UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                   ----------
                                   FORM 10-QSB

(X)  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934.

                For the quarterly period ended September 30, 2005

(X)  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
     OF 1934


For the transition period from __________ to __________


                          GENERAL STEEL HOLDINGS, INC.
                 (Name of Small Business Issuer in Its Charter)

            NEVADA                                         412079252
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
 Incorporation or Organization)

10th Floor, Building A, Haitong Plaza, No.3 Nanlishi Ave.               100037
                    Xicheng District
                     Beijing, China
        (Address of Principal Executive Offices)                      (Zip Code)

                              Incorp Services Inc.
                             6075 S. Eastern Avenue
                     Suite 1, Las Vegas, Nevada, 89119-3146
                               Tel: (702) 866-2500
           (Name, address and telephone number for Agent for Service)

                               + 86 (10) 68000346
                           (Issuer's telephone number)

Securities registered under Section 12(b) of the Exchange Act:  none
Securities registered under Section 12(g) of the Exchange Act:

                          Common Stock, $.001 par value
                                (Title of Class)

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

The number of shares of Common  Stock  outstanding  on  September  30,  2005 was
32,426,665.

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]

<PAGE>

     Certain  financial  information  included in this quarterly report has been
derived from data originally  prepared in Renminbi ("RMB"),  the currency of the
People's  Republic  of  China  ("China"  or  "PRC").  For the  purposes  of this
quarterly  report,  the balance  sheet  amounts with the  exception of equity at
September 30, 2005 were  translated at 8.08 RMB to $1.00 USD as compared to 8.26
RMB at December 31, 2004.  The equity  accounts were stated at their  historical
rate.  The  average  translation  rate of 8.22  RMB for the  nine  months  ended
September 30, 2005 was applied to income statement accounts.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS












                                      -1-
<PAGE>
<TABLE>
<CAPTION>

                  GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
                (FORMERLY KNOWN AS AMERICAN CONSTRUCTION COMPANY)

                           CONSOLIDATED BALANCE SHEETS
                 AS OF SEPTEMBER 30, 2005 AND DECEMBER 31, 2004

                                   A S S E T S
                                   -----------

                                                                                September 30,   December 31,
                                                                                2005            2004
                                                                                -------------   -------------
<S>                                                                             <C>             <C>
                                                                                (Unaudited)     (Audited)
                                                                                -------------   -------------
CURRENT ASSETS:
    Cash                                                                        $   9,541,073   $   5,547,810
    Restricted cash                                                                 2,108,820       3,597,480
    Accounts receivable, net of allowance for doubtful accounts of $1,403
      and $1,371 as of September 30, 2005 and December 31, 2004, respectively         511,585         523,398
    Notes receivable                                                                2,928,841         374,955
    Other receivables                                                                 961,682         214,905
    Inventories                                                                    13,851,949      12,826,561
    Advances on inventory purchases                                                13,465,758      13,469,984
    Short-term investment                                                              37,140          36,300
                                                                                -------------   -------------
      Total current assets                                                         43,406,848      36,591,393
                                                                                -------------   -------------

PLANT AND EQUIPMENT, net                                                           15,205,365      14,100,324
                                                                                -------------   -------------

OTHER ASSETS:
    Intangible assets - land use right, net of accumulated amortization             2,109,676       2,277,279
                                                                                -------------   -------------

        Total assets                                                            $  60,721,889     $52,968,996
                                                                                =============   =============

        L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y
        ----------------------------------------------------------------

CURRENT LIABILITIES:
    Accounts payable                                                            $     271,461   $     293,348
    Short term loans - bank                                                        26,245,600      25,748,800
    Short term notes payable                                                        4,283,480       6,776,000
    Other payables                                                                    398,878         400,110
    Other payable - related party                                                   1,180,000       1,011,012
    Accrued liabilities                                                               414,881         393,532
    Customer deposits                                                               4,393,358       2,009,313
    Deposits due to sales representatives                                           1,382,846       1,231,780
    Taxes payable                                                                   3,468,376       1,879,615
                                                                                -------------   -------------
      Total current liabilities                                                    42,038,880      39,743,510

SHARES SUBJECT TO MANDATORY REDEMPTION                                              2,081,891            --
                                                                                -------------   -------------

        Total liabilities                                                          44,120,771      39,743,510
                                                                                -------------   -------------

MINORITY INTEREST                                                                   5,136,942       4,015,108
                                                                                -------------   -------------

SHAREHOLDERS' EQUITY:
    Common Stock, $0.01 par value, 75,000,000 shares authorized,
      31,250,000 shares issued and outstanding                                         31,250          31,250
    Paid-in-capital                                                                 6,395,617       6,871,358
    Retained earnings                                                               4,507,658       2,152,976
    Statutory reserves                                                                154,794         154,794
    Accumulated other comprehensive income (loss)                                     374,857            --
                                                                                -------------   -------------
      Total shareholders' equity                                                   11,464,176       9,210,378
                                                                                -------------   -------------
        Total liabilities and shareholders' equity                              $  60,721,889     $52,968,996
                                                                                =============   =============
</TABLE>

The accompanying notes are an integral part of these statements.


                                      -2-
<PAGE>
<TABLE>
<CAPTION>

                  GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
                (FORMERLY KNOWN AS AMERICAN CONSTRUCTION COMPANY)

        CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
     FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004


                                                       Three months ended               Nine months ended
                                                  ----------------------------    ----------------------------
                                                          September 30                    September 30
                                                  ----------------------------    ----------------------------
                                                      2005            2004            2005            2004
                                                  ------------    ------------    ------------    ------------
<S>                                               <C>             <C>             <C>             <C>
                                                  (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)
                                                  ------------    ------------    ------------    ------------
REVENUES                                          $ 26,032,015    $ 23,790,719    $ 72,021,091    $ 58,280,868

COST OF SALES                                       23,379,706      20,608,044      63,656,562      52,984,213
                                                  ------------    ------------    ------------    ------------

GROSS PROFIT                                         2,652,309       3,182,675       8,364,529       5,296,655

SELLING, GENERAL AND  ADMINISTRATIVE EXPENSES          523,063         444,087       1,763,706       1,215,449
                                                  ------------    ------------    ------------    ------------

INCOME FROM OPERATIONS                               2,129,246       2,738,588       6,600,823       4,081,206

OTHER EXPENSE, NET                                    (447,943)     (1,654,884)     (1,308,339)     (2,210,426)
                                                  ------------    ------------    ------------    ------------

INCOME BEFORE PROVISION FOR INCOME TAXES             1,681,303       1,083,704       5,292,484       1,870,780
    AND MINORITY INTEREST

PROVISION FOR INCOME TAXES                             548,972         314,197       1,815,968         617,358
                                                  ------------    ------------    ------------    ------------

NET INCOME BEFORE MINORITY INTEREST                  1,132,331         769,507       3,476,516       1,253,422

LESS MINORITY INTEREST                                 350,118         230,799       1,121,834         376,027
                                                  ------------    ------------    ------------    ------------

NET INCOME                                             782,213         538,708       2,354,682         877,395

OTHER COMPREHENSIVE INCOME:
    Foreign currency translation adjustment            374,857            --           374,857            --
                                                  ------------    ------------    ------------    ------------

COMPREHENSIVE INCOME                              $  1,157,070    $    538,708    $  2,729,539    $    877,395
                                                  ============    ============    ============    ============

WEIGHTED AVERAGE NUMBER OF SHARES                   31,250,000      31,215,000      31,250,000      31,215,000
                                                  ============    ============    ============    ============

EARNING PER SHARE, BASIC AND DILUTED              $       0.04    $       0.02            0.09    $       0.03
                                                  ============    ============    ============    ============
</TABLE>





The accompanying notes are an integral part of these statements.


                                      -3-
<PAGE>
<TABLE>
<CAPTION>

                  GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
                (FORMERLY KNOWN AS AMERICAN CONSTRUCTION COMPANY)

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004


                                                        Number              Common             Paid-in              Statutory
                                                      of shares             stock              capital              reserves
                                                  -----------------   -----------------   -----------------    -----------------
<S>                                               <C>                 <C>                 <C>                  <C>

BALANCE, January 1, 2004 restated in accordance
    with acquisition agreement (audited)                 31,215,000   $          31,215   $       6,871,218    $            --
    Net income                                                 --                  --                  --                   --
    Cash received                                              --                  --                  --                   --

                                                  -----------------   -----------------   -----------------    -----------------
BALANCE, September 30, 2004 (unaudited)                  31,215,000   $          31,215   $       6,871,218    $            --

    Net income                                                 --                  --                  --                   --
    Adjustment to statutory reserve                            --                  --                  --                154,794
    Stock issued for services                                35,000                  35                 140                 --
                                                  -----------------   -----------------   -----------------    -----------------
BALANCE, December 31, 2004 (audited)                     31,250,000   $          31,250   $       6,871,358    $         154,794

    Net income                                                 --                  --                  --                   --
    Issuance of redeemable stock                               --                  --              (475,741)                --
    Foreign currency translation gain                          --                  --                  --                   --
                                                  -----------------   -----------------   -----------------    -----------------
BALANCE, September 30, 2005 (unaudited)                  31,250,000   $          31,250   $       6,395,617    $         154,794
                                                  =================   =================   =================    =================


                                                                                            Accumulated other
                                                       Retained              Stock            comprehensive
                                                       earnings            receivable             income             Totals
                                                  -----------------    -----------------    -----------------   -----------------

BALANCE, January 1, 2004 restated in accordance
    with acquisition agreement (audited)          $       1,392,772    $         (10,000)   $            --     $       8,285,205
    Net income                                              877,395                 --                   --               877,395
    Cash received                                              --                 10,000                 --                10,000

                                                  -----------------    -----------------    -----------------   -----------------
BALANCE, September 30, 2004 (unaudited)           $       2,270,167    $            --      $            --     $       9,172,600

    Net income                                               37,603                 --                   --                37,603
    Adjustment to statutory reserve                        (154,794)                --                   --                  --
    Stock issued for services                                  --                   --                   --                   175
                                                  -----------------    -----------------    -----------------   -----------------
BALANCE, December 31, 2004 (audited)              $       2,152,976    $            --      $            --     $       9,210,378

    Net income                                            2,354,682                 --                   --             2,354,682
    Issuance of redeemable stock                               --                   --                   --              (475,741)
    Foreign currency translation gain                          --                   --                374,857             374,857
                                                  -----------------    -----------------    -----------------   -----------------
BALANCE, September 30, 2005 (unaudited)           $       4,507,658    $            --      $         374,857   $      11,464,176
                                                  =================    =================    =================   =================
</TABLE>

The accompanying notes are an integral part of these statements.


