UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
  FORM
10-K/A
 
 (Amendment
No.1)
  x ANNUAL REPORT UNDER
SECTION 13 OR 15(d) OF THE
 SECURITIES
EXCHANGE ACT OF 1934
 
 For
the Fiscal Year Ended December 31, 2008
 
 OR
 
  ̈TRANSITION REPORT UNDER SECTION 13
OR 15(d) OF THE
 SECURITIES
EXCHANGE ACT OF 1934
 
 For
the transition period ____________ to__________
 
 Commission
File Number 0-52870
 
 CAVICO CORP.(Name
      of Issuer in its charter)
 
 Delaware
                
                20-4863704(
      State of other
      jurisdiction of incorporation or organization)
                
                (I.R.S.
      Employer Identification No.)17011
      Beach Blvd., Suite 1230,
                  Huntington
      Beach, California
                
                92647(Address
      of principal executive offices)
                
                (Zip
      Code)
 
 Issuer's telephone
number:   714-843-5456
 Copies
to:
 Gregory
Sichenzia, Esq.
 Peter
DiChiara, Esq.
 Sichenzia
Ross Friedman Ference LLP
 61
Broadway
 New York,
New York 10006
 Tel:
(212) 930-9700
 Fax:
(212) 930-9725
  Securities
Registered Pursuant to Section 12(b) of the Act: None
  Securities
Registered Pursuant to Section 12(g) of the Exchange Act:
 
 Common Stock, par value
$.001
 Title
of Class
 
 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 registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.    Yes x    No  ̈
  Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  ̈
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act.
  Large
      accelerated filer  ̈
              Accelerated
      filer  ̈
              Non-accelerated
      filer  ̈
              Smaller
      reporting company x
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  Yes  ̈    No x
 
 As of
June 30, 2008, the aggregate market value of the registrant’s common stock held
by non-affiliates of the registrant was $23,338,873.
 
 The
number of shares outstanding of the registrant’s Common Stock, $0.001 par value,
was 3,047,795 as
of September 28, 2009.
  
  TABLE
OF CONTENTS
  PagesPART
      IItem
      1. Description of Business
                
                
                1Item
      1A. Risk Factors
                
                
                11Item
      1B. Unresolved Staff Comments
                
                
                20Item
      2. Description of Property
                
                
                21Item
      3. Legal Proceedings
                
                
                23Item
      4. Submission Of Matters To A Vote Of Security Holders
                
                
                23PART
      IIItem
      5. Market Price of and Dividends on the Registrant's Common Equity and
      Related Stockholder Matters
                
                
                24Item
      6.  Selected Financial Data
                
                
                25Item
      7. Management's Discussion and Analysis of Financial Condition and Results
      Of Operations
                
                
                33Item
      7A. Quantitative and Qualitative Disclosures about Market
      Risk
                
                
                34Item
      8. Financial Statements and Supplementary Data
                
                
                F-1 -
      F-37Item
      9. Changes in and Disagreement with Accountants on Accounting and
      Financial Disclosures.
                
                
                35Item
      9A. Controls and Procedures
                
                
                35Item
      9B.  Other Information
                
                
                35PART
      IIIItem
      10. Directors, Executive Officers, and Corporate
      Governance
                
                
                37Item
      11. Executive Compensation
                
                
                40Item
      12. Security Ownership of Certain Beneficial Owners and
      Management
                
                
                40Item
      13. Certain Relationships and Related Transactions.
                
                
                42Item
      14. Principal Accountant Fees and Services
                
                
                42PART
      IVItem
      15. Exhibits and Financial Statement Schedules
                
                
                43Signatures
                
                
                44
  
  PART
I
  CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
  This Form
10-K contains forward-looking statements and information relating to Cavico
Corp. (“Cavico” or “the Company”).  Cavico Corp. intends to identify
forward-looking statements in this prospectus by using words such as "believes,"
"intends," "expects," "may," "will," "should," "plan," "projected,"
"contemplates," "anticipates," "estimates," "predicts," "potential," "continue,"
or similar terminology. These statements are based on the Company’s beliefs as
well as assumptions the Company made using information currently available to
us. The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events, or otherwise. Because these statements reflect the Company’s current
views concerning future events, these statements involve risks, uncertainties,
and assumptions. Actual future results may differ significantly from the results
discussed in the forward-looking statements.
 
 ITEM
      1.
              BUSINESS
 
 History
  We
were incorporated in Delaware on September 13, 2004 under the name Laminaire
Corp. On November 9, 2004, the name of the Company was changed to Agent 155
Media Group, Inc. On May 2, 2006, our name was changed to Cavico Corp.  Our
website may be found at www.cavicocorp.com
..  Our executive offices are located at 17011 Beach Blvd., Suite 1230,
Huntington Beach, California, 92647.  Our telephone number is (714)
843-5456.
  During
2006 and 2007, we acquired Cavico Vietnam Company Limited (formerly, Cavico
Vietnam Joint Stock Company Limited), a corporation organized under the laws of
Vietnam (“Cavico Vietnam”) as our wholly owned subsidiary. As a result of legal
restrictions on the foreign ownership of Vietnamese entities imposed by the
Vietnamese government, the acquisition of Cavico Vietnam occurred in multiple
steps, as follows:
  ●
              On April 18, 2006, we entered
      into an asset purchase agreement with Cavico Vietnam. Under the terms of
      the agreement, Cavico purchased all of the assets of Cavico Vietnam in
      consideration for the issuance to Cavico Vietnam of 1,975,000 shares of
      our common stock. Cavico Vietnam subsequently transferred 1,501,555 of
      these shares to the former shareholders of Cavico Vietnam in return for
      their shares of Cavico Vietnam stock. An additional 473,445 shares
      were deposited with Cavico Vietnam for the use of that entity’s
      management, of which 123,445 shares were distributed to Cavico Vietnam’s
      management in 2006 (of which 2,238 were returned by employees) and 125,000
      shares were sold to employees in 2008 for $300,000 at a price of $2.40 per
      share. The remaining 227,147 shares owned by our wholly owned subsidiary,
      Cavico Vietnam, are for sale or issuance to employees or to third-parties
      by that entity’s management. Pursuant to Delaware General Corporation Law,
      shares owned by Cavico Vietnam are not entitled to vote on any matters at
      a meeting of stockholders. The shares owned by Cavico Vietnam, therefore,
      are not considered to be outstanding shares, similar to shares of treasury
      stock.
 
 ●
              Following our purchase of
      Cavico Vietnam’s assets, and pending the grant of the requisite approval
      by a Vietnamese government agency of the acquisition of Cavico Vietnam, as
      required under Vietnamese law, Cavico Vietnam continued to use its assets
      subject to our control. Government approval of the acquisition of Cavico
      Vietnam was granted in January 2007. Following the grant of this approval
      and our subsequent acquisition of Cavico Vietnam to become our
      wholly-owned subsidiary, all assets previously purchased from Cavico
      Vietnam by the Company in April 2006 were transferred back to Cavico
      Vietnam.
 
 We
operate nationwide in Vietnam through our subsidiaries, serving almost
exclusively public sector clients.  Our wholly-owned subsidiary, Cavico
Vietnam, conducts its operations through a number of subsidiaries. Some of these
entities are wholly owned while others are partially owned by Cavico Vietnam.
The officers and directors of Cavico Vietnam also hold positions on the boards
of these subsidiaries. During 2007 and 2008, we permitted Cavico
Bridge and Underground Construction and Cavico Mining As of
August 31, 2009, through either the purchase and sale of securities, Cavico
Vietnam's consolidated ownership percentage from December 31, 2008 to August 31,
2009 in: Cavico Hydropower Construction JSC decreased from 73.48% to 73.42%;
Cavico Tower decreased from 37.73% to 37.27%; Cavico Industry & Tech Service
decreased from 66.71% to 64.06%; Cavico Stone & Mineral decreased from
35.50% to 35.41%; Cavico PHI Cement decreased from 92.90% to 87.72%; Luong Son
International Tourist increased from 93.16% to 93.74%; and Cavico Land increased
from 13.35% to 15.23%.  These Vietnamese companies do not have
authorized shares. Any sale or issuance of shares must be approved by the
shareholders of the Vietnamese subsidiaries. We do not plan to sell any
additional shares in any of our subsidiaries.
 
 Our
website may be found at www.cavicocorp.com.
  1
  Business
Strategy
 
 We are
a major infrastructure construction, infrastructure investment and natural
resources company headquartered in Hanoi, Vietnam.  We provide construction
and engineering services for large civil construction infrastructure projects in
Vietnam, including the construction of tunnels, roads, highways, bridges, mines
and dams.  In addition, we are currently making investments in hydropower
electric plants, cement production plants, mining operations and urban
developments in Vietnam and Laos.  During the year ended December 31, 2008,
we generated approximately 83% of our revenues from tunnel construction for
hydroelectric plants and dam construction.
  Our
fundamental objective is to increase long-term shareholder value by focusing on
consistent profitability from controlled revenue growth. In our view,
shareholder value is measured by the appreciation of the value of our common
stock over a period of years and, eventually, a return through dividends. We
consider the following to be key factors in our ability to achieve this
objective:
 
 Position Our Business for Future
Infrastructure Spending - As a result of strong economic expansion, there
is a growing awareness of the need to build, reconstruct and repair Vietnam’s
infrastructure, especially its network of roads to enable transportation as well
as in the area of power supply. Significant funds have been authorized for
investments in these areas. We will continue to build on our expertise in the
civil construction market for transportation and water infrastructure, to
develop new capabilities to service these markets and to maintain our human and
capital resources to effectively meet required demand.
  Employee Development - We
believe that our employees are a key to the successful implementation of our
business strategies. Significant resources are employed to attract, nurture and
retain extraordinary talent and fully develop each employee’s
capabilities.  We sponsor events with our employees to include employees in
our growth.  We are building a company culture through various activities,
including company newsletters and music to instill feelings of pride with our
accomplishments.
  Brand Building – We are
trying to affirm and maintain the brand of “Cavico – Always Growing” by
promptly completing projects, while ensuring their quality and safety, to gain
the trust of investors and customers.  Cavico Bridge and Underground
Construction and Cavico Mining and Construction received in 2008 a Vietnamese
Golden Star award from the Vietnam Association of Young Entrepreneurs to
recognize Cavico as one of the top brands in Vietnam.
  Infrastructure Construction
Focus - We concentrate our core competencies on this segment of the
construction industry, which includes the building of tunnels, roads, highways,
bridges and dams.
  Continue Adding Construction
Capabilities -. By adding capabilities that are complementary to our core
civil construction competencies, we are able to improve gross margin
opportunities, more effectively compete for contracts and compete for contracts
that might not otherwise be available to us. We continue to investigate
opportunities to integrate additional services and products into our
business.
  Alternative Energy - We are
actively engaged in a variety of alternative energy projects, including
producing electricity from hydropower plants and wind farms.
  Expansion into Countries other than
Vietnam – We intend to expand our operations into other Pacific Rim
countries such as Laos.  On January 22, 2009 our majority-owned subsidiary,
Cavico Bridge and Underground Construction (“Cavico Bridge”), was awarded a $6.2
million contract by Cooperativa Muratori e Cementisti – CMC di Ravenna (“CMC”),
an Italian leading construction company, for tunnel construction work at Theun
HinBoun Expansion Project in Laos.  Also, on April 22, 2009, our
wholly-owned subsidiary, Cavico Vietnam entered into an agreement with Laos
Ministry of Planning and Investment to explore and exploit copper, gold, and
other ores in Muang Hom district, Vientiane province, Laos.  In September
2009, we received approval from the Laos Ministry of Planning and a certificate
of investment for a copper mine in Laos.
  2
  Operations
  Tunnel Construction. We apply
what we believe to be the latest tunnel engineering methods such as New Austria
Tunnel Method (“NATM”), a tunneling method that involves sequential
excavation using blasting procedures and mechanical methods, and advanced Tunnel
Boring Machines (“TBM”) for the construction of highways, hydropower plants and
civil infrastructure. Cavico Vietnam has an extensive network of tunnels that
are used for government hydropower plants including:
  Project
                  
                  Subsidiary
      (Ownership Interest)
                  
                  Tunnel
      SizeDai
      Ninh
                  
                  Cavico-Vietnam
      (100% owned)
                  
                  300MW;
      6000m length of tunnel diameter of 5.2m to 8mBuon
      Kuop
                  
                  Cavico-Vietnam
      (100% owned)
                  
                  280MW;
      5180m length of tunnel diameter of 7.5m to 8.6mBan
      Ve
                  
                  Cavico
      Transport JSC (74% owned)
                  
                  320MW;
      1720m length of tunnel diameter of 5m to 7.8mBac
      Binh
                  
                  Cavico-Vietnam
      (100% owned)
                  
                  33MW;
      tunnel length of 2644m with diameter of 5.2mDong
      Nai 4
                  
                  Cavico-Vietnam
      (100% owned)
                  
                  340MW;
      tunnel length of 2926m with diameter of 5.5m to
9.2mDong
      Nai 3
                  
                  Cavico-Vietnam
      (100% owned)
                  
                  180MW;
      tunnel length of 1305m with diameter of 8m to 9.2mNam
      Chien
                  
                  Cavico-Vietnam
      (100% owned)
                  
                  210MW;
      tunnel length of 9126m with diameter of 3.8mBao
      Loc
                  
                  Cavico-Vietnam
      (100% owned)
                  
                  24.5MW;
      tunnel length of 960m with diameter of 6.4mA
      Luoi
                  
                  Cavico-Vietnam
      (100% owned)
                  
                  170MW;
      tunnel length of 13151m with diameter of 5.25m to
  6.5mDak
      Mi 4
                  
                  Cavico
      Power and Resource JSC (78% owned)
                  
                  190MW;
      tunnel length of 3355m with diameter of 7.6mZa
      Hung
                  
                  Cavico-Vietnam
      (100% owned)
                  
                  30MW;
      tunnel length of 1400m with diameter of 6m )Dasiat
                  
                  Cavico-Vietnam
      (100% owned)
                  
                  13.5MW;
      tunnel length of 2512m with diameter of 2.5mSong
      Tranh 2
                  
                  Cavico
      Bridge and Underground (66% owned)
                  
                  190MW;
      tunnel length of 1200m with diameter of
9.9m
  We
believe that Cavico Vietnam is the first company to use TBM tunnel technology in
Vietnam, in the Dai Ninh Hydropower plant construction.
  To
maximize the use of water for hydropower, tunnels are often needed to move water
to electric turbines. Usually, the electric turbines are located in a lower
elevation in relation to the elevation of the reservoir. Water is brought from
the reservoir to the turbines via a system of open channels or underground
tunnels depending on geographic conditions. A headrace tunnel is the main tunnel
to connect from the reservoir to the inclined penstock, a big steel pipe
installed and inclined outside on a hill or installed inclined inside in a
tunnel excavated in a mountain, to bring water from headrace tunnel to the
turbines. Surge shafts and surge tanks, both vertical tunnels connected to the
headrace tunnel with an opening to the surface, are used to moderate the flow
and pressure of the water that runs through the headrace tunnel to the inclined
penstock to turbines. We have expertise in construction of shafts and tunnels,
including  surge shafts and inclined penstocks to regulate the flow of
water for hydropower plants applying the different boring machines and
boring methods.
  Within
the civil construction field, tunnel construction is one of the most complicated
areas. It requires special technique to apply comprehensive methodology from the
design stage to the time of delivery of the finished product. It involves
experienced managers, engineers and other manpower together with synchronized
equipment to carry out complicated subterranean construction projects (under
mountain, river, even under the sea). There are few companies that have the
requisite expertise to execute a tunnel construction project from beginning to
end. As a result of “state of art” methods such as NATM and TBM that we employ,
we believe that we have the requisite expertise.
  Tunnels
are widely used in the construction of Hydropower Plant (“HP”) to collect and
divert water resources to run turbine rotary engines that produce
electricity.  They are also used in the construction of highways that cross
through the mountain or under water. In addition, tunnels are used for
underground mining, underground water supply, irrigation, agriculture and
environmental purposes.
  Most
of our tunnel projects have been built in connection with the construction of
hydropower plants. We anticipate seeing the strongest growth in that area until
the year 2020 since the Vietnamese government has committed to increase power
supply to meet the demand for electricity to sustain the economic expansion that
is currently underway in Vietnam. According to a directive by the Vietnamese
Prime Minister issued on July 18, 2007, the government plans to implement a
power development plan that at the most basic level anticipates annual growth of
17% until 2015 and the construction of 75 hydropower plants, some of which are
scheduled to have a greater than 100 MW capacity.
  Specifically,
based on discussions with government officials, we anticipate future growth in
tunnel construction for roads and highways, especially in the large metropolitan
areas of Hanoi, Hochiminh, Haiphong and Danang. Although we may have an
opportunity to bid on such projects, we do not have any current agreements for
any of this future work.
  3
  Our
largest hydropower assignment is the A Luoi Hydropower located on the A Sap
River, 70 km from Hue City. This is a Grade II hydropower project, the second
most productive grade, with the valley area of 331 square kilometers and
the total capacity of reservoir of 60.2 million cubic meters. The constructed
project which has the entire investment of Vietnamese Dong 3,234.7 billion
composes of 2 units with the total installed capacity of 170 MW and the annual
power output of 686.5 million kwh/year. As estimated, the project will be
finished and put into operation in 2010.  Cavico Vietnam, our wholly-owned
subsidiary, has been awarded two contracts for $58 million, and will be paid on
completion of the various construction stages that began in 2007. The tunnel is
around 11.6km long and 4m to 6m wide, and will also include a surge tank, will
take 40 months to complete.
  In
January 2009, our majority-owned subsidiary, Cavico Hydropower Construction
(“Cavico Hydropower”), was awarded a $9.8 million construction contract by Song
Giang 2 Hydropower Joint Stock Company (“Song Giang”). Cavico Hydropower will be
responsible for the construction of a 3,900 meter long headrace tunnel to bring
water to the hydropower plant, two sub tunnels of total 650 meters in length,
and a 42 meter tall surge tank. The sub tunnels allow us to excavate the
headrace tunnel more efficiently. Cavico Hydropower expects to complete the
construction within a period of 20 months. The first phase of the project which
will involve site preparation is expected to commence in the first quarter of
2009.  Song Giang 2 hydropower plant will be built on the Song Giang River.
This plant will be located southwest of Khanh Hoa province, which is 30 miles
away from Nha Trang city. Upon completion, the 37 megawatt hydropower plant is
expected to generate 141 million kilowatt-hour of electricity annually. The
plant will be connected to the national grid to help to ease the shortage of
electricity supply in the country. The Song Giang 2 hydropower plant has a total
estimated value of approximately $50 million and is considered to be one of the
largest hydropower projects in the Khanh Hoa province.
  Also
in January, our majority-owned subsidiary, Cavico Bridge, was awarded a $6.2
million contract by an Italian leading construction company, for tunnel
construction work at the Theun HinBoun Expansion Project in Laos as described
more fully below.
  Hydroelectric Plants and Dam
Construction - Generally, hydropower is built based on the principle of
bringing high-pressure water stream to turn turbines for generating electricity.
Tropical country likes Vietnam having a lot of rain during a large part of the
year. Building dams and reservoirs prevents flooding and allows operators to use
the water for electricity turbines and to provide water for agricultural use.
Cavico Vietnam’s experience in dam construction for hydropower plants is
diverse, ranging from dams with earth and stones, to concrete dams with
curvilinear surfaces. Curvilinear surfaces are a design feature of concrete dam
designed with many curved lines to stabilize the dam.
  Cavico
Vietnam has current dam construction projects for hydropower plants in Buon
TuaSha ( 86MW; dam length of 1037m, dam high of 492m; water reservoir volume of
430 million cubic meters ), Ba Ha ( 220MW; dam length of 808m, dam high of
110.7m; water reservoir volume of 350 million cubic meters ), Cua Dat ( 97MW;
dam length 1023m, dam high 119m, water reservoir volume of 1.45 billion cubic
meters ), and Ta Trach (dam length 1187m, dam high 60m, water reservoir volume
700 million cubic meters ).
  Mining Construction - Cavico
Vietnam utilizes modern equipment from companies such as Caterpillar, Volvo,
Drilltech, Atlas, Copco and Tamrock for operations at the mines. Cavico Vietnam
constructs coal mines in Nui Beo (Quang Ninh) and VietMindocoal (Quang Ninh).
Cavico Vietnam intends to construct mines for the exploration of coal and iron
ore in Australia and other countries. Under Vietnamese resources and mineral
laws, operating mineral mines requires a license by the local Province or
Ministry of Resources and Environmental or Prime Minister depending on reserve
capacity of the mine, kind of mineral and size of the mine project. However, we
only construct coal mines; we do not own them. Therefore, no such licenses are
required to be obtained in connection with its operations.
  Highway Construction - Cavico
Vietnam has designed and built a large variety of highways from small to large,
and from simple to complex, both in urban centers and in rural settings. We help
clients find innovative ways to finance, deliver and manage highways and have
been involved in flagship design/build (“DB”) and build-operate-transfer (“BOT”)
projects. Our highway projects include:
  ●Improvement of national route 1A sponsored and
      financed in part by the Asian Development Bank and the World Bank. We are
      undertaking a project that includes, among other things, repavement,
      widening the surface from six to 12 meters, adding a layer of asphalt,
      digging drainage systems and constructing retaining
      walls;
  ●Ho Chi Minh route, we have been awarded contract
      packages (i.e. segments of a highway construction project) for the
      following locations: Tan ky (Nghe an), Khe co (Ha Tinh), A Luoi (Hue),
      Phuoc son (Quang nam), Dac zon - Dackpet
    (Kontum);
  ●Construction of a number of roads in Sonla Province;
      and
  4
  ●Construction of roads in connection with the
      construction and operation of hydropower
  plants.
  Urban Development - Cavico
Vietnam provides one-stop shopping for residential and commercial buildings,
from permitting to design, and from construction management to operations and
maintenance. Cavico Vietnam can provide comprehensive services through the life
of a project, working as a team member, acting as a program manager, or leading
an entire building project. Cavico Vietnam is currently developing a 27 floor
office building in Hanoi, developing a Chieng Ngan 400 hectare new urban area in
Son La and developing a Ngo Sai 10.4 hectare new urban area in Ha Noi. To date,
we have not generated any revenues from these development
projects.
  The
company is in the process of applying for an investment permit for Luong Son’s
new tourism zone of 353.53 hectares which is a part of master plan developed by
the Province of Hoa Binh to upgrade Luong Son town during the next 10 years.
This project will include a feasibility study to construct a tourist resort,
including villas that may be offered for sale.
  Our
minority-owned subsidiary, Cavico Tower, has commenced construction of the APEX
Tower.  The APEX tower, which was designed by RDC Design, upon completion,
will be a 27-story tower covering 14,960 square feet of land on Pham Hung
Street, Tu Liem district in Hanoi. The state-of-the-art tower will consist of
three floors for parking, eight elevators, and three stairways.  We plan to
occupy seven floors of the tower for its headquarters and subsidiary offices and
lease the remaining 20 floors of the tower. The APEX Tower is located near the
National Convention Center, which hosted the APEC 14 (Asia Pacific Economic
Cooperation).
  Expansion into Laos – Cavico
Bridge will be responsible for constructing a 1000 meter long tunnel and a 45
meters deep shaft. We expect to complete the construction in 24 months and the
first phase of the project will involve road preparation to transport Tunnel
Boring Machine (“TBM”), which was completed by in August 2009.  Theun
HinBoun Power Company (“THPC”) is the owner and operator of the existing
220-Megawatt Theun HinBoun hydropower, which is currently in operation in
Bolikhamsai province. In September 2008, THPC contracted CMC as the main
contractor for Theun HinBoun Expansion Project after receiving approval from the
Laos government to construct an additional hydropower plant in the same area of
the existing plant. Electricity generated from this plant will be sold to the
neighboring country, Thailand.
  Wind Farms – In October 2008,
Cavico Transport, our majority-owned subsidiary, received approval from the
officials of Lam Dong province to study and evaluate different areas in the
province for possible wind farms. The province will use the results of these
studies as part of its windpower planning. For its contribution to the studies,
we are being given a priority to invest and participate in windpower projects in
the province according to its financial capability. We have researched and
identified a few potential sites for wind farm development along the country.
Our study has concluded that the coastal areas of southern and south-central
Vietnam, where the proposed site is located, show exceptional promise for wind
energy.  In this first phase, we are studying the construction of a 30
megawatt (“MW”) wind farm, which will connect to the national grid upon
completion. The feasibility study at the site is expected to be completed over a
period of one year and will involve collection of wind data and detailed
analysis to determine the scope and size of the wind turbines. Prior to the
completion of the study, we plan to begin construction of connecting roads and
other site preparations.
  Subsidiaries
  Our
wholly-owned subsidiary, Cavico Vietnam, conducts its operations through a
number of subsidiaries. Some of these entities are wholly owned while others are
partially owned by Cavico Vietnam. The directors of Cavico Vietnam also hold
positions on the boards of these subsidiaries.
  During
2007 and 2008, we permitted Cavico Bridge and Underground Construction and
Cavico Mining to sell shares to third parties for the purpose of raising funds
for expanded operations, thereby reducing our percentage held in those entities.
As of August 31, 2009, through either the purchase and sale of securities,
Cavico Vietnam's consolidated ownership percentage from December 31, 2008 to
August 31, 2009 in: Cavico Hydropower Construction JSC decreased from 73.48% to
73.42%; Cavico Tower decreased from 37.73% to 37.27%; Cavico Industry & Tech
Service decreased from 66.71% to 64.06%; Cavico Stone & Mineral decreased
from 35.50% to 35.41%; Cavico PHI Cement decreased from 92.90% to 87.72%; Luong
Son International Tourist increased from 93.16% to 93.74%; and Cavico Land
increased from 13.35% to 15.23%.  These Vietnamese companies do not have
authorized shares. Any sale or issuance of shares must
be approved by the shareholders of the
Vietnamese subsidiaries. We do not plan to sell any additional shares in
any of our subsidiaries. In addition, to the extent that any of the subsidiaries
are publicly traded in Vietnam, Vietnamese securities regulations limit foreign
ownership of these subsidiaries to 49%.  Currently, only shares of Cavico
Mining and Construction JSC, our minority-owned subsidiary, are publicly traded
in Vietnam on the HCM Exchange under the symbol MCV.
  5
  The
following table sets forth for our principal operating subsidiaries that
generate more than five percent of our revenues on a combined basis, a summary
of their main activities, Cavico Vietnam’s percentage of ownership and their
revenues as a percentage of the combined company’s construction revenues for the
year ended December 31, 2008.
  Name
                                                                                          
                                                                                          Principal Activity
                                                                                          
                                                                                          Percentage
                                                                                            Owned as
      of

                                                                                              August
      31, 2009
                                                                                              (6)
                                                                                          
                                                                                          
                                                                                          Percentage of
                                                                                            Construction
                                                                                            Revenues of
                                                                                            Combined
                                                                                            CompanyCavico
      Bridge andUnderground
      Construction JSC
                                                                                          
                                                                                          Civil
      construction, specializing in tunnel and bridge construction, frequently
      in conjunction with hydropower construction projects
                                                                                          
                                                                                          
                                                                                          66.42
                                                                                          %
                                                                                          
                                                                                          
                                                                                          28.87
                                                                                          %Cavico
      Mining and Construction JSC
                                                                                          
                                                                                          Mining
      construction and civil construction, especially in connection with mining
      and dam construction, equity investments in mines, power supply plants and
      land development projects.
                                                                                          
                                                                                          
                                                                                          25.55
                                                                                          %(1)
                                                                                          
                                                                                          
                                                                                          13.01
                                                                                          %Energy
      Construction JSC
                                                                                          
                                                                                          Civil
      construction, specializing in hydropower construction
      projects
                                                                                          
                                                                                          
                                                                                          37.57
                                                                                          %(2)
                                                                                          
                                                                                          
                                                                                          13.15
                                                                                          %Cavico
      Hydropower Construction JSC
                                                                                          
                                                                                          Civil
      construction, specializing in hydropower construction
      projects
                                                                                          
                                                                                          
                                                                                          73.42
                                                                                          %(3)
                                                                                          
                                                                                          
                                                                                          11.50
                                                                                          %Cavico
      Infrastructure Construction JSC
                                                                                          
                                                                                          Civil
      construction, specializing in infrastructure development and construction
      projects
                                                                                          
                                                                                          
                                                                                          68.83
                                                                                          %
                                                                                          
                                                                                          
                                                                                          8.58
                                                                                          %Cavico
      Transport JSC
                                                                                          
                                                                                          Civil
      construction, with an emphasis on road construction.
                                                                                          
                                                                                          
                                                                                          73.84
                                                                                          %
                                                                                          
                                                                                          
                                                                                          6.99
                                                                                          %Cavico
      Construction Trading JSC
                                                                                          
                                                                                          Trading
      of machinery, equipment and materials for civil construction
      industry.
                                                                                          
                                                                                          
                                                                                          63.39
                                                                                          %(4)
                                                                                          
                                                                                          
                                                                                          -Cavico
      Power and Resource JSC
                                                                                          
                                                                                          Civil
      construction, focus on power installation.
                                                                                          
                                                                                          
                                                                                          77.67
                                                                                          %
                                                                                          
                                                                                          
                                                                                          14.02
                                                                                          %Cavico
      Tower
                                                                                          
                                                                                          Office
      for leases
                                                                                          
                                                                                          
                                                                                          32.27
                                                                                          %(5)
                                                                                          
                                                                                          
                                                                                          -Cavico
      Industry & Tech Service
                                                                                          
                                                                                          Steel
      fabrication production
                                                                                          
                                                                                          
                                                                                          64.06
                                                                                          %(5)
                                                                                          
                                                                                          
                                                                                          -Cavico
      Manpower
                                                                                          
                                                                                          Labor
      supply for projects
                                                                                          
                                                                                          
                                                                                          30.00
                                                                                          %
                                                                                          
                                                                                          
                                                                                          3.88
                                                                                          %Cavico
      Stone & Mineral
                                                                                          
                                                                                          Production
      of white stone
                                                                                          
                                                                                          
                                                                                          35.41
                                                                                          %
                                                                                          
                                                                                          
                                                                                          -Cavico
      PHI Cement
                                                                                          
                                                                                          Cement
      factory operation
                                                                                          
                                                                                          
                                                                                          87.72
                                                                                          %(5)
                                                                                          
                                                                                          
                                                                                          -Luong
      Son International Tourist
                                                                                          
                                                                                          Operation
      of tourism zone
                                                                                          
                                                                                          
                                                                                          93.74
                                                                                          %(5)
                                                                                          
                                                                                          
                                                                                          -Cavico
      Land
                                                                                          
                                                                                          Land
      investment and development
                                                                                          
                                                                                          
                                                                                          15.23
                                                                                          %(5)
                                                                                          
                                                                                          
                                                                                          -
  (1)
                In
      accordance with current rules promulgated by the Vietnam State Security
      Committee relating to foreign ownership of publicly traded Vietnamese
      entities, we had to reduce our ownership in this entity to 48.32% in 2006.
      In 2008, our percentage of ownership was reduced to 25.55% from 39.13% due
      to additional sale of ownership.  In addition, approximately 5%
      is held by Cavico Vietnam officers who also hold more than 50% of the
      Board of Management members in this subsidiary. As a member of the World
      Trade Organization, the Vietnamese government has announced its commitment
      to open the country to free trade, which includes permitting unlimited
      foreign investments by the year 2009 or soon thereafter. We expect that by
      that time we will no longer be limited in our ownership of Cavico
      Mining.(2)
                This
      subsidiary was newly acquired by Cavico during the year 2007 with 37.57%
      ownership by Cavico.  In addition, approximately 5% is held by
      Cavico Vietnam officers who also hold more than 50% of the Board of
      Management members in this subsidiary.(3)
                The
      percentage of ownership decreased to 73.42% as of August 31,
      2009.  The percentage of ownership had been increased to 73.48%
      on December 31, 2008 from 72.65% on December 31,
  2007.(4)
                The
      percentage ownership has been increased to 63.39% on December
      31,  2008 from 59.05% on December
      31,  2007.(5)
                This
      subsidiary had no operations in 2008.(6)
                As
      of August 31, 2009, through either the purchase and sale of securities,
      Cavico Vietnam’s consolidated ownership percentage from December 31, 2008
      to August 31, 2009 in: Cavico Tower decreased from 37.73% to 37.27%;
      Cavico Industry & Tech Service decreased from 66.71% to 64.06%; Cavico
      Stone & Mineral decreased from 35.50% to 35.41%; Cavico PHI Cement
      decreased from 92.90% to 87.72%; Luong Son International Tourist increased
      from 93.16% to 93.74%; and Cavico Land increased from 13.35% to
      15.23%.
    6
  
