UNITED STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
10-K




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.


Louis A.
Brilleman, Esq.


Sichenzia
Ross Friedman Ference LLP


61
Broadway


New York,
New York 10006


Tel:
(212) 930-9700


Fax:
(212) 930-9725




Securities
Registered Under Section 12(b) of the Exchange Act:




Name
      of each exchangeTitle
      of Each Class
            on
      which registeredCommon
      Stock, par value $.001
            Over-the-Counter
      Bulletin Board





Securities
to be registered under Section 12(g) of the Act:


Securities registered pursuant to
Section 12(b) of the Act: None


Securities
Registered Under Section 12(g) of the Exchange Act: None





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes  ̈  No
x





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





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, was121,911,793 as of March 31, 2009.











TABLE
OF CONTENTS




PagesPART
      IItem
      1. Description of Business
            
            
            3Item
      1A. Risk Factors
            
            
            10Item
      1B. Unresolved Staff Comments
            
            
            15Item
      2. Description of Property
            
            
            16Item
      3. Legal Proceedings
            
            
            18Item
      4. Submission Of Matters To A Vote Of Security Holders
            
            
            18PART
      IIItem
      5. Market Price of and Dividends on the Registrant's Common Equity and
      Related Stockholder Matters
            
            
            19Item
      6.  Selected Financial Data
            
            
            20Item
      7. Management's Discussion and Analysis of Financial Condition and Results
      Of Operations
            
            
            20Item
      7A. Quantitative and Qualitative Disclosures about Market
    Risk
            
            
            28Item
      8. Financial Statements and Supplementary Data
            
            
            F-1 -
      F-24Item
      9. Changes in and Disagreement with Accountants on Accounting and
      Financial Disclosures.
            
            
            29Item
      9A. Controls and Procedures
            
            
            29Item
      9B.  Other Information
            
            
            30PART
      IIIItem
      10. Directors, Executive Officers, and Corporate
Governance
            
            
            31Item
      11. Executive Compensation
            
            
            33Item
      12. Security Ownership of Certain Beneficial Owners and
      Management
            
            
            34Item
      13. Certain Relationships and Related Transactions.
            
            
            35Item
      14. Principal Accountant Fees and Services
            
            
            35PART
      IVItem
      15. Exhibits and Financial Statement Schedules
            
            
            36Signatures
            
            
            37




2


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


Cavico
Corp. 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
2006 and 2007, we acquired Cavico Vietnam 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 79,000,000 shares of our common stock. Cavico Vietnam
      subsequently transferred 60,062,200 of these shares to the former
      shareholders of Cavico Vietnam in return for their shares of Cavico
      Vietnam stock. An additional 18,937,800 shares were deposited into a
      Cavico Vietnam bonus plan for that entity’s management, of which 4,937,800
      shares were distributed to management in 2006.·
            Following
      our purchase of the Cavico Vietnam assets, and pending the grant of the
      requisite approval of the acquisition of Cavico Vietnam by a Vietnamese
      government agency as required under Vietnamese law, Cavico Vietnam
      continued to use the 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. Also, at that time, Cavico Vietnam
      changed its name to Cavico Vietnam Company
  Limited.




We
operate nationwide in Vietnamthrough
our direct and indirect subsidiaries, serving almost exclusively public sector
clients. We primarily concentrate on large infrastructure projects, including
the construction of tunnels, roads, highways, bridges, mines and dams. In
addition, we are currently making investments in hydropower and cement
production plants and urban developments in Vietnam.





Our
website may be found at www.cavicocorp.com.




Business
Strategy





Our
fundamental objective is to increase long-term shareholder value by focusing on
consistent profitability from controlled revenue growth. Shareholder value is
measured by the appreciation of the value of our common stock over a period of
years and, eventually, a return from 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.




3





Employee Development - We
believe that our employees are 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.




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
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.


Operations




Tunnel Construction. We apply
what we believe to be the latest tunnel engineering methods such as NATM [New
Austria Tunnel Method], and TBM [Tunnel Boring Machine] 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 like
Dai Ninh ( 300MW; 6000m length of tunnel diameter of 5.2m to 8m,) Buon Kuop (
280MW; 5180m length of tunnel diameter of 7.5m to 8.6m ), Ban Ve ( 320MW; 1720m
length of tunnel diameter of 5m to 7.8m ), Bac Binh (33MW; tunnel
length  of 2644m with diameter of 5.2m ), Dong Nai 4 ( 340MW; tunnel
length of 2926m with diameter of 5.5m to 9.2m ), Dong Nai 3 ( 180MW; tunnel
length of 1305m with diameter of 8m to 9.2m ), Nam Chien ( 210MW; tunnel length
of 9126m with diameter of 3.8m )  Bao Loc ( 24.5MW; tunnel length of
960m with diameter of 6.4m ), A Luoi ( 170MW; tunnel length of 13151m with
diameter of 5.25m to 6.5m ), Dak Mi 4 ( 190MW; tunnel length of 3355m with
diameter of 7.6m ), Za Hung ( 30MW; tunnel length of 1400m with diameter of 6m
), Dasiat ( 13.5MW; tunnel length of 2512m with diameter of 2.5m ), and Song
Tranh 2 ( 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. We are also expertised in
construction of surge sharfs, inclined penstocks for Hydro power plants applying
the Alimax or Robin boring machine method.