                                      -4-
<PAGE>
<TABLE>
<CAPTION>

                  GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
                (FORMERLY KNOWN AS AMERICAN CONSTRUCTION COMPANY)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

                                                               September 30    September 30
                                                                   2005            2004
                                                               ------------    ------------
<S>                                                            <C>             <C>
                                                               (Unaudited)     (Unaudited)
                                                               ------------    ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                 $  2,354,682    $    877,395
    Adjustments to reconcile net income to cash
      provided by (used in) operating activities:
       Minority Interest                                          1,121,834         376,027
       Depreciation                                                 789,131         724,270
       Amortization                                                 216,528         214,864
       Loss on disposal of equipment                                 34,998          26,255
      (Increase) decrease in assets:
       Accounts receivable                                           11,813         158,203
       Other receivables                                           (746,777)       (501,075)
       Other receivables - related parties                             --        (1,069,603)
       Inventories                                               (1,025,388)     (3,784,926)
       Advances on inventory purchases                                4,226      (7,987,339)
       Advances on inventory purchases - related party                 --         1,021,824
      Increase (decrease) in liabilities:
       Accounts payable                                             (21,887)     (1,131,468)
       Other payables                                                (1,232)        705,018
       Other payable - related party                                168,988         990,000
       Accrued liabilities                                           21,348         127,873
       Customer deposits                                          2,384,045       1,155,918
       Deposits due to sales representatives                        151,066           3,630
       Taxes payable                                              1,588,761          24,153
                                                               ------------    ------------
         Net cash provided by (used in) operating activities      7,052,136      (8,068,981)
                                                               ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Increase in notes receivable                                 (2,553,886)      1,034,942
    Increase in short term investment                                  (840)        (24,200)
    Additions to equipment and land use right                    (1,978,094)       (233,665)
    Cash proceeds from sale of equipment                               --               605
                                                               ------------    ------------
         Net cash (used in) provided by investing activities     (4,532,820)        777,682
                                                               ------------    ------------

CASH FLOWS FINANCING ACTIVITIES:
    Borrowings, net of payments on short term loans - bank          496,800      12,003,200
    Payments on short term notes payable                         (2,492,520)     (2,329,250)
    Cash received on stock issuance                                    --            10,000
    Manadatory redeemable stock                                   1,606,150            --
                                                               ------------    ------------
         Net cash (used in) provided by financing activities       (389,570)      9,683,950
                                                               ------------    ------------

EFFECTS OF EXCHANGE RATE CHANGE IN CASH                             374,857            --
                                                               ------------    ------------

INCREASE IN CASH                                                  2,504,603       2,392,651

CASH, beginning of period                                         9,145,290       3,703,074
                                                               ------------    ------------

CASH, end of period                                            $ 11,649,893    $  6,095,725
                                                               ============    ============
</TABLE>

The accompanying notes are an integral part of these statements.


                                      -5-
<PAGE>

                  GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
                (FORMERLY KNOWN AS AMERICAN CONSTRUCTION COMPANY)

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Background

On March 7, 2005,  General Steel Holdings,  Inc. (the Company)  formally changed
its name from American Construction Company to General Steel Holdings, Inc.

The Company was  established on August 5, 2002 for the purpose of commencing the
business of general construction  contracting.  It is the Company's objective to
provide to its customers  timely and durable  construction of their  residential
and commercial needs. We established our subsidiary for the purpose of achieving
our  above  stated  objectives  in  Saskatchewan,  Canada.  We  established  our
subsidiary to enter the residential and commercial construction industry in this
market.

To  accomplish  the above  objective  the  founder  of our  company,  Jeff Mabry
established American  Construction Company (a Nevada company) on August 5, 2002.
American  Construction  Company  then  established  its  subsidiary,   West  Dee
Construction  Ltd.  (a  Saskatchewan,  Canada  Company)  on  August  8,  2002 by
purchasing 100 shares from its treasury.

On October 14, 2004, American  Construction Company and General Steel Investment
Co., Ltd (referred to as General Steel) and Northwest  Steel  Company,  a Nevada
corporation,  entered  into an  Agreement  and Plan of Merger (the  "Agreement")
pursuant to which American Construction Company acquired General Steel, and it's
70% ownership in its subsidiary Daqiuzhuang Metal Sheet Co., Ltd in exchange for
shares of the  Company's  common  stock,  of which  22,040,000  shares are a new
issuance by the Company,  and 7,960,000 shares are from certain  shareholders of
the  Company,  which  in  aggregate,  constitute  96% of the  total  issued  and
outstanding shares of the Company.

Under  the  terms of the  Agreement,  General  Steel  will  remain a 100%  owned
subsidiary of the Company.  The  transaction  contemplated  by the Agreement was
intended to be a "tax-free" reorganization pursuant to the provisions of Section
351 and 368(a) (1) (A) of the  Internal  Revenue Code of 1986,  as amended.  The
stockholders  of  General  Steel,  as of the  closing  date  of the  merger  own
approximately  96% of the Company's  common stock  outstanding as of October 15,
2004  (excluding  any  additional  shares to be issued on  outstanding  options,
warrants and other securities convertible into common stock).

The  accounting  for these  transactions  is identical to that  resulting from a
reverse-acquisition,  except  that no  goodwill  or other  intangible  assets is
recorded. Accordingly, the financial statements of General Steel Investment Co.,
Limited are the  historical  financial  statements of the Company,  formerly the
operations of Daqiuzhuang Metal Sheet Co., Ltd.

Daqiuzhuang  Metal  Sheet  Co.,  Ltd.  (referred  to as  Daqiuzhuang  Metal) was
established on August 18, 2000 in Jinghai county,  Tianjin city, Hebei province,
the People's Republic of China (PRC). The Articles of Corporation provides for a
10 year operating term beginning on August 18, 2000 with registered capital of $
9,583,200.  The Company is a Chinese registered limited liability company with a
legal structure  similar to a limited  liability  company  organized under state
laws in the United States of America.


                                      -6-
<PAGE>

Note 1 - Background, (continued)

Tianjin Long Yu Trading  Material  Co.,  Ltd was the majority  owner with 71% of
ownership  interest.  Tianjin Long Yu Trading Material Co., Ltd was incorporated
in 2000 in Tianjin Municipality, Daqiuzhuang County; P.R.C. Mr. Yu Zuo Sheng has
90% of ownership interest in Tianjin Long Yu Trading Material Co., Ltd.

During January 2004, upon the board directors' approval, Tianjin Long Yu Trading
Material Co., Ltd and other minority shareholders sold their interests amounting
to 70% to  Yang Pu  Capital  Automotive  Investment  Limited.  Yang  Pu  Capital
Automotive  Investment Limited is a Chinese registered limited liability company
which is 100% indirectly owned by Mr. Yu Zuo Sheng.

On May 16, 2004,  Company  agreed to purchase  Yang Pu's 70% equity  interest in
Daqiuzhuang  Metal  for  the  amount  of  RMB  55.45  million  or  approximately
$6,709,450.  The entire  purchase price is to be paid within one year of the new
business  license  being  issued  which  is June  25,  2004.  Due to the  common
ownership by Mr. Yu Zuo Sheng in both General Steel Investment Co., Ltd and Yang
Pu Capital Automotive  Investment  Limited,  the Company's board of directors by
board resolution dated May 16, 2004 has instructed Mr. Yu Zuo Sheng as the 99.9%
shareholder  of  General  Steel on  behalf  of the  Company  to remit  the total
purchase price to Yang Pu from his personal funds. Mr. Yu Zuo Sheng will receive
no compensation for completing this transaction nor will General Steel reimburse
Mr. Yu Zuo Sheng for the  $6,709,450.  As of December 31, 2004, Mr. Yu Zuo Sheng
has paid  the  entire  purchase  price to Yang Pu.  Because  the  entities  have
essentially  the same owner,  Mr. Yu Zuo Sheng and the entities are under common
control,  the transfer of ownership is accounted for at  historical  costs under
guidance of SFAS No. 141. The Company received a new business license certifying
the new ownership structure as a Chinese Foreign Joint Venture on June 25, 2004.

The purchase of Yang Pu's 70% equity  interest and the issuance of the Company's
common stock have been  accounted  for as a reverse  acquisition  presented as a
recapitalization, except no goodwill or the intangible assets are recorded.

Based on the Company's Plan of Merger with General Steel, the Board of Directors
determined  to  change  the  Registrant's  fiscal  year end from  January  31 to
December 31.