 Investment
  Approximately
87% of our revenues are from civil construction projects where we are the
contractor or subcontractor.  We may from time to time continue to act as a
passive investor in projects for which we serve as the contractor.  After
construction, these projects will be managed by unrelated parties. 
Projects that we have invested in include hydropower projects, cement plants,
petroleum and land development projects in urban and tourist areas. We are
expanding our investment in wind power.  We have been also carrying on the
exploration study of a copper mine in Vietnam, copper mine and a tin mine in
Laos. These above mentioned investment are targeted investments as we have
substantial expertise and experiences in these fields.
  Customers
  Our
customers are found primarily in the public sector. Our largest customer is
Electricity of Vietnam, a state owned utility.   During the years ended
December 31, 2008 and December 31, 2007, contracts with this entity represented
approximately 64% and 65%, respectively, of our revenue.  During the years
ended December 31, 2008 and December 31, 2007, contracts with Vinacomin
represented approximately 8% and 11%, respectively, of our
revenue.
  Suppliers
  Our
raw materials consist of fuel, steel and concrete. The most significant raw
material cost is for steel which represents approximately 39% of total material
costs, cement which represents approximately 18% of our total material costs and
fuel which represents approximately 8% of total material costs. Most of these
raw materials are purchased directly from suppliers and manufacturers pursuant
to simple purchase orders. We do not have long term contracts with any of our
suppliers. All of the raw materials used in our construction projects are
commodities that may be purchased from any sources if any of our suppliers would
cease to sell to us for any reason. We source our raw material purchases to
suppliers located in the area of our projects. As a result, no supplier
accounted for more than 10% of total material costs for the year ended December
31, 2008.
  Backlog
  Our
backlog includes the total value of awarded contracts that have not been
completed, including our proportionate share of unconsolidated joint venture
contracts.  Our backlog was approximately $251.9 million at December 31,
2008.  Approximately $90 million of this backlog is expected to be
completed during 2009.  We include a construction project in our backlog at
such time as a contract is awarded and funding is in place. Substantially all of
the contracts in our backlog may be canceled or modified at the election of our
customers.  We have not, however, been materially adversely affected by
contract cancellations or modifications in the past.
  Marketing
  We have
an extensive network of contacts within various levels of the Vietnamese
national and local governments and are not currently engaged in any significant
marketing efforts. We usually manage to be granted contracts based on the
quality of our prior construction projects.
  Contract
Provisions and Subcontracting
  Our
contracts with our customers include “fixed unit price” or “fixed price” and
“adjustment contracts”.  Under fixed unit price contracts which represent
approximately 10% of our total contracts and may change from time to time, we
are committed to provide materials or services required by a project at fixed
unit prices (for example, dollars per cubic yard of concrete poured or cubic
yard of earth excavated). While the fixed unit price contract shifts the risk of
estimating the quantity of units required for a particular project to the
customer, any increase in our unit cost over the expected unit cost in the bid,
whether due to inflation, inefficiency, faulty estimates or other factors, is
borne by us unless otherwise provided in the contract. Fixed price contracts are
priced on a lump-sum basis under which we bear the risk of performing all the
work for the specified amount. Our contracts are generally obtained through
competitive bidding in response to advertisements by local government agencies
and private parties. Less frequently, contracts may be obtained through direct
negotiations with private owners. Our contract risk mitigation process includes
identifying risks and opportunities during the bidding process, review of bids
fitting certain criteria by various levels of management and, in some cases, by
the executive committee of our Board of Directors.
  7
  There
are a number of factors that can create variability in contract performance and
results as compared to a project’s original bid. The most significant of these
include the completeness and accuracy of the original bid, costs associated with
added scope changes, extended overhead due to owner and weather delays,
subcontractor performance issues, changes in productivity expectations, site
conditions that differ from those assumed in the original bid (to the extent
contract remedies are unavailable), the availability and skill level of the
workers in the geographic location of the project and a change in the
availability and proximity of equipment and materials. All of these factors can
impose inefficiencies on contract performance, which can drive up costs and
lower profits. Conversely, if any of these or other factors are more positive
than the assumptions in our bid, project profitability can improve. The ability
to realize improvements on project profitability is more limited than the risk
of lower profitability. Design/build projects carry other risks such as the risk
inherent in estimating quantities and prices before the project design is
completed and design error risk, including additional construction costs due to
any design errors, liability to the contract owner for the design of the project
and right-of-way and permit acquisition costs. Although we manage this
additional risk by adding contingencies to our bid amounts, obtaining errors and
omissions insurance and obtaining indemnifications from our design consultants
where possible, there is no guarantee that these risk management strategies will
always be successful.
  For
the last four years, as a leading company in Vietnamese Hydropower (“HP”)
construction, we have been granted preferred construction contracts by the
Government. State agencies have been using adjustment contracts for most large
HPs in the hope of expediting the completion of HP projects. Under adjustment
contracts, completion of work certifications are based on actual work completion
in accordance with site inspections performed by engineers. Payments are made
based on the price of local construction labor and materials and adjusted for
inflation. The Government periodically issues new rates and guidelines that
apply to HP projects to cover additional work as well as additional cost
incurred in connection with the projects to provide incentives to the
contractors to accelerate completion of HP projects. As a result, our risk of
cost overruns is reduced. However, the procedures to get rate guidelines
approved may take from three to six months. Therefore, we must often carry large
quantities of work in progress on our balance sheet.
  All
government contracts and most of our other contracts provide for termination of
the contract for the convenience of the contract owner, with provisions to pay
us for work performed through the date of termination. We have not been
materially adversely affected by these provisions in the past.  Many of our
contracts contain provisions that require us to pay liquidated damages if
specified completion schedule requirements are not met and these amounts can be
significant. Generally, however, when contract conditions change, we are able to
negotiate modifications to the contract which mitigates this
risk.
  We act as
prime contractor on most of the construction projects we undertake. We
accomplish the majority of our projects with our own resources and subcontract
specialized activities such as electrical and mechanical work. As prime
contractor, we are responsible for the performance of the entire contract,
including subcontract work. Thus, we may be subject to increased costs
associated with the failure of one or more subcontractors to perform as
anticipated. We manage this risk by reviewing the size of the subcontract, the
financial stability of the subcontractor and other factors and, based on this
review, determine whether to require that the subcontractor furnish a bond or
other type of security that guarantees their performance. As with all of our
subcontractors, some may not be able to obtain surety bonds or other types of
performance security.
  Equipment
  The
Company believes that it owns through its subsidiaries the largest private fleet
of heavy construction equipment in Vietnam. The total value of all vehicles and
pieces of machinery and equipment after depreciation at December 31, 2008, was
$22,260,419 and includes the following equipment:
  Type
                  
                  UnitsTunnel
      Drill Machines 1 boom to 3 booms; for Tunnel Diameter from 8m2 to
      80m2
                  
                  
                  18Tunnel
      Wheel Loaders capacity from 2m3 to 3m3
                  
                  
                  24Tunnel
      Dump Trucks capacity from 20 tons to 30 tons
                  
                  
                  24Bulldozers
      capacity from 130hp to 385 hp
                  
                  
                  21Excavators
      and wheel loaders capacity from 0.7m3 to 10m3
                  
                  
                  44Off-Highway
      Dump Trucks capacity over 50 tons ( 32 m3 )
                  
                  
                  30Light
      and medium Dump Trucks Capacity up to 15 tons
                  
                  
                  56Open
      cut Drilling Rigs Dia 89mm - 225mm
                  
                  
                  20Electronic
      Construction Survey Sets/Stations
                  
                  
                  33Concrete
      Batching Plants capacity from 60 to 120m3/hour
                  
                  
                  10Aggregate
      Crushing Plants/Stations capacity from 60 to 180 tons/hour
                  
                  
                  08Concrete
      Pumps capacity up to 100m3/hour
                  
                  
                  45Crawer
      Cranes capacity up to 100 tons
                  
                  
                  17Site
      service cars
                  
                  
                  77Other
      construction machinery and Equipments ( Generator sets, Air compressors,
      Transformers, shotcretes, pumps, Graders, Road Rollers, lift cars,
      Concrete mixer Trucks, sliding forms, etc )
                  
                  
                  467Total
                  
                  
                  894
  8
 
 We
believe that ownership of equipment is generally preferable to leasing because
ownership ensures the equipment is available as needed and normally results in
lower equipment costs. We regularly lease or rent equipment on a short-term
basis to supplement existing equipment and respond to construction activity
peaks. We are able to purchase used equipment and maintain repair facilities
which keep the equipment in good working order. Most of our equipment brands are
Caterpillar, Komatsu, Tamrock and Atlascopco. Many of our equipment was
purchased during the year 2000 and 2005 with lower price compared to present and
got 4 years to 9 years depreciation are still in good working
condition.
  Competition
  Factors
influencing our competitiveness include price, reputation for quality, the
availability of aggregate materials, machinery and equipment, financial
strength, knowledge of local markets and conditions, and project management and
estimating abilities. Although some of our competitors are larger than we are
and may possess greater resources, we believe that we compete favorably on the
basis of the foregoing factors. Although the construction business is highly
competitive, we believe we are well positioned to compete effectively in the
markets in which we operate.
  We
believe that we are the only company executing construction projects in Vietnam
utilizing Tunnel Boring Machines. This technology is the most advanced
engineering method of tunnel construction. It enables excavation and finishing
of underground concrete structures in the most time efficient manner. This
technique is also applied for long tunnels, weak ground conditions and complex
geological conditions. For example, the traffic tunnel that connects England and
France was constructed utilizing this method.
  Our
areas of strength include modern technology, advanced management, and
professionally executed quality projects.
  In
Vietnam, we are aware of four other companies with expertise in our area of
construction, namely Song Da Corporation, Vinaconex Corporation,
Hydro-construction No. 4 Corporation and Agriculture Electric-mechanical
construction Corporation. Cavico and Song Da are the two largest companies in
the area of hydropower construction. At the current time, we are the principal
contractors in Vietnam for more than 60% of the total quantity of tunnel
construction works and have backlog of up to approximately 70% of tunnel
construction projects and 30-40% dam construction works. We have stakes in
approximately 90% of hydropower construction projects, approximately 10% of long
high way/road development projects and about 5% of open cut mining construction.
Within Vietnam, we believe we have a strong reputation and the advantage of
expertise in the construction of modern and complex projects.
  We are
also diversifying our efforts in other construction and services fields such as
steel fabrication and mechanical products/services exported to Australia and
overseas.
  During
the past five years, we have acted as subcontractors for several large Japanese
construction companies like Kumagai Gumi, Kajima, and Maeda. This has resulted
in additional involvement in large projects overseas (e.g., a manpower
sub-contract to construct tunnels of highway in Algeria (Granted to us by
Kajima) or a tunnel construction contract for Theu Hinboun hydropower project in
Laos).
  Government
Regulation
  Our
operations are subject to compliance with the requirements of local Vietnamese
government agencies and authorities, including regulations concerning workplace
safety, labor relations and disadvantaged businesses. Additionally, all of our
operations are subject to local laws and regulations relating to the
environment, including those relating to discharges to air, water and land, the
handling and disposal of solid and hazardous waste, the handling of underground
storage tanks and the cleanup of properties affected by hazardous substances.
Certain environmental and other laws impose substantial penalties for
non-compliance. We continually evaluate whether we must take additional steps at
our locations to ensure compliance with environmental and other
laws.
  While
compliance with applicable regulatory requirements has not materially adversely
affected our operations in the past, there can be no assurance that these
requirements will not change and that compliance will not adversely affect our
operations in the future. In addition, our operations require operating permits
granted by governmental agencies.  We believe that, based on statements
from government officials, tighter regulations for the protection of the
environment and other factors will make it increasingly difficult to obtain new
permits and renewal of existing permits may be subject to more restrictive
conditions than currently exist.
  9
  Environmental
  Our
operations are subject to environmental regulation in Vietnam. Environmental
regulation, established by The Law on Environmental Protection, passed on
December 12, 2005, is still evolving in Vietnam and it is expected to evolve in
a manner which may require stricter standards and enforcement, increased fines
and penalties for non-compliance, more stringent environmental assessments of
proposed projects and a heightened degree of responsibility for companies and
their officers, directors and employees.
  As a
contractor in Vietnam, environmental regulations do not affect our work as we
only follow the specifications established by the project developer. Our
customers are charged with the environmental protection duties and this duty
stipulated in their investment license for each project.  To obtain an
investment license for any project, our customers and its consultants have to
submit an environmental impact analysis report to the relevant government
authorities and receive approval from relevant authorities.
  If there
are future changes in environmental regulation, they could impede our current
and future business activities and negatively impact the profitability of
operations.
  Employees
 
 As of
June 30, 2009, we have, with our subsidiaries, 3,666 full time employees, of
which approximately 700 are engineers. Most of our employees are located
throughout Vietnam but there are 450 employees in Algeria and a small
number stationed in Australia. All of our employees are represented by labor
unions. If and when the need arises, we intend to hire additional employees to
meet the demand of a certain project.
  It is
our goal to focus on building a dynamic and professional labor force by
utilizing the following methods:
  ●
              Regular salary adjustments
      commensurate with cost of living and inflation trends in the Vietnamese
      labor market;
  ●
              Payment of incentive and
      performance bonuses;
  ●
              Improvement of labor
      conditions for our
workers;
  ●
              Continuous professional
      training; and
  ●
              Build a company culture
      through various activities, including company newsletters, music and other
      promotions to instill feelings of pride with our
      accomplishments.
  The
majority of our work is done through employees governed by our collective labor
agreement with the Labor Union of Cavico Vietnam. The agreement was signed on
January 20, 2009. The original term of the agreement expires on January 20, 2012
but it may be extended for one year if both parties agree. Pursuant to the
collective labor agreement, each employee signs an employment contract with us.
We believe that our relationships with all our employees, both union and
non-union, are satisfactory. We have not experienced a strike or
lockout.
  Reverse
Stock Split
  Our
Board of Directors and shareholders have approved a proposal to grant
discretionary authority to our Board of Directors to amend our Certificate of
Incorporation to effect a reverse stock split of our issued and outstanding
common stock at any time before April 27, 2010 at any whole number ratio between
a 20-for-1 reverse stock split and 60-for-1 reverse stock split , with the exact
exchange ratio and timing of the reverse stock split (if at all) to be
determined at the discretion of the Board of Directors (the “Reverse Stock
Split”), without decreasing the number of our authorized capital stock. The
reverse stock split of 40-for-1 was completed on August 19,
2009.
  The
Reverse Stock Split was affected simultaneously for all our then-existing common
stock (the “Old Shares”) and the exchange ratio is the same for all of our
shares of issued and outstanding common stock. The Reverse Stock Split affected
all of our shareholders uniformly and did not affect any shareholder’s
percentage ownership interests in us, except to the extent that the Reverse
Stock Split resulted in any of our shareholders owning a fractional
share.  If this occured, the fractional shares were rounded up to the
next whole share, including fractional shares that were less than one
share.  Shares of common stock issued pursuant to the Reverse Stock
Split (the “New Shares”) remain fully paid and nonassessable.
  Reports
to Security Holders
  We are
subject to the filing and reporting requirements of the Exchange Act. These
requirements include the filing of annual reports that include audited financial
statements as well as quarterly reports and current reports that will be filed
upon the occurrence of certain significant events. We are also subject to the
proxy rules under the Exchange Act and its insiders are required to file reports
disclosing their beneficial ownership of our securities. It is estimated that
the annual cost of compliance with the Exchange Act reporting requirements will
be approximately $100,000.
  The
public may read and copy any materials we file with the SEC at the SEC's Public
Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. Additionally, the SEC maintains an Internet site that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC, which can be found at
http://www.sec.gov
..
  10
  ITEM
      1A.
              RISK
      FACTORS
  Risks Associated with Our
Business
  If
we are unable to accurately estimate the overall risks or costs when we bid on a
contract, we may achieve a lower than anticipated profit or incur a loss on the
contract.
  A
portion of our revenues and contract backlog are typically derived from fixed
unit price contracts. Fixed unit price contracts require us to perform the
contract for a fixed unit price irrespective of our actual costs. As a result,
we realize a profit on these contracts only if we successfully estimate our
costs and then successfully control actual costs and avoid cost overruns. If our
cost estimates for a contract are inaccurate, or if we do not execute the
contract within our cost estimates, then cost overruns may cause us to incur
losses or cause the contract not to be as profitable as we expected. This, in
turn, could negatively affect our cash flow, earnings and financial
position.  During the year ended December 31, 2008, 14%, respectively, of
our revenue was generated from fixed unit price contracts of which we have not
experienced any losses due to cost overruns.
  The costs
incurred and gross profit realized on those contracts can vary, sometimes
substantially, from the original projections due to a variety of factors,
including, but not limited to:
  ●
              on-site conditions that differ
      from those assumed in the original
  bid;
 ●
              delays caused by weather
      conditions;
 ●
              contract modifications
      creating unanticipated costs not covered by change
      orders;
 ●
              changes in availability,
      proximity and costs of materials, including steel, concrete, aggregate and
      other construction materials (such as stone, gravel and sand), as well as
      fuel and lubricants for our
  equipment;
 ●
              availability and skill level
      of the workers in the geographic location of a
      project;
 ●
              our suppliers’ or
      subcontractors’ failure to
perform;
 ●
              fraud or theft committed by
      our employees;
 ●
              mechanical problems with our
      machinery or equipment;
 ●
              citations issued by a
      governmental authority;
 ●
              difficulties in obtaining
      required governmental permits or
  approvals;
 ●
              changes in applicable laws and
      regulations; and
 ●
              claims or demands from third
      parties alleging damages arising from our work or from the project of
      which our work is part.
 ●
              claims
      relating to construction
deficiency
 
 We
attempt to shift construction risks to its customers. We, however, provide a
warranty period of two to three year after completion of the construction
contract. Our customers generally keep the retention of 5 to 10 percent of the
contract amount until the warranty period expires. Due to this retention period,
our receivables can be significantly delayed and may adversely impact our cash
flow. In accordance with SOP 81-1 we continually review contract performance and
any anticipated additional costs that might be associated with contract
performance and modify contract income accordingly.  Our practice in many
instances has been to supersede these terms with an agreement to obtain
insurance covering both the customer and ourselves. In cases where insurance is
not obtained, our experience has often been that public sector customers have
been willing to negotiate equitable adjustments in the contract compensation or
completion time provisions if unexpected circumstances arise. If we are unable
to obtain insurance, and if public sector customers seek to impose contractual
risk-shifting provisions more aggressively, we could face increased risks, which
may adversely affect our cash flow, earnings and financial
position.
  Economic
downturns or reductions in government funding of infrastructure projects, or the
cancellation of significant contracts, could reduce our revenues and profits and
have a material adverse effect on our results of operations.
  Our
business is highly dependent on the amount of infrastructure work funded by
various governmental entities, which, in turn, depends on the overall condition
of the economy, the need for new or replacement infrastructure, the priorities
placed on various projects funded by governmental entities and federal, state or
local government spending levels. Decreases in government funding of
infrastructure projects could decrease the number of civil construction
contracts available and limit our ability to obtain new contracts, which could
reduce our revenues and profits.
  Due to
the global downturn in the financial markets, Vietnam may not be able to
maintain its recent growth rates mainly due to the lack of demand of exports to
countries that are in recessions. Our earnings may become unstable if Vietnam’s
domestic growth slows significantly and our public sector clients are unable to
fund infrastructure projects. Contracts that we enter into with governmental
entities may usually be canceled at any time by them with payment only for the
work already completed. In addition, we could be prohibited from bidding on
certain governmental contracts if we fail to maintain qualifications required by
those entities. A sudden cancellation of a contract or our debarment from the
bidding process could cause our equipment and work crews to remain idled for a
significant period of time until other comparable work became available, which
could have a material adverse effect on our business and results of
operations.
  11
  The loans that
finance our construction are renewable each year and classified as short-term
loans creating a working capital deficit.  Our banks’
failure to renew such loans or our failure to repay our loans could impact our
operations.
  At
December 31, 2008, we had $50,141,069 in short-term construction loans.  We
obtain these short-term construction loans to finance our civil construction and
mining projects.  Each time we begin a construction project, we obtain a
loan from one of several banks to purchase equipment and supplies and to
mobilize our employees and materials to the worksite.  As we complete a
percentage of each construction project, our customer certifies our work in
process and our customer, or its financing source, pays us for our completed
work, less a retention percentage (which we will collect at the end of the
warranty period), and we repay the bank from which we borrowed funds for each
project.  Construction contracts include a two to three year warranty
period that is part of the construction contract.
  It is
the general practice of Vietnamese banks to give short term loans such as these
for each construction contract and make the loans renewable every year until the
construction contract is completed.  As a result, the loans are classified
as current liabilities.  Our retention receivables and a portion of our
work in process, however, are classified as long-term assets.  As a result,
our working capital deficit as of December 31, 2008 was $26,621,023.  As of
December 31, 2008, long-term retention receivables and long-term work in process
totaled $15,481,590.
  We
expect to renew these loans with the banks and repay the balances as we complete
our projects.  In the first six months of 2009, we made $40,632,840 of
payments on our notes payable.  We also needed to draw down $47,461,073
from our notes payable to finance our construction projects.
  Although
a substantial majority of our loans are not secured by our assets other than our
work in process and receivables, our banks’ decision not to
renew these loans or our failure to repay these loans could have important
consequences including the following:
  ●
              it may limit our ability to
      borrow money or issue equity to finance our working capital, construction
      projects or capital projects or other
  purposes;
 ●
              it may limit our flexibility
      in planning for, or reacting to, changes in our operations or
      business;
 ●
              a substantial portion of our
      cash flow from operations could be dedicated to the repayment of our
      indebtedness and would not be available for other
      purposes;
 ●
              there would be a material
      adverse effect on our business and financial condition if we were unable
      to service our indebtedness or obtain additional financing, as needed;
      and
 ●
              It may result in the banks
      repossessing up to $14,000,000 of our
  equipment.
 
 Our
operations are currently focused in Vietnam, and any adverse change to the
economy or business environment in Vietnam could significantly affect our
operations, which would lead to lower revenues and reduced
profitability.
  Our
operations are currently concentrated in Vietnam. Because of this concentration
in a specific geographic location, we are susceptible to fluctuations in our
business caused by adverse economic or other conditions in this region,
including natural or other disasters. A stagnant or depressed economy in Vietnam
generally, or in any of the other markets that we serve, could adversely affect
our business, results of operations and financial condition.
  Our
business is subject to significant political and economic uncertainties and may
be affected by political, economic and social developments in Vietnam. Over the
past several years, the government of Vietnam has pursued economic reform
policies. Changes in policies, laws and regulations or in their interpretations
or the imposition of confiscatory taxation, restrictions on currency conversion,
restrictions or prohibitions on dividend payments to stockholders, or
devaluations of currency could cause a decline in the price of our common stock,
should a market for our common stock ever develop.
  12
  Our
industry is highly competitive, with a variety of larger companies with greater
resources competing with us, and our failure to compete effectively could reduce
the number of new contracts awarded to us or adversely affect our margins on
contracts awarded.
  Most
contracts on which we bid are awarded through a competitive bid process, with
awards generally being made to the lowest bidder, but sometimes recognizing
other factors, such as shorter contract schedules or prior experience with the
customer. Within our markets, we compete with many national, regional and local
construction firms. Some of these competitors have achieved greater market
penetration than we have in the markets in which we compete, and some have
greater financial and other resources than we have. In addition, there are a
number of national companies in our industry that are larger than we are and
that, if they so desired, could establish a presence in our markets and compete
with us for contracts. As a result, we may need to accept lower contract margins
in order to compete against these competitors. If we are unable to compete
successfully in our markets, our relative market share and profits could be
reduced.
  Our
dependence on subcontractors and suppliers of materials, including
petroleum-based products, could increase our costs and impair our ability to
complete contracts on a timely basis or at all, which would adversely affect our
profits and cash flow.
  We
rely on third-party subcontractors to perform some of the work on many of our
contracts. We do not bid on contracts unless we have the necessary
subcontractors committed for the anticipated scope of the contract and at prices
that we have included in our bid. Therefore, to the extent that we cannot engage
subcontractors, our ability to bid for contracts may be impaired. In addition,
if a subcontractor is unable to deliver its services according to the negotiated
terms for any reason, including the deterioration of its financial condition, we
may suffer delays and be required to purchase the services from another source
at a higher price. This may reduce the profit to be realized, or result in a
loss, on a contract.
  We also
rely on third-party suppliers to provide all of the materials, including fuel,
aggregates (sand and gravel), concrete, steel and pipe, for our contracts. We do
not own any quarries, and there are no naturally occurring sources of aggregates
in Vietnam. We do not bid on contracts unless we have commitments from suppliers
for the materials required to complete the contract and at prices that we have
included in our bid. Thus, to the extent that we cannot obtain commitments from
our suppliers for materials, our ability to bid for contracts may be impaired.
In addition, if a supplier is unable to deliver materials according to the
negotiated terms of a supply agreement for any reason, including the
deterioration of its financial condition, we may suffer delays and be required
to purchase the materials from another source at a higher price. This may reduce
the profit to be realized, or result in a loss, on a contract.
  Diesel
fuel and other petroleum-based products are utilized to operate the equipment
used in our construction contracts. Decreased supplies of those products
relative to demand and other factors can cause an increase in their
cost.
  Future
increases in the costs of fuel and other petroleum-based products used in our
business, particularly if a bid has been submitted for a contract and the costs
of those products have been estimated at amounts less than the actual costs
thereof, could result in a lower profit, or a loss, on a contract.
  Our
contracts may require us to perform extra or change order work, which can result
in disputes and adversely affect our working capital, profits and cash
flows.
  Our
contracts generally require us to perform extra or change order work as directed
by the customer even if the customer has not agreed in advance on the scope or
price of the extra work to be performed. This process may result in disputes
over whether the work performed is beyond the scope of the work included in the
original project plans and specifications or, if the customer agrees that the
work performed qualifies as extra work, the price that the customer is willing
to pay for the extra work. These disputes may not be settled to our
satisfaction. Even when the customer agrees to pay for the extra work, we may be
required to fund the cost of that work for a lengthy period of time until the
change order is approved by the customer and we are paid by the
customer.
  To the
extent that actual recoveries with respect to change orders or amounts subject
to contract disputes or claims are less than the estimates used in our financial
statements, the amount of any shortfall will reduce our future revenues and
profits, and this could have a material adverse effect on our reported working
capital and results of operations. In addition, any delay caused by the extra
work may adversely impact the timely scheduling of other project work and our
ability to meet specified contract milestones.
  Our
failure to meet schedule or performance requirements of our contracts could
adversely affect us.
  In most
cases, our contracts require completion by a scheduled acceptance date. Failure
to meet any such schedule could result in additional costs being incurred,
penalties and liquidated damages being assessed against us, and these could
exceed projected profit margins on the contract. Performance problems on
existing and future contracts could cause actual results of operations to differ
materially from those anticipated by us and could cause us to suffer damage to
our reputation within the industry and among our customers.
  13
  Timing
of the award and performance of new contracts could have an adverse effect on
our operating results and cash flow.
  At any
point in time, a substantial portion of our revenues may be derived from a
limited number of large construction contracts. It is generally very difficult
to predict whether and when new contracts will be offered for tender, as these
contracts frequently involve a lengthy and complex design and bidding process,
which is affected by a number of factors, such as market conditions, financing
arrangements and governmental approvals. Because of these factors, our results
of operations and cash flows may fluctuate from quarter to quarter and year to
year, and the fluctuation may be substantial.
  The
uncertainty of the timing of contract awards may also present difficulties in
matching the size of work crews with contract needs. In some cases, we may
maintain and bear the cost of a ready work crew that is larger than currently
required, in anticipation of future employee needs for existing contracts or
expected future contracts. If a contract is delayed or an expected contract
award is not received, we would incur costs that could have a material adverse
effect on our anticipated profit.
  In
addition, the timing of the revenues, earnings and cash flows from our contracts
can be delayed by a number of factors, including adverse weather conditions such
as prolonged or intense periods of rain, storms or flooding, delays in receiving
material and equipment from suppliers and changes in the scope of work to be
performed. Those delays, if they occur, could have an adverse effect on our
operating results for a particular period.
  Our
dependence on a limited number of customers could adversely affect our business
and results of operations.
  Due to
the size and nature of our construction contracts, one or a few customers have
in the past and may in the future represent a substantial portion of our
consolidated revenues and gross profits in any one year or over a period of
several consecutive years. Similarly, our contract backlog frequently reflects
multiple contracts for individual customers; therefore, one customer may
comprise a significant percentage of contract backlog at a certain point in
time. For the year ended December 31, 2008, Electricity of Vietnam accounted for
approximately 64% of our revenues and Vinacomin accounted for 8% of our
revenues. The loss of business from these entities could have a material adverse
effect on our business or results of operations. Because we do not maintain any
reserves for payment defaults, a default or delay in payment on a significant
scale could materially adversely affect our business, results of operations and
financial condition.
  We
may incur higher costs to acquire and maintain equipment necessary for our
operations, and the market value of our equipment may decline.
  We have
traditionally owned most of the construction equipment used to build our
projects, and we do not bid on contracts for which we do not have, or cannot
quickly procure (whether through acquisition or lease), the necessary equipment.
To the extent that we are unable to buy construction equipment necessary for our
needs, either due to a lack of available funding or equipment shortages in the
marketplace, we may be forced to rent equipment on a short-term basis, which
could increase the costs of completing contracts. In addition, our equipment
requires continuous maintenance for which we maintain our own repair facilities.
If we are unable to continue to maintain the equipment in our fleet, we may be
forced to obtain third-party repair services, which could increase our
costs.
  The
market value of our equipment may unexpectedly decline at a faster rate than
anticipated. Such a decline would reduce the borrowing base under our
construction business credit facility, thereby reducing the amount of credit
available to us and impeding our ability to expand our business consistent with
historical levels.
  Unanticipated
adverse weather conditions may cause delays, which could slow completion of our
contracts and negatively affect our revenues and cash flow.
  Because
most of our construction projects are built outdoors, work on our contracts is
subject to unpredictable weather conditions. Lengthy periods of wet weather will
generally interrupt construction, and this can lead to under-utilization of
crews and equipment, resulting in less efficient rates of overhead recovery.
While revenues can be recovered following a period of bad weather, it is
generally impossible to recover the efficiencies, and hence, we may suffer
reductions in the expected profit on contracts.
  Our
operations are subject to hazards that may cause personal injury or property
damage, thereby subjecting us to liabilities and possible losses, which may not
be covered by insurance.
  Our
workers are subject to the usual hazards associated with providing services on
construction sites. Operating hazards can cause personal injury and loss of
life, damage to, or destruction of, property, plant and equipment and
environmental damage. We self-insure our workers’ compensation claims, subject
to stop-loss insurance coverage. We also maintain insurance coverage in amounts
and against the risks that we believe are consistent with industry practice, but
this insurance may not be adequate to cover all losses or liabilities that we
may incur in our operations.
  14
  Insurance
liabilities are difficult to assess and quantify due to unknown factors,
including the severity of an injury, the determination of our liability in
proportion to other parties, the number of incidents not reported and the
effectiveness of our safety program. If we were to experience insurance claims
or costs above our estimates, we might also be required to use working capital
to satisfy these claims rather than to maintain or expand our operations. To the
extent that we experience a material increase in the frequency or severity of
accidents or workers’ compensation claims, or unfavorable developments on
existing claims, our operating results and financial condition could be
materially and adversely affected.
  Environmental
and other regulatory matters could adversely affect our ability to conduct our
business and could require expenditures that could have a material adverse
effect on our results of operations and financial condition.
  Our
operations are subject to various environmental laws and regulations relating to
the management, disposal and remediation of hazardous substances and the
emission and discharge of pollutants into the air and water. As a contractor,
however, our customers are primarily responsible for environmental
protection.  Nevertheless, we could be held liable for the contamination
created not only by our own activities but also by the historical activities of
others on our project sites or on properties that we acquire.
  Our
operations are also subject to laws and regulations relating to workplace safety
and worker health, which, among other things, regulate employee exposure to
hazardous substances. Violations of those laws and regulations could subject us
to substantial fines and penalties, cleanup costs, third-party property damage
or personal injury claims.
  In
addition, these laws and regulations have become, and are becoming, increasingly
stringent. Moreover, we cannot predict the nature, scope or effect of
legislation or regulatory requirements that could be imposed, or how existing or
future laws or regulations will be administered or interpreted, with respect to
products or activities to which they have not been previously applied.
Compliance with more stringent laws or regulations, as well as more vigorous
enforcement policies of the regulatory agencies, could require us to make
substantial expenditures for, among other things, pollution control systems and
other equipment that we do not currently possess, or the acquisition or
modification of permits applicable to our activities.
  If
we fail to obtain additional financing we will be unable to execute our business
plan.
  We may
need additional funds to finance our capital projects. Should such needs arise,
we intend to seek additional funds through public or private equity or debt
financing, strategic transactions and/or from other sources.  There are no
assurances that future funding will be available on favorable terms or at all.
If additional funding is not obtained, we will need to reduce, defer or cancel
development programs, planned initiatives or overhead expenditures, to the
extent necessary. The failure to fund our capital requirements would have a
material adverse effect on our business, financial condition and results of
operations.
  We
may face potential dilution of our ownership interest in our
subsidiaries.
  We
operate nationwide in Vietnam through our subsidiaries, serving almost
exclusively public sector clients.  Our wholly-owned subsidiary, Cavico
Vietnam, conducts its operations through a number of subsidiaries. Some of these
entities are wholly owned while others are partially owned by Cavico Vietnam.
The officers and directors of Cavico Vietnam also hold positions on the boards
of these subsidiaries. The profit generated from the entities in which we have
less than fifty percent ownership shares was 25% of our total profit for the
year ended December 31, 2008.
  Some
of our subsidiaries were able to raise working capital by selling their shares
to independent third parties.  During 2007 and 2008, we permitted Cavico
Bridge and Underground Construction and Cavico Mining to sell shares to third
parties for the purpose of raising funds for expanded operations, thereby
reducing our percentage held in those entities.  As of August 31, 2009,
through either the purchase and sale of securities, Cavico Vietnam's
consolidated ownership percentage from December 31, 2008 to August 31, 2009 in:
Cavico Hydropower Construction JSC decreased from 73.48% to 73.42%; Cavico Tower
decreased from 37.73% to 37.27%; Cavico Industry & Tech Service decreased
from 66.71% to 64.06%; Cavico Stone & Mineral decreased from 35.50% to
35.41%; Cavico PHI Cement decreased from 92.90% to 87.72%; Luong Son
International Tourist increased from 93.16% to 93.74%; and Cavico Land increased
from 13.35% to 15.23%.  We do not plan to sell additional shares in any of
our subsidiaries.  If we do sell additional shares in our subsidiaries or
if the subsidiaries sell additional shares to third parties, our ownership
interest in our subsidiaries could be diluted and we would potentially recognize
less income from our subsidiaries.
  We
will be unsuccessful if we fail to attract and retain qualified
personnel.
  We
depend on a core management team. The loss of any of these individuals could
prevent us from achieving our business objective of commercializing our product
candidates. Our future success will depend in large part on our continued
ability to attract and retain other highly qualified scientific, technical and
management personnel, as well as personnel with expertise in clinical testing
and government regulation. We face competition for personnel from other
companies, universities, public and private research institutions, government
entities and other organizations. If our recruitment and retention efforts are
unsuccessful, our business operations could suffer.
  15
  Risks Associated with Our
Capital Structure
  Insiders
have substantial control over the company, and issuance of shares Series A
Preferred Stock and shares of Common Stock pursuant to our incentive plan will
dilute your ownership and voting rights and allow insiders to control the
direction of the Company.
  Our
executive officers and directors, beneficially owned as of September 17, 2009,
in the aggregate, approximately 585,158 shares of our outstanding common stock,
after giving effect to a 40-for-1 reverse stock split, which constitutes
approximately 19.2% of our outstanding shares.  Our officers and directors
ownership percentage will increase as a result of any shares issued under our
incentive plan under which we can issue 1,250,000 shares to our officers,
directors, employees and consultants.
  Further,
our directors voting control will increase after the issuance of any of the
shares of Class A Preferred Stock to our directors.  Immediately prior to
the effectiveness of the registration statement of which this prospectus is a
part, we plan to designate and grant for no monetary consideration 1,200,000
shares of Class A Preferred Stock, $0.001 par value, to our directors and
management.  These shares of Class A Preferred Stock shall vote along with
holders of our common stock and shall be entitled to cast three votes for each
share held of the Class A Preferred Stock on all matters presented to the
stockholders. We expect that the holders of the Class A Preferred Stock will be
able to exercise approximately 34.4% of the voting power associated with our
voting stock. Each share of Class A Preferred Stock is convertible into one
share of our common stock at the option of the holders thereof at any time that
the closing market price of our common stock is greater than $9.35 for more than
five consecutive days.  The right to convert shares of Class A Preferred
Stock into common stock shall expire on the second anniversary of the issuance
of the Class A Preferred Stock.  On such second anniversary, we will redeem
each share of Class A Preferred Stock at its par value.
  If we
issue all 1,250,000 shares and 1,200,000 shares of Class A Preferred Stock to
our management, these stockholders will control nearly 34.4% of the votes on all
matters requiring stockholder approval, including the election of directors and
approval of significant corporate transactions. This could delay or prevent an
outside party from acquiring or merging with us even if our other stockholders
wanted it to occur.
  Our
common stock does not have a vigorous trading market and you may not be able to
sell your securities when desired.
  We
have a limited active public market for our common shares. We cannot assure you
that a more active public market will ever develop, allowing you to sell large
quantities of shares or all of your holdings. Consequently, you may not be able
to liquidate your investment in the event of an emergency or for any other
reason.
  Our
common stock could be subject to extreme volatility.
  The
trading price of our shares has from time to time fluctuated widely and may be
subject to similar fluctuations in the future. The trading price of our common
stock may be affected by a number of factors, including events described in the
risk factors set forth in this prospectus, as well as our operating results,
financial condition, announcements of construction projects, general conditions
in Vietnam, Southeast Asia, overall country-wide development, and other events
or factors. In recent years, broad stock market indices, in general, and smaller
capitalization companies, in particular, have experienced substantial price
fluctuations. In a volatile market, we may experience wide fluctuations in the
market price of our common stock. These fluctuations may have a negative effect
on the market price of our common stock.  In addition, the securities
market has from time to time experienced significant price and volume
fluctuations that are not related to the operating performance of particular
companies. These market fluctuations may also materially and adversely affect
the market price of our stock.
  We
have never paid dividends and have no plans to in the future.
  Holders
of shares of our common stock are entitled to receive such dividends as may be
declared by our board of directors. To date, we have paid no cash dividends on
our shares of common stock and we do not expect to pay cash dividends on our
common stock in the foreseeable future. We intend to retain future earnings, if
any, to provide funds for operations of our business. Therefore, any return
investors in our common stock may have will be in the form of appreciation, if
any, in the market value of their shares of common stock.
  16
  Our
common stock may be subject to “penny stock” rules of the Securities and
Exchange Commission, which may make it more difficult for stockholders to sell
our common stock.
  Under
the rules of the Securities and Exchange Commission, if the price of our
securities is below $5.00 per share and our securities are not listed on
the Nasdaq Capital Market or another national securities exchange, our
securities will come within the definition of a “penny stock.” In that case, our
securities may become subject to the “penny stock” rules and regulations.
Broker-dealers who sell penny stocks to certain types of investors are required
to comply with the Commission's regulations concerning the transfer of penny
stock. These regulations require broker-dealers to:
  •
              Make a suitability
      determination prior to selling penny stock to the
      purchaser;
 •
              Receive the purchaser's
      written consent to the transaction;
  and
 •
              Provide certain written
      disclosures to the
purchaser.
 
