UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549








FORM
10-K/A








x
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934 for the fiscal year ended - DECEMBER 31,
  2008





OR





 ̈
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934 for the transition period from





Commission
file number 0-024828





SORL
AUTO PARTS, INC.


(Name of
Issuer in Its Charter)





DELAWARE
                (State or Other jurisdiction
                of Incorporation or Organization)
              30-0091294
                (I.R.S. Employer Identification No.)





NO.1169
YUMENG ROAD


RUIAN
ECONOMIC DEVELOPMENT DISTRICT


RUIAN
CITY, ZHEJIANG PROVINCE


PEOPLE’S
REPUBLIC OF CHINA


(Address
of Principal Executive Offices, including zip code.)





86-577-65817720


(Issuer’s
Telephone Number, Including Area Code)





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





TITLE OF EACH CLASS
              NAME OF EACH
                EXCHANGE ON WHICH REGISTEREDCOMMON STOCK: 0.002 PARVALUE
              NASDAQ GLOBAL MARKET





Securities
registered pursuant to Section 12(g) of the Act: NONE











Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


Yes  ̈ No x





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





Indicate
by check mark whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports) and (2)
has been subject to such filing requirements for the past 90 days. Yes x No  ̈





Indicate
by check mark if disclosure of delinquent filers in response to Item 405 of
Regulation S-K is not contained in this form, and no disclosure will be
contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by referenced in Part III of this Form 10-K
or any amendment to this Form 10-K. x





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definition of “accelerated filer”, “large accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.


Large
accelerated filer  ̈
Accelerated filer  ̈
Non-accelerated  ̈
Smaller Reporting Companyx





Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).


Yes  ̈ No x





State
issuer’s revenues for its most recent fiscal year December 31, 2008:
$130,893,422





State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity as of the last
business day of registrant’s most recently completed second fiscal quarter. As
of June 30, 2008, the value was approximately $37,231,185.





State the
number of shares outstanding of each of the issuer’s classes of common equity:
18,279,254 as of March 17, 2009.





DOCUMENTS
INCORPORATED BY REFERENCE





Portions
of the registrant’s definitive proxy statement for its annual meeting of
shareholders, scheduled for June 10th, 2009, are incorporated by reference into
Part III of this report.






















ITEM
8 FINANCAL STATEMENTS AND SUPPLEMENTARY DATA






REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To the
Board of Directors and Stockholders of
 SORL Auto
Parts, Inc. and Subsidiaries
 Ruian
City, Zhejiang Province
 People's
Republic of China
  We have
audited the accompanying consolidated balance sheets of SORL Auto Parts, Inc.
and Subsidiaries as of December 31, 2008 and 2007, and the related consolidated
statements ofincome, stockholders' equity and comprehensive income, and cash flows for
each ofthe years in the two-year period ended December 31, 2008. SORL Auto
Parts, Inc. and Subsidiaries' management is responsible for these consolidated
financial statements. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
  We
conducted our audits in accordance with the standards ofthe Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. The company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. Our audit
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
company's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements,
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
 
 In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of SORL Auto Parts, Inc. and
Subsidiaries as of December 31, 2008 and 2007, and the results of its operations
and its cash flows for each of the years in the two-year period ended December
31, 2008 in conformity with accounting principles generally accepted in the
United States of America.
   /s/
Rotenberg & Co. LLP
  Rotenberg
& Co. LLP
 Rochester,
New York
 March 27,
2009





SORL
Auto Parts, Inc. and Subsidiaries


Consolidated
Balance Sheets


December
31, 2008 and 2007





December 31, 2008
                              
                              
                              
                              December 31, 2007(Audited)
                              
                              
                              
                              (Audited)AssetsCurrent
      AssetsCash
      and Cash Equivalents
                              
                              
                              
                              US$
                              7,795,987
                              
                              US$
                              
                              
                              4,340,211Accounts
      Receivable, Net of Provision
                              
                              
                              
                              
                              35,797,824
                              
                              
                              
                              
                              30,586,239Notes
      Receivable
                              
                              
                              
                              
                              7,536,534
                              
                              
                              
                              
                              9,410,385Inventory
                              
                              
                              
                              
                              19,105,845
                              
                              
                              
                              
                              8,220,373Prepayments, including $187,813 and $0
      from related parties at December 31, 2008 and December 31, 2007,
      respectively.
                              
                              
                              
                              
                              1,013,440
                              
                              
                              
                              
                              1,336,212Other current
      assets, including $1,906,070 and
      $1,761,007 from related parties at December 31, 2008 and December 31,
      2007, respectively.
                              
                              
                              
                              
                              4,445,778
                              
                              
                              
                              
                              4,275,294Total
      Current Assets
                              
                              
                              
                              
                              75,695,408
                              
                              
                              
                              
                              58,168,714Fixed
      AssetsProperty,
      Plant and Equipment
                              
                              
                              
                              
                              32,927,306
                              
                              
                              
                              
                              27,889,182Less:
      Accumulated Depreciation
                              
                              
                              
                              
                              (8,951,886
                              )
                              
                              
                              
                              (6,094,229
                              )Property,
      Plant and Equipment, Net
                              
                              
                              
                              
                              23,975,420
                              
                              
                              
                              
                              21,794,953Land
      Use Rights, Net
                              
                              
                              
                              
                              14,514,983
                              
                              
                              
                              
                              13,889,705Other
      AssetsDeferred
      compensation cost-stock options
                              
                              
                              
                              
                              9,935
                              
                              
                              
                              
                              69,571Intangible
      Assets
                              
                              
                              
                              
                              161,347
                              
                              
                              
                              
                              76,150Less:
      Accumulated Amortization
                              
                              
                              
                              
                              (39,018
                              )
                              
                              
                              
                              (25,116
                              )Intangible
      Assets, Net
                              
                              
                              
                              
                              122,329
                              
                              
                              
                              
                              51,034Deferred
      tax assets
                              
                              
                              
                              
                              189,228
                              
                              
                              
                              
                              -Total
      Other Assets
                              
                              
                              
                              
                              321,492
                              
                              
                              
                              
                              120,605Total
      Assets
                              
                              
                              
                              US$
                              114,507,303
                              
                              US$
                              
                              
                              93,973,977Liabilities and Stockholders'
      EquityCurrent
      LiabilitiesAccounts Payable and
      Notes Payable,
      including $0 and $97,503 due to related parties at December 31, 2008 and
      December 31, 2007, respectively.
                              
                              
                              
                              US$
                              4,623,850
                              
                              US$
                              
                              
                              5,305,172Deposit
      Received from Customers
                              
                              
                              
                              
                              6,295,857
                              
                              
                              
                              
                              2,079,946Short
      term bank loans
                              
                              
                              
                              
                              ―
                              
                              
                              
                              
                              3,370,328Income
      tax payable
                              
                              
                              
                              
                              340,138
                              
                              
                              
                              
                              373,769Accrued
      Expenses
                              
                              
                              
                              
                              2,389,314
                              
                              
                              
                              
                              1,859,938Other
      Current Liabilities
                              
                              
                              
                              
                              460,124
                              
                              
                              
                              
                              463,563Total
      Current Liabilities
                              
                              
                              
                              
                              14,109,283
                              
                              
                              
                              
                              13,452,716Non-Current
      LiabilitiesDeferred
      tax liabilities
                              
                              
                              
                              
                              106,826
                              
                              
                              
                              
                              -Total
      Liabilities
                              
                              
                              
                              
                              14,216,109
                              
                              
                              
                              
                              13,452,716Minority
      Interest
                              
                              
                              
                              
                              10,007,166
                              
                              
                              
                              
                              8,024,152Stockholders'
      EquityCommon
      Stock - $0.002 Par Value; 50,000,000 authorized,18,279,254
      and 18,279,254 issued and outstanding as ofDecember
      31, 2008 and December 31, 2007 respectively
                              
                              
                              36,558
                              
                              
                              
                              
                              36,558Additional
      Paid In Capital
                              
                              
                              
                              
                              37,498,452
                              
                              
                              
                              
                              37,498,452Reserves
                              
                              
                              
                              
                              3,126,086
                              
                              
                              
                              
                              1,882,979Accumulated
      other comprehensive income
                              
                              
                              
                              
                              10,848,248
                              
                              
                              
                              
                              5,432,189Retained
      Earnings
                              
                              
                              
                              
                              38,774,684
                              
                              
                              
                              
                              27,646,93190,284,028
                              
                              
                              
                              
                              72,497,109Total
      Liabilities and Stockholders' Equity
                              
                              
                              
                              US$
                              114,507,303
                              
                              US$
                              
                              
                              93,973,977





The
accompanying notes are an integral part of these financial
statements











SORL
Auto Parts, Inc. and Subsidiaries


Consolidated
Statements of Income


For
Years Ended on December 31, 2008 and 2007





2008
                            
                            
                            2007Sales
                            
                            
                            