Note 2 - Summary of significant accounting policies

Basis of presentation
---------------------

The consolidated  financial  statements of General Steel Holdings,  Inc. reflect
the activities of the following subsidiaries:

                                                                      Pecentage
                         Subsidiary                                 Of Ownership
------------------------------------------------------------------  ------------
General Steel Investment Co., Ltd.          British Virgin Islands     100.0%
Tianjin Daqiuzhuang Metal Sheet Co., Ltd    P.R.C.                      70.0%


                                      -7-
<PAGE>

Note 2 - Summary of significant accounting policies, (continued)

Basis of presentation, (continued)
----------------------------------

The  consolidated  financial  statements have been presented as if the Agreement
and Plan of Merger of the  subsidiary  occurred  during  the year of 2003 due to
common management and ownership.

Revenue recognition
-------------------

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

Foreign currency translation
----------------------------

The reporting  currency of the Company is the US dollar.  The Company uses their
local  currency,  Renminbi  (RMB),  as their  functional  currency.  Results  of
operations  and cash flow are  translated at average  exchange  rates during the
period,  and assets and liabilities are translated at the unified  exchange rate
as quoted by the  People's  Bank of China at the end of the period.  Translation
adjustments  resulting  from this  process  are  included in  accumulated  other
comprehensive income in the statement of shareholders' equity. Transaction gains
and  losses  that  arise  from  exchange  rate   fluctuations   on  transactions
denominated in a currency other than the functional currency are included in the
results of operations as incurred.

Translation  adjustments resulting from this process are included in accumulated
other comprehensive income in the consolidated statement of shareholders' equity
and amounted to $374,857 and $0 as of September  30, 2005 and December 31, 2004,
respectively.  The  balance  sheet  amounts  with the  exception  of  equity  at
September 30, 2005 were  translated at 8.08 RMB to $1.00 USD as compared to 8.26
RMB at December 31, 2004.  The equity  accounts were stated at their  historical
rate.  The  average  translation  rate of 8.22  RMB for the  nine  months  ended
September 30, 2005 was applied to income statement accounts.

Plant and equripment, net
-------------------------

Plant  and  equipment  are  stated  at  cost  less   accumulated   depreciation.
Depreciation  is computed  using the  straight-line  method  over the  estimated
useful lives of the assets with 3% residual value. The depreciation  expense for
the nine  months  ended  September  30, 2005 and 2004  amounted to $789,131  and
$724,270, respectively.


                                      -8-
<PAGE>

Note 2 - Summary of significant accounting policies, (continued)

Plant and equipment, net, (continued)
-------------------------------------

Estimated useful lives of the assets are as follows:

                                                          Estimated
                                                         Useful Life
                                                        -------------
Buildings                                                10-30 years
Machinery and equipment                                   8-15 years
Other equipment                                           5-8  years
Transportation equipment                                 10-15 years

Construction  in progress  represents the costs incurred in connection  with the
construction of buildings or new additions to the Company's plant facilities. No
depreciation  is provided for  construction  in progress  until such time as the
assets are completed and are placed into service.

The cost and  related  accumulated  depreciation  of  assets  sold or  otherwise
retired are eliminated from the accounts and any gain or loss is included in the
statements of  operations.  Maintenance,  repairs and minor renewals are charged
directly to expenses as incurred.  Major  additions and  betterment to buildings
and equipment are capitalized.

Long-term  assets of the  Company  are  reviewed  annually  as to whether  their
carrying value has become impaired.  The Company considers assets to be impaired
if the  carrying  value  exceeds the future  projected  cash flows from  related
operations.  The  Company  also  re-evaluates  the  periods of  amortization  to
determine whether subsequent events and circumstances  warrant revised estimates
of useful lives.  As of September 30, 2005, the Company  expects these assets to
be fully recoverable.

Plant and equipment consist of the following:

                                        September 30,   December 31,
                                             2005            2004
                                        -------------   -------------
                                          Unaudited        Audited
                                        -------------   -------------
Buildings and improvements              $   5,301,159   $   5,089,350
Transportation equipment                      267,486         240,847
Machinery                                  12,719,328      12,294,697
Construction in progress                    1,292,517            --
                                        -------------   -------------
              Totals                       19,580,490      17,624,894
Less accumulated depreciation               4,375,125       3,524,570
                                        -------------   -------------
              Totals                    $  15,205,365     $14,100,324
                                        =============   =============


                                      -9-
<PAGE>

Note 2 - Summary of significant accounting policies, (continued)

Use of estimates
----------------

The preparation of financial  statements in conformity  with generally  accepted
accounting  principles  of the United States of America  requires  management to
make estimates and assumptions  that affect the amounts reported in the combined
financial  statements  and  accompanying  notes.  Management  believes  that the
estimates  utilized in preparing its financial  statements  are  reasonable  and
prudent. Actual results could differ from these estimates.

Cash and concentration of risk
------------------------------

Cash includes cash on hand and demand deposits in accounts maintained with state
owned banks  within the  People's  Republic  of China and Hong Kong.  Total cash
(including  restricted  cash  balances) in these banks at September 30, 2005 and
December 31, 2004, amounted to $9,955,107 and $9,256,618,  respectively of which
no deposits are covered by insurance. The Company has not experienced any losses
in such accounts and believes it is not exposed to any risks on its cash in bank
accounts.

Restricted Cash
---------------

The Company  through its bank  agreements is required to keep certain amounts on
deposit  that are  subject to  withdrawal  restrictions  and these  amounts  are
$2,108,820  and  $3,597,480  as of  September  30, 2005 and  December  31, 2004,
respectively.

Inventories
-----------

Inventories  are  stated  at the  lower of cost or  market  using  the  first-in
first-out basis and consist of the following:

                                         September 30,   December 31,
                                              2005            2004
                                         -------------   -------------
                                           Unaudited        Audited
                                         -------------   -------------
Raw materials                            $   8,209,334   $   9,123,814
Finished goods                               5,642,615       3,702,747
                                         -------------   -------------
Totals                                   $  13,851,949     $12,826,561
                                         =============   =============

Inventories  consist of raw materials and finished goods. Raw materials  consist
primarily  of iron and steel  used in  production.  The cost of  finished  goods
included  direct  costs  of raw  materials  as  well  as  direct  labor  used in
production.  Indirect  production  costs such as utilities  and  indirect  labor
related to  production  such as assembly and  delivery are also  included in the
cost of inventory.  No work in process  inventory existed at September 30, 2005,
and December 31, 2004, as all inventory in process was completed and transferred
to finished goods prior to the physical inventory count. The Company reviews its
inventory  annually for possible  obsolete goods or to determine if any reserves
are necessary for potential obsolescence.  As of September 30, 2005 and December
31, 2004,  the Company has determined  that no reserves are necessary.


                                      -10-
<PAGE>

Note 2 - Summary of significant accounting policies, (continued)

Financial instruments
---------------------

Statement of Financial  Accounting  Standards  No. 107 (SFAS 107),  "Disclosures
about Fair Value of Financial Instruments" requires disclosure of the fair value
of financial instruments held by the Company. SFAS 107 defines the fair value of
financial  instruments as the amount at which the instrument  could be exchanged
in a current  transaction  between willing  parties.  The Company  considers the
carrying  amount  of cash,  accounts  receivable,  other  receivables,  accounts
payable, accrued liabilities and other payables to approximate their fair values
because of the short period of time between the origination of such  instruments
and their expected realization and their current market rate of interest.

Intangible assets
-----------------

All land in the People's Republic of China is owned by the government and cannot
be sold to any individual or company.  However, the government grants the user a
"land use right" (the Right) to use the land.  The Company has acquired land use
rights  during  the  years  ending  in  2000  and  2003  for a total  amount  of
$2,937,336.  The  Company  has the right to use this  land for 50  years.  As of
September 30, 2005 and December 31, 2004,  accumulated  amortization amounted to
$827,660 and $593,623.  The cost of the rights is being amortized over ten years
using the straight-line method.

Intangible  assets of the Company  are  reviewed  annually  as to whether  their
carrying value has become impaired.  The Company considers assets to be impaired
if the  carrying  value  exceeds the future  projected  cash flows from  related
operations.  The  Company  also  re-evaluates  the  periods of  amortization  to
determine whether subsequent events and circumstances  warrant revised estimates
of useful lives.  As of September 30, 2005, the Company  expects these assets to
be fully recoverable.

Total  amortization  expense for the nine months  ended  September  30, 2005 and
2004, amounted to $216,528 and $214,864 respectively.

Shares subject to mandatory redemption
--------------------------------------

The Company has adopted  Statement of Financial  Accounting  Standards  No. 150,
"Accounting  for Certain  Financial  Instruments  with  Characteristics  of both
Liabilities  and  Equity".  FAS 150  establish  classification  and  measurement
standards  for  three  types of  freestanding  financial  instruments  that have
characteristics of both liabilities and equity.  Instruments within the scope of
FAS 150 must be classified  as  liabilities  within the  Company's  Consolidated
Financial Statements and be reported at settlement date value. The provisions of
FAS 150 are effective for (1) instruments entered into or modified after May 31,
2003,  and (2)  pre-existing  instruments  as of July 1, 2003. In November 2003,
through the issuance of FSP 150-3, the FASB indefinitely  deferred the effective
date  of  certain  provisions  of  FAS  150,  including   mandatory   redeemable
instruments as they relate to minority  interests in  consolidated  finite-lived
entities.


                                      -11-
<PAGE>

Note 2 - Summary of significant accounting policies, (continued)

Shares subject to mandatory redemption, (continued)
---------------------------------------------------

The Company issued new redeemable  stock during the quarter ended  September 30,
2005.  The net  present  value of the  settlement  date value is recorded in the
liability section of the financial statements.