 These
requirements may restrict the ability of broker/dealers to sell our securities,
and may affect the ability to resell our securities.
  Ifwefailtomaintainaneffectivesystemofinternalcontrol,wemaynotbeabletoaccuratelyreportourfinancialresultsorpreventfraud.
  We are
subject to reporting obligations under the U.S. securities laws. The SEC, as
required by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules
requiring every public company to include a management report on such company’s
internal controls over financial reporting in its annual report, which contains
management’s assessment of the effectiveness of our internal controls over
financial reporting.  Our reporting obligations as a public company will
place a significant strain on our management, operational and financial
resources and systems for the foreseeable future. Effective internal controls,
particularly those related to revenue recognition, are necessary for us to
produce reliable financial reports and are important to help prevent fraud. As a
result, our failure to achieve and maintain effective internal controls over
financial reporting could result in the loss of investor confidence in the
reliability of our financial statements, which in turn could harm our business
and negatively impact the trading price of our stock.
  Our
management identified a material weakness in internal control during its
assessment of internal controls over financial reporting as of December 31,
2008.  Management determined that we did not fully implement our transition
to United States Generally Accepted Accounting Principles (“US GAAP”) which are
different from the accounting principles used in Vietnam.  As a result, we
were required to record certain adjustments to the December 31, 2008 and 2007
financial statements to bring them into compliance.  In an effort to
remediate the identified material weakness and to further enhance our internal
controls, we are in the process of identifying and retaining a consultant who
can work with our Vietnamese accounting team to indentify US GAAP related issues
and help evaluate and address such issues before they present problems in
reporting in the United States.
  Our
compliance with the Sarbanes-Oxley Act and SEC rules concerning internal
controls may be time consuming, difficult and costly for us.
  It may be
time consuming, difficult and costly for us to develop and implement the
internal controls and reporting procedures required by the Sarbanes-Oxley Act.
We may need to hire additional financial reporting, internal controls and other
finance staff in order to develop and implement appropriate internal controls
and reporting procedures. If we are unable to comply with the internal controls
requirements of the Sarbanes-Oxley Act, we may not be able to obtain the
independent accountant certifications that the Sarbanes-Oxley Act requires
publicly-traded companies to obtain.
  If
we fail to remain current in our reporting requirements, our securities could be
removed from the NASDAQ Capital Market, which would limit the ability of
broker-dealers to sell our securities and the ability of stockholders to sell
their securities in the secondary market.
  Companies
trading on the NASDAQ Capital Market must be reporting issuers under Section 12
of the Exchange Act, and must be current in their reports under Section 13, in
order to maintain price quotation privileges on the NASDAQ Capital Market. If we
fail to remain current on our reporting requirements, we could be removed from
the NASDAQ Capital Market. As a result, the market liquidity for our securities
could be severely adversely affected by limiting the ability of broker-dealers
to sell our securities and the ability of stockholders to sell their securities
in the secondary market.
  17
  We
may need additional capital, and the sale of additional shares or other equity
securities could result in additional dilution to our
stockholders.
  We
believe that our current cash and cash equivalents, anticipated cash flow from
operations and the net proceeds from this financing will be sufficient to meet
our anticipated cash needs for the foreseeable future. We may, however, require
additional cash resources due to changed business conditions or other future
developments, including any investments or acquisitions we may decide to pursue.
If our resources are insufficient to satisfy our cash requirements, we may seek
to sell additional equity or debt securities or obtain a credit facility. The
sale of additional equity securities could result in additional dilution to our
stockholders. The incurrence of indebtedness would result in increased debt
service obligations and could result in operating and financing covenants that
would restrict our operations. We cannot assure you that financing will be
available in amounts or on terms acceptable to us, if at
all.
  The
implementation of our stock-based incentive plan may dilute your percentage
ownership interest and may also result in downward pressure on the price of our
stock.
  Our
board has adopted a stock-based incentive plan, which was approved at a special
shareholders’ meeting on April 27, 2009.  Under the incentive plan, we can
grant 1,250,000 shares (assuming the consummation of a reverse stock split, at a
ratio of 40-for-1) to our officers, directors, employees and consultants. 
Shareholders would experience a dilution in ownership interest of 29%, assuming
the maximum issuance of 1,250,000 shares from stock options or awards of
restricted stock under the plan.  In addition, the existence of a
significant amount of stock and stock options that would be issuable upon the
adoption and approval of our stock-based incentive plan may be perceived by the
market as having a dilutive effect, which could lead to a decrease in the price
of our common stock.
  18
  Risks Related to Doing
Business in Vietnam
  Adverse changes
in political and economic policies of the Vietnamese government could have a
material adverse effect on the overall economic growth of Vietnam, which could
reduce the demand for our products and materially and adversely affect our
competitive position.
  Our
business, financial condition, results of operations and prospects are affected
significantly by economic, political and legal developments in Vietnam. The
Vietnamese economy differs from the economies of most developed countries in
many respects, including:
  •
              the amount of government
      involvement;
 •
              the level of
      development;
 •
              the growth
      rate;
 •
              the control of foreign
      exchange; and
 •
              the
      allocation of resources.
 
 While
the Vietnamese economy has grown significantly in the past 20 years, the
growth has been uneven, both geographically and among various sectors of the
economy. The Vietnam government has implemented various measures to
encourage economic growth and guide the allocation of resources. Some of these
measures benefit the overall Vietnamese economy, but may also have a negative
effect on us. For example, our financial condition and results of operations may
be adversely affected by Vietnamese government control over capital investments
or changes in tax regulations that are applicable to us.
  The
Vietnamese economy has been transitioning from a planned economy to a more
market-oriented economy. Although in recent years the Vietnamese government
has implemented measures emphasizing the utilization of market forces for
economic reform, the reduction of state ownership of productive assets and the
establishment of sound corporate governance in business enterprises, a
substantial portion of the productive assets in Vietnam is still owned by the
Vietnam government. The continued control of these assets and other aspects of
the national economy by the Vietnamese government could materially and
adversely affect our business. The Vietnam government also exercises
significant control over Vietnamese economic growth through the allocation of
resources, controlling payment of foreign currency-denominated obligations,
setting monetary policy and providing preferential treatment to particular
industries or companies. Efforts by the Vietnam government to slow the pace
of growth of the Vietnamese economy could result in decreased capital
expenditure by the government, which in turn could reduce demand for our
services.
  Any
adverse change in the economic conditions or government policies in Vietnam
could have a material adverse effect on the overall economic growth and the
level of energy and infrastructure investments and expenditures in Vietnam,
which in turn could lead to a reduction in demand for our products and
consequently have a material adverse effect on our businesses.
  Restrictions on
currency exchange may limit our ability to receive and use our revenues
effectively.
  All of
our revenues and most of our expenses are denominated in the Vietnamese Dong. If
our revenues denominated in the Vietnamese Dong increase or expenses denominated
in Vietnamese Dong decrease in the future, we may need to convert a portion of
our revenues into other currencies to meet our foreign currency obligations,
including, among others, payment of dividends declared, if any, in respect of
our ordinary shares.
  19
  Our
operations and assets in Vietnam are subject to significant political and
economic uncertainties.
  Government
policies are subject to rapid change and the Vietnam government may adopt
policies which have the effect of hindering private economic activity and
greater economic decentralization. There is no assurance that the Vietnam
government will not significantly alter its policies from time to time without
notice in a manner with reduces or eliminates any benefits from its present
policies of economic reform. In addition, a substantial portion of productive
assets in Vietnam remains government-owned. For instance, all lands are state
owned and leased to business entities or individuals through governmental
granting of state-owned land use rights. The granting process is typically based
on government policies at the time of granting, which could be lengthy and
complex. This process may adversely affect our business. The Vietnam government
also exercises significant control over Vietnam’s economic growth through the
allocation of resources, controlling payment of foreign currency and providing
preferential treatment to particular industries or companies. Uncertainties may
arise with changing of governmental policies and measures. In addition, changes
in laws and regulations, or their interpretation, or the imposition of
confiscatory taxation, restrictions on currency conversion, imports and sources
of supply, devaluations of currency, the nationalization or other expropriation
of private enterprises, as well as adverse changes in the political, economic or
social conditions in Vietnam, could have a material adverse effect on our
business, results of operations and financial condition.
  A downturn in the
economy of Vietnam may slow our growth and
profitability.
  The
growth of the Vietnamese economy has been uneven across geographic regions and
economic sectors. There can be no assurance that growth of the Vietnamese
economy will be steady or that any downturn will not have a negative effect on
our business.
  It will be
extremely difficult to acquire jurisdiction and enforce liabilities against our
officers, directors and assets based in Vietnam.
  Substantially
all of our assets will be located in Vietnam and the majority of our officers
and present directors reside outside of the United States.  As a result, it
may not be possible for United States investors to enforce their legal rights,
to effect service of process upon our directors or officers or to enforce
judgments of United States courts predicated upon civil liabilities and criminal
penalties of our directors and officers under Federal securities laws. Moreover,
we have been advised that Vietnam does not have treaties providing for the
reciprocal recognition and enforcement of judgments of courts with the United
States. Further, it is unclear if extradition treaties now in effect between the
United States and Vietnam would permit effective enforcement of criminal
penalties of the Federal securities laws.
 
 ITEM
      1B.
              UNRESOLVED
      STAFF COMMENTS.
 
 Not
applicable
  20
  ITEM
      2.
              PROPERTIES
  Our
principal executive offices are located at 17011 Beach Blvd., Suite 1230,
Huntington Beach, CA 92647. These offices consist of approximately 200 square
feet leased on a month to month basis included in $2,000 per month of management
fees. These offices are made available to us under the terms of a Management
Services Agreement dated May 15, 2006, with Providential Holdings, Inc. Other
services provided by Providential under the terms of this agreement include
secretarial and receptionist services, office and computer equipment, and
bookkeeping for the company’s U.S. operations. The agreement has a terms of two
years that is automatically renewable for one-year periods, unless either party
notifies the other of its desire to terminate the agreement at least 60 days
prior to the end of the agreement, or any renewal thereto.
  Cavico's
subsidiary, Cavico Vietnam, maintains its corporate headquarters in Hanoi,
Vietnam, where it leases approximately 11,764 square feet of office space, and
in other cities and townships throughout the country, where additional
operations are conducted, equipment is maintained and stored, and research
and/or development is conducted. Combined monthly lease payments for these
locations amount to approximately $36,000.
  We
have a long term land lease commitment for a period of 50 years with respect to
14,960 square feet of land in Hanoi. It intends to build an office building of
27 floors with a total of 280,000 square feet available to us and our
subsidiaries. It also intends to rent some of the space to commercial
tenants.
  We
have a long term land handed-over (70 years as per the current land law) in Son
La consisting of an area of 160 hectares that we intend to convert into a new
urban area, including office buildings, commercial centers, super markets,
condominiums and apartment buildings. Vietnam does not recognize land ownership.
Rather, parcels of land are leased from and land use rights are granted by the
Government. In general, land use rights may be exercised by the user in
accordance with the purpose for which the land was designated as specified in
the certificate of land use, and includes the right to develop the land. Land
use rights certificate issued by the Government to the user specify the land is
a) land lease to the user or b) land hand-over to user. Land use rights may be
assigned, lease, sub-leased, bequeathed and mortgaged. Grantees of land use
rights are also entitled to compensation in the event the State recovers the
land prematurely.  Such compensation consists of either money having the
same value as the land taken by the state prematurely or another land use grant
for similar property.
  The
Son La parcel of land was granted to us in payment for its development of the
Chieng Ngan 400 hectare urban area in Son La. The services provided include
planning and building out of the local infrastructure. Provided we exercise the
land use rights respecting this area in accordance with the government approved
master plan, there are no restrictions on our land use rights. To date, we have
not generated any revenues from this project.
  We own
additional offices and dormitories totaling 254,404 square feet and workshops
totaling 376,931 square feet at construction sites owned by the us and our
subsidiaries. These properties were built us on sites recorded as our property
for use for a period of three to ten years depending on the life of the
construction contracts/projects. Upon completion of the construction contracts,
we may relinquish our right to the property or sell the properties to the
project owner/local entities.
  21
  The
following table contains a summary of the Company’s properties owned and leased
on a long term basis by its subsidiaries in Vietnam in square feet.
  Name of company
                    
                    Long-term
                      Land Leased
                    
                    
                    Office Lease
                      in Hanoi
                    
                    
                    Offices Built
                      at Sites
                    
                    
                    Workshops
                      Built at Sites
                    
                    LocationCavico
      Vietnam Company Limited
                    
                    
                    
                    
                    
                    11,764
                    
                    
                    
                    
                    
                    
                    
                    Song
      Da Building,Pham Hung, My Dinh, Ha NoiCavico
      Mining Construction Joint Stock Company
                    
                    
                    
                    
                    
                    2,626
                    
                    
                    
                    21,528
                    
                    
                    
                    65,014
                    
                    Song
      Da Building,Pham Hung, My Dinh,Ha NoiCavico
      Trading Joint Stock Company
                    
                    
                    
                    
                    
                    1,507
                    
                    
                    
                    
                    
                    
                    
                    8,611
                    
                    CT3.2
      Building, Me Tri Ha, Ha NoiCavico
      Bridge & Tunnel Construction Joint Stock Company
                    
                    
                    
                    
                    
                    5,683
                    
                    
                    
                    82,688
                    
                    
                    
                    76,284
                    
                    CT4
      Building, My Dinh, Ha NoiCavico
      Vietnam Tower Joint Stock Company
                    
                    
                    14,960
                    
                    
                    
                    926
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    CHP
      Building, Me Tri Ha,Tu Liem, Ha NoiChieng
      Ngan Urban Area
                    
                    
                    17,222,257
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    Chieng
      Ngan,Thi xa Son La, Son LaCavico
      Energy Construction Joint Stock Company
                    
                    
                    
                    
                    
                    
                    2,662
                    
                    
                    
                    28,255
                    
                    
                    
                    96,821
                    
                    Song
      Da Building,Pham Hung, My Dinh,Ha NoiCavico
      Transportation Joint Stock Company
                    
                    
                    
                    
                    
                    
                    2,883
                    
                    
                    
                    12,917
                    
                    
                    
                    8,611
                    
                    Song
      Da Building,Pham Hung, My Dinh,Ha NoiCavico
      Infrastructure Investment and Construction Joint Stock
    Company
                    
                    
                    
                    
                    
                    
                    3,143
                    
                    
                    
                    15,446
                    
                    
                    
                    8,073
                    
                    Song
      Da Building,Pham Hung, My Dinh,Ha NoiCavico
      Hydropower Construction  Joint Stock Company
                    
                    
                    
                    
                    
                    
                    2,085
                    
                    
                    
                    11,474
                    
                    
                    
                    26,361
                    
                    Song
      Da Building,Pham Hung, My Dinh,Ha NoiCavico
      Power and Resource Joint Stock Company
                    
                    
                    
                    
                    
                    
                    2,852
                    
                    
                    
                    46,694
                    
                    
                    
                    6,103
                    
                    Song
      Da Building,Pham Hung, My Dinh,Ha NoiCavico
      Industry & Tech Service Joint Stock Company
                    
                    
                    
                    
                    
                    
                    1,615
                    
                    
                    
                    
                    
                    
                    
                    23,681
                    
                    My
      Dinh 2 Urban Zone, Tu Liem, Ha NoiCavico
      Manpower Joint Stock Company
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    31,215
                    
                    
                    
                    53,820
                    
                    CT4
      Building, My Dinh, Ha NoiCavico
      Stone and Mineral Joint Stock Company
                    
                    
                    
                    
                    
                    
                    1,722
                    
                    
                    
                    4,187
                    
                    
                    
                    3,552
                    
                    CT3.1
      Building, Me Tri Ha, Ha NoiCavico
      PHI cement Joint Stock Company
                    
                    
                    
                    
                    
                    
                    1,399
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    SIMCO
      Building, Tu Liem , Ha NoiLuong
      Son International Tourist Investment Joint Stock Company
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    Song
      Da Building,Pham Hung, My Dinh,Ha NoiCavico
      Land Investment & Development JSC
                    
                    
                    
                    
                    
                    
                    1,593
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    Song
      Da Building,Pham Hung, My Dinh,Ha NoiTotal
                    
                    
                    17,237,217
                    
                    
                    
                    42,460
                    
                    
                    
                    254,404
                    
                    
                    
                    376,931
  22
  ITEM
      3.
              LEGAL
      PROCEEDINGS
  We are
party to certain legal actions arising out of the normal course of its business.
In management’s opinion, none of these actions will have a material effect on
our operations, financial condition or liquidity. No form of proceedings has
been brought, instigated or is known to be contemplated against us by any
governmental agency.
 
 ITEM
      4.
              SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY
HOLDERS
 
 None.
  23
 
 PART II
  ITEM
5.            
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
  Our
common stock was first quoted on the OTC Bulletin Board in April 2008 under the
symbol “CVIC.OB.” Our symbol was changed to “CAVO” on August 19, 2009 when 40
for 1 reverse stock split became effective. The prices, as presented below
adjusted to reflect the 40-for-one reverse stock split, represent the highest
and lowest intra-day prices for our common stock as quoted on the OTC Bulletin
Board. Such over-the-counter market quotations may reflect inter-dealer prices,
without markup, markdown or commissions and may not necessarily represent actual
transactions.
  High
                    
                    
                    LowFirst
      Quarter 2008
                    
                    $
                    75.20
                    
                    
                    $
                    21.20Second
      Quarter 2008
                    
                    $
                    70.00
                    
                    
                    $
                    8.40Third
      Quarter 2008
                    
                    $
                    11.60
                    
                    
                    $
                    6.00Fourth
      Quarter 2008
                    
                    $
                    6.80
                    
                    
                    $
                    2.20First
      Quarter 2009
                    
                    $
                    5.20
                    
                    
                    $
                    3.20Second
      Quarter 2009
                    
                    $
                    7.40
                    
                    
                    $
                    4.00Third
      Quarter 2009 (through September 17, 2009)
                    
                    $
                    9.00
                    
                    
                    $
                    4.50
  Our
common stock has been approved listing on the NASDAQ Capital Market under the
symbol “CAVO” and commenced trading on such exchange on September 18,
2009.
  Number
of Stockholders
  As of
September 17, 2009, there were approximately 900 holders of record of our common
stock.
  Dividend
Policy
  Holders
of our Common Stock are entitled to receive dividends if and when declared by
our Board of Directors out of funds legally available for distribution. Any such
dividends may be paid in cash, property or shares of our common
stock.
  We
have has not paid any dividends since its inception, and it is not likely that
any dividends on its Common Stock will be declared in the foreseeable future.
Any dividends will be subject to the discretion of our Board of Directors, and
will depend upon, among other things, our operating and financial condition and
our capital requirements and general business conditions.
  Securities
Authorized for Issuance under Equity Compensation Plans
  In
March 2009, the Board approved the Cavico Corp. Stock Award and Incentive Plan
which was subsequently approved by at a special meeting of shareholders on April
27, 2009.  The purpose of the Cavico Corp. Stock Award and Incentive Plan
is to give us a competitive advantage in attracting, retaining, and motivating
officers, employees, directors, and consultants and to provide us with an
incentive plan that gives officers, employees, directors, and consultants
financial incentives directly linked to shareholder value.
  The
maximum number of shares that may be issued pursuant to incentive stock options
granted under the plan is 1,250,000 (after giving effect to the 40-for-1 reverse
stock split).  The maximum number of shares of our common stock that may be
issued per individual pursuant to awards granted under the Cavico Stock Award
and Incentive Plan is 125,000 (after giving effect to the 40-for-1 reverse stock
split).
  As of
the date hereof, there are no awards granted under this the Cavico Stock Award
and Incentive Plan.
  24
  ITEM
      6.
              SELECTED
      FINANCIAL DATA
 
 Years Ended December 31,2008
                                (Audited)(1)
                              
                              
                              2007
                                (Audited)(2)Net
      sales
                              
                              $
                              58,006,269
                              
                              
                              $
                              37,850,606Income
      (loss) from operations
                              
                              
                              2,313,311
                              
                              
                              
                              1,660,009Net
      other income (expense)
                              
                              
                              (2,671,115
                              )
                              
                              
                              7,705,139Net
      income (loss )
                              
                              
                              631,816
                              
                              
                              
                              5,894,868Net
      income ( loss ) per share
                              
                              
                              0.01
                              
                              
                              
                              0.05Total
      assets
                              
                              $
                              112,788,065
                              
                              
                              $
                              94,518,004Total
      liabilities
                              
                              $
                              94,014,495
                              
                              
                              $
                              76,342,878
 
 (1)
              During
      the year 2008, we added Cavico Tower, Cavico ITS, Cavico Manpower, Cavico
      Stone & Mineral, Cavico PHI, Cavico Luong Son   and Cavico
      Land.
 
 (2)
              During
      the year 2007, we acquired additional interest and control of  Cavico
      Energy, a new subsidiary. Also, the significant increase in other income
      is mostly from sale of available- for- sale securities of
      Habubank.
 
 ITEM
7.             MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Forward-Looking
Statements
 
 The
information in this report contains forward-looking statements. All statements
other than statements of historical fact made in report are forward looking. In
particular, the statements herein regarding industry prospects and future
results of operations or financial position are forward-looking statements.
These forward-looking statements can be identified by the use of words such as
“believes,” “estimates,” “could,” “possibly,” “probably,” anticipates,”
“projects,” “expects,” “may,” “will,” or “should” or other variations or similar
words. No assurances can be given that the future results anticipated by the
forward-looking statements will be achieved. Forward-looking statements reflect
management’s current expectations and are inherently uncertain. Our actual
results may differ significantly from management’s expectations.
 
 The
following discussion and analysis should be read in conjunction with our
financial statements, included herewith. This discussion should not be construed
to imply that the results discussed herein will necessarily continue into the
future, or that any conclusion reached herein will necessarily be indicative of
actual operating results in the future. Such discussion represents only the best
present assessment of our management.
 
 Background
  Cavico
Corp. (the “Company,” “Cavico” or “we”) was incorporated in Delaware on
September 13, 2004 under the name Laminaire Corp. On November 9, 2004, the name
of the Company was changed to Agent 155 Media Group, Inc. On May 2, 2006, the
Company’s name was changed to Cavico Corp.
  During
2007 and 2006, as described below, we acquired Cavico Vietnam Joint Stock
Company, a corporation organized under the laws of Vietnam (“CVJSC”) as our
wholly owned subsidiary. As a result of legal restrictions on the foreign
ownership of Vietnamese entities imposed by the Vietnamese government, the
acquisition of CVJSC occurred in multiple steps, as follows:
 
 ·
              On April 18, 2006, we entered
      into an asset purchase agreement with CVJSC. Under the terms of the
      agreement, Cavico purchased all of the assets of CVJSC  in
      consideration for the issuance to CVJSC of 79,000,000 shares of our common
      stock. CVJSC subsequently transferred 60,062,200 of these shares of our
      common stock to the former shareholders of CVJSC in return for their
      shares of CVJSC stock. An additional 18,937,800 shares of our common
      stock were deposited into a CVJSC bonus plan for that entity’s management,
      of which 4,937,800 shares were distributed to CVJSC’s management in
      2006.
  25
 
 ·
              Following our purchase of the
      CVJSC assets, and pending the grant of the requisite approval of the
      acquisition of CVJSC by a Vietnamese government agency as required under
      Vietnamese law, CVJSC continued to use the assets subject to our control.
      Government approval of the acquisition of CVJSC was granted in January
      2007. Following the grant of this approval and our subsequent acquisition
      of CVJSC to become our wholly-owned subsidiary, all assets previously
      purchased from CVJSC by the Company in April 2006 were transferred back to
      CVJSC. Also, at that time, CVJSC changed its name to Cavico Vietnam
      Company Limited.
 
 The
transaction was accounted for as a reverse acquisition under the purchase method
of accounting since the shareholders of Cavico Vietnam Company Limited obtained
control of the consolidated entity. Accordingly, the merger of the two companies
is recorded as a recapitalization of Agent 155 Media Group, Inc., with Cavico
Vietnam Company Limited being treated as the continuing entity. The historical
financial statements to be presented are those of Cavico Vietnam Company
Limited, our wholly-owned subsidiary.
 
 Critical
Accounting Policies
 
 Principles
of Consolidation
 
 The
consolidated financial statements include the accounts of the parent company,
Cavico Corp., and its following subsidiaries:
  % of OwnershipSubsidiary
                    
                    12/31/08
                    
                    
                    12/31/07Cavico
      Vietnam Company Limited
                    
                    
                    100
                    %
                    
                    
                    100
                    %Cavico
      Bridge and Underground Construction JSC
                    
                    
                    66
                    %
                    
                    
                    66
                    %Cavico
      Mining and Construction JSC
                    
                    
                    26
                    %
                    
                    
                    26
                    %Cavico
      Trading JSC
                    
                    
                    63
                    %
                    
                    
                    63
                    %Cavico
      Construction and Infrastructure Investment JSC
                    
                    
                    69
                    %
                    
                    
                    69
                    %Cavico
      Power and Resource JSC
                    
                    
                    78
                    %
                    
                    
                    78
                    %Cavico
      Transport JSC
                    
                    
                    74
                    %
                    
                    
                    74
                    %Cavico
      Hydropower Construction JSC
                    
                    
                    73
                    %
                    
                    
                    73
                    %Cavico
      Energy Construction JSC
                    
                    
                    38
                    %
                    
                    
                    38
                    %Cavico
      Tower JSC
                    
                    
                    38
                    %
                    
                    
                    39
                    %Cavico
      Industry and Technical Service JSC
                    
                    
                    67
                    %
                    
                    
                    65
                    %Cavico
      Manpower JSC
                    
                    
                    30
                    %
                    
                    
                    30
                    %Cavico
      Stone and Mineral JSC
                    
                    
                    36
                    %
                    
                    
                    35
                    %Cavico
      PHI Cement JSC
                    
                    
                    93
                    %
                    
                    
                    38
                    %Cavico
      Luong Son JSC
                    
                    
                    93
                    %
                    
                    
                    100
                    %Cavico
      Land JSC
                    
                    
                    13
                    %
                    
                    
                    11
                    %
 
 Cavico
Vietnam Company has a control in the management and decision making of all these
subsidiaries.  All significant intercompany accounts and transactions have
been eliminated.
 
 Estimates
  The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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 revenue and expenses during the reporting
period. Such estimates may be materially different from actual financial
results. Significant estimates include the recoverability of long-lived assets
and the collectability of accounts receivable.
  Cash
and Cash Equivalents
  For
purposes of the statement of cash flows, we consider all cash and highly liquid
investments with initial maturities of three months or less to be cash
equivalents.
  Investment
in Marketable Securities
  Investments
with original maturities of less than 90 days are considered cash equivalents,
and all other investments are classified as short-term
investments.
  26
  Inventories
  Inventories
are stated at the weighted-average method. Market value for raw materials is
based on replacement cost and for work-in-process on net realizable
value.
  Accounts
Receivable
  We
grant credit to customers within Vietnam and do not require collateral. Our
ability to collect receivables is affected by economic fluctuations in the
geographic areas and industries that we serve. Our main customers were project
management units established by Electricity of Vietnam, which accounts for
49.65% of all accounts receivable. Reserves for uncollectable amounts, which
management believes are sufficient, are based on past experience and a specific
analysis of the accounts. As of December 31, 2008, we had a reserve for doubtful
accounts of $597,349.
  Property
and Equipment
  Property
and equipment, including renewals and betterments, are stated at cost. Assets
held under capital leases are recorded at lease inception at the lower of the
present value of the minimum lease payments or the fair market value of the
related assets. We follow the practice of capitalizing property and equipment
purchased over $600. The cost of ordinary maintenance and repairs is charged to
operations while renewals and replacements are capitalized. Depreciation and
amortization are computed on the straight-line method over the estimated useful
lives of the related assets, which range from two to twenty five
years.
  Long-Lived
Assets
  Our
management assesses the recoverability of its long-lived assets by determining
whether the depreciation and amortization of long-lived assets over their
remaining lives can be recovered through projected undiscounted future cash
flows. The amount of long-lived asset impairment if any, is measured based on
fair value and is charged to operations in the period in which long lived assets
impairment is determined by management.
  Real
Estate Activities
  Cavico
Tower’s, one of our subsidiaries,  principal business activities consist of
civil and industrial construction; internal and external fitting out; land
leveling and surface improvement; building leasing; real estate business;
restaurants and supermarkets operation; real estate consulting; machine and
equipment leasing; materials, machinery and equipment trading for construction,
transport, hydropower; dealers for buying and selling goods, construction
materials trading. During the year 2008, our major activities included capital
expenditures related to building construction in the amount of
$1,519,241.
  Fair
Value of Financial Instruments
  The
carrying amount of cash, cash equivalents, investment securities, notes payable,
accounts receivable, accounts payable and accrued expenses are considered to be
representative of their respective fair values because of the short-term nature
of these financial instruments. The carrying amount of the notes payable and
long-term debt are reasonable estimates of fair value as the loans bear interest
based on market rates currently available for debt with similar
terms.
  Revenue
Recognition
  For all
construction contracts, revenue is recorded when the persuasive evidence of an
arrangement exists, work has been completed, price is fixed or determined and
collection is reasonably assured.
  We
recognize revenues from construction projects based upon work that is
periodically certified as completed by our customers or which is virtually
complete. Production costs, including materials, labor and subcontractor costs
are allocated to revenue based upon the ratio of total costs incurred to date
compared to total work  to date.  Costs related to work performed but
not completed are included in work in progress. Customer-furnished materials,
labor, and equipment, and in certain cases subcontractor materials, labor, and
equipment are included in revenues and cost of revenue when management believes
that we are responsible for the acceptability of the project by client.
Contracts are not segmented between types of services such as engineering and
construction, and accordingly, gross margin is recognized under construction
services.
  Changes
to total estimated contract cost or losses, if any, are recognized in the period
in which they are determined. Claims against customers are recognized as revenue
upon settlement. Revenues recognized in excess of amounts billed are classified
as current assets under work-in-progress. Amounts billed to clients in excess of
revenues recognized to date are classified as current liabilities under advance
billing on contracts.
  27
  Other
Comprehensive Income
  We have
adopted Financial Accounting Standards Board Statement No. 130, “Reporting
Comprehensive Income”. SFAS 130 requires reporting and displaying comprehensive
income and its components in a full set of general-purpose financial
statement.
  Foreign
Currency Translation
  We
account for translation of foreign currency in accordance with Statement of
Financial Accounting Standards No. 52 “Foreign Currency Translation.” The
resulting translation adjustments are reported under other comprehensive income
in accordance with SFAS No. 130, “Reporting Comprehensive Income.” Gains and
losses resulting from foreign currency transactions are reflected in the income
statement.
  Results
of Operations
 
 Results
of Operations for the year ended December 31, 2008 compared to the year ended
December 31, 2007.
 