                            US$
                            130,893,422
                            
                            
                            
                            115,760,070Include:
      sales to related parties
                            
                            
                            
                            
                            2,816,816
                            
                            
                            
                            1,398,638Cost
      of Sales
                            
                            
                            
                            
                            97,225,582
                            
                            
                            
                            88,757,611Gross
      Profit
                            
                            
                            
                            
                            33,667,840
                            
                            
                            
                            27,002,459Expenses:Selling
      and Distribution Expenses
                            
                            
                            
                            
                            8,423,124
                            
                            
                            
                            7,461,652General
      and Administrative Expenses
                            
                            
                            
                            
                            9,295,299
                            
                            
                            
                            6,542,522Financial
      Expenses
                            
                            
                            
                            
                            852,640
                            
                            
                            
                            1,000,931Total
      Expenses
                            
                            
                            
                            
                            18,571,063
                            
                            
                            
                            15,005,105Operating
      Income
                            
                            
                            
                            
                            15,096,777
                            
                            
                            
                            11,997,354Other
      Income
                            
                            
                            
                            
                            683,104
                            
                            
                            
                            731,982Non-Operating
      Expenses
                            
                            
                            
                            
                            (441,288
                            )
                            
                            
                            (141,814
                            )Income  Before
      Provision for Income Taxes
                            
                            
                            15,338,593
                            
                            
                            
                            12,587,522Provision
      for Income Taxes
                            
                            
                            
                            
                            1,586,503
                            
                            
                            
                            636,976Net
      Income Before Minority Interest & Other Comprehensive
      Income
                            
                            
                            
                            US$
                            13,752,090
                            
                            
                            
                            11,950,546Minority
      Interest
                            
                            
                            
                            
                            1,381,230
                            
                            
                            
                            1,206,515Net
      Income Attributable to Stockholders
                            
                            
                            12,370,860
                            
                            
                            
                            10,744,031Foreign
      Currency Translation Adjustment
                            
                            
                            6,017,843
                            
                            
                            
                            4,810,800Minority
      Interest's Share
                            
                            
                            
                            
                            601,784
                            
                            
                            
                            481,080Comprehensive
      Income
                            
                            
                            
                            
                            17,786,919
                            
                            
                            
                            15,073,751Weighted
      average common share - Basic
                            
                            
                            18,279,254
                            
                            
                            
                            18,277,094Weighted
      average common share - Diluted
                            
                            
                            18,279,254
                            
                            
                            
                            18,323,315EPS
      - Basic
                            
                            
                            
                            
                            0.68
                            
                            
                            
                            0.59EPS
      - Diluted
                            
                            
                            
                            
                            0.68
                            
                            
                            
                            0.59








SORL
Auto Parts, Inc. and Subsidiaries


Consolidated
Statements of Cash Flows


For
Years Ended on December 31,2008 and 2007





2008
                                            
                                            
                                            2007Cash
      Flows from Operating ActivitiesNet
      Income
                                            
                                            US$
                                            12,370,860
                                            
                                            
                                            
                                            10,744,031Adjustments
      to reconcile net income (loss) to net cash from operating
      activities:Minority
      Interest
                                            
                                            
                                            1,381,230
                                            
                                            
                                            
                                            1,206,515Bad
      Debt Expense
                                            
                                            
                                            32,674
                                            
                                            
                                            
                                            33,848Depreciation
      and Amortization
                                            
                                            
                                            2,706,053
                                            
                                            
                                            
                                            1,769,647Stock-Based
      Compensation Expense
                                            
                                            
                                            59,636
                                            
                                            
                                            
                                            114,045Loss
      on disposal of Fixed Assets
                                            
                                            
                                            24,892
                                            
                                            
                                            
                                            41,418Deferred tax
                                            
                                            
                                            (79,663
                                            )
                                            
                                            
                                            ―Changes
      in Assets and Liabilities:Account
      Receivables
                                            
                                            
                                            (3,000,167
                                            )
                                            
                                            
                                            (1,940,993
                                            )Notes
      Receivables
                                            
                                            
                                            2,437,182
                                            
                                            
                                            
                                            (5,485,625
                                            )Other
      Currents Assets
                                            
                                            
                                            111,707
                                            
                                            
                                            
                                            (1,111,529
                                            )Inventory
                                            
                                            
                                            (9,977,123
                                            )
                                            
                                            
                                            (3,266,270
                                            )Prepayments
                                            
                                            
                                            400,877
                                            
                                            
                                            
                                            4,425,704Accounts
      Payable and Notes Payable
                                            
                                            
                                            (1,011,371
                                            )
                                            
                                            
                                            353,406Income
      Tax Payable
                                            
                                            
                                            (33,631
                                            )
                                            
                                            
                                            (9,019
                                            )Deposits
      Received from Customers
                                            
                                            
                                            3,937,491
                                            
                                            
                                            
                                            1,485,349Other
      Current Liabilities and Accrued Expenses
                                            
                                            
                                            312,840
                                            
                                            
                                            
                                            498,076Net
      Cash Flows from Operating Activities
                                            
                                            
                                            9,673,487
                                            
                                            
                                            
                                            8,858,603Cash
      Flows from Investing ActivitiesAcquisition
      of Property and Equipment
                                            
                                            
                                            (3,063,458
                                            )
                                            
                                            
                                            (10,103,783
                                            )Sales
      Proceeds of Disposal of Fixed Assets
                                            
                                            
                                            4,187
                                            
                                            
                                            
                                            ―Acquisition
      of Land Use Rights
                                            
                                            
                                            ―
                                            
                                            
                                            
                                            (9,297,253
                                            )Investment
      in Intangible Assets
                                            
                                            
                                            (77,303
                                            )
                                            
                                            
                                            (26,304
                                            )Net
      Cash Flows from Investing Activities
                                            
                                            
                                            (3,136,574
                                            )
                                            
                                            
                                            (19,427,340
                                            )Cash
      Flows from Financing ActivitiesProceeds
      from (Repayment of) Bank Loans
                                            
                                            
                                            (3,482,360
                                            )
                                            
                                            
                                            3,257,911Proceeds
      from Share Issuance
                                            
                                            
                                            ―
                                            
                                            
                                            
                                            ―Capital
      contributed by Minority S/H
                                            
                                            
                                            ―
                                            
                                            
                                            
                                            ―Net
      Cash flows from Financing Activities
                                            
                                            
                                            (3,482,360
                                            )
                                            
                                            
                                            3,257,911Effects
      on changes in foreign exchange rate
                                            
                                            
                                            401,223
                                            
                                            
                                            
                                            513,536Net
      Change in Cash and Cash Equivalents
                                            
                                            
                                            3,455,776
                                            
                                            
                                            
                                            (6,797,290
                                            )Cash
      and Cash Equivalents- Beginning of the year
                                            
                                            
                                            4,340,211
                                            
                                            
                                            
                                            11,137,501Cash
      and cash Equivalents - End of the year
                                            
                                            US$
                                            7,795,987
                                            
                                            
                                            
                                            4,340,211Supplemental
      Cash Flow Disclosures:Interest
      Paid
                                            
                                            
                                            182,385
                                            
                                            
                                            
                                            148,813Tax
      Paid
                                            
                                            
                                            2,106,992
                                            
                                            
                                            
                                            1,784,965Supplemental
      Disclosures of Non-Cash Investing and Financing
Activities:Common
      stock of 49,500 shares issued to key employees60,000 options
      issued in 2006 to employees
                                            
                                            
                                            
                                            
                                            
                                            
                                            59,6364,128
      options issued in 2007 for service rendered
                                            
                                            
                                            
                                            
                                            
                                            
                                            23,201Common
      stock of 4,128 shares issued in 2007 for service rendered
                                            
                                            
                                            
                                            
                                            
                                            
                                            31,208Non-Cash
      Transaction Disclosure:Exchange
      of Construction in Progress for Acquisition ofProperty
      and Equipment:
                                            
                                            
                                            
                                            
                                            
                                            
                                            2,059,276Exchange
      of Construction in Progress for Acquisition ofLand
      Use Rights
                                            
                                            
                                            
                                            
                                            
                                            
                                            4,203,728











SORL
Auto Parts, Inc. and Subsidiaries


Consolidated
Statements of Changes in Stockholders' Equity


For
Years Ended on December 31, 2008 and 2007





Additional
                                    
                                    
                                    
                                    
                                    
                                    Retained
                                    
                                    
                                    Accumu.
      OtherNumber
                                    
                                    
                                    Common
                                    
                                    
                                    Paid-in
                                    
                                    
                                    
                                    
                                    
                                    Earnings
                                    
                                    
                                    Comprehensive
                                    
                                    
                                    Stockholders'
                                    