Income taxes
------------

The Company has adopted  Statement of Financial  Accounting  Standards  No. 109,
"Accounting  for Income Taxes" (SFAS 109).  SFAS 109 requires the recognition of
deferred  income  tax  liabilities  and  assets  for  the  expected  future  tax
consequences  of temporary  differences  between  income tax basis and financial
reporting basis of assets and liabilities. Provision for income taxes consist of
taxes  currently due plus deferred  taxes.  There are no deferred tax amounts at
September 30, 2005 and December 31, 2004.

The charge for  taxation is based on the  results  for the year as adjusted  for
items, which are non-assessable or disallowed.  It is calculated using tax rates
that have been enacted or substantively enacted by the balance sheet date.

Deferred  tax is  accounted  for using the  balance  sheet  liability  method in
respect of temporary  differences  arising from differences between the carrying
amount  of  assets  and   liabilities  in  the  financial   statements  and  the
corresponding tax basis used in the computation of assessable tax profit.

In principle,  deferred tax liabilities are recognized for all taxable temporary
differences,  and  deferred tax assets are  recognized  to the extent that it is
probably  that  taxable  profit  will  be  available  against  which  deductible
temporary differences can be utilized.

Deferred  tax is  calculated  at the tax rates that are expected to apply to the
period when the asset is realized or the  liability is settled.  Deferred tax is
charged or  credited  in the income  statement,  except when it related to items
credited or charged  directly to equity,  in which case the deferred tax is also
dealt with in equity.

Deferred tax assets and  liabilities are offset when they relate to income taxes
levied by the same  taxation  authority  and the  Company  intends to settle its
current tax assets and liabilities on a net basis.

Under the Income Tax Laws, the Company is generally  subject to an income tax at
an effective  rate of 33% (30% state income taxes plus 3% local income taxes) on
incomes reported in the statutory  financial  statements  after  appropriate tax
adjustments,  unless the enterprise is located in a specially  designated region
for which more favorable effective tax rates are applicable.


                                      -12-
<PAGE>

Note 2 - Summary of significant accounting policies, (continued)

Income taxes (continued)
------------------------

The  provision  for income taxes for the period ended  September 30 consisted of
the following:


                                                      2005         2004
                                                   ----------   ----------
                                                   Unaudited    Unaudited
                                                   ----------   ----------
Provision for China Income Tax                     $1,634,371   $  555,622
Provision for China Local Tax                         181,597       61,736
                                                   ----------   ----------
      Total provision for income taxes             $1,815,968   $  617,358
                                                   ==========   ==========


The  following  table  reconciles  the U.S.  statutory  rates  to the  Company's
effective tax rate for the nine months ended September 30:


                                                      2005         2004
                                                   ----------   ----------
U.S. Statutory rates                                     34.0%        34.0%
Foreign income not recoginized in USA                   (34.0)       (34.0)
China income taxes                                       33.0         33.0
                                                   ----------   ----------
      Total provision for income taxes                   33.0%        33.0%
                                                   ==========   ==========


The  Company's  subsidiary,  Daqiuzhuang  Metal Sheet Co.,  Ltd became a Chinese
Sino-foreign equity joint venture at the time of the merger on October 14, 2004.
Daqiuzhuang Metal Sheet Co., Ltd should be now taxed under the Income Tax Law of
the People's Republic of China (PRC) concerning Foreign  Investment  Enterprises
and Foreign Enterprises and various local income tax laws (the Income Tax Laws).
The  Income  Tax  Law for  Enterprises  with  Foreign  Investments  and  Foreign
Enterprises  states.  "Any enterprise  with foreign  investments of a production
nature scheduled to operate for a period of not less than ten years shall,  upon
examination  and  verification  by the tax  authorities  in the year the company
begins to make a profit,  will be exempted  from  income  taxes in the first and
second years and allowed a fifty percent  reduction in the standard tax rates in
the third to fifth years."

The Company is in the process of  applying  for this tax benefit  from the local
Chinese tax  authority.  The Company will continue to accrue income taxes at the
applicable tax rates until such time the Company's application has been approved
by the local Chinese tax authority exempting them from income taxes.

Value Added Tax
---------------

Enterprises  or  individuals  who  sell   commodities,   engage  in  repair  and
maintenance  or import and export  goods in the PRC are subject to a value added
tax in accordance with Chinese laws. The value added tax standard rate is 17% of
the gross sales price.  A credit is available  whereby VAT paid on the purchases
of  semi-finished  products  or raw  materials  used  in the  production  of the
Company's  finished  products  can be used to offset the VAT due on sales of the
finished  product.

Note 3 - Consolidated financial statements and condensed footnotes

The  interim  consolidated  financial  statements  presented  herein  have  been
prepared by the Company  and include the  unaudited  accounts of the Company and
its subsidiaries.  All significant  inter-company accounts and transactions have
been eliminated in the consolidation.

These  consolidated  financial  statements have been prepared in accordance with
generally  accepted  accounting  principles  in the United  States  for  interim
financial  information  and the  instructions  for Form 10-QSB and Article 10 of
Regulation S-X.


                                      -13-
<PAGE>

Certain  information  and footnote  disclosures  that are  normally  included in
financial  statements presented in accordance with generally accepted accounting
principles  have been condensed or omitted.  Management of the Company  believes
the  disclosures  made  are  adequate  to make  the  information  presented  not
misleading.  The condensed  consolidated  financial statements should be read in
conjunction  with the Company's  audited  financial  statements  included in its
Annual Report on Form 10-KSB dated March 30, 2005.

In the opinion of management,  the unaudited  consolidated  financial statements
reflect  all  adjustments  (which  include  only normal  recurring  adjustments)
necessary  to  present  fairly  the  financial  position  of the  Company  as of
September 30, 2005 and December 31, 2004, and the results of operations, changes
in  shareholders'  equity and cash flows for the nine months ended September 30,
2005 and 2004.  Interim  results  are not  necessarily  indicative  of full year
performance because of the impact of seasonal and short-term variations.

Note 4 - Earnings Per Share

The Company reports earnings per share in accordance with the provisions of SFAS
No. 128,  "Earnings Per Share." SFAS No. 128 requires  presentation of basic and
diluted earnings per share in conjunction with the disclosure of the methodology
used in computing  such earnings per share.  Basic  earnings per share  excludes
dilution and is computed by dividing income available to common  stockholders by
the  weighted  average  common  shares  outstanding  during the period.  Diluted
earnings per share takes into account the potential dilution that could occur if
securities or other contracts to issue common stock were exercised and converted
into common stock.

Under   SFAS  150   "Accounting   for   Certain   Financial   Instruments   with
Characteristics  of both  Liabilities  and  Equity",  entities  that have issued
mandatory  redeemable  shares of common stock or entered into forward  contracts
that require physical settlement by repurchase of a fixed number of the issuer's
equity  shares of common  stock in  exchange  for cash shall  exclude the common
shares that are to be redeemed or repurchased  in calculating  basic and diluted
earnings per share.  Therefore,  the weighted  average  number of shares used to
calculate EPS for the nine months ended September 30, 2005 (31,250,000) and 2004
(31,215,000)   reflect  only  the  additional   shares  issue  from  the  merger
acquisition on October 14, 2004 retroactively starting January 1, 2003.

Note 5 - Supplemental disclosure of cash flow information

Interest  paid  amounted to  $1,344,433  and  $987,519 for the nine months ended
September 30, 2005 and 2004, respectively.

Income tax payments  amounted to $488,344 and $495,618 for the nine months ended
September 30, 2005 and 2004, respectively.

Note 6 - Notes receivable

This amount  represents  trade accounts  receivable  due from various  customers
where the customers'  bank has guaranteed  the payment of the  receivable.  This
amount is non-interest  bearing and is normally paid within three to six months.
The  Company  has the  ability  to  submit  their  request  for  payment  to the
customer's  bank earlier than the scheduled  payment  date.  However the Company
will incur an interest  charge and a  processing  fee when they submit a payment
request  early.  The Company  had  $2,928,841  and  $374,955  outstanding  as of
September 30, 2005 and December 31, 2004, respectively.


                                      -14-
<PAGE>

Note 7 - Advances on inventory purchases

Advances on inventory purchases including the related party purchases are monies
deposited or advanced to outside vendors or related parties on future  inventory
purchases.  Due to the high  shortage of steel in China,  most of the  Company's
vendors  require  a  certain  amount  of money to be  deposited  with  them as a
guarantee that the Company will receive their purchases on a timely basis.

This amount is refundable and bears no interest. The Company has a legal binding
contract with their vendors for the guarantee  deposit,  which is to be returned
to the Company at the end of the contract.  The inventory is normally  delivered
within  one month  after the  monies has been  advanced.  The total  outstanding
amount was $13,465,758 and $13,469,984 as of September 30, 2005 and December 31,
2004, respectively.

Note 8 - Other payable - related party

The Company has a short term loan from Golden Glister Holdings  Limited.  Golden
Glister  Holdings Limited is incorporated in the territory of the British Virgin
Islands which our president Yu Zuo Sheng is the majority shareholder. The amount
was loaned to General Steel  Investment  Co., Ltd for business  operations.  The
Company had $1,180,000 and $990,000 outstanding on this loan as of September 30,
2005 and December 31, 2004,  respectively.  This amount is short-term and is non
interest bearing.





                                      -15-
<PAGE>
<TABLE>
<CAPTION>

Note 9 - Short term loans - bank

Short term loans - bank represent  amounts due to various banks which are due on
demand or normally  within one year.  These loans can be renewed with the banks.
The Company had a total of  $26,245,600  and  $25,748,800  short term bank loans
with various banks as of September 30, 2005 and December 31, 2004, respectively.


