruments. Trade
            accounts  receivable,  accounts payable, and accrued liabilities are
            reflected in the  financial  statements at fair value because of the
            short-term maturity of the instruments.

      (I)   Revenue recognition

            The  Company  recognizes  revenue  upon  delivery or shipment of the
            products,  at which time title passes to the customer provided that:
            there are no uncertainties regarding customer acceptance; persuasive
            evidence  of an  arrangement  exists;  the sales  price is fixed and
            determinable; and collectability is deemed probable.

      (J)   Income taxes

            The Company is organized  in the  People's  Republic of China and no
            tax benefit is expected from the tax credits in the future.

            PRC  income  tax is  computed  according  to the  relevant  laws and
            regulations  in the PRC.  The Company is entitled to full  exemption
            from income tax for two years  beginning  from 2002,  the first year
            the Company  becomes  profitable  and a 50% income tax reduction for
            the  subsequent  three  years.  The  Company  is  entitled  to  full
            exemption  from  income  tax in 2003  which is the  second  year the
            Company  becomes  profitable.  The income tax  expense  for 2004 was
            $666,995.

      (K)   Foreign currency translation

            The  functional  currency  of the  Company is the  Chinese  Renminbi
            ("RMB").  Transactions  denominated in currencies other than RMB are
            translated  into United  States  dollars  using  period end exchange
            rates as to assets and liabilities and average  exchange rates as to
            revenues and  expenses.  Capital  accounts are  translated  at their
            historical exchange rates when the capital transaction occurred. Net
            gains and losses  resulting from foreign  exchange  translations are
            included in the statements of operations and stockholder's equity as
            other comprehensive income (loss).

      (L)   Segments

            The  Company  operates  in  only  one  segment,  thereafter  segment
            disclosure is not presented.

      (M)   Recent Accounting Pronouncements

            Statement  of  Financial  Accounting  Standards  ("SFAS")  No.  151,
            "Inventory  Costs - an amendment  of ARB No. 43,  Chapter 4 SFAS No.
            152,  "Accounting  for Real Estate  Time-Sharing  Transactions  - an
            amendment  of  FASB  Statements  No.  66  and  67,"  SFAS  No.  153,
            "Exchanges of Non-monetary  Assets - an amendment of APB Opinion No.
            29,", SFAS No. 123 (revised 2004),  "Share-Based  Payment," and SFAS
            No. 154  "Accounting  Changes and Error  Corrections"  were recently
            issued.  SFAS No. 151, 152, 153, 154 and 123 (revised  2004) have no
            current  applicability  to the  Company  and have no  effect  on the
            financial statements.

                                                                             F-7
DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                        NOTES TO THE FINANCIAL STATEMENTS
                        AS OF DECEMBER 31, 2004 AND 2003

2.    ACCOUNTS RECEIVABLE

      Accounts  receivable  at  December  31,  2004  and 2003  consisted  of the
      following:
                                                    2004            2003
                                               ------------   -------------
      Accounts receivable                      $  1,760,586       1,951,621
      Less: allowance for doubtful accounts              -               -
                                               ------------   -------------
      Accounts receivable, net                 $  1,760,586   $   1,951,621
                                               ------------   -------------

      As of December  31, 2004 and 2003,  the Company  considered  all  accounts
      receivable  collectable  and has not  recorded a  provision  for  doubtful
      accounts.

3.    INVENTORIES

      Inventories at December 31, 2004 and 2003 consisted of the following:

                                                   2004            2003
                                               ------------   -------------
      Raw materials                            $   862,806    $    252,640
      Work-in-progress                              93,392          57,583
      Finished goods                             1,094,058         157,913
                                               ------------   -------------
                                                 2,050,256         468,136
      Less: provision of obsolescence                    -               -
                                               ------------   -------------
      Inventories, net                         $ 2,050,256    $    468,136
                                               ------------   -------------

      For the years ended  December 31, 2004 and 2003, no provision for obsolete
      inventories was recorded by the Company.