                                    
                                    Minorityof
      Share
                                    
                                    
                                    Stock
                                    
                                    
                                    Capital
                                    
                                    
                                    Reserves
                                    
                                    
                                    (Deficit)
                                    
                                    
                                    Income
                                    
                                    
                                    Equity
                                    
                                    
                                    InterestBeginning
      Balance – Jan 1, 2007
                                    
                                    
                                    18,275,126
                                    
                                    
                                    
                                    36,550
                                    
                                    
                                    
                                    37,444,051
                                    
                                    
                                    
                                    797,116
                                    
                                    
                                    
                                    17,988,763
                                    
                                    
                                    
                                    1,102,469
                                    
                                    
                                    
                                    57,368,949
                                    
                                    
                                    
                                    6,336,557Net
      Income
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    10,744,031
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    10,744,031
                                    
                                    
                                    
                                    1,206,515Other
      Comprehensive Income(Loss)
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    4,329,720
                                    
                                    
                                    
                                    4,329,720
                                    
                                    
                                    
                                    481,080Common
      stock of 4,128 shares issued
                                    
                                    
                                    4,128
                                    
                                    
                                    
                                    8
                                    
                                    
                                    
                                    31,200
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    31,208
                                    
                                    
                                    
                                    ―Transfer
      to reserve
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    1,085,863
                                    
                                    
                                    
                                    (1,085,863
                                    )
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―4,128
      options issued in 2007
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    23,201
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    23,201
                                    
                                    
                                    
                                    ―Ending
      Balance - December 31, 2007
                                    
                                    
                                    18,279,254
                                    
                                    
                                    
                                    36,558
                                    
                                    
                                    
                                    37,498,452
                                    
                                    
                                    
                                    1,882,979
                                    
                                    
                                    
                                    27,646,931
                                    
                                    
                                    
                                    5,432,189
                                    
                                    
                                    
                                    72,497,109
                                    
                                    
                                    
                                    8,024,152Net
      Income
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    12,370,860
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    12,370,860
                                    
                                    
                                    
                                    1,381,230Other
      Comprehensive Income(Loss)
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    5,416,059
                                    
                                    
                                    
                                    5,416,059
                                    
                                    
                                    
                                    601,784Transfer
      to reserve
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    1,243,107
                                    
                                    
                                    
                                    (1,243,107
                                    )
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―Ending
      Balance - December 31, 2008
                                    
                                    
                                    18,279,254
                                    
                                    
                                    
                                    36,558
                                    
                                    
                                    
                                    37,498,452
                                    
                                    
                                    
                                    3,126,086
                                    
                                    
                                    
                                    38,774,684
                                    
                                    
                                    
                                    10,848,248
                                    
                                    
                                    
                                    90,284,028
                                    
                                    
                                    
                                    10,007,166




The
accompanying notes are an integral part of these financial
statements











NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE
1 - DESCRIPTION OF BUSINESS





SORL Auto
Parts, Inc. is principally engaged in the manufacture and distribution of
automotive air brake valves and related components for commercial vehicles
weighing more than three tons, such as trucks, and buses, through its 90%
ownership of Ruili Group Ruian Auto Parts Company Limited (“Ruian”, or “the
Company”) in the People’s Republic of China (“PRC” or “China”). The Company
distributes products both in China and internationally under SORL trademarks.
The Company’s product range includes 40 categories of brake valves with over
1000 different specifications.





NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





ACCOUNTING
METHOD





The
Company uses the accrual method of accounting for financial statement and tax
return purposes.





PRINCIPLES
OF CONSOLIDATION





The
consolidated financial statements include the accounts of SORL Auto Parts, Inc.
and its majority owned subsidiaries. All significant inter-company balances and
transactions have been eliminated in the consolidation.





USE
OF ESTIMATES





The
preparation of financial statements in conformity with U.S generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Management makes its best estimate of the outcome for these items based on
historical trends and other information available when the financial statements
are prepared. Changes in estimates are recognized in accordance with the
accounting rules for the estimate, which is typically in the period when new
information becomes available to management. Actual results could differ from
those estimates.





FAIR
VALUE OF FINANCIAL INSTRUMENTS





For
certain of the Company’s financial instruments, including cash and cash
equivalents, trade receivables and payables, prepaid expenses, deposits and
other current assets, short-term bank borrowings, and other payables and
accruals, the carrying amounts approximate fair values due to their short
maturities.





RELATED
PARTY TRANSACTIONS





A related
party is generally defined as (i) any person that holds 10% or more of the
Company’s securities and their immediate families, (ii) the Company’s
management, (iii) someone that directly or indirectly controls, is controlled by
or is under common control with the Company, or (iv) anyone who can
significantly influence the financial and operating decisions of the Company. A
transaction is considered to be a related party transaction when there is a
transfer of resources or obligations between related parties. The company
conducts business with its related parties in the ordinary course of business.
All transactions have been recorded at far market value of the goods and
services exchanged.











FINANCIAL
RISK FACTORS AND FINANCIAL RISK MANAGEMENT





The
Company is exposed to the following risk factors:





(i) Credit
risks - The Company has policies in place to ensure that sales of products are
made to customers with an appropriate credit history. The Company performs
ongoing credit evaluations with respect to the financial condition of its
creditors, but does not require collateral. In order to determine the value of
the Company’s accounts receivable, the Company records a provision for doubtful
accounts to cover probable credit losses. Management reviews and adjusts this
allowance periodically based on historical experience and its evaluation of the
collectiblity of outstanding accounts receivable. The Company has
four customers that respectively account for more than 5.5% of its total
revenues for the period. The Company also has a concentration of credit risk due
to geographic sales as a majority of its products are marketed and sold in the
PRC.


(ii)
Liquidity risks - Prudent liquidity risk management implies maintaining
sufficient cash, the availability of funding through an adequate amount of
committed credit facilities and ability to close out market
positions.


(iii)
Interest rate risk - The interest rate and terms of repayments of short-term and
long-term bank borrowings are approximately 6.47% per annum. The Company’s
income and cash flows are substantially independent of changes in market
interest rates. The Company has no significant interest-bearing assets. The
Company’s policy is to maintain all of its borrowings in fixed rate
instruments.





CASH
AND CASH EQUIVALENTS





The
Company considers all highly liquid instruments purchased with an original
maturity of three months or less to be cash equivalents.





INVENTORIES





Inventories
are stated at the lower of cost or net realizable value, with cost computed on a
weighted-average basis. Cost includes all costs of purchase, cost of conversion
and other costs incurred in bringing the inventories to their present location
and condition. Net realizable value is the estimated selling price in the
ordinary course of business less the estimated costs of completion and the
estimated costs necessary to make the sale.





PROPERTY,
PLANT AND EQUIPMENT





Property,
plant and equipment are stated at cost less accumulated depreciation and
impairment losses. The initial cost of the asset comprises its purchase price
and any directly attributable costs of bringing the asset to its working
condition and location for its intended use. Depreciation is provided using the
straight-line method over the estimated useful life of the respective assets as
follows:





Category
              
              Estimated
      Useful Life(Years)Buildings
              
              10-20Machinery
      and equipment
              
              5-10Electronic
      equipment
              
              5Motor
      Vehicles
              
              5-10





Significant
improvements and betterments are capitalized where it is probable that the
expenditure resulted in an increase in the future economic benefits expected to
be obtained from the use of the asset beyond its originally assessed standard of
performance. Routine repairs and maintenance are expensed when incurred. Gains
and losses on disposal of fixed assets are recognized in the income statement
based on the net disposal proceeds less the carrying amount of the
assets.











LAND
USE RIGHTS





According
to the law of China, the government owns all the land in China. Companies or
individuals are authorized to possess and use the land only through land use
rights granted by the Chinese government. Land use rights are being amortized
using the straight-line method over its useful lives. The land use rights
is amortized on a straight-line basis over the estimated useful life of 45
years.





IMPAIRMENT
OF LONG-LIVED ASSETS





Long-lived
assets, such as property, plant and equipment and other non-current assets,
including intangible assets, are reviewed periodically for impairment whenever
events or changes in circumstances indicate that the carrying value of an asset
may not be recoverable. An impairment loss is recognized when the estimated
undiscounted cash flows associated with the asset or group of assets is less
than their carrying value. If impairment exists, an adjustment is made to write
the asset down to its fair value, and a loss is recorded as the difference
between the carrying value and fair value. Fair values are determined based on
quoted market values, discounted cash flows or internal and external appraisals,
as applicable. Assets to be disposed of are carried at the lower of carrying
value or estimated net realizable value.