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, TBM, we believe that we
have that expertise.




Tunnels
are widely used in the construction of Hydro Power Plant (HPP) to collect and
divert water resources to run turbines. 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 hydro
power plants. We anticipate seeing the strongest growth in that area 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 hydro power plants, some of which of which are scheduled to
have a greater than 100 MW capacity .




Specifically,
we expect to see strong growth in tunnel construction for roads and highways,
especially in the large metropolitan areas of Hanoi, Hochiminh, Haiphong and
Danang.




Dam Construction - 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. 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,
Cavico only constructs coal mines; it does not own them. Therefore, no special
licenses are required.





4


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. Cavico
helps clients find innovative ways to finance, deliver and manage highways and
Cavico has 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·
            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,
the Company has not generated any revenues from these development
projects.





The
company is in the process of applying for an investment permit for Luong Son new
tourism zone of 353.53 hectares which is a part of master plan 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.





During
the year ended December 31, 2008, we generated revenues of $4,259,850 from
mining operations, $50,430,360 from construction operations, $463,613 from sale
of production and $2,852,446 from other operation such as leasing machinery and
equipment and the sale of materials. Costs of production were $3,315,077 for
mining operation, $42,461,358 for construction operation, $383,496 for sale of
production  and $2,252,985 for other operation.


Subsidiaries




Our
wholly-owned subsidiary, Cavico Vietnam, conducts its operations througha 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 2008, we permitted some our subsidiaries to issue shares to
third parties for the purpose of raising funds for expanded operations, thereby
reducing our percentage held in those entities. We believe that this
restructuring will result in more efficient and transparent management. 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%.





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
            
            Percentage
      of Construction Revenues of Combined
              CompanyCavico
      Bridge and Underground Construction JSC
            
            Civil
      construction, specializing in tunnel and bridge construction, frequently
      in conjunction with hydro power 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. Cavico Mining is publicly traded on HCMC stock
      exchange.
            
            25.55
            %(1)
            
            13.01
            %




5




Energy
      Construction JSC
            
            Civil
      construction, specializing in hydro power construction
      projects
            
            37.57
            %(2)
            
            13.15
            %Cavico
      Hydropower Construction JSC
            
            Civil
      construction, specializing in hydro power construction
      projects
            
            73.48
            %(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
            
            37.73
            %(5)Cavico
      Industry & Tech Service
            
            Steel
      fabrication production
            
            66.71
            %(5)Cavico
      Manpower
            
            Labor
      supply for projects
            
            30.00
            %
            
            3.88
            %Cavico
      Stone & Mineral
            
            Production
      of white stone
            
            35.50
            %Cavico
      PHI Cement
            
            Cement
      factory operation
            
            92.90
            %(5)Luong
      Son International Tourist
            
            Operation
      of tourism zone
            
            93.16
            %(5)Cavico
      Land
            
            Land
      investment and development
            
            13.35
            %(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. 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 ownership has been increased to 73.48% in 2008 from 72.65% in
      2007.(4)
            The
      percentage ownership has been increased to 63.39% in 2008 from 59.05% in
      2007.(5)
            This
      subsidiary had no operations in
2008.





Investment


We may
from time to time continue to act as a passive investor in projects that we
develop and that are subsequently managed by unrelated parties. We may from to
time also take a more active role in the management of certain projects.
Projects that we have invested in include hydropower projects, cement plants,
tourism, petroleum and land development projects. We have expanding our
investment in wind power.  We have been also carrying on the
exploration study of copper mine in Vietnam, copper mine and tin mine in Lao.
These above mentioned investment is our targeted investment as we have expertise
and experiences of long time involving in these field.


Customers




Our
customers are found primarily in the public sector. Our largest customer is
Electricity of Vietnam, a state owned utility.  During the year ended
December 31, 2008 and 2007, contracts with this entity represented approximately
64% and 65%, respectively, of our revenue.




6


Suppliers





Most of
our raw materials are purchased directly from 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 source if any of our suppliers would cease to sell to
us for any reason.





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 $251,963,000 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 the
customer; however, we have not 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.