4.    PREPAID EXPENSES AND OTHER CURRENT ASSTES

      Prepaid  expenses and other  current  assets at December 31, 2004 and 2003
      consisted of the following:

                                                      2004            2003
                                               ------------   -------------
      Prepaid expenses                         $   111,030    $  2,735,342
      Advances to suppliers                        402,137         629,585
      Advances to staff                            239,732          99,897
      Other receivables                          2,104,517         576,508
                                               ------------   -------------
                                               $ 2,857,416    $  4,041,332
                                               ------------   -------------

5.    PROPERTY AND EQUIPMENT

      The following is a summary of property and equipment at December 31:

                                                    2004            2003
                                               -------------   -------------
      Buildings                                $ 13,209,090    $    656,749
      Plant and machinery                         9,026,944       7,828,781
      Office equipment                              130,007          81,120
      Motor vehicles                                823,715         614,907
      Construction in progress                   11,514,743      13,652,032
                                               -------------   -------------
                                                 34,704,499      22,833,589
      Less: accumulated depreciation             (1,237,201)       (466,147)
                                               -------------   -------------
      Property and equipment, net              $ 33,467,298    $ 22,367,442
                                               -------------   -------------

      Depreciation  expense for the years ended  December  31, 2004 and 2003 was
      $771,054 and $318,259 respectively.

                                                                             F-8
DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                        NOTES TO THE FINANCIAL STATEMENTS
                        AS OF DECEMBER 31, 2004 AND 2003

6.    INTANGIBLE ASSETS

      Intangible  assets related to two registered patent rights acquired by the
      Company from third parties:-

                                                   2004            2003
                                               ------------   -------------
      Patents                                  $ 1,303,822    $  1,303,822
      Less: accumulated amortization               365,661         240,952
                                               ------------   -------------
      Intangible assets, net                   $   938,161    $  1,062,870
                                               ------------   -------------

      Intangible  assets are stated at cost, less  accumulated  amortization and
      are amortized on a straight line basis over 7 years and 15 years from date
      of acquisition to the date of expiry of the registration.  Amortization of
      patents for the years ended and  December  31, 2004 and 2003 was  $124,709
      and $240,952 respectively.

7.    LAND USE RIGHTS

      Land use rights at December 31, 2004 and 2003 consisted of the following:-

                                                   2004            2003
                                               ------------   -------------
      Rights to use land                       $ 4,845,065    $  4,845,065
      Less: accumulated amortization               153,427          56,525
                                               ------------   -------------
      Land use rights, net                     $ 4,691,638    $  4,788,540
                                               ------------   -------------

      Land use rights are stated at cost, less accumulated  amortization and are
      amortized  over the term of the relevant  rights of 50 years from the date
      of  acquisition.  Amortization  of land use  rights  for the  years  ended
      December 31, 2004 and 2003 was $96,901 and $56,526 respectively.

8.    OTHER PAYABLES AND ACCRUED LIABILITIES

      Other  payables  and accrued  liabilities  at  December  31, 2004 and 2003
      consisted of the following:

                                                    2004           2003
                                               -------------   ------------
      Other payables                           $    271,977    $ 1,348,574
      Accrued liabilities                           338,268         96,813
                                               -------------   ------------
                                               $    610,245    $ 1,445,387
                                               -------------   ------------

                                                                             F-9
DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                        NOTES TO THE FINANCIAL STATEMENTS
                        AS OF DECEMBER 31, 2004 AND 2003

9.    NOTES PAYABLE

      Balance at December 31, 2004 and 2003:
2004          2003
                                                               ------------   -----------
Note payable to a bank, interest rate of 5.58% per annum,      $  4,837,929   $ 4,837,929
    collateralized by buildings and plant and machinery of
    the Company and related parties, due October 2008

Note payable to a bank, interest rate of 5.58% per annum,         4,837,930     4,837,930
    guaranteed by a related company, due October 2008