INTANGIBLE
ASSETS





Intangible
assets represent mainly the patent of technology, plus the computer software.
Intangible assets are measured initially at cost. Intangible assets are
recognized if it is probable that the future economic benefits that are
attributable to the asset will flow to the enterprise and the cost of the asset
can be measured reliably. After initial recognition, intangible assets are
measured at cost less any impairment losses. Intangible assets with definite
useful lives are amortized on a straight-line basis over their useful
lives.





ACCOUNTS
RECEIVABLES AND ALLOWANCE FOR BAD DEBTS





The
Company presents accounts receivables, net of allowances for doubtful accounts
and returns, to ensure accounts receivable are not overstated due to
uncollectibility. Accounts receivables generated from credit sales have general
credit terms of 90 days for domestic aftermarket customers.





The
allowances are calculated based on a detailed review of certain individual
customer accounts, historical rates and an estimation of the overall economic
conditions affecting the Company’s customer base. The Company reviews a
customer’s credit history before extending credit. If the financial condition of
its customers were to deteriorate, resulting in an impairment of their ability
to make payments, additional allowances may be required.





The
Company will write off the uncollectible receivables once the customers are
bankrupt or there is a remote possibility that the Company will collect the
outstanding balance. The write-off must be reported to the local tax authorities
and receive official approval from them. To date, the Company has not written
off any account receivable.





NOTES
RECEIVABLE





Notes
receivable are issued by some customers to pay certain outstanding receivable
balances to the Company with specific payment terms and definitive due dates.
Notes receivable do not bear interest.











REVENUE
RECOGNITION





Revenue
from the sale of goods is recognized when the risks and rewards of ownership of
the goods have transferred to the buyer including factors such as when
persuasive evidence of an arrangement exits, delivery has occurred, the sales
price is fixed and determinable, and collectibility is probable. Revenue
consists of the invoice value for the sale of goods and services net of
value-added tax (“VAT”), rebates and discounts and returns. The Company nets
sales return in gross revenue, i.e., the revenue shown in the income statement
is the net sales.





INCOME
TAXES





The
Company accounts for income taxes under the provision of Statement of Financial
Accounting Standards (“SFAS” No. 109), “Accounting for Income Taxes,” whereby
deferred income tax assets and liabilities are computed for differences between
the financial statements and tax bases of assets and liabilities that will
result in taxable or deductible amounts in the future, based on enacted tax laws
and rates applicable to the periods in which the differences are expected to
affect taxable income. Valuation allowances are established when necessary; to
reduce deferred income tax assets to the amount expected to be
realized.





FOREIGN
CURRENCY TRANSLATION





The
Company maintains its books and accounting records in Renminbi (“RMB”), the
currency of the PRC, The Company’s functional currency is also RMB. The Company
has adopted SFAS 52 in translating financial statement amounts from RMB to the
Company’s reporting currency, United States dollars (“US$”). All assets and
liabilities are translated at the current rate. The shareholders’ equity
accounts are translated at appropriate historical rate. Revenue and expenses are
translated at the weighted average rates in effect on the transaction
dates.





Translation
adjustments resulting from this process are included in accumulated other
comprehensive income in the statement of stockholders’ equity. Transaction gains
and losses that arise from exchange rate fluctuations on transactions
denominated in a currency other than the functional currency are include in the
results of operations as incurred.








STOCK-BASED
COMPENSATION





In
December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
123R, “Share-Based Payment” (“SFAS 123R”). SFAS 123R revises FASB Statement No.
123 “Accounting for Stock-Based Compensation” and supersedes APB Opinion No. 25
“Accounting for Stock Issued to Employees”. SFAS 123R requires all public and
non-public companies to measure and recognize compensation expense for all
stock-based payments for services received at the grant-date fair value, with
the cost recognized over the vesting period (or the requisite service period).
The Company has adopted SFAS 123R as of January 1, 2005. Refer to Note 19: stock
compensation plan for additional information on our stock option plan and
related stock-based compensation expense.





EMPLOYEES’
BENEFITS





Mandatory
contributions are made to Government’s health, retirement benefit and
unemployment schemes at the statutory rates in force during the period,
based on gross salary payments. The cost of these payments is charged to the
statement of income in the same period as the related salary costs.





RESEARCH
AND DEVELOPMENT EXPENSES





Research
and development costs are classified as general and administrative expenses and
are expensed as incurred.





SHIPPING
AND HANDLING COSTS





Shipping
and handling cost are classified as selling expenses and are expensed as
incurred.











ADVERTISING
COSTS





Advertising
costs are classified as selling expenses and are expensed as
incurred.





WARRANTY
CLAIMS





The
company provides for the estimated cost of product warranties when the products
are sold. Such estimates of product warranties were based on, among other
things, historical experience, product changes, material expenses, service and
transportation expenses arising from the manufactured product. Estimates will be
adjusted on the basis of actual claims and circumstances.





PURCHASE
DISCOUNTS





Purchase
discounts, if applicable, are netted in the cost of goods sold.





LEASE
COMMITMENTS





The
Company has adopted SFAS No. 13, “Accounting for Leases”. If the lease terms
meet one or all of the following four criteria, it will be classified as a
capital lease, otherwise, it is an operating lease: (1) The lease transfers the
title to the lessee at the end of the term; (2) the lease contains a bargain
purchase option; (3) the lease term is equal to 75% of the estimated economic
life of the leased property or more; (4) the present value of the minimum lease
payment in the term equals or exceeds 90% of the fair value of the leased
property.





RECENTLY
ISSUED FINANCIAL STANDARDS




In
February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities-Including an Amendment of SFAS 115",
which allows for the option to measure financial instruments and certain other
items at fair value. Unrealized gains and losses on items for which the fair
value option has been elected are reported in earnings. The adoption of SFAS No.
159 has not had a material impact on the Company's consolidated results of
operations or financial position.




In
December 2007, the FASB issued FASB 141(R), "Business Combinations" of which the
objective is to improve the relevance, representational faithfulness, and
comparability of the information that a reporting entity provides in its
financial reports about a business combination and its effects. The new standard
requires the acquiring entity in a business combination to recognize all (and
only) the assets acquired and liabilities assumed in the transaction;
establishes the acquisition-date fair value as the measurement objective for all
assets acquired and liabilities assumed; and requires the acquirer to disclose
to investors and other users all of the information they need to evaluate and
understand the nature and financial effect of the business
combination.




In
December 2007, the FASB issued FASB 160 "Noncontrolling Interests in
Consolidated Financial Statements - an amendment of ARB No.51" of which the
objective is to improve the relevance, comparability, and transparency of the
financial information that a reporting entity provides in its consolidated
financial statements by establishing accounting and reporting standards by
requiring all entities to report noncontrolling (minority) interests in
subsidiaries in the same way - as an entity in the consolidated financial
statements. Moreover, Statement 160 eliminates the diversity that currently
exists in accounting for transactions between an entity and noncontrolling
interests by requiring they be treated as equity transactions.




Both FASB
141(R) and FASB 160 are effective for fiscal years beginning after December 15,
2008. The Company does not believe that the adoption of these standards will
have any impact on its financial statements.





In
December 2007, the SEC issued Staff Accounting Bulletin No. 110 (“SAB 110”). SAB
110 permits companies to continue to use the simplified method, under certain
circumstances, in estimating the expected term of “plain vanilla” options beyond
December 31, 2007. SAB 110 updates guidance provided in SAB 107 that previously
stated that the Staff would not expect a company to use the simplified method
for share option grants after December 31, 2007. Adoption of SAB 110 is not
expected to have a material impact on the Company’s consolidated financial
statements.











In March
2008, the FASB issued SFAS No.161, Disclosures about Derivative Instruments and
Hedging Activities- an amendment of FASB statement No.133.SFAS No.161 requires
enhanced disclosures about an entity’s derivative and hedging activities and
thereby improves the transparency of financial reporting. SFAS No.161 is
effective for fiscal years, and interim periods within those fiscal years,
beginning after November 15, 2008, with early application encouraged. As such,
the Company is required to adopt these provisions at the beginning of the fiscal
year ending December 31, 2009. The Company is currently evaluating the impact of
SFAS No. 161 on its financial statements.




In May
2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles.” SFAS 162 identifies the sources of accounting principles
and the framework for selecting the principles used in the preparation of
financial statements of nongovernmental entities that are presented in
conformity with GAAP in the United States. SFAS 162 is effective 60 days
following the SEC’s approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, The Meaning of Present Fairly in Conformity With
Generally Accepted Accounting Principles. The Company is currently evaluating
the impact of SFAS 162 on its consolidated financial statements but does not
expect it to have a material effect.




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




NOTE
3 - RELATED PARTY TRANSACTIONS





The
Company continued to purchase non-valve automotive products, components for
valve parts and packaging materials from the Ruili Group Co., Ltd. The Ruili
Group Co., Ltd., is the minority shareholder of the Joint Venture and is
controlled by the Zhang family, who is also the controlling party of the
Company.