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 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 is 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 hydro power (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 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 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, when contract conditions change, we  are able
to negotiate modifications to the contract which mitigate this
risk.




7




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





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 us 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.





Cavico's
areas of strength include modern technology, advanced management, and
professionally executed quality projects.




8




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 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. We are expanding our
construction activities to Laos, Algeria and are focusing increasingly on
Australia. 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. Within Vietnam, we believe we have a strong
reputation, and the advantage of expertise in the construction of modern and
complex projects.




During
the past five years, we have acted as subcontractors for several large Japanese
construction companies like Kumagai Gumi, Kajima, Maeda. This has resulted in
additional involvement in large projects overseas likes manpower sub-contract to
construct tunnels of high way in Algeria (Granted to us by Kajima) or tunnel
construction contract for Theu Hinboun hydro power project in Lao.




Government
Regulation




Our
operations are subject to compliance with 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 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.





Environmental





The
Company’s operations are subject to environmental regulation in Vietnam.
Environmental legislation is still evolving in this jurisdiction 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. 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





The
Company and its subsidiaries currently have approximately 3,000 employees (of
which approximately 700 are engineers) located in Hanoi and throughout the
country as well as more than 450 manpower in Algeria and a small number
stationed in Australia. If and when the need arises, the Company intends to hire
additional employees to meet the demand of a certain project.


The
Company has always focused 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  working place condition for our
  workers.




·
            Continuous
      professional training.




·
            Building
      of a company culture through various activities, including company
      newsletters, events, and other promotional activities which instill
      feelings of pride with the Company’s
  accomplishments.




9




Reports
to Security Holders





The
Company is not required to deliver an annual report to security holders and at
this time does not anticipate the distribution of such a report. The Company
recently became subject to the filing and reporting requirements of the Exchange
Act. These requirements include the filing of annual reports that will include
audited financial statements and quarterly reports as well as reports that will
be filed upon the occurrence of certain significant events. It is also subject
to the proxy rules under the Exchange Act and its insiders will have to file
reports disclosing their beneficial ownership of the Company’s 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 the Company files 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.





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
substantial 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.




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 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.




10




Many of our contracts with public sector customers contain
provisions that attempt to shift some or all of the above risks from the
customer to us, even in cases where the customer is partly at fault. 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.




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.





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.





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 us 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.




11




We also
rely on third-party suppliers to provide all of the materials, including
aggregates, concrete, steel and pipe, for our contracts. We do not own any
quarries, and there are no naturally occurring sources of aggregate in the
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.




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.





12


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. The loss of business from this entity or any
one of those customers 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.




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.




13




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. 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.





Risks
Associated with Equity Ownership of our Securities and Our Capital
Structure




Insiders
have substantial control over the company, and they could delay or prevent a
change in our corporate control, even if our other stockholders wanted such a
change to occur.




Our
executive officers, directors, and principal stockholders who hold 5% or more of
the outstanding common stock and their affiliates beneficially owned as of
December 31, 2008, in the aggregate, approximately 23,406,300 shares of our
outstanding common stock. These stockholders will be able to exercise
significant control over 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.





We
do not meet the requirements for our stock to be quoted on NASDAQ, the American
Stock Exchange or any other senior exchange and even if our securities quoted on
the OTC Bulletin Board, the tradability in our securities will be limited under
the penny stock regulations.




The
liquidity of our securities may be restricted even they are included for
quotation in the OTC Bulleting Board, should our securities fall within the
definition of a penny stock.





Under the
rules of the Securities and Exchange Commission, if the price of our securities
on the OTC Bulletin Board is below $5.00 per share, our securities will come
within the definition of a "penny stock." As a result, it is possible that 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.





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.




14


We
do not have a written stock option plan in place, which may create potential
conflicts of interest for our management and may dilute or diminish the value of
our common stock.




The
options to purchase common stock that are outstanding or that may be issued in
the future are not and may not be issued in accordance with a comprehensive
written option plan. Management presents proposed grants of stock options to our
Board of Directors for approval, and the terms of the options we grant are
contracted between each recipient and the Company on a case-by-case basis.
Therefore, our board may issue options on terms and in amounts not yet
determined. These circumstances may create a conflict of interest with respect
stock option recipients serving on the board. Furthermore, if more stock options
are granted, the eventual exercise of those options will dilute the holdings of
the current stockholders, and significant sales of stock issued upon the
exercise of options could have a negative effect on our stock
price.




If
we fail to remain current in our reporting requirements, our securities could be
removed from the OTC Bulletin Board, 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 OTC Bulletin Board 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 OTC Bulletin Board. If we
fail to remain current on our reporting requirements, we could be removed from
the OTC Bulletin Board. 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.





