UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-K/A


Amendment
No. 5





(Mark
One)


x
ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE


ACT
OF 1934





For
the Fiscal Year Ended December 31, 2007*





o
TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
ACT OF 1934





For
the transition period from _________ to __________





Commission
file number: 000-27159





SUNWAY GLOBAL
INC.


(Exact
name of registrant as specified in its charter)





Nevada
                
                65-0439467(State
      or other jurisdiction of
                
                (IRS
      Employer Identificationincorporation
      or organization)
                
                No.)





Daqing Hi-Tech Industry
Development Zone


Daqing, Heilongjiang, Post
Code 163316


People’s Republic of
China





(Address
of principal executive offices)





86-459-604-6043


(Registrant's
telephone number, including area code)





National Realty and
Mortgage, Inc.


*Former Fiscal Year End:
September 30, 2006


(Former
name, former address and former fiscal year, if changed since last
report)





Copies
to:


Marc
Ross, Esq.


Sichenzia
Ross Friedman Ference LLP


61
Broadway


New York,
New York 10006


Phone:
(212) 930-9700


Fax:
(212) 930-9725





Securities
registered under Section 12(b) of the Exchange Act: None.





Securities
registered pursuant to Section 12(g) of the Act: Common Stock, par value
$.0000001





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





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





(COVER
CONTINUES ON FOLLOWING PAGE)








Indicate
by check mark whether the Registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
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 o





Indicate
by check mark if disclosure of delinquent filers in response to Item 405 of
Regulation S-K (§229.405) is not contained herein, and will not be contained, to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. o





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b2 of the Exchange Act.





Large
      accelerated filer o
            Accelerated
      filer oNon-accelerated
      filer o
      (Do not check if a smaller reporting company)
            Smaller
      reporting company x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes o No x





State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter. $4,176,134





Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date: 18,499,736 shares issued and
outstanding as of March 2, 2009.





*As of
June 6, 2007, Sunway Global Inc. changed its fiscal year end from September 30
to December 31. The new fiscal period was first reflected in the Company’s Form
10-QSB for the quarter ending September 30, 2007.










EXPLANATORY
NOTE:





The
Amendment No. 5 to Sunway Global Inc, (the “Company”, “Sunway”)’s Annual report
on Form 10K/A for the year ended December 31, 2007 (the “Amended 10-K”),is being
filed as a result of the Company’s recent discovery of certain incorrect
classifications of paid-in capital and retained earnings.





This
Amended 10-K is being filed to make to amend, the earnings per share, paid-in
capital and retained earnings accounts in the Balance Sheet as of December 31,
2007 and the Statements of Shareholders’ Equity for the year ended December 31,
2007. In addition, this Amended 10-K is being filed to amend the net profit for
the year 2007 in Note 17 and the calculation of basic and diluted earnings per
share for 2007. This Amended 10-K also includes corrections to certain
typographical errors in the Index to Financial Statements, and also includes
changes to Item 9A - Evaluation of Disclosure Controls and Procedures. In
addition, this Amended 10-K includes an adjustment to the audit report of the
Company’s independent registered accountants to reflect certain changes to Notes
17 and 22 of the financial statements. No other information included in the
original Form 10-KSB or prior four Amendments on Form 10-K/A are amended
hereby.





For
convenience and ease of reference, the Company is filing the annual report in
its entirety with applicable changes. Unless otherwise stated, all information
contained in this Amended 10-K, is as of April 8, 2008, the filing date of the
original Annual Report. Except as stated herein, this Amended 10-K does not
reflect events or transactions occurring after April 8, 2008 and does not
contain any modifications or updates to the disclosure contained in the Annual
Report  filed on April 8, 2008 that may have been affected by events
or transactions occurring subsequent to such filing date. No information in the
Annual Report other than as set forth above is amended hereby.





FORWARD
LOOKING STATEMENTS





In this
annual report, references to “Sunway Global,” “Sunway,” “SUWG,” “the Company,”
“we,” “us,” and “our” refer to Sunway Global Inc.





This
Annual Report on Form 10-K/A (including the section regarding Management's
Discussion and Analysis or Plan of Operation) contains forward-looking
statements regarding our business, financial condition, results of operations
and prospects. Words such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates" and similar expressions or variations of such
words are intended to identify forward-looking statements, but are not deemed to
represent an all-inclusive means of identifying forward-looking statements as
denoted in this Annual Report on Form 10-K/A. Additionally, statements
concerning future matters are forward-looking statements.





Although
forward-looking statements in this Annual Report on Form 10-K/A reflect the good
faith judgment of our Management, such statements can only be based on facts and
factors currently known by us. Consequently, forward-looking statements are
inherently subject to risks and uncertainties and actual results and outcomes
may differ materially from the results and outcomes discussed in or anticipated
by the forward-looking statements. Factors that could cause or contribute to
such differences in results and outcomes include, without limitation, those
specifically addressed under the heading "Risks Related to Our Business" below,
as well as those discussed elsewhere in this Annual Report on Form 10-K/A.
Readers are urged not to place undue reliance on these forward-looking
statements, which speak only as of the date of this Annual Report on Form
10-K/A. We file reports with the Securities and Exchange Commission ("SEC"). We
make available on our website under "Investor Relations/SEC Filings," free of
charge, our annual reports on Form 10-KSB, quarterly reports on Form 10-QSB,
current reports on Form 8-K and amendments to those reports as soon as
reasonably practicable after we electronically file such materials with or
furnish them to the SEC. Our website address is www.sunwaytech.com.cn/.  
You can also read and copy any materials we file with the SEC at the SEC's
Public Reference Room at 100 F Street, NE, Washington, DC 20549. You can obtain
additional information about the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet
site (www.sec.gov) that contains reports, proxy and information statements, and
other information regarding issuers that file electronically with the SEC,
including us.





We
undertake no obligation to revise or update any forward-looking statements in
order to reflect any event or circumstance that may arise after the date of this
Annual Report on Form 10-KSB, except as required by law. Readers are urged to
carefully review and consider the various disclosures made throughout the
entirety of this Annual Report, which are designed to advise interested parties
of the risks and factors that may affect our business, financial condition,
results of operations and prospects.








TABLE OF
CONTENTS




PagePART
      IItem
      1.
                DESCRIPTION
      OF BUSINESS
                
                3Item
      1A
                RISK
      FACTORS
                
                11Item
      1B
                UNRESOLVED
      STAFF COMMENTS
                
                20Item
      2.
                DESCRIPTION
      OF PROPERTY
                
                21Item
      3.
                LEGAL
      PROCEEDINGS
                
                21Item
      4.
                SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
                
                21PART
      IIItem
      5.
                MARKET
      FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS ISSUER PURCHASES OF EQUITY
      SECURITIES
                
                22Item
      6
                SELECT
      FINANCIAL DATA
                
                23Item
      7.
                MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
                
                23Item
      7A
                QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
                
                28Item
      8.
                FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA
                
                29Item
      9.
                CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
                
                30Item
      9A.
                CONTROLS
      AND PROCEDURES
                
                30Item
      9B.
                OTHER
      INFORMATION
                
                31PART
      IIIItem
      10.
                DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION
      16(b) OF THE EXCHANGE ACT
                
                32Item
      11.
                EXECUTIVE
      COMPENSATION
                
                33Item
      12.
                SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
                
                34Item
      13.
                CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE
                
                35Item
      14.
                PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
                
                36Item
      15.
                EXHIBITS,
      FINANCIAL STATEMENT SCHEDULES
                
                36SIGNATURES
                
                38




2





PART
I





ITEM
1. - BUSINESS





Our
Business





As a
result of the consummation of a reverse merger, discussed below, we are engaged
in the business of designing, manufacturing and selling logistic transport
systems and medicine dispensing systems and equipment. Our principal product is
a pneumatic tube logistic transport system used in hospitals and other medical
facilities. We recently developed an automatic medicine dispensing and packing
system, which we introduced to the market in the first quarter
of 2008 for use in hospitals and medical facilities.





Our
customers are primarily hospitals and medical appliance companies in the
People’s Republic of China (the “PRC”). As the market for pneumatic transport
systems is still an emerging market, official data about the industry in general
and competition in particular have not been readily available. Based on
information we have collected from bids, the internet and other market
intelligence, it is our estimate that among the hospitals that have adopted
pneumatic transport systems in China, we were the supplier to the largest number
of hospitals in 2005, 2006 and 2007. In 2005, we sold 1,105 units to 43
hospitals and medical facilities and recognized revenue of $5,047,365. In 2006,
we sold 1,930 units to 65 hospitals and medical facilities and recognized
revenue of $8,914,139. In 2007, we sold 2,575 units to 87 hospitals and medical
facilities and recognized revenue of $11,865,138. We sell our products both
directly, through our sales employees, direct sales office and indirectly,
through thirteen independent sales agents and four direct sales office. Our
sales network covers Beijing, Shanghai, Guangzhou Chengdu, Xian and 13 other
provinces in the PRC.





We
generate our revenues from sales in two product types: Type A workstations and
Type B workstations, which have the same function and price but with different
product designs. Having two types of workstations enables us to provide more
options and flexibility to our customers to accommodate their aesthetic taste,
space restrictions and other requirements.





About
Us





We are a
Nevada corporation which was formed on October 18, 1971. Prior to June 6, 2007,
we were a shell company. On June 6, 2007, we consummated (i) a reverse merger
transaction, in which we acquired control over an operating company in the PRC
and (ii) a private sale of our restricted stock, in which we received an
aggregate of $6.7 million of financing. Through these transactions, we ceased to
be a shell company and, through our subsidiaries, entered into the business of
manufacturing and selling logistic transport systems and medicine
dispensing and system in the PRC.


3





On June
6, 2007, the Company acquired World Through Limited, a British Virgin Islands
Corporation (“WTL”) through a share exchange transaction with WTL and Rise Elite
International Limited (“Rise Elite”), a company incorporated under the laws of
the British Virgin Islands and the owner of 100% of the outstanding voting stock
of WTL (such shares, the “WTL Shares”; such transaction, the “Share Exchange”).
In the Share Exchange, we received the WTL Shares from Rise Elite, and in
exchange we issued and delivered to Rise Elite 210,886 shares of our
newly-designated Series A convertible preferred stock. Each share of Series A
convertible preferred stock is automatically convertible into 60 shares of our
common stock upon the consummation of the reverse stock split described below.
The Share Exchange was effected pursuant to the terms of a Share Exchange
Agreement among us, WTL and Rise Elite. As a result of the consummation of the
Share Exchange Agreement, we are no longer a shell company as that term is
defined in Rule 12b-2 under the Securities Exchange Act, as
amended.





WTL owns
all of the stock of Sunway World Through Technology (Daqing) Co., Ltd. (“SWT”),
a wholly foreign-owned enterprise (“WFOE”) organized under the laws of the PRC.
SWT has a series of contracts with the Company’s operating company, Daqing
Sunway Technology Co., Ltd. (“Daqing Sunway”), a company organized under the
laws of the PRC, which gives it control over Daqing Sunway’s business, personnel
and finances as if it were a wholly owned subsidiary of SWT. The transaction was
structured in this way because PRC regulations require that Daqing Sunway be
acquired for cash and the natural person in control of WTL was unable to raise
sufficient funds to pay the full value for Daqing Sunway’s shares of assets in
cash prior to the acquisition.





On June
6, 2007, concurrent with the reverse merger of WTL into the Company, the Company
adopted the fiscal year end of Daqing Sunway, thereby changing its fiscal year
end from September 30 to December 31. The new fiscal period was first reflected
in the Company’s next Form 10-QSB for the quarter ending September 30,
2007.





As
contemplated by the reverse merger and approved by a majority of shareholders on
June 28, 2007, the Company effected a 86.3035-for-one reverse split that took
effect on February 7, 2008.





Description
of Our Products and Services





Medical
Transport Systems





The
Company’s principal product has been the SUNTRANS-160 pneumatic tube transport
system (“PTS”) used in hospitals and medical facilities. Pneumatic tube material
transport systems are used in over 140 countries throughout the world with many
of the systems used in hospitals and medical facilities. Our annual PTS sales in
2004, 2005, 2006 and 2007 were 785, 1,105, 1,930 and 2,575 units (each unit
consists of one workstation in a PTS), respectively. The average price of our
PTS is approximately $138,235 (consisting of 30 workstations on
average).





Our PTS
transports small materials weighing up to five kilograms in capsules at
high-speed through a network of tubing and transfer units that connect hundreds
of working departments of a hospital, including nurse stations, operation
departments, medicine dispensing centers, testing centers and disinfection
stations, each designated as a user workstation. The high speed transmission of
the materials in the tubing network is through pneumatic air flow powered by air
compressors and the path of a capsule can be switched and redirected through
transfer units. Typical applications for our PTS are the transport of items from
a user workstation to another user workstation at a users’ request.





Our PTS
provides two-way carrier travel between send/receive user workstations through a
single interconnecting tube. It can deliver anything that fits in a capsule to a
remote location - even on different floors or in other buildings - in a few
seconds at speeds up to 8 meters per second on a stream of compressed air in the
transmission tubes. Capsules can be transmitted up to 1,800 meters horizontally
and 120 meters vertically. Each pneumatic tube transport system can have up to
eight sub-systems with up to 64 send/receive workstations under control by each
sub-system.





The
control units for user workstations and transfer units contain self-diagnostic
and troubleshooting software. When an operating error occurs, the applicable
control unit will send error message to each user workstation and the system
control center. When a receiving user workstation malfunctions, the system will
automatically return the transmission carrier to its originating user
workstation.





A PTS
primarily consists of send/receive user workstations, transfer units, tubing
network, capsules, air compressors, system blower and system control
centers.


4





User
Workstations





User
Workstations are combined sending and receiving units that send and receive
capsules carrying the items transported. Each workstation has an easy-to-use
control panel equipped with a 5-inch LCD screen. It displays the real-time
operating status of all workstations, capsules, transfer units and air
compressors throughout a PTS and also monitors capsules in transit, indicates
the sequence of transport requests and displays destinations of a transport. It
has a heightened security system that can discern and prevent the entry of any
foreign items that are not requested to be transported by the system. Each
workstation has a voice function that announces the arrival of a capsule as well
as its originating workstation. When error occurs in one user workstation, such
user workstation can automatically shut down without interfering with the
operation of other user workstations.





Transfer
Units





Transfer
units are switching devices used at branching points in a tubing system to
direct and redirect the path of a capsule from one route into another route
until it gets to its final destination.





Tubing
network





The
tubing and bends in a PTS are made from strong, lightweight, non-corroding,
dent-resistant U-PVC that can withstand adverse exterior weather conditions as
well as a numerous harsh conditions between buildings, through existing
utilities and underground. Generally, the diameter of a straight tube is 160mm
and the radius of a bend is 850 mm and the tube wall is 3.2mm
thick.





System
Control Centers





A system
control center consists of one computer that controls the control units of all
other components of the PTS connected through communication cables, and it
configures the sub-systems, monitors system operations and troubleshoots system
errors. It has a graphical user interface, dynamic system monitoring and
administration, real-time tracking of capsules, event reporting and
self-diagnostic systems and a security system to prevent unauthorized use. The
system control centers can also store current and historical transport data and
instructions entered into the system, which can be retrieved for research and
other purposes. In the event of a system shut-down due to a blackout, the system
can resume operation without loosing any data or instructions and complete
transport requests given prior to the shut-down when the power supply
resumes.





Capsules





Capsules
are the transporting “vehicle” for medical items within the hospital. A capsule
is a tube-like bottle made from transparent Plexiglas with leak-resistant caps
at both ends. Each capsule can carry a load weigh up to five
kilograms.





Air
Compressors and System Blower





Air
compressors and the system blower compress and pressurize air which creates
pneumatic force that moves capsules through the tubing system.





Execution
and Transmission Flow of a Transport Request





A
transport request is typically executed as follows: At an originating user
workstation, a user places the item to be transmitted in a capsule and puts the
capsule in the input basket of the originating user workstation. The user then
enters a transmission request on the control panel of the workstation for the
capsule to be delivered to another designated user workstation. The request will
then be transmitted to the system control center. Upon receipt of the
transmission request, the system control center will check whether there is any
item currently in transit in the applicable route. If not, the system control
center will instruct the originating user workstation to allow the capsule to
enter the tube. Upon the capsule’s entry into the tube, the air compressor and
system blower will be turned on. The system blower will provide vacuum to suck
the capsule into the transfer unit and the transfer unit will then switch to the
path leading to the destination workstation. The system blower will then provide
positive pressure in the tube that will carry the capsule to its destination.
Upon arrival of the capsule at the destination workstation, the destination
workstation will automatically release the capsule into its output basket. At
the same time, the destination workstation will make a voice announcement to
alert the arrival of the capsule and the system control center records and
stores all the information regarding the transport operation.





Installation





Send/receive
workstations with built-in air compressors can sit on desks or tables, or mount
easily in a minimum of space on walls, building columns, or any convenient flat
surface, without using prime locations. Tubing may be installed indoors or
outdoors and fire prevention measures can be added. Our outdoor installation
utilizes antifreeze and is waterproof. Tubes can be installed through floors and
walls with fireproof insulation casing.





Our PTS
has two types: Type A Workstations and Type B Workstations. The two types of
workstations are priced the same with similar functions. The differences between
the two types lie in the mechanism of sending and receiving items as well as
size and method of installation. Having two types of workstations enables us to
provide more options and flexibility to our customers to accommodate their
aesthetic taste, space restrictions and other requirements.


5





Medicine
Dispensing Systems





We have
developed a new medicine dispensing system, Sunway Automatic Dispensing and
Packing (“SADP”) primarily for hospital use, which we launched commercially
in the first quarter of 2008. Our SAPD is a computerized system that
can automatically fill medical prescriptions for oral medications in single or
multiple dosages with high efficiency. Based on the prescriptions entered into
the system by pharmacists, the system automatically dispenses and packages the
prescribed amount of medication with printed labels that provides a patient’s
name, location in the hospital, hospital bed identification, name of medication,
quantity of medication and instructions for taking the medication. The
prescription information can be stored in medicine dispensing system for up to
one year for future reference. Each medicine dispensing system is connected with
hospital computer network and can retrieve information from the network when
necessary. Our SADP is capable of dispensing and packaging up to 60
prescriptions in one minute and can fill the prescriptions and package
medication for 500 patients based on three doses per day in approximately 30
minutes.





Each of
our SADPs has the capacity to house between 240 to 500 medicine storage bins,
which allows for the dispensing and packaging of between 240 and 500 different
types of medication at any given time. Each medicine storage bin has a CPU which
controls the precise dosage dispensed in accordance with the prescription. The
interior of the medicine storage bins are specifically designed to hold
different types of medications based on the specifications provided by
hospitals. Our SADP also comes with a back-up medicine bin which can house up to
40 different types of medications. When a medication that is not stored in any
of the storage bins is prescribed or if a non-standard dosage of a medication is
prescribed (for example, one-half of a tablet may be prescribed), a pharmacist
can mix and prepare the medication and place it in the back-up medicine bin for
dispensing by our SADP system together with the rest of the prescribed
medication.