Note payable to a bank, interest rate of 5.544% per annum,        3,628,447          -
    collateralized by buildings of the Company, due April 2005

Note payable to a bank, interest rate of 5.544% per annum,          241,896          -
    collateralized by buildings of the Company, due April 2005

Note payable to a bank, interest rate of 5.544% per annum,          604,741          -
    collateralized by buildings of the Company, due April 2005

Note payable to a bank, interest rate of 6.138% per annum,        1,814,224          -
    collateralized by buildings of the Company, due
    September 2005

Note payable to a bank, interest rate of 5.742% per annum,          604,741          -
    collateralized by buildings of the Company, due May 2005
                                                               ------------   -----------
                                                                 16,569,908     9,675,859

Less: current maturities                                          6,894,049      -
                                                               ------------   -----------
                                                               $  9,675,859   $  9,675,859
                                                               ------------   -----------
Maturities are as follows:

       For the year ending December 31,
       2005                                 $   6,894,049  $          -
       2006                                            -              -
       2007                                            -              -
       2008                                     9,675,859      9,675,859
                                            -------------  -------------
                                            $  16,569,908  $   9,675,859
                                            -------------  -------------

      Interest paid in 2004 and 2003 was $721,427 and $253,240  respectively  of
      which   $342,839  and  $199,484   were   capitalized   in  2004  and  2003
      respectively.

10.   COMMITMENTS AND CONTINGENCIES

      (A)   Employee benefits

            The full time  employees  of the  Company  are  entitled to employee
            benefits  including medical care,  welfare  subsidies,  unemployment
            insurance and pension benefits through a Chinese government mandated
            multi-employer defined contribution plan. The Company is required to
            accrue for those benefits  based on 14% of the employees'  salaries.
            The  total  provision  for such  employee  benefits  was  $86,367and
            $30,398   for  the  years   ended   December   31,  2004  and  2003,
            respectively.  The Company is required to make  contributions to the
            plans out of the amounts  accrued for medical and pension  benefits.
            The  contributions  for the year ended  December  31,  2004 and 2003
            amounted to $35,400 and $11,475 respectively. The Chinese government
            is responsible for the medical benefits and the pension liability to
            be paid to these employees.

      (B)   Commitments

            As at December 31, 2004,  the Company had firm purchase  commitments
            for capital projects in progress of $216,876.

                                                                            F-10
DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                        NOTES TO THE FINANCIAL STATEMENTS
                        AS OF DECEMBER 31, 2004 AND 2003

11.   SHAREHOLDERS' EQUITY

      (A)   REGISTERED CAPITAL

            In accordance  with the Articles of Association of the Company,  the
            registered capital of the Company of $4,837,929  (RMB40,000,000) was
            fully paid on  December  12, 2001 in cash by the  stockholders.  The
            registered  capital of the  Company  was  increased  by  $14,513,788
            (RMB120,000,000)  to $19,351,717  (RMB160,000,000) on July 16, 2003.
            The increase in registered  capital was paid  $9,752,056 for in cash
            and land use rights of $4,761,732 were transferred to the Company at
            its historical cost by the stockholders.

      (B)   APPROPRIATED RETAINED EARNINGS

            The Company is required to make  appropriations  to reserves  funds,
            comprising the statutory  surplus reserve,  statutory public welfare
            fund and  discretionary  surplus  reserve,  based on  after-tax  net
            income determined in accordance with generally  accepted  accounting
            principles  of the  People's  Republic  of China  (the "PRC  GAAP").
            Appropriation  to the statutory  surplus  reserve should be at least
            10% of the after tax net income  determined in  accordance  with the
            PRC  GAAP  until  the  reserve  is  equal  to 50%  of the  entities'
            registered  capital.  Appropriations to the statutory public welfare
            fund are at 5% to 10% of the  after  tax net  income  determined  in
            accordance  with the PRC GAAP. The statutory  public welfare fund is
            established  for the purpose of providing  employee  facilities  and
            other collective benefits to the employees and is  non-distributable
            other  than  in  liquidation.  Appropriations  to the  discretionary
            surplus  reserve  are  made  at  the  discretion  of  the  Board  of
            Directors.