The
following related party transactions occurred for the fiscal year ended December
31, 2008 and 2007:





December31,2008
                  
                  
                  2007PURCHASES
      NON-VALVE PRODUCT , COMPONENTS FOR VALVE AUTO PARTS AND PACKAGING
      MATERIAL FROM FROM:Ruili
      Group Co., Ltd.
                  
                  $
                  35,344,273
                  
                  
                  $
                  26,589,425Total
      Purchases
                  
                  $
                  35,344,273
                  
                  
                  
                  26,589,425PURCHASES
      LAND USE RIGHTS FROM RUILI GROUP CO., LTD.
                  
                  $
                  ―
                  
                  
                  $
                  13,501,009PURCHASES
      PLANT FROM RUILI GROUP CO., LTD.
                  
                  $
                  ―
                  
                  
                  $
                  6,613,724SALES
      TO:Ruili
      Group Co., Ltd.
                  
                  
                  2,816,816
                  
                  
                  
                  1,398,638Total
      Sales
                  
                  $
                  2,816,816
                  
                  
                  $
                  1,398,638










December31,2008
                      
                      
                      2007ACCOUNTS
      PAYABLE AND OTHER PAYABLESRuili
      Group Co., Ltd.
                      
                      $
                      —
                      
                      
                      $
                      97,503Total
                      
                      $
                      —
                      
                      
                      $
                      97,503PREPAYMENTSRuili
      Group Co., Ltd.
                      
                      $
                      187,813
                      
                      
                      $
                      —Total
                      
                      $
                      187,813
                      
                      
                      $
                      —OTHER  ACCOUNTS
      RECEIVABLERuili
      Group Co., Ltd.
                      
                      $
                      1,906,070
                      
                      
                      $
                      1,761,007Total
                      
                      $
                      1,906,070
                      
                      
                      $
                      1,761,007





1.
            The
      total purchases from Ruili Group during the fiscal year ended December 31,
      2008 consisted of $29.6  million of finished products for
      non-valve auto parts, $4.2 million of components for non-valve auto
      parts and $1.6 million of packaging
  materials.


2.
            On September 28, 2007, the
      Company purchased land use rights, a manufacturing plant, and an office
      building from Ruili Group for an aggregate purchase price of approximately
      RMB152 million (approximately $20.1 million translated with an average
      exchange rate of
      7.5567). DTZ Debenham Tie Leung Ltd., an internationally recognized
      appraiser, appraised the total asset value at RMB154 million
      (approximately $20.4 million translated with an average exchange rate of
      7.5567). RMB69.4million(approximately $9.1 million translated with an
      average exchange rate of 7.5567) of the purchase price was paid on a
      transfer of the Company’s an existing project that
      includes a construction-in-progress and prepayment of land use rights. The
      remaining balance was paidby the cash generated from
      operation and a bank credit
line.





NOTE
4 - ACCOUNTS RECEIVABLE





The
changes in the allowance for doubtful accounts at December 31, 2008 and December
31, 2007 were summarized as follows:




December
                                  31,2008
                                
                                
                                December
                                  31,2007Beginning
      balance
                                
                                $
                                27,987
                                
                                
                                $
                                8,769Add:
      Increase to allowance
                                
                                
                                (2,990
                                )
                                
                                
                                19,218Less:
      Accounts written off
                                
                                
                                —
                                
                                
                                
                                —Ending
      balance
                                
                                $
                                24,997
                                
                                
                                $
                                27,987








December 31,
                                        2008
                                      
                                      
                                      December 31,
                                        2007Accounts
      receivable
                                      
                                      $
                                      35,822,821
                                      
                                      
                                      $
                                      30,614,226Less:
      allowance for doubtful accounts
                                      
                                      
                                      (24,997
                                      )
                                      
                                      
                                      (27,987
                                      )Account
      receivable balance, net
                                      
                                      $
                                      35,797,824
                                      
                                      
                                      $
                                      30,586,239





NOTE
5 - INVENTORIES





On
December 31, 2008 and December 31, 2007, inventories consisted of the
following:





December 31,
      2008
                  
                  
                  December 31, 2007Raw
      Material
                  
                  $
                  2,705,224
                  
                  
                  $
                  2,354,637Work
      in process
                  
                  
                  8,074,488
                  
                  
                  
                  4,157,643Finished
      Goods
                  
                  
                  8,326,133
                  
                  
                  
                  1,708,093Total
      Inventory
                  
                  $
                  19,105,845
                  
                  
                  $
                  8,220,373





NOTE
6 - PROPERTY, PLANT AND EQUIPMENT





Property,
plant and equipment consisted of the following, on December 31, 2008 and
December 31, 2007:




December31,2008
                  
                  
                  December31,2007Machinery
                  
                  $
                  22,085,672
                  
                  
                  $
                  18,118,125Molds
                  
                  
                  1,275,561
                  
                  
                  
                  1,193,488Office
      equipment
                  
                  
                  618,403
                  
                  
                  
                  358,163Vehicle
                  
                  
                  972,422
                  
                  
                  
                  757,311Building
                  
                  
                  7,975,248
                  
                  
                  
                  7,462,096Sub-Total
                  
                  
                  32,927,306
                  
                  
                  
                  27,889,182Less:
      Accumulated depreciation
                  
                  
                  (8,951,886
                  )
                  
                  
                  (6,094,229
                  )Fixed
      Assets, net
                  
                  $
                  23,975,420
                  
                  
                  $
                  21,794,953




Depreciation
expense charged to operations was $2,375,363 and $1,689,021 for the fiscal year
ended December 31, 2008 and 2007, respectively.


NOTE
7 – LAND USE RIGHTS
 
 December
      31,2008
                      
                      
                      December
      31,2007Cost:
                      
                      $
                      14,927,340
                      
                      
                      $
                      13,966,870Less:
      Accumulated amortization:
                      
                      
                      412,357
                      
                      
                      
                      77,165Land
      use rights, net
                      
                      $
                      14,514,983
                      
                      
                      $
                      13,889,705










According
to the law of China, the government owns all the land in China. Companies and
individuals are authorized to possess and use the land only through land use
rights granted by the Chinese government. The company purchased the land use
rights from Ruili Group for approximately $13.9 million on September 28, 2007.
The Company has not yet obtained the land use right certificate. However, the
Company is in the process of applying to obtain the land use right
certificate. The remaining balance of land use rights as of Dec 31,
2008 is amortized on a straight-line basis over 44 years, its remaining useful
lives. Amortization expenses were $335,192 and $77,165 for the fiscal years
ended December 31, 2008 and 2007, respectively.





NOTE
8 - INTANGIBLE ASSETS





Gross
intangible assets were $161,347, less accumulated amortization of
$39,018 for net intangible assets of $ 122,329 as of December 31, 2008.
Gross intangible assets were $76,150, less accumulated amortization of $25,116
for net intangible assets of $51,034 as of December 31, 2007. Amortization
expenses were $11,770 and $6,035 for the fiscal years ended December 31,
2008 and 2007 respectively. Future estimated amortization expense is as
follows:





2009
                    
                    2010
                    
                    
                    2011
                    
                    
                    2012
                    
                    
                    2013
                    
                    
                    Thereafter$
                    16,135
                    
                    $
                    16,135
                    
                    
                    $
                    16,135
                    
                    
                    $
                    16,135
                    
                    
                    $
                    16,135
                    
                    
                    $
                    42,115





NOTE
9 - PREPAYMENT





Prepayment
consisted of the following as of December 31, 2008 and December 31,
2007:


December
      31,
                  
                  
                  December
      31,2008
                  
                  
                  2007Raw
      material suppliers
                  
                  $
                  878,374
                  
                  
                  $
                  929,178Equipment
      purchase
                  
                  
                  135,066
                  
                  
                  
                  407,035Total
      prepayment
                  
                  $
                  1,013,440
                  
                  
                  $
                  1,336,212




NOTE
10- DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES





Deferred
tax assets as at December 31, 2008 comprise the following:


Dec
      31, 2008Deferred
      tax assets - currentProvision
                  
                  
                  3,990Warranty
                  
                  
                  277,892Deferred
      tax assets
                  
                  
                  281,883Valuation
      allowance
                  
                  
                  ―Net
      deferred tax assets - current
                  
                  
                  281,883Deferred
      tax liabilities - currentRevenue
                  
                  
                  92,655Deferred
      tax liabilities - current
                  
                  
                  92,655Net
      deferred tax assets - current
                  
                  
                  189,228Deferred
      tax liabilities - non-currentLand
      use right
                  
                  
                  106,826Deferred
      tax liabilities - non-current
                  
                  
                  106,826











Deferred
taxation is calculated under the liability method in respect of taxation effect
arising from all timing differences, which are expected with reasonable
probability to realize in the foreseeable future. The Company and its
subsidiaries do not have income tax liabilities in U.S. and Hong Kong as the
Company had no taxable income for the reporting period. The Company’s subsidiary
registered in the PRC is subject to income taxes within the PRC at the
applicable tax rate.