 Net
Sales
  We
generated $58,006,269 in net sales during the year ended December 31, 2008
compared to $37,850,606 during the year ended December 31, 2007, mostly from
construction and mining projects. Company’s net sales from mining construction
decreased by $62,621 or 1% to $4,259,850 for the year ending December 31, 2008
from $4,322,471 for the year ending December 31, 2007. This was due principally
to a reduction in mining activity in the Nui Beo mine and the redeployment of
some of our equipment from that mine to other civil engineering projects
(primarily new hydro power construction projects resulting in higher revenues)
based on the Company’s expectation that the size of that project would decrease
at the annual rate of 10% to 20% as stipulated in the agreement with the owner
of the mine. The Company’s net sales  from civil construction increased by
$18,936,592 or 60% to $50,430,360for the year ending December 31, 2008 from
$31,493,768 for the year ending December 31, 2007. This is due to an increase in
hydro power construction projects. The Company’s net sales from other operations
(leasing machinery and equipment, selling materials, steel fabrication)
increased by $1,281,692 or 63% to $3,316,059 for the year ending December 31,
2008 from $2,034,367 for the year ending December 31, 2007.
  The
revenues from our major projects in 2008 compared  to 2007 are as
follows;
 
 Buon Kuop
                  
                  
                  A Luoi Tunnel
                  
                  
                  Buon TuaSrah
                  
                  
                  Bac Binh
                  
                  
                  Daksrong2008
                  
                  $
                  7,925,582
                  
                  
                  $
                  7,525,751
                  
                  
                  $
                  4,654,046
                  
                  
                  $
                  2,218,872
                  
                  
                  $
                  1,723,0832007
                  
                  
                  4,218,525
                  
                  
                  
                  1,120,120
                  
                  
                  
                  2,992,497
                  
                  
                  
                  634,483
                  
                  
                  
                  1,377,619Contract
      Amount
                  
                  
                  31,226,535
                  
                  
                  
                  53,662,263
                  
                  
                  
                  13,322,030
                  
                  
                  
                  6,176,577
                  
                  
                  
                  4,454,112Contract
      period
                  
                  
                  2003-2008
                  
                  
                  
                  2007-2010
                  
                  
                  
                  2006-2008
                  
                  
                  
                  2004-2007
                  
                  
                  
                  2007-2008
  The
revenues from Buon Kuop Project increased by $3,707,057 or 88% during  the
year ending December 31, 2008 compared to the year ending December 31, 2007 and
revenues for the year ending December 31, 2009 are anticipated approximately
$2.8 million as the project is being completed. The revenues from  A Luoi
Tunnel Project increased by $6,405,631 or 572% for the year ending December 31,
2008 compared to  the year ending December 31, 2007 and revenues for the
year ending December 31, 2009 are anticipated approximately $10.7 million. The
revenues from Buon TuaSha Project increased by $1,661,549 or 56% for the year
ending December 31, 2008 compared to  the year ending December 31, 2007 and
the Company anticipates approximately $3.7 million in revenue for the year
ending December 31, 2009.
 
 Cost of
production
 
 Costs of
Goods sold were $48,712,916 and $31,339,235 for the year ended December 31, 2008
and 2007, respectively.  Cost of Goods sold includes capitalization of
interest expenses of $5,872,378 and $3,045,838 for the year ended December 31,
2008 and 2007, respectively. The increase in capitalization of interest was due
to new loans added in 2008.
 
 Cost of
Goods sold (without capitalization of interest expenses) increased by
$14,547,141 or 51% to $42,840,538 for the year ending December 31, 2008 from
$28,293,397 for the year ending December 31, 2007. Cost of Goods sold excluding
capitalization of interest expenses as a percentage of sales decreases by 1% to
74% for the year ended December 31, 2008 from 75% of sales for the year ended
December 31, 2007.
  28
 
 Company’s
cost of production from mining construction for the year ended December 31, 2008
was $3,315,077, of which as a percentage of sales increased by 16% to 78% in
2008 from 62% of sales for the year ended December 31, 2007. The increased cost
of production from mining construction as a percentage of sales was due to
increase of the inflation which resulted in cost of fuels, materials, spare
parts increase. Company’s cost of production from civil construction for the
year ended December 31, 2008 was $42,461,358, of which as a percentage of sales
decreases by 1% to 84% for the year ended December 31, 2008 from 85% of sales
for the year ended December 31, 2007. The decrease of cost of civil construction
as a percentage of sales was due to the improvement in efficiency of machinery
and equipment. Company’s cost of production from other operations (i.e. leasing
machinery and equipment, selling steel fabrication) for the year ended December
31, 2008 was $2,636,481, of which as a percentage of sales increased  by 8%
to 80% for the year ended December 31, 2008 from 72% for the year ended December
31, 2007. The increase of cost of production from other operation as a
percentage of sales was due to decrease of demand in trading which result in
smaller sales price increase compared to cost increase.
 
 The cost
of goods sold including project depreciation and interest from our major
projects in 2008 compared to 2007 are as follows;
 
 2008
                  
                  Buon Kuop
                  
                  
                  A Luoi Tunnel
                  
                  
                  Buon TuaSrah
                  
                  
                  Bac Binh
                  
                  
                  DaksrongCost
      of goods sold
                  
                  $
                  7,722,660
                  
                  
                  $
                  6,088,541
                  
                  
                  $
                  4,262,512
                  
                  
                  $
                  2,752,757
                  
                  
                  $
                  1,744,058Depreciation
                  
                  
                  234,601
                  
                  
                  
                  558,265
                  
                  
                  
                  514,143
                  
                  
                  
                  135,259
                  
                  
                  
                  124,296Interest
                  
                  
                  352,645
                  
                  
                  
                  742,701
                  
                  
                  
                  737,461
                  
                  
                  
                  306,908
                  
                  
                  
                  205,651
  2007
                  
                  Buon Kuop
                  
                  
                  A Luoi Tunnel
                  
                  
                  Buon TuaSrah
                  
                  
                  Bac Binh
                  
                  
                  DaksrongCost
      of goods sold
                  
                  $
                  3,595,349
                  
                  
                  $
                  539,577
                  
                  
                  $
                  2,811,692
                  
                  
                  $
                  784,476
                  
                  
                  $
                  997,733Depreciation
                  
                  
                  348,753
                  
                  
                  
                  55,975
                  
                  
                  
                  281,756
                  
                  
                  
                  232,565
                  
                  
                  
                  104,383Interest
                  
                  
                  152,831
                  
                  
                  
                  92,296
                  
                  
                  
                  488,958
                  
                  
                  
                  377,462
                  
                  
                  
                  101,461
 
 The costs
of goods sold on these projects were increased in 2008 compared to 2007 
generally in proportion to the increase in revenue.
  The cost
of goods sold from Buon Kuop project increased by $4,127,311 or 115%
during  the year ending December 31, 2008 compared to the year ending
December 31, 2007.  The percentage of cost of good sold to sales was
increased to 97% in 2008 compared to 85% in 2007.  The cost of goods sold
from  A Luoi Tunnel project increased by $5,548,964, or 102%  for the
year ending December 31, 2008 compared to 2007 since the project started in
2007. The percentage of cost of good sold to sales for this project increased to
81% in 2008 compared to 48% in 2007. The cost of goods sold from Buon TuaSha
project increased by $1,450,820 or 52% for the year ending December 31, 2008
compared to  2007. The percentage of cost of good sold to sale for this
project was decreased to 92% in 2008 compared to 94% in 2007.
 
 Gross
Profit
 
 The gross
profit for the year ended December 31, 2008 was $9,293,353 or 16% of sales
compared to $6,511,371 or 17% of sales for the year ended December 31, 2007. The
increase in gross profit is due to an increase in sales by $20,155,663 in
comparison to increase in cost of goods sold by $17,373,681 as described
above.
 
 The gross
profits from our major projects in 2008 compared to 2007 are as
follows:
  Buon Kuop
                  
                  
                  A Luoi Tunnel
                  
                  
                  Buon TuaSrah
                  
                  
                  Bac Binh
                  
                  
                  Daksrong2008
                  
                  $
                  202,922
                  
                  
                  $
                  1,437,210
                  
                  
                  $
                  391,534
                  
                  
                  $
                  (533,885
                  )
                  
                  $
                  (20,975
                  )2007
                  
                  
                  623,176
                  
                  
                  
                  580,543
                  
                  
                  
                  180,805
                  
                  
                  
                  (149,993
                  )
                  
                  
                  379,886
  The
Company recorded losses from Bac Binh project and Daksrong project in 2008. This
was due to extension  of projects and a loss of time  caused by bad
weather in Bac Binh and Daksrong as well as a delay by project consultant
and  other contractors ( Daksrong ). The Company has not gotten a
compensation approval from the clients for these additional costs.
  Operating
expenses
 
 The
company’s operating expenses in 2008 was $6,980,042, compared to
$4,851,362  in 2007 with an increase of $2,128,680. The increase in
operating expenses was mainly resulted from increased in the size of our support
facilities as we prepare for the future growth of the Company and its
subsidiaries, noted as follows:
 
 ·
              Rent expenses increased by
      $75,122 to $439,270 for the year ended December 31, 2008 from $364,148 for
      the year ended December 31,
2007.
  29
  ·
                Payroll expenses increased by
      $835,406 to $2,463,276 for the year ended December 31, 2008 from
      $1,627,870 for the year ended December 31, 2007.
 ·
                Other administration cost of
      other subsidiaries increased by $593,724 to $2,505,140 for the year ended
      December 31, 2008 from $1,911,416 for the year ended December 31, 
      2007.
 ·
              Administrative
      cost of corporate office (mainly audit fees, legal fees and consulting
      fees) increased by $769,801 to $1,279,949 for the year ended December 31,
      2008 from $510,148 for the year ended December 31,
  2007.
 
 ·
              Selling expenses were decreased
      by $3,924 to $78,779 for the year ended December 31, 2008 from $82,703 for
      the year ended December 31,
2007.
 
 The
Company also recorded a bad debt expense of $212,828 and $404,044 for the year
ended December 31, 2008 and 2007, respectively.
  Other Income
(expenses)
 
 The total
other income (expenses) decreased by $10,376,254 to $2,671,115 as expenses for
the year ended December 31, 2008 from $7,705,139  as income for the year
ended December 31, 2007. Other income includes gain from disposal of fixed
assets and leased machinery of $44,471 for the year ended December 31, 2008
compared to $119,986  in 2007. Other income also includes loss on sale of
marketable securities of  $439,934 for the year ended December 31, 2008
compared to a gain of $9,684,686  in 2007. During the year ended December
31, 2007, we sold 1,897,985 shares of common stock of Habubank and received
$7,073,823 with a profit of $5,065,028 and we also sold shares of common stock
of six subsidiaries to reduce the ownership in these entities from 100% to a
range of 49% to 72% and received $8,419,607 with a profit of $3,543,201. In 2007
we sold 538,370 shares of common stock of Cavico Mining to reduce the ownership
in this entity from 50 % to 39% and received $1,563,752 with a profit of
$627,533. Income from sales of our investment at other subsidiaries was $448,924
for the year ended December 31, 2007. We recorded $100,982 loss on foreign
currency exchange for the year ended December 31, 2008 compared to $250,870 loss
in 2007. This loss was resulted from the currency exchange difference measured
at the year end on the loan in Euro. The interest income during the year ended
December 31, 2008 was $891,898 compared to $1,046,394 in 2007.
 
 Interest
expense excluding capitalized interest increased by $175,045 to $3,101,243 for
the year ended December 31, 2008 from $2,926,198 for the year ended December 31,
2007. The increase was due to additional loans added in 2008.
 
 Net
Income
  The
Company had net income of $631,816 for the year ended December 31, 2008,
compared to $5,894,868 for the year ended December 31, 2007. The decrease of
$5,263,052 was mainly due to the decrease of $10,124,620  in gain on sale
of marketable securities and an increase in operating expenses of $2,128,680 and
the increase of $508,867 in minority interest which was offset by an increase in
gross profit of 2,781,982, and taxes change of $4,968,767 from $2,283,822 as a
tax benefit in 2008 compared to $2,684,945  as a tax expense in
2007.
 
 The
effective rate in Vietnam was 28% of taxable profits for 2007 and 2008. In 2007,
the Company made large profits of USD 9,684,686 on securities trading
activities. Per the Vietnamese tax laws in affect at the time, these profits
were subject to taxation and no exemption was applied.  Accordingly,
corporate taxes of $2.7 million related to these activities were recorded in the
Cavico consolidated financial statements
 
 During
2008 when the tax authorities reviewed the Cavico tax returns for 2007, they
concluded that the securities trading activities not subject to tax. During
2008, because of poor market conditions, the Vietnamese government equivocated
on its position that these activities were taxable.  Recently, the
Vietnamese government reinstated the tax on marketable securities, retroactively
effective to January 1, 2009. The tax related to the 2007 securities trading
activities was reversed during the year ended December 31,
2008.
 
 The net
income per share for the year ended December 31, 2008 was $0.01 compared to
$0.05 for the year period ended December 31, 2007.  The decrease in
unrealized gains of $9,639,883 in marketable securities resulted from an
unrealized loss of $6,352,628 in 2008 and an unrealized gain of 3,287,255 in
2007.  The cost and current fair value of the marketable securities as of
December 31, 2008 were $4,475,051 and $1,820,406, respectively.  The
majority of marketable securities are invested in Vietnamese
companies.
  30
 
 Liquidity
and Capital Resources
 
 Our working
capital deficit as of December 31, 2008 increased to $(26,621,023) compared to
$(15,611,618) as of December 31, 2007 as current assets increased less than the
increase in current liabilities. The major factors  contributed to this
decrease in working capital in 2008 compared to 2007 were a decrease of
$8,033,630 in investment available for sale and an increase of $9,179,246 in
advances from customers . Generally in Vietnam, bank loans are granted on a
yearly basis and renewed each year. The Company has $50,141,069 in maturing
debts in 2009 of which $12,455,320 has been paid off in the first quarter of
2009.
 
 As of
December 31, 2008, we had $3,148,985 in cash, current accounts receivable
of $9,184,339, an inventory of $3,940,768, a construction WIP of $29,606,602 and
net fixed assets of $22,979,090. Our current accounts receivable was increased
by $1,525,068 from the prior year end. Our accounts receivable increase was due
to an increase in sales from completed projects. Our current construction WIP
for the current year was increased by $6,992,796 from the prior year end. Our
construction WIP increase was due to an increase in work in progress from new
projects. We anticipate our accounts receivable and inventory will continue to
increase in 2009 as we completed and  added more new 
projects.
  We
have current receivables, long-term receivables and work in process with the
following characteristics:
  December
      31, 2008
                    
                    
                    December
      31, 2007Accounts
      receivable -trade- net
                    
                    $
                    9,184,339
                    
                    
                    $
                    7,659,271Receivable
      - other
                    
                    
                    7,491,803
                    
                    
                    
                    4,852,957Work
      in process
                    
                    
                    29,606,602
                    
                    
                    
                    22,613,806Receivables
      and advances from related parties
                    
                    
                    1,088,596
                    
                    
                    
                    673,057Long-term
      retention receivables
                    
                    
                    14,933,897
                    
                    
                    
                    7,770,407Long-term
      work in process
                    
                    
                    547,693
                    
                    
                    
                    2,542,477
 
 Accounts receivable - trade
are generated from civil construction and mining construction projects as well
as from our other commercial activities. We receive payment on our accounts
receivable for major projects after two certificates are received.  The
first certificate, a “certificate of completed work,” is a certificate received
from the customer we perform the work and the work has passed the customer’s
technical quality examination.  The second certificate, a “certificate of
payment,” is a certificate that the customer issues to approve payment. 
Depending on the project, payment is made within 30 days to 105 days after
receiving the certificates.
  At
December 31, 2008, the balance of accounts receivable-trade that was outstanding
for more than six months was $1,653,181, $1,432,750 of this amount was from the
Buonuop, Dakmi 4 and Dong Nai 3 projects.  All of the balances from these
projects was collected by June 30, 2009 ($628,138 of this amount was collected
in the first quarter of 2009 and the balance of $804,612 was collected in the
second quarter of 2009).  The remaining balance in the accounts receivable
–trade outstanding for more than six months of $220,431 is expected to be paid
by the end of year.  Management believes reserves for uncollectable
amounts, which are provided based on past experience and a specific analysis of
the accounts, are sufficient. Although we expect to collect amounts due, actual
collections may differ from the estimated amounts. As of December 31, 2008, we
had a reserve for doubtful accounts of $597,349.  We do not have liens or
collateral rights on these projects but these projects have the support and
financial backing of the Government of Vietnam.
  Receivable – other consists
of $3,090,109 of advances, $2,354,887 of prepayments to suppliers and $2,046,807
of short-term receivables. These receivables are generated from civil
construction and mining construction projects as well as from our other
commercial activities. Advances include monies advanced for miscellaneous
expenses such as business travel costs, selling costs and material purchases. As
of December 31, 2009, the entire balance is expected to be collected or expensed
within the year. Advances and prepayments  to our supplies are for works to
be performed on our contracts. The execution of the work and the approval by the
necessary Vietnamese agencies can take up to a year. We expect to collect all
amounts due and this expectation is supported by past collection
history.
  31




Work in process and Long-term work in process
includes the costs of production such as materials, labor, overhead and interest
cost on projects not yet recognized as revenue.  The revenue is
recognized when the work is completed and the customer certifies
completion.  There are no contractual provisions that prevent our work
in process from being collected.  As of December 31, 2008, the balance
of work in process was $29,606,602 of which approximately $12,730,000 was over 6
month from various projects.  These amounts are billed or expected to
be billed as follows: billed and collected $13,672,000 by June 30, 2009,
expected to bill $10,841,000 by December 31, 2009 which includes $3,552,000 of
work performed, but the payment rates have not been approved by customer and
$5,093,000 by December 31, 2010.   The largest work in process
balances are for the Ban Ve Hydropower Project, the Buon Kuop Hydropower
Project, the Buon Tua Srah Hydropower Project and Ta Trach Dam project, which
totals approximately $3,647,000.  As of December 31, 2008, we had
reserved $843,494 against work in process balances.




Included
in the current work in process over six months old are (1) work completed but
the examined by consultant to grant a certificate  of completion for
payment  (2)preparation and temporary facility work for whole project
which is included in the unit rate which will be paid gradually by every
certificate of payment to the end of the project (3)additional work performed
based on the instruction and agreement with the customer but waiting for the
approval of the payment rate from the customer.  Long-term work in
process is $547,693 as of December 31, 2008, equal to less than 1% of our
assets. The long-term work in process will be billed and collected after the
project owner certifies the work. We are not currently aware of any factors that
would cause the ultimate timing of collections to change. We have determined
that the reserves against work in process were sufficient for both short term
and long term work in process.




Receivables and advances from
related parties include advances to management and employees include
miscellaneous expenses such as business travel costs, selling costs and material
purchases. Our policy is to receive expense reports for these amounts and move
them to the appropriate expense account. If an expense report is not turned in,
these advances can be deducted from the salary of the related individuals. These
loans were made with no interest, not secured and due on demand. We had loans
receivable in the amounts of $361,367 and advances of $727,230 as of December
31, 2008.  By June 30, 2009, we had reduced loans receivable to
$27,158 and advances to $429,914.




Long term retention
receivable has a balance of $14,933,897 at December 31, 2009. We attempt
to shift our construction risks to our customers. We do, however, provide a
warranty period of two to three year after completion of the construction
contract. Our customers generally keep the retention of 5 to 10 percent of the
contract amount until the warranty period expires. Due to this retention period,
our receivables can be significantly delayed and may adversely impact our cash
flow. In accordance with SOP 81-1 we continually review contract performance and
any anticipated additional costs that might be associated with contract
performance and modify contract income accordingly. Long-term retention
receivables are typically paid within two years after the completion of a
construction project. The amounts outstanding for more than two years have not
been paid pursuant to the payment terms of our contracts. We expect to collect
these amounts within two years after the completion of the applicable
construction contract.  The largest long-term retention receivable
balances are for the Dai Ninh Hydropower Project, the Buon Kuop Hydropower
Project, ALuoi Hydropower Project and the Buon Tua Srah Hydropower Project. All
three projects are current in their payments and there are no known disputes
regarding the work performed to date. For example, our construction contract for
Buon Kuop hydro power is scheduled to run from June 2004 to June 2009. Our
accumulated revenue at Buon Kuop from June 2004 to June 2009 is approximately
$20 million. Since 5% of the revenue is held by as long-term retention, $1
million is held by the customer as long-term retention. If the construction of
this project is completed on time by June 2009, this $1 million and any other
long-term retention balance associated with this project would be expected to be
paid in June 2011. When paid, a portion of the long-term retention receivable
will be seven years old but will still be paid in accordance with the
contractual terms of the contract. We believe that the Buon Kuop long-term
retention receivable, along with our other long-term retention receivables will
be collected when due under each contract’s terms.  We have received
100% of the retention from the contracts completed upon the expiration of
warranty periods such as 2B Hai Van project or A Loid Road
project.




Our total
current liabilities as of December 31, 2008 were $84,504,794 which was increased
by $17,070,430 from the prior year end. The current liabilities were represented
mainly accounts payable of $10,234,650, accrued expenses of $4,485,336, advances
from customers of $15,102,331, and short term loans, including loans from
related parties of $50,349,736. Advances from customers increased mainly
due to Damb’ri HP project for which we received approximately $3.04 million, Nam
Chien HP project for which we received approximately $0.5 million and Ta Trach
HP project  for which we received approximately $4.99 million during
the year ended December 31, 2008. Current Notes payable including loans from
related parties increased by $8,091,359 from the prior year end. This increase
is mainly due to an increase in financial needs for new projects such as A Luoi
HP, Nam Chien HP, Song Tranh HP, Dong Nai 4 HP, Dasiat HP, Dong Nai 3 HP, Nho
Que HP, ZaHung HP. We anticipate our current liabilities will continue to
increase in 2009 as we added new loans and received advances for
new projects.


32


At
December 31, 2008, we had $59,381,463 in construction loans, of which
$50,141,069 are classified as short-term construction loans with annual interest
rates ranging from 9.6% to 19%. We obtain these short-term construction loans to
finance our civil construction and mining projects. Most of these loans are
unsecured except a few loan secured by equipment, but the bank controls the
disbursement of funds. in the following manner. These construction loans are
made by the banks for a specific project. Disbursements on these construction
loans are designed to pay for expenses of a project as the work progresses.
Banks will typically only disburse funds under these construction loans for
equipment, supplies and other expenses for the specific project. In most
instances, the bank will allow us to pay only to the supplier or subcontractor
that the bank approves for payment. No funds are disbursed for other corporate
purposes. The amount of outstanding construction loans secured by equipment,
which are mostly major construction trucks, at December 31, 2008 was
$17,060,855, 29% of total construction loans.




These
loans mature from July 2009 through May 2013. Each time we begin a construction
project, we obtain a loan from one of several banks to purchase equipment
supplies and mobilize our employees and materials to the worksite.  As we
complete a percentage of each construction project, our customer certifies our
work in process and every month, our customer or its financing source,
pays us the interim payment for our completed work, less a retention
percentage (which we will collect at the end of the warranty period). When the
payment is received, it is put into the deposit account which was set up
with the bank upon signing the construction loan and from which we repay the
bank for monthly interest and principal when due. The remaining balance of
this account will be used by the company for expenses related to this
contract or corporate purposes.  When we need to pay to the suppliers
or sub-contractors and other expenditures related to the contract,
we submit to the bank documents such as supply contracts,
subcontractor contract, invoices or demand letters. Upon approval of our
submission, the bank issues Indebtedness Certificate. After this process, the
bank transfers the funds to our bank account so that the payments can be
made to our suppliers or sub-contractors.




Events
that may prevent us from obtaining additional funding from the banks include:
(i) use of presently borrowed funds borrowed for unauthorized purposes, (ii)
cash flows from the relevant construction contract being significantly lower
than estimated, and (iii) a material downturn in our overall financial
position.




We
maintain lines of credit with various banks and as of December 31, 2008, the
outstanding balance was $29.3 million and available balances were $16.7 million
as of December 31, 2008. The banks do not have any financial covenants. Since
these lines of credits are linked to construction contracts, however, our
ability to draw down on these lines of credit is controlled by the
banks.




It is
the general practice of Vietnamese banks to give short term loans for each
construction contract and make the loans renewable every year until the
construction contract completed. As a result, the loans are classified as
current liabilities. Our retention receivables and a portion of our work in
process, however, are classified as long-term assets. As a result, our working
capital deficit as of December 31, 2008 was $26,621,023. As of December 31,
2008, long-term retention receivables and long-term work in process totaled
$15,481,590.




We
expect to renew these loans with the banks and repay the balances as we complete
our projects. In the first six months of 2009, we made $40,632,840 of payments
on our notes payable. We also needed to draw down $47,461,073 from our notes
payable to finance our construction projects.




Although
a substantial majority of our loans are not secured by our assets other than our
work in process and receivables, our banks decision not to renew these loans or
our failure to repay these loans could have important consequences including the
following:




•
            it may limit our ability to
      borrow money or issue equity to finance our working capital, construction
      projects or capital projects or other
  purposes;


•
            it may limit our flexibility
      in planning for, or reacting to, changes in our operations or
      business;


•
            a substantial portion of our
      cash flow from operations could be dedicated to the repayment of our
      indebtedness and would not be available for other
      purposes;


•
            there would be a material
      adverse effect on our business and financial condition if we were unable
      to service our indebtedness or obtain additional financing, as needed;
      and


•
            It may result in the banks
      repossessing up to $14,000,000 of our
  equipment.





Cash
flows




The
Company used cash of $835,595  in operating activities for the year
ended December 31, 2008 compared to $10,095,134 from operating activities for
the year ended December 31, 2007. The major reasons are an increase in
advances from customer  of $10,135,499 in 2008 compared to $4,792,728
in 2007, an increase in payable to employees in the amount of
$2,009,274  and $48,346  during the year ended December 31,
2008 and 2007, respectively and due to a reduction in gain or loss from other
investment activities  from gain of $9,684,686 in 2007 to $439,934 loss in
2008.




In
investing activities, we used net cash of $12,769,359 for the year ended
December 31, 2008 to purchase property, equipment and investments in other
entities. The Company spent $13,053,533 for the purchase of fixed assets, which
primarily included vehicles, equipment, machinery and intangible assets. The
Company also received $527,718 in proceeds from disposal of fixed assets.
Additionally,  the Company purchased investments in other entities
during the December 31, 2008 in the amount of $472,592 and received $179,360
from sale of investments.  The Company used net cash of $5,539,509 for
the year ended December 31, 2007 in purchase of property, equipment and
investments in other entities. The Company spent $9,367,374 for the purchase of
fixed assets, which primary include for the purchase of vehicles, equipment,
machinery and intangible assets. The Company also received $726,171 in proceeds
from disposal of fixed assets. Also, the Company’s investments in other entities
during the year 2007 increased by $12,054,906 and proceeds from sales of
investment were $15,121,687.


33





During
the year ended December 31, 2008, the Company generated cash flows of
$15,489,909 from financing activities, which included $87,478,969 from loan
proceeds and repayments of loans in the amount of $76,007,827. The Company also
received $3,795,675 proceeds from additional investments by  minority
interests during the year ended December 31, 2008. During the year ended
December 31, 2007, the Company generated cash flows of $16,291,720 from
financing activities, which included $9,131,721 from common shares issued, and
$69,909,001 from loan proceeds and  repayments for loans of
$68,481,879. The Company also received $5,859,035 proceeds from additional
investments by  minority interests during the year ended December 31,
2007.





The
Company generated net income of $631,816 and $5,894,868 for the year ended
December 31, 2008 and 2007, respectively.





As of
December 31, 2008, the Company has approximately $252 million for contract
backlog. We intend to meet our liquidity requirements, including capital
expenditures related to the purchase of equipment, purchase of materials, and
the expansion of our business, through cash flow provided by operations and
funds raised through cash investments. We may also use short term loans bank
loans to meet our liquidity requirements. There is no assurance, however, that
without funds we will ultimately be able to carry out our business.





Off-Balance
Sheet Arrangements





We do not
have any off balance sheet arrangements that are reasonably likely to have a
current or future effect on our financial condition, revenues, results of
operations, liquidity or capital expenditures.




ITEM
7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





The
following discussion about Cavico Corp’s market risk involves forward-looking
statements. Actual results could differ materially from those projected in the
forward-looking statements.




Currency
Fluctuations and Foreign Currency Risk




Substantially
all of our operations are conducted in Vietnam.  All of our sales and
purchases are conducted in Vietnamese Dong, which is the official currency of
Vietnam.  As a result, the effect of the fluctuations of exchange
rates is considered minimal to our business operations.




Substantially
all of our revenues and expenses are denominated in Dong.  However, we
use the United States dollar for financial reporting
purposes.   Exchange rate fluctuations may adversely affect the
value, in U.S. dollar terms, of our net assets and income derived from its
operations in Vietnam.




Interest
Rate Risk




We do not
have significant interest rate risk, as most of our debt obligations are
primarily short-term in nature, with fixed interest rates.




Credit
Risk




We have
not experienced significant credit risk, as our major customers are government
related and have good payment records.  Our receivables are monitored
regularly by our credit managers.




Inflation
Risk




Vietnam
is currently experiencing high inflation. The average inflation rate for the
year ended December 31, 2008 was 23%.


34


ITEM
8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





CAVICO
CORP. AND SUBSIDIARIES


FINANCIAL
STATEMENTS


December
31, 2008 and 2007





Contents





PageReport
      of Independent Registered Public Accounting Firm
                      
                      
                      F-2Financial
      Statements:Consolidated
      Balance Sheets as of December 31, 2008 and 2007
                      
                      
                      F-3Consolidated
      Statements of Operations and Comprehensive Income for Years Ended December
      31, 2008 and 2007
                      
                      
                      F-5Consolidated
      Statement of Shareholders’ Equity for the Years Ended December 31, 2008
      and 2007
                      
                      
                      F-6Consolidated
      Statements of Cash Flows for the Years Ended December 31, 2008 and
      2007
                      
                      
                      F-7Notes
      to Consolidated Financial Statements
                      
                      
                      F-9 - F-34


F-1




REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To the
Board of Directors




Cavico
Corp. and Subsidiaries




We have
audited the accompanying consolidated balance sheets of Cavico Corp. and
Subsidiaries (“the Company”) as of December 31, 2008 and 2007, and the related
consolidated statements of operations and comprehensive income, stockholders’
equity  and cash flows for the years then ended.  These
consolidated financial statements are the responsibility of the Company’s
management. 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 of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. 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 financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.




In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Cavico Corp.
and Subsidiaries at December 31, 2008 and 2007, and the results of its
operations, stockholders’ equity and its cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.




We
draw attention to Note 1 to the financial statements, which describes the
reverse stock split approved by the Company's Board of Directors and
shareholders to be effective concurrently with the effective date of the
Company’s registration statement on Form S-1, (File No. 333-159464),
 for the registration of 3,571,428 shares of common stock which has been
filed with the U.S. Securities and Exchange Commission. Our opinion is not
qualified in respect of this matter.




As
discussed in Note 20 to the consolidated financial statements, the accompanying
2007 financial statements have been restated.




/s/ PMB
Helin Donovan, LLP




PMB Helin
Donovan, LLP




Certified
Public Accountants




San
Francisco, California




April 6,
2009


F-2




CAVICO
CORP. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS


December
31, 2008 and 2007


2008
                                        
                                        
                                        2007(Restated)ASSETSCurrent
      Assets:Cash
                                        
                                        $
                                        3,148,985
                                        
                                        
                                        $
                                        1,412,201Investments,
      available for sale
                                        
                                        
                                        1,820,406
                                        
                                        
                                        
                                        9,854,036Accounts
      receivable -trade- net
                                        
                                        
                                        9,184,339
                                        
                                        
                                        
                                        7,659,271Receivable
      - other
                                        
                                        
                                        7,491,803
                                        
                                        
                                        
                                        4,852,957Inventory
                                        
                                        
                                        3,940,768
                                        
                                        
                                        
                                        3,144,450Work
      in process
                                        
                                        
                                        29,606,602
                                        
                                        
                                        
                                        22,613,806Receivables
      and advances from related parties
                                        
                                        
                                        1,088,596
                                        
                                        
                                        
                                        673,057Other
      current assets
                                        
                                        
                                        1,602,272
                                        
                                        
                                        
                                        1,612,968Total
      current assets
                                        
                                        
                                        57,883,771
                                        
                                        
                                        
                                        51,822,746Fixed
      Assets:Land
      and building development costs
                                        
                                        
                                        8,925,718
                                        
                                        
                                        
                                        3,993,191Temporary
      housing assets
                                        
                                        
                                        548,642
                                        
                                        
                                        
                                        432,460Machinery
      and equipment
                                        
                                        
                                        26,411,441
                                        
                                        
                                        
                                        20,671,611Vehicles
                                        
                                        
                                        12,211,356
                                        
                                        
                                        
                                        12,666,344Office
      and computer equipment
                                        
                                        
                                        780,756
                                        
                                        
                                        
                                        710,16048,877,913
                                        
                                        
                                        
                                        38,473,766Less
      accumulated depreciation
                                        
                                        
                                        (16,973,105
                                        )
                                        
                                        
                                        (12,808,293
                                        )Net
      fixed assets
                                        
                                        
                                        31,904,808
                                        
                                        
                                        
                                        25,665,473Intangible
      Assets:Goodwill
                                        
                                        
                                        855,947
                                        
                                        
                                        
                                        921,703Licenses
      - net
                                        
                                        
                                        301,885
                                        
                                        
                                        
                                        25,941Net
      Intangible Assets
                                        
                                        
                                        1,157,832
                                        
                                        
                                        
                                        947,644Other
      Non Current Assets:Investments,
      non-consolidated companies & JVs
                                        
                                        
                                        3,065,516
                                        
                                        
                                        
                                        2,585,636Long-term
      retention receivables
                                        
                                        
                                        14,933,897
                                        
                                        
                                        
                                        7,770,407Prepaid
      expenses
                                        
                                        
                                        2,530,944
                                        
                                        
                                        
                                        1,910,527Long-term
      work in process
                                        
                                        
                                        547,693
                                        
                                        
                                        
                                        2,542,477Other
      assets
                                        
                                        
                                        763,604
                                        
                                        
                                        
                                        1,273,094Total
      other assets
                                        
                                        
                                        21,841,654
                                        
                                        
                                        
                                        16,082,141TOTAL
      ASSETS
                                        
                                        $
                                        112,788,065
                                        
                                        
                                        $
                                        94,518,004




The
accompanying notes are an integral part of these consolidated financial
statements.