The
central control system controls of an SADP monitors the operating status of each
storage bin. It also automatically recognizes and tracks the locations to which
each medication was transmitted and the quantities of medication in each bin.
Pharmacists can give operate the SADP with its touch screen.





Medical
treatment mistakes are often caused by human errors made by medical
professionals in prescribing and dispensing medicine because of lack of
historical information on patients and the medication that the patients have
been taking. We believe that the SAPD, which retains information about patients
medications can help reduce the number of such errors. In Europe and the United
States, approximately 80% of hospitals already use some form of automatic drug
dispensation system. However, the use of such systems has just started in the
PRC.





Manufacture
and Quality Control





We
manufacture the main components of our products, such as tube diverters and
pneumatic direction diverters, in our own facility. We outsource the
manufacturing of certain other parts such as workstations. We assemble all the
components and parts into finished products. In choosing our suppliers, we focus
on the quality of raw material supplied. We conduct our manufacturing procedures
and quality testing based on ISO 9000 Quality Standard and ISO Environmental
Standards. In August 2004 we received ISO 9000 certification.





We
provide a standard 12-month product warranty to our customers. During the
warranty period, we replace defective products for our customers without
charge.





Our
Product/Marketing Strategy





Our
product/marketing strategy focuses on using our human resources and intellectual
capital to design new and better hardware and software products with a variety
of applications for many markets. Currently, we are focused on logistics
products for the hospital and medical markets, but believe that we can expand
into other markets.





Implementing
our product/marketing strategy involves the following:





Expand and
Strengthen Our Product Lines. Currently, we offer two main products:
medical transport systems and medicine dispensing systems. We hope to leverage
the existing technologies that we own and our technical expertise to expand our
product offerings in developing new logistics products and new medical and
hospital products.





Expand and
Strengthen Our Markets for our Current Product Lines in the PRC and then outside
of the PRC. Our medical transport systems and medicine dispensing systems
are designed principally for hospital use. Currently, we are conducting research
and development to expand the use of our products in banks, industrial companies
and office buildings. We believe that our low cost structure that comes with
operating in the PRC can allow us to expand into other countries and
successfully compete based on our cost and price advantages.


6





Expand and
Strengthen Our Distribution Network in the PRC and then outside of the
PRC. We own the technologies used in our existing products, and
therefore, our cost of sales and the prices for our products are lower than
those of other companies which must pay licensing fees and royalties. As result,
we have been able to capture significant market share in the PRC (approximately
50% of hospitals and medical facilities that use pneumatic tube systems). In
order to leverage this strength, we will seek to build our own distribution
service centers in strategic locations in the PRC.





Sales
and Marketing





We sell
our products directly through our sales employees, direct sales office and
indirectly through independent sales agents. As of the date of this report, we
have thirteen independent sales agents and four direct sales office covering
Beijing, Shanghai, Guangzhou, Chengdu, Xi’an and 13 other provinces, and
fourteen sales employees. Our sales agents purchase products from us and resell
them at higher prices.





Materials
and Suppliers





The
principal supplies purchased for our business are composite panels, aluminum
frames, micro processors and other IC chips, power supplies, LCD panels, fans,
U-PVC tubes and equipment chassis. Except for LCD panels, which we purchase from
Truly Semiconductors Limited, a Japanese manufacturer, we have at least two
suppliers for each of the supplies we purchase for our business. We generally
have long-term relationships with our suppliers but no written contracts with
them as the materials we need are generally available in the
market.





Customers





Our
customers are primarily hospitals and medical appliance companies. The following
table presents, for the periods indicated, our largest customers by
revenue:





Percentage of SalesFiscal year ended December 31,Customers
                        
                        2007
                        
                        
                        2006Jian
      Su Yong Shen Medical Purge Project Co.,Ltd
                        
                        
                        11.13
                        %
                        
                        
                        -Kun
      Min Wei Shi Science and Technology Development Co., Ltd.
                        
                        
                        10.89
                        %
                        
                        
                        13.90
                        %Beijing
      Equipment Setting Project No. 4 Company
                        
                        
                        9.74
                        %
                        
                        
                        -Tai
      Yuan Yi Jia Medical Equipment Co.,Ltd.
                        
                        
                        9.23
                        %
                        
                        
                        -Ji
      Nan Feng Ru Yang Guang Technology Development Co.,Ltd
                        
                        
                        8.96
                        %
                        
                        
                        -Beijing
      He Sheng Science and Technology Development Co., Ltd.
                        
                        
                        7.99
                        %
                        
                        
                        -Total
                        
                        
                        57.94
                        %
                        
                        
                        13.90
                        %





The
payment terms of our standard sales agreement generally require a cash payment
of 30% of the total purchase price within 5 days of the signing of the
agreement, a cash payment of 30% of the total purchase price upon receipt of the
products if there is no exterior damage to the products, and a cash payment of
40% of the total purchase price upon installation, completion of testing, and
acceptance of the products. The purchase price generally includes shipping
expenses. If a shipment is delayed in breach of a sales agreement, we are
required to pay 1.0% of the total purchase price for each day delayed up to 10%
of the total purchase price.





Technology
and Research and Development





We have
developed and own the intellectual property used in our products. Currently we
hold thirteen PRC patents for our medical transport systems. In September 1999,
Daqing Sunway was designated as a New-and-High-Technology Enterprise in
Heilongjiang Province by the Science and Technology Commission of Heilongjiang
Province.





We have
25 full-time employees engaged in research and development (“R&D”) efforts.
Our R&D personnel specialize in the fields of software development,
electronic engineering, machinery design and manufacture, electronic information
technology, communication technology and application, automatic control
technology and optoelectronic technology. Most of our R&D personnel have
more than 5 years experience in their fields of specialty. We also outsource
certain software development projects to third party software
developers.





Currently,
we are conducting R&D on products for use in banks, industrial companies and
commercial use office buildings.





For the
fiscal years ended December 31, 2007 and 2006, respectively, we expended
approximately $175,567 and $289,838 on R&D activities.


7





Competition
and Competitive Advantages





Pneumatic
Transport System





Our main
competitors in the supply of PTS are Beijing Chuansheng Weiye Science Trade Co.,
Ltd., Hainan Lingjing Medical Purification Project Co., Ltd., and Beijing Ruize
Network Co., Ltd. While we are both a manufacturer and distributor of our
medical transport systems, our competitors are distributors of imported
pneumatic transport systems. Among these companies, Hainan Lingjing Medical
Purification Project Co., Ltd. is a distributor of Swisslog’s pneumatic force
transportation products, and Beijing Ruize Network Co., Ltd. is a distributor
for Sumetzberger GMBH, an Austrian company.





As the
market for pneumatic transport systems is still an emerging market in the PRC,
official data about the industry in general, and competition in particular, have
not been readily available. Based on the information we collected from
competitive bids, the internet and other market intelligence, it is our estimate
that among suppliers of pneumatic transport systems in the PRC, we were the
supplier to the largest number of hospitals in the fiscal years ended December
31, 2006 and 2007.





The
following table sets forth our estimates, based on information we have
collected from bids, the internet and other market intelligence, of the relative
number of hospitals and medical facilities in the PRC supplied with pneumatic
transport systems by us and our major competitors in 2006 and 2007:





Time of PRC
                                                        
                                                        
                                                        Percentage of
                                                          PRC Hospitals
                                                          Adopting PTSName
                                                        
                                                        Brand
                                                        
                                                        Market Entry
                                                        
                                                        
                                                        2007
                                                        
                                                        
                                                        2006Daqing
      Sunway Technology Co. Ltd.
                                                        
                                                        Suntrans
                                                        
                                                        2002
                                                        
                                                        
                                                        
                                                        48.5
                                                        %
                                                        
                                                        
                                                        46
                                                        %Beijing
      Chuansheng Weiye Science Trade Co., Ltd.
                                                        
                                                        Telecom
                                                        
                                                        1999
                                                        
                                                        
                                                        
                                                        3.5
                                                        %
                                                        
                                                        
                                                        3.5
                                                        %Hainan
      Lingjing Medical Purification Project Co., Ltd.
                                                          Jiangsu
      Jiuxin Purification Project Co., Ltd.
                                                        
                                                        Swisslog
                                                          Swisslog
                                                        
                                                        
                                                        1998
                                                          1998
                                                        
                                                        
                                                        
                                                        20
                                                        %
                                                        
                                                        
                                                        21.8
                                                        %Beijing
      Ruize Network Co., Ltd.
                                                        
                                                        Sumetzberger
                                                        
                                                        1996
                                                        
                                                        
                                                        
                                                        15
                                                        %
                                                        
                                                        
                                                        16.1
                                                        %Beijing
      Keliping Medical Equipment Co., Ltd
                                                          Shanghai
      Yili Co., Ltd.
                                                        
                                                        Hortig
                                                          Hortig
                                                        
                                                        
                                                        2006
                                                          2001
                                                        
                                                        
                                                        
                                                        7.3
                                                        %
                                                        
                                                        
                                                        7.3
                                                        %





Medicine
Dispensing Systems





We
introduced our medicine dispensing systems to the market in May 2007. Currently,
we face competition from Japanese manufacturers, Yuyama Manufacturing Co., Tosho
Co., Inc. and Sany Co., Ltd., and a South Korean company, JV Medi Co., Ltd.,
whose products are imported into the PRC and sold through distributors.  Since the introduction
of our medical dispensing system to the market in January 2008, we have received
orders to purchase eight of our systems. We already have two units delivered as
of March 2008.




Competitive
Advantages





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





Cost : We have cost
advantages because we source our supplies domestically and our products are
manufactured domestically using technologies developed by us. Our major
competitors are domestic distributors of imported products that cost more in
both materials and labor and, additionally, are subject to customs duties. As a
result, our PTS is generally priced lower than our competitors’ products - our
PTS is priced at approximately $138,235 per unit while our cost of sales is
approximately $40,467 per unit, representing a gross margin of approximately
70.72%. We estimate that similar products of our competitors are priced at
approximately $210,000 per unit. Our medicine dispensing system, which we
launched in the first quarter of 2008, is priced at $225,000 per unit
while our cost of sales is approximately $73,000, representing a gross margin of
approximately 68%. We estimate that our competitors’ prices range from $220,000
to $280,000.





Large Existing Customer Base and
Customer Loyalty: As of the end of 2007, we estimate, based on
information we have collected through competitive bids, internet research and
other market sources, that we had an approximate 50% share in
hospitals and medical facilities using pneumatic tube systems in the PRC market
based on the number of hospitals and medical facilities that have adopted
pneumatic tube transport systems in China , as compared to an approximate
20% for our largest competitor, Swisslog. Our large existing customer base,
which includes approximately 183 hospitals as our end users, provides us an
advantage in the marketing and sales of additional products and services, both
because existing customers are an important source of new orders, and
because we are frequently referred to new customers by our existing
customers due to our cost advantage, localized technology and excellent
service.





Localized and Customized
Technology : We are the only provider of PTS with localized interfaces in
Chinese language specifically designed based on the needs of PRC customers.
Daqing Sunway’s PTS is therefore more user friendly for Chinese speaking
customers. Our competitors’ products are based on English language interfaces.
As the general population in the PRC is not proficient in English, purchasers of
our competitors’ products are required to employ highly educated and specially
trained English speaking personnel to operate their systems, which represents an
additional expense adding to their already higher prices. In addition, as the
technologies used in our systems are developed by us, we have the capacity and
flexibility to easily and quickly adapt our products to specific customer
requirements and changing market trends.


8





Extensive After-Sales Service
Coverage: We believe that we are more accessible to our
customers than our competitors because we are the only manufacturer in
the PRC, as opposed to distributor, of pneumatic tube systems. As a
manufacturer, we believe we are in a better position to provide pre-sale
consultation and post-sale services than our competitors, all of which are
distributors of imported systems. We are available to provide pre-sale
consultation to help potential customers determine their specific needs and
design their transportation networks using PTS, and post-sale services such as
on-site diagnostic tests to identify and prevent any potential problems, and
maintenance and repair services. Our competitors’ customers do not have
such easy access to the manufacturers because they must rely
on the distributors to provide that access indirectly. Often, parts needed
for maintenance are not available in the PRC and must be ordered from overseas
for replacement, with a lag time for delivery.





Intellectual
Property





Patents





Our
products use patented technologies developed by us. Currently, we hold thirteen
PRC patents used in our products. The following is a list of the patents we
hold:





No.
                Certificate No.
                Issuer
                Name of the Patent
                Registered No.
                Application
                  Date
                Valid
                  Term1
                523933
                State
      Intellectual Property Office (SIPO)
                Pneumatic
      tube material transport facility
                ZL
      01 2 71975 7
                12/02/2001
                102
                532336
                SIPO
                Tube
      air flow direction converter
                ZL
      02 2 09902 6
                1/22/2002
                103
                534389
                SIPO
                One
      type of tube direction converter
                ZL
      02 2 09901 8
                1/22/2002
                104
                556112
                SIPO
                Pneumatic
      tube material transport sending and receiving box
                ZL
      02 2 73509 7
                5/23/2002
                105
                275295
                SIPO
                Pneumatic
      tube material transport sending and receiving box (exterior
      design)
                ZL
      02 3 52960 1
                5/23/2002
                106
                567890
                SIPO
                Pneumatic
      tube material transport air sender
                ZL
      02 2 73510 0
                20020523
                107
                655292
                SIPO
                Pneumatic
      tube material transport sending and receiving box of parallel changing
      mode
                ZL
      03 2 60602 8
                9/24/2003
                108
                719650
                SIPO
                Self
      motivating rail car for material transport system
                ZL
      2004 2 0070058 5
                7/28/2004
                109
                719482
                SIPO
                Car
      rail of material transport system
                ZL
      2004 2 0070057 0
                7/08/2004
                1010
                732675
                SIPO
                Pneumatic
      tube material transport sending and receiving box of parallel changing
      mode
                ZL
      2004 2 0063538 9
                10/11/2004
                1011
                743362
                SIPO
                Material
      flow tube router
                ZL
      2004 2 0063537 4
                10/11/2004
                1012
                738892
                SIPO
                One
      type of tube air flow direction converter
                ZL
      2004 2 0063535 5
                10/11/2004
                1013
                739042
                SIPO
                One
      type of tube direction converter
                ZL
      2004 2 0063536 X
                10/11/2004
                10





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


9





Registered
software:





We own
the following software used in our products:





No.
                Certificate No
                Software
                Issued by
                Issuance date
                Term
                  (year)1
                HEI DGY-2003
                  0005
                Daqing Sunway material transport control
                  software V 1.0 (Daqing Sunway material
                  transport imbedded software)
                Heilongjiang
                  Software Industry
                  Association
                20030310
                5




Trademarks





We have
two trademarks registered with the Trademark Office of the State Administration
for Industry and Commerce in PRC as follows:





No.
              Trademark number
              Issuer
              Classification
              Term1
              1102674
              State Trademark Bureau
              10
              Sep.14,2007 — Sep.13, 20172
              3205734
              State Trademark Bureau
              10
              Dec.14 , 2003 — Dec.13, 2013





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





Other Intellectual Property
Rights Protections in the PRC.





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





Insurance





We
currently do not carry any product liability or other similar insurance, nor do
we have property insurance covering our plant, manufacturing equipment and
office building. While product liability lawsuits in the PRC are rare and Daqing
Sunway has never experienced significant failures or accidents, there can be no
assurance that Daqing Sunway would not face liability in the event of any
failure or accident.





Daqing
Sunway maintains social insurance for their staff and employees in accordance
with relevant compulsory requirements under the PRC laws and have compulsory
insurance and fixed-sum insurance for cars and other vehicles.





Employees





Presently
we have 226 full-time employees and contractors, out of which 35 are management
and accounting personnel, 25 are R&D personnel, six are marketing
and sales personnel and 166 manufacturing personnel.





Government
Regulation





Under
certain regulations in the form of public notices issued by the PRC State
Administration of Foreign Exchange, or SAFE, our shareholders who are PRC
resident entities or individuals are subject to certain registration
requirements due to the status of WTL as “SPC”s (as defined under the public
notice issued by SAFE on October 21, 2005). These regulations would prohibit SWT
distributing dividends or profits to WTL and/or SWT as “SPC”s unless the
registration requirements are complied with. The registration procedures were
completed and SWT obtained a SAFE certificate from SAFE’s Heilongjiang office on
March 30, 2007. Our PRC counsel advised us that the SAFE certificate will allow
SWT to distribute dividends and profits out of the PRC.




10





Medical
Appliance manufacturing companies in the PRC are required to obtain Medical
Appliance Manufacturing permits. Daqing Sunway holds a Medical Appliance
registration certificate and Medical Appliance Manufacturing Permit issued by
Heilongjiang Province Food and Drug Supervision Administration
Bureau.





Pursuant
to the tax laws of PRC, general enterprises are subject to income tax at an
effective rate of 33%. Companies qualified as hi-technology companies are
subject to certain preferential tax treatment. Daqing Sunway was approved as a
domestic hi-technology company and enjoys a 15% corporate income tax rate
according to National New and High Tech Develop Zone Taxes Policy.





Other
than the foregoing, Daqing Sunway is not subject to any other significant
government regulation of its business or production, or any other government
permits or approval requirements, except for the laws and regulations of general
applicability for corporations formed under the laws of the PRC.





ITEM
1A. - RISK FACTORS





An investment in our securities involves a high degree of risk. In determining
whether to purchase our securities, you should carefully consider all of the
material risks described below, together with the other information contained in
this prospectus before making a decision to purchase our securities. You should
only purchase our securities if you can afford to suffer the loss of your entire
investment.





Risks Related to Our
Business





We
operate in an emerging industry and an unsettled market.





The
automated material transport system and medication distribution industries in
which we operate in the PRC are in an early stage of development. While we
believe that the potential advantages of this situation, including a strong
potential for growth, are significant, there are also related risks. In a
rapidly-growing market, our competitors could develop new technologies or new
variations of existing technologies that could gain popularity quickly. While we
believe that we understand the needs and preferences of our potential customers,
especially hospitals, for the kinds of systems we produce, these needs and
preferences could change in ways that our competitors anticipate or adapt to
more rapidly than we do. While we believe that our relatively large customer
base is one of our strengths, in a rapidly growing market, our industry could
gain so many new customers that the number of our existing customers could
become insignificant. If any of these risks materialize, our competitive
position, results of operations and financial condition could be significantly
impaired.





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





We
commenced our current line of business operations in recent years. 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:


11




·
            raise
      adequate capital for expansion and
operations;





·
            implement
      our business model and strategy and adapt and modify them as
      needed;





·
            increase
      awareness of our brands, protect our reputation and develop customer
      loyalty;





·
            manage
      our expanding operations and service offerings, including the integration
      of any future acquisitions;





·
            maintain
      adequate control of our expenses;





·
            anticipate
      and adapt to changing conditions in the transport and distribution systems
      markets in which we operate as well as the impact of any changes in
      government regulations, 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
failure to compete effectively may adversely affect our ability to generate
revenue.