NOTE
11 - ACCRUED EXPENSES





Accrued
expenses consisted of the following as of December 31, 2008 and December 31,
2007:





December31,2008
                                
                                
                                December31,2007Accrued
      payroll
                                
                                $
                                617,522
                                
                                
                                $
                                601,733Other
      accrued expenses
                                
                                
                                1,771,792
                                
                                
                                
                                1,258,205Total
      accrued expenses
                                
                                $
                                2,389,314
                                
                                
                                $
                                1,859,938





NOTE
12 - BANK LOANS





Bank
loans represented the following as of December 31, 2008 and December 31,
2007:





December 31, 2008
                      
                      
                      December 31, 2007Secured
                      
                      $
                      —
                      
                      
                      $
                      3,370,328Less:
      Current portion
                      
                      $
                      —
                      
                      
                      $
                      (3,370,328
                      )Non-current
      portion
                      
                      $
                      —
                      
                      
                      $
                      —


As of
December 31, 2008, the Company had repaid all outstanding short-term loans
with banks. The Company did not provide any sort of guarantee to any other
parties.





NOTE
13 - INCOME TAXES





The Joint
Venture is registered in the PRC, and is therefore subject to state and local
income taxes within the PRC at the applicable tax rate on the taxable income as
reported in the PRC statutory financial statements in accordance with relevant
income tax laws. According to applicable tax laws regarding Sino-Foreign Joint
Venture, the Joint Venture is exempted from income taxes in the PRC for the
fiscal years ended December 31, 2005 and 2004. Thereafter, the Joint Venture is
entitled to a 50% income tax deduction for the following three years ended
December 31, 2006, 2007, and 2008. As a result of the Joint Venture
obtaining its Sino-foreign joint venture status in 2004, in accordance with
applicable PRC tax regulations, the Joint Venture was exempted from PRC income
tax in both fiscal 2004 and 2005. Thereafter, the Joint Venture is entitled to a
tax concession of 50% of the applicable income tax rate of 26.4% for the two
years ended December 31, 2006 and 2007. With the new PRC Enterprise Income Tax
Law, effective on 1st January 2008, the China’s enterprises are generally
subject to a PRC income tax rate of 25% and the Joint Venture is entitled to a
tax concession of 50% of the applicable income tax rate of 25% for the year
ended December 31, 2008.











Additionally,
the Company increased its investment in the Joint Venture as a result of its
financing in December, 2006. In accordance with the Income Tax Law of the
People's Republic of China on Foreign-invested Enterprises and Foreign
Enterprises, the Joint Venture is eligible for additional preferential tax
treatment. For the years 2007 and 2008, the Joint Venture entitled to an income
tax exemption on all pre-tax income generated by the company above its pre-tax
income generated in the fiscal year 2006. Thereafter, the Joint Venture
will enjoy a 50% exemption from the applicable income tax rate of 25% on any
pre-tax income above its 2006 pre-tax income, to be recognized in the years
2009, 2010 and 2011. In addition, in accordance with China's relevant
regulations of income taxes, there is a benefit, which 40% of the additional
investment in the Joint Venture used to purchase eligible domestic equipments
can be used as a tax credit to reduce the current income taxes to the limit of
any incremental income taxes in addition to the prior year.The company
received an income tax benefit of $377,147 and $991,133 in 2008 and 2007,
respectively.





The
reconciliation of the effective income tax rate of the Joint Venture to the
statutory income tax rate in the PRC for the fiscal year ended on December 31,
2008 and 2007 is as follows:





2008
                                
                                
                                2007Statutory
      tax rate
                                
                                
                                25.0
                                %
                                
                                
                                26.4
                                %Tax
      holidays and concessions
                                
                                
                                -12.5
                                %
                                
                                
                                -13.2
                                %Effective
      tax rate
                                
                                
                                12.5
                                %
                                
                                
                                13.2
                                %





Income
taxes are calculated on a separate entity basis. Deferred income taxes reflect
the net tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for
income tax purposes Significant components of the Company’s net deferred tax
assets and liabilities are approximately as follows at December 31,2008. No
valuation allowance is deemed necessary. There currently is no tax benefit
or burden recorded for the United States or Hong Kong.The
provisions for income taxes for the years ended December 31, 2008 and 2007,
respectively, are summarized as follows:


2008
                    
                    
                    2007PRC
      only:Current
                    
                    $
                    1,666,166
                    
                    
                    $
                    636,976Deferred
                    
                    
                    (79,663
                    )
                    
                    
                    ―Total
                    
                    $
                    1,586,503
                    
                    
                    $
                    636,976





The
Company adopted the provisions of FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes, on January 1, 2007. As the result of the
implementation of the FASB Interpretation No. 48 (“FIN 48”), Accounting for
Uncertainty in Income Taxes – In Interpretation of FASB Statement No. 109, the
Company recognized no material adjustments to unrecognized tax benefits. At the
adoption date of January 1, 2007 and as of December 31, 2008 and 2007, the
Company has no unrecognized tax benefits.





NOTE
14 - LEASES





In
December 2006, the Joint Venture entered into a lease agreement with Ruili Group
Co., Ltd. for the lease of two apartment buildings. These two apartment
buildings are for the Joint Venture’s management personnel and staff,
respectively. The lease term is from January 2007 to December 2011 for one of
the apartment buildings and from January 2007 to December 2012 for the
other.











Future
minimum rental payments for the years ended December 31, are as
follows:





2009
                    
                    
                    2010
                    
                    
                    2011
                    
                    
                    2012
                    
                    
                    2013
                    
                    
                    ThereafterBuildings
                    
                    $
                    281,167
                    
                    
                    $
                    281,167
                    
                    
                    $
                    281,167
                    
                    
                    $
                    68,219
                    
                    
                    $
                    —
                    
                    
                    $
                    —Total
                    
                    $
                    281,167
                    
                    
                    $
                    281,167
                    
                    
                    $
                    281,167
                    
                    
                    $
                    68,219
                    
                    
                    $
                    —
                    
                    
                    $
                    —





NOTE
15 - ADVERTISING COSTS





Advertising
costs are expensed as incurred and are classified as selling expenses.
Advertising costs were $6,126 and $110,512 for the fiscal years ended
December 31, 2008 and 2007, respectively.





NOTE
16 - RESEARCH AND DEVELOPMENT EXPENSE





Research
and development costs are expensed as incurred and were $3,219,895 and
$1,795,510 for the fiscal years ended December 31, 2008 and 2007,
respectively.





NOTE
17 - WARRANTY CLAIMS





Warranty
claims were $1,901,974 and $2,152,978 for the fiscal year ended on
December 31, 2008 and 2007 respectively. The movement of accrued warranty
expenses for fiscal year 2008 is as follows. Accrued warranty expenses are
included in Accrued Expenses.





Beginning
      balance at Jan 01, 2008
                  
                  $
                  863,428Accrued
      during the fiscal
      year ended December 31, 2008:
                  
                  $
                  1,901,974Less:
      Actual Paid during the fiscal year ended December
      31, 2008:
                  
                  $
                  1,653,833Ending
      balance at December 31, 2008
                  
                  $
                  1,111,569





NOTE
18 - STOCK COMPENSATION PLAN





(1) The
Company’s 2005 Stock Compensation Plan (the Plan) permits the grant of share
options and shares to its employees for up to 1,700,000 shares of common stock.
The Company believes that such awards better align the interests of its
employees with those of its shareholders. Option awards are generally granted
with an exercise price equal to the market price of the Company’s stock at the
date of grant.





Pursuant
to the Plan, the Company issued 60,000 options with an exercise price of $4.79
per share on March 1, 2006. In accordance with the vesting provisions of the
grants, the options will become vested and exercisable under the following
schedule.





Number of Shares
                    
                    % of Shares Issued
                    
                    Initial Vesting Date60,000
                    
                    
                    100
                    %
                    March
      1, 2009





The
Company accounts for stock-based compensation in accordance with SFAS No. 123
Revised, “Share-Based Payment.” The fair value of each option award is estimated
on the date of grant using the Black-Scholes-Merton option-pricing model that
uses the assumptions noted in the following table.





Dividend
      Yield
                  
                  
                  0.00
                  %Expected
      Volatility
                  
                  
                  75.75
                  %Risk-Free
      Interest Rate
                  
                  
                  4.59
                  %Contractual
      Term
                  
                  3
      yearsStock
      Price at Date of Grant
                  
                  $
                  4.79Exercise
      Price
                  
                  $
                  4.79











Total
deferred stock-based compensation expenses related to the 60,000 stock options
granted amounted to $178,904.  This amount is amortized over three years in
a manner consistent with Financial Accounting Standards Board Interpretation No.
123 (R). The amortization of deferred stock-based compensation for
these equity arrangements was both $59,636 for the fiscal year ended December
31, 2008 and 2007. As of December 31, 2008, there was $ 9,935 of total
unrecognized compensation cost related to non-vested share-based compensation
arrangements granted under the plan. The cost is expected to be recognized over
a period of 0.2 years.