F-3




CAVICO
CORP. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS


December
31, 2008 and 2007




2008
                                                                        
                                                                        
                                                                        2007(Restated)LIABILITIESCurrent
      Liabilities:Accounts
      payable
                                                                        
                                                                        $
                                                                        10,214,130
                                                                        
                                                                        
                                                                        $
                                                                        10,676,932Accounts
      payable – related parties
                                                                        
                                                                        
                                                                        20,520
                                                                        
                                                                        
                                                                        
                                                                        45,547Accrued
      expenses
                                                                        
                                                                        
                                                                        4,485,336
                                                                        
                                                                        
                                                                        
                                                                        6,092,787Advances
      from customers
                                                                        
                                                                        
                                                                        15,102,331
                                                                        
                                                                        
                                                                        
                                                                        5,923,085Payable
      to employees
                                                                        
                                                                        
                                                                        4,220,124
                                                                        
                                                                        
                                                                        
                                                                        2,412,672Notes
      payable - current
                                                                        
                                                                        
                                                                        50,141,069
                                                                        
                                                                        
                                                                        
                                                                        41,202,014Notes
      payable - related parties
                                                                        
                                                                        
                                                                        208,667
                                                                        
                                                                        
                                                                        
                                                                        1,056,363Current
      portion of capital lease obligations
                                                                        
                                                                        
                                                                        112,617
                                                                        
                                                                        
                                                                        
                                                                        24,964Total
      current liabilities
                                                                        
                                                                        
                                                                        84,504,794
                                                                        
                                                                        
                                                                        
                                                                        67,434,364Long-Term
      Debt:Capital
      lease obligations – long-term
                                                                        
                                                                        
                                                                        269,307
                                                                        
                                                                        
                                                                        
                                                                        39,243Long-term
      debt
                                                                        
                                                                        
                                                                        9,240,394
                                                                        
                                                                        
                                                                        
                                                                        8,869,271Total
      long-term debt
                                                                        
                                                                        
                                                                        9,509,701
                                                                        
                                                                        
                                                                        
                                                                        8,908,514TOTAL
      LIABILITIES
                                                                        
                                                                        
                                                                        94,014,495
                                                                        
                                                                        
                                                                        
                                                                        76,342,878Stockholders'
      Equity:Preferred
      stock:$.001 par value - 25,000,000 authorized, none issued and
      outstanding
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        -Common
      stock, $.001 par value; 300,000,000 shares authorized; 3,274,942 and
      3,271,192 shares issued, 3,047,795 and 2,919,045 shares outstanding,
      respectively
                                                                        
                                                                        
                                                                        3,048
                                                                        
                                                                        
                                                                        
                                                                        2,919Additional
      paid-in capital
                                                                        
                                                                        
                                                                        13,619,865
                                                                        
                                                                        
                                                                        
                                                                        13,235,244Accumulated
      deficit
                                                                        
                                                                        
                                                                        (6,547,740
                                                                        )
                                                                        
                                                                        
                                                                        (6,950,248
                                                                        )Accumulated
      other comprehensive income (loss)
                                                                        
                                                                        
                                                                        (3,864,303
                                                                        )
                                                                        
                                                                        
                                                                        3,080,235Total
      Cavico Corp. stockholders' equity
                                                                        
                                                                        
                                                                        3,210,870
                                                                        
                                                                        
                                                                        
                                                                        9,368,150Noncontrolling
      interest
                                                                        
                                                                        
                                                                        15,562,700
                                                                        
                                                                        
                                                                        
                                                                        8,806,976Total
      stockholders' equity
                                                                        
                                                                        
                                                                        18,773,570
                                                                        
                                                                        
                                                                        
                                                                        18,175,126TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                                                                        
                                                                        $
                                                                        112,788,065
                                                                        
                                                                        
                                                                        $
                                                                        94,518,004




The
accompanying notes are an integral part of these consolidated financial
statements.


F-4




CAVICO
CORP. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


For
the Years Ended December 31, 2008 and 2007




2008
                                                      
                                                      
                                                      2007(Restated)Revenues:Civil
      construction
                                                      
                                                      $
                                                      50,430,360
                                                      
                                                      
                                                      $
                                                      31,493,768Mining
      construction
                                                      
                                                      
                                                      4,259,850
                                                      
                                                      
                                                      
                                                      4,322,471Commercial
      activities
                                                      
                                                      
                                                      3,316,059
                                                      
                                                      
                                                      
                                                      2,034,367Total
      revenue
                                                      
                                                      
                                                      58,006,269
                                                      
                                                      
                                                      
                                                      37,850,606Cost
      of Goods Sold:Civil
      construction
                                                      
                                                      
                                                      42,461,358
                                                      
                                                      
                                                      
                                                      27,187,859Mining
      construction
                                                      
                                                      
                                                      3,315,077
                                                      
                                                      
                                                      
                                                      2,682,428Commercial
      activities
                                                      
                                                      
                                                      2,636,481
                                                      
                                                      
                                                      
                                                      1,468,948Total
      cost of goods sold
                                                      
                                                      
                                                      48,712,916
                                                      
                                                      
                                                      
                                                      31,339,235Gross
      Profit
                                                      
                                                      
                                                      9,293,353
                                                      
                                                      
                                                      
                                                      6,511,371Operating  Expenses:Selling
      expenses
                                                      
                                                      
                                                      78,779
                                                      
                                                      
                                                      
                                                      82,703General
      & administrative expenses
                                                      
                                                      
                                                      6,901,263
                                                      
                                                      
                                                      
                                                      4,768,659Total
      operating expenses
                                                      
                                                      
                                                      6,980,042
                                                      
                                                      
                                                      
                                                      4,851,362Total
      income from operations
                                                      
                                                      
                                                      2,313,311
                                                      
                                                      
                                                      
                                                      1,660,009Other
      income (expenses):Gain
      on disposal of assets
                                                      
                                                      
                                                      44,471
                                                      
                                                      
                                                      
                                                      119,986Other
      income
                                                      
                                                      
                                                      34,675
                                                      
                                                      
                                                      
                                                      31,141Gain
      (loss) on sales of marketable securities
                                                      
                                                      
                                                      (439,934
                                                      )
                                                      
                                                      
                                                      9,684,686Loss
      on foreign currency exchange
                                                      
                                                      
                                                      (100,982
                                                      )
                                                      
                                                      
                                                      (250,870
                                                      )Interest
      income
                                                      
                                                      
                                                      891,898
                                                      
                                                      
                                                      
                                                      1,046,394Interest
      expense
                                                      
                                                      
                                                      (3,101,243
                                                      )
                                                      
                                                      
                                                      (2,926,198
                                                      )Total
      other income ( expense)
                                                      
                                                      
                                                      (2,671,115
                                                      )
                                                      
                                                      
                                                      7,705,139Income
      before income taxes and noncontrolling interest
                                                      
                                                      
                                                      (357,804
                                                      )
                                                      
                                                      
                                                      9,365,148Income
      taxes benefit (expense)
                                                      
                                                      
                                                      2,283,822
                                                      
                                                      
                                                      
                                                      (2,684,945
                                                      )Income
      before noncontrolling interest
                                                      
                                                      
                                                      1,926,018
                                                      
                                                      
                                                      
                                                      6,680,203Net
      income attributable to noncontrolling interest
                                                      
                                                      
                                                      (1,294,202
                                                      )
                                                      
                                                      
                                                      (785,335
                                                      )Net
      income attributable to Cavico Corp.
                                                      
                                                      $
                                                      631,816
                                                      
                                                      
                                                      $
                                                      5,894,868Other
      comprehensive income:Unrealized
      gain(loss) on  investments available for
sale
                                                      
                                                      
                                                      (6,352,628
                                                      )
                                                      
                                                      
                                                      3,287,255Foreign
      currency translation adjustment
                                                      
                                                      
                                                      (591,910
                                                      )
                                                      
                                                      
                                                      38,223Comprehensive
      income (loss)
                                                      
                                                      $
                                                      (6,312,722
                                                      )
                                                      
                                                      $
                                                      9,220,346Per
      Share Information:Weighted
      average number of common shares outstanding-basic and diluted (after 40
      for one reverse split)
                                                      
                                                      
                                                      2,941,726
                                                      
                                                      
                                                      
                                                      2,881,806Net
      income per common share-basic and diluted
                                                      
                                                      $
                                                      0.21
                                                      
                                                      
                                                      $
                                                      2.05




The
accompanying notes are an integral part of these consolidated financial
statements.


F-5




CAVICO
CORP. AND SUBSIDIARIES


Consolidated Statement
of Stockholders'
Equity


For
the Years Ended December 31, 2008 and 2007




AccumulatedCommon Stock
                            
                            
                            Additional
                              Paid-in
                            
                            
                            Subscription
                            
                            
                            Accumulated
                            
                            
                            other
                              Comprehensive
                            
                            
                            Total Cavico Corp
                              Stockholders’Shares
                            
                            
                            Amount
                            
                            
                            Capital
                            
                            
                            Receivable
                            
                            
                            Deficit
                            
                            
                            Income(loss)
                            
                            
                            EquityBalance,
      December 31, 2006 (as previously reported)
                            
                            
                            2,032,660
                            
                            
                            $
                            2,033
                            
                            
                            $
                            4,119,409
                            
                            
                            $
                            (15,000
                            )
                            
                            $
                            (12,945,137
                            )
                            
                            $
                            (245,243
                            )
                            
                            $
                            (9,083,938
                            )Shares
      issued for cash
                            
                            
                            893,500
                            
                            
                            
                            893
                            
                            
                            
                            9,115,828
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            9,116,721Shares
      returned and to be issued
                            
                            
                            (7,115
                            )
                            
                            
                            (7
                            )
                            
                            
                            7
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -Foreign
      currency translation adjustment
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            38,223
                            
                            
                            
                            38,223Unrealized
      gain on securities available for sale
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            3,287,255
                            
                            
                            
                            3,287,255Consolidation
      of Cavico Energy
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            100,021
                            
                            
                            
                            -
                            
                            
                            
                            100,021Cash
      received on subscription receivables
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            15,000
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            15,000Net
      income
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            5,894,868
                            
                            
                            
                            -
                            
                            
                            
                            5,894,868Balance,
      December 31, 2007 (restated)
                            
                            
                            2,919,045
                            
                            
                            $
                            2,919
                            
                            
                            $
                            13,235,244
                            
                            
                            $
                            -
                            
                            
                            $
                            (6,950,248
                            )
                            
                            $
                            3,080,235
                            
                            
                            $
                            9,368,150Shares
      issued for services
                            
                            
                            3,750
                            
                            
                            
                            4
                            
                            
                            
                            84,746
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            84,750Shares
      issued for cash
                            
                            
                            125,000
                            
                            
                            
                            125
                            
                            
                            
                            299,875
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            300,000Foreign
      currency translation adjustment
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (591,910
                            )
                            
                            
                            (591,910
                            )Unrealized
      loss on securities available for sale
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (6,352,628
                            )
                            
                            
                            (6,352,628
                            )Consolidation
      of additional subsidiaries
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (229,308
                            )
                            
                            
                            -
                            
                            
                            
                            (229,308
                            )Net
      income
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            631,816
                            
                            
                            
                            -
                            
                            
                            
                            631,816Balance,
      December 31, 2008
                            
                            
                            3,047,795
                            
                            
                            $
                            3,048
                            
                            
                            $
                            13,619,865
                            
                            
                            $
                            -
                            
                            
                            $
                            (6,547,740
                            )
                            
                            $
                            (3,864,303
                            )
                            
                            $
                            3,210,870




The
accompanying notes are an integral part of these consolidated financial
statements.


F-6




CAVICO
CORP. AND SUBSIDIARIES


Consolidated
Statement of Cash Flows


For
the Years Ended December 31, 2008 and 2007




2008
                                            
                                            
                                            2007Cash
      Flows From Operating Activities:
                                            
                                            
                                            
                                            
                                            
                                            (Restated)Net
      income
                                            
                                            $
                                            1,926,018
                                            
                                            
                                            $
                                            6,680,203Adjustments
      to reconcile net income to net cash used in operating
      activities:Depreciation
      and amortization
                                            
                                            
                                            5,985,845
                                            
                                            
                                            
                                            4,661,372Change
      in provisions for uncollectible receivables
                                            
                                            
                                            212,828
                                            
                                            
                                            
                                            83,525Gain
      on sale of fixed assets
                                            
                                            
                                            (44,471
                                            )
                                            
                                            
                                            (119,986
                                            )(Gain)
      loss from other investment activities
                                            
                                            
                                            439,934
                                            
                                            
                                            
                                            (9,684,686
                                            )Stock
      issued for services
                                            
                                            
                                            84,750
                                            
                                            
                                            
                                            -Changes
      in assets and liabilities:Increase
      in accounts receivable and other current assets
                                            
                                            
                                            (12,403,280
                                            )
                                            
                                            
                                            (9,709,796
                                            )Increase
      in inventory
                                            
                                            
                                            (1,004,665
                                            )
                                            
                                            
                                            (628,314
                                            )Increase
      in construction WIP
                                            
                                            
                                            (6,608,044
                                            )
                                            
                                            
                                            (6,808,957
                                            )Decrease
      (increase) in other assets
                                            
                                            
                                            (483,266
                                            )
                                            
                                            
                                            (1,792,742
                                            )Increase
      in advances from customer
                                            
                                            
                                            10,135,499
                                            
                                            
                                            
                                            4,792,728Increase
      in payable to employees
                                            
                                            
                                            2,009,274
                                            
                                            
                                            
                                            48,346Increase(decrease)  in
      accounts payables and accrued expenses
                                            
                                            
                                            (1,086,017
                                            )
                                            
                                            
                                            2,383,173Total
      adjustments
                                            
                                            
                                            (1,467,411
                                            )
                                            
                                            
                                            (15,990,002
                                            )Net
      Cash Used in Operating Activities
                                            
                                            
                                            (835,595
                                            )
                                            
                                            
                                            (10,095,134
                                            )Cash
      Flows from Investing Activities:Purchase
      of property, equipment and intangible assets
                                            
                                            
                                            (13,053,533
                                            )
                                            
                                            
                                            (9,367,374
                                            )Cash
      acquired in consolidation  of new entities
                                            
                                            
                                            49,688
                                            
                                            
                                            
                                            34,913Proceeds
      from withdrawals of investments in nonconsolidated
      companies
                                            
                                            
                                            179,360
                                            
                                            
                                            
                                            15,121,687Purchase
      of investments in nonconsolidated companies and joint
      venture
                                            
                                            
                                            (472,592
                                            )
                                            
                                            
                                            (12,054,906
                                            )Proceeds
      from sales of fixed assets
                                            
                                            
                                            527,718
                                            
                                            
                                            
                                            726,171Net
      Cash Used in Investing Activities
                                            
                                            
                                            (12,769,359
                                            )
                                            
                                            
                                            (5,539,509
                                            )Cash
      Flow From Financing Activities:Proceeds
      from contribution by noncontrolling interests
                                            
                                            
                                            3,795,675
                                            
                                            
                                            
                                            5,859,035Proceeds
      from shares issued
                                            
                                            
                                            300,000
                                            
                                            
                                            
                                            9,131,721Proceeds
      from notes payable
                                            
                                            
                                            84,818,167
                                            
                                            
                                            
                                            66,674,053Proceeds
      from notes payable - related parties
                                            
                                            
                                            2,660,802
                                            
                                            
                                            
                                            3,234,948Payments
      of notes  payable- others
                                            
                                            
                                            (73,082,393
                                            )
                                            
                                            
                                            (63,949,376
                                            )Payments
      of notes payable- related parties
                                            
                                            
                                            (2,925,434
                                            )
                                            
                                            
                                            (4,532,503
                                            )Payments
      of capital leases obligations
                                            
                                            
                                            (76,908
                                            )
                                            
                                            
                                            (126,158
                                            )Net
      Cash Provided By Financing Activities
                                            
                                            
                                            15,489,909
                                            
                                            
                                            
                                            16,291,720Increase
      in Cash
                                            
                                            
                                            1,884,955
                                            
                                            
                                            
                                            657,077Cash
      at Beginning of period
                                            
                                            
                                            1,412,201
                                            
                                            
                                            
                                            716,901Effect
      of foreign currency translation
                                            
                                            
                                            (148,171
                                            )
                                            
                                            
                                            38,223Cash
      at End of period
                                            
                                            $
                                            3,148,985
                                            
                                            
                                            $
                                            1,412,201Supplemental
      Cash Flow Information:Interest
      paid
                                            
                                            $
                                            8,890,961
                                            
                                            
                                            $
                                            5,417,369Taxes
      paid
                                            
                                            $
                                            124,590
                                            
                                            
                                            $
                                            500,366




The
accompanying notes are an integral part of these consolidated financial
statements.


F-7




CAVICO
CORP. AND SUBSIDIARIES


Consolidated
Statement of Cash Flows


For
the Years Ended December 31, 2008 and 2007




2008
                  
                  
                  2007Non-Cash  Investing and Financing
      Activities:Assets
      acquired under capital lease
                  
                  $
                  509,482
                  
                  
                  $
                  32,100Non
      cash changes to assets and liabilities due to the consolidation
      of  subsidiaries previously accounted for as cost method
      investments;Accounts
      receivable and other current assets
                  
                  $
                  2,257,815
                  
                  
                  $
                  2,018,015Inventory
                  
                  
                  4,718
                  
                  
                  
                  225,949Construction
      Work in Progress
                  
                  
                  325,832
                  
                  
                  
                  2,055,375Other
      Assets
                  
                  
                  108,753
                  
                  
                  
                  238,466Accounts
      payable & Accrued expenses
                  
                  
                  640,476
                  
                  
                  
                  4,194,988Payable
      to employees
                  
                  
                  537,963
                  
                  
                  
                  126,228




The
accompanying notes are an integral part of these consolidated financial
statements.


F-8


CAVICO
CORP. AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 December
31, 2008 and 2007




NOTE
1 – ORGANIZATION AND BASIS OF PRESENTATION




The
Company




Cavico
Corp. and Subsidiaries, (the Company) was organized as a Delaware corporation on
September 13, 2004, to engage in any lawful act or activity for which
corporations may be organized. At the time of incorporation, the Company was
named Laminaire Corp. and in November 2004 the name was changed to Agent 155
Media Group, Inc. In April 2006, the Company entered into an “Asset Purchase
Agreement” with Cavico Vietnam Joint Stock Company, a joint stock company duly
organized and existing under the laws of Socialist Republic of Vietnam. Under
this purchase agreement, Agent 155, the buyer, transferred 79,000,000 shares
(1,975,000 shares post-reverse split) of the Company’s common shares for all
assets and liabilities of Cavico Vietnam Joint Stock Company (“CVJSC”) following
a 300-to-1 reverse stock split of Agent 155 common stock. On May 2, 2006,
following the consummation of the Asset Purchase Agreement, the name of the
Company was changed to Cavico Corp.




The
merger of Agent 155 Media Group, Inc. with “CVJSC” was accounted for as a
reverse acquisition under the purchase method of accounting since the
shareholders of CVJSC obtained control of the consolidated entity (the
“Company”). Accordingly, the merger of the two companies is recorded as a
recapitalization of Agent 155 Media Group, Inc., with CVJSC being treated as the
continuing entity. The historical financial statements to be presented are those
of CVJSC.




Cavico
Vietnam Joint Stock Company in Hanoi, Vietnam. Construction and Investment
Vietnam Joint Stock Company’s main operations include the following:
constructing power projects up to 35KV, shoveling mine soil and stone,
constructing transport and irrigation works, industrial and civil construction,
leasing machines and equipment, trading production and consumption materials,
machines and equipment for construction, transport, irrigation, and power
projects installation.




The
financial statements are presented after giving the retroactive effect to a 40
for 1 reverse stock split.




Principles
of Consolidation




The
accompanying consolidated financial statements include the accounts of the
Company, its wholly owned subsidiaries, majority owned subsidiaries and all
entities in which the Company has less than fifty percent ownership that are
variable interest entities in which Cavico Vietnam is the primary beneficiary.
The Company also consolidates all entities in which the Company has less than
fifty percent ownership in which the Company has the power to control the
majority of the voting interest through its ownership and agreements with other
stockholders.   The Company exercises significant control over
all of its consolidated entities though shared management, guarantees of
indebtedness, inter-company credit lines, shared use of assets and control
of major contracts. Some of these consolidated entities were able to raise
working capital by selling the shares to independent third parties without
affecting the benefits the Company received from these
entities. Profit generated from the entities in which the Company has less
than fifty percent ownership shares was 25% of total profit for the year ended
December 31, 2008. All significant intercompany accounts and transactions have
been eliminated.  The consolidated financial statements include the
accounts of the parent company, Cavico Corp., and its following
subsidiaries:


% of OwnershipSubsidiary
                        
                        12/31/08
                        
                        
                        12/31/07Cavico
      Vietnam Company Limited
                        
                        
                        100
                        %
                        
                        
                        100
                        %Cavico
      Bridge and Underground Construction JSC
                        
                        
                        66
                        %
                        
                        
                        66
                        %Cavico
      Mining and Construction JSC
                        
                        
                        26
                        %
                        
                        
                        39
                        %Cavico
      Trading JSC
                        
                        
                        63
                        %
                        
                        
                        63
                        %Cavico
      Construction and Infrastructure Investment JSC
                        
                        
                        69
                        %
                        
                        
                        69
                        %Cavico
      Power and Resource JSC
                        
                        
                        78
                        %
                        
                        
                        78
                        %Cavico
      Transport JSC
                        
                        
                        74
                        %
                        
                        
                        74
                        %Cavico
      Hydropower Construction JSC
                        
                        
                        73
                        %
                        
                        
                        73
                        %Cavico
      Energy Construction JSC
                        
                        
                        38
                        %
                        
                        
                        38
                        %Cavico
      Tower JSC
                        
                        
                        38
                        %
                        
                        
                        39
                        %Cavico
      Industry and Technical Service JSC
                        
                        
                        67
                        %
                        
                        
                        65
                        %Cavico
      Manpower JSC
                        
                        
                        30
                        %
                        
                        
                        30
                        %Cavico
      Stone and Mineral JSC
                        
                        
                        36
                        %
                        
                        
                        35
                        %Cavico
      PHI Cement JSC
                        
                        
                        93
                        %
                        
                        
                        38
                        %Cavico
      Luong Son JSC
                        
                        
                        93
                        %
                        
                        
                        100
                        %Cavico
      Land JSC
                        
                        
                        13
                        %
                        
                        
                        11
                        %


F-9




CAVICO
CORP. AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 December
31, 2008 and 2007




Name of Entity
                              
                              Consolidation Date
                              
                              Percentage of ownership
                              
                              Description of businessCavico
      Tower
                              
                              April
      01, 2008
                              
                              
                              39
                              %
                              Office
      for leasesCavico
      ITS
                              
                              April
      01, 2008
                              
                              
                              66
                              %
                              Steel
      fabrication productionCavico
      Manpower
                              
                              April
      01, 2008
                              
                              
                              100
                              %
                              Labor
      supply for projectsCavico
      Stone & Mineral
                              
                              July
      01, 2008
                              
                              
                              35
                              %
                              Production
      of white stoneCavico
      PHI
                              
                              July
      01, 2008
                              
                              
                              38
                              %
                              Cement
      factory operationCavico
      Luong Son JSC
                              
                              July
      01, 2008
                              
                              
                              100
                              %
                              Operation
      of tourism zoneCavico
      Land JSC
                              
                              July
      01, 2008
                              
                              
                              11
                              %
                              Land
      investment and developmentCavico
      Energy
                              
                              April
      01, 2007
                              
                              
                              38
                              %
                              Civil
      construction, specializing in hydropower construction
      projects




NOTE
      2-
            SUMMARY OF
      SIGNIFICANT ACCOUNTING
POLICIES




The
financial statements are presented after giving the retroactive
effect  to 40 for 1 reverse stock split.




Estimates




The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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 revenue and expenses during the reporting
period. Such estimates may be materially different from actual financial
results. Significant estimates include the recoverability of long-lived assets
and the collectability of accounts receivable.




Cash
and Cash Equivalents




The
Company maintains the majority of its cash at commercial banks and as cash on
hand. The total cash balances  in the commercial banks are insured by
the state bank of Vietnam. The Company’s bank account in United States at
times may exceed federally insured limits. The Company has not experienced any
losses on such accounts. For purposes of the statement of cash flows, the
Company considers all cash and highly liquid investments with initial maturities
of three months or less to be cash equivalents.




Investment
in Marketable Securities




Management
determines the appropriate classification of investments at the time of purchase
and reevaluates such designation as of each balance sheet
date.  Marketable securities that are actively traded  in
the near term are classified as trading securities and are reported at fair
value, with unrealized gains and losses recognized in earnings.
Available-for-sale investments are stated at fair value with net unrealized
gains or losses reported in stockholders’ equity as other comprehensive
income(loss).  Investments classified as held-to-maturity are carried
at amortized cost in the absence of any other than temporary decline in
value.  Realized gains and losses, and declines in value judged to be
other than temporary are included in other income.  The cost of
securities sold is computed using the specific identification
method.




Accounts
Receivable




The
Company grants credit to customers within Vietnam and does not require
collateral. The Company’s ability to collect receivables is affected by economic
fluctuations in the geographic areas and industries served by the Company.
Reserves for uncollectable amounts are provided, based on past experience and a
specific analysis of the accounts, which management believes are sufficient.
Although the Company expects to collect amounts due, actual collections may
differ from the estimated amounts. As of December 31, 2008, the Company had a
reserve for doubtful accounts of $597,349 of which $227,759 was reserved for
current receivable and $369,590 for long-term receivable. As of December 31,
2007, the Company had a reserve for doubtful accounts of $385,713 of which
$186,703 was reserved for current receivable and $199,010 for long-term
receivable.


F-10


CAVICO
CORP. AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 December
31, 2008 and 2007


Inventories




Inventories
consist of supplies and raw materials. Supplies, such as fuel and spare parts,
are carried at the weighted average cost. Raw materials are valued at lower of
cost or market.




Work
in Process




Work
in process includes the costs of production such as materials, labor, overhead
and interest cost on projects not yet recognized as revenue.  The
interest costs  included in work in process were $4,235,405 and
$2,458,732 at December 31, 2008 and 2007, respectively. The Company had $520,977
and $547,693 in long term work in process at December 31, 2008 and 2007,
respectively, which will be recorded as cost of goods sold when certified
revenue is recognized. Reserves for uncollectible amounts are provided and are
periodically reviewed for collectability and any costs not expected to have
future value are written off. As of December 31, 2008 and 2007, the reserves
against work in process were $843,494 and $844,285, respectively. The Company
determined these reserves were sufficient for both short term and long term work
in process.




Property
and Equipment




Property
and equipment, including renewals and betterments, are stated at cost. Assets
held under capital leases are recorded at lease inception at the lower of the
present value of the minimum lease payments or the fair market value of the
related assets. The Company follows the practice of capitalizing property and
equipment purchased over $600. The cost of ordinary maintenance and repairs is
charged to operations while renewals and replacements are capitalized.
Depreciation and amortization are computed on the straight-line method over the
following estimated useful lives of the related assets, which range from three
to ten years, and are as follows:




Temporary
      housing assets
            5
      yearsMachinery
      and Equipment
            5
      to 7 yearsVehicles
            3
      to 10 yearsOffice
      Equipment
            3-8
      yearsComputer
      software
            5
      years




Depreciation
expense for the years ended December 31, 2008 and 2007 was $5,985,845 and
$4,661,372,  respectively.




Land
and Building Development




Land
and building development is stated at cost and includes the cost of construction
and other direct costs attributable to the construction of Cavico Tower, a high
rise commercial building in Hanoi which is expected to be completed at the end
of 2010, and land development costs attributable to Chieng Ngan which is an
urban development project in Vietnam. No provision for depreciation is made on
land development until such time as the relevant assets are completed and put
into use.




Long-Lived
Assets




The
Company’s management assesses the recoverability of its long-lived assets by
determining whether the depreciation and amortization of long-lived assets over
their remaining lives can be recovered through projected undiscounted future
cash flows. The amount of long-lived asset impairment if any, is measured based
on fair value and is charged to operations in the period in which long lived
assets impairment is determined by management. At December 31, 2008 and 2007,
the Company’s management believes there was no impairment of its long-lived
assets. There can be no assurance however, that market conditions will not
change or demand for the Company’s services will continue, which could result in
impairment of long-lived assets in the future.




Intangible
Assets




The
Company reviews annually for impairment of intangible assets in accordance with
Statement of Financial Accounting Standards No. 144, Accounting for Impairment
on Disposed of Long lived Assets. In accordance with SFAS 144, an impairment
loss will be recognized if carrying amount of the intangible asset is not
recoverable and its carrying amount exceeds its value. As of December 31, 2008
and 2007, no impairment was recorded.




F-11




CAVICO
CORP. AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 December
31, 2008 and 2007


Goodwill




We
perform goodwill impairment tests in accordance with Statement of Financial
Accounting Standards No. 142, Goodwill and Other Intangible
Assets (“SFAS 142”). We perform these impairment tests annually during
our fourth quarter and more frequently when events and circumstances occur that
indicate a possible impairment of goodwill. In determining whether there is an
impairment of goodwill, we calculate the estimated fair value of the reporting
unit in which the goodwill is recorded using a discounted future cash flow
method. We then compare the resulting fair value to the net book value of the
reporting unit, including goodwill. If the net book value of a reporting unit
exceeds its fair value, we measure and record the amount of the impairment loss
by comparing the implied fair value of the reporting unit’s goodwill with the
carrying amount of that goodwill. As of December 31, 2008 and 2007, no
impairment of goodwill was recorded.




Real
Estate Activities




Cavico
Tower’s, one of our subsidiaries,  principal business activities
consist of civil and industrial construction; internal and external fitting out;
land leveling and surface improvement; building leasing; real estate business;
restaurants and supermarkets operation; real estate consulting; machine and
equipment leasing; materials, machinery and equipment trading for construction,
transport, hydropower; dealers for buying and selling goods, construction
materials trading. During the year 2008, the major activities of the Company
were capital expenditures related to building construction in the amount of
$1,519,241.




Fair
Value of Financial Instruments




Statement
of financial accounting standard No. 107, Disclosures about fair value of
financial instruments, requires that the Company disclose estimated fair values
of financial instruments. The Company’s fair value of financial instruments,
including cash, accounts receivable, accounts payable, accrued expenses and
short term notes payable approximated carrying values because of the short-term
nature of these instruments. Available-for-sale marketable securities and
investments  are recorded at fair values.




Effective
January 1, 2008, the Company adopted Statement of Financial Accounting
Standards No. 157 (SFAS 157), Fair Value Measurements and adopted this
Statement for the assets and liabilities shown in Note 7. SFAS 157
clarifies the definition of fair value, prescribes methods for measuring fair
value, establishes a fair value hierarchy based on the inputs used to measure
fair value, and expands disclosures about the use of fair value measurements.
The adoption of SFAS 157 did not have a material impact on our fair value
measurements. Financial Accounting Standards Board (FASB) Staff Position SFAS
No. 157-2, Effective Date of SFAS No. 157, permits the Company to
defer the recognition and measurement of the nonfinancial assets and
nonfinancial liabilities until January 1, 2009. At December 31, 2008, the
Company did not have any nonfinancial assets or nonfinancial liabilities that
are recognized or disclosed at fair value. SFAS No. 157 requires that financial
assets and liabilities that are reported at fair value be categorized as one of
the following types of investments based upon the methodology for determining
fair value.




Level 1 -
Quoted prices in active markets for identical assets or
liabilities.




Level 2 -
Observable inputs other than Level 1 prices such as quoted prices for similar
assets or liabilities; quoted prices in markets that are not active; or other
inputs that are observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilities.




Level 3 -
Unobservable inputs that are supported by little or no market activity and that
are significant to the fair value of the assets or liabilities.




The
Company utilizes various approaches to measure fair value for available-
for-sale securities.




Long-term
Retention Receivable




Construction
contracts include a two to three year warranty period that is part of the
construction contract. The Company has recorded $14,933,897 and $7,770,407 as
long term retention receivable at December 31, 2008 and 2007, respectively. To
date, the Company has not incurred any warranty costs.


F-12


CAVICO
CORP. AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 December
31, 2008 and 2007


Income
Taxes




The
Company utilizes SFAS No. 109, “Accounting for Income Taxes,” which requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred income taxes are recognized for the tax
consequences in future years of differences between the tax bases of assets and
liabilities and their financial reporting amounts at each period end based on
enacted tax laws and statutory tax rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized.




Concentration
of Credit Risk




The
Company invests its excess cash in government bonds and other highly liquid debt
instrument of financial institutions and corporations with strong credit
ratings. The Company has established guidelines relative to diversification and
maturities to safely maintain an adequate level of liquidity.




Major Customers and Suppliers




The
Company generated 64% and 70% of total revenues from major customers, in the
years ended December 31, 2008 and 2007, respectively. During
the year ended December 31, 2008, the Company had two major customers. The
Company generated $27,200,837 from Electricity of Vietnam under civil
construction and $7,896,737 from Mien Trung HP JSC under civil construction.
During the year ended December 31, 2007, the Company had two major customers.
The Company generated $20,925,130 from Electricity of Vietnam under civil
construction and $4,325,958 from Vinacomin under mining construction.


Electricity of Vietnam was our major
customer since 2003. As a civil contractor, the Company can provide civil
construction work to any customer without relying on current major customer.
However, based on the government plan of power
development, the market of hydro power construction is expected to be
in demand for next 10 years .


The
accounts receivable balance for these customer at December 31, 2008 and 2007 was
$12,179,055and $5,734,874, respectively. The Company did not have long-term
contracts with any of its suppliers for the years ended December 31, 2008 and
2007.




Revenue
Recognition




For all
construction contracts, revenue is recorded when the persuasive evidence of an
arrangement exists, work has been completed, price is fixed or determined and
collection is reasonably assured.




Paragraph
22 of Statement of Position 81-1 “Accounting for Performance of
Construction-Type and Certain Production-Type Contracts” (“SOP 81-1”), provides
that, in a typical construction contract, a contractor has the right to receive
payment for work performed.  The Company recognizes revenues from
construction projects based upon work that is periodically certified as
completed by the customer or which is virtually complete. The Company
considers  the title to work performed  passes to the
customer upon the certification by the customer. Production costs, including
materials, labor and subcontractor costs are allocated to revenue based upon the
ratio of total costs incurred to date compared to total work  to
date.  Costs related to work performed but not completed are included
in work in progress. Any losses from damages to work in process are generally
covered by the customer. Customer-furnished materials, labor, and equipment, and
in certain cases subcontractor materials, labor, and equipment are included in
revenues and cost of revenue when management believes that we are responsible
for the acceptability of the project by client. Contracts are not segmented
between types of services such as engineering and construction, and accordingly,
gross margin is recognized under construction services.




Changes
to total estimated contract cost or losses, if any, are recognized in the period
in which they are determined. Claims against customers are recognized as revenue
upon settlement. During the years ended December 31, 2008 and 2007, the Company
recognized $3,641,465 and $495,132, respectively as revenue. Revenues recognized
in excess of amounts billed are classified as current assets under contract
work-in-progress. Amounts billed to clients in excess of revenues recognized to
date are classified as current liabilities under advances from
customers.




Under SOP
81-1, “Accounting for Performance of Construction Type and Certain Performance
Type Contracts”, the zero profit method permits the recognition of work
performed (uncertified) as revenue at zero profit. Under this method, the
Company would recognize all the cost increases in work in process as revenue and
cost of goods sold with zero profit. The Company would recognize additional
revenue and expenses at zero profit of $6,992,276 and $4,853,624, respectively
as of December 31, 2008 and 2007.




Sales
revenue from commercial activities, such as sales of construction materials or
steel fabrication, is recognized at the date when goods are delivered and
accepted by the buyer and all significant risks and rewards relating to the
ownership of the goods have been passed to the buyer.