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.





We
may issue additional shares of our capital stock or debt securities to raise
capital or complete acquisitions, which would reduce the percentage equity
interest of our stockholders.





Our
certificate of incorporation authorizes the issuance of up to 300,000,000 shares
of common stock, par value $0.001 per share.  As of March 31, 2009,
there were 169,002,307 authorized and unissued shares of our common stock which
have not been reserved and accordingly, are available for future issuance.
Although we have not entered into any agreements as of this date to issue our
unreserved shares of common stock, we may issue a substantial number of
additional shares of our common stock to raise capital in the private or public
markets. The issuance of additional shares of our common stock may significantly
reduce the equity interest of investors in this offering; and may adversely
affect prevailing market prices for our common stock.







ITEM
1B.UNRESOLVED STAFF
COMMENTS.





None.





15




ITEM 2.PROPERTIES




Cavico’s
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 Cavico 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.




The
Company has 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 the
Company and its subsidiaries. It also intends to rent some of the space to
commercial tenants.




The
Company has 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 the
Company  intends 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.




The Son
La parcel of land was granted to the Company 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, the
Company has not generated any revenues from this project.





The
Company owns additional offices and dormitories totaling 254,404 square feet and
workshops totaling 376,931 square feet at construction sites owned by the
Company and its subsidiaries. These properties were built by the Company on
sites recorded as Company 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, the Company may relinquish its right to the property
or sell the properties to the project owner/local entities.







16




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






17




ITEM 3.LEGAL PROCEEDINGS




From time
to time the Company may become subject to litigation incidental to its business.
Such claims, if successful, could exceed applicable insurance coverage. The
Company is not currently a party to any material legal proceedings.





ITEM
4.SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS





None.




















18





PART II




ITEM
5.MARKET FOR
REGISTRANT’S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES
OF EQUITY SECURITIES


Market
Information





We are
currently trading our common stock on the OTC Bulletin Board under the symbol of
“CVIC”. We started trading in April 2008.





The
quotations set forth below reflect inter-dealer prices, without retail mark-up,
markdown or commission and may not represent actual transactions.





Fiscal 2009
            
            High
            
            
            LowJan  2009
            
            $
            0.12
            
            
            $
            0.08Feb
      2009
            
            $
            0.13
            
            
            $
            0.09March
      2009
            
            $
            0.13
            
            
            $
            0.09Fiscal
      2008First
      Quarter
            
            
            N/A
            
            
            
            N/ASecond
      Quarter
            
            $
            1.75
            
            
            $
            0.21Third
      Quarter
            
            $
            0.26
            
            
            $
            0.15Fourth
      Quarter
            
            $
            0.17
            
            
            $
            0.06




Number
of Stockholders




As of
December 31, 2008, there were 977  holders of record of our common
stock.


Dividend
Policy




Holders
of the Company's Common Stock are entitled to receive dividends if and when
declared by the Company’s Board of Directors out of funds legally available for
distribution. Any such dividends may be paid in cash, property or shares of the
Company’s common stock.




The
Company 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 the Company's Board
of Directors, and will depend upon, among other things, the operating and
financial condition of the Company, its capital requirements and general
business conditions.




Securities
Authorized for Issuance under Equity Compensation Plans




The
Company does not currently have any equity compensation plans
authorized.





Description
of Securities




Our
authorized capital consists of 300,000,000 shares of common stock, $.001 par
value per share, of which 130,007,693 shares were issued and 121,911,793 shares
were outstanding as of December 31, 2008, and 100,000,000 shares of Class B
Preferred Stock, none of which are outstanding.




The
following description is a summary and is qualified in its entirety by our
Certificate of Incorporation and By-laws as currently in effect.





Each
holder of common stock is entitled to receive ratable dividends, if any, as may
be declared by the Board of Directors out of funds legally available for the
payment of dividends. As of the date of this filing, we have not paid any
dividends on our common stock, and none are contemplated in the foreseeable
future. We anticipate that all earnings that may be generated from our
operations will be used to finance our growth.





Holders
of common stock are entitled to one vote for each share held of record. There
are no cumulative voting rights in the election of directors. Thus the holders
of more than 50% of the outstanding shares of common stock can elect all of our
directors if they choose to do so.


The
holders of our common stock have no preemptive, subscription, conversion or
redemption rights. Upon our liquidation, dissolution or winding-up, the holders
of our common stock are entitled to receive our assets pro rata.




19




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:








20




·
            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.




·
            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 collectibility of accounts receivable.





Cash
and Cash Equivalents




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.




21




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.





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 are provided, based on past
experience and a specific analysis of the accounts, which management believes
are sufficient. We reserved for uncollectable amounts of $597,349 and $369,590
for the year ended December 31, 2008 and 2007, respectively.