We
compete primarily on the basis of our price advantage, cost advantage, our
technology and product features that are specifically designed for the PRC
market, our extensive after-sales service coverage and such after-sales services
being easily accessible to our clients. These competitive advantages are in part
based on our being a local manufacturer while our competitors are generally
distributors of foreign products with much higher costs and less accessible
after-sales services. There can be no assurance that we will maintain these
advantages in the future. Our foreign competitors may establish manufacturing
capabilities in the PRC to lower their costs and improve accessibility of
after-sales services. Our local competitors may gain larger market share and
reduce their costs by taking advantage of economies of scale. Developments of
this kind could have a material adverse effect on our business, results of
operations and financial condition. Further, our business requires large amounts
of working capital to fund our operations. Our competitors may have better
resources and better strategies to raise capital which could also have a
material adverse effect on our business, results of operations or financial
condition.





We
rely on sales to a single kind of customer in a single industry. Our long-term
growth may be impaired if we are unable to expand our customer base beyond the
hospital industry.





Nearly
all of our sales are made to hospitals and medical facilities in the PRC. If the
medical industry in the PRC shrinks or loses steam, our customer base and
potential customers will have fewer resources for the purchase of our products,
and our business, results of operations and financial condition could be
adversely affected.





Although
we intend to expand our business to make products that will be used by customers
in other industries, there is no guarantee that we will succeed. If we are
unable to expand beyond the hospital industry, our long-term growth could fall
short of expectations.





If
we are unable to fund our capital requirements for research and development, our
growth and profitability may be adversely affected.





Pneumatic
tube transport systems and medicine dispensing systems are the only two products
from which we generate or expect to generate substantial revenues. Both of our
product lines are designed for use in hospitals and medical facilities. Our
long-term growth and profitability could depend on our ability to expand beyond
the medical industry. This expansion may require us to make substantial and
long-term investments in research and development to develop new products or new
features for our existing products. If we are unable to fund such research and
development efforts, our long-term market potential, income and financial
condition could be impaired.





We
do not have written contracts with our suppliers and could be hurt by a change
in the market for our supplies.





We have
at least two suppliers for most of the principal supplies used in the
manufacture of our products, including composite panels, aluminum frames, micro
processors and other IC chips, power supplies, fans, U-PVC tubes and equipment
chassis. The suppliers of these supplies are PRC companies. We purchase LCD
panels from one supplier only, Truly Semiconductors Limited, a Japanese
manufacturer. Although we believe that our supplies are generally available in
the market and that we are not at great risk of disruption to these supply
chains, there can be no guarantee that the markets for these supplies will not
be disrupted, for business or economic reasons relating to a particular
manufacturing sector, or for economic or political reasons affecting the PRC
more generally.


12





We
are responsible for the indemnification of our officers and
directors.





Our
bylaws provide for the indemnification of our directors, officers, employees,
and agents, under certain circumstances, against costs and expenses incurred by
them in any litigation to which they become a party arising from their
association with or activities on behalf of us. This indemnification policy
could result in substantial expenditures, which we may be unable to
recoup.





We
may not be able to effectively protect our proprietary technology and other
intellectual property, which could harm our business and competitive
position.





We have
13 PRC patents on proprietary technology used in the manufacture of our
products. We also have a registered software program and two registered
trademarks. Our success depends in part on our ability to protect our
proprietary technologies. Although we believe we are protected from intellectual
property infringement both by our patents and by the complexity of our designs,
which we believe makes them difficult to copy, we cannot assure you that we will
be able to effectively protect our technology, or that our current or potential
competitors do not have, or will not obtain or develop, similar
technology.





We also
rely on trade secrets, non-patented proprietary expertise and continuing
technological innovation that we seek to protect, in part, by entering into
confidentiality agreements with licensees, suppliers, employees and consultants.
These agreements may be breached and there may not be adequate remedies in the
event of a breach. Disputes may arise concerning the ownership of intellectual
property or the applicability of confidentiality agreements. Moreover, our trade
secrets and proprietary technology may otherwise become known or be
independently developed by our competitors. If patents are not issued with
respect to products arising from research, we may not be able to maintain the
confidentiality of information relating to these products.





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





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





We use
our own patented proprietary technology in manufacturing our products. However,
as litigation becomes more common in China in resolving commercial disputes, we
face a higher risk of being the subject of intellectual property infringement
claims brought by others. The outcome of claims relating to our logistic
transport systems could involve complex technical, legal and factual questions
and analysis and, therefore, may be highly uncertain. The defense and
prosecution of intellectual property suits, patent opposition proceedings and
related legal and administrative proceedings can be both costly and time
consuming and may significantly divert the efforts and resources of our
technical and management personnel. An adverse determination in any such
litigation or proceedings to which we may become a party could subject us to
significant liability, including damage awards, to third parties, require us to
seek licenses from third parties, to pay ongoing royalties, or to redesign our
products or subject us to injunctions preventing the manufacture and sale of our
products. Protracted litigation could also result in our customers or potential
customers deferring or limiting their purchase or use of our products until
resolution of such litigation.





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





To the
knowledge of our management team, the manufacture of our products does not
require us to comply with PRC environmental laws other than PRC environmental
laws of general applicability. It has not been alleged that we have violated any
current environmental regulations   by PRC government officials; however,
there can be no assurance that the Chinese government will not amend its current
environmental protection laws and regulations. Our business and operating
results could be materially and adversely affected if we were to increase
expenditures in order to comply with environmental regulations affecting our
operations.





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





Our
future success depends heavily upon the continuing services of the members of
our senior management team, in particular our President and Chief Executive
Officer, Mr. Liu Bo; our Chief Financial Officer Mr. Samuel Sheng; and our Chief
Operating Officer and Secretary Mr. Sun Weishan. If one or more of our senior
executives or other key personnel are unable or unwilling to continue in their
present positions, we may not be able to replace them easily or at all, and our
business may be disrupted and our financial condition and results of operations
may be materially and adversely affected. Competition for senior management and
senior technology personnel is intense, the pool of qualified candidates is very
limited, and we may not be able to retain the services of our senior executives
or senior technology personnel, or attract and retain high-quality senior
executives or senior technology personnel in the future. Such failure could
materially and adversely affect our future growth and financial
condition.


13





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





We
currently do not carry any product liability or other similar insurance. While
product liability lawsuits in the PRC are rare and we have never experienced
significant failures of our products, we cannot assure you that we would not
face liability in the event of the failure of any of our products. We do not
carry any property insurance to cover our real property or manufacturing
equipment , nor do we have other insurance such as business liability or
disruption insurance coverage for our operations in the PRC .





Risks Related to Doing
Business in the PRC





Adverse
changes in political and economic policies of the Chinese government could have
a material adverse effect on the overall economic growth of China, which could
reduce the demand for our products and materially and adversely affect our
competitive position.





Our
business, financial condition, results of operations and prospects are affected
significantly by economic, political and legal developments in China. The
Chinese economy differs from the economies of most developed countries in many
respects, including:




Ÿ
            the
      amount of government involvement;





Ÿ
            the
      level of development;





Ÿ
            the
      growth rate;





Ÿ
            the
      control of foreign
exchange; and





Ÿ
            the
      allocation of resources.





While the
Chinese economy has grown significantly in the past 20 years, the growth
has been uneven, both geographically and among various sectors of the economy.
The Chinese government has implemented various measures to encourage
economic growth and guide the allocation of resources. Some of these measures
benefit the overall Chinese economy, but may also have a negative effect on us.
For example, our financial condition and results of operations may be adversely
affected by government control over capital investments or changes in tax
regulations that are applicable to us, as well as its ability to control prices,
including the price of coal, which is a principal raw material for our
business.





The
Chinese economy has been transitioning from a planned economy to a more
market-oriented economy. Although in recent years the Chinese government has
implemented measures emphasizing the utilization of market forces for economic
reform, the reduction of state ownership of productive assets and the
establishment of sound corporate governance in business enterprises, a
substantial portion of the productive assets in China is still owned by the
Chinese government. Further, there is no private ownership of land in China.
Rather, land is owned by the government and the government issues land use
rights. Although the land use rights are transferable, it is necessary to obtain
government approval for a transfer. The continued control of these assets and
other aspects of the national economy by the Chinese government could materially
and adversely affect our business. The Chinese government also exercises
significant control over Chinese economic growth through the allocation of
resources, controlling payment of foreign currency-denominated obligations,
setting monetary policy and providing preferential treatment to particular
industries or companies.





Any
adverse change in the economic conditions or government policies, policy
interpretations, imposition of confiscatory taxation, restrictions on currency
conversion, exports, devaluations of currency, the nationalization or other
expropriation of private enterprises in China could have a material adverse
effect on the overall economic growth and the level of investments and
expenditures in China, which in turn could lead to a reduction in demand for our
products in both the Chinese and international markets.





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





There are
substantial uncertainties regarding the interpretation and application of PRC
laws and regulations, including but not limited to the laws and regulations
governing our business, or the enforcement and performance of our arrangements
with customers in the event of the imposition of statutory liens, death,
bankruptcy and criminal proceedings. We and any future subsidiaries are
considered foreign persons or foreign funded enterprises under PRC laws, and as
a result, we are required to comply with PRC laws and regulations. These laws
and regulations are sometimes vague and may be subject to future changes, and
their official interpretation and enforcement may involve substantial
uncertainty. The effectiveness of newly enacted laws, regulations or amendments
may be delayed, resulting in detrimental reliance by foreign investors. New laws
and regulations that affect existing and proposed future businesses may also be
applied retroactively. We cannot predict what effect the interpretation of
existing or new PRC laws or regulations may have on our businesses.
Additionally, if the relevant authorities find us in violation of PRC laws or
regulations, they would have broad discretion in dealing with such a violation,
including, without limitation:


14





·
            levying
      fines;





·
            revoking
      our business and other licenses;





·
            requiring
      that we restructure our ownership or operations;
  and





·
            to
      the extent that we use the Internet for marketing and providing
      information on our products and services, requiring that we discontinue
      any portion or all of our Internet related
  business.





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 in the PRC. Although the PRC economy has grown significantly in
recent years, we cannot assure you that such growth will continue. A slowdown in
overall economic growth, an economic downturn or recession or other adverse
economic developments in the PRC may materially reduce the demand for our
products and materially and adversely affect our business.





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





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





SWT
is subject to restrictions on paying dividends and making other payments to
us.





We are a
holding company incorporated in the State of Nevada and do not have any assets
or conduct any business operations other than our investments in our
subsidiaries. As a result of our holding company structure, we rely primarily on
dividends payments from our subsidiary in China. However, PRC regulations
currently permit payment of dividends only out of accumulated profits, as
determined in accordance with PRC accounting standards and regulations. Our
subsidiary and affiliated entity in China are also required to set aside a
portion of their after-tax profits according to PRC accounting standards and
regulations to fund certain reserve funds. The PRC government also imposes
controls on the conversion of RMB into foreign currencies and the remittance of
currencies out of China. We may experience difficulties in completing the
administrative procedures necessary to obtain and remit foreign currency. See “
Governmental control of
currency conversion may affect the value of your investment .”
Furthermore, if our subsidiary or affiliated entity in China incurs debt on
their own in the future, the instruments governing the debt may restrict their
ability to pay dividends or make other payments. If we are unable to receive all
of the revenues from our operations through contractual or dividend
arrangements, we may be unable to pay dividends on our common stock even if we
wish to pay dividends.





If
certain tax exemptions within the PRC regarding withholding taxes are removed,
we may be required to deduct corporate withholding taxes from any dividends we
may pay in the future.





Under the
PRC’s current tax laws, regulations and rulings, companies are exempt from
paying withholding taxes with respect dividends paid to stockholders outside of
the PRC. However, if the foregoing exemption is removed, we may be required to
deduct certain amounts from any dividends we pay to our
stockholders.





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 dominated 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.


15





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. 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.





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





Price
controls may affect both our revenues and net income.





The laws
of the PRC provide for the government to fix and adjust prices. To the extent
that we are subject to price control, our revenue, gross profit, gross margin
and net income will be affected since the revenue we derive from our sales will
be limited and, unless there is also price control on the products that we
purchase from our suppliers, we may face no limitation on our costs. Further, if
price controls affect both our revenue and our costs, our ability to be
profitable and the extent of our profitability will be effectively subject to
determination by the applicable regulatory authorities in the PRC.





Our
operations may not develop in the same way or at the same rate as might be
expected if the PRC economy were similar to the market-oriented economies of
OECD member countries.





The
economy of the PRC has historically been a nationalistic, “planned economy,”
meaning it functions and produces according to governmental plans and pre-set
targets or quotas. In certain aspects, the PRC’s economy has been making a
transition to a more market-oriented economy, although the government imposes
price controls on certain products and in certain industries. However, we cannot
predict the future direction of these economic reforms or the effects these
measures may have. The economy of the PRC also differs from the economies of
most countries belonging to the Organization for Economic Cooperation and
Development (the “OECD”), an international group of member countries sharing a
commitment to democratic government and market economy. For
instance:




·
            the
      level of state-owned enterprises in the PRC, as well as the level of
      governmental control over the allocation of resources is greater than in
      most of the countries belonging to the
OECD;





·
            the
      level of capital reinvestment is lower in the PRC than in other countries
      that are members of the OECD;





·
            the
      government of the PRC has a greater involvement in general in the economy
      and the economic structure of industries within the PRC than other
      countries belonging to the OECD;





·
            the
      government of the PRC imposes price controls on certain products and our
      products may become subject to additional price controls;
    and





·
            the
      PRC has various impediments in place that make it difficult for foreign
      firms to obtain local currency, as opposed to other countries belonging to
      the OECD where exchange of currencies is generally free from
      restriction.





As a
result of these differences, our business may not develop in the same way or at
the same rate as might be expected if the economy of the PRC were similar to
those of the OECD member countries.





If
we are not able to protect our intellectual property rights, our business may be
impaired.





Our
intellectual property relates to our know-how in developing our products. The
protection of intellectual property rights in the PRC is weak, and we cannot
give any assurance that we will be able to protect our intellectual property
rights. To the extent that our business is dependent upon intellectual property,
our ability to generate revenue from these products, would be severely impaired
if we are not able to protect our rights in these products.


16





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





A renewed outbreak of SARS or another widespread public health problem in the
PRC, where all of our revenue is derived, could have an adverse effect on our
operations. Our operations may be adversely impacted by a number of
health-related factors, including the following:




·
            quarantines
      or closures of some of our offices which would severely disrupt our
      operations,





·
            the
      sickness or death of our key officers and employees,
  and





·
            a
      general slowdown in the economy of the
PRC





Because
our principal assets are located outside of the United States and nearly all of
our directors and all our officers reside outside of the United States, it may
be difficult for you to enforce your rights based on U.S. Federal Securities
Laws against us and our officers and some directors in the U.S. or to enforce
U.S. Court Judgment against us or them in the PRC.





All of
our directors and officers reside outside of the United States. In addition,
Sunway, which functions as our operating subsidiary, is located in the PRC and
substantially all of its assets are located outside of the United States. It may
therefore be difficult for investors in the United States to enforce their legal
rights based on the civil liability provisions of the U.S. Federal securities
laws against us in the courts of either the U.S. or 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
may have limited legal recourse under Chinese law if disputes arise under
contracts with third parties.





Almost
all of our agreements with our employees and third parties, including our
supplier and customers, are governed by the laws of the PRC. The legal system in
the PRC is a civil law system based on written statutes. Unlike common law
systems, such as we have in the United States, it is a system in which decided
legal cases have little precedential value. The government of the PRC has
enacted some laws and regulations dealing with matters such as corporate
organization and governance, foreign investment, commerce, taxation and trade.
However, their experience in implementing, interpreting and enforcing these laws
and regulations is limited, and our ability to enforce commercial claims or to
resolve commercial disputes is unpredictable. The resolution of these matters
may be subject to the exercise of considerable discretion by agencies of the
PRC, and forces unrelated to the legal merits of a particular matter or dispute
may influence their determination. Any rights we may have to specific
performance or to seek an injunction under Chinese law are severely limited, and
without a means of recourse by virtue of the Chinese legal system, we may be
unable to prevent these situations from occurring. The occurrence of any such
events could have a material adverse effect on our business, financial condition
and results of operations.





Because
we may not be able to obtain business insurance in the PRC, we may not be
protected from risks that are customarily covered by insurance in the United
States.





Business
insurance is not readily available in the PRC. To the extent that we suffer a
loss of a type which would normally be covered by insurance in the United
States, such as product liability and general liability insurance, we would
incur significant expenses in both defending any action and in paying any claims
that result from a settlement or judgment. Since our products are used for the
transportation and storage of CNG and chemicals, any damage caused by the
failure or alleged failure of our products could result in substantial damages,
and if the nature or amount of any uninsured loss is significant, we may be
unable to continue in business





Because
our funds are held in banks which do not provide insurance, the failure of any
bank in which we deposit our funds could affect our ability to continue in
business.





Banks and
other financial institutions in the PRC do not provide insurance for funds held
on deposit. As a result, in the event of a bank failure, we may not have access
to funds on deposit. Depending upon the amount of money we maintain in a bank
that fails, our inability to have access to our cash could impair our
operations, and, if we are not able to access funds to pay our suppliers,
employees and other creditors, we may be unable to continue in
business.





Failure
to comply with the United States Foreign Corrupt Practices Act could subject us
to penalties and other adverse consequences.





We are
subject to the United States Foreign Corrupt Practices Act, which generally
prohibits United States companies from engaging in bribery or other prohibited
payments to foreign officials for the purpose of obtaining or retaining
business. Foreign companies, including some that may compete with us, are not
subject to these prohibitions. Corruption, extortion, bribery, pay-offs, theft
and other fraudulent practices occur from time-to-time in the PRC. We can make
no assurance, however, that our employees or other agents will not engage in
such conduct for which we might be held responsible. If our employees or other
agents are found to have engaged in such practices, we could suffer severe
penalties and other consequences that may have a material adverse effect on our
business, financial condition and results of operations.


17





If
the United States imposes trade sanctions on the PRC due to its currency, export
or other policies, our ability to succeed in the international markets may be
diminished.