F-13


CAVICO
CORP. AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 December
31, 2008 and 2007


Other
Comprehensive Income




The
Company has adopted Financial Accounting Standards Board Statement No. 130,
“Reporting Comprehensive Income” (SFAS 130). SFAS 130 requires reporting and
displaying comprehensive income and its components in a full set of
general-purpose financial statements. The Company’s unrealized loss of $591,910
and unrealized gain of $38,223 for the years ended December 31, 2008 and
2007, respectively relate to the translation of financial statements from
Vietnamese Dong to US Dollars. The Company also recorded an unrealized loss of
$6,352,628 and unrealized gain of $3,287,255 on securities available for sale
for the year ended December 31, 2008, and 2007, respectively.




Foreign
Currency Translation




As of
December 31, 2008, the accounts of the Company were maintained, and the
financial statements were expressed in Vietnamese Dong (VND). The Company
accounts for translation of foreign currency in accordance with Statement of
Financial Accounting Standards No. 52 (SFAS 52) “Foreign Currency Translation,”
with the VND as the functional currency. According to SFAS 52, all assets and
liabilities were translated at the exchange rate on the balance sheet date,
stockholder’s equity was  translated at the historical rates and
statements of operations and statements of cash flows items were translated at
the weighted average exchange rate for the 12  months
period.




Earnings
(Loss) Per Share of Common Stock




Net
earnings (loss) per share of common stock is computed by dividing the net loss
by the weighted average number of shares of common stock outstanding during the
period. Diluted loss per share is determined using the weighted average number
of common shares outstanding during the period, adjusted for the dilutive effect
of common stock equivalents, consisting of shares that might be issued upon
exercise of common stock options. In periods where losses are reported, the
weighted average number of common shares outstanding excludes common stock
equivalents, because their inclusion would be anti-dilutive. There were no
common stock equivalents during the years ended December 31, 2008 and
2007.




Restatement




SFAS
154 requires retrospective application to prior periods’ financial statements of
changes in accounting principle and error correction unless impracticable to do
so. SFAS 154 states an exception to retrospective application when a change in
accounting principle, or the method of applying it, may be inseparable from the
effect of a change in accounting estimate. When a change in principle is
inseparable from a change in estimate, such as depreciation, amortization or
depletion, the change to the financial statements is to be presented in a
prospective manner. The Company has restated its December 31, 2007 financial
statements for corrections of errors. (See Note 20)




Reclassifications




Certain
prior year items have been reclassified to conform to the current year
presentation. These reclassifications had no impact on our consolidated
financial statements.


F-14


CAVICO
CORP. AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 December
31, 2008 and 2007


Recent
Pronouncements




In
December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business Combinations”. The
objective of this statement will significantly change the accounting for
business combinations. Under Statement 141R, an acquiring entity will be
required to recognize all the assets acquired and liabilities assumed in a
transaction at the acquisition date fair value with limited exceptions.
Statement 141 applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. SFAS No. 141(R) will become
effective beginning with the first quarter of 2009. The Company does not expect
the adoption of SFAS No. 141R to have a material impact on the consolidated
financial statements.




In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements-An Amendment of ARB No. 51”. The
objective of this statement is to establish new accounting and reporting
standards for the Noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. Statement 160 is effective for fiscal years,
and interim periods within those fiscal years, beginning on or after December
15, 2008. SFAS No. 160 will become effective beginning with the first quarter of
2009. The Company will reclass noncontrolling interest from liability to a
component in stockholders’ equity.




In March
2008, the FASB issued Statement of Financial Accounting Standards (“SFAS”)
No. 161, Disclosures
about Derivative Instruments and Hedging Activities, an amendment of FASB
Statement No. 133, which requires
additional disclosures about the objectives of the derivative instruments and
hedging activities, the method of accounting for such instruments under SFAS
No. 133 and its related interpretations, and a tabular disclosure of the
effects of such instruments and related hedged items on our financial position,
financial performance, and cash flows. SFAS No. 161 is effective for us
beginning January 1, 2009. The Company does not expect the adoption of SFAS
No. 161 to have a material impact on the consolidated financial
statements.




In
April 2008, the FASB issued FSP FAS No. 142-3, which amends the
factors that must be considered in developing renewal or extension assumptions
used to determine the useful life over which to amortize the cost of a
recognized intangible asset under FAS No. 142, “Goodwill and Other
Intangible Assets.” The FSP requires an entity to consider its own assumptions
about renewal or extension of the term of the arrangement, consistent with its
expected use of the asset, and is an attempt to improve consistency between the
useful life of a recognized intangible asset under FAS No. 142 and the
period of expected cash flows used to measure the fair value of the asset under
FAS No. 141, “Business Combinations.” This FSP is effective for us
beginning January 1, 2009, and the guidance for determining the useful life
of a recognized intangible asset must be applied prospectively to intangible
assets acquired after the effective date. The Company does not expect the
adoption of FSP FAS No. 142-3 to have a material impact on the consolidated
financial statements.




In
May 2008, the FASB issued Financial Accounting Standard
(FAS) No. 162, “The Hierarchy of Generally Accepted Accounting
Principles.” The statement is intended to improve financial reporting by
identifying a consistent hierarchy for selecting accounting principles to be
used in preparing financial statements that are prepared in conformance with
generally accepted accounting principles. Unlike Statement on Auditing Standards
(SAS) No. 69, “The Meaning of Present in Conformity With GAAP,” FAS
No. 162 is directed to the entity rather than the auditor. The statement is
effective 60 days following the SEC’s approval of the Public Company
Accounting Oversight Board (PCAOB) amendments to AU Section 411, “The
Meaning of Present Fairly in Conformity with GAAP,” and is not expected to have
any impact on the Company’s consolidated financial statements.




In
June 2008, the Financial Accounting Standards Board (FASB) issued FASB
Staff Position (FSP) Emerging Issues Task Force (EITF) No. 03-6-1,
“Determining Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities.” Under the FSP, unvested share-based payment awards
that contain rights to receive nonforfeitable dividends (whether paid or unpaid)
are participating securities, and should be included in the two-class method of
computing EPS. This FSP is effective for us beginning January 1, 2009 and
the Company does not expect that FSP EITF No. 03-6-1 would have a
material impact on the consolidated financial statements.




In
November 2008, the FASB ratified the Emerging Issues Task Force (EITF)
consensus on Issue No. 08-6, “Equity Method Investment Accounting
Considerations” (EITF 08-6) which addresses certain effects of SFAS Nos. 141R
and 160 on an entity’s accounting for equity-method investments. The consensus
indicates, among other things, that transaction costs for an investment should
be included in the cost of the equity-method investment (and not expensed) and
shares subsequently issued by the equity-method investee that reduce the
investor’s ownership percentage should be accounted for as if the investor had
sold a proportionate share of its investment, with gains or losses recorded
through earnings. EITF 08-6 is effective of us for transactions occurring after
December 31, 2008. The Company does not expect this standard to have a
material impact on the consolidated results of operations or financial
condition.


F-15


CAVICO
CORP. AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 December
31, 2008 and 2007


In
November 2008, the FASB ratified the EITF consensus on Issue No. 08-7,
“Accounting for Defensive Intangible Assets” (EITF 08-7). The consensus
addresses the accounting for an intangible asset acquired in a business
combination or asset acquisition that an entity does not intend to use or
intends to hold to prevent others from obtaining access (a defensive intangible
asset). Under EITF 08-7, a defensive intangible asset would need to be accounted
as a separate unit of accounting and would be assigned a useful life based on
the period over which the asset diminishes in value. EITF 08-6 is effective for
us for transactions occurring after December 31, 2008. The Company does not
expect that this standard  would have a material impact on the
consolidated financial statements.




In
December 2008, the FASB issued FSP No. FAS 132(R)-1, “Employers’
Disclosures about Postretirement Benefit Plan Assets”. This FSP requires
additional disclosures about plan assets for sponsors of defined benefit pension
and postretirement plans including expanded information regarding investment
strategies, major categories of plan assets, and concentrations of risk within
plan assets. Additionally, this FSP requires disclosures similar to those
required under SFAS No. 157 with respect to the fair value of plan assets
such as the inputs and valuation techniques used to measure fair value and
information with respect to classification of plan assets in terms of the
hierarchy of the source of information used to determine their value. The
disclosures under this FSP are required for annual periods ending after
December 15, 2009. The Company does not expect that this
standard  would have a material impact on the consolidated financial
statements since the Company does not have Postretirement Benefit Plan
Assets.




In
January 2009, the FASB issued FSP No. EITF 99-20-1, “Amendments to the
Impairment Guidance of EITF Issue No. 99-20” (FSP No. EITF 99-20-1).
This FSP provided additional guidance with respect to how entities determine
whether an “other-than-temporary impairment” (OTTI) exists for certain
beneficial interests in a securitized transaction, such as asset-backed
securities and mortgage-backed securities, that (1) do not have a high
quality rating or (2) can be contractually prepaid or otherwise settled
such that the holder would not recover substantially all of its investment. FSP
No. EITF 99-20-1 amended EITF Issue No. 99-20 to more closely align
its OTTI guidance with that of SFAS No. 115, “Accounting for Certain
Investment in Debt and Equity Securities.” This FSP was effective for us
prospectively beginning October 1, 2008. The Company considered this FSP’s
additional interpretation of EITF Issue No. 99-20 when classifying
respective additional impairments as “temporary” or “other-than-temporary”
beginning with the fourth quarter of 2008. This FSP had no material impact on
such classifications.


F-16


CAVICO
CORP. AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 December
31, 2008 and 2007


NOTE
      3-
            RECEIVABLE
      – OTHER




Other
receivables at December 31, 2008 and 2007 by major classification were comprised
of the following:




2008
                      
                      
                      2007Advances
                      
                      $
                      3,090,109
                      
                      
                      $
                      1,993,448Prepayments
      to suppliers
                      
                      
                      2,354,887
                      
                      
                      
                      1,345,593Other
      short-term receivable
                      
                      
                      2,046,807
                      
                      
                      
                      1,513,916Total
                      
                      $
                      7,491,803
                      
                      
                      $
                      4,852,957




NOTE
      4-
            INVENTORY




Inventories
at December 31, 2008 and 2007  by major classification, were comprised
of the following:




2008
                      
                      
                      2007Goods
      in transit
                      
                      $
                      679,449
                      
                      
                      $
                      234,142Material
      and supplies
                      
                      
                      2,882,793
                      
                      
                      
                      2,651,619Tools,
      instruments
                      
                      
                      58,022
                      
                      
                      
                      17,181Merchandises
                      
                      
                      495,842
                      
                      
                      
                      416,056Inventory
      reserve
                      
                      
                      (175,338
                      )
                      
                      
                      (174,548
                      )Inventory
      – net
                      
                      $
                      3,940,768
                      
                      
                      $
                      3,144,450




NOTE
      5-
            OTHER
      CURRENT ASSETS


Other
current assets at December 31, 2008 and  2007 by major classifications
were comprised of the following:


2008
                      
                      
                      2007Prepaid
      loan interest
                      
                      $
                      282,690
                      
                      
                      $
                      96,506Other
      prepaid expenses
                      
                      
                      200,435
                      
                      
                      
                      317,369Tools
      and instruments
                      
                      
                      484,657
                      
                      
                      
                      837,376Deductible
      Value Added Tax
                      
                      
                      391,385
                      
                      
                      
                      117,966Other
      current assets
                      
                      
                      243,105
                      
                      
                      
                      243,751TOTAL
                      
                      $
                      1,602,272
                      
                      
                      $
                      1,612,968




*Tools
and instruments which do not meet the capitalization policy of over $600 are
amortized over 12 months.




Tools
and instruments which do not meet the capitalization policy of over $600 which
have more than 12 months amortization  period were included in Prepaid
expense under other assets. These amounts were $1,123,295 and $1,886,513 for the
year ended  December 31, 2008 and, 2007, respectively and
are  amortized over 2 to 4 years. The remaining non-current prepaid
expenses of $1,407,649 and $24,015 as of December 31, 2008 and 2007 are
amortized over 2 to 4 years  based on the benefiting periods. The
Company recognized amortization expenses of $1,635,801 and $997,993 from these
non-current prepaid expenses for the year ended December 31, 2008 and 2007,
respectively.


F-17




CAVICO
CORP. AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 December
31, 2008 and 2007


NOTE
6 – INVESTMENTS IN NON-CONSOLIDATED COMPANIES AND JOINT VENTURES




Investee
companies not accounted for under the consolidation or the equity method of
accounting are accounted for under the cost method. Under this method, the
Company’s share of the earnings or losses of such investee companies is not
included in the consolidated balance sheet or statement of operations. However,
impairment changes are recognized in the consolidated statement of operations.
The Company classifies as “Non-marketable investments” in which the Company has
less than a 20% interest and in which it does not have the ability to exercise
significant influence over the investee. These investments are in private
companies or capital partnerships, which carried at the lower of cost or net
realized value. The estimated aggregate fair value of these investments
approximated their carrying amount. The fair value of these investments were
estimated based on a combination of the most recent financing and securities
transactions and on other pertinent information, including financial condition
and operating results of the investees. These investments are initially recorded
at cost and reviewed at the end of each quarter for other than temporary
impairment and discloses the impairment when the fair value of the investment is
less than 95% of the amortized cost and has been in a continuous unrealized loss
position for more than 12 months or at any time when immediate impairment is
apparent. The review for impairment procedures include review of the financial
reports, discussion with the investee’s officers, on-site visit, trends and
prospects, relevant economic factors and review of investee company operations
on website, if available. The Company determined that the impairment was
temporary for some investments whose fair values were measured below the cost.
Therefore, as of December 31, 2008 and 2007, no impairment was necessary. The
Company invested $131,591 and $1,534,690 in various companies during 2008 and
2007, respectively. During the year ended December 31, 2008, we withdrew our
investment of $124,116 in Vietravico as this company was not formed and received
our investment back. There was no sale of investments in 2008 and
2007.




Investment
in companies;




The
Company’s investments in companies are accounted for on the cost method of
accounting.  The cost basis at December 31, 2008 and 2007 and the fair
value at December 31, 2008 consisted of the following:




2008
                      
                      
                      20071.
      Agriculture Construction Corporation
                      
                      $
                      67,739
                      
                      
                      $
                      62,0582.
      Tour Zones Investment and Construction JSC  *
                      
                      
                      581,610
                      
                      
                      
                      83,7783.
      Vietnam Power Investment and Development JSC *
                      
                      
                      238,389
                      
                      
                      
                      251,1564.
      Mai Son Cement Joint Stock Company
                      
                      
                      459,445
                      
                      
                      
                      484,0515.
      Van Chan Hydropower Company
                      
                      
                      29,452
                      
                      
                      
                      31,0296.
      Ha Tay Investment and Development JSC
                      
                      
                      14,137
                      
                      
                      
                      14,8947.
      Businessman Culture Development JSC
                      
                      
                      29,452
                      
                      
                      
                      18,6178.
      Vietnam Media Financial JSC
                      
                      
                      117,412
                      
                      
                      
                      100,1189.
      VEC Tower JSC
                      
                      
                      123,108
                      
                      
                      
                      129,70110.
      Agribank Insurance
                      
                      
                      235,613
                      
                      
                      
                      248,23111.
      Vietnam Industry Investment and Construction JSC
                      
                      
                      58,903
                      
                      
                      
                      62,05812.
      Dong Duong Finance JSC
                      
                      
                      5,301
                      
                      
                      
                      5,58513.
      Nam Viet Investment and Consultant JSC
                      
                      
                      96,620
                      
                      
                      
                      93,08714.
      Sao Mai-Ben Dinh Petrolium Investment JSC
                      
                      
                      589,032
                      
                      
                      
                      620,57815.
      IDICO Industry Zone Investment Development JSC
                      
                      
                      8,835
                      
                      
                      
                      9,30916.
      Vietravico JSC
                      
                      
                      -
                      
                      
                      
                      124,11617.
      Vietnam Power Development JSC
                      
                      
                      58,903
                      
                      
                      
                      62,05818.
      IDICO Long Son Petrolium Industry Zone Investment
                      
                      
                      117,806
                      
                      
                      
                      124,11619.
      Nhan Tri JSC
                      
                      
                      23,561
                      
                      
                      
                      9,30920.
      Minh Viet JSC
                      
                      
                      73,629
                      
                      
                      
                      46,54321.
      North and South Investment Development JSC
                      
                      
                      5,890
                      
                      
                      
                      -22.
      Lilamavico Joint Venture
                      
                      
                      19,545
                      
                      
                      
                      -23.
      Vietnam Design JSC
                      
                      
                      15,904
                      
                      
                      
                      -24.  Song
      Tranh Hydropower JSC
                      
                      
                      2,945
                      
                      
                      
                      -25.  Kasvina
      JSC
                      
                      
                      75,526
                      
                      
                      
                      -26.  Vietnam
      Anti-counterfeit and trading promotion JSC
                      
                      
                      11,781
                      
                      
                      
                      - -27.
      Others
                      
                      
                      4,978
                      
                      
                      
                      5,244TOTAL
                      
                      $
                      3,065,516
                      
                      
                      $
                      2,585,636


* Related entity by common
directors.




(a)
For investments under $100,000, the Company reviews all available general
financial information to determine if impairment
is necessary.  It was not practical to measure the fair
value.
  (b)This
amount was invested at the formation of this entity and the entity has had no
financial activity; this company is in the process of receiving a license from
the government authority.
  (c)This
company became public in June 2009. Market value of this investment was $563,746
at June 30, 2009.
  (d)
Fair value was calculated using average PE ratios and expected income estimated
based on average rate of return on assets and discounted at 40% in comparable
public companies in the same industry in Vietnam as these companies were in
various stages of startup.
  (e)
Fair value was calculated using average PE ratios and expected income estimated
based on average rate of return on equity discounted at 40% in comparable public
companies in the same industry in Vietnam as this company is in the development
phase. Using average rate of return on assets in the comparable companies
resulted in higher fair value.


F-18




CAVICO
CORP. AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 December
31, 2008 and 2007


NOTE
7- INVESTMENTS, AVAILABLE FOR SALE




Assets
measured at fair value on a recurring basis are summarized below. The Company
has no financial liabilities measured at fair value on a recurring
basis.




December
      31, 2008
                      
                      Level 1
                      
                      
                      Level 2
                      
                      
                      Level 3
                      
                      
                      TotalAvailable-for-sale
      securities
                      
                      $
                      380,223
                      
                      
                      $
                      1,440,183
                      
                      
                      $
                      -
                      
                      
                      $
                      1,820,406




Available-
for- sale securities consisted of the following at December 31,
2008:




Common Stock:
                        
                        Number of
                          shares
                        
                        
                        Cost
                        
                        
                        Fair Value
                        
                        
                        Accumulated
                          unrealized
                          gain/(loss)Providential
      Holdings, Inc.
                        
                        
                        2,000,000
                        
                        
                        $
                        100,000
                        
                        
                        $
                        40,000
                        
                        
                        $
                        (60,000
                        )Habubank
      Stock
                        
                        
                        630,000
                        
                        
                        
                        1,549,155
                        
                        
                        
                        332,230
                        
                        
                        
                        (1,216,925
                        )Vinavico
                        
                        
                        470,200
                        
                        
                        
                        668,427
                        
                        
                        
                        340,223
                        
                        
                        
                        (328,204
                        )Vietnam
      Growth Investment Fund (VF2)
                        
                        
                        2,000,000
                        
                        
                        
                        1,195,735
                        
                        
                        
                        685,553
                        
                        
                        
                        (510,182
                        )Military
      Bank Stock
                        
                        
                        355,807
                        
                        
                        
                        828,589
                        
                        
                        
                        296,724
                        
                        
                        
                        (531,865
                        )Military
      Bank Bond
                        
                        
                        150,700
                        
                        
                        
                        133,145
                        
                        
                        
                        125,676
                        
                        
                        
                        (7,469
                        )Total
      Securities
                        
                        
                        
                        
                        
                        $
                        4,475,051
                        
                        
                        $
                        1,820,406
                        
                        
                        $
                        (2,654,645
                        )




The
Company’s short-term investments comprise equity and debt securities, all of
which are classified as available-for-sale securities. In compliance with SFAS
157, Fair Value Measurements which was adopted effective January 1, 2008, these
securities are carried at their fair market value based on either quoted market
prices of the securities,  trading prices of over the counter market.
VF2 securities were measured by HSBC Bank at December 31, 2008.  Net
realized gains and losses are included in net earnings while unrealized gains
and losses are included in other comprehensive income for available for sale
securities . For purpose of determining realized gains and losses, the cost of
securities sold is based on specific identification.




During
the year ended December 31, 2008, the Company recorded $439,934 loss using
average cost method on sale of marketable securities. The Company reviewed the
decrease in the fair market value of these securities and determined that the
impairment was temporary as of December 31, 2008. The Company reviews the
securities for possible other than temporary impairment at each
balance sheet date and discloses  the impairment when the
fair value of the security is less than 95% of the amortized cost and
has been in a continuous unrealized loss position for more than 12 months or at
anytime when
immediate impairment is apparent. No impairment was identified on
investments available for sale as the fair value for each available for sale
security has been less than the cost for no longer than six
months.  The Company’s determination for impairment on  the
available-for-sale securities are based on evaluations of performance indicators
of the underlying assets in the securities, industry analyst reports, volatility
of the securities’ fair value and other relevant information.




Available-for-sale
securities consisted of the following at December 31, 2007:


Common
      Stock:
                            
                            Number
                              of
                              shares
                            
                            
                            Cost
                            
                            
                            Fair Value
                            
                            
                            Accumulated
                              unrealized
                              gain/(loss)Providential
      Holdings, Inc.
                            
                            
                            2,000,000
                            
                            
                            $
                            100,000
                            
                            
                            $
                            100,000
                            
                            
                            $
                            -Habubank
      Stock
                            
                            
                            2,488,896
                            
                            
                            
                            3,696,829
                            
                            
                            
                            6,023,765
                            
                            
                            
                            2,326,936Vinavico
                            
                            
                            752,000
                            
                            
                            
                            1,099,451
                            
                            
                            
                            2,300,707
                            
                            
                            
                            1,201,256Vietnam
      Growth Investment Fund (VF2)
                            
                            
                            2,000,000
                            
                            
                            
                            1,259,774
                            
                            
                            
                            1,429,564
                            
                            
                            
                            169,790Total
      Securities
                            
                            
                            
                            
                            
                            $
                            6,156,054
                            
                            
                            $
                            9,854,036
                            
                            
                            $
                            3,697,982




The
Company  recorded $9,684,686 gain using average method on sales of
marketable securities during the year ended December 31, 2007.


F-19


CAVICO
CORP. AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 December
31, 2008 and 2007


NOTE
8 – INTANGIBLE ASSETS




Intangible
assets consist of goodwill, licenses and computer software.  Net
intangible assets at December 31, 2008 and  2007 are as
follows:




2008
                        
                        
                        2007Goodwill
                        
                        $
                        855,947
                        
                        
                        $
                        921,703Amortizable
      Intangible Assets:Licenses
      for land use rights
                        
                        
                        330,930
                        
                        
                        
                        58,955Less
      Accumulated amortization
                        
                        
                        (29,045
                        )
                        
                        
                        (33,014
                        )Amortizable
      Intangibles, net
                        
                        
                        301,885
                        
                        
                        
                        25,941Total
      Intangible Assets
                        
                        $
                        1,157,832
                        
                        
                        $
                        947,644




The
Company recorded goodwill when the Company purchased stock at a premium from the
minority shareholders in its subsidiaries, These stock purchases were accounted
for using purchase  method. The reduction in goodwill was related to
the Company selling shares of its investment during 2008.




The
Company has license for land use rights from Hanoi Home Investment and
Development Department and City of Hanoi. The land use rights are amortized over
a period of 50 years. Amortization expenses for the Company’s intangible assets
for the years ended December 31, 2008 and 2007 were $46,929 and $21,922,
respectively.




NOTE
9 – ACCRUED EXPENSES




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




2008
                      
                      
                      2007Accrued
      interest
                      
                      $
                      551,720
                      
                      
                      $
                      452,250Accrued
      taxes
                      
                      
                      3,625,259
                      
                      
                      
                      4,830,799Other
      accrued Expenses
                      
                      
                      308,357
                      
                      
                      
                      809,738TOTAL
                      
                      $
                      4,485,336
                      
                      
                      $
                      6,092,787


NOTE
10 – ADVANCES FROM CUSTOMERS




Advances
from customers  represent the payments received from customers on the
contract on which the work has  not been performed or reduced by
billed amount. As of December 31, 2008 and 2007, the Company had $15,102,331 and
$5,923,085, respectively.




NOTE
11 – PAYABLE TO EMPLOYEES




Under
Vietnamese law, some wages to employees are paid during the national holidays
and other times a year. As of December 31, 2008 and 2007, the payable to
employees were $4,220,124 and $2,412,672.  The Company recorded
payroll expenses for salaries and wages of $2,463,276 and $1,627,870 for the
years ended December 31, 2008 and 2007, respectively.


F-20





CAVICO
CORP. AND SUBSIDIARIES


Notes
to the Consolidated Financial Statements


December
31, 2008 and 2007





NOTE
      12-
            CAPITAL LEASE
      OBLIGATIONS




The
Company is a lessee of certain equipment under capital leases that expire on
various dates through August 2012. Terms of the leases call for quarterly
payments from $1,646 to $11,833 at implicit interest rates of 12.6% and 21% per
annum (the incremental borrowing rate).  The assets and liabilities
under capital leases are recorded at lease inception at the lower of the present
value of the minimum lease payments or the fair market value of the related
assets.  The assets are depreciated over their estimated useful
lives.




Minimum
future lease payments under current lease agreements at December 31, 2008 are as
follows:




2009
                
                $
                176,9662010
                
                
                155,9122011
                
                
                124,4462012
                
                
                66,3492013
                
                
                -Total
      minimum lease payments
                
                
                523,673Less:
      amount representing interest
                
                
                (141,749
                )Present
      value of net minimum lease payments
                
                
                381,924Less:
      current portion
                
                
                (112,617
                )Long-term
      portion
                
                $
                269,307




The
following is an analysis of the equipment under capital leases as of December
31, 2008 and 2007, which is included in property and equipment:




2008
                
                
                2007Equipment
      and vehicles
                
                $
                547,644
                
                
                $
                538,728Less
      accumulated depreciation
                
                
                (44,315
                )
                
                
                (295,137
                )Net
                
                $
                503,329
                
                
                $
                243,591




Depreciation
expenses on the equipment under capital leases for the years ended December 31,
2008 and 2007 were $48,701 and $76,658 respectively.




NOTE
13 – RENTAL OF VEHICLES




The
Company generated income from rental of vehicles. The vehicles rented of
available for rental as of December 31, 2008 and 2007 are as
follows:




2008
                      
                      
                      2007Equipment
                      
                      $
                      70,978
                      
                      
                      $
                      141,355Vehicles
                      
                      
                      50,173
                      
                      
                      
                      105,721Less
      accumulated depreciation
                      
                      
                      (66,659
                      )
                      
                      
                      (111,870
                      )Net
                      
                      $
                      54,492
                      
                      
                      $
                      135,206




The
company and its subsidiaries did not have any rental revenue from non-cancelable
leases.




Cancelable
rentals included in income for the years ended December 31, 2008 and 2007
are $12,381 and $47,177, respectively.


F-21
 
 CAVICO
CORP. AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 December
31, 2008 and 2007
 
 NOTE
14 - COMMITMENTS AND CONTINGENCIES
 
 Operating
Rental Leases
  The
Company leases its office and warehouse facilities in Hanoi, Vietnam from
various lessors under operating leases that require minimum monthly payments of
approximately $42,500.  The leases, which  require the
Company to pay property taxes and maintenance, expire in September, October,
December 31, 2009, December 31, 2010 and November 2011. For the years ended
December 31, 2008 and 2007, building rent expenses were $439,270 and $364,148,
respectively.
  The
Company’s principal executive offices in the United States are leased on a month
to month basis which are  included in a monthly management fee of
$2,000 which includes use of office space, equipment and administrative
services. These offices are made available to the Company under the terms of a
Management Services Agreement dated May 15, 2006, with Providential Holdings,
Inc.
  Future
minimum operating lease payments for long term operating leases are as
follows:
  Year Ending December 31,
                    
                    Total Lease2010
                    
                    $
                    68,9132011
                    
                    
                    6,1322012
                    
                    
                    -2013
                    
                    
                    -2014
                    
                    
                    -Total
                    
                    $
                    75,045
  Long
term lease
  Cavico Tower, a subsidiary of the
Company has a land lease agreement which expires year 2055 in
Hanoi.  The annual lease payment is $2,953.  Future minimum long term lease payments
relating to this lease are as follows:
  Year Ending December 31,
                    
                    Total Lease2010
                    
                    $
                    2,9532011
                    
                    
                    2,9532012
                    
                    
                    2,9532013
                    
                    
                    2,9532014
      and after
                    
                    
                    124,026Total
                    
                    $
                    135,838
  Environmental
Remediation Costs
  The
Company had not environmental remediation obligation under the current
regulation in Vietnam as of December 31, 2008 and 2007.
  Tax
Liabilities
  The
Company filed its tax returns based on the subsidiaries’ income and loss. The
final tax liability will be determined by the tax authority of
Vietnam.
  Litigation
  The
Company may be involved from time to time in various claims, lawsuits, disputes
with third parties, actions involving allegations or discrimination or breach of
contract actions incidental in the normal operations of the business. The
Company is currently not involved in any such litigation which management
believes could have a material adverse effect on its financial
position.
  F-22
  CAVICO
CORP. AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 December
31, 2008 and 2007
  Credit Limit on Notes
  The
Company maintains approximately $46 million in lines of credit with various
banks. The average interest rate on these lines of credit is 14%, although it
may vary based on market conditions. These credit lines mature throughout 2009.
As of December 31, 2008 and 2007, the outstanding balances were $29,342,000 and
$21,134,856, respectively.
  Management
Service Agreement
  On May
15, 2006, the Company signed a management service agreement with a business
advisory firm. The monthly fee is $2,000 for management services and lease of
space. The term of the agreement was 2 years and automatically renews for an
additional one year period. For each of the years ended  December 31,
2008 and 2007, the Company recorded $24,000 for management fees and of
space.
  Contract
under Guarantee
  The
Company has several contracts under guarantee.  These guarantees are
made through the banks to meet certain conditions under the  contracts
with customers. The Company pays the guarantee fees to banks , normally 1.5% to
2% annually of guaranteed amount. These fees are recorded in general and
administrative expenses. For the years ended December 31, 2008 and 2007, these
fees totaled $347,168 and $295,301, respectively.
  F-23
  CAVICO
CORP. AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 December
31, 2008 and 2007
  NOTE
15 - NOTES PAYABLE
  Notes
payable consisted of the following at December 31, 2008
and  2007:
 2008
                    
                    
                    2007Notes
      payable to Hanoi Building Commercial Joint Stock Bank*, secured by
      machinery and equipment, annual interest rates ranging from 12% to 21%,
      maturity dates ranging from January 18, 2009**to  December 29,
      2009 .
                    
                    $
                    5,927,960
                    
                    
                    $
                    2,805,433Notes
      payable to Hanoi Building Commercial Joint Stock Bank, secured by
      machinery and equipment, annual interest rates ranging from 11% to 20%,
      maturity dates ranging from January 3, 2009** to June 25,
      2012
                    
                    
                    1,520,841
                    
                    
                    
                    3,092,452Notes
      payable to Agribank - Eastern Hanoi Branch*, unsecured, annual interest
      rate of 11.4%, matures  on April 25, 2009 and September 29,
      2009
                    
                    
                    3,571,408
                    
                    
                    
                    4,153,400Notes
      payable to Agribank - Eastern Hanoi Branch, secured by machinery and
      equipment, annual interest rate of 13.2%, matured on October 31,
      2008.
                    
                    
                    -
                    
                    
                    
                    608,757Notes
      payable to Agribank - Tu Liem Branch*, unsecured, annual interest rates
      ranging from 12% to 21%, maturity dates ranging from January 9, 2009** to
      December 31, 2009.
                    
                    
                    5,359,843
                    
                    
                    
                    3,300,157Notes
      payable to Agribank - Tu Liem Branch, secured by machinery and equipment,
      annual interest rate of 12%, matures on April 16, 2012
                    
                    
                    830,801
                    
                    
                    
                    124,116Notes
      payable to Military Commercial Joint Stock Bank*, secured by machinery,
      equipment , annual interest rates  ranging from 13% to 15%,
      matures  on May 29, 2009 and September 28,
    2009.
                    
                    
                    837,859
                    
                    
                    
                    702,497Notes payable to
      Military Commercial Joint Stock Bank, secured by machinery and equipment, annual
      interest rates ranging from 13.2% to 13.32%, matures on December 19, 2010,
      October 17, 2011
                    
                    
                    3,187,975
                    
                    
                    
                    1,528,354Notes
      payable to North Asia Commercial Joint Stock Bank - Nghe An Branch,
      secured by VF2 Fund Certificate, annual interest rate of 12.75%, matures
      on December 31, 2009.
                    
                    
                    2,061,612
                    
                    
                    
                    1,480,778Notes
      payable to Agribank - Northern Hanoi Branch*, unsecured, annual interest
      rates ranging from 12.36% to 18%,  maturity dates ranging from
      August 30, 2009 to November 21, 2009.
                    
                    
                    11,807,997
                    
                    
                    
                    12,190,737Notes
      payable to Agribank - Northern Hanoi Branch, secured by machinery and
      equipment, interest rate of 16.8% maturity dates ranging from October 25,
      2010  to December 18, 2011.
                    
                    
                    1,855,925
                    
                    
                    
                    2,523,786Note
      payable to Agribank - Southern Hanoi Branch*, unsecured, annual interest
      rate of 12.36%, matured on August 3, \2008.
                    
                    
                    -
                    
                    
                    
                    1,005,683Notes
      payable to Agribank - Southern Hanoi Branch, secured by machinery and
      equipment, annual interest rate of 18%, matures on December 17,
      2009.
                    
                    
                    493,756
                    
                    
                    
                    789,107Notes
      payable to BIVD – Son La Branch*,unsecured, annual interest rate of 13.2%,
      maturity dates ranging from February 9, 2009**  to August 10,
      2009.
                    
                    
                    186,085
                    
                    
                    
                    258,347Notes
      payable to BIVD – Son La Branch, secured by machinery and equipment,
      annual interest rate of 14.4%, matures on August 8,
    2010.
                    
                    
                    77,576
                    
                    
                    
                    116,607Notes
      payable to Agribank - Hoang Mai Branch*, unsecured,  annual
      interest rate of 15%, matures on July 18, 2009 and December 12,
      2009
                    
                    
                    3,715,132
                    
                    
                    
                    1,706,359Notes
      payable to Agribank-Hoang Mai Branch, secured by machinery and equipment,
      annual interest rates ranging from EURBOR to 12.6%, matures on September
      7, 2012 and December 13, 2011
                    
                    
                    3,402,941
                    
                    
                    
                    2,620,039Notes
      payable to Saigon Commercial JS Bank, secured by machinery and equipment,
      annual interest rate of 13.2%, matures on November 1,
    2009
                    
                    
                    125,366
                    
                    
                    
                    414,340Notes
      payable to Incombank-Yen Vien Branch, secured by machinery and equipment,
      annual interest rate of 10.5%, matured on January 11,
      2008.
                    