                                                             September 30,   December 31,
                                                                  2005            2004
                                                             -------------   -------------
<S>                                                          <C>             <C>
                                                               Unaudited        Audited
                                                             -------------   -------------
Loans from China Bank, JingHai Branch,
      secured by equipment and property                      $        --     $   1,185,800

Loans from Agriculture Bank, DaQiuZhuang Branch, due
      various dates from October 2005 to July 2006
      Monthly interest only payments in 2005 ranging
      from 6.691% to 7.56% per annum, guaranteed by an
      unrelated third party and secured by property and
      equipment                                                 10,337,300      10,648,000

Loan from Construction Bank of China, JinHai Branch, due
      August 15, 2006.  Monthly interst only payment at
      6.217% per annum, secured by properties                    1,002,780       1,089,000

Loans from ShangHai PuFa Bank, due various dates from
      November 2005 to July 2006. Monthly interest only
      payments ranging from 5.31% to 6.696% per month,
      guaranteed by an unrelated third party                     6,190,000       6,050,000

Loans from China Merchants Bank, due various dates from
      June 2006 to September 2006. Quarterly interest only
      payments, annual interest rate of 5.0445% to 5.869%,
      guaranteed by an unrelated third party                     8,047,000       6,050,000

Loan from Construction Bank of China, due August 21, 2006
      Monthly interest only payment at 7.4604% per annum,
      guaranteed by an unrelated third party                       668,520         726,000
                                                             -------------   -------------
                 Totals                                      $  26,245,600     $25,748,800
                                                             =============   =============
</TABLE>


                                      -16-
<PAGE>
<TABLE>
<CAPTION>

Note 10 - Short term notes payable

The  Company  has the  following  short term notes  payable  outstanding  as for
September 30, 2005 and December 31, 2004:


                                                           September 30,   December 31,
                                                                2005            2004
                                                           -------------   -------------
<S>                                                        <C>             <C>
                                                             Unaudited        Audited
                                                           -------------   -------------
China Bank, Jing Hai Branch, various amounts,
      restricted cash required 50%,
      guaranteed by the company                            $        --     $   1,694,000

Agricultural Bank of China, various amounts, due dates
      ranging between November 2005 and January 2006,
      restricted cash required of 50% of loan amount,
      guaranteed by the Company                                1,485,600       2,057,000

Daqiuzhuang Industrial and Commercial Bank,
      due November 2005, restricted cash required of 30%
       of loan amount, guaranteed by the company                 321,880         605,000

ShangHai PuFa Bank, due November 2005, restricted
      cash required of 50% of loan balance, guaranteed
      by the Company                                           2,476,000       2,420,000
                                                           -------------   -------------
          Totals                                           $   4,283,480      $6,776,000
                                                           =============   =============
</TABLE>

Total interest expense for the nine months ending September 30, 2005 and 2004 on
all debt amounted to $1,344,433 and $987,519, respectively.

Note 11 - Customer deposits

Customer deposits represent amounts advanced by customers on product orders. The
product  normally  is shipped  within six months  after  receipt of the  advance
payment and the related sale is  recognized  in  accordance  with the  Company's
revenue  recognition  policy.  As of  September  30, 2005 and December 31, 2004,
customer deposits amounted to $4,393,358 and $2,009,313, respectively.

Note 12 - Deposits due to sales representatives

The Company has entered  into  agreements  with  various  entities to act as the
Company's  exclusive  sales agent in a specified  area.  These  exclusive  sales
agents must meet certain  criteria and are required to deposit a certain  amount
of money with the Company.  In return the sales agents receive  exclusive  sales
rights to a specified area and discounted  prices on products they order.  These
deposits  bear no  interest  and are  required to be returned to the sales agent
once  the  agreement  has  been  terminated.  The  Company  had  $1,382,846  and
$1,231,780 in deposits due to sales representatives  outstanding as of September
30, 2005 and December 31, 2004, respectively.

Note 13 - Major customers and suppliers

The Company has 5 major customers which represent  approximately  41% and 35% of
the Company's total sales for the nine months ended September 30, 2005 and 2004,
respectively.


                                      -17-
<PAGE>

For the nine months ended  September  30, 2005 and 2004,  the Company  purchases
approximately 78% and 78%, respectively,  of their raw materials from four major
suppliers; each of these suppliers individually represents as follows:


                               2005                               2004
Suppliers               % to total purchase               % to total purchase
---------               -------------------               -------------------
    A                           36%                                38%
    B                           26%                                18%
    C                            8%                                16%
    D                            8%                                 6%


Note 14 - Minority interest

Minority interest  represents the outside  shareholders' 30% interest in Tianjin
Daqiuzhuang Metal Sheet Co., Ltd.

Note 15 - Other expense, net

Other income and expense for the nine months  ended  September 30 consist of the
following:


                                                  2005           2004
                                               Unaudited      Unaudited
                                              -----------    -----------
Finance/interest expense                      $(1,348,949)   $  (987,545)
Interest income                                    45,279         32,175
Other nonoperating income                          12,441      3,172,627
Other nonoperating expense                        (17,110)    (4,427,683)
                                              -----------    -----------
Total other expense                           $(1,308,339)   $(2,210,426)
                                              ===========    ===========


Note 16 - Reclassifications

Certain amounts for the nine months ended September 30, 2004 in the accompanying
financial statements have been reclassified to conform to the 2005 presentation.
These reclassifications have no effect on net income or cash flows.

Note 17 - Private Offering of Redeemable Stock

The Company has offered an  aggregate  of  3,333,333  shares of Common Stock par
value $0.001 in a private  placement  to investors at a purchase  price of $1.50
per share.  On September 18, the Company  entered into a subscription  agreement
with certain  investors  to sell a total of 1,176,665  shares of common stock at
$1.50 per share.  In addition  each share of common stock  included two warrants
which give the right of the warrant  holder to purchase an additional  2,353,330
of common  stock in the  future.  The  warrants  can be  exercised  on the first
anniversary date at $2.50 per share and on the second  anniversary date at $5.00
per share. The number of shares attached to the warrants will be adjusted due to
dividends and changes in the capital stock structure changes.


                                      -18-
<PAGE>

At the option of the investors the Company maybe required to repurchase the
1,176,665 shares of common stock 18 months after the closing date at a per share
price of $1.95.

In accordance with SFAS no. 150, the Company has recorded this stock issuance as
a  liability  in  the  financial  statements  due to  the  mandatory  redemption
provision.  The shares have been  recorded at the net present value of the stock
using a discount  interest rate of 6.5%. The following  table shows the carrying
value of the shares subject to mandatory redemption:


                                                                 September 30,
                                                                      2005
                                                                 -------------
Total liability of mandetory redeemable common stock
      1,176,665 shares at $1.95 per share                        $   2,294,497

Unamortized interest at 6.5%                                          (212,606)
                                                                 -------------

Carrying value of shares subject t$ mandatory redemption             2,081,891
                                                                 =============


Interest expense will be amortized over the next 18 months.

Under this private  offering,  the Company  raised total of  $1,765,000,  net of
$158,850 paid for commissions for net proceeds of $1,606,150.

Note 18 - Joint venture agreement with Baotou Steel

On September  28,  2005,  General  Steel  Investment  Co.,  Ltd., a wholly owned
subsidiary of General Steel Holdings,  Inc., entered into a certain  Baotou-GSHI
Special Steel Joint Venture Agreement (the "Agreement") with Da Qiu Zhuang Metal
Sheet  Co.,  Ltd.,  and  Baotou  Iron and Steel  (Group)  Co.,  Ltd.,  a limited
liability  company formed under the laws of the People's  Republic of China (the
"Baotou  Steel").  The name of the joint  venture  will be Baotou  Steel-General
Steel Special Steel Joint Venture Company Limited.

The Joint  Venture  Company will be located at Kundulun  District,  Baotou City,
Inner  Mongolia,  China.  The stated  purposes of the Joint Venture Company are,
among  others,  to produce  and sell  special  steel and to improve  the product
quality and the production  capacity and  competitiveness  by adopting  advanced
technology in the production of steel products.  The Joint Venture Company shall
have a capacity of producing 600,000 of specialty steel products a year.

The registered  capital of the joint venture will be approximately  $24,000,000.
The products of the joint venture will be sold in the Chinese market and abroad.
The ownership will be comprised of the following:


                                                               % Ownership
                                                              -------------
Baotou Iron and Steel (Group) Co.,Ltd.                              49%
General Steel Investment Co., Ltd.                                  31%
Da Qiu Zhuang Metal Sheet Co., Ltd                                  20%


Baotao Steel shall  contribute  land,  existing  equipment  and  materials at an
estimated value of  approximately  $12,000,000  which will be contributed to the
joint  venture at the date of the  approval of Joint  Venture or issuance of the
business   license.   General  Steel   Investment   Co.,  Ltd.  will  contribute
approximately  $7,500,000  of cash and Da Qiu Zhuang Metal Sheet Co.,  Ltd. will
contribute  approximately  $5,000,000 cash. These contributions will be required
to be made on the following  payment schedule 30% of their capital  contribution
within  30 days of the  date of  approval  of the  Joint  Venture;  30% of their
capital  contribution  within 3  months  of the date of  approval  of the  Joint
Venture;  and 40% of their capital  contribution  within 6 months of the date of
approval of the Joint Venture.


                                      -19-
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION OR PLAN OF
OPERATIONS

     The  following  is   management's   discussion   and  analysis  of  certain
significant  factors which have  affected our  financial  position and operating
results during the periods included in the accompanying  consolidated  financial
statements,  as  well  as  information  relating  to the  plans  of our  current
management.  The following discussion and analysis should be read in conjunction
with our  consolidated  financial  statements  and the related notes thereto and
other financial information contained elsewhere in this Form 10-QSB.