The PRC
currently “pegs” its currency to a basket of currencies, including United States
dollar. This means that each unit of Chinese currency has a set ratio for which
it may be exchanged for United States currency, as opposed to having a floating
value like other countries’ currencies. This policy is currently under review by
policy makers in the United States. Trade groups in the United States have
blamed the cheap value of the Chinese currency for causing job losses in
American factories, giving exporters an unfair advantage and making its imports
expensive. There is increasing pressure for the PRC to change its currency
policies to provide for its currency to float freely on international markets.
As a result, Congress is considering the enacting legislation which could result
in the imposition of quotas and tariffs. If the PRC changes its existing
currency policies or if the United States or other countries enact laws to
penalize the PRC for its existing currency policies, our business may be
adversely affected, even though we do not sell outside of the PRC. Further, we
cannot predict what action the PRC may take in the event that the United States
imposes tariffs, quotas or other sanctions on Chinese products. Even though we
do not sell products into the United States market, it is possible that such
action by the PRC may nonetheless affect our business since we are a United
States company, although we cannot predict the nature or extent thereof. Any
government action which has the effect of inhibiting foreign investment could
hurt our ability to raise funds that we need for our operations. The devaluation
of the currency of the PRC against the United States dollar would have adverse
effects on our financial performance and asset values when measured in terms of
the United Stated dollar.





Any
deterioration of political relations between the United States and the PRC could
impair our operations.





The
relationship between the United States and the PRC is subject to sudden
fluctuation and periodic tension. Changes in political conditions in the PRC and
changes in the state of PRC-U.S. relations are difficult to predict and could
adversely affect our operations. Such a change could lead to a decline in our
profitability. Any weakening of relations between the United States and the PRC
could have a material adverse effect on our operations, particularly in our
efforts to raise capital to expand our business activities.





Our
operations and assets in the PRC are subject to significant political and
economic uncertainties.





Government
policies are subject to rapid change and the government of the PRC may adopt
policies which have the effect of hindering private economic activity and
greater economic decentralization. There is no assurance that the government of
the PRC will not significantly alter its policies from time to time without
notice in a manner with reduces or eliminates any benefits from its present
policies of economic reform. In addition, a substantial portion of productive
assets in the PRC remains government-owned. For instance, all lands are state
owned and leased to business entities or individuals through governmental
granting of state-owned land use rights. The granting process is typically based
on government policies at the time of granting, which could be lengthy and
complex. This process may adversely affect our operations. The government of the
PRC also exercises significant control over China’s economic growth through the
allocation of resources, controlling payment of foreign currency and providing
preferential treatment to particular industries or companies. Uncertainties may
arise with changing of governmental policies and measures. In addition, changes
in laws and regulations, or their interpretation, or the imposition of
confiscatory taxation, restrictions on currency conversion, imports and sources
of supply, devaluations of currency, the nationalization or other expropriation
of private enterprises, as well as adverse changes in the political, economic or
social conditions in the PRC, could have a material adverse effect on our
business, results of operations and financial condition.





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





The PRC
historically has not adopted a Western style of management and financial
reporting concepts and practices, as well as in modern banking, computer and
other control systems. We may have difficulty in hiring and retaining a
sufficient number of qualified employees to work in the PRC. As a result of
these factors, we may experience difficulty in establishing management, legal
and financial controls, collecting financial data and preparing financial
statements, books of account and corporate records and instituting business
practices that meet Western standards.





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 72.0% (prior
to the Reverse Split) and 70.9% (after the Reverse Split effective February 7,
2008) of our Common Stock. Liu Bo, our Chairman and Chief Executive Officer,
beneficially owns approximately 65.0% (prior to the Reverse Split) and 63.9%
(after the Reverse Split effective February 7, 2008) of our Common Stock. As a
result, Mr. Liu is able to influence the outcome of stockholder votes on various
matters, including the election of directors and extraordinary corporation
transactions including business combinations. Yet Mr. Liu’s interests may differ
from other stockholders.




18


We
are not likely to pay cash dividends in the foreseeable future.




We
currently intend to retain any future earnings for use in the operation and
expansion of our business. We do not expect to pay any cash dividends in the
foreseeable future but will review this policy as circumstances dictate. Should
we decide in the future to do so, as a holding company, our ability to pay
dividends and meet other obligations depends upon the receipt of dividends or
other payments from our operating subsidiary. In addition, our operating
subsidiary, from time to time, may be subject to restrictions on its ability to
make distributions to us, including as a result of restrictions on the
conversion of local currency into U.S. dollars or other hard currency and other
regulatory restrictions.





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





Our
common stock is quoted on the over-the-counter Bulletin Board. However, our bid
and asked quotations have not regularly appeared on the OTC Bulletin Board for
any consistent period of time. There is no established trading market for our
common stock and our common stock may never be included for trading on any stock
exchange or through any other quotation system (including, without limitation,
the NASDQ Stock Market). In the absence of an active trading market, you may
have difficulty buying and selling or obtaining market quotations; the market
visibility for our stock may be limited, and the lack of visibility for our
common stock may have a depressive effect on the market price for our common
stock.





The price of our common stock
may fluctuate dramatically.





There is
a limited market for our common stock and we cannot give any assurance that
there will ever be an active market for our common stock. If a market for our
common stock develops, there is a significant risk that our stock price may
fluctuate dramatically in the future in response to any of the following
factors, some of which are beyond our control:




·
            variations
      in our quarterly operating results;





·
            announcements
      that our revenue or income are below analysts’
    expectations;





·
            general
      economic slowdowns;





·
            matters
      affecting the economy of the PRC and the relationship between the United
      States and the PRC;





·
            changes
      in market valuations of both similar companies and companies whose
      business is primarily or exclusively in the
PRC;





·
            sales
      of large blocks of our common
stock;





·
            announcements
      by us or our competitors of significant contracts, acquisitions, strategic
      partnerships, joint ventures or capital
  commitments;





·
            fluctuations
      in stock market prices and volumes, which are particularly common among
      highly volatile securities of internationally-based
    companies.





·
            concern
      by potential investors that the large number of shares of common stock
      which may be sold pursuant to this prospectus may have a downward effect
      upon the market price of the stock.





·
            the
      effect of sales pursuant to this prospectus on the trading volume of our
      common stock.





Failure
to achieve and maintain effective internal controls in accordance with Section
404 of the Sarbanes-Oxley Act could have a material adverse effect on our
business and operating results and stockholders could lose confidence in our
financial reporting.





Effective
internal controls are necessary for us to provide reliable financial reports and
effectively prevent fraud. If we cannot provide reliable financial reports or
prevent fraud, our operating results could be harmed. We will be required to
document and test our internal control procedures in order to satisfy the
requirements of Section 404 of the Sarbanes-Oxley Act, which requires increased
control over financial reporting requirements, including annual management
assessments of the effectiveness of such internal controls and a report by our
independent certified public accounting firm addressing these assessments.
Failure to achieve and maintain an effective internal control environment,
regardless of whether we are required to maintain such controls, could also
cause investors to lose confidence in our reported financial information, which
could have a material adverse effect on our stock price.




19


Our
Common Stock is subject to “Penny Stock” Rules of the Securities and Exchange
Commission, which makes transactions in our stock more
difficult


The
Securities and Exchange Commission has adopted Rule 3a51-1 which establishes the
definition of a "penny stock," for purposes relevant to us, as any equity
security that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain exceptions. For
any transaction involving a penny stock, unless exempt, Rule 15g-9
requires:




•
            that
      a broker or dealer approve a person's account for transactions in penny
      stocks; and





•
            the
      broker or dealer receive from the investor a written agreement to the
      transaction, setting forth the identity and quantity of the penny stock to
      be purchased





In order
to approve a person’s account for transactions in penny stocks, the broker or
dealer must:




•
            obtain
      financial information and investment experience objectives of the person;
      and





•
            make
      a reasonable determination that the transactions in penny stocks are
      suitable for that person and the person has sufficient knowledge and
      experience in financial matters to be capable of evaluating the risks of
      transactions in penny stocks.





The
broker or dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prescribed by the SEC relating to the penny stock market,
which, in highlight form:




•
            sets
      forth the basis on which the broker or dealer made the suitability
      determination; and





•
            that
      the broker or dealer received a signed, written agreement from the
      investor prior to the transaction.





Generally,
brokers may be less willing to execute transactions in securities subject to the
“penny stock” rules. This may make it more difficult for investors to dispose of
our common stock and cause a decline in the market value of our
stock.





Disclosure
also has to be made about the risks of investing in penny stocks in both public
offerings and in secondary trading and about the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks.





The
application of these rules may affect the ability of broker-dealers to sell our
common stock and may affect your ability to sell any common stock you may
own





As
an issuer of “penny stock” the protection provided by the federal securities
laws relating to forward looking statements does not apply to us.





Although
the federal securities law provide a safe harbor for forward-looking statements
made by a public company that files reports under the federal securities laws,
this safe harbor is not available to issuers of penny stocks. As a result, we
will not have the benefit of this safe harbor protection in the event of any
based upon an claim that the material provided by us contained a material
misstatement of fact or was misleading in any material respect because of our
failure to include any statements necessary to make the statements not
misleading.





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





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





ITEM
1B – UNRESOLVED STAFF COMMENTS





Not
Applicable





Available
Information





Our
electronic filings with the United States Securities and Exchange Commission
(including our annual report on Form 10-K, quarterly reports on Form 10-Q and
current reports on Form 8-K, and any amendments to these reports) are available
free of charge on the Securities and Exchange Commission’s website at
http://www.sec.gov.




20




ITEM
2 – DESCRIPTION OF PROPERTY





The
Company’s manufacturing facilities are housed in a two-story building occupying
26,522 square meters of land located in Daqing Municipal Hi-Tech Development
Zone, Zone Three, Daqing, Helongjiang Province, PRC. Our office building is
located in Saertu Daqing Software Development Zone, Daqing, Helongjiang
Province, PRC.





Under the
PRC law, most land is owned by the government, which grants a "land use right"
to an individual or entity after a purchase price for such “land use right” is
paid to the government. The “land use right” allows the holder the right to use
the land for a specified long-term period of time and enjoys all the ownership
rights incident to the land. Daqing Sunway holds the land use right for one
parcel of land that was used in its business and which will be used in SWT's
business pursuant to the leases entered into in connection with the
Restructuring Agreements.





Land
Use Right





Set forth
below is the detailed information regarding the land use right registered under
the name of Daqing Sunway:




Registered owner
                                              of
                                              land use right
                                            
                                            Location & certificate of land use right
                                            
                                            Usage
                                            
                                            (Approximate)
                                              square meters
                                            
                                            Date of Issuance
                                              or Grant
                                            
                                            Expiration
                                              DateDaqing Sunway
                                            
                                            Daqing
      Municipal Hi-Tech Development Zone, Zone
                                              Three,
      Daqing, Helongjiang Provice, PRC
                                              
                                              Daqing
      Municipality Guo Yong (2005) No. 021843
                                            
                                            Industrial use
                                            
                                            26,522
                                            
                                            September 16, 2005
                                            
                                            June 13, 2052





Lease





Pursuant
to a lease agreement, the Company is leasing from Daqing Chuangye Square Co.,
Ltd. a building with a total of 2,342.87 square meters for use in its operation
for a term of three years starting from May 18, 2007 with an annual rent of
approximately $21,895.





Building
Properties





The
Company also owns two building properties as follows:





Owner
                                    
                                    Location
                                    
                                    Usage
                                    
                                    Approximate
                                      square meters
                                    
                                    Certificate of Ownership or
                                      Right to UseDaqing Sunway
                                    
                                    North
      Section of Longfeng District, West Wing of Building No. 15, 1st Floor,
      Daqing, Helongjiang Province, PRC
                                    
                                    Real
      property for use by joint stock company limited enterprise
                                    
                                    3,050
                                    
                                    Qing
      Real Property Right Certificate No. No. 00014093 (Original Certificate No.
      0230404)Daqing Sunway
                                    
                                    Building
      No. 3, Saertu Software Development Zone, Daqing, Helongjiang Province,
      PRC
                                    
                                    Real
      property for use by joint stock company limited enterprise
                                    
                                    5,066.96
                                    
                                    Qing
      Real Property Right Certificate Longfeng District
    No.NA216750





Effective
on November 30, 2005, Daqing Sunway granted a lien on the land use right and
property located at the West Wing of Building No. 15 to Daqing Industrial
and Commercial Mortgage Company for a debt of Sunway in the amount of 3,000,000
RMB owed to it. The lien will expire on November 30, 2009. The property located
in the North Section of Longfeng District, West Wing of Building No. 15, 1 st Floor
is not currently used in Daqing Sunway’s business.





ITEM
3 - LEGAL PROCEEDINGS





To our
knowledge, there is no material litigation pending or threatened against
us.





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





There
were no matters submitted to a vote of our security holders during the fourth
quarter of the fiscal year ended December 31, 2007.





On June
28, 2007 a majority of shareholders approved an amendment to the Company’s
Articles of Incorporation,that would adopt a 86.3035-for-one reverse split of
the Company’s common stock. The Company effected the reverse split on February
7, 2008.


21


PART
II





ITEM
5 - MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES
OF EQUITY SECURITIES





Market
Information





The
Company’s common stock is quoted on the OTC Bulletin Board under the symbol
“SUWG.OB.”  The following table sets forth, for the calendar periods
indicated, the range of the high and low last reported bid and ask prices of the
Company’s common stock from January 1, 2006 through December 31, 2007, as
reported by the OTC Bulletin Board.  The quotations represent inter-dealer
prices without retail mark-ups, mark-downs or commissions, and may not
necessarily represent actual transactions.  The quotations may be rounded
for presentation.




Period
                  
                  High*
                  
                  
                  Low*First
      Quarter 2006
                  
                  $
                  7.334
                  
                  
                  $
                  0.518Second
      Quarter 2006
                  
                  $
                  2.588
                  
                  
                  $
                  0.863Third
      Quarter 2006
                  
                  $
                  1.294
                  
                  
                  $
                  0.863Fourth
      Quarter 2006
                  
                  $
                  2.761
                  
                  
                  $
                  0.431First
      Quarter 2007
                  
                  $
                  1.726
                  
                  
                  $
                  0.690Second
      Quarter 2007
                  
                  $
                  4.228
                  
                  
                  $
                  0.863Third
      Quarter 2007
                  
                  $
                  2.502
                  
                  
                  $
                  0.863Fourth
      Quarter 2007
                  
                  $
                  2.502
                  
                  
                  $
                  0.690





On
December 31, 2007, the last price of the Company’s common stock as reported on
the OTC Bulletin Board was $1.510* per share.





As of
December 31, 2007, the Company had approximately 645 shareholders of
record.  Certain of the shares of common stock are held in “street” name
and may be held by numerous beneficial owners.





*The
above-quoted stock prices have been adjusted to reflect the 86.3035-for-one
reverse split that was approved by a majority of shareholders on June 28, 2007
and took effect on February 7, 2008.





Dividends





The
Company’s board of directors has not declared a dividend on our common stock
during the last two fiscal years and we do not anticipate the payments of
dividends in the near future as we intend to reinvest our profits to grow
operations. We rely on dividends from Daqing Sunway for our funds and PRC
regulations may limit the amount of funds distributed to us from Daqing Sunway,
which will affect our ability to declare any dividends.





Recent
Sales of Unregistered Securities





The
following summarizes the securities that we sold during the fiscal year
ended December 31, 2007 without registering the securities under the Securities
Act:





On June
6, 2007, we issued 210,886 shares of Series A Preferred to Rise Elite pursuant
to the Share Exchange in exchange for all outstanding ownership interest in SWT
held by Rise Elite.





On June
6, 2007, we issued to Kuhns Brothers, Inc. and its designees an aggregate of
17,646 shares of Series A Preferred and a Series J warrant to purchase an
aggregate of 496,296 shares of common stock of the Company at $1.62 per share in
connection with the reverse merger transaction pursuant to the placement agent
agreement with the Kuhns Brothers, Inc. 7,990 shares out of the 17,646 share of
Series A Preferred were assigned by Kuhns Brothers to Vision as an incentive for
being the lead investor in the private financing.





On June
6, 2007, pursuant to the Preferred B Agreement, for a cash payment of $6,700,000
in gross proceeds, the Company issued to Vision and Columbia (i) an aggregate of
165,432 shares of our Series B Preferred and (ii) five series of warrants,
Series A, B, J, C and D, to purchase an aggregate of 4,962,971, 2,481,481,
4,496,644, 4,962,963 and 2,248,322 shares of our common stock, respectively.
Each of the Series A, B, C and D warrants will expire on June 5, 2012. The
Series J warrants will expire on June 5, 2008. The Series C and D warrants are
exercisable only upon the exercise of the Series J warrants. The warrant
exercise prices are: $1.76 (Series A), $2.30 (Series B), $1.49 (Series J), $1.94
(Series C) and $2.53 (Series D).





On June
6, 2007, we issued 12,734,696 shares of our common stock to Vision for the
conversion of the debentures in the outstanding principal amount of $199,202
that Vision purchased pursuant to the Shell Purchase Agreement.


22


*All of
the above offerings and sales were deemed to be exempt under rule 506 of
Regulation D and Section 4(2) of the Securities Act of 1933, as amended. No
advertising or general solicitation was employed in offering the securities. The
offerings and sales were made to a limited number of persons, all of whom were
accredited investors, business associates of Sunway Global or executive officers
of Sunway Global, and transfer was restricted by Sunway Global in accordance
with the requirements of the Securities Act of 1933. In addition to
representations by the above-referenced persons, we have made independent
determinations that all of the above-referenced persons were accredited or
sophisticated investors, and that they were capable of analyzing the merits and
risks of their investment, and that they understood the speculative nature of
their investment. Furthermore, all of the above-referenced persons were provided
with access to our Securities and Exchange Commission filings.





Equity
Compensation Plan Information





As of the
date of this report, the Company neither has any securities authorized for
issuance under any equity compensation plans nor does it have any equity
compensation plans.





Purchases
of Equity Securities by the Small Business Issuer and Affiliated
Purchasers





None.





ITEM
6 – SELECT FINANCIAL DATA





Not
Applicable





ITEM
7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS





Overview





The
following discussion and analysis of the consolidated financial condition and
results of operations should be read in conjunction with the consolidated
financial statements and related notes of Sunway, appearing elsewhere in this
report. This discussion and analysis contains forward-looking statements that
involve risks, uncertainties and assumptions. Actual results may differ
materially from those anticipated in these forward-looking
statements.





As a
result of the reverse merger, financing and related transactions described
in our current report on Form 8-K/A filed with the SEC on June 27, 2007, the
Company ceased to be a shell company and became a holding company for entities
that, through contractual relationships, control the business of Daqing Sunway,
a company organized under the laws of the PRC that designs, manufactures and
sells logistic transport systems and medicine dispensing systems and equipment
that are principally used by hospitals and other medical facilities in the PRC.
Because Sunway’s operations are the only significant operations of the Company
and its affiliates, this discussion and analysis focuses on the business results
of Sunway, comparing its results in the fiscal years ended December 31, 2007 and
2006.





Results
of Operations





In the
fiscal year ended December 31, 2007, company net sales, gross profit, operating
income and net income all rose substantially as compared with the same period in
the preceding year. These increases are due in large part to increased sales of
Daqing Sunway’s pneumatic tube transport systems. Cost of sales also increased
during these periods, somewhat outpacing the increase in sales. The increase in
cost of sales is due largely to increased depreciation expenses related to
Sunway’s investment in 2007 in new molds , production lines used and the
increased prices of raw materials used in the manufacture of its newly designed
medicine packaging and dispensing equipment. The company expects cost of sales
to level off or decline once sales of the new equipment begin in the first
quarter of 2008.