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, 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




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.





22




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 contract work-in-progress. Amounts billed to clients in
excess of revenues recognized to date are classified as current liabilities
under advance billing on contracts.





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 revenue 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 revenue for the year ending December 31, 2009
is  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.




23


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.





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




24




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.·
            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 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.





25





Liquidity
and Capital Resources





The Company’s 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, the Company 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.





The
Company's 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.





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, the Company 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.




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 $631,816and $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.





26





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.








27




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%.










28


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-4Consolidated
      Statement of Shareholders’ Equity for the Years Ended December 31, 2008
      and 2007
            
            
            F-5Consolidated
      Statements of Cash Flows for the Years Ended December 31, 2008 and
      2007
            
            
            F-6Notes
      to Consolidated Financial Statements
            
            
            F-7
      - F-24










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.







/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
            
            
            2007ASSETSCurrent
      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:Temporary
      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
            
            
            
            710,16039,952,195
            
            
            
            34,480,575Less
      accumulated depreciation
            
            
            (16,973,105
            )
            
            
            (12,808,293
            )Net
      fixed assets
            
            
            22,979,090
            
            
            
            21,672,282Intangible
      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
            
            
            9,473,411
            
            
            
            6,535,668Other
      assets
            
            
            763,604
            
            
            
            1,273,094Total
      other assets
            
            
            30,767,372
            
            
            
            20,075,332TOTAL
      ASSETS
            
            $
            112,788,065
            
            
            $
            94,518,004LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      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
            
            
            
            76,342,878Minority
      interest in subsidiaries
            
            
            15,562,700
            
            
            
            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 sharesauthorized;
      130,997,693 and 130,847,693shares
      issued,  121,911,793 and 116,761,793 shares
              outstanding,
      respectively
            
            
            121,912
            
            
            
            116,762Additional
      paid-in capital
            
            
            13,501,001
            
            
            
            13,121,401Accumulated
      deficit
            
            
            (6,547,740
            )
            
            
            (6,950,248
            )Accumulated
      other comprehensive income (loss)
            
            
            (3,864,303
            )
            
            
            3,080,235Total
      stockholders' equity
            
            
            3,210,870
            
            
            
            9,368,150TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
            
            $
            112,788,065
            
            
            $
            94,518,004




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





F-3





CAVICO
      CORP. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOMEFor
      the Years Ended December 31, 2008 and
2007




2008
            
            
            2007Revenues: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 minority interest
            
            
            (357,804
            )
            
            
            9,365,148Income
      taxes benefit (expense)
            
            
            2,283,822
            
            
            
            (2,684,945
            )Income
      before minority interest
            
            
            1,926,018
            
            
            
            6,680,203Minority
      interest in consolidated subsidiaries
            
            
            (1,294,202
            )
            
            
            (785,335
            )Net
      income
            
            $
            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
            
            
            117,669,053
            
            
            
            115,272,234Net
      income per common share-basic and diluted
            
            $
            0.01
            
            
            $
            0.05




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




F-4


CAVICO
CORP. AND SUBSIDIARIES


Consolidated
Statement of Stockholders’ Equity


For
the Years Ended December 31, 2008 and 2007





AccumulatedCommon
      Stock
            
            
            AdditionalPaid-in
            
            
            Subscription
            
            
            Accumulated
            
            
            other
              Comprehensive
            
            
            Total
      Stockholders’Shares
            
            
            Amount
            
            
            Capital
            
            
            Receivable
            
            
            Deficit
            
            
            Income(loss)
            
            
            EquityBalance,
      December 31, 2006
            
            
            81,306,382
            
            
            $
            81,306
            
            
            $
            4,040,136
            
            
            $
            (15,000
            )
            
            $
            (12,945,137
            )
            
            $
            (245,243
            )
            
            $
            (9,083,938
            )Shares
      issued for cash
            
            
            35,740,000
            
            
            
            35,740
            
            
            
            9,080,981
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            9,116,721Shares
      returned and to be issued
            
            
            (284,589
            )
            
            
            (284
            )
            
            
            284
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -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
            
            
            116,761,793
            
            
            $
            116,762
            
            
            $
            13,121,401
            
            
            $
            -
            
            
            $
            (6,950,248
            )
            
            $
            3,080,235
            
            
            $
            9,368,150Shares
      issued for services
            
            
            150,000
            
            
            
            150
            
            
            
            84,600
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            84,750Shares
      issued for cash
            
            
            5,000,000
            
            
            
            5000
            
            
            
            295,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            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
            
            
            121,911,793
            
            
            $
            121,912
            
            
            $
            13,501,001
            
            
            $
            -
            
            
            $
            (6,547,740
            )
            
            $
            (3,864,303
            )
            
            $
            3,210,870











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





F-5





CAVICO
      CORP. AND SUBSIDIARIESConsolidated
      Statements of Cash FlowsFor
      the years ended December 31, 2008 and
2007




2008
            
            
            2007Cash
      Flows From Operating Activities:Net
      income
            
            $
            631,816
            
            
            $
            5,894,868Adjustments 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
            )Minority
      interest
            
            
            1,294,202
            
            
            
            785,335Stock
      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 minority 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


Non-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-6





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 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.