                    
                    -
                    
                    
                    
                    163,833
  *  The
      bank must approve all funding and controls the use of
      funds.
                **These
      loans were paid off in
2009.
  F-24
  CAVICO
CORP. AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 December
31, 2008 and 2007
 
 2008
                    
                    
                    2007Notes
      payable to BIDV - North Hanoi Branch, secured by machinery and equipment,
      annual interest rate of 12%, matures on March 25, 2012
                    
                    
                    676,423
                    
                    
                    
                    447,195Notes
      payable to Vietnam Development Bank* – Son La Branch, unsecured, annual
      interest rate of 5.4%, matures on February 28, 2011, paid full in
      2008.
                    
                    
                    -
                    
                    
                    
                    803,266Notes
      payable to VID Public Bank*, unsecured, annual interest rate of 13.2%,
      matures on June 10, 2010
                    
                    
                    8,835
                    
                    
                    
                    15,514Notes
      payable to Housing Development Bank*, unsecured, annual interest rate of
      13.2%, matures on September 14, 2012
                    
                    
                    37,845
                    
                    
                    
                    50,670Notes
      payable to Phuong Dong Commercial JS Bank, secured by machinery and
      equipment, annual interest rate of 14.4%, matured on January 4,
      2008.
                    
                    
                    -
                    
                    
                    
                    1,458,359Notes
      payable to Vinashin Financial Company*, unsecured, annual interest rate of
      15%, matures on June 19, 2009.
                    
                    
                    589,032
                    
                    
                    
                    3,009,805Notes
      payable to Lung Lo Construction JSC*, unsecured, annual interest rate of
      12%, matured on September 30, 2008
                    
                    
                    -
                    
                    
                    
                    48,014Notes
      payable to Petroleum Financial Company*, unsecured, annual interest rate
      of 10.8%, matured on December 31, 2008. Currently negotiating to extend
      maturity date to March 25, 2009**.
                    
                    
                    543,264
                    
                    
                    
                    528,852Notes
      payable to Petroleum Financial Company , secured by machinery and
      equipment, annual interest rate of 11.52%, matures on March 18,
      2010
                    
                    
                    127,693
                    
                    
                    
                    224,219Notes
      payable to Vietnam Development Bank - Thua Thien Hue Branch, secured by
      machinery and equipment, annual interest rate of 14.4%, matures on May 30,
      2009.
                    
                    
                    1,178,064
                    
                    
                    
                    -Notes
      payable to Thang Long Securities JSC, secured by stock of subsidiaries,
      annual interest rate of 17.4%, matures on February 09,
      2009**
                    
                    
                    618,484
                    
                    
                    
                    -Notes
      payable to Agribank – Hoang Quoc Viet branch*, unsecured, annual interest
      rate ranging from 11.28% to 16.8%, matures dates ranging from March 23,
      2009** to November 19, 2009
                    
                    
                    4,492,027
                    
                    
                    
                    -Notes
      payable to Agribank – Hoang Quoc Viet branch, secured by machinery and
      equipment, annual interest rate of 16.2%, matures on December 31,
      2011.
                    
                    
                    1,269,198
                    
                    
                    
                    -Notes
      payable to Agribank - Muong La branch*, unsecured, annual interest rate of
      11.4%, matures on June 30, 2009
                    
                    
                    200,271
                    
                    
                    
                    -Notes
      payable to Global Petrolium JS Bank, secured by machinery and equipment,
      annual interest rate of 12.75% and 15%, matures on March 18,
      2009**
                    
                    
                    47,123
                    
                    
                    
                    -Notes
      payable to Techcombank, secured by machinery and equipment, annual
      interest rate of 15.2%, matures on October 27, 2011.
                    
                    
                    84,781
                    
                    
                    
                    -Notes
      payable to AnBinh JS bank, secured by machinery and equipment, annual
      interest rate of 16.5%, matures on May 21, 2009
                    
                    
                    14,726
                    
                    
                    
                    -Notes
      payable to Ms Nguyen Thi Thuy An, secured by Habubank shares, annual
      interest rate of 14.4%, matured on September 30, 2008
                    
                    
                    -
                    
                    
                    
                    1,117,041Notes
      payable to various individuals, unsecured, annual interest rates ranging
      from 12% to 16.8%, matures on December 31, 2009 and December 31,
      2012
                    
                    
                    4,530,620
                    
                    
                    
                    2,783,568Total
      Notes Payable
                    
                    $
                    59,381,463
                    
                    
                    $
                    50,071,285ST
      Note payable and current portion of LT notes, weighted average interest
      rates of 15.7% for 2008 and 11.9% for 2007
                    
                    $
                    50,141,069
                    
                    
                    $
                    41,202,014Long-term
      Notes Payable
                    
                    $
                    9,240,394
                    
                    
                    $
                    8,869,271
  *  The
      bank must approve all funding and controls the use of
    funds.
                **These
      loans were paid off in
2009.
  F-25
  CAVICO
CORP. AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 December
31, 2008 and 2007
 
 Future
maturities on long-term debt as of December 31 are as follows:
 2009
                  
                  $
                  50,141,0692010
                  
                  
                  3,725,1992011
                  
                  
                  2,782,6332012
                  
                  
                  1,720,8662013
                  
                  
                  179,6332014
                  
                  
                  832,063$
                  59,381,463
  As of
December 31, 2008, the amounts of long-term and short term notes
payable  are stated at contract amounts which approximate fair value
based on current interest rates of Vietnam.
  NOTE
16 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  The
Company had loans receivable in the amounts of $361,367 and $242,656 and
advances of $727,230 and $430,401 from various officers and directors of the
Company as of December 31, 2008 and 2007, respectively. The loans to officers
were made with no interest, not secured and due on demand.
  The
Company had other payables of $20,520 and $45,547 to officers and directors of
the Company as of December 31, 2008 and 2007, respectively.
  The
Company had loans payable to officers and directors of $208,667 and $1,056,363
as of December 31, 2008 and 2007, respectively. These loans are unsecured, and
due on demand with annual interest from 12% to 24%.
  The
Company has investments, which are accounted for on the cost method, in Vietnam
Power Investment and Development, JSC and Tour Zones Investment and Construction
JSC (Note 6). These entities share common directors with the
Company.
  NOTE
17 - STOCKHOLDERS’ EQUITY
  The
stock transactions are presented after giving the retroactive
effect  to 40 for 1 reverse stock split.
  Preferred
Stock
  The
Company has 25,000,000 authorized shares of blank check Preferred
Stock with $0.001 par value. As of December 31, 2008 and 2007, no shares of
Preferred Stock were issued and outstanding.
  Common
Stock
  The
Company has 300,000,000 authorized shares of Common Stock with $0.001 par value.
As of December 31, 2008 and 2007, 3,274,942 shares and 3,271,192 shares were
issued, 3,047,795 shares and 2,919,045 shares were outstanding,
respectively.
  The
Company accounts for the issuance of equity instruments to acquire goods and
services based on the fair value of the goods and services or the fair value of
the equity instrument at the time of issuance, whichever is more reliably
measurable.
  During
the year ended December 31, 2008, the Company issued 1,250 shares of common
stock for legal services and 2,500 shares of common stock for consulting
services. The total fair market value of these shares on date of issuance was
$84,750.
  During
the year ended December 31, 2008, the Company sold 125,000 shares of common
stock for cash at a price of $2.40 per share and received
$300,000.
  During
the year ended December 31, 2007, the Company had the following
transactions:
  - The
company issued 818,500 common shares for cash amounting $9,116,721 at average
price of $11.14 per share.
  - The
Company received $15,000 from the 2006 subscription receivable .
  F-26
  CAVICO CORP. AND
SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 December
31, 2008 and 2007
  Noncontrolling
Interest
  Pursuant
to the disclosure requirement under SFAS No. 160, the following schedule
presents a reconciliation of the beginning and ending balances of the equity
attributable to the Company and the noncontrolling owners and the effect of the
changes in Company’s ownership in a subsidiary and the equity attributable to
the Company.
  AccumulatedComprehensive
                            Income (loss)
                          
                          
                          Retained
                            Earnings
                          
                          
                          Other
                            Comprehensive
                            Income
                          
                          
                          Common
                            Stock
                          
                          
                          Paid-in
                            Capital
                          
                          
                          Noncontrolling
                            Interest
                          
                          
                          TotalBeginning
      balance, December 31, 2006 (as previously reported)
                          
                          
                          -
                          
                          
                          
                          (12,945,137
                          )
                          
                          
                          (245,243
                          )
                          
                          $
                          2,033
                          
                          
                          $
                          4,119,409
                          
                          
                          
                          1,070,388
                          
                          
                          
                          7,998,550Shares
      issued for cash
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          894
                          
                          
                          
                          9,115,827
                          
                          
                          
                          
                          
                          
                          
                          9,116,721Shares
      returned and reissued
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          (7
                          )
                          
                          
                          7
                          
                          
                          
                          
                          
                          
                          
                          -Sale
      of share from noncontrolling interest
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          6,951,253
                          
                          
                          
                          6,951,253Net
      income
                          
                          
                          6,680,203
                          
                          
                          
                          5,894,868
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          785,335
                          
                          
                          
                          6,680,203Acquisition
      of new subsidiary
                          
                          
                          100,021
                          
                          
                          
                          100,021
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          100,021Other
      comprehensive income:Unrealized
      gain(loss) on Securities
                          
                          
                          3,287,255
                          
                          
                          
                          
                          
                          
                          
                          3,287,255
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          -
                          
                          
                          
                          3,287,255Foreign
      currency translation adjustment
                          
                          
                          38,223
                          
                          
                          
                          
                          
                          
                          
                          38,223
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          -
                          
                          
                          
                          38,223Ending
      balance, December 31, 2007 (as restated)
                          
                          $
                          -
                          
                          
                          $
                          (6,950,248
                          )
                          
                          $
                          3,080,235
                          
                          
                          $
                          2,920
                          
                          
                          $
                          13,235,243
                          
                          
                          $
                          8,806,976
                          
                          
                          $
                          18,175,126Net
      income
                          
                          
                          1,926,018
                          
                          
                          
                          631,816
                          
                          
                          
                          -
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          1,294,202
                          
                          
                          
                          1,926,018Shares
      issued for service
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          4
                          
                          
                          
                          84,746
                          
                          
                          
                          -
                          
                          
                          
                          84,750Shares
      issued for cash
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          125
                          
                          
                          
                          299,875
                          
                          
                          
                          -
                          
                          
                          
                          300,000Acquisition
      of new subsidiary
                          
                          
                          (229,308
                          )
                          
                          
                          (229,308
                          )
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          (229,308
                          )Sale
      of share from noncontrolling interest
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          5,461,522
                          
                          
                          
                          5,461,522Other
      comprehensive income:
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          -
                          
                          
                          
                          -Unrealized
      gain(loss) on Securities
                          
                          
                          (6,352,628
                          )
                          
                          
                          -
                          
                          
                          
                          (6,723,484
                          )
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          370,856
                          
                          
                          
                          (6,352,628
                          )Foreign
      currency translation adjustment
                          
                          
                          (591,910
                          )
                          
                          
                          -
                          
                          
                          
                          (221,054
                          )
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (370,856
                          )
                          
                          
                          (591,910
                          )Ending
      balance, December 31, 2008
                          
                          $
                          -
                          
                          
                          $
                          (6,547,740
                          )
                          
                          $
                          (3,864,303
                          )
                          
                          $
                          3,049
                          
                          
                          $
                          13,619,864
                          
                          
                          $
                          15,562,700
                          
                          
                          $
                          18,773,570
  NOTE
18- INCOME TAX
  Pursuant
to the tax laws of Vietnam, general enterprises are subject to income tax at an
effective rate of 28%. Each subsidiary files a separate tax return in
Vietnam.
  In
addressing the realizability of deferred tax assets, management considers
whether is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences are deductible.
  F-27
  CAVICO
CORP. AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 December
31, 2008 and 2007
  NOTE
18- INCOME TAX
  The
principal components of the Company’s income tax provision at December 31, 2008
and 2007 are as follows:
  2008
                    
                    
                    2007Current
      Taxes:US
      Federal
                    
                    $
                    -
                    
                    
                    $
                    -US
      State
                    
                    
                    -
                    
                    
                    
                    -Vietnam
                    
                    
                    (2,283,822
                    )
                    
                    
                    2,684,945Total
                    
                    $
                    (2,283,822
                    )
                    
                    $
                    2,684,945Deferred
      Taxes:US
      Federal
                    
                    
                    -
                    
                    
                    
                    -US
      State
                    
                    
                    -
                    
                    
                    
                    -Vietnam
                    
                    
                    -
                    
                    
                    
                    -Total
                    
                    $
                    -
                    
                    
                    $
                    -
  The
principal components of the Company’s deferred tax assets at December 31, 2008
and 2007 are as follows:
  2008
                  
                  
                  2007U.S.
      operations loss carry forward at statutory rate
                  
                  $
                  631,044
                  
                  
                  $
                  322,194Non-U.S.
      operations loss carry forward at statutory rate
                  
                  
                  365,293
                  
                  
                  
                  437,554Total
                  
                  $
                  996,337
                  
                  
                  $
                  759,748Less
      Valuation Allowance
                  
                  
                  (996,337
                  )
                  
                  
                  (759,748
                  )Net
      Deferred Tax Assets
                  
                  $
                  -
                  
                  
                  $
                  -Change
      in Valuation allowance
                  
                  $
                  236,589
                  
                  
                  $
                  421,731
  A
reconciliation of the statutory federal  and state tax in the United
States and Vietnam income tax  rates to the
Company’s  effective  tax rates  is as
follows:
  December
      31, 2008
                  
                  
                  December
      31, 2007Tax
      on income/loss using federal income tax rate
                  
                  
                  (121,653
                  )
                  
                  
                  3,184,150Foreign
      tax rate difference
                  
                  
                  21,468
                  
                  
                  
                  (561,909
                  )Permanent
      difference
                  
                  
                  951,280
                  
                  
                  
                  484,434PY
      accrual reversed in CY
                  
                  
                  (2,898,328
                  )
                  
                  
                  —Change
      in valuation allowance
                  
                  
                  (236,589
                  )
                  
                  
                  (421,731
                  )Total
                  
                  
                  (2,283,822
                  )
                  
                  
                  2,684,945
  At
December 31, 2008 and 2007, the Company had net operating loss carry forwards
from US operation of $1,856,011 and $947,628, respectively. Since the Internal
Revenue Code limits the availability of net operating losses that arose prior to
certain cumulative changes in a corporation’s ownership resulting in a change of
control of the Company, the Company reserved 100% of the losses from US
operation as this tax asset will not be realized.
  At
December 31, 2008 and 2007, the Company had net operating loss carry forwards
from Vietnam of approximately $1,304,618 and $1,562,693, respectively, which
were derived from subsidiaries with operating losses and  will be
available to offset future taxable income.
  These net
operating loss carry forwards expire through year 2013. The Company has
established a valuation allowance against its deferred tax asset, due to the
uncertainty of the realization of the asset. Management periodically evaluates
the recoverability of the deferred tax asset. At such time as it is determined
that it is more likely than not that deferred tax assets are realizable, the
valuation allowance will be reduced.
  During
the year ended December 31, 2008, the Vietnamese tax authorities determined that
the Company’s tax obligation was lower than the Company’s originally estimated
amount. The Company estimates the tax obligation based on 28% under Vietnamese
law. During 2008, the Company recorded a tax benefit of $2,898,328 which was
offset against the 2008 tax expense of $614,506. The Company uses a gross method
to estimate the Company’s tax obligation assessed by Vietnam governmental
authorities on sales in the income statement
  F-28
  CAVICO CORP. AND
SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 December
31, 2008 and 2007
  NOTE
19- SEGMENT REPORTING
  Statement
of Financial Accounting Standards No. 131 (“SFAS 131”),  ”Disclosure
About Segments of an Enterprise and Related Information” requires use of the
“management approach” model for segment reporting. The management approach model
is based on the way a company’s management organizes segments within the company
for making operating decisions and assessing performance.  Reportable
segments are based on products and services, geography, legal structure,
management structure, or any other manner in which management disaggregates a
company.
  Following
is a summary of segment information for the year ended December 31,
2008:
  Civil
                  
                  
                  Construction
                  
                  
                  CommercialConstruction
                  
                  
                  Mining
                  
                  
                  Activities
                  
                  
                  Others
                  
                  
                  Unallocated
                  
                  
                  TotalSales
                  
                  $
                  50,430,360
                  
                  
                  $
                  4,259,850
                  
                  
                  $
                  3,267,484
                  
                  
                  $
                  48,575
                  
                  
                  $
                  -
                  
                  
                  $
                  58,006,269Operating
      income/(loss)
                  
                  
                  4,524,476
                  
                  
                  
                  684,546
                  
                  
                  
                  (190,625
                  )
                  
                  
                  3,758
                  
                  
                  
                  (2,708,844
                  )
                  
                  
                  2,313,311Total
      Assets
                  
                  
                  51,402,020
                  
                  
                  
                  9,045,204
                  
                  
                  
                  4,683,418
                  
                  
                  
                  -
                  
                  
                  
                  47,657,423
                  
                  
                  
                  112,788,065Capital
      Expenditure
                  
                  
                  10,366,197
                  
                  
                  
                  361,706
                  
                  
                  
                  289,119
                  
                  
                  
                  -
                  
                  
                  
                  2,036,511
                  
                  
                  
                  13,053,533Interest
      Income
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  891,898
                  
                  
                  
                  891,898Interest
      Expense
                  
                  
                  641,740
                  
                  
                  
                  195,838
                  
                  
                  
                  436,532
                  
                  
                  
                  -
                  
                  
                  
                  1,827,133
                  
                  
                  
                  3,101,243Depreciation/Amortization
                  
                  
                  5,280,858
                  
                  
                  
                  518,327
                  
                  
                  
                  77,997
                  
                  
                  
                  -
                  
                  
                  
                  108,663
                  
                  
                  
                  5,985,845
  Following
is a summary of segment information for the year ended December 31,
2007:
  Civil
                  
                  
                  Construction
                  
                  
                  CommercialConstruction
                  
                  
                  Mining
                  
                  
                  Activities
                  
                  
                  Others
                  
                  
                  Unallocated
                  
                  
                  TotalSales
                  
                  $
                  31,493,768
                  
                  
                  $
                  4,322,471
                  
                  
                  $
                  1,987,190
                  
                  
                  $
                  47,177
                  
                  
                  $
                  -
                  
                  
                  $
                  37,850,606Operating
      income/(loss)
                  
                  
                  2,544,948
                  
                  
                  
                  1,447,582
                  
                  
                  
                  205,214
                  
                  
                  
                  2,882
                  
                  
                  
                  (2,540,617
                  )
                  
                  
                  1,660,009Total
      Assets
                  
                  
                  57,838,661
                  
                  
                  
                  9,144,726
                  
                  
                  
                  2,373,984
                  
                  
                  
                  -
                  
                  
                  
                  25,160,633
                  
                  
                  
                  94,518,004Capital
      Expenditure
                  
                  
                  5,671,774
                  
                  
                  
                  194,530
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  3,501,070
                  
                  
                  
                  9,367,374Interest
      Income
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  1,046,394
                  
                  
                  
                  1,046,394Interest
      Expense
                  
                  
                  868,330
                  
                  
                  
                  352,130
                  
                  
                  
                  221,083
                  
                  
                  
                  -
                  
                  
                  
                  1,484,655
                  
                  
                  
                  2,926,198Depreciation/Amortization
                  
                  
                  3,642,327
                  
                  
                  
                  607,791
                  
                  
                  
                  22,701
                  
                  
                  
                  -
                  
                  
                  
                  388,553
                  
                  
                  
                  4,661,372
  NOTE
20 – RESTATEMENT
  The
financial statements for the year ended December 31, 2007 were re-audited
pursuant to an instruction from SEC informing the Company that the PCAOB revoked
the registration of Company’s previous auditor Jaspers + Hall PC and the
previously audited financial statements were no longer reliable. The Company’s
current auditor re-audited the financial statements as of December 31, 2007 and
the Company’s financial statements have been restated to reflect corrections and
changes in presentation of the financial statements required reclassification of
certain accounts.
  Effects
on previously issued 2007 financial statements as follows:
  Increase
      in cost of sales
                  
                  $
                  563,630Increase
      in general administrative expenses
                  
                  
                  354,277Increase
      in loss on foreign exchange
                  
                  
                  250,870Subtotal
                  
                  
                  1,168,777Income
      tax effect of restatement
                  
                  
                  257,014Increase
      in 2007 net loss
                  
                  $
                  911,764
  F-29
  CAVICO
CORP. AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 December
31, 2008 and 2007
  The
accompanying financial statements for the year ended December 31, 2007 have been
restated to reflect the corrections in accordance with Statement of Financial
Accounting Standards No. 154, “Accounting Change and Error Corrections”. This
restatement is primarily due to the corrections of errors in the previously
reported financial statements. Net income per common share remained the same at
$0.05 as a result of these changes. The effect on the Company’s previously
issued 2007 financial statements in summarized as follows:
  Balance
Sheet as of December 31, 2007
  Previously
                              
                              
                              NetReported
                              
                              
                              Change
                              
                              
                              RestatedASSETSCurrent
      Assets:Cash
                              
                              $
                              1,412,201
                              
                              
                              $
                              -
                              
                              
                              $
                              1,412,201Investments,
      available for sale
                              
                              
                              -
                              
                              
                              
                              9,854,036
                              (d)(h)
                              
                              
                              9,854,036Accounts
      receivable -trade- net
                              
                              
                              22,658,533
                              
                              
                              (14,999,262
                              )(a)(b)(e)(g)(k)(l)
                              
                              
                              7,659,271Receivable
      - other
                              
                              
                              -
                              
                              
                              
                              4,852,957
                              (e)(k)(p)
                              
                              
                              4,852,957Inventory
                              
                              
                              28,300,733
                              
                              
                              
                              (25,156,283
                              )(f)
                              
                              
                              3,144,450Work
      in process
                              
                              
                              -
                              
                              
                              
                              22,613,806
                              (f)
                              
                              
                              22,613,806Receivables
      and advances  from related parties
                              
                              
                              -
                              
                              
                              
                              673,057
                              (g)
                              
                              
                              673,057Other
      current assets
                              
                              
                              1,712,968
                              
                              
                              
                              (100,000
                              )(h)
                              
                              
                              1,612,968Total
      current assets
                              
                              
                              54,084,435
                              
                              
                              
                              2,261,689
                              
                              
                              
                              51,822,746Fixed
      Assets:Land
      development
                              
                              
                              3,195,654
                              
                              
                              
                              797,537
                              (i)
                              
                              
                              3,993,191Temporary
      housing assets
                              
                              
                              432,460
                              
                              
                              
                              -
                              
                              
                              
                              432,460Machinery
      and equipment
                              
                              
                              20,671,611
                              
                              
                              
                              -
                              
                              
                              
                              20,671,611Vehicles
                              
                              
                              12,666,344
                              
                              
                              
                              -
                              
                              
                              
                              12,666,344Office
      and computer equipment
                              
                              
                              687,092
                              
                              
                              
                              23,068
                              (o)
                              
                              
                              710,160Less
      accumulated depreciation
                              
                              
                              (12,797,636
                              )
                              
                              
                              (10,657
                              )(o)(b)
                              
                              
                              (12,808,293Net
      fixed assets
                              
                              
                              24,855,535
                              
                              
                              
                              809,938
                              
                              
                              
                              25,665,473Intangible
      Assets:Goodwill
                              
                              
                              -
                              
                              
                              
                              921,703
                              (j)
                              
                              
                              921,703Licenses
      - net
                              
                              
                              -
                              
                              
                              
                              25,941
                              (k)(o)
                              
                              
                              25,941Net
      Intangible Assets
                              
                              
                              -
                              
                              
                              
                              947,644
                              
                              
                              
                              947,644Other
      Non Current Assets:Investments,
      non-consolidated companies & JVs
                              
                              
                              11,228,489
                              
                              
                              
                              (8,642,853
                              )(d)
                              
                              
                              2,585,636Long-term
      retention receivables
                              
                              
                              -
                              
                              
                              
                              7,770,407
                              (l)
                              
                              
                              7,770,407Prepaid
      expenses
                              
                              
                              2,832,230
                              
                              
                              
                              (921,703
                              )(j)
                              
                              
                              1,910,527Long-term
      work in process
                              
                              
                              -
                              
                              
                              
                              2,542,477
                              (f)
                              
                              
                              2,542,477Other
      assets
                              
                              
                              5,433
                              
                              
                              
                              1,267,661
                              (k)
                              
                              
                              1,273,094Total
      other assets
                              
                              
                              14,066,152
                              
                              
                              
                              2,015,989
                              
                              
                              
                              16,082,141TOTAL
      ASSETS
                              
                              $
                              93,006,122
                              
                              
                              
                              1,511,882
                              
                              
                              $
                              94,518,004
  F-30
  CAVICO
CORP. AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 December
31, 2008 and 2007
  Previously
                                            
                                            
                                            NetReported
                                            
                                            
                                            Change
                                            
                                            
                                            RestatedLIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      Liabilities:Accounts
      payable
                                            
                                            $
                                            10,722,479
                                            
                                            
                                            
                                            (45,547
                                            )(m)
                                            
                                            $
                                            10,676,932Accounts
      payable – related parties
                                            
                                            
                                            -
                                            
                                            
                                            
                                            45,547
                                            (m)
                                            
                                            
                                            45,547Accrued
      expenses
                                            
                                            
                                            6,349,801
                                            
                                            
                                            
                                            (257,014
                                            )(n)
                                            
                                            
                                            6,092,787Advances
      from customers
                                            
                                            
                                            5,485,539
                                            
                                            
                                            
                                            437,546
                                            (p)
                                            
                                            
                                            5,923,085Payable
      to employees
                                            
                                            
                                            2,412,672
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            2,412,672Notes
      payable - current
                                            
                                            
                                            41,871,176
                                            
                                            
                                            
                                            (669,162
                                            )(m)
                                            
                                            
                                            41,202,014Notes
      payable - related parties
                                            
                                            
                                            452,201
                                            
                                            
                                            
                                            604,162
                                            (m)
                                            
                                            
                                            1,056,363Current
      portion of capital lease obligations
                                            
                                            
                                            24,964
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            24,964Total
      current liabilities
                                            
                                            
                                            67,318,832
                                            
                                            
                                            
                                            115,532
                                            
                                            
                                            
                                            67,434,364Long-Term
      Debt:Capital
      lease obligations – long-term
                                            
                                            
                                            39,243
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            39,243Long-term
      debt
                                            
                                            
                                            8,618,401
                                            
                                            
                                            
                                            250,870
                                            (c)
                                            
                                            
                                            8,869,271Total
      long-term debt
                                            
                                            
                                            8,657,643
                                            
                                            
                                            
                                            250,871
                                            
                                            
                                            
                                            8,908,514TOTAL
      LIABILITIES
                                            
                                            
                                            75,976,475
                                            
                                            
                                            
                                            366,403
                                            
                                            
                                            
                                            76,342,878Minority
      interest in subsidiaries
                                            
                                            
                                            9,246,458
                                            
                                            
                                            
                                            (439,482
                                            )(q)
                                            
                                            
                                            8,806,976Stockholders’
      Equity:Preferred
      stock:$.001 par value – Class B, 100,000,000 authorized, none issued and
      outstanding
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -Common
      stock, $.001 par value; 300,000,000 shares authorized; 130,997,693 and
      130,847,693 shares issued,  121,911,793 and 116,761,793 shares
      outstanding, respectively
                                            
                                            
                                            130,848
                                            
                                            
                                            
                                            (14,086
                                            )(r)
                                            
                                            
                                            116,762Additional
      paid-in capital
                                            
                                            
                                            13,107,315
                                            
                                            
                                            
                                            14,086
                                            (r)
                                            
                                            
                                            13,121,401Accumulated
      deficit
                                            
                                            
                                            (6,038,484
                                            )
                                            
                                            
                                            (911,764
                                            )(s)
                                            
                                            
                                            (6,950,248Accumulated
      other comprehensive income (loss)
                                            
                                            
                                            583,509
                                            
                                            
                                            
                                            2,496,726
                                            (t)
                                            
                                            
                                            3,080,235Total
      stockholders' equity
                                            
                                            
                                            7,783,189
                                            
                                            
                                            
                                            1,584,962
                                            
                                            
                                            
                                            9,368,150TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                                            
                                            $
                                            93,006,122
                                            
                                            
                                            
                                            1,511,882
                                            
                                            
                                            $
                                            94,518,004
  F-31
  CAVICO
CORP. AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 December
31, 2008 and 2007
  Statement
of Operations and Comprehensive Income for the Year Ended December 31,
2007
 
 Previously
                              
                              
                              NetReported
                              
                              
                              Change
                              
                              
                              RestatedRevenues:Civil
      construction
                              $
                              
                              
                              
                              
                              
                              
                              
                              $
                              31,493,768Mining
      construction
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              4,322,471Commercial
      activities
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              2,034,367Total
      revenue
                              
                              
                              37,850,606
                              
                              
                              
                              -
                              
                              
                              
                              37,850,606Cost
      of Goods Sold:Civil
      construction
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              27,187,859Mining
      construction
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              2,682,428Commercial
      activities
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              1,468,948Total
      cost of goods sold
                              
                              
                              30,775,605
                              
                              
                              
                              563,630
                              (a)
                              
                              
                              31,339,235Gross
      Profit
                              
                              
                              7,075,001
                              
                              
                              
                              (563,630
                              )
                              
                              
                              6,511,371Operating  Expenses:Selling
      expenses
                              
                              
                              82,703
                              
                              
                              
                              -
                              
                              
                              
                              82,703General
      & administrative expenses
                              
                              
                              4,414,382
                              
                              
                              
                              354,277
                              (b)
                              
                              
                              4,768,659Total
      operating expenses
                              
                              
                              4,497,085
                              
                              
                              
                              354,277
                              
                              
                              
                              4,851,362Total
      income from operations
                              
                              
                              2,577,916
                              
                              
                              
                              (917,907
                              )
                              
                              
                              1,660,009Other
      income (expenses):Gain
      on disposal of assets
                              
                              
                              119,986
                              
                              
                              
                              -
                              
                              
                              
                              119,986Other
      income
                              
                              
                              31,141
                              
                              
                              
                              -
                              
                              
                              
                              31,141Gain
      (loss) on sales of marketable securities
                              
                              
                              9,684,686
                              
                              
                              
                              -
                              
                              
                              
                              9,684,686Loss
      on foreign currency exchange
                              
                              
                              
                              
                              
                              
                              (250,870
                              )(c)
                              
                              
                              (250,870Interest
      income
                              
                              
                              1,046,394
                              
                              
                              
                              -
                              
                              
                              
                              1,046,394Interest
      expense
                              
                              
                              (2,926,198
                              )
                              
                              
                              -
                              
                              
                              
                              (2,926,198Total
      other income (expense)
                              
                              
                              7,956,009
                              
                              
                              
                              (250,870
                              )
                              
                              
                              7,705,139Income
      before income taxes and minority interest
                              
                              
                              10,533,925
                              
                              
                              
                              (1,168,777
                              )
                              
                              
                              9,365,148Income
      taxes benefit (expense)
                              
                              
                              (2,941,959
                              )
                              
                              
                              (257,014
                              )(n)
                              
                              
                              (2,684,945Income
      before minority interest
                              
                              
                              7,591,967
                              
                              
                              
                              (911,764
                              )
                              
                              
                              6,680,203Minority
      interest in consolidated subsidiaries
                              
                              
                              (785,335
                              )
                              
                              
                              -
                              
                              
                              
                              (785,335Net
      income
                              
                              $
                              6,806,632
                              
                              
                              
                              (911,764
                              )
                              
                              $
                              5,894,868Other
      comprehensive income:Unrealized
      gain(loss) on  investments available for
sale
                              
                              
                              -
                              
                              
                              
                              3,287,255
                              (t)
                              
                              
                              3,287,255Foreign
      currency translation adjustment
                              
                              
                              -
                              
                              
                              
                              38,223
                              (u)
                              
                              
                              38,223Comprehensive
      income (loss)
                              
                              $
                              -
                              
                              
                              $
                              9,220,346
                              
                              
                              
                              9,220,346Per
      Share Information:Weighted
      average number of common shares outstanding-basic and
      diluted
                              
                              
                              129,358,134
                              
                              
                              
                              (14,085,900
                              )
                              
                              $
                              115,272,234Net
      income per common share-basic and diluted
                              
                              $
                              $0.05
                              
                              
                              
                              -
                              
                              
                              $
                              0.05
 (a) Correction
of error originally included in advances receivable of $563,630 were for
expenses through cost of goods sold.
  F-32
  CAVICO
CORP. AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 December
31, 2008 and 2007
  (b,s) Correction
of error of accounts receivable of $246,704 was written off as bad debts and
additional increase in the provision for bad debt expense in the amount of
$107,573.
  (c,s) 
Correction of error involving note payable denominated in a foreign currency for
which $250,870 was recognized as a loss from a foreign currency
exchange.
  (d) 
Reclassification of investments, available for sale in the amount of $9,854,036
from investments, non-consolidated companies & JV’s in the amount
$8,642,853.
  (e) 
Reclassification of other receivable $4,852,957 from accounts receivable
trade.
  (f) 
Reclassification of current work-in-process in the amount of $22,613,806 and
long-term work-in-process in the amount of $2,542,477 from inventory for proper
presentation.
  (g) 
Reclassification of receivable in the amount of $673,057 to receivables and
advances from related parties from accounts receivable for proper
presentation.
  (h) 
Reclassification of other current assets in the amount of $100,000 to available
for sale securities for proper presentation.
  (i) 
Reclassification of construction costs related to land development
$797,537.
  (j) 
Reclassification of goodwill when the Company purchased stock at a premium from
the minority shareholders of its subsidiaries that was included in prepaid
expenses in the amount of $921,703.
  (k) 
Reclassification of deposits on equipment, and other long-term assets in nature
from other current assets in the amount of $1,267,661.
  (l) 
Reclassification of long term retention receivable from accounts receivable and
related provision for bad debt in the amount of $7,770,407.
  (m) 
Reclassification of payable to related parties in the amount of
$45,547.
  (n,s) 
Correction of errors of recorded the 2007 Vietnamese income tax expense and
related income tax liabilities in the amount of $257,014.
  (o) 
Correction of errors of costs of computer equipment and licenses in the amounts
of $23,068 and $25,941.
  (b,p) 
Reclassification of credit balance in receivables from customers to advances
from customers in the amount of $437,546.
  (q) 
Reclassification of amounts included in related party receivables in the amount
of $291,526 and receivable other in the amount of $147,956 to minority interest
in the amount of $439,482 for stock purchased by individuals in the
subsidiaries.
  (r) 
Correction of error originally included 14,000,000 shares that were deemed to be
issued to management in the amount of $14,086. These shares were considered to
be issued but not outstanding.
  (t) 
Correction of error to adjust the available for sale securities to fair value
and record unrealized gain as accumulated other comprehensive income of
$3,287,255.
  (u) Correction
of error to record the changes in foreign exchange translation adjustment in the
amount of $38,223.
  F-33


CAVICO
CORP. AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 December
31, 2008 and 2007
  NOTE
21 – SUBSEQUENT EVENTS
  On
January 12, 2009, the Company engaged Rodman & Renshaw, LLC as the Company’s
exclusive advisor in connection with the proposed Offering or any other debt or
equity financing for a term of 12 months. The Offering will consist
of  sale of approximately $15 million worth of common stock of the
Company. The Underwriting Agreement will provide that the Company will grant to
Rodman an option, exercisable within 45 days after the closing of the Offering
to acquire up to an additional 15% of the total number of shares to be offered
by the Company in the Offering to cover over-allotments. The Company paid
$25,000 advance which will be applied against the non-accountable expense
allowance equal to 1% of the public offering price. In addition, Rodman is
entitled to the delivery of a warrant, if requested, at closing to purchase
additional shares of common stock equal to 5% of the total number of shares sold
pursuant to the Offering. The Underwriter’s warrant will be exercisable during
the four year period commencing one year from the closing at the price per share
equal to 125% of the public offering price per share at the Offering. The
Underwriter’s warrant will provide for registration rights and customary
anti-dilution provisions. As of this date, the Offering has not been
closed.
  F-34
  ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
 
 On
April 15, 2008, we dismissed Jaspers + Hall PC (“Jaspers + Hall”) as our
independent certified public accountant. Effective April 15, 2008, we engaged
PMB Helin Donovan, LLP (“PMBHD”), as our independent certified public
accountant. Our decision to dismiss Jaspers + Hall and retain the PMBHD was
approved by our Board of Directors on April 15, 2008.
  The
reports of the Jaspers + Hall on our financial statements for each of the two
most recent fiscal years, did not contain an adverse opinion or disclaimer of
opinion and was not qualified or modified as to uncertainty, audit scope or
accounting principles for the two most recent fiscal years, except that Jaspers
+ Hall’s opinion in its report on our financial statements expressed substantial
doubt with respect to our ability to continue as a going concern for the years
ending December 31, 2007 and December 31, 2006.
  During
the years ending December 31, 2007 and December 31, 2006 and the subsequent
interim period through the date of dismissal, there were no disagreements with
Jaspers + Hall on any matters of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which, if not resolved to
the satisfaction of Jaspers + Hall would have caused it to make reference to the
subject matter of the disagreements in connection with its reports on these
financial statements for those periods.
  We did
not consult with PMBHD regarding the application of accounting principles to a
specific transaction, either completed or proposed, or the type of audit opinion
that might be rendered on our financial statements, and no written or oral
advice was provided by PMBHD that was a factor considered in reaching our
decision as to the accounting, auditing or financial reporting
issues.
  In
October 2008, the PCAOB revoked the registration of our prior auditor, Jaspers +
Hall.  As a result, the financial statements for the fiscal year ended
December 31, 2007 were re-audited by PMBHD to be included in our filing with the
Commission.
 