            During  2004  and  2003,  the  Company  appropriated   $570,721  and
            $522,126, respectively to the reserves funds based on its net income
            under PRC GAAP.

      12.   RELATED PARTY TRANSACTIONS

            The Company loaned $456,527 to three related  companies as unsecured
            loans free of interest payment and repayable on demand.

            The Company owed a related company $153,519 for short-term unsecured
            advances free of interest and repayable on demand.

      13.   CONCENTRATIONS AND RISKS

            During 2004 and 2003,  100% of the Company's  assets were located in
            China.

            The Company  relied on five  customers and sales to those  customers
            for the year ended December 31, 2004 and 2003 are as follows:
Customer A  Customer B Customer C  Customer D   Customer E
For the year ended
    December 31, 2004        21%         19%        16%          8%          10%
    December 31, 2003        14%         15%        18%         17%           0%
At  December  31,  2004 and 2003,  accounts  receivable  from  those
            customers totaled $937,862 and $1,020,012 respectively.

            The  Company  relied  on two  suppliers  and  purchases  from  those
            suppliers  for the  year  ended  December  31,  2004 and 2003 are as
            follows:
Supplier A  Supplier B
For the year ended
    December 31, 2004                                           37%          59%
    December 31, 2003                                           43%          44%
At  December  31,  2004 and  2003,  accounts  payable  to those  two
            suppliers totaled $126,939 and $157,377 respectively.

                                                                            F-11
DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED

                              FINANCIAL STATEMENTS
                      AS OF SEPTEMBER 30, 2005 (UNAUDITED)
DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED

                                    CONTENTS
Pages
-------------------------------------------------------------------------------------------------------------

Condensed Balance Sheet as of September 30, 2005 (unaudited)                                                1
-------------------------------------------------------------------------------------------------------------

Condensed Statements of Operations for the three and nine months ended September 30, 2005 and
2004 (unaudited)                                                                                            2
-------------------------------------------------------------------------------------------------------------

Condensed Statements of Cash Flows for the nine months ended September 30, 2005 and 2004                    3
-------------------------------------------------------------------------------------------------------------

Notes to Condensed Financial Statements as of September 30, 2005 (unaudited)                            4 - 6
-------------------------------------------------------------------------------------------------------------
DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                             CONDENSED BALANCE SHEET
                      AS OF SEPTEMBER 30, 2005 (UNAUDITED)

                                     ASSETS

CURRENT ASSETS
    Cash and cash equivalents                                   $    2,844,904
    Accounts receivable, net                                         5,332,718
    Due from related companies                                       2,712,587
    Inventories, net                                                 2,302,410
    Prepayments and other receivables, net                           4,608,296
                                                                --------------
        Total Current Assets                                        17,800,915

PROPERTY AND EQUIPMENT, NET                                         35,606,114

OTHER ASSETS
    Intangible assets, net                                             849,164
    Land use rights, net                                             4,618,962
                                                                --------------
TOTAL ASSETS                                                    $   58,875,155
                                                                ==============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Accounts payable                                            $    1,311,371
    Other payables and accrued liabilities                             667,972
    Notes payable - current maturities                              12,089,729
    Value added tax and other taxes payable                          1,834,972
    Income tax payable                                               1,519,899
    Due to a related company                                           328,611
                                                                --------------
        Total Current Liabilities                                   17,752,554

LONG-TERM LIABILITIES
    Notes payable - long term                                        9,675,859
                                                                --------------
TOTAL LIABILITIES                                                   27,428,413
                                                                --------------