Principles
of Consolidation





The
accompanying consolidated financial statements include the accounts of the
Company, its wholly owned subsidiaries, majority owned subsidiaries and all
entities that the Company controls directly or indirectly. 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
              %
              
              
              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
              %




During
the years ended December 31, 2008 and 2007, the following entities were
added  in the consolidation.




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







F-7


NOTE 2-   SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES





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.





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 includes certain amounts
in work in process as a long-term asset which will be recorded as cost of goods
sold when cerified revenue is recognized. As of December 31, 2008 and 2007, the
Company recorded  a long term work in process of $9,473,411 and
$6,535,668, respectively. 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.




F-8




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.





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.





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.




F-9





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 portion of revenue related to retentions ranges from
5% to 15% depending on each contract and is not recognized until the retention
period has expired. 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.





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 year ended December 31,
2008 and 2007, respectively. 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.





F-10




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.





The
Company  recognizes revenues from construction projects based upon
work that is periodically certified as completed by the customer 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 contract work-in-progress. Amounts billed to clients in
excess of revenues recognized to date are classified as current liabilities
under advance billing on contracts.





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.





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.





Earning
(Loss) Per Share of Common Stock




Net
earning (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.





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-11




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 minority 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.





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.




F-12




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.





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
            
            
            685,092
            
            
            
            1,154,745Deductible
      Value Added Tax
            
            
            391,385
            
            
            
            117,966Other
      current assets
            
            
            243,105
            
            
            
            243,751TOTAL
            
            $
            1,602,272
            
            
            $
            1,612,968







F-13


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





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
are initially recorded at cost and periodically reviewed for impairment.As of December 31, 2008
and 2007, no impairment was necessary.





Investment
in companies;





The
Company’s investments in companies that are accounted for on the cost method of
accounting at December 31, 2008 and 2007 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.






F-14





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.





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-15


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
Vietenamese 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
year ended December 31, 2008 and 2007, respectively.





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.





F-16


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





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 $36,000.  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 year 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:




F-17




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, action 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.





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 gurantees 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-18





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,
      December 13, 2011
            
            
            3,402,941
            
            
            
            2,620,039




F-19




Notes  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.
            
            
            -
            
            
            
            163,833Notes
      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
            
            
            
            -




F-20




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 of15.7%
      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.





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





Preferred
Stock


The
Company has 100,000,000  authorized shares of noncumulative,
non-voting, non-convertible Class B,  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, 130,997,693 shares and 130,847,693 shares were
issued,  121,911,793 shares and 116,761,793 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.





F-21




During
the year ended December 31, 2008, the Company issued 50,000 shares of common
stock for legal services and 100,000 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 5,000,000 shares of common
stock  for cash at a price of $0.06 per share and received
$300,000.




During
the year ended December 31, 2007, the Company had  the following
transactions:





- The
company issued 32,740,000 common shares for cash amounting $9,116,721 at average
price of $.28 per share.





- The
Company received $15,000 from the 2006 subscription receivable.





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.


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
            
            $
            742,404
            
            
            $
            379,051Non-U.S.
      operations loss carry forward at statutory rate
            
            
            365,293
            
            
            
            437,554Total
            
            $
            1,107,697
            
            
            $
            816,605Less
      Valuation Allowance
            
            
            (1,107,697
            )
            
            
            (816,605
            )Net
      Deferred Tax Assets
            
            $
            -
            
            
            $
            -





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:




F-22




December 31,
      2008
            
            December 31,
      2007Statutory regular
      federal income tax rate
            
            
            34
            %
            
            
            34
            %Statutory regular
      state income tax rate
            
            
            6
            %
            
            
            6
            %Foreign tax rate
      difference
            
            
            (4
            )%
            
            
            (4
            )%Change in valuation
      allowance
            
            
            (36
            )%
            
            
            (36
            )%Total
            
            
            0
            %
            
            
            0
            %




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.





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








F-23





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 – 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-24


ITEM 9.CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES





In
October 2008, the PCAOB has revoked the registration of our prior auditor,
Jaspers + Hall. In April 2008, the Company dismissed Jaspers + Hall and engaged
PMB Helin Donovan, a PCAOB registered Certified Public Accounting firm. The
financial statements for the fiscal year ended December 31, 2007 was re-audited
to be included in our filing with the Commission.