The
following table summarizes the results of our operations during the fiscal years
ended December 31, 2007 and 2006, respectively, and provides information
regarding the dollar and percentage increase or (decrease) from the the fiscal
years ended December 31, 2007 and 2006.




Fiscal Year Ended December 31,2007
                          
                          
                          2006
                          
                          
                          Change
                          
                          
                          Change rateNet Revenues
                          
                          $
                          11,865,138
                          
                          
                          $
                          8,914,139
                          
                          
                          $
                          2,950,999
                          
                          
                          
                          33.10
                          %Cost
      of net revenues
                          
                          $
                          3,473,411
                          
                          
                          $
                          2,386,996
                          
                          
                          $
                          1,086,415
                          
                          
                          
                          45.51
                          %Gross
      Profit
                          
                          $
                          8,391,727
                          
                          
                          $
                          6,527,143
                          
                          
                          $
                          1,864,584
                          
                          
                          
                          28.57
                          %Gross
      Margin
                          
                          
                          70.73
                          %
                          
                          
                          73.22
                          %
                          
                          
                          
                          
                          
                          $
                          -2.49
                          %Operating
      Income
                          
                          $
                          5,829,728
                          
                          
                          $
                          4,825,513
                          
                          
                          $
                          1,004,215
                          
                          
                          
                          20.81
                          %Net
      Income
                          
                          $
                          6,047,505
                          
                          
                          $
                          4,029,553
                          
                          
                          $
                          2,017,952
                          
                          
                          
                          50.08
                          %Net
      profit margin
                          
                          
                          50.97
                          %
                          
                          
                          45.20
                          %
                          
                          
                          
                          
                          
                          
                          5.77
                          %




23


Net
revenue





Net
revenue for the fiscal year ended December 31, 2007, which resulted entirely
from sales of pneumatic material transport system workstations, were
$11,865,138, an increase of 33.10% as compared with the net revenue of
$8,914,139 in the same period ended on December 31, 2006. In the same period, we
sold 2,575 workstations, an increase of 33.42% as compared with 1,930
workstations sold in the same period ended on December 31, 2006.





The
following table presents information about our revenue for the periods
indicated:





Fiscal Year Ended December 31,2007
                                
                                
                                2006
                                
                                
                                ChangeNet
      revenues
                                
                                $
                                11,865,138
                                
                                
                                
                                8,914,139
                                
                                
                                
                                33.10
                                %





Gross
Profit





Gross
profit increased 28.57% to $8,391,727 for fiscal year ended December 31, 2007,
as compared to $6,527,143 for the fiscal year ended December 31, 2006. Our gross
profit margin fell 2.49% from 73.22% as of the fiscal year ended December 31,
2006 to 70.73% as of the same period of 2007, mainly due to our efforts to
develop new molds and new production line, which raised depreciation costs and
therefore raised the cost of sales; at the same time, due to the use of newer
but more costly raw materials instead of old raw material in order to increase
product quality and perfect workstation surface, raw material costs increased
markedly.





The table
below presents information about our gross profit for the periods
indicated:





Fiscal Year Ended December 31,2007
                  
                  
                  2006US$
                  
                  
                  Gross profit
                    margin
                  
                  
                  US$
                  
                  
                  Gross profit
                    marginGross Profit
                  
                  $
                  8,391,727
                  
                  
                  
                  70.73
                  %
                  
                  $
                  6,527,143
                  
                  
                  
                  73.22
                  %





Income
from Operations





Operating
income increased 20.81% to $5,829,728 for the fiscal year ended December
31, 2007, as compared with $4,825,513 for the fiscal year ended December 31,
2006. The increase was primarily a result of the higher revenue during the
fiscal year ended on December 31, 2007 as compared to the same period in
2006.





Cost
of Net Revenues





Cost of
net revenues increased to $3,473,411 for the fiscal year ended December 31,
2007, representing 45.51% increase as compared with $2,386,996 for the same
period of 2006. This increase is due primarily to purchases in August 2006,
during which we purchased several new molds used in transport system production
line, and in November 2006 during which we purchased new production line using
for dispensation and packaging system, both of which increased the depreciation
cost from the time of purchase forward; and prices of raw materials increased
5.96% for the fiscal year ended December 31, 2007, as compared to the same
period in 2006.





The table
below presents information about our cost of sales for the periods
indicated:





Fiscal Year Ended December 31,2007
                  
                  
                  2006
                  
                  ChangeCost
      of net revenues
                  
                  $
                  3,473,411
                  
                  
                  $
                  2,386,996
                  
                  
                  
                  45.51
                  %





Operating
Expenses





Operating
expenses were $2,561,999 for the fiscal year ended December 31, 2007, an
increase of 50.56% as compared to $1,701,630 for the same period of 2006. This
increase was composed by two reasons: (1) decrease in selling expenses; and (2)
increase in general and administration expenses. In the fiscal year ended
December 31, 2007, we decreased exhibition fees for promoting our products,
which totaled $72,835, compared with $212,504 for the same period of 2006. Also,
in the fiscal year ended December 31, 2007, we increased salary and benefits of
management. Reflecting this change, costs related to salary and benefits
increased 261% in the fiscal year ended December 31, 2007, compared with the
same period of 2006, and our inter listing consultant expenses for the reverse
merger and private placement were increased from $49,402 as of the fiscal year
ended December 31, 2006 to $178,576 as of the same period of
2007.


24


The table
below presents information about our operating expenses for the periods
indicated:





Fiscal Year Ended December 31,2007
                  
                  
                  2006
                  
                  
                  changeSelling
      expenses
                  
                  $
                  234,792
                  
                  
                  $
                  238,212
                  
                  
                  $
                  -1.44
                  %General
      & Administrative Expenses
                  
                  $
                  2,327,207
                  
                  
                  $
                  1,463,418
                  
                  
                  $
                  59.03
                  %Total
      operating expenses
                  
                  $
                  2,561,999
                  
                  
                  $
                  1,701,630
                  
                  
                  $
                  50.56
                  %





Net
Income





Net
income was $6,047,505 for the fiscal year ended December 31, 2007, an increase
of 50.08% from $4,029,553 for the same period of 2006. This increase is
attributable to the increase in sales of our workstation products and disposal
of investments. Our net profit margin rose 5.77% from 45.20% as of the fiscal
year ended December 31, 2006 to 50.97% as of the same period of 2007. This
increase was primarily attributable to the Company’s increase in gains on
disposal of investments by $1,346,989 for the fiscal year ended December 31,
2007, accounting for 11.35% of net revenues.





Cash
and Cash Equivalents





Cash and
Cash Equivalents increased to $5,820,100 as of December 31, 2007, as compared to
$1,749,048 as of December 31, 2006. This increase was mainly due to our reverse
merger and private placement on June 6, 2007, which resulted in an increase of
$4,977,133 in net cash.





Trade
receivables





Trade
receivables increased 3.90% to $1,525,201 as of December 31, 2007, compared with
$1,467,963 as of December 31, 2006. This increase in Trade receivables was
primarily attributable to a substantial increase in workstation sales in the
fiscal year ended December 31, 2007. We will focus corporate resources on
enhancing the cooperation of our marketing and sales department with our
financial department in order to reduce the deferral of payments by our
customers and reduce our Trade receivables.





Inventory





Inventory
consists of raw materials and finished goods as of December 31, 2007; the
recorded value of our inventory has increased 103.59% to $766,933 from $376,708
as of December 31, 2006. This increase is mainly due to a decrease in finished
goods from $200,852 as of December 31, 2006 to $161,005 as of December 31, 2007,
a decrease of 19.84%. In addition direct raw materials increased from $175,856
as of December 31, 2006 to $605,928 as of December 31, 2007, an increase of
244.56%, which was due to increased sales and design capacity.





The table
below presents information about our inventory for the periods
indicated:





Item
                
                December 31,
                  2007
                
                
                December 31,
                  2006
                
                
                changeRaw
      material
                
                $
                605,928
                
                
                $
                175,856
                
                
                
                244.56
                %Finished
      goods
                
                $
                161,005
                
                
                $
                200,852
                
                
                
                -19.84
                %Total
                
                $
                766,933
                
                
                $
                376,708
                
                
                
                103.59
                %





Accounts
payable





Accounts
payable amounted to $245,917 as of December 31, 2007, an increase of 329.26%
from $57,289 as of December 31, 2006. This increase is mainly due to volume of
production increase caused by increased purchases of raw
materials.


25


Liquidity
and Capital Resources





We have
historically financed our operations and capital expenditures principally
through private placements of debt and equity offerings, and cash provided by
operations.





The table
below presents information about our cash flow for the periods
indicated:




Fiscal Year Ended December 31,2007
                  
                  
                  2006
                  
                  
                  ChangeNet
      cash provided by (used in) operating activities
                  
                  $
                  4,903,141
                  
                  
                  $
                  4,161,381
                  
                  
                  $
                  741,760Net
      cash provided by (used in) investing activities
                  
                  $
                  -5,689,488
                  
                  
                  $
                  -3,516,947
                  
                  
                  $
                  -2,172,541Net
      cash provided by (used in) financing activities
                  
                  $
                  4,979,412
                  
                  
                  $
                  -75,170
                  
                  
                  $
                  5,054,582Effect
      of foreign currency translation on cash and cash
    equivalents
                  
                  $
                  -122,013
                  
                  
                  $
                  -8,541
                  
                  
                  $
                  -113,472cash
      and cash equivalents at beginning of year
                  
                  $
                  1,749,048
                  
                  
                  $
                  1,188,325
                  
                  
                  $
                  560,723Cash
      and cash equivalents–end of year
                  
                  $
                  5,820,100
                  
                  
                  $
                  1,749,048
                  
                  
                  $
                  4,071,052





Operating
Activities





For the
fiscal year ended December 31, 2007, net cash provided by operating activities
was $4,903,141. This was primarily attributable to our net income of $6,047,505,
adjusted by an add-back of non-cash expenses mainly consisting of depreciation
and amortization of $1,404,463 offset by a $1,201,838 decrease in working
capital and a deduction of $1,346,989 profit on disposal of investments.
Specifically, the working capital decrease was primarily due to i) a $42,054
trade  receivables decrease driven by reduce the deferral of payments
by our customers; ii) a $349,802 inventory increase, principally raw materials,
to support planned expansion and sales growth; iii) a $975,910 increase in
advance to suppliers to purchase raw materials; iv) a $350,505 increase in
prepayments expenses , tender deposits, travel advances to shareholders and
advances to employees, consisting primarily of prepayments for raw materials
supplies in advance of shipment; partially offset by a $432,325 increase in
accounts payable , tax payables, expected warranty liabilities, customer
deposits, accrued liabilities and other payables.





Investing
Activities





For the
fiscal year ended December 31, 2007, net cash used in investing activities was
$5,689,488 and was primarily attributable to i) a $491,049 increase in
restricted cash for investor relations hold back; ii) a $2,659,808 income
for net sales of short term investments; iii) a $619,627 capital expenditure for
purchase of new plant and equipment; iv) a $5,687,457 capital expenditure
improvement of intangibles assets and purchase of new intangibles; v ) a
$562,406 working capital for Beijing direct sales offices; vi ) a $988,757
working capital for another direct sales offices.





Financing
Activities





For the
fiscal year ended December 31, 2007, net cash provided by financing activities
was $4,979,412, which was primarily attributable to $5,176,335 in preference
stock and debentures, partially offset by a $196,923 decrease in Bank loan
repayments .





As of
December 31, 2007, we had cash and cash equivalents of $5,820,100, up $4,071,052
from $1,749,048 at December 31, 2006.





In future
periods, we believe that our existing cash, cash equivalents and cash flows from
operations, combined with availability under our revolving credit facility, will
be sufficient to meet our presently anticipated future cash needs for at least
the next 12 months. We may, however, require additional cash resources due to
changed business conditions or other future developments, including any
investments or acquisitions we may decide to pursue.





Obligations
under Material Contracts





We do not
have any material contractual obligations as of December 31, 2007.





Critical
Accounting Policies





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


26


Impairment of long-lived
assets . We account for impairment of property, plant and equipment and
amortizable intangible assets in accordance with SFAS No. SFAS No. 144. The
carrying value of a long-lived asset is considered impaired when the anticipated
undiscounted cash flow from such asset is separately identifiable and is less
than its carrying value. In that event, a loss is recognized based on the amount
by which the carrying value exceeds the fair market value of the long-lived
asset. Fair market value is determined primarily using the anticipated cash
flows discounted at a rate commensurate with the risk involved. Losses on
long-lived assets to be disposed of are determined in a similar manner, except
that fair market values are reduced for the cost to dispose. During the
reporting years, there was no impairment loss incurred. Competitive pricing
pressure and changes in interest rates, could materially and adversely affect
our estimates of future net cash flows to be generated by our long-lived
assets.





Inventories . Inventories
consist of finished goods and raw materials, and stated at the lower of cost or
market value. Substantially all inventory costs are determined using the
weighted average basis. Finished goods are comprised of direct materials, direct
labor and an appropriate proportion of overhead. The management regularly
evaluates the composition of its inventory to identify slow-moving and obsolete
inventories to determine if additional write-downs are required. Changes in
sales volumes due to unexpected economic or competitive conditions are among the
factors that could materially affect the adequacy of such write
down.





Trade receivable
..


Trade
receivables are recognized and carried at the original invoice amount less
allowance for any uncollectible amounts. An allowance for doubtful accounts is
maintained for all customers based on a variety of factors, including the length
of time the receivables are past due, significant one-time events and historical
experience. Bad debts are written off as incurred.  During the
reporting years, there were no bad debts.


Outstanding
accounts balances are reviewed individually for collectability. The Company do
not charge any interest income on trade receivables.  Accounts
balances are charged off against the allowance after all means of collection
have been exhausted and the potential for recovery is considered remote. To
date, the Company has not charged off any balances as it has yet to exhaust all
means of collection.





Revenue recognition
..


Revenue
represents the invoiced value of goods sold recognized upon the delivery of
goods to customers. Revenue is recognized when all of the following criteria are
met:


-
Persuasive evidence of an arrangement exists;


-
Delivery has occurred or services have been rendered;


- The
seller’s price to the buyer is fixed or determinable, and


-
Collection is reasonably assured.


Contract
revenues are recognized when the manufacturing and installation of the medical
equipments is completed. Generally, the company receives total contract sum from
clients in 3 installments. Deposit of 30% is received from client when the
contract is signed. Second payment of 30% is received when the project
commenced. The final sum of the remaining portion is received after the
construction is completed within 4 months.





Expected
warranty liabilities


The
Company warrants its products against defects in design, materials, and
workmanship generally for one year. A provision for estimated future costs
relating to warranty expense are recorded when products are shipped, and the
provision is based upon our own historical claim experience.





Off-Balance
Sheet Arrangements





We do not
have any off-balance sheet arrangements as of December 31,
2007.


27


ITEM
7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





Not
Applicable.


28


ITEM
8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





SUNWAY
GLOBAL INC.





INDEX
TO FINANCIAL STATEMENTS





PageReports
      of Independent Registered Public Accounting Firms
                            F-2Consolidated
      Balance Sheets as of December 31, 2007 and December 31,
    2006
                            F-3 –
      F-4Consolidated
      Statements of Income for the Years Ended December 31, 2007 and December
      31, 2006
                            F-5Consolidated
      Statements of Shareholders' Equity for the Years Ended December 31, 2007
      and December 31, 2006
                            F-6Consolidated
      Statements of Cash Flows for the Years Ended December 31, 2007 and
      December 31, 2006
                            F-7 –
      F-8Notes
      to Consolidated Financial Statements
                            F-9 – F-37




29


ALBERT
WONG & CO.


CERTIFIED
PUBLIC ACCOUNTANTS


7th
Floor, Nan Dao Commercial Building


359-361
Queen’s Road Central


Hong
Kong


Tel :
2851 7954


Fax: 2545
4086





ALBERT
WONG


B.Soc.,
Sc., LL.B., P.C.LL., Barrister-at-law, C.P.A.(Practising).





To:
            The
      board of directors and stockholders
of


Sunway
Global Inc.





Report of Independent
Registered Public Accounting Firm





We have
audited the accompanying consolidated balance sheets of Sunway Global Inc. and
subsidiaries as of December 31, 2007 and 2006 and the related consolidated
statements of income, stockholders' equity and cash flows for the years then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.





We
conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Sunway Global
Inc. as of December 31, 2007 and 2006 and the results of its operations and its
cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.





Since our
previous report dated April 8, 2008, it was determined that the consolidated
financial statements needed restatement to make corrections as described in note
22.





/s/ Albert Wong &
Co.Hong
      Kong
              Albert
      Wong & Co.April
      8, 2008
              Certified
      Public Accountants


Except
for note 17 and 22 which are dated January 31, 2011


F-2


SUNWAY
GLOBAL INC.





CONSOLIDATED
BALANCE SHEETS


AS
AT DECEMBER 31, 2007 AND 2006


(Stated
in US Dollars)





Notes
                          
                          
                          2007
                          
                          
                          2006Restated
                          
                          
                          RestatedASSETSCurrent
      assetsCash
      and cash equivalents
                          
                          
                          
                          
                          $
                          5,820,100
                          
                          
                          $
                          1,749,048Short
      term investments
                          
                          4
                          
                          
                          
                          -
                          
                          
                          
                          1,702,718Trade
      receivables, net
                          
                          7
                          
                          
                          
                          1,525,201
                          
                          
                          
                          1,467,963Inventories
                          
                          10
                          
                          
                          
                          766,933
                          
                          
                          
                          376,708Advances
      to suppliers
                          
                          
                          
                          
                          
                          1,331,159
                          
                          
                          
                          294,535Prepayments
                          
                          
                          
                          
                          
                          125,333
                          
                          
                          
                          334,658Tender
      deposits
                          
                          
                          
                          
                          
                          131,013
                          
                          
                          
                          42,924Travel
      advances to shareholders
                          
                          8
                          
                          
                          
                          30,824
                          
                          
                          
                          6,457Advances
      to employees
                          
                          9
                          
                          
                          
                          548,364
                          
                          
                          
                          54,992Total
      current assets
                          
                          
                          
                          
                          $
                          10,278,927
                          
                          
                          $
                          6,030,003Restricted
      cash
                          
                          
                          
                          
                          
                          491,049
                          
                          
                          
                          -Amount
      due from a related company
                          
                          5
                          
                          
                          
                          585,678
                          
                          
                          
                          -Amount
      due from a director
                          
                          6
                          
                          
                          
                          1,028,474
                          
                          
                          
                          -Property,
      plant and equipment, net
                          
                          11
                          
                          
                          
                          4,449,619
                          
                          
                          
                          4,715,150Intangibles,
      net
                          
                          12
                          
                          
                          
                          6,933,491
                          
                          
                          
                          1,157,950TOTAL
      ASSETS
                          
                          
                          
                          
                          $
                          23,767,238
                          
                          
                          $
                          11,903,103LIABILITIES
      ANDSTOCKHOLDERS’
      EQUITYCurrent
      liabilitiesShort
      term bank loans
                          
                          13
                          
                          
                          $
                          -
                          
                          
                          $
                          191,877Accounts
      payable
                          
                          
                          
                          
                          
                          245,917
                          
                          
                          
                          57,289Income
      tax payable
                          
                          
                          
                          
                          
                          157,877
                          
                          
                          
                          249,843Turnover
      and other taxes
                          
                          
                          
                          
                          
                          143,857
                          
                          
                          
                          110,886Expected
      warranty liabilities
                          
                          14
                          
                          
                          
                          55,351
                          
                          
                          
                          22,811Customers
      deposits
                          
                          
                          
                          
                          
                          208,274
                          
                          
                          
                          67,157Accrued
      liabilities
                          
                          
                          
                          
                          
                          323,464
                          
                          
                          
                          164,537Other
      payables
                          
                          
                          
                          
                          
                          35,984
                          
                          
                          
                          3,110Total
      current liabilities
                          
                          
                          
                          
                          $
                          1,170,724
                          
                          
                          $
                          867,510TOTAL
      LIABILITIES
                          
                          
                          
                          
                          $
                          1,170,724
                          
                          
                          $
                          867,510





See notes
to consolidated financial statements


F-3


SUNWAY
GLOBAL INC.