COMMITMENTS AND CONTINGENCIES                                               --

STOCKHOLDERS' EQUITY
    Registered capital of $19,351,717 fully paid                    19,351,717
    Retained earnings
        Unappropriated                                              11,014,586
        Appropriated                                                 1,220,164
    Accumulated other comprehsive loss                                (139,725)
                                                                --------------
        Total Stockholders' Equity                                  31,446,742
                                                                --------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                      $   58,875,155
                                                                ==============

    The accompanying notes are an integral part of these financial statements

                                                                             F-1
DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
            CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE
              MONTHS ENDED SEPTEMBER 30, 2005 AND 2004 (UNAUDITED)
For the three          For the three           For the nine           For the nine
                                                  months ended           months ended           months ended           months ended
                                            September 30, 2005     September 30, 2004     September 30, 2005     September 30, 2004
                                            ------------------     ------------------     ------------------     ------------------
NET SALES                                   $        8,521,006     $        4,542,923     $       18,072,468     $       12,463,520

COST OF SALES                                       (4,626,276)            (2,660,559)           (10,219,442)            (7,028,502)
                                            ------------------     ------------------     ------------------     ------------------

GROSS PROFIT                                         3,894,730              1,882,364              7,853,026              5,435,018
                                            ------------------     ------------------     ------------------     ------------------

OPERATING EXPENSES
    Selling expenses                                    77,112                144,755                168,910                478,958
    General and administrative expenses                456,245                243,825                815,133                460,653
    Depreciation and amortization                      370,585                103,263                679,767                308,050
                                            ------------------     ------------------     ------------------     ------------------
           Total Operating Expenses                    903,942                491,843              1,663,810              1,247,661
                                            ------------------     ------------------     ------------------     ------------------

INCOME FROM OPERATIONS                               2,990,788              1,390,521              6,189,216              4,187,357

OTHER INCOME (EXPENSES)
    Provision for doubtful debts on other
    receivables                                        (70,000)                    --                (70,000)                    --
    Other income                                            89                     --                     89                     --
    Other expense                                       (4,105)                    --                 (4,105)                    --
    Interest income                                     44,509                  1,366                 58,044                 18,278
    Interest expense                                  (191,436)              (177,609)              (425,752)              (233,859)
                                            ------------------     ------------------     ------------------     ------------------
           Total Other Expenses                       (220,943)              (176,243)              (441,724)              (215,581)

INCOME FROM OPERATIONS BEFORE TAXES                  2,769,845              1,214,278              5,747,492              3,971,776

INCOME TAX EXPENSE                                    (406,256)              (182,141)              (852,904)              (595,766)
                                            ------------------     ------------------     ------------------     ------------------

NET INCOME                                  $        2,363,589     $        1,032,137     $        4,894,588     $        3,376,010
                                            ==================     ==================     ==================     ==================

OTHER COMPREHENSIVE LOSS
    Foregin currency translation loss                 (139,725)                    --               (139,725)                    --
                                            ------------------     ------------------     ------------------     ------------------

COMPREHENSIVE INCOME                        $        2,223,864     $        1,032,137     $        4,754,863     $        3,376,010
                                            ==================     ==================     ==================     ==================
The accompanying notes are an integral part of these financial statements