 ITEM
9A.  CONTROLS AND PROCEDURES
 
 (a)           Evaluation of
Disclosure Controls and Procedures
 
 We have
adopted and maintain disclosure controls and procedures (as such term is defined
in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) that are designed to ensure that information
required to be disclosed in our reports under the Exchange Act, is recorded,
processed, summarized and reported within the time periods required under the
SEC’s rules and forms and that the information is gathered and communicated to
our management, including our Chief Executive Officer (Principal Executive
Officer) and Chief Financial Officer (Principal Financial Officer), as
appropriate, to allow for timely decisions regarding required
disclosure.
 
 Management,
together with our CEO and CFO, evaluated the effectiveness of our disclosure
controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the
end of the period covered by this report.. Based on the foregoing evaluation,
they have concluded that our disclosure controls and procedures were not
effective in timely alerting them to information that was required to be
disclosed in our periodic reports that we file under the Securities Exchange Act
of 1934 was accumulated and communicated to them to allow timely decisions
regarding required disclosure.  The material weakness in our internal
control over financial reporting resulted in the restatement of previously
reported financial statements for the year ended December 31, 2007, management
believes that the material weakness in our internal control over financial
reporting did not have any effect on the accuracy of our financial statements
for the current annual report.
 
 This
annual report does not include an attestation report of the Company’s registered
accounting firm regarding internal control over financial reporting.
 Management’s report was not subject to attestation by the Company’s
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission.
  35
  MANAGEMENT'S
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
 
 Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act. Our internal control over financial reporting
is  designed  to provide reasonable assurance regarding the
reliability of financial  reporting and
the  preparation  of financial  statements for
external purposes in accordance with generally accepted accounting principles.
Our internal control over financial reporting includes those policies and
procedures that:
  1.
              Pertain to the maintenance of
      records that in reasonable detail accurately and fairly reflect the
      transactions and dispositions of our
  assets;
 2.
              Provide reasonable assurance that
      transactions are recorded as necessary to permit preparation of
      financial  statements in accordance   with U.S.
      GAAP, and that our receipts and  expenditures are being made
      only
      in  accordance  with  the  authorization  of
      our  management  and directors;
    and
 3.
              Provide reasonable assurance
      regarding prevention or timely detection of unauthorized acquisition, use
      or disposition of our assets that could have a material effect on the
      financial statements.
 
 Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Also, projections  of any
evaluation  of  effectiveness  to
future  periods  are  subject to the risk that
controls may become  inadequate  because of changes
in  conditions,  or that the degree of compliance with the
policies or procedures may deteriorate.
  Management
assessed the effectiveness of our internal control over financial reporting as
of December 31, 2008.  Based on this assessment, management concluded
that the Company did not maintain effective internal controls over financial
reporting as a result of the identified material weakness in our internal
control over financial reporting described below.  In making this
assessment, management used the framework set forth in the report entitled
Internal Control—Integrated Framework issued by the
Committee of   Sponsoring Organizations of the Treadway
Commission, or COSO. The COSO framework summarizes each of the components of a
company's internal control system, including (i) the
control  environment,  (ii)
risk  assessment,  (iii)  control  activities,  (iv)
information and communication,  and (v) monitoring.  This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial
reporting.  Management's report was not subject to attestation by our
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permits us to provide only management's report in
this annual report.
  IDENTIFIED
MATERIAL WEAKNESS
 
 A
material weakness in our internal control over financial reporting is a
control  deficiency,  or  combination  of
control deficiencies,  that  results  in more than
a remote  likelihood  that a material
misstatement  of
the  financial  statements  will not
be  prevented or detected.
 
 Management
identified the following material weakness during its assessment of internal
controls over financial reporting as of December 31, 2008:
 
 We
lack an effective period-end financial statement reconciliation process from
Vietnamese Accounting Standards to U.S. Generally Accepted Accounting Principles
(“GAAP”).  There is no formal guidance or checklist of procedures to
facilitate the reconciliation of the financial statements reported under
Vietnamese accounting standards to GAAP.  We lack the accounting
personnel that have appropriate knowledge of GAAP and had not fully implemented
its transition to GAAP and were required to record certain adjustments to the
December 31, 2008 and 2007 financial statements to bring them into
compliance.
  MANAGEMENT'S
REMEDIATION INITIATIVES
 
 Since
the Company identified that there was a material weakness in internal control
over financial reporting, it has been actively seeking qualified personnel to
assist in the remediation.  In an effort to address the identified
material weakness and to further enhance our internal controls, in September
2009, we hired in June Kim, a certified public accountant as Chief Financial
Officer in the United States.  She is both familiar with GAAP and with
Company through her service as an independent director.  We are also
reviewing the qualifications of qualified GAAP consultants who can work with the
Company’s Chief Financial Officer and Vietnamese accounting team to indentify
GAAP related issues and help evaluate and address such issues before they
present problems in reporting in the United States.  We expect to
retain a qualified consultant in the near future.
 
 The
Company also elevated Bao Quoc Tran, a highly qualified professional in
Vietnamese accounting to the position of Principal Accounting Officer to improve
the Company’s ability to add resources to the Company’s internal control
capabilities.
  36
 
 In light
of the identified material weaknesses, management, performed (1) significant
additional substantive review of those areas described above, and (2) performed
additional analyses, including but not limited to a detailed balance sheet and
statement of operations analytical review that compared changes from the prior
period's financial statements and analyzed all significant differences. These
procedures were completed so management could gain assurance that the financial
statements and schedules included in this Form 10-K fairly present in all
material respects the Company's financial position, results of operations and
cash flows for the periods presented.
 
 (b)           Changes
In Internal Control Over Financial Reporting
 
 The
change noted above, are the only changes during our most recently audited years
that have materially affected or are reasonably likely to materially affect, our
internal control over financial reporting, as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act.
  ITEM
9B.  OTHER INFORMATION
 
 None.
 
 PART
III
 
 ITEM
10.  DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE
GOVERNANCE
 
 Directors
and Executive Officers
  The
following table sets forth the names and ages of the members of our Board of
Directors and our executive officers and the positions held by
each.
 
 Name
              
              Age
              
              Current
    Position/Office
              
              Position Held
  SinceHa
      Quang Bui
              
              45
              
              CEO/Chairman
              
              April
      28, 2006Hung
      Manh Tran
              
              46
              
              Executive
      Vice-President/Director
              
              April
      28, 2006Timothy
      Pham
              
              42
              
              Vice-President/Director
              
              April
      28, 2006Hieu
      Van Phan
              
              44
              
              Vice-President
              
              April
      28, 2006Hai
      Thanh Tran
              
              46
              
              Vice-President
              
              April
      28, 2006Giang
      Linh Bui
              
              37
              
              Vice-President
              
              April
      28, 2006June
      Kim
              
              53
              
              Chief
      Financial Officer
              
              September
      3, 2009Tuan
      Duong Hoang
              
              45
              
              Director
              
              May
      2007Thanh
      Binh Huynh
              
              53
              
              Director
              
              May
      2007Madhava
      Rao Mankal
              
              58
              
              Director
              
              October
      2007John
      McNicholas
              
              43
              
              Director
              
              August
      2009
 Set forth
below is a brief description of the background and business experience of each
of our executive officer and directors for the past five years.
  Ha Quang Bui. From May 2003 to
present, Ha Quang Bui has served as chairman of the board of directors and Chief
Executive Officer of Cavico Vietnam and as chairman of the board of directors of
Cavico Tower Company.  Mr. Bui became the Chief Executive Officer and
Chairman of the Board of Directors of Cavico Corp. on April 28, 2006. He
currently is Chief Executive Officer and Chairman of Cavico
Corp.  From March 2001 to May 2003, Ha Quang Bui served as Vice
President of Lung Lo Construction Company. He is a director of Energy Investment
Company and a director of Mai Son Concrete Company. He graduated from the
Military Technology Institute, Department of Defense, in 1986 with a degree in
engineering.
  Hung Manh Tran. Hung Manh Tran
has been a director and Executive Vice President of Cavico Corp. since 2006 and
2007, respectively (and Vice President from 2006 to 2007) to the present
time.  From March 2001 to March 2002, Hung Manh Tran served as
president of an affiliate of Cavico. From 2002, he has been Vice
President and director of Cavico Vietnam. In addition, he has been chairman of
Cavico Mining (since 2006), chairman of VFMC (since 2007), chairman of Luong son
international tourism JSC (since 2007), director of v-power (since 2006),
director of Cavico construction machinery (since 2007), and a director of Cavico
Australia (since 2005). Hung Manh Tran graduated from Hanoi University in 1986
with a degree in nuclear physics. He also did course work in law at Hanoi
University during 1992-1996. Mr. Tran also holds a degree in international trade
from Hanoi International Trade University in 1991.
 37
  Timothy Dac Pham . Timothy Dac
Pham has been a Vice President and director of Cavico Corp. since June
2006.  Since that time he has worked as an independent consultant for
Providential Holdings, Inc. and as a registered representative and life
insurance agent for Richave Financial Inc.  During 2004, he worked as
a registered representative at Golden Beneficial Securities Corp. From 2002
through 2003, Mr. Pham was a registered representative at NT Securities in
Chicago, Illinois. Mr. Pham graduated in 1991 from the University of California
at Berkeley with a degree in Business Administration in the fields of Finance
and Marketing.
  Hieu Van Phan
..  Hieu Van Phan became a Vice-President and Director of Cavico Corp.
on April 28, 2006.  He resigned as a director of Cavico Corp. in April
2009.  From July 2003 to present, Hieu Van Phan has been a vice
president and a director of Cavico Vietnam.  Hieu Van Phan is
currently Chief Operating Officer of Cavico Vietnam, chairman of the board of
directors of Cavico Power Installation Construction Co. and a Director of Cavico
Mining and Energy Construction Co.  From 2001 to July 2003, Hieu Van
Phan served as president of Power Installation Company. Hieu Van Phan graduated
from the Military Technology Institute, Department of Defense, in 1986 with a
degree in engineering.
  Hai Thanh Tran . Hai Thanh
Tran became a Vice-President and Director of Cavico Corp. on April 28,
2006.  He resigned as a director of Cavico Corp. in April
2009.  From July 2003 to present, he has been a director and vice
president of Cavico Vietnam.  He currently is Chief Executive Officer
of Cavico Vietnam, chairman of the Board of Directors of CAVICO Hydropower
Construction Co.  From April 2002 to July 2003, Hai Thanh Tran was
president of Bridge and Underground Construction Cavico Company.  From
March 2001 to April 2002, Hai Thanh Tran worked as an assistant at the Planning
Department of 25/3 Lung lo Construction Co - MOD. He graduated from the Military
Technology Institute, Department of Defense, in 1986 with a degree in
engineering.
  Giang Linh Bui.
  Giang Linh Bui became a Vice-President and Director of Cavico Corp.
on April 28, 2006.  He resigned as a director of Cavico Corp. in April
2009.  Giang Linh Bui is currently a director of Nam Chien Hydropower
Company, Director of CAVICO PHI Cement Construction Co., and chairman of the
Board of Directors of CAVICO Infrastructure Construction Co.  Mr. Bui
is also a director of Cavico Vietnam.  From March 2001 to November
2002, Giang Linh Bui worked in the Projected Technology Department at Lung lo
Construction Company.  Giang Linh Bui graduated from Hanoi University
of Architecture in 1994 with a degree in architecture.
  June Kim. June Kim has been
the Chief Financial Officer of Cavico Corp. since September 2009 after serving
as a director and member of the audit committee from April 2009 to August
2009.  Prior to accepting the position of Chief Financial Officer, she
worked for Providential Holdings, Inc. from July 2007 to August 2009 as a
consultant. She prepared annual and quarterly SEC filings for public companies
and assisted auditors for audits and reviews.  Prior to joining
Providential Holdings, Inc., she worked for Stonefield Josephson, a CPA firm, as
audit manager from August 2005 through March 2007 and Kabani & Company,
Inc., a CPA firm, as a full time audit manager from February 2000 to June
2005.  She is a Certified Public Accountant and holds CPA licenses in
the state of Washington and California. She graduated with a Bachelor of Science
in accounting degree in 1980 from California State University.
  Tuan Duong Hoang. Tuan Duong
Hoang has been a director of Cavico Corp. since May 2007. Mr. Hoang has been
Professor of Education at The University of New South Wales since 2003. From
1999 to 2003, he was an associate professor in the Department of Electrical and
Computer Engineering at the Toyota Technical Institute, Nagoya, Japan. He holds
a masters degree and a Ph.D. from the University of Odessa in the
Ukraine.
  Thanh Binh Huynh. Thanh Binh
Huynh has been a director of Cavico Corp. since May 2007. Mr. Huynh has been
Vice President of the Tuan Chao Joint Stock Company since 2003. From 2001 to
2003 he was a consultant at Edwards, Wynn & Associates LLP. During
that same period he was also Chairman and President of Raycorp.com
LLC.
  Madhava Rao Mankal. Madhava
Rao Mankal has been a director of Cavico Corp. since October 2007. He has been
Chief Financial Officer and Secretary and a Director of Medina International
Holdings, Inc., a manufacturer of boats since November 2004. Also, Mr. Mankal
has been Chief Financial Officer, Secretary and Treasurer of Genesis Companies
Group, Inc., Company formed to develop Laser stripping equipment. Since March
2006, Mr. Mankal served as President of Force Protection Inc., manufacturer of
mine detecting vehicles, from January 2002 to September 2003 and Chief
Financial Officer from May 1999 until September 2003.  In
addition, he served on the Board of Directors of that entity from
December 2001 to September 30, 2004. He has over 28 years experience in finance
and accounting and holds accounting certifications from India and the
United States. He has a Bachelors Degree in commerce from Bangalore
University.
  John T. McNicholas.  John
T. McNicholas joined our board of directors in August 2009.  He is
currently the President of Vineyards LLC and has served as President since its
inception in 2007.  From June 2003 to July 2007, he was the Chief Executive
Officer of Penloyd, LLC, a manufacturing company based in Tulsa, Oklahoma. 
Prior to his service at Penloyd, he was the Chief Operating Officer for Wachovia
Insurance Services from 2000 to 2003 and the Chief Operating Officer for
Thunderbird Moulding Company.  Mr. McNicholas has significant financial
experience serving as the Chief Financial Officer of American Wood Moulding,
working as a Manager at PriceWaterhouseCoopers and an auditor for Deloitte
Touche.  He graduated in 1988 from the University of Notre Dame with a
B.B.A. in accounting.
 Messrs.
Ha Quang Bui and Giang Linh Bui are brothers.
 
 During
the year 2008, Madhava Rao Mankal received 50,000 shares of the Company’s common
stock valued at $9,750 for his service.
 
 Employment
Agreements
  Each of
our executives has entered into an employment agreement with us. Each agreement
is on at will basis subject to termination upon 30 day notice. The executives
are entitled to vacation and personal and sick days as well as standard health
benefits and insurance available to all of our employees. Each agreement
contains standard confidentiality provisions.
  Compensation
under the employment agreements for each is as follows:
  Name
                              
                              Current
    Position/Office
                              
                              Annual CompensationHa
      Quang Bui
                              
                              Chief
      Executive Officer/ Chairman
                              
                              $
                              77,246
                              *Hung
      Manh Tran
                              
                              Executive
      Vice-President/Director
                              
                              $
                              63,599
                              **Hieu
      Van Phan
                              
                              Vice-President/Director
                              
                              $
                              46,549
                              ***Hai
      Thanh Tran
                              
                              Vice-President/Director
                              
                              $
                              50,439
                              ***Giang
      Linh Bui
                              
                              Vice-President/Director
                              
                              $
                              27,417
                              ***Timothy
      Pham
                              
                              Vice-President/Director
                              
                              $
                              60,000
  38
 
 * $70,000
payable by Cavico Corp and $7,246 payable by Cavico Vietnam.
 **  $40,000
payable by Cavico Corp and $23,599 payable by Cavico Vietnam.
 ***
Payable by Cavico Vietnam.
 
 Committees
of the Board
  Our Board
of Directors has established an Audit Committee, Compensation Committee, a
Nominating Committee and Governance Committee.
 
 The
functions of the Audit Committee are: (i) to recommend the engagement of the
Company's independent auditors and review with them the plan, scope and results
of their audit for each year; and (ii) to consider and review other matters
relating to the financial and accounting affairs of the Company. The Audit
Committee consists of Messrs. Madhava Rao Mankal (Chairman and considered
independent under the Nasdaq rules), Hung Manh Tran and Timothy Dac
Pham.
 
 The
functions of the Compensation Committee are: (i) reviewing and approving the
amounts and types of compensation to be paid to the Company's executive officers
and the non-employee directors; (ii) reviewing and approving all bonus and
equity compensation to be paid to other Company employees; and (iii)
administering the Company's stock-based compensation plans. The Compensation
Committee consists of Messrs. Thanh Binh Huynh (Chairman and considered
independent under the Nasdaq rules) and Hieu Van Phan.
 
 The
functions of the Nominating Committee are: (i) leading the search for,
screening, evaluating and recommending to the Board qualified candidates or
nominees for election or appointment as directors, consistent with the Board's
Director Nomination Policy; (ii) recommending the number of members that shall
serve on the Board; and (iii) reviewing the processes and performance of the
Board in order to identify areas of concern or potential issues relating to
Board and committee processes, performance and effectiveness and to assess and
evaluate the overall effectiveness of individual directors. The Nominating
Committee consists of Messrs. Tuan Duong Hoang (Chairman and considered
independent under the Nasdaq rules), Giang Linh Bui and Hai Thanh
Tran.
 
 The
activities of the Governance Committee
are:  (i)overseeing  all matter of corporate governance
including formulation and recommendation of governance policies; (ii) monitoring
and safeguarding the independence of the Board; and (iii) selecting, evaluating
and recommending qualified candidates for election or appointment as directors.
The Governance Committee consists of Messrs. Tuan Duong Hoang (Chairman and
considered independent under the Nasdaq rules), Giang Linh Bui and Hai Thanh
Tran.
 
 Code
of Ethics
  On
July 31, 2009. we have adopted a "Code of Business Conduct and Ethics", a code
of ethics that applies to all directors and executive officers, which shall
include the Chief Executive Officer, Chief Financial Officer and Principal
Accounting Officer or Controller.  A copy of our Code of Business
Conduct and Ethics is filed as an exhibit to this Form 10-K/A and shall be
available at www.cavicocorp.com,
our website.
  39
  ITEM
11.  EXECUTIVE COMPENSATION
 
 The
following table sets forth compensation information for the Company’s Chief
Executive Officer for the periods indicated. Under the rules of the Securities
and Exchange Commission no other individual is required to be included in the
table.
  SUMMARY
COMPENSATION TABLE*
  Name and principal position (a)
                                  
                                  Year (b)
                                  
                                  Salary ($) (c)
                                  
                                  
                                  Stock Awards ($) (d)
                                  
                                  
                                  Total ($) (j)Ha
      Quang Bui
                                    Chief
      Executive Officer/Chairman/
                                  
                                  2008
                                  
                                  
                                  77,246
                                  
                                  
                                  
                                  
                                  
                                  
                                  77,246Chief
      Financial  Officer
                                  
                                  2007
                                  
                                  
                                  75,398
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  75,3982006
                                  
                                  
                                  39,565
                                  (1)
                                  
                                  
                                  3,900
                                  (1)
                                  
                                  
                                  43,465
                                  (1)
 
 * In
accordance with the rules of the Securities and Exchange Commission, this table
omits columns that are not relevant.
 (1) Mr.
Bui did not join the Company until April 2006. Amounts disclosed represent
compensation actually earned. Compensation was paid in Vietnamese currency and,
for purposes of disclosure translated into US Dollars using an exchange rate of
15.739 Vietnamese Dongs per US Dollar. As part of his compensation, the Company
issued 390,000 shares to Mr. Bui valued at $0.01 per share, representing the
price at which the Company’s shares were being sold to third parties in arm’s
length transactions. The Company accounts for the issuance of equity instruments
based on the fair value of services or fair value of the equity instruments at
the time of issuance, whichever is more readily measurable.
 
 To date,
none of the Company's non-employee directors have received any compensation from
the Company.
 
 ITEM 12.  SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
 The
following table sets forth the beneficial ownership of Common Stock of the
Company as of December 31, 2008 for the following: (i) each person or entity who
is known to the Company to beneficially own more than 5% of the outstanding
shares of the Company's Common Stock; (ii) each of the Company's Directors;
(iii) the Company's Chief Executive Officer and each of the other executive
officers; and (iv) all Directors and executive officers of the Company as a
group.
  The
number and percentage of shares beneficially owned is determined under rules of
the Securities and Exchange Commission ("SEC"), and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under such
rules, beneficial ownership includes any shares as to which the individual has
sole or shared voting power or dispositive power and also any shares that the
individual has the right to acquire within sixty days of the Record Date through
the exercise of any stock option or other right. Unless otherwise indicated in
the footnotes, each person has sole voting and dispositive power (or shares such
power) with respect to the shares shown as beneficially owned.
  40
  Name And AddressOf Beneficial Owner
                          
                          Amount And
                            Nature Of Beneficial
                            Ownership
                          
                          
                          Percent Of Class (1)Ha
      Quang Bui
                            Group
      10, Ward Tu Lien, Tay Ho District,
                            Ha
      Noi, Vietnam
                          
                          
                          10,885,800
                          (2)
                          
                          
                          8.9
                          %Hung
      Manh Tran
                            14A
      Alley 123A, Thuy Khue Street
                            Thuy
      Khue Ward, Tay Ho District
                            Ha
      Noi, Vietnam
                          
                          
                          2,947,600
                          (3)
                          
                          
                          2.4
                          %Hieu
      Van Phan
                            No.
      304, 24T2, Trung Hoa Nha Chinh Ward
                            Cau
      Giay District, Ha Noi, Vietnam
                          
                          
                          2,186,600
                          (4)
                          
                          
                          1.8
                          %Hai
      Thanh Tran
                            34
      Alley 178/1, Tay Son Square
                            Trung
      Liet Ward, Dong Da District
                            Ha
      Noi, Vietnam
                          
                          
                          2,434,900
                          (5)
                          
                          
                          2.0
                          %Timothy
      Dac Pham
                            14721
      Wilson Street
                            Midway
      City, CA 92647
                          
                          
                          307,000
                          (6)
                          
                          
                          *Giang
      Linh Bui
                            No.
      1103, 17T1, Trung Hoa Nha Chinh Ward
                            Cau
      Giay District, Ha Noi, Vietnam
                          
                          
                          2,563,700
                          (7)
                          
                          
                          2.1
                          %Tuan
      Duong Hoang
                            26
      Warwick St., Killara, NSW 2071,Australia
                          
                          
                          830,700
                          
                          
                          
                          *Thanh
      Binh Huynh
                            262
      Beach Road
                            Bay
      Farm Island, CA 94502
                          
                          
                          200,000
                          (8)
                          
                          
                          *Madhava
      Rao Mankal
                            7476
      Sungold Ave.
                            Corona,
      California 92880
                          
                          
                          50,000
                          
                          
                          
                          *All
      Officers and Directors as a group
                          
                          
                          23,406,300
                          
                          
                          
                          19.2
                          %
  *   Less
than one percent.
  (1)
                Based
      upon 121,911,793 shares outstanding as of December 31,
    2008.(2)
                Includes
      4,381,400 shares held by Mr. Bui’s wife.(3)
                Includes
      252,000 shares held by Mr. Tran’s wife.(4)
                Includes
      200,000 shares held by Mr. Phan’s wife..(5)
                Includes
      367,300 shares held by Mr. Tran’s wife.(6)
                Shares
      held by Mr. Pham’s wife.(7)
                Includes
      374,100 shares held by Mr. Bui’s wife..(8)
                Shares
      held by Mr. Huynh’s wife.
 41
  ITEM
13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
 Except
as set forth below, since January 1, 2006, there has been no transaction, and
there is no currently proposed transaction with any executive officer, director
or 5% or greater stockholder of the Company or any affiliate or immediate family
member of any such person in which the Company was or is to be a participant and
the amount involved exceeds $120,000.
  Cavico
Vietnam, our wholly-owned subsidiary, had a loan payable to Mr. Ha Quang Bui,
our Chief Executive Officer, a balance of $92,203 at December 31,
2009.  The loan was originated in January 2008 and renewed for a
one-year term in January 2009.  The highest loan balance owed by
Cavico Vietnam to Mr. Bui was $458,673 on March 31, 2008. This loan had an
annual interest rate of 12%.  Cavico Vietnam, our subsidiary, borrowed
on December 1, 2006 from Ms. Ty Thi Pham, vice-chairman of Cavico Vietnam,
at an interest rate of 12%.  The highest loan balance owed by Cavico
Vietnam to Ms. Pham was $1,246,883, as of December 31, 2006. This loan was paid
off during the year ended December 31, 2007 with interest payment of
$132,551.
  Our
subsidiaries made advances of $727,230 to their officers and directors as of
December 31, 2008. Advances to management and employees include miscellaneous
expenses such as business travel costs, selling costs and material purchases.
Our policy is to receive expense reports for these amounts and move them to the
appropriate expense account. If an expense report is not turned in, these
advances can be deducted from the salary of the related individuals. Our
subsidiaries had other payables of $20,520 to their officers and directors as of
December 31, 2008.
  We had
loans receivable of $361,367 from their officers and directors as of December
31, 2008, respectively. These loans were made with no interest, not secured and
due on demand.
  Our
subsidiaries had loans payable to their officers and directors of $208,667
December 31, 2008, respectively. These loans are unsecured, and due on demand
with annual interest from 12% to 24%.
  We had
investments, which are accounted for on the cost method, in Vietnam Power
Investment and Development, JSC and Tour Zones Investment and Construction JSC.
These entities share common directors with the Company. Tour Zones Investment
and Construction JSC owns 6.4% of Cavico Luong Son JSC, a subsidiary of which
Cavico Vietnam owns the remaining 93.6%.
 
 ITEM
14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
 Audit
Fees
 
 The
aggregate fees billed by PMB Helin Donavan, LLP for the audit for the years
ended December 31, 2008 and 2007 and quarterly reviews of  Cavico’s
consolidated financial statements  for 2008 was $168,095 and aggregate
fees by Jaspers + Hall, for the audit of the annual consolidated financial
statement and reviews of quarterly financial statements for the year ended
December 31, 2007 was $140,500 .  These fees were pre-approved by
audit committee.
 
 All
Other Fees
 
 The
Company did not pay any non-audit fees for fiscal year 2008 or
2007.
  42
  PART
IV
 
 ITEM
15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 
 Financial
Statements
 
 The
following consolidated financial statements of Cavico Corp. and its subsidiaries
are included:
  Consolidated
      Balance Sheets
              
              —
      December 31, 2008 and 2007Consolidated
      Statements of Operations and Comprehensive Income
              
              —
      For the  years ended December 31, 2008 and
      2007Consolidated
      Statements of Cash Flows
              
              —
      For the years ended December 31, 2008 and 2007Consolidated
      Statements of Stockholders’ Equity
              
              —
      For the  years ended December 31, 2008 and
      2007Notes
      to Consolidated Financial Statements.Report
      of Independent Registered Public Accounting Firm
 
 Index
to Exhibits*
  Exhibit
      No.
                  
                  Description1.1
                  
                  Form
      of Underwriting Agreement(2)2.1
                  
                  Asset
      Purchase Agreement, dated April 18, 2006(1)3.3
                  
                  Bylaws(1)3.4
                  
                  Amended
      and Restated Certificate of Incorporation (3)3.5
                  
                  Certificate
      of Designation of Series A Preferred Stock (7)3.6
                  
                  Certificate
      of Amendment to the Amended and Restated Certificate of Incorporation
      (5)10.2
                  
                  Employment
      Agreement dated January 8, 2007 between the Company and Giang Linh
      Bui(1)10.3
                  
                  Employment
      Agreement dated January 8, 2007 between the Company and Ha Quang
      Bui(1)10.4
                  
                  Employment
      Agreement dated January 8, 2007 between the Company and Hai Thanh
      Tran(1)10.5
                  
                  Employment
      Agreement dated January 8, 2007 between the Company and Hieu Van
      Phan(1)10.6
                  
                  Employment
      Agreement dated January 8, 2007 between the Company and Hung Manh
      Tran(1)10.7
                  
                  Employment
      Agreement dated April 28, 2007 between the Company and Timothy
      Pham(1)10.8
                  
                  Management
      Service Agreement dated May 15, 2006 between Cavico Corp. and Providential
      Holdings, Inc.(1)10.9
                  
                  Loan
      Agreements with Thi Ty Pham (3)10.10
                  
                  Loan
      Agreement with Ha Quang Bui (3)10.11
                  
                  Revised
      Loan Agreement with Ha Quang Bui (4)10.12
                  
                  Employment
      Agreement, dated September 3, 2009, between the Company and June Kim
      (6)14.1
                  
                  Code
      of Ethics*21
                  
                  Subsidiaries** Filed
      herewith.(1)
                  Incorporated
      by reference to the Company’s Registration Statement on Form 10-SB filed
      October 23, 2007.(2)
                  Incorporated
      by reference to the Company’s Registration Statement on Form S-1 filed May
      22, 2009.(3)
                  Incorporated
      by reference to the Company’s Amendment No.1 to the Registration Statement
      on Form S-1 filed July 9, 2009.(4)
                  IncorporatedbyreferencetotheCompany’sAmendmentNo.2totheRegistrationStatementonFormS-1filedAugust6,2009.(5)
                  Incorporated
      by reference to the Company’s Current Report on Form 8-K filed August 19,
      2009.(6)
                  Incorporated
      by reference to the Company’s Current Report on Form 8-K filed September
      4, 2009.(7)
                  IncorporatedbyreferencetotheCompany’sAmendmentNo.4toRegistrationStatementonFormS-1filedSeptember28,
      2009
  43
 
 SIGNATURES
  Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized on September 28,
2009.
 
 CAVICO
      CORP.By:
                /s/ Ha Quang BuiHa Quang Bui, Chairman
      and Chief Executive Officer
                  Principal Executive Officer and Principal Financial Officer
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the date indicated:
  Pursuant to the
requirements of the Securities Act of 1933, this registration statement has been
signed below by the following persons in the capacities and on the date
indicated.
  Name
                    
                    Title
                    
                    Date/s/ Ha Quang Bui
                    
                    Chairman and Chief Executive Officer
                      Principal Executive Officer
                    
                    September
      28, 2009Ha Quang BuiChief
      Financial Officer/s/ June Kim
                    
                    Principal Financial Officer
                    
                    September
      28, 2009June
      Kim/s/ Bao Quoc Tran
                    
                    Principal
      Accounting Officer
                    
                    September
      28, 2009Bao
      Quoc Tran/s/ Hung Manh Tran
                    
                    Executive
      Vice-President/Director
                    
                    September
      28, 2009Hung
      Manh Tran/s/ Timothy Pham
                    
                    Vice-President/Director
                    
                    September
      28, 2009Timothy
      Pham/s/ Madhava Rao
    Mankal
                    
                    Director
                    
                    September
      28, 2009Madhava
      Rao Mankal/s/ Tuan Duong Hoang
                    
                    Director
                    
                    September
      28, 2009Tuan
      Duong Hoang/s/ Thanh Binh Huynh
                    
                    Director
                    
                    September
      28, 2009Thanh
      Binh Huynh
  44