CONSOLIDATED
BALANCE SHEETS (Continued)


AS
AT DECEMBER 31, 2007 AND 2006


(Stated
in US Dollars)





Notes
                    
                    
                    2007
                    
                    
                    2006Restated
                    
                    
                    RestatedSTOCKHOLDERS’
      EQUITYSeries
      A Convertible Preferred Stock $0.0000001 par value; 400,000 shares
      authorized; 228,531 shares issued and outstanding at Dec 31, 2007 and
      2006
                    
                    
                    
                    
                    $
                    1
                    
                    
                    $
                    1Series
      B Convertible Preferred Stock $0.0000001 par value; 400,000 shares
      authorized; 165,432 shares issued and outstanding at Dec 31, 2007 and
      2006
                    
                    16
                    
                    
                    
                    1
                    
                    
                    
                    1Common
      stock at $0.0000001 par value; 100,000,000 shares authorized; 223,658
      shares issued and outstanding at Dec 31, 2007 and 2006
                    
                    
                    
                    
                    
                    1
                    
                    
                    
                    1Additional
      paid-in capital
                    
                    
                    
                    
                    
                    11,244,325
                    
                    
                    
                    4,223,632Statutory
      reserves
                    
                    
                    
                    
                    
                    2,127,978
                    
                    
                    
                    1,124,073Retained
      earnings
                    
                    
                    
                    
                    
                    8,043,920
                    
                    
                    
                    4,844,680Accumulated
      other comprehensive incomeUnrealised
      gain on investment
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    423,537Foreign
      currency translation
                    
                    
                    
                    
                    
                    1,180,288
                    
                    
                    
                    419,668$
                    22,596,514
                    
                    
                    $
                    11,035,593TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                    
                    
                    
                    
                    $
                    23,767,238
                    
                    
                    $
                    11,903,103





See notes
to consolidated financial statements


F-4


SUNWAY
GLOBAL INC.





CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME


FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006


(Stated
in US Dollars)





2007
                                      
                                      
                                      2006Notes
                                      
                                      
                                      Restated
                                      
                                      
                                      RestatedNet
      revenues
                                      
                                      21
                                      
                                      
                                      $
                                      11,865,138
                                      
                                      
                                      $
                                      8,914,139Cost
      of net revenues
                                      
                                      21
                                      
                                      
                                      
                                      (3,473,411
                                      )
                                      
                                      
                                      (2,386,996
                                      )Gross
      profit
                                      
                                      
                                      
                                      
                                      $
                                      8,391,727
                                      
                                      
                                      $
                                      6,527,143Selling
      expenses
                                      
                                      
                                      
                                      
                                      
                                      (234,792
                                      )
                                      
                                      
                                      (238,212
                                      )General
      and administrative expenses
                                      
                                      
                                      
                                      
                                      
                                      (2,327,207
                                      )
                                      
                                      
                                      (1,463,418
                                      )Operating
      income
                                      
                                      
                                      
                                      
                                      $
                                      5,829,728
                                      
                                      
                                      $
                                      4,825,513Interest
      income/(expenses), net
                                      
                                      18
                                      
                                      
                                      
                                      51,852
                                      
                                      
                                      
                                      (5,175
                                      )Gain
      on disposal of investments
                                      
                                      4
                                      
                                      
                                      
                                      1,346,989
                                      
                                      
                                      
                                      -Income before
      income taxes
                                      
                                      
                                      
                                      
                                      $
                                      7,228,569
                                      
                                      
                                      $
                                      4,820,338Income
      taxes
                                      
                                      19
                                      
                                      
                                      
                                      (1,181,064
                                      )
                                      
                                      
                                      (790,785
                                      )Net
      income
                                      
                                      
                                      
                                      
                                      $
                                      6,047,505
                                      
                                      
                                      $
                                      4,029,553Foreign
      currency translation
                                      
                                      
                                      
                                      
                                      
                                      760,620
                                      
                                      
                                      
                                      290,692Unrealized
      gain on investments
                                      
                                      
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      423,537Reclassification
      adjustment
                                      
                                      
                                      
                                      
                                      
                                      (423,537
                                      )
                                      
                                      
                                      -Comprehensive
      income
                                      
                                      
                                      
                                      
                                      $
                                      6,384,588
                                      
                                      
                                      $
                                      4,743,782Net
      income per share:-Basic
                                      
                                      17
                                      
                                      
                                      $
                                      18.79
                                      
                                      
                                      $
                                      18.02-Diluted
                                      
                                      17
                                      
                                      
                                      $
                                      0.28
                                      
                                      
                                      $
                                      18.02Weighted
      average number of common stock-Basic
                                      
                                      17
                                      
                                      
                                      
                                      223,658
                                      
                                      
                                      
                                      223,658-Diluted
                                      
                                      17
                                      
                                      
                                      
                                      14,814,958
                                      
                                      
                                      
                                      223,658





See notes
to consolidated financial statements


F-5


SUNWAY
GLOBAL INC.





CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY


FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006


(Stated
in US Dollars)





Additional
                        
                        
                        
                        
                        
                        
                        
                        
                        AccumulatedPreferred
                        
                        
                        Preferred
                        
                        
                        No.
                        
                        
                        
                        
                        
                        paid
                        
                        
                        
                        
                        
                        
                        
                        
                        otherSeries
                        
                        
                        Series
                        
                        
                        shares
                        
                        
                        Common
                        
                        
                        in
                        
                        
                        Statutory
                        
                        
                        Retained
                        
                        
                        comprehensiveA
                        
                        
                        B
                        
                        
                        outstanding
                        
                        
                        stock
                        
                        
                        capital
                        
                        
                        reserves
                        
                        
                        earnings
                        
                        
                        income
                        
                        
                        TotalBalance,
      January 1,2006
                        
                        $
                        1
                        
                        
                        $
                        1
                        
                        
                        
                        223,658
                        
                        
                        $
                        1
                        
                        
                        $
                        4,223,632
                        
                        
                        $
                        451,906
                        
                        
                        $
                        1,487,294
                        
                        
                        $
                        128,976
                        
                        
                        $
                        6,291,811Net
      income
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        4,029,553
                        
                        
                        
                        -
                        
                        
                        
                        4,029,553Appropriation
      to statutory reserves
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        672,167
                        
                        
                        
                        (672,167
                        )
                        
                        
                        -
                        
                        
                        
                        -Unrealized
      gain on investment
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        423,537
                        
                        
                        
                        423,537Foreign
      currency translation adjustment
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        290,692
                        
                        
                        
                        290,692Balance,
      December 31,2006
                        
                        $
                        1
                        
                        
                        $
                        1
                        
                        
                        
                        223,658
                        
                        
                        $
                        1
                        
                        
                        $
                        4,223,632
                        
                        
                        $
                        1,124,073
                        
                        
                        $
                        4,844,680
                        
                        
                        $
                        843,205
                        
                        
                        $
                        11,035,593Balance,
      January 1, 2007
                        
                        $
                        1
                        
                        
                        $
                        1
                        
                        
                        
                        223,658
                        
                        
                        $
                        1
                        
                        
                        $
                        4,223,632
                        
                        
                        $
                        1,124,073
                        
                        
                        $
                        4,844,680
                        
                        
                        $
                        843,205
                        
                        
                        $
                        11,035,593Reversal
      of realized gain on investment
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (423,537
                        )
                        
                        
                        (423,537
                        )Net
      income
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        6,047,505
                        
                        
                        
                        -
                        
                        
                        
                        6,047,505Appropriation
      to statutory reserves
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        1,003,905
                        
                        
                        
                        (1,003,905
                        )
                        
                        
                        -
                        
                        
                        
                        -Issuance
      to Vision re: Debentures
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        199,200
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        199,200Issuance
      of Series B Convertible Preferred Stock
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        6,821,493
                        
                        
                        
                        -
                        
                        
                        
                        (1,844,360
                        )
                        
                        
                        -
                        
                        
                        
                        4,977,133Foreign
      currency translation adjustment
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        760,620
                        
                        
                        
                        760,620Balance,
      December 31,2007
                        
                        $
                        1
                        
                        
                        $
                        1
                        
                        
                        
                        223,658
                        
                        
                        $
                        1
                        
                        
                        $
                        11,244,325
                        
                        
                        $
                        2,127,978
                        
                        
                        $
                        8,043,920
                        
                        
                        $
                        1,180,288
                        
                        
                        $
                        22,596,514





See notes
to consolidated financial statements


F-6


SUNWAY
GLOBAL INC.





CONSOLIDATED
STATEMENTS OF CASH FLOWS


FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006


(Stated
in US Dollars)





2007
                    
                    
                    2006Cash
      flows from operating activitiesNet
      income
                    
                    $
                    6,047,505
                    
                    
                    $
                    4,029,553Depreciation
                    
                    
                    1,186,203
                    
                    
                    
                    874,376Amortization
                    
                    
                    218,260
                    
                    
                    
                    24,745Profit
      on disposal of investments
                    
                    
                    (1,346,989
                    )
                    
                    
                    -Provision
      for bad debs
                    
                    
                    -
                    
                    
                    
                    2,891Loss
      on disposal of fixed assets
                    
                    
                    -
                    
                    
                    
                    58,186Adjustments
      to reconcile net income to net cash provided by operating
      activities:Trade
      receivables, net
                    
                    
                    42,054
                    
                    
                    
                    (578,245
                    )Inventories
                    
                    
                    (349,802
                    )
                    
                    
                    205,365Advances
      to suppliers
                    
                    
                    (975,910
                    )
                    
                    
                    48,209Prepayments
                    
                    
                    223,112
                    
                    
                    
                    (68,507
                    )Tender
      deposits
                    
                    
                    (81,747
                    )
                    
                    
                    (42,040
                    )Travel
      advances to shareholders
                    
                    
                    (21,764
                    )
                    
                    
                    (3,588
                    )Advances
      to employees
                    
                    
                    (470,106
                    )
                    
                    
                    (53,859
                    )Accounts
      payable
                    
                    
                    178,921
                    
                    
                    
                    (286,297
                    )Income
      tax payable
                    
                    
                    (104,819
                    )
                    
                    
                    154,564Turnover
      and other taxes
                    
                    
                    24,330
                    
                    
                    
                    50,234Expected
      warranty liabilities
                    
                    
                    29,737
                    
                    
                    
                    22,341Customers
      deposits
                    
                    
                    131,064
                    
                    
                    
                    (331,002
                    )Accrued
      liabilities
                    
                    
                    141,730
                    
                    
                    
                    66,702Other
      payables
                    
                    
                    31,362
                    
                    
                    
                    (12,247
                    )Net
      cash provided by operating activities
                    
                    $
                    4,903,141
                    
                    
                    $
                    4,161,381Cash
      flows from investing activitiesSale
      of plant and equipment
                    
                    $
                    -
                    
                    
                    $
                    48,359Restricted
      cash
                    
                    
                    (491,049
                    )
                    
                    
                    -Sale
      of short term investments
                    
                    
                    6,073,136
                    
                    
                    
                    -Advances
      to related company
                    
                    
                    (562,406
                    )
                    
                    
                    -Advances
      to a director
                    
                    
                    (988,757
                    )
                    
                    
                    (2,736
                    )Purchase
      of short term investments
                    
                    
                    (3,413,328
                    )
                    
                    
                    (1,301,195
                    )Purchase
      of plant and equipment
                    
                    
                    (619,627
                    )
                    
                    
                    (2,261,375
                    )Purchase
      of intangibles assets
                    
                    
                    (5,687,457
                    )
                    
                    
                    -Net
      cash used in investing activities
                    
                    $
                    (5,689,488
                    )
                    
                    $
                    (3,516,947
                    )Cash
      flows from financing activitiesProceeds
      from vision re: Debentures
                    
                    $
                    199,202
                    
                    
                    $
                    -Preference
      Stock
                    
                    
                    4,977,133
                    
                    
                    
                    -Bank
      borrowings
                    
                    
                    -
                    
                    
                    
                    375,851Bank
      loan repayments
                    
                    
                    (196,923
                    )
                    
                    
                    (451,021
                    )Net
      cash provided by/(used in) financing activities
                    
                    $
                    4,979,412
                    
                    
                    $
                    (75,170
                    )




F-7


SUNWAY
GLOBAL INC.





CONSOLIDATED
STATEMENTS OF CASH FLOWS (Continued)


FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006


(Stated
in US Dollars)





2007
                      
                      
                      2006Net
      in cash and cash equivalents sourced
                      
                      $
                      4,193,065
                      
                      
                      $
                      569,264Effect
      of foreign currency translation oncash and cash
      equivalents
                      
                      
                      (122,013
                      )
                      
                      
                      (8,541
                      )Cash
      and cash equivalents-beginning of year
                      
                      
                      1,749,048
                      
                      
                      
                      1,188,325Cash
      and cash equivalents-end of year
                      
                      $
                      5,820,100
                      
                      
                      $
                      1,749,048





2007
                      
                      2006Supplementary
      cash flow information:Tax
      paid
                      
                      $
                      1,117,678
                      
                      
                      $
                      965,229Interest
      received
                      
                      
                      61,983
                      
                      
                      
                      24,092Interest
      paid
                      
                      
                      9,442
                      
                      
                      
                      28,863





See notes
to consolidated financial statements


F-8


SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006


(Stated
in US Dollars)





1.
            ORGANIZATION AND PRINCIPAL
      ACTIVITIES





Sunway
Global Inc. (the “Company”) was incorporated in the state of Nevada on October
18, 1971. Prior to June 6, 2007 the company has only nominal operations and
assets.





On June
6, 2007, the Company executed a reverse-merger with Rise Elite International
Limited (“Rise Elite (BVI)”) by an exchange of shares whereby the Company issued
210,886 shares of the Company’s Series A Convertible Preferred Stock, par value
$0.0000001 per share in exchange for all shares in World Through Limited, a
British Virgin Islands corporation (“World Through (BVI)”).





World
Through (BVI) holds Sunway World Through Technology (Daqing) Co Ltd (“SWT” or
“WFOE”), which entered into a series of agreements with Daqing Sunway Technology
Co., Ltd (“Sunway”) including but not limited to management, loan, purchase
option, consignment, trademark licensing, non-competition, etc. As a result of
entering the abovementioned agreements, WFOE deems to control Sunway as a
Variable Interest Entity as required by FASB Interpretation No. 46 (revised
December 2003) Consolidated of Variable Interest Entities, an Interpretation of
ARB No. 51 since SWT was the primary beneficiary.





The
Company, through its subsidiaries and Sunway, (hereinafter, collectively
referred to as “the Group”), is now in the business of designing, manufacturing
and selling logistic transport systems and medicine dispensing systems and
equipment.





On
February 7, 2008, the Company changed its name from National Realty and
Mortgage, Inc. to Sunway Global Inc.





2.
            SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES





(a)
            Method of
      Accounting





The
Company maintains its general ledger and journals with the accrual method
accounting for financial reporting purposes. The financial statements and notes
are representations of management. Accounting policies adopted by the Company
conform to generally accepted accounting principles in the United States of
America and have been consistently applied in the presentation of financial
statements.


F-9


SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006


(Stated
in US Dollars)





2.
            SUMMARY OF
      SIGNIFICANT ACCOUNTING POLICIES (Continued)





(b)
            Principles of
      Consolidation





The
consolidated financial statements, which include the Company and its
subsidiaries, are complied in accordance with generally accepted accounting
principles in the United States of America. All significant inter-company
accounts and transactions have been eliminated. The consolidated financial
statements include 100% of assets, liabilities, and net income or loss of those
wholly-owned subsidiaries.





The
company owned the three subsidiaries since its reverse-merger on June 6, 2007.
Retroactively restated as of December 31, 2006, 2005, and 2004, the detailed
identities of the consolidating subsidiaries would have been as
follows:





Name of Company
                    
                    Place of incorporation
                    
                    Attributable interestWorld
      Through Ltd
                    
                    British
      Virgin Islands
                    
                    
                    100
                    %Sunway
      World Through Technology (Daqing) Co Ltd
                    
                    PRC
                    
                    
                    100
                    %*Daqing
      Sunway Technology Co Ltd
                    
                    PRC
                    
                    
                    100
                    %Note:
      Deemed variable interest entity





(c)
            Use of
      estimates





The
preparation of the financial statements in conformity with generally accepted
accounting principles in the United States of America requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Management makes these estimates using the best
information available at the time the estimates are made; however actual results
could differ materially from those estimates.





(d)
            Economic and political
      risks





The
Group’s operations are conducted in the PRC. Accordingly, the Company’s
business, financial condition and results of operations may be influenced by the
political, economic and legal environment in the PRC, and by the general state
of the PRC economy.





The
Group’s operations in the PRC are subject to special considerations and
significant risks not typically associated with companies in North America and
Western Europe. These include risks associated with, among others, the
political, economic and legal environment and foreign currency exchange. The
Group’s results may be adversely affected by changes in the political and social
conditions in the PRC, and by changes in governmental policies with respect to
laws and regulations, anti-inflationary measures, currency conversion,
remittances abroad, and rates and methods of taxation, among other
things.