A summary
of option activity under the Plan as of December 31, 2008 and changes
during the fiscal year ended December 31, 2008 is as follows:


Options
                            
                            
                            Weighted
                              Average
                              Exercise
                              Price
                            
                            
                            Weighted
                              Average
                              Remaining
                              Contractual
                              Term
                            
                            
                            Aggregate
                              Intrinsic
                              ValueJanuary
      1, 2006
                            
                            
                            —
                            
                            
                            $
                            —
                            
                            
                            
                            —
                            
                            
                            $
                            —Granted
                            
                            
                            60,000
                            
                            
                            
                            4.79
                            
                            
                            3Years
                            
                            
                            
                            —Exercised
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —Forfeited
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —Outstanding
      at December 31, 2008
                            
                            
                            60,000
                            
                            
                            $
                            4.79
                            
                            
                            0.2Years
                            
                            
                            $
                            —Exercisable
      at December 31, 2008
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —








(ii).
Subject to all the terms and provisions of the 2005 Stock Compensation
Plan,on June 20,
2007,the Company granted to its
previous senior manager of investor relations, David Ming He options to purchase
4,128 shares of its common stocks with an exercise price of $7.25 per share.The option became vested and exercisable immediately on the date
thereof.





Number of Shares
                  
                  % of Shares Issued
                  
                  Initial Vesting Date4,128
                  
                  
                  100
                  %
                  June
      20, 2007





The
Company accounts for stock-based compensation in accordance with SFAS No. 123
Revised, “Share-Based Payment.” The fair value of each warrant is estimated on
the date of grant using the Black-Scholes-Merton option-pricing model that uses
the assumptions noted in the following table.





Dividend
      Yield
                  
                  
                  0.00
                  %Expected
      Volatility
                  
                  
                  66.70
                  %Risk-Free
      Interest Rate
                  
                  
                  5.14
                  %Contractual
      Term
                  
                  3
      yearsStock
      Price at Date of Grant
                  
                  $
                  7.09Exercise
      Price
                  
                  $
                  7.25











Total
stock-based compensation expenses related to the 4,128 stock options granted
amounted to $23,201. This amount is charged to G&A during 2007
year.





A summary
of option activity under the Plan as of December 31, 2008 and changes
during the fiscal year ended December 31, 2008 is as follows:


Options
                          
                          
                          Weighted
                            Average
                            Exercise
                            Price
                          
                          
                          Weighted
                            Average
                            Remaining
                            Contractual
      Term
                          
                          
                          Aggregate
                            Intrinsic
                            ValueJanuary
      1, 2007
                          
                          
                          —
                          
                          
                          $
                          —
                          
                          
                          
                          —
                          
                          
                          $
                          —Granted
                          
                          
                          4,128
                          
                          
                          $
                          7.25
                          
                          
                          3Years
                          
                          
                          
                          —Exercised
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —Forfeited
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —Outstanding
      at December 31, 2008
                          
                          
                          4,128
                          
                          
                          $
                          7.25
                          
                          
                          1.6Years
                          
                          
                          $
                          —Exercisable
      at December 31, 2008
                          
                          
                          4,128
                          
                          
                          $
                          7.25
                          
                          
                          1.6Years
                          
                          
                          $
                          —





(2)
On January 5, 2006, the Company issued 100,000 warrants for financial services
to be provided by Maxim Group LLC and Chardan Capital Markets, LLC, with an
exercise price of $6.25 per share. In accordance with the common stock purchase
warrant agreement, the warrants became vested and exercisable immediately on the
date thereof. As set forth in the agreement, the Company will retain Maxim Group
LLC and Chardan Capital Markets, LLC as its exclusive financial advisors and
investment bankers for a period of twelve months.





Number of Shares
                  
                  % of Shares Issued
                  
                  Initial Vesting Date100,000
                  
                  
                  100
                  %
                  January
      5, 2006





The
Company accounts for stock-based compensation in accordance with SFAS No. 123
Revised, “Share-Based Payment.” The fair value of each warrant is estimated on
the date of grant using the Black-Scholes-Merton option-pricing model that uses
the assumptions noted in the following table.





Dividend
      Yield
                  
                  
                  0.00
                  %Expected
      Volatility
                  
                  
                  77.62
                  %Risk-Free
      Interest Rate
                  
                  
                  4.36
                  %Contractual
      Term
                  
                  4
      yearsStock
      Price at Date of Grant
                  
                  $
                  4.70Exercise
      Price
                  
                  $
                  6.25





Total
deferred stock-based compensation expenses related to the 100,000 warrants
granted amounted to $299,052. This amount is amortized over one year in a manner
consistent with Financial Accounting Standards Board Interpretation No. 123 (R).
The amortization of deferred stock-based compensation for these equity
arrangements was $299,052 for the fiscal year ended December 31,
2006.





A summary
of option activity with respect to the warrants as of December 31, 2008 and
changes during the fiscal year ended December 31, 2008 is as
follows:











Warrants
                          
                          
                          Weighted
                            Average
                            Exercise
                            Price
                          
                          
                          Weighted
                            Average
                            Remaining
                            Contractual
                            Term
                          
                          
                          Aggregate
                            Intrinsic
                            ValueJanuary
      1, 2006
                          
                          
                          —
                          
                          
                          $
                          —
                          
                          
                          
                          —
                          
                          
                          $
                          —Granted
                          
                          
                          100,000
                          
                          
                          $
                          6.25
                          
                          
                          4Years
                          
                          
                          
                          —Exercised
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —Forfeited
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —Outstanding
      at December 31, 2008
                          
                          
                          100,000
                          
                          
                          $
                          6.25
                          
                          
                          1.1Years
                          
                          
                          $
                          —Exercisable
      at December 31, 2008
                          
                          
                          100,000
                          
                          
                          $
                          6.25
                          
                          
                          1.1Years
                          
                          
                          $
                          —





NOTE
19- COMMITMENTS AND CONTINGENCIES





(1)  According
to the law of China, the government owns all the land in China. Companies and
individuals are authorized to possess and use the land only through land use
rights granted by the Chinese government. The company purchased the land use
rights from Ruili Group for approximately $13.9 million on September 28, 2007.
The Company has not yet obtained the land use right certificate. However, the
Company is in the process of applying to obtain the land use right
certificate.





(2)  The
information of lease commitments is provided in Note 14.





NOTE
20 - OFF-BALANCE SHEET ARRANGEMENTS





At
December 31, 2008, we do not have any material commitments for capital
expenditures or have any transactions, obligations or relationships that could
be considered off-balance sheet arrangements.





NOTE
21 - SUBSEQUENT EVENTS





On March
24, 2009, we collected $1,463,143 of other accounts receivable due from RuiLi
Group, one related party.





NOTE
22 – RESTRICTED NET ASSETS





Relevant
PRC laws and regulations permit payments of dividends by our PRC subsidiaries
only out of their retained earnings, if any, as determined in accordance with
PRC accounting standards and regulations. In addition, PRC laws and regulations
require that annual appropriations of 10% of after-tax income should be set
aside prior to payment of dividends as a general reserve fund. As a result of
these PRC laws and regulations, our PRC subsidiaries and our affiliated PRC
entities are restricted in their ability to transfer a portion of their
net assets to us whether in the form of dividends, loans or advances. As of
December 31, 2008 and 2007, the amounts of our restricted net assets
were approximately $ 3.1 million and $1.9 million,
respectively.





Additional
Information—Financial Statement Schedule I




This
financial statements schedule has been prepared in conformity with accounting
principles generally accepted in the United States of America.





SORL
AUTO PARTS, INC.





This
financial statements schedule has been prepared in conformity with accounting
principles generally accepted in the United States of America. The parent
company financial statements have been prepared using the same accounting
principles and policies described in the notes to the consolidated financial
statements, with the only exception being that the company accounts for its
subsidiaries using the equity method. Please refer to the notes to the
consolidated financial statements presented above for additional information and
disclosures with respect to these financial statements.