ITEM
9A.CONTROLS AND
PROCEDURES





(a)           Evaluationof 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.





As
required by SEC Rule 15d-15(b), our Chief Executive Officer and Chief Financial
Officer carried out an evaluation under the supervision and with the
participation of our management, of the effectiveness of the design and
operation of our disclosure controls and procedures pursuant to Exchange Act
Rule 15d-14 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 are effective in timely alerting them to material information
required to be included in our periodic SEC filings and to ensure that
information required to be disclosed in our periodic SEC filings is accumulated
and communicated to our management, including our Chief Executive Officer and
Chief Financial Officer, to allow timely decisions regarding required disclosure
about our internal control over financial reporting discussed
below.





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.





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. 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.




29




IDENTIFIED
MATERIAL WEAKNESS





A
material weakness 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 in internal control during its
assessment of internal controls over financial reporting as of December 31,
2008:





The
Company had not fully implemented its transition to United States Generally
Accepted Accounting Principals and was required to record certain adjustments to
the December 31, 2008 and 2007 financial statements to bring them into
compliance.




MANAGEMENT'S
REMEDIATION INITIATIVES





In an
effort to remediate the identified material weakness and to further enhance our
internal controls, we have initiated, or plan to initiate, the following series
of measures:





Identify
and retain a GAAP consultant who can work with the Company’s 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.





CONCLUSION





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.











30





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/
      CFO
            
            April
      28, 2006Hung
      Manh Tran
            
            46
            
            Executive
      Vice-President/Director
            
            April
      28, 2006Hieu
      Van Phan
            
            44
            
            Vice-President/Director
            
            April
      28, 2006Hai
      Thanh Tran
            
            46
            
            Vice-President/Director
            
            April
      28, 2006Giang
      Linh Bui
            
            37
            
            Vice-President/Director
            
            April
      28, 2006Madhava
      Rao Mankal
            
            58
            
            Director
            
            October
      2007Tuan
      Duong Hoang
            
            45
            
            Director
            
            May
      2007Thanh
      Binh Huynh
            
            53
            
            Director
            
            May
      2007Timothy
      Pham
            
            42
            
            Vice-President/Director
            
            April
      28, 2006


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 March 2001
to May 2003, Ha Quang Bui served as Vice President of Lung Lo Construction
Company. From May 2003 to present, Ha Quang Bui served as chairman of the board
of directors of Cavico Vietnam and as chairman of the board of directors of
Cavico Tower Company. He is a director of Energy Investment Company and a
director of Mai Son Concrete Company. Mr. Bui became the Chief Executive
Officer, Chief Financial officer and Chairman of the Board of Directors of
Cavico Corp. on April 28, 2006. He currently is CEO, CFO and Chairman of Cavico
Corporation. He graduated from the Military Technology Institute, Department of
Defense, in 1986 with a degree in engineering.




Hung Manh Tran. 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.
Hung Manh Tran has been a director and Executive Vice President of Cavico since
2006 and 2007, respectively (and Vice President from 2006 to 2007). 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 physic. He also did course
work in law at the same University during 1992-1996. Mr. Tran also holds a
degree in international trade from Hanoi International Trade University in
1991.




Hieu Van Phan. From 2001 to
July 2003, Hieu Van Phan served as president of Power Installation Company. From
July 2003 to present, Hieu Van Phan has been vice president and a director of
Cavico Vietnam, and became a Vice-President and Director of Cavico Corp. on
April 28, 2006. Hieu Van Phan is currently COO 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.. Hieu Van Phan graduated
from the Military Technology Institute, Department of Defense, in 1986 with a
degree in engineering.




Hai Thanh Tran. 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. From April 2002 to July 2003,
Hai Thanh Tran was president of Bridge and Underground Construction Cavico
Company. From July 2003 to present, he has been a director and vice president of
Cavico Vietnam, and on April 28, 2006, he became a Vice-President and Director
of Cavico Corp and currently is CEO of Cavico Vietnam, chairman of the Board
Director of CAVICO Hydropower Construction Co., He graduated from the Military
Technology Institute, Department of Defense, in 1986 with a degree in
engineering.





Giang Linh Bui. From March
2001 to November 2002, Giang Linh Bui worked in the Projected Technology
Department at Lung lo Construction Company. Giang Linh Bui is currently a
director of Nam Chien Hydropower Company, Director of CAVICO PHI Cement
Construction Co., and chairman of the Board Director of CAVICO Infrastructure
Construction Co, and became a Vice-President and Director of Cavico Corp. on
April 28, 2006. Mr. Bui is also a director of Cavico Vietnam. Giang Linh Bui
graduated from Hanoi University of Architecture in 1994 with a degree in
architecture.