Overview

     Following  the  acquisition  of  ownership  in  General  Steel   Investment
Co.,Ltd.,  the  Company has shifted  its main  business  focus to general  steel
products and steel  manufacturing.  As the  core-operating  unit of the Company,
Tianjin  Daqiuzhuang  Metal Sheet Co., Ltd. (herein referred to as "DQ") started
its operation in 1988. DQ's core business is the  manufacturing  of high quality
hot  rolled  carbon  and  silicon  steel  sheets  which are  mainly  used in the
production of tractors,  agricultural vehicles, shipping containers and in other
specialty markets.

     DQ uses a traditional  rolling mill production  sequence,  such as heating,
rolling, cutting,  annealing, and flattening to process slabs into steel sheets.
The sheet sizes are approximately 2,000 mm (length) x 1,000 mm (width) x 0.75 to
2.0 mm  (thickness).  Limited  size  adjustments  are  possible  to  meet  order
requirements. "Qiu Steel" is the registered name for the Company's products.

     Since  1998,  DQ  has  expanded  its  operations  to six  production  lines
processing  250,000 tons of 0.75-2.0 mm hot-rolled carbon steel sheets per year,
maintaining  a 40% market  share of all steel sheets used in the  production  of
agricultural  vehicles in China. The Company is building a new plant next to the
existing  facility  with four new  production  lines to increase its  hot-rolled
steel sheet  production  capacity by 150,000 tons.  The new  production  site is
expected to be put in use by January 2006.

     Having negotiated with Baotou Iron and Steel (Group) Co., Ltd. for nearly a
year, we finally announced on September 28, 2005 the firm agreement with them to
set up the Baotou  Steel-General  Steel  Special  Steel  Joint  Venture  Company
Limited.

     The Joint  Venture  Company  will be located at Kundulun  District,  Baotou
City,  Inner Mongolia,  China.  The stated purposes of the Joint Venture Company
are, among others,  to produce and sell special steel and to improve the product
quality and the production  capacity and  competitiveness  by adopting  advanced
technology in the production of steel products.  The Joint Venture Company shall
have a capacity of producing 600,000 of specialty steel products a year.

     The  registered   capital  of  the  joint  venture  will  be  approximately
$24,000,000.  The  products  of the joint  venture  will be sold in the  Chinese
market and abroad. The ownership will be comprised of the following:


                                      -20-
<PAGE>

                                                               % Ownership
                                                              -------------
Baotou Iron and Steel (Group) Co.,Ltd.                              49%
General Steel Investment Co., Ltd.                                  31%
Da Qiu Zhuang Metal Sheet Co., Ltd                                  20%


     Baotao Iron and Steel (Group) Co., Ltd.  shall  contribute  land,  existing
equipment and materials at an estimated value of approximately $12,000,000 which
will be  contributed  to the joint  venture at the date of the approval of Joint
Venture or issuance of the business license.  General Steel Investment Co., Ltd.
will contribute  approximately  $7,500,000 of cash and Da Qiu Zhuang Metal Sheet
Co., Ltd. will contribute  approximately $5,000,000 in cash. These contributions
will be  required  to be made on the  following  payment  schedule  30% of their
capital  contribution  within  30 days  of the  date of  approval  of the  Joint
Venture;  30% of their  capital  contribution  within  3  months  of the date of
approval of the Joint Venture;  and 40% of their capital  contribution  within 6
months of the date of approval of the Joint Venture.

     In the third quarter ended September 30, 2005, the Company also completed a
private  placement and sold a total of 1,176,665 shares of common stock at $1.50
per unit. Each unit contains one share of its common stock and two warrants. The
warrants can be exercised on the first  anniversary  date at $2.50 per share and
on the  second  anniversary  date at  $5.00  per  share.  At the  option  of the
investors the Company  maybe  required to  repurchase  the  1,176,665  shares of
common  stock 18 months  after the  closing  date at a per share price of $1.95.

     Under this private offering, the Company raised a total of $1,765,000 which
will be used to pay for the above mentioned joint venture.

Results of Operations

     The results of operations of the Company are largely dependent on the level
of general economic activity in China.  Economic  forecasts  indicate  continued
fast pace growth in China in 2005.  As a result,  the  consumption  of our steel
products is expected to remain at a high level.  The Company also  believes that
the highly  competitive  market will exist  throughout  2005, with pressures for
shipment  volumes  and prices.  In view of the above  factor,  the Company  will
continue to keep its focus on cost control,new market  development,and  products
mix optimization.

     The Company's  sales revenue  mainly comes from the sale of metal sheets in
different  specifications and steel scrap generated in the cutting process.  The
Company's cost of sales includes the cost of its primary raw materials, rollers,
energy cost,  labor cost,  the cost of warehousing  and handling  finished steel
products and freight costs.

Net sales and gross profit

     Net sales for the nine months  ended  September  30, 2005 were  $72,021,091
compared  to  $58,280,868  for the  same  period  in  2004,  representing  a 24%
increase.  Shipments for the nine months ended September 30, 2005 climbed 11% to
149,543  tons from  134,658  tons due to overall  increase in  productivity  and
market  development.  Average  selling price per ton including sale of scrap for
the nine months  ended  September  30, 2005 and 2004 has  increased to $481 from
$456 as a result of good market demand for our steel products.  In summary,  the
main reasons for the increase in sales  revenue is due to an increase in selling
price and an increase in demand for steel products.


                                      -21-
<PAGE>

     Gross profit for the nine months ended  September 30, 2005 was  $8,364,529,
an increase of 58% or $3,067,874  from $5,296,655 for the same period last year.
Gross  profit  margin  increased  to 11.6% from 9.1% for the nine  months  ended
September 30, 2005 and 2004.  This increase in gross profit margin is mainly due
to the increase in both sales volume and selling price outpacing the increase in
raw materials price. Since March this year, the price of steel products has been
decreasing globally due to the overall increase in steel supply. The Company has
to adjust its  products'  prices in order to stay  competitive  in this  market.
Therefore,  the  management  takes a cautious  stand on the  continuance of good
gross profit margins for the rest of the year.

Cost of sales

     Overall  cost of sales went up to  $63,656,562  for the nine  months  ended
September 30, 2005 from  $52,984,213  for the same period in 2004.  Average cost
per ton was $425 and $393,  respectively for the nine months ended September 30,
2005 and 2004. As a result, the increase in cost of sales is the combined effect
of both increases in production volume and raw material price.

     However, cost of sales as percentage of sales decreased from 90.9% to 88.4%
due primarily to the low raw material price for the nine months ended  September
30, 2005 compared to the same period in 2004.

Selling, General and Administrative Expenses

     Selling,   general  and   administrative   expenses,   such  as   executive
compensation, office expenses, legal and accounting charges, travel charges, and
various taxes were  $1,763,706 for the nine months ended  September 30, 2005. It
represented a 45% increase from  $1,215,449 for the same period in 2004. A large
component  of the  increase  came  from the legal and  accounting  expenses  and
investor and public relations charges for the public listed company.

Other income (expense)

     Other  income  (expense)  in the  nine  months  ended  September  30,  2005
consisted  mainly of finance charges and interest  income.  Interest expense was
$1,344,433  for the nine months ended  September  30, 2005, a $356,914  increase
from the same period in 2004.  Outstanding  bank loans  increased to $26,245,600
from $25,748,800 as of June 30, 2005 and December 31, 2004,  respectively.  This
increase in debt borrowing is mainly driven by management's decision to increase
the working capital for the current operation.

Income taxes

     The Company did not carry on any  business  and did not maintain any branch
office in the United States during the nine months ended  September 30, 2005 and
2004.  Therefore,  no provision for withholding or U.S.  federal income taxes or
tax benefits on the undistributed earnings and/or losses of the Company has been
made.

     Pursuant to the relevant laws and  regulations in the People's  Republic of
China, Daqiuzhuang Metal, as a foreign owned enterprise in the People's Republic
of China, is entitled to an exemption from the PRC enterprise income tax for two
years  commencing from its first  profitable year. The Company is in the process
of applying  for this tax  benefit.  The Company  expects to obtain the approval
from the  government  by the end of 2005 and will be refunded for all the income
tax paid during the year.


                                      -22-
<PAGE>

     For the nine  months  ended  September  30,  2005  and  2004 the  Company's
effective  state and local  income  tax rate was 33%.  Income  tax  expense  was
$1,815,968 for the nine months ended September 30, 2005, up from $617,358 in the
same period of 2004 due to higher pretax income.

Liquidity and capital resources

     Due to the good market conditions of the steel industry,  the Company plans
to maintain  higher-than-average  debt to equity ratio to better position itself
in this fast growing  market.  The bank loans are considered  short-term for the
purpose  of the  preparation  of  the  financial  statements  because  they  are
renewable with the banks every year.  Due to the recent joint venture  agreement
with Baotou Iron and Steel (Group) Co.,  Ltd., the Company is reserving cash for
the first 30% of its capital  contribution,  approximately  $3.7 million,  which
needs  to be paid  when the  government  gives  approval  to the  joint  venture
agreement. .

Operating activities

     Net  cash  provided  by  operating  activities  for the nine  months  ended
September  30,  2005 was $7.05  million  compared  with  $8.07  million  used in
operating  activities  for the same  period of 2004.  The  Company's  net income
before  minority  interest was $3.48 million for the nine months ended September
30, 2005, a $2.22 million  increase  compared with the same period of last year.
More  customer  deposits and less  advances on inventory  purchases  also became
major factors of this increase in cash generated by operating activities.

Investing activities

     Net cash used in investing activities was $4.53 million for the nine months
ended  September  30, 2005  compared  with $0.78  million  provided by investing
activities  for the nine months ended  September  30, 2004.  This change  mainly
resulted from the increase in notes  receivable.  Our customers  usually pay for
our products with promissory notes issued by the banks which in turn can be used
like cash by the  Company to pay for its  purchases.  The Company is also in the
process of building four more  production  lines next to the existing  facility.
For the nine months  ended  September  30, 2005,  the Company has already  spent
$1.29 million on construction in progress.