F-10


SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006


(Stated
in US Dollars)





2.
            SUMMARY OF
      SIGNIFICANT ACCOUNTING POLICIES (Continued)





(e)
            Intangibles





Intangibles
are stated at cost less accumulated amortisation. Amortisation is provided over
the respective useful lives, using the straight-line method. Estimated useful
lives of the intangibles are as follows:





Land
      use rights
                47
      yearsTechnology-based
      design
                10
      years





(f)
            Accounting for software
      systems





The
Company adopts FASB No. 86 for accounting of software systems, in that all
expenditures incurred from start-up to completion of feasibility are expensed;
development costs, after the feasibility study through system completion, are
capitalized, and are depreciated over a useful life of three years. Expenditures
incurred after completion are expensed as repairs and maintenance.





(g)
            Property, plant and
      equipment





Plant and
equipment are carried at cost less accumulated depreciation. Depreciation is
provided over their estimated useful lives, using the straight-line method.
Estimated useful lives of the plant and equipment are as follows:





Buildings
              20
      yearsMachinery
      and equipment
              6
      yearsMolding
              10
      yearsComputer
      software
              3
      yearsOffice
      equipment and motor vehicles
              6 -
      10 years





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 statement
of income.





(h)
            Maintenance
      and repairs





The cost
of maintenance and repairs is charged to income as incurred, whereas significant
renewals and betterments are capitalized.





(i)
            Accounting
      for the impairment of long-lived
assets





The Group
periodically evaluates the carrying value of long-lived assets to be held and
used, including intangible assets subject to amortization, when events and
circumstances warrant such a review, pursuant to the guidelines established in
SFAS No. 144. The carrying value of a long-lived asset is considered impaired
when the anticipated undiscounted cash flow from such asset is separately
identifiable and is less than its carrying value. In that event, a loss is
recognised based on the amount by which the carrying value exceeds the fair
market value of the long-lived asset. Fair market value is determined primarily
using the anticipated cash flows discounted at a rate commensurate with the risk
involved. Losses on long-lived assets to be disposed of are determined in a
similar manner, except that fair market values are reduced for the cost to
dispose .





During
the reporting years, there was no impairment loss.


F-11


SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006


(Stated
in US Dollars)





2.
            SUMMARY OF
      SIGNIFICANT ACCOUNTING POLICIES (Continued)





(j)
            Inventories





Inventories
consist of finished goods and raw materials, and stated at the lower of cost or
market value. Substantially all inventory costs are determined using the
weighted average basis. Finished goods are comprised of direct materials, direct
labor and an appropriate proportion of overhead. The management regularly
evaluates the composition of its inventory to identify slow-moving and obsolete
inventories to determine if additional write-downs are required.





(k)
            Trade
      receivables





Trade
receivables are recognized and carried at the original invoice amount less
allowance for any uncollectible amounts. An allowance for doubtful accounts is
maintained for all customers based on a variety of factors, including the length
of time the receivables are past due, significant one-time events and historical
experience. Bad debts are written off as incurred. During the reporting years,
there were no bad debts.


Outstanding
accounts balances are reviewed individually for collectability. The Company do
not charge any interest income on trade receivables.  Accounts
balances are charged off against the allowance after all means of collection
have been exhausted and the potential for recovery is considered remote. To
date, the Company has not charged off any balances as it has yet to exhaust all
means of collection.





(l)
            Cash and cash
      equivalents





The
Company considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents. The Company maintains
bank accounts only in the PRC. The Company does not maintain any bank accounts
in the United States of America.





2007
                    
                    
                    2006Bank
      of Communications, Branch of DaqingCity
      Economic Zone
                    
                    $
                    5,398,866
                    
                    
                    $
                    1,630,320Daqing
      City Commercial Bank
                    
                    
                    72,690
                    
                    
                    
                    100,573HSBC
                    
                    
                    348,362
                    
                    
                    
                    -Cash
      on hand
                    
                    
                    182
                    
                    
                    
                    18,155$
                    5,820,100
                    
                    
                    $
                    1,749,048





(m)
            Restricted
      cash





Restricted
cash are pledged deposits in an escrow account for investor relations
purpose.





(n)
            Revenue
      recognition




Revenue
represents the invoiced value of goods sold recognized upon the delivery of
goods to customers. Revenue is recognized when all of the following criteria are
met:


-
            Persuasive evidence of an
      arrangement exists;


-
            Delivery has occurred or services
      have been rendered,


-
            The seller’s price to the buyer
      is fixed or determinable,
and;


-
            Collection is reasonably
      assured.


F-12


SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006


(Stated
in US Dollars)





2.
            SUMMARY OF
      SIGNIFICANT ACCOUNTING POLICIES (Continued)




(n)
            Revenue
      recognition(Continued)





Contract
revenues are recognized when the manufacturing and installation of the medical
equipments is completed.  Generally, the company receives total
contract sum from clients in 3 installments. Deposit of 30% is received from
client when the contract is signed.  Second payment of 30% is received
when the project commenced.  The final sum of the remaining portion is
received after the construction is completed within 4 months.





(o)
            Expected Warranty
      liabilities





The
Company warrants its products against defects in design, materials, and
workmanship generally for one year. A provision for estimated future costs
relating to warranty expense are recorded when products are shipped, and the
provision is based upon our own historical claim experience.





(p)
            Cost
      of sales





Cost of
sales consists primarily of material costs, employee compensation, depreciation
and related expenses, which are directly attributable to the production of
products. All inbound freight charges, purchasing and receiving costs,
inspection costs, warehousing costs, internal transfer costs, and the other
costs of distribution network are also included. Write-down of inventory to
lower of cost or market is also recorded in cost of revenues.





(q)
            Leases





The Group
did not have lease which met the criteria of capital lease. Leases which do not
qualify as capital lease are classified as operating lease. Operating lease
rental payment included in general and administrative expenses were nil and nil
for the years ended December 31, 2007 and 2006 respectively.





(r)
            Advertising





The Group
expensed all advertising costs as incurred. Advertising expenses included in
selling expenses were $72,835 and $212,504 for the years ended December 31, 2007
and 2006 respectively.





(s)
            Shipping
      and handling





All
shipping and handling are expensed as incurred. Shipping and handling expenses
included in selling expenses were $35,577 and $25,148 for the years ended
December 31, 2007 and 2006 respectively.





(t)
            Research
      and development





All
research and development costs are expensed as incurred. The research and
development costs included in general and administrative expenses were $175,567
and $289,838 for the years ended December 31, 2007 and 2006
respectively.





(u)
            Retirement
      benefits





Retirement
benefits in the form of contributions under defined contribution retirement
plans to the relevant authorities are charged to the statements of income as
incurred. The retirement benefit expenses included in general and administrative
expenses were $26,970 and $19,522 for the years ended December 31, 2007 and 2006
respectively.


F-13


SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006


(Stated
in US Dollars)





2.
            SUMMARY OF
      SIGNIFICANT ACCOUNTING POLICIES (Continued)





(v)
            Income
      taxes





The Group
accounts for income tax using an asset and liability approach and allows for
recognition of deferred tax benefits in future years. Under the asset and
liability approach, deferred taxes are provided for the net tax effects of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. A
valuation allowance is provided for deferred tax assets if it is more likely
than not these items will either expire before the Group is able to realize
their benefits, or that future realization is uncertain.





(w)
            Foreign
      currency translation





The
accompanying financial statements are presented in United States dollars. The
reporting currency of the Group is the U.S. dollar ($). SWT and Sunway use its
local currency, Renminbi (RMB), as its 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 end of period exchange
rates. Translation adjustments resulting from this process are included in
accumulated other comprehensive income in stockholders’ equity. Transaction
gains and losses that arise from exchange rate fluctuations from transactions
denominated in a currency other than the functional currency are included in the
results of operations as incurred.





The PRC
government imposes significant exchange restrictions on fund transfers out of
the PRC that are not related to business operations. These restrictions have not
had a material impact on the Group because it has not engaged in any significant
transactions that are subject to the restrictions.





The
exchange rates used to translate amounts in RMB into USD for the purposes of
preparing the consolidated financial statements were as follows:




2007
                  
                  
                  2006Year
      end RMB : USD exchange rate
                  
                  
                  7.31410
                  
                  
                  
                  7.81750Average
      yearly RMB : USD exchange rate
                  
                  
                  7.61720
                  
                  
                  
                  7.98189





The RMB
is not freely convertible into foreign currency and all foreign exchange
transactions must take place through authorized institutions. No representation
is made that the RMB amounts could have been, or could be, converted into USD at
the rates used in translation.





(x)
            Statutory
      reserves





As
stipulated by the PRC’s Company Law and as provided in the SWT, and Sunway’s
Articles of Association, SWT and Sunway’s net income after taxation can only be
distributed as dividends after appropriation has been made for the
following:





(i)
            Making up cumulative prior years’
      losses, if any;


(ii)
            Allocations to the “Statutory
      surplus reserve” of at least 10% of income after tax, as determined under
      PRC accounting rules and regulations, until the fund amounts to 50% of the
      Company's registered capital, which is restricted for set off against
      losses, expansion of production and operation or increase in registered
      capital;


(iii)
            Allocations of 5-10% of income
      after tax, as determined under PRC accounting rules and regulations, to
      the Company's “Statutory common welfare fund”, which is restricted for
      capital expenditure for the collective benefits of the Company's
      employees; and


(iv)
            Allocations to the discretionary
      surplus reserve, if approved in the shareholders’ general
      meeting.


F-14


SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006


(Stated
in US Dollars)





2.
            SUMMARY OF
      SIGNIFICANT ACCOUNTING POLICIES (Continued)





(y)
            Comprehensive
      income





Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, all
items that are required to be recognized under current accounting standards as
components of comprehensive income are required to be reported in a financial
statement that is presented with the same prominence as other financial
statements. The Group’s current component of other comprehensive income is the
foreign currency translation adjustment and the unrealised gain on investment
held for resale.





(z)
            Recent accounting
      pronouncements





In
September 2006, the FASB issued SFAS 157, Fair Value Measurements, which defines
fair value, establishes a framework for measuring fair value in generally
accepted accounting principles, and expands disclosures about fair value
measurements. SFAS 157 applies under other accounting pronouncements that
require or permit fair value measurements, where fair value is the relevant
measurement attribute. The standard does not require any new fair value
measurements. SFAS 157 is effective for financial statements issued for fiscal
year beginning after November 15, 2007, and interim periods within that fiscal
year. The Company is currently evaluating the impact of SFAS 157 on its
operation and financial conditions.





In
September 2006, the SEC issued SAB No. 108, which provides guidance on the
process of quantifying financial statement misstatements. In SAB No. 108, the
SEC staff establishes an approach that requires quantification of financial
statement errors, under both the iron-curtain and the roll-over methods, based
on the effects of the error on each of the Company’s financial statements and
the related financial statement disclosures. SAB No.108 is generally effective
for annual financial statements in the first fiscal year ending after November
15, 2006. The transition provisions of SAB No. 108 permit existing public
companies to record the cumulative effect in the first year ending after
November 15, 2006 by recording correcting adjustments to the carrying values of
assets and liabilities as of the beginning of that year with the offsetting
adjustment recorded to the opening balance of retained earnings. The Company
does not anticipate that the adoption of this standard will have a material
impact on these consolidated financial statements.





In
February 2007, FASB issued Statement of Financial Accounting Standards No.
(“SFAS”) 159, “The Fair Value Option for Financial Assets and Financial
Liabilities - Including an Amendment of FASB Statement No. 115” (“SFAS 159”).
SFAS 159 permits entities to choose to measure many financial instruments and
certain other items at fair value. Entities that elect the fair value option
will report unrealized gains and losses in earnings at each subsequent reporting
date. The fair value option may be elected on an instrument-by-instrument basis,
with a few exceptions. SFAS 159 also establishes presentation and disclosure
requirements to facilitate comparisons between entities that choose different
measurement attributes for similar assets and liabilities. The requirements of
SFAS 159 are effective for our fiscal year beginning on January 1,
2008.


The
Company does not anticipate that the adoption of this standard will have a
material impact on these consolidated financial statements.


F-15


SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006


(Stated
in US Dollars)





2.
            SUMMARY OF
      SIGNIFICANT ACCOUNTING POLICIES (Continued)





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





In
December 2007, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard (“SFAS”) No. 160, "Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51”. SFAS 160
establishes accounting and reporting standards for the noncontrolling interest
in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is
effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008. As such, the Company is required to
adopt these provisions at the beginning of the fiscal year ended December 31,
2009. The Company is currently evaluating the impact of SFAS 160 on its
consolidated financial statements but does not expect it to have a material
effect.





In
December 2007, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard (“SFAS”) No. 141(R), "Business Combinations”. SFAS
141(R) establishes principles and requirements for how the acquirer recognizes
and measures in its financial statements the identifiable assets acquired, the
liabilities assumed, an any noncontrolling interest in the acquiree, recognizes
and measures the goodwill acquired in the business combination or a gain from a
bargain purchase, and determines what information to disclose to enable users of
the financial statements to evaluate the nature and financial effects of the
business combination. SFAS 141(R) is effective for fiscal years, and interim
periods within those fiscal years, beginning on or after December 15, 2008. As
such, the Company is required to adopt these provisions at the beginning of the
fiscal year ended December 31, 2009. The Company is currently evaluating the
impact of SFAS 141(R) on its consolidated financial statements but does not
expect it to have a material effect.


F-16


SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006


(Stated
in US Dollars)





3.
            CONCENTRATIONS OF CREDIT RISK AND
      MAJOR CUSTOMERS





Financial
instruments which potentially expose the Group to concentrations of credit risk,
consists of cash and trade receivables as of December 31, 2007 and 2006. The
Group performs ongoing evaluations of its cash position and credit evaluations
to ensure collections and minimize losses.





As of
December 31, 2007 and 2006, the Group’s bank deposits were all placed with banks
in the PRC where there is currently no rule or regulation in place for
obligatory insurance of bank accounts.





For the
years ended December 31, 2007 and 2006, all of the Group’s sales were generated
from the PRC. In addition, all trade receivables as of December 31, 2007 and
2006 also arose in the PRC.





The
maximum amount of loss due to credit risk that the Group would incur if the
counter parties to the financial instruments failed to perform is represented
the carrying amount of each financial asset in the balance sheet.





Normally
the Group does not obtain collateral from customers or debtors.





Details
of the customers accounting for 10% or more of the Group’s revenue are as
follows:





2007
                  
                  
                  2006Customer
      A
                  
                  $
                  1,323,321
                  
                  
                  $
                  -Customer
      B
                  
                  
                  1,295,752
                  
                  
                  
                  1,451,893Customer
      C
                  
                  
                  -
                  
                  
                  
                  1,123,550Customer
      D
                  
                  
                  -
                  
                  
                  
                  1,051,725Customer
      E
                  
                  
                  -
                  
                  
                  
                  959,378Customer
      F
                  
                  
                  -
                  
                  
                  
                  897,814





Details
of customers accounting for 10% or more of the Group’s trade receivables are as
follows:





2007
                  
                  
                  2006Customer
      A
                  
                  $
                  275,851
                  
                  
                  $
                  -Customer
      B
                  
                  
                  269,861
                  
                  
                  
                  -Customer
      F
                  
                  
                  -
                  
                  
                  
                  163,436Customer
      G
                  
                  
                  235,149
                  
                  
                  
                  -Customer
      H
                  
                  
                  221,510
                  
                  
                  
                  -Customer
      I
                  
                  
                  159,005
                  
                  
                  
                  -Customer
      J
                  
                  
                  146,688
                  
                  
                  
                  -Customer
      K
                  
                  
                  -
                  
                  
                  
                  148,766Customer
      L
                  
                  
                  -
                  
                  
                  
                  140,684





F-17


SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006


(Stated
in US Dollars)





4.
            SHORT TERM
      INVESTMENTS





On
October 22, 2006, the Company invested in Bank of Communication Growth Fund
(PRC) at a cost of $1,279,181 (RMB 10,000,000). The market value of this
investment increased to $1,702,718 (RMB 13,311,000) as of December 31,
2006.





As at
December 31, 2006, the appreciation in value of $423,537 (RMB3,311,000) was
recorded as “unrealized investment gain” and included in the stockholders’
equity.





As at
July 15, 2007, the Group disposed of the investments and realized a gain of
$1,316,888 (RMB10,031,000).





On July
12, 2007, the Company invested in Bank of Communications Schroders Monetary
Investment Fund (PRC) at a cost of $3,413,328 (RMB 26,000,000). As at October
31, 2007, the Group disposed of the investments and realized a gain of $30,101
(RMB229,287).





5.
            AMOUNT DUE FROM A RELATED
      COMPANY





Amount
due from Beijing Sunway New-force Medical Treatment Tech Co., Ltd (Beijing
Sunway), a related company where Mr Liang Deli, the director of the Group is a
shareholder. The amount is unsecured, interest free and repayable on demand. The
amount is held by Beijing Sunway for the proposed development of representative
offices in Beijing, Hang Zhou, Xi’an & Shanghai. This arrangement would be a
better working capital arrangement.





6.
            AMOUNT DUE FROM A
      DIRECTOR





Amount
due from Liu Bo, the director of the company is unsecured, interest free and
repayable on demand.  The amount is held for the proposed development
of representative offices in Beijing, Hang Zhou, Xi’an & Shanghai. This
arrangement would be a better working capital arrangement.


F-18


SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006


(Stated
in US Dollars)





7.
            TRADE RECEIVABLES,
      NET





2007
                    
                    
                    2006Trade
      receivables, gross
                    
                    $
                    1,533,085
                    
                    
                    $
                    1,475,340Provision
      for doubtful debts
                    
                    
                    (7,884
                    )
                    
                    
                    (7,377
                    )$
                    1,525,201
                    
                    
                    $
                    1,467,963




All of
the above trade receivables are due within one year of aging.





An
analysis of the allowance for doubtful accounts for the years ended December 31,
2007 and 2006 is as follows:




2007
                    
                    
                    2006Balance
      at beginning of year
                    
                    $
                    7,377
                    
                    
                    $
                    4,284Addition
      of the provision
                    
                    
                    -
                    
                    
                    
                    2,891Foreign
      exchange adjustment
                    
                    
                    507
                    
                    
                    
                    202Balance
      at end of year
                    
                    $
                    7,884
                    
                    
                    $
                    7,377





Allowance
was made when collection of the full amount is no longer probable. Management
reviews and adjusts this allowance periodically based on historical experience,
current economic climate as well as its evaluation of the collectability of
outstanding accounts. The Group evaluates the credit risks of its customers
utilizing historical data and estimates of future performance.





8.
            TRAVEL ADVANCES TO
      SHAREHOLDERS





Travel
advances were made to certain shareholders. These shareholders are also the
management of the Company, and these advances are used to enable their execution
of operational duties such as marketing and sales promotion. The following table
provides the details of the outstanding accounts.




2007
                    
                    
                    2006Bo
      Liu
                    
                    $
                    4,244
                    
                    
                    $
                    2,794Qichai
      Zhao
                    
                    
                    700
                    
                    
                    
                    655Deli
      Liang
                    
                    
                    6,568
                    
                    
                    
                    -Weishan
      Sun
                    
                    
                    19,312
                    
                    
                    
                    3,008$
                    30,824
                    
                    
                    $
                    6,457




9.
            ADVANCES TO
      EMPLOYEES





Advances
to employees are advances for purchases and traveling. They are unsecured,
interest free and repayable on demand.