Financial
Information Of Parent Company


Balance
Sheets





31-Dec-08
                                  
                                  
                                  31-Dec-07ASSETSCurrent
      Assets:Cash
      and cash equivalents
                                  
                                  $
                                  32,718
                                  
                                  
                                  $
                                  33,288Other
      current assets
                                  
                                  
                                  16,161
                                  
                                  
                                  
                                  16,161Total
      current assets
                                  
                                  
                                  48,879
                                  
                                  
                                  
                                  49,449Deferred
      compensation cost-stock options
                                  
                                  
                                  9,935
                                  
                                  
                                  
                                  69,571Investments
      in subsidiaries
                                  
                                  
                                  81,952,101
                                  
                                  
                                  
                                  69,521,035TOTAL
      ASSETS
                                  
                                  $
                                  82,010,915
                                  
                                  
                                  $
                                  69,640,055LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      Liabilities:Other
      current liability
                                  
                                  
                                  2,486,566
                                  
                                  
                                  
                                  2,486,566Total
      current liabilities
                                  
                                  
                                  2,486,566
                                  
                                  
                                  
                                  2,486,566Total
      liabilities
                                  
                                  
                                  2,486,566
                                  
                                  
                                  
                                  2,486,566Stockholders'
      equity:Common
      Stock - $0.002 Par Value; 50,000,000 authorized, 18,279,254 and 18,279,254
      issued and outstanding as of  December 31, 2008 and December 31,
      2007 respectively
                                  
                                  
                                  36,558
                                  
                                  
                                  
                                  36,558Additional
      paid-in capital
                                  
                                  
                                  37,498,452
                                  
                                  
                                  
                                  37,498,452Retained
      earnings
                                  
                                  
                                  41,989,339
                                  
                                  
                                  
                                  29,618,479Total
      stockholders' equity
                                  
                                  
                                  79,524,349
                                  
                                  
                                  
                                  67,153,489TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
                                  
                                  $
                                  82,010,915
                                  
                                  
                                  $
                                  69,640,055











Financial
Information Of Parent Company


Statements
Of Income


For
Years Ended on Dec 31, 2008 and 2007





2008
                                  
                                  
                                  2007Equity
      in earnings of subsidiaries
                                  
                                  $
                                  12,431,066
                                  
                                  
                                  $
                                  10,858,638General
      and administrative expenses
                                  
                                  
                                  59,636
                                  
                                  
                                  
                                  114,045Financial
      expenses
                                  
                                  
                                  570
                                  
                                  
                                  
                                  562Net
      income attributable to stockholders
                                  
                                  $
                                  12,370,860
                                  
                                  
                                  $
                                  10,744,031Weighted
      average common share - Basic
                                  
                                  
                                  18,279,254
                                  
                                  
                                  
                                  18,277,094Weighted
      average common share - Diluted
                                  
                                  
                                  18,279,254
                                  
                                  
                                  
                                  18,323,315EPS
      - Basic
                                  
                                  
                                  0.68
                                  
                                  
                                  
                                  0.59EPS
      - Diluted
                                  
                                  
                                  0.68
                                  
                                  
                                  
                                  0.59





Financial
Information Of Parent Company


For
Years Ended On December 31, 2008 And 2007


Additional
                                  
                                  
                                  RetainedNumber
                                  
                                  
                                  Common
                                  
                                  
                                  Paid-in
                                  
                                  
                                  Earnings
                                  
                                  
                                  Stockholders'of
      Share
                                  
                                  
                                  Stock
                                  
                                  
                                  Capital
                                  
                                  
                                  (Deficit)
                                  
                                  
                                  EquityBeginning
      Balance – Jan 1, 2007
                                  
                                  
                                  18,275,126
                                  
                                  
                                  
                                  36,550
                                  
                                  
                                  
                                  37,444,051
                                  
                                  
                                  
                                  18,874,448
                                  
                                  
                                  
                                  56,355,049Net
      Income
                                  
                                  
                                  ―
                                  
                                  
                                  
                                  ―
                                  
                                  
                                  
                                  ―
                                  
                                  
                                  
                                  10,744,031
                                  
                                  
                                  
                                  10,744,031Common
      stock of 4,128 shares issued
                                  
                                  
                                  4128
                                  
                                  
                                  
                                  8
                                  
                                  
                                  
                                  31,200
                                  
                                  
                                  
                                  ―
                                  
                                  
                                  
                                  31,2084,128
      options issued in 2007
                                  
                                  
                                  ―
                                  
                                  
                                  
                                  ―
                                  
                                  
                                  
                                  23,201
                                  
                                  
                                  
                                  ―
                                  
                                  
                                  
                                  23,201Ending
      Balance - December 31, 2007
                                  
                                  
                                  18,279,254
                                  
                                  
                                  
                                  36,558
                                  
                                  
                                  
                                  37,498,452
                                  
                                  
                                  
                                  29,618,479
                                  
                                  
                                  
                                  67,153,489Net
      Income
                                  
                                  
                                  ―
                                  
                                  
                                  
                                  ―
                                  
                                  
                                  
                                  ―
                                  
                                  
                                  
                                  12,370,860
                                  
                                  
                                  
                                  12,370,860Ending
      Balance - December 31, 2008
                                  
                                  
                                  18,279,254
                                  
                                  
                                  
                                  36,558
                                  
                                  
                                  
                                  37,498,452
                                  
                                  
                                  
                                  41,989,339
                                  
                                  
                                  
                                  79,524,349




Financial
Information Of Parent Company


Statements
Of Cash Flows


For
Years Ended on Dec 31, 2008 and 2007





2008
                                    
                                    
                                    2007Cash
      flow from operating activities:Net
      income
                                    
                                    $
                                    12,370,860
                                    
                                    
                                    $
                                    10,744,031Adjustments
      to reconcile net income to net cash provided by operating
      activitiesEquity
      in earnings of subsidiaries
                                    
                                    
                                    (12,431,066
                                    )
                                    
                                    
                                    (10,858,638
                                    )Stock-Based
      Compensation Expense
                                    
                                    
                                    59,636
                                    
                                    
                                    
                                    114,045Changes
      in other current assets
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    (14,396
                                    )Changes
      in other current  liabilities
                                    
                                    
                                    ―
                                    
                                    
                                    
                                    ―Net
      cash provided by operating activities
                                    
                                    $
                                    (570
                                    )
                                    
                                    $
                                    (14,958
                                    )Cash
      flows from investing activities:Investment
      in subsidiaries, net of cash acquired
                                    
                                    $
                                    ―
                                    
                                    
                                    $
                                    ―Net
      cash (used in) provided by investing activities
                                    
                                    $
                                    ―
                                    
                                    
                                    $
                                    ―Cash
      flows from financing activities:Proceeds
      from Share Issuance
                                    
                                    $
                                    ―
                                    
                                    
                                    $
                                    ―Net
      cash provided by (used in) financing activities
                                    
                                    $
                                    ―
                                    
                                    
                                    $
                                    ―Net
      change in increase in cash and cash equivalents
                                    
                                    $
                                    (570
                                    )
                                    
                                    $
                                    (14,958
                                    )Cash
      and cash equivalents, beginning of period
                                    
                                    
                                    33,288
                                    
                                    
                                    
                                    48,246Cash
      and cash equivalents, end of period
                                    
                                    $
                                    32,718
                                    
                                    
                                    $
                                    33,288









ITEM
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES





1.           Financial
Statements.





See Item 8 for the financial
statements filed with this report.





2.           Financial
Statement Schedules.





See Item 8 of this report





EXHIBIT
INDEX


EXHIBIT NO.
                
                DOCUMENT
  DESCRIPTION31.1
                
                Certification
      of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
      promulgated under the Securities and Exchange Act of 1934, as
      amended.31.2
                
                Certification
      of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
      promulgated under the Securities and Exchange Act of 1934, as
      amended.32
                
                Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002 (Chief Executive Officer and Chief
      Financial Officer).







SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, on this 1st day
of April 2009.





SORL
      AUTO PARTS, INC.By:
                /s/ Xiao Ping ZhangXiao
      Ping ZhangChief
      Executive Officer and
Chairman





Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following person on behalf of the Registrant and in the
capacities.





Name
              
              Position
              
              Date/s/ Xiao Ping Zhang
              
              Chief
      Executive Officer, and Chairman
              
              April
      1, 2009Xiao
      Ping Zhang/s/ Xiao Feng Zhang
              
              Chief
      Operating Officer and Director
              
              April
      1, 2009Xiao
      Feng Zhang/s/ Zong Yun Zhou
              
              Chief
      Financial Officer
              
              April
      1, 2009Zong
      Yun Zhou/s/ Li Min Zhang
              
              Director
              
              April
      1, 2009Li
      Min Zhang/s/ Zhi Zhong Wang
              
              Director
              
              April
      1, 2009Zhi
      Zhong Wang




/s/ Yi Guang Huo
              
              Director
              
              April
      1, 2009Yi
      Guang Huo/s/ Jiang Hua Feng
              
              Director
              
              April
      1, 2009Jiang
      Hua Feng/s/ Jung Kang Chang
              
              Director
              
              April
      1, 2009Jung
      Kang Chang