Financing activities

     The  Company  issued  1,176,665  shares  of  redeemable  stock in a private
placement  round on September 18, 2005.  The stock was issued at $1.50 per share
with  options  for the Company to  purchase  the shares back at $1.95,  eighteen
month after the closing date.  Under this private  offering,  the Company raised
total  of  $1,765,000  which  will be used to pay for the  special  steel  joint
venture in Baotou.

Compliance with environmental laws and regulations

     Based on the equipment,  technologies and measures adopted,  the Company is
not considered a high-pollution  factory in China.  The production  process does
not need much water and produces only a minimal amount of chemical pollution. We
use gas-fired reheat furnaces recommended by the State Environmental  Protection
Agency to heat our raw materials and semi-finished products.

     In 2005,  the  Daqiuzhuang  County  will  order an  environmental  clean-up
campaign and will require harmless waste water discharge. In order to meet these
requirements,  we are going to invest  $50,000 to remodel our  industrial  water
recycling system to reduce new water consumption and industrial water discharge.
As for the remodeling of gas furnace and desulphurization of discharged gas, the


                                      -23-
<PAGE>

local  government has not posted any control  measures  currently and we have no
plans to proceed  with this  remodeling  until such time  regulations  have been
implemented.

     The Company believes that future costs relating to environmental compliance
will not have a material  adverse  effect on the Company's  financial  position.
There is always the possibility,  however,  that unforeseen changes, such as new
laws or enforcement policies, could result in material adverse costs.

Impact of inflation

     We are subject to commodity price risks arising from price  fluctuations in
the market prices of the raw  materials.  The Company has generally been able to
pass on cost increases through price adjustments.  However,  the ability to pass
on these increases  depends on market  conditions driven by the overall economic
conditions in China. Price risks are managed by the Company through productivity
improvements  and  cost-containment  measures.  Management does not believe that
inflation risk is material to our business or our financial position, results of
operations or cash flows.

Off-balance sheet arrangements

     There are currently no off-balance sheet arrangements.

Risk factors

Risks Related to Our Business

     Competition  within  the steel  industry  is  intense.  In the sale of flat
rolled carbon steel and silicon steel,  the Company competes with competitors on
the basis of product quality,  responsiveness to customer needs and price. There
are two types of steel and iron  companies  in China:  State  Owned  Enterprises
(SOEs) and privately owned companies.

     The  Company  competes  with both state  owned and  privately  owned  steel
manufacturers. While we believe that our price and quality are superior to other
manufacturers,  many of our competitors are better capitalized more experienced,
and have deeper ties in the Chinese  marketplace.  We may be unsuccessful in our
attempts to compete,  which would have a material adverse impact on our business
and financial  condition.  The Company considers there to be 5 major competitors
of similar  size,  production  capability  and product line in the market place:
Henan Anyang Metal Sheet Plant, Nanjing Metal Sheet Plant, Tianjin No. 1 Rolling
Steel Plant,  Tianjin  Yinze Metal Sheet Plant and Tangshan  Fengrun Metal Sheet
Plant.  With the PRC's  entry into the World  Trade  Organization  and the PRC's
agreements  to lift many of the  barriers  to foreign  competition,  the Company
believes that  competition will increase in the PRC auto parts market as a whole
with the entry of foreign companies to the market.

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

     We began our  operations  in 2000.  Our limited  operating  history may not
provide a  meaningful  basis on which to evaluate  our  business.  Although  our
revenues have grown rapidly since  inception,  we cannot assure you that we will
maintain our  profitability  or that we will not incur net losses in the future.
We  expect  that  our  operating  expenses  will  increase  as  we  expand.  Any
significant  failure to  realize  anticipated  revenue  growth  could  result in
significant   operating   losses.  We  will  continue  to  encounter  risks  and
difficulties   frequently  experienced  by  companies  at  a  similar  stage  of
development, including our potential failure to:


                                      -24-
<PAGE>

          o    Implement  our  business  model and strategy and adapt and modify
               them as needed;

          o    Increase  awareness  of our brands,  protect our  reputation  and
               develop customer loyalty;

          o    Manage our expanding operations and service offerings,  including
               the integration of any future acquisitions;

          o    Maintain adequate control of our expenses;

          o    Anticipate  and adapt to  changing  conditions  in the auto parts
               markets in which we operate as well as the impact of any  changes
               in government regulation;

          o    Mergers and acquisitions involving our competitors, technological
               developments  and  other   significant   competitive  and  market
               dynamics.

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

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

     Our  continued  growth is dependent  upon our ability to raise capital from
outside  sources.  We believe  that in order to continue  to capture  additional
market  share,  we will have to increase  our  production  capacity  through the
purchase of machinery and equipment with a value of  approximately  $10 million.
In the future we may be unable to obtain  the  necessary  financing  on a timely
basis and on acceptable terms, and our failure to do so may adversely affect our
financial position, competitive position, growth and profitability.  Our ability
to obtain  acceptable  financing  at any time may depend on a number of factors,
including:

          o    Our financial condition and results of operations,
          o    The  condition  of the PRC economy  and the auto  industry in the
               PRC, and
          o    Conditions in relevant financial markets in the U.S., the PRC and
               elsewhere in the world.

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

     If our business and markets grow and develop,  it will be necessary  for us
to finance and manage expansion in an orderly fashion.  This growth will lead to
an  increase  in the  responsibilities  of  existing  personnel,  the  hiring of
additional  personnel and expansion of our scope of operations.  There can be no
assurance  that we will be able to raise the  required  financing or control and
manage this future growth.

     We depend on large contracts and a concentration of customers.

     Our revenue is dependent,  in large part, on  significant  contracts from a
limited  number of  customers.  During the nine months ended  September 30, 2005
approximately  41% of sales  were to five  customers.  We believe  that  revenue
derived  from current and future large  customers  will  continue to represent a
significant  portion of our total  revenue.  Our inability to continue to secure
and  maintain  a  sufficient  number of large  contracts  would  have a material
adverse  effect on our  business,  operating  results and  financial  condition.
Moreover, our success will depend in part upon our ability to obtain orders from
new customers,  as well as the financial  condition and success of our customers
and general economic conditions.


                                      -25-
<PAGE>

     We may not be able to pass on to  customers  increases  in the costs of our
raw materials, particularly iron and steel.

     The major raw materials that we purchase for production are iron and steel.
The  price  and  availability  of these  raw  materials  are  subject  to market
conditions  affecting supply and demand.  Our financial  condition or results of
operations  may be impaired by further  increases in raw  material  costs to the
extent we are unable to pass those higher costs to our  customers.  In addition,
if these  materials are not available on a timely basis or at all, we may not be
able to produce our products and our sales may decline.

Risks Related to Operating Our Business in China

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

     The economy of China is at a transition  from a planned economy to a market
oriented economy subject to five-year and annual plans adopted by the government
that set down  national  economic  development  goals.  Policies  of the Chinese
government can have significant effects on the economic conditions of China. The
Chinese  government has confirmed that economic  development will follow a model
of market economy under socialism. Under this direction, we believe that the PRC
will continue to strengthen its economic and trading  relationships with foreign
countries and business  development in China will follow market forces. While we
believe that this trend will continue,  there can be no assurance that such will
be the case.  A change in  policies by the Chinese  government  could  adversely
affect our interests in by, among other factors: changes in laws, regulations or
the  interpretation  thereof;  confiscatory  taxation;  restrictions on currency
conversion,   imports  or  sources  of  supplies;   or  the   expropriation   or
nationalization of private enterprises. Although the Chinese government has been
pursuing  economic reform policies for  approximately  two decades,  there is no
assurance that the government will continue to pursue such policies or that such
policies may not be significantly  altered,  especially in the event of a change
in leadership,  social or political disruption, or other circumstances affecting
China's political, economic and social life.

     The PRC laws and regulations  governing our current business operations and
contractual  arrangements are uncertain, and if we are found to be in violation,
we could be subject to sanctions.  In addition, any changes in such PRC laws and
regulations may have a material and adverse effect on our business.

     There  are  substantial  uncertainties  regarding  the  interpretation  and
application of PRC laws and  regulations,  including but not limited to the laws
and  regulations  governing our business,  or the enforcement and performance of
our  arrangements  with  customers in the event of the  imposition  of statutory
liens, death,  bankruptcy and criminal proceedings.  Our subsidiaries and we are
considered  foreign persons or foreign funded enterprises under PRC laws, and as
a result,  we are required to comply with PRC laws and  regulations.  These laws
and  regulations  are relatively new and may be subject to future  changes,  and
their  official   interpretation   and  enforcement   may  involve   substantial
uncertainty.  The effectiveness of newly enacted laws, regulations or amendments
may be delayed, resulting in detrimental reliance by foreign investors. New laws
and regulations that affect existing and proposed future  businesses may also be
applied retroactively.  In addition, the PRC authorities retain broad discretion
in dealing with  violations of laws and  regulations,  including  levying fines,
revoking business  licenses and requiring  actions necessary for compliance.  In
particular,  licenses, permits and beneficial treatments issued or granted to us
by relevant  governmental  bodies may be revoked at a later time under  contrary
findings  of  higher  regulatory  bodies.  We cannot  predict  what  effect  the


                                      -26-
<PAGE>

interpretation  of  existing  or new PRC  laws or  regulations  may  have on our
businesses.  We cannot assure you that any such restructuring would be effective
or would not  result in  similar  or other  difficulties.  We may be  subject to
sanctions, including fines, and could be required to restructure our operations.
As a result of these substantial uncertainties, we cannot assure you hat we will
not be found in violation of any current or future PRC laws or regulations.