                                                                             F-2
DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                       CONDENSED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
                                  (UNAUDITED)
For the nine months          For the nine months
                                                                              ended September 30, 2005     ended September 30, 2004
                                                                              ------------------------     ------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                                                                $              4,894,588     $              3,376,010
    Adjusted to reconcile net income to cash (used in) provided
       by operating activities:
       Depreciation and amortization - cost of sales                                           372,970                      223,295
       Depreciation                                                                            518,095                      141,842
       Amortization of land use rights                                                          88,997                       78,724
       Amortization of intangible assets                                                        72,676                       93,532
       Provision for doubtful debts on other receivables                                        70,000                           --
    Changes in operating assets and liabilities (Increase) decrease in:
       Accounts receivable                                                                  (3,572,132)                     248,910
       Prepaid expenses and other current assets                                            (1,820,879)                   1,068,039
       Inventories                                                                            (252,154)                    (451,967)
       Due from related companies                                                           (2,256,060)                      15,658
    Increase (decrease) in:
       Accounts payable                                                                       (249,066)                   5,566,439
       Other payables and accrued liabilities                                                   57,726                   (1,198,963)
       Value added tax and other taxes payable                                                 106,697                    1,487,613
       Due to related companies                                                                175,092                      112,159
                                                                              ------------------------     ------------------------
       Net cash (used in) provided by operating activities                                  (1,793,450)                  10,761,291
                                                                              ------------------------     ------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Purchase of property and equipment                                                      (3,029,881)                  (9,506,078)
                                                                              ------------------------     ------------------------
       Net cash used in investing activities                                                (3,029,881)                  (9,506,078)
                                                                              ------------------------     ------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds from the issuance of notes payable                                             21,281,795                    1,487,663
    Payment on notes payable                                                               (16,086,115)                    (278,181)
                                                                              ------------------------     ------------------------
       Net cash provided by financial activities                                             5,195,680                    1,209,482
                                                                              ------------------------     ------------------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                                      372,349                    2,464,695

EFFECT OF EXCHANGE RATE ON CASH                                                               (139,727)                          --

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD                                         2,612,282                      260,281
                                                                              ------------------------     ------------------------

CASH AND CASH EQUIVALENTS AT END OF THE PERIOD                                $              2,844,904     $              2,724,976
                                                                              ========================     ========================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid for interest expense                                                $                848,536     $                617,532
                                                                              ========================     ========================
The accompanying notes are an integral part of these financial statements

                                                                             F-3
DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                   NOTES TO THE CONDENSED FINANCIAL STATEMENTS
                      AS OF SEPTEMBER 30, 2005 (UNAUDITED)

NOTE 1      ORGANIZATION

            Dalian Fushi Bimetallic Manufacturing Company Limited ("Dalian
            Fushi") was incorporated on January 16, 2002 in the People's
            Republic of China ("PRC") as a limited liability company. On the
            date of incorporation, the registered capital was $4,837,929 and was
            increased to $19,351,717 on July 16, 2003.

            Dalian Fushi is principally engaged in the manufacturing and sale of
            complex wires and its principal place of business is Dalian, PRC.

NOTE 2      BASIS OF PREPARATION

            The accompanying unaudited condensed financial statements have been
            prepared in accordance with accounting principles generally accepted
            in the United States of America for interim financial information
            and pursuant to the rules and regulations of the Securities and
            Exchange Commission. Accordingly, they do not include all of the
            information and footnotes required by generally accepted accounting
            principles for complete financial statements.

            In the opinion of management, the unaudited condensed financial
            statements contain all adjustments consisting only of normal
            recurring accruals considered necessary to present fairly the
            Company's financial position at September 30, 2005, the results of
            operations for the three months and nine months ended September 30,
            2005 and 2004, and cash flows for the nine months ended September
            30, 2005 and 2004. The results for the nine months ended September
            30, 2005 are not necessarily indicative of the results to be
            expected for the entire fiscal year ending December 31, 2005.

            For further information, refer to the financial statements and
            footnotes of the company for the year ended December 31, 2004 and
            2003.

NOTE 3      USE OF ESTIMATES

                  The preparation of the financial statements in conformity with
            generally accepted accounting principles requires management to make
            estimates and assumptions that affect the reported amount 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 period. Actual results
            could differ from those estimates.

NOTE 4      SEGMENTS

            The Company operates in only one segment, thereafter segment
            disclosure is not presented.