Tuan Duong Hoang. Mr Hoang has
been Professor in Electrical Engineer and Telecommunications at The University
of New South Wales, UNSW, Sydney, NSW 2052, Australia, since 2003. From 1999 to
2003, he was an associate professor in Electrical and Computer Engineering at
the Toyota Technical Institute,  Nagoya, Japan. He holds a honor
bacheler degree and a Ph.D. all in applied mathematics  from the Odessa
State University, Odessa, Ukraine.




31




Timothy Dac Pham . From 2002
through 2003, Mr. Pham was a registered representative at NT Securities in
Chicago, Illinois. Through 2004, he worked as a registered representative at
Golden Beneficial Securities Corp. 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. He has been
our Vice President since June 2006. 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.




Thanh Binh Huynh. 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. Mr.
Huynh holds business administration degrees from institutions of higher learning
in Russia, China and the United States.




Madhava Rao Mankal has been a
director 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 Bachelor Degree in
commerce from Bangalore University.


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/ Chief Financial Officer
            
            $
            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




* $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.





32




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




We have
adopted a "Code of Ethics for Directors, Officers and Employees", a code of
ethics that applies to all employees, including our executive officers. A copy
of our Code of Ethics for Directors, Officers and Employees was filed
previouslywith the Securities and
Exchange Commission.




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.




33


ITEM12.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.




Name And Address Of 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
            %




34




*   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.




ITEM13.CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS





Since the
beginning of the most recent fiscal year, we have engaged in the following
transactions with the executive officers listed below:





Names
            Relationship
            Major
      transactions during the year
            
            
            US$Mr.
      Ha Quang Bui
            Chief
      Executive Officer and Chairman/CFO
            Loans
      obtained
            
            $
            447,774Repayment
      of loans principal
            
            
            353,667Ms.
      Ty Thi Pham
            Management
      Board Member of Cavico Vietnam
            Loans
      obtained
            
            $
            441,501Repayment
      of loans principal
            
            
            858,474





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.





35





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*




2.1
            Asset
      Purchase Agreement, dated April 18, 2006*3.1
            Certificate
      of Incorporation*3.2
            Amendment
      to the Certificate of Incorporation*3.2a
            Amendment
      to Certificate of Incorporation*3.3
            Bylaws*10.2
            Employment
      Agreement dated January 8, 2007 between the Company and Giang Linh
      Bui*10.3
            Employment
      Agreement dated January 8, 2007 between the Company and Ha Quang
      Bui*10.4
            Employment
      Agreement dated January 8, 2007 between the Company and Hai Thanh
      Tran*10.5
            Employment
      Agreement dated January 8, 2007 between the Company and Hieu Van
      Phan*10.6
            Employment
      Agreement dated January 8, 2007 between the Company and Hung Manh
      Tran*10.7
            Employment
      Agreement dated April 28, 2007 between the Company and Timothy
      Pham*10.8
            Management
      Service Agreement dated May 15, 2006 between Cavico Corp. and Providential
      Holdings, Inc.*14.1
            Code
      of Ethics*21
            Subsidiaries*31.1
            Certification
      by the Chief Executive Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200231.2
            Certification
      by the Chief Financial Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.32.1
            Certification
      by the Chief Executive Officer and Chief Financial Officer pursuant to
      Section 906 of the Sarbanes-Oxley Act of
2002




*      Incorporated
by reference to the Company’s Registration Statement of Form 10-SB.





36





SIGNATURES




Pursuant
to the requirement of Section 12 of the Securities Exchange Act of 1934, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.





CAVICO
      CORP.Date:
            April
      14, 2009By:
            Ha
      Quang BuiHa
      Quang Bui, CEO


Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of Cavico Corp. and in the
capacities and on the date indicated.




Name
            
            Title
            
            DateHa
      Quang Bui
            
            Chairman
      and Chief Executive Officer
              Chief
      Financial Officer
            
            April
      14, 2009Hung
      Manh Tran
            
            Director
            
            April
      14, 2009Hieu
      Van Phan
            
            Director
            
            April
      14, 2009Hai
      Thanh Tran
            
            Director
            
            April
      14, 2009Giang
      Linh Bui
            
            Director
            
            April
      14, 2009Madhava
      Rao Mankal
            
            Director
            
            April
      14, 2009Tuan
      Duong Hoang
            
            Director
            
            April
      14, 2009Thanh
      Binh Huynh
            
            Director
            
            April
      14, 2009Timothy
      Pham
            
            Director
            
            April
      14, 2009






37