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

     All of our  operations are conducted in the PRC and all of our revenues are
generated  from  sales to  businesses  operating  in the PRC.  Although  the PRC
economy has grown  significantly in recent years, we cannot assure you that such
growth will continue.  The automotive  industry in the PRC is relatively new and
growing,  but we do not know how  sensitive  we are to a  slowdown  in  economic
growth or other  adverse  changes in the PRC economy which may affect demand for
cars and  trucks,  and  therefore,  auto parts.  A slowdown in overall  economic
growth, an economic downturn or recession or other adverse economic developments
in the PRC may materially  reduce the demand for our products and materially and
adversely affect our business.

     Inflation in China could negatively affect our profitability and growth.

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

     Governmental  control of currency  conversion  may affect the value of your
investment.

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

     The PRC government may also at its discretion restrict access in the future
to foreign currencies for current account transactions.  If the foreign exchange
control system prevents us from obtaining sufficient foreign currency to satisfy
our currency demands,  we may not be able to pay certain of our expenses as they
come due.


                                      -27-
<PAGE>

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

     The value of the Renminbi  against the U.S. dollar and other currencies may
fluctuate and is affected by, among other things, changes in the PRC's political
and economic conditions.  As we rely entirely on revenues earned in the PRC, any
significant  revaluation of the Renminbi may materially and adversely affect our
cash flows, revenues and financial condition. For example, to the extent that we
need to convert U.S.  dollars we receive from an offering of our securities into
Renminbi  for our  operations,  appreciation  of the  Renminbi  against the U.S.
dollar could have a material adverse effect on our business, financial condition
and results of operations.

     Conversely,  if we decide to convert our Renminbi into U.S. dollars for the
purpose of making  payments  for  dividends  on our  common  shares or for other
business purposes and the U.S. dollar appreciates against the Renminbi, the U.S.
dollar equivalent of the Renminbi we convert would be reduced. To date, however,
we  have  not  engaged  in  transactions  of  either  type.  In  addition,   the
depreciation  of significant  U.S. dollar  denominated  assets could result in a
charge to our income statement and a reduction in the value of these assets.

     Since 1994 the PRC has pegged the value of the Renminbi to the U.S. dollar.
We do not believe  that this policy has had a material  effect on our  business.
However,   there  have  been   indications   that  the  PRC  government  may  be
reconsidering  its monetary  policy in light of the overall  devaluation  of the
U.S. dollar against the Euro and other currencies  during the last two years. In
July 2005,  the PRC  government  revalued  the Renminbi by 2.1% against the U.S.
dollar,  moving from Renminbi  8.28 to Renminbi 8.11 per dollar.  Because of the
pegging of the Renminbi to the U.S.  dollar is loosened,  we anticipate that the
value of the Renminbi will appreciate  against the dollar with the  consequences
discussed above.

     The PRC legal system has inherent  uncertainties  that could materially and
adversely affect us.

     The PRC legal system is based upon written statutes.  Prior court decisions
may be cited for  reference  but are not  binding on  subsequent  cases and have
limited  value as  precedents.  Since  1979,  the PRC  legislative  bodies  have
promulgated  laws and regulations  dealing with economic matters such as foreign
investment, corporate organization and governance, commerce, taxation and trade.
However, the PRC has not developed a fully integrated legal system and the array
of new laws and  regulations  may not be  sufficient  to cover  all  aspects  of
economic  activities  in  the  PRC.  In  particular,   because  these  laws  and
regulations  are relatively  new, and because of the limited volume of published
decisions and their non-binding  nature,  the  interpretation and enforcement of
these  laws  and  regulations  involve  uncertainties.  In  addition,  published
government policies and internal rules may have retroactive effects and, in some
cases,  the policies and rules are not published at all. As a result,  we may be
unaware of our violation of these policies and rules until some time later.  The
laws  of the  PRC  govern  our  contractual  arrangements  with  our  affiliated
entities.  The enforcement of these contracts and the interpretation of the laws
governing these relationships are subject to uncertainty.

Risks Related to Our Common Stock

     Our officers,  directors and affiliates  control us through their positions
and stock ownership and their interests may differ from other stockholders.

     Our officers,  directors and affiliates  beneficially own approximately 96%
of our common stock. Mr. Yu, Zuo Sheng our major shareholder,  beneficially owns
approximately 96% of our common stock and is the selling stockholder herein. Mr.
Yu  can  effectively  control  us  and  his  interests  may  differ  from  other
stockholders


                                      -28-
<PAGE>

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

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

     We have  never  paid  cash  dividends  and are not  likely  to do so in the
foreseeable future.

     We currently  intend to retain any future earnings for use in the operation
and expansion of our business. We do not expect to pay any cash dividends in the
foreseeable future but will review this policy as circumstances dictate.

     There is only a limited trading market for our common stock.

     Our common  stock is now  listed on the  over-the-counter  Bulletin  Board.
There is  currently  limited  trading  market for our common stock and we do not
know if any  trading  market will ever  develop.  You may be unable to sell your
shares due to the absence of a trading market.

     In addition,  broker-dealers  who  recommend our common stock to people who
are not established  customers or qualifying investors must follow special sales
procedures, including getting the purchaser's written consent prior to the sale.
Our common  stock is also  subject to the "penny  stock"  rules,  which  require
delivery  of a schedule  explaining  the penny stock  market and the  associated
risks before any sale.  See "MARKET PRICE OF AND  DIVIDENDS ON THE  REGISTRANT'S
COMMON EQUITY AND RELATED  STOCKHOLDER  MATTERS." These requirements may further
limit your ability to sell your shares.

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

     The market price of our common stock could fluctuate substantially due to a
variety of factors,  including  market  perception of our ability to achieve our
planned growth,  quarterly operating results of other auto parts makers, trading
volume in our common stock, changes in general conditions in the economy and the
financial markets or other developments affecting our competitors or us.

     In  addition,  the stock  market is  subject  to  extreme  price and volume
fluctuations.  This volatility has had a significant  effect on the market price
of securities  issued by many companies for reasons unrelated to their operating
performance and could have the same effect on our common stock.


                                      -29-
<PAGE>

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

There has been no legal proceedings  issued against or commenced by the company.

ITEM 2.  CHANGES IN SECURITIES

The Company has offered an  aggregate  of  3,333,333  shares of Common Stock par
value $0.001 in a private  placement  to investors at a purchase  price of $1.50
per share.  On September 18, the Company  entered into a subscription  agreement
with certain  investors  to sell a total of 1,176,665  shares of common stock at
$1.50 per share.  In addition  each share of common stock  included two warrants
which give the right of the warrant  holder to purchase an additional  2,353,330
of common  stock in the  future.  The  warrants  can be  exercised  on the first
anniversary date at $2.50 per share and on the second  anniversary date at $5.00
per share. The number of shares attached to the warrants will be adjusted due to
dividends and changes in the capital stock structure changes.

At the option of the  investors the Company  maybe  required to  repurchase  the
1,176,665 shares of common stock 18 months after the closing date at a per share
price of $1.95.

Under this private  offering,  the Company  raised total of  $1,765,000,  net of
$158,850 paid for commissions for net proceeds of $1,606,150.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None for the period covered by this report.

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

None for the period covered by this report.

ITEM 5.  OTHER INFORMATION

None for the period covered by this report.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

31.1     Certification of Chief Executive Officer;
31.2     Certification of Chief Financial Officer;
32.1     Certification of Chief Executive Officer; and
32.2     Certification of Chief Financial Officer.

(b)      Reports on Form 8-K

Current report on Form 8-K filed with the Commission on October 31, 2005

     In this report General Steel reported that it concluded a private placement
pursuant  to  Regulation  D of the  Securities  Act of 1933.  The purpose of the
private placement was to raise a total of $1,765,000 to finance the transactions
contemplated under the Joint Venture agreement with DQ and Baotou Steel.

Current report on Form 8-K filed with the Commission on

     In this report we disclosed  that on  September  28,  2005,  General  Steel
Investment Co., Ltd., a limited  liability  company formed under the laws of the
British Virgin Islands and wholly owned  subsidiary of the Registrant  ("General
Steel"),  entered  into  a  certain  Baotou-GSHI  Special  Steel  Joint  Venture


                                      -30-
<PAGE>

Agreement (the  "Agreement") with Da Qiu Zhuang Metal Sheet Co., Ltd., a limited
liability  company formed under the laws of the People's Republic of China and a
subsidiary of the Registrant ("DQ") and Baotou Iron and Steel (Group) Co., Ltd.,
a limited  liability  company formed under the laws of the People's  Republic of
China (the "Baotou Steel").

Current report on Form 8-K filed with the Commission on March 4, 2005

In this report we  disclosed  that the  Company  appointed  John Chen,  as Chief
Financial  Officer and  Director,  Huancheng  Li, as Director,  Guodong Wang, as
Chief  Technical  Officer and Director and Shengguo  Zhao, as Chief Engineer and
Director. We also announced that Jeff Mabry resigned as director.












                                      -31-
<PAGE>

SIGNATURES

In accordance with the  requirements of the Exchange Act, the Registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

                                           General Steel Holdings, Inc.
                                           (Registrant)

Date: November 14, 2005                     /s/ Zuo Sheng Yu
                                           -------------------------------------
                                           Zuo Sheng Yu
                                           Chief Executive Officer and President



                                           General Steel Holdings, Inc.
                                           (Registrant)

Date: November 14, 2005                     /s/ John Chen
                                           -------------------------------------
                                           John Chen
                                           Director and Chief Financial Officer












                                      -32-