NOTE 5      PREPAYMENTS AND OTHER RECEIVABLES

            Prepayments and other receivables at September 30, 2005 consisted of
            the following:
Prepaid expenses                                                       $   111,591
            Advances to suppliers                                                    1,243,240
            Other receivables                                                        3,323,465
                                                                                   -----------
                                                                                     4,678,296
            Less: general provision for doubtful debts on other receivables            (70,000)
                                                                                   -----------

            Prepayments and other receivables, net                                 $ 4,608,296
                                                                                   ===========
F-4
DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                   NOTES TO THE CONDENSED FINANCIAL STATEMENTS
                      AS OF SEPTEMBER 30, 2005 (UNAUDITED)

NOTE 6      NOTES PAYABLE

            Balance at September 30, 2005:
Note payable to a bank, interest rate of 5.58% per annum,           $ 4,837,929
                  secured by buildings and plant and machinery of
                  the Company and related parties, due April 2008

            Note payable to a bank, interest rate of 5.58% per annum,             4,837,930
                  guaranteed by a related company, due April 2008

            Note payable to a bank, interest rate of 6.14% per annum,             1,849,568
                  secured by buildings of the Company, due June 2006

            Note payable to a bank, interest rate of 4.875% per annum,            1,233,046
                  secured by buildings of the Company, due March 2006

            Note payable to a bank, interest rate of 5.742% per annum,            1,849,568
                  secured by buildings of the Company, due April 2006

            Note payable to a bank, interest rate of 6.138% per annum,            1,171,393
                  secured by buildings of the Company, due April 2006

            Note payable to a bank, interest rate of 6.138% per annum,              986,437
                  secured by buildings of the Company, due March 2006

            Note payable to a bank, interest rate of 5.742% per annum,              616,523
                  secured by buildings of the Company, due January 2006

            Note payable to a bank, interest rate of 5.742% per annum,              560,752
                  secured by buildings of the Company, due January 2006

            Note payable to a bank, interest rate of 5.742% per annum,              369,914
                  secured by buildings of the Company, due January 2006

            Note payable to a bank, interest rate of 5.742% per annum,              863,132
                  secured by buildings of the Company, due December 2005

            Note payable to a bank, interest rate of 4.35% per annum,               739,827
                  secured by buildings of the Company, due February 2006

            Note payable to a bank, interest rate of 6.138% per annum,            1,849,569
                  secured by buildings of the Company, due February 2006
                                                                                -----------
                                                                                 21,765,588
            Less: current maturities                                             12,089,729
                                                                                -----------
                                                                                $ 9,675,859
                                                                                ===========
Maturities are as follows:
For the period ending September 30,
            2006                                                                 12,089,729
            2007                                                                         --
            2008                                                                  9,675,859
                                                                                -----------
                                                                                $21,765,588
                                                                                ===========
F-5
DALIAN FUSHI BIMETALLIC MANUFACTURING COMPANY LIMITED
                   NOTES TO THE CONDENSED FINANCIAL STATEMENTS
                      AS OF SEPTEMBER 30, 2005 (UNAUDITED)

NOTE 7      RELATED PARTY TRANSACTIONS

            The Company loaned $2,712,587 to three related companies as
            unsecured loans free of interest payment and repayable on demand.

            The Company owed a related company $328,611 for short-term unsecured
            advances free of interest and repayable on demand.

NOTE 9      CONCENTRATIONS AND RISKS

            During the nine months ended September 30, 2005, 100% of the
            Company's assets were located in China.

            The Company relied on three customers in the PRC and sales to those
            customers for the period ended September 30, 2005 are as follows:

                                     Customer A     Customer B     Customer C
            For the period ended
            September 30, 2005              14%            10%            11%

            At September 30, 2005, accounts receivable from those customers
            totaled $2,291,928.

            The Company relied on two suppliers in the PRC and purchases from
            those suppliers for the period ended September 30, 2005 are as
            follows:

                                                    Supplier A     Supplier B
            For the period ended
            September 30, 2005                             45%            51%

            At September 30, 2005, accounts payable to those two suppliers
            totaled $601,588.

                                                                             F-6
SIGNATURES

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

Date: December 13, 2005

                                        Parallel Technologies, Inc.
                                        (Registrant)

                                        By: /s/ Li Fu
                                           ------------------------
                                           Li Fu
                                           President