F-19


SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006


(Stated
in US Dollars)





10.
            INVENTORIES





Inventories
comprise the followings:


2007
                    
                    2006Finished
      goods
                    
                    $
                    161,005
                    
                    
                    $
                    200,852Raw
      materials
                    
                    
                    605,928
                    
                    
                    
                    175,856$
                    766,933
                    
                    
                    $
                    376,708





11.
            PROPERTY, PLANT AND EQUIPMENT,
      NET





Property,
plant and equipment comprise the followings:





2007
                            
                            
                            2006At
      costBuilding
                            
                            $
                            1,356,392
                            
                            
                            $
                            1,269,048Machinery
      and equipment
                            
                            
                            1,022,960
                            
                            
                            
                            902,789Moldings
                            
                            
                            2,992,166
                            
                            
                            
                            2,679,885Computer
      software
                            
                            
                            1,942,823
                            
                            
                            
                            1,407,099Office
      equipment andmotor vehicles
                            
                            
                            80,439
                            
                            
                            
                            56,029$
                            7,394,780
                            
                            
                            $
                            6,314,850Less:
      accumulated depreciation
                            
                            
                            (2,945,161
                            )
                            
                            
                            (1,599,700
                            )$
                            4,449,619
                            
                            
                            $
                            4,715,150





Depreciation
expense is included in the statement of income as follows:





2007
                        
                        
                        2006Cost
      of sales
                        
                        $
                        598,077
                        
                        
                        $
                        233,573General
      and administrative expenses
                        
                        
                        588,126
                        
                        
                        
                        640,803$
                        1,186,203
                        
                        
                        $
                        874,376




F-20


SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006
 (Stated
in US Dollars)
  12.
              INTANGIBLES
 
 Intangible
assets are as follows:
 2007
                                
                                
                                2006Land
      use rights, at cost
                                
                                $
                                1,269,151
                                
                                
                                $
                                1,187,426Less:
      accumulated amortization
                                
                                
                                (58,508
                                )
                                
                                
                                (29,476
                                )$
                                1,210,643
                                
                                
                                $
                                1,157,950Technology-based
      design , at cost
                                
                                $
                                5,923,149
                                
                                
                                $
                                -Less:
      accumulated amortization
                                
                                
                                (200,301
                                )
                                
                                
                                -$
                                5,722,848
                                
                                
                                $
                                -$
                                6,933,491
                                
                                
                                $
                                1,157,950
 
 Patent of
the Pneumatic Tube System has been registered with the PRC government under
Serial No. 264-2004 2005 with a registration fee of $347 (RMB 2,800) which was
expensed in 2003. This amount was immaterial for capitalization.
 
 The Group
acquired the rights to use a parcel of land totaling 26,522 square meters, for a
consideration of $1,149,788 (RMB 9,282,700), located at Daqing Hi-Tech Industry
Development Zone, Daqing, Heilongjiang in the People’s Republic of China 163316
for a term of 46 years from September 16, 2005 to June 13, 2052. The land has
been used to build the Group’s facility.
 
 Amortization
expense included in the general and administrative expenses for the years ended
2007 and 2006 were $218,260 and $24,745 respectively.
 
 13.
              SHORT TERM BANK
      LOANS
 
 The Group
was granted a loan of $383,754 (RMB 3,000,000) on April 28, 2006 for a term from
April 28, 2006 to November 30, 2007 at an interest rate of 5.76% per annum to be
secured by a mortgage of the Group’s real property being the office facility as
registered under property permit reference number NA216750.
 
 The loan
agreement stipulated a repayment of $191,877 (RMB 1,500,000) on December 21,
2006; therefore, the loan balance outstanding at December 31, 2006 amounted to
$191,877 (RMB 1,500,000).
  F-21
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006
 (Stated
in US Dollars)
 
 14.
              EXPECTED WARRANTY
      LIABILITIES
 
 An
analysis of the expected warranty liabilities for the years ended December 31,
2007 and 2006 is as follows:
  2007
                              
                              
                              2006Balance
      at beginning of year
                              
                              $
                              22,811
                              
                              
                              $
                              -Addition
      of warranty liabilities
                              
                              
                              55,918
                              
                              
                              
                              22,811Warranty
      expense for the year
                              
                              
                              (23,378
                              )
                              
                              
                              -Balance
      at end of year
                              
                              $
                              55,351
                              
                              
                              $
                              22,811
 
 15.
              COMMITMENTS AND
      CONTINGENCIES
 
 The Group
has entered into a tenancy agreement for factory expiring through 2008. Total
rental expenses for the year ended December 31, 2007 and 2006 amounted to
$14,016 and nil respectively.
 
 As at
December 31, 2007, the Group’s commitments for minimum lease payments under
these leases for the next one year and thereafter are as follows:
  December
      31, 2008
                                      
                                      $
                                      8,466$
                                      8,466
  F-22
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006
 (Stated
in US Dollars)
 
 16.
              SERIES B CONVERTIBLE PREFERRED
      STOCK AND ASSOCIATED
WARRANTS
  On June
5, 2007, the Company entered into a purchase agreement, whereby the company
agreed to sell 165,432 shares of the Company’s Series B Preferred shares and
various stock purchase warrants to purchase up to 18,686,054 shares of the
Company’s common shares. The exercise price, expiration date and number of share
eligible to be purchased with the warrants is summary in the following
table:
  Investment
                                                              Amount
                                                            
                                                            
                                                            Preferred
      B
                                                            
                                                            
                                                            A
      Warrant
                                                            
                                                            
                                                            B
      Warrant
                                                            
                                                            
                                                            J
      Warrant
                                                            
                                                            
                                                            C
      Warrant
                                                            
                                                            
                                                            D
      WarrantVision
      Opportunity
                                                              Master
      Fund, Ltd.
                                                            
                                                            
                                                            6,500,000
                                                            
                                                            
                                                            
                                                            160,494
                                                            
                                                            
                                                            
                                                            4,814,815
                                                            
                                                            
                                                            
                                                            2,407,407
                                                            
                                                            
                                                            
                                                            4,362,416
                                                            
                                                            
                                                            
                                                            4,362,416
                                                            
                                                            
                                                            
                                                            2,181,208Columbia
      China
                                                              Capital
      Group, Inc.
                                                            
                                                            
                                                            200,000
                                                            
                                                            
                                                            
                                                            4,938
                                                            
                                                            
                                                            
                                                            148,148
                                                            
                                                            
                                                            
                                                            74,074
                                                            
                                                            
                                                            
                                                            134,228
                                                            
                                                            
                                                            
                                                            134,228
                                                            
                                                            
                                                            
                                                            67,114
 
 Series of Warrant
                                
                                Number of shares
                                
                                
                                Exercise Price
                                
                                
                                Expiry DateSeries
      A
                                
                                
                                4,962,963
                                
                                
                                $
                                1.76
                                
                                
                                6
      /5 /2012Series
      B
                                
                                
                                2,481,481
                                
                                
                                
                                2.30
                                
                                
                                6
      /5 /2012Series
      J
                                
                                
                                4,496,644
                                
                                
                                
                                1.49
                                
                                
                                6
      /5 /2008Series
      C
                                
                                
                                4,496,644
                                
                                
                                
                                1.94
                                
                                
                                6
      /5 /2012Series
      D
                                
                                
                                2,248,322
                                
                                
                                
                                2.53
                                
                                
                                6
      /5
/2012
  On June
6, 2007, we issued to Kuhns Brothers, Inc. and its designees an aggregate of
17,646 shares of Series A Preferred and a Series J warrant to purchase an
aggregate of 496,296 shares of common stock of the Company at $1.62 per share in
connection with the reverse merger transaction pursuant to the placement agent
agreement with the Kuhns Brothers, Inc.
  The
Series B preferred stock has liquidation rights senior to common stock and
Series A preferred stock. In the event of a liquidation of the Company, holders
of Series B preferred stock are entitled to receive a distribution equal to
$40.50 per share of Series B preferred stock prior to any distribution to the
holders of common stock and Series A preferred stock. The Series B preferred
stock is entitled to non-cumulative dividends only upon declaration of dividends
by the Company. To date, no dividends have been declared or accrued. The Series
B preferred stock will participate based on their respective as-if conversion
rates if the Company declares any dividends. After the Amendment were filed
effect the Reverse Split, each share of Series B preferred stock would be
convertible into 30 shares of Common Stock for $1.35 each, which both may be
adjusted from time to time pursuant to the conversion rate. The holders of
Series B preferred stock shall be entitled to voting rights by applicable law
and the right to vote together with the holders of Common and Series A Preferred
Stock.
  F-23
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006
 (Stated
in US Dollars)
 
 16.
              SERIES B CONVERTIBLE PREFERRED
      STOCK AND ASSOCIATED WARRANTS
(continued)
 
 The gross
proceeds of the transaction were $6.7 million. The proceeds from the transaction
were allocated to the Series B preferred stock, warrants and beneficial
conversion feature based on the relative fair value of the securities. The value
of the Preferred Series B was determined by reference to the market price of the
common shares into which it converts, and the gross value of the warrants was
calculated using the Black -Scholes model with the following assumptions:
expected life of 1 year, volatility of 117% and an interest rate of
4.99%.
 
 The
Company recognized a beneficial conversion feature discount on the Series B
preferred stock at its intrinsic value, which was the fair value of the common
stock at the commitment date for the Series B preferred stock investment, less
the effective conversion price but limited to the $6.7 million of proceeds
received from the sale. The Company recognized the $6.7 million beneficial
conversion feature as an increase in paid in capital in the accompanying
consolidated balance sheets on the date of issuance of the Series B preferred
shares since the Series B preferred shares were convertible at the issuance
date.
 
 The
agreement, also provided that if a Registration Statement is not effective
within a certain period of time or the common shares are not listed on the
NASDAQ or American exchange by December 31, 2008, the Company will pay the
holders of the shares a penalty that can range from $67,000 to $670,000 and
certain principal shareholders would issue up to 1,000,000 additional shares to
the purchasers of the Preferred Series B shares. The company is accounting for
these penalties in accordance with FAS 5 - Accounting for Contingencies, whereby
the penalty will not be recorded as a liability until and if it is probable the
penalty will be incurred. No penalty has been recorded in the accompanying
financial statements for this contingency.
 
 17.
              EARNINGS PER
      SHARE
 
 The
calculation of the basic and diluted earnings per share attributable to the
common stock holders is based on the following data:
 Earnings:
                                  
                                  2007
                                  
                                  
                                  2006(Restated)Net
      profit for the year
                                  
                                  $
                                  6,047,505
                                  
                                  
                                  $
                                  4,029,553Beneficial
      conversion feature of convertible preferred stock
                                  
                                  
                                  (1,844,360
                                  )
                                  
                                  
                                  -Earnings
      for the purpose of basic earnings per share
                                  
                                  
                                  4,203,145
                                  
                                  
                                  
                                  4,029,553Effect
      of dilutive potential common stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Earnings
      for the purpose of basic earnings per share
                                  
                                  $
                                  4,203,145
                                  
                                  
                                  $
                                  4,029,553Number
      of shares:Weighted
      average number of common stock for the purpose of basic earnings per
      share
                                  
                                  
                                  223,658
                                  
                                  
                                  
                                  223,658Effect
      of dilutive potential common stock-
      conversion of Series Aconvertible
      preferred stock
                                  
                                  
                                  9,628,340
                                  
                                  
                                  
                                  --
      conversion of Series Bconvertible
      preferred stock
                                  
                                  
                                  4,962,960
                                  
                                  
                                  
                                  -Weighted
      average number of common stock for the purpose of dilutive earnings per
      share
                                  
                                  
                                  14,814,958
                                  
                                  
                                  
                                  223,658
  F-24
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006
 (Stated
in US Dollars)
 
 18.
              INTEREST INCOME/(EXPENSES),
      NET
 
 Interest
income/(expenses), net for the years ended December 31, 2007 and 2006 are as
follows:
 
 2007
                                    
                                    
                                    2006Interests
      on bank borrowings
                                    
                                    $
                                    (9,442
                                    )
                                    
                                    $
                                    (28,863
                                    )Bank
      charges
                                    
                                    
                                    (689
                                    )
                                    
                                    
                                    (404
                                    )Bank
      deposit interest income
                                    
                                    
                                    61,983
                                    
                                    
                                    
                                    24,092$
                                    51,852
                                    
                                    
                                    $
                                    (5,175
                                    )
 
 19.
              INCOME
    TAXES
 
 The
Company is registered in the State of Nevada whereas its subsidiary, WTL being
incorporated in the British Virgin Islands is not subject to any income tax and
conducts all of its business through its PRC subsidiary, SWT and Sunway (see
note 1).
 
 SWT and
Sunway, being registered in the PRC, are subject to PRC’s Enterprise Income Tax.
Pursuant to the PRC Income Tax Laws, Enterprise Income Taxes (“EIT”) is
generally imposed at a statutory rate of 33%, which comprises 30% national
income tax and 3% local income tax.
 
 However,
Sunway is a high technology company, and in accordance with the relevant
regulations regarding the favorable tax treatment for high technology companies,
Sunway is entitled to a reduced tax rate of 15% as long as Sunway located and
registered in the high and advance technology development zone.
 
 A
reconciliation between the income tax computed at the U.S. statutory rate and
the Group’s provision for income tax is as follows:
 
 2007
                              
                              
                              2006U.S.
      statutory rate
                              
                              
                              34
                              %
                              
                              
                              34
                              %Foreign
      income not recognized in the U.S.
                              
                              
                              (34
                              )%
                              
                              
                              (34
                              )%PRC
      Enterprise Income Tax
                              
                              
                              33
                              %
                              
                              
                              33
                              %Tax
      holiday
                              
                              
                              (18
                              )%
                              
                              
                              (18
                              )%Provision
      for income tax
                              
                              
                              15
                              %
                              
                              
                              15
                              %
 
 20.
              FAIR VALUE OF FINANCIAL
      INSTRUMENTS
 
 The fair
value of a financial instrument is the amount at which the instrument could be
exchanged in a current transaction between willing parties. The carrying amounts
of financial assets and liabilities, such as cash and cash equivalents, trade
accounts receivable, other receivables, accounts payable, and other payables,
approximate their fair values because of the short maturity of these instruments
and the availability of the market rates of interest.
  F-25
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006
 (Stated
in US Dollars)
 
 21.
              SEGMENT
      INFORMATION
 
 The Group
currently is engaged in the manufacturing and selling of logistic transport
systems. The Group has contracted with customers with two types of product
altogether, workstation type A and workstation type B. These two types of
workstation are of the same function but with different product
design.
 
 Net
revenues and cost of revenues by product:
 
 2007
                      
                      Workstation
                      
                      
                      WorkstationType A
                      
                      
                      Type B
                      
                      
                      ConsolidatedNet
      revenues
                      
                      $
                      4,221,531
                      
                      
                      $
                      7,643,607
                      
                      
                      $
                      11,865,138Cost
      of net revenues
                      
                      
                      (1,229,000
                      )
                      
                      
                      (2,244,411
                      )
                      
                      
                      (3,473,411
                      )$
                      2,992,531
                      
                      
                      $
                      5,399,196
                      
                      
                      $
                      8,391,727
 
 2006
                                  
                                  Workstation
                                  
                                  
                                  WorkstationType A
                                  
                                  
                                  Type B
                                  
                                  
                                  ConsolidatedNet
      revenues
                                  
                                  $
                                  6,149,169
                                  
                                  
                                  $
                                  2,764,970
                                  
                                  
                                  $
                                  8,914,139Cost
      of net revenues
                                  
                                  
                                  (1,666,407
                                  )
                                  
                                  
                                  (720,589
                                  )
                                  
                                  
                                  (2,386,996
                                  )$
                                  4,482,762
                                  
                                  
                                  $
                                  2,044,381
                                  
                                  
                                  $
                                  6,527,143
 
 The
Group’s operations are located in the PRC. All revenue is from customers in the
PRC. All of the Group’s assets are located in the PRC. Sales of workstations are
carried out in the PRC. Accordingly, no analysis of the Group's sales and assets
by geographical market is presented.
 
 22.
              RESTATEMENTS
 
 During
the course of internal evaluation, our accounting staff found misstatements in
our previously reported financial statements for the fiscal years ended December
31, 2006 that required correction relating to: (1) the improper use of exchange
rates of shareholders’ equity items and incorrect par value of the Series A and
B Convertible Preferred Stock and common stock recorded. Specifically, the
Series A and B Convertible Preferred Stock was overstated by $245 and
understated by $1 respectively, common stock was overstated by $223, additional
paid-in capital was overstated by $253,033, statutory reserves were overstated
by $37,309, retained profits were overstated by $128,861 and accumulated other
comprehensive income were understated by $410,498 and (2) other misstatements
identified, which were individually not material, including amounts related to
cash and cash equivalents ,travel advances to directors, income tax payables,
other payables, general and administrative expenses and interest expenses
items.  The impacts have made the changes in figures as of December 31,
2006 by a decrease of $8,340 and $831 of cash and cash equivalents and travel
advances to shareholders respectively, a decrease of $1 of income tax payable,
an increase of $2 of other payables and a decrease of $38,596 and $29,425 of net
income and foreign currency translation respectively.
 
 In
addition, there was a correction for the basic and diluted weighted average
number of common stock from 223,653 to 223,658 for the year ended December 31,
2006.
 
 There
were misstatements in 2007 due to the improper use of exchange rate of
shareholders’ equity items and incorrect par value of the Series A and B
Convertible Preferred Stock and common stock recorded. Specifically, the Series
A and B Convertible Preferred Stock were overstated by $245 and $164
respectively, common stock was overstated by $223, additional paid-in capital
was overstated by $252,868, statutory reserves were overstated by $37,309,
retained earnings were overstated by $128,861, and the accumulated other
comprehensive income and foreign currency translation understated by $419,670
and $47,296 respectively for the year ended December 31, 2007.
 
 Moreover,
during the course of internal evaluation, there was a reclassification of
restricted cash $491,049 from current asset to non current asset and there was a
correction for the basic and diluted weighted average number of common stock
from 223,653 to 223,658 and from 14,814,953 to 14,814,958 respectively for the
year ended December 31, 2007.
 
 In addition, during the
course of internal evaluation, management identified an improper classification
of additional paid in capital items for the year ended December 31, 2007;
overstated additional paid-in capital was adjusted down by $4,855,640, and
understated retained earnings were adjusted up by $4,855,640. The earnings for
the purpose of basic earnings per share also changed owing to the reduction of
1,844,360 as complied to ASC 470-20-35-7 (c) The basic and diluted earnings per
share are changed accordingly.
  F-26
  SUNWAY
GLOBAL INC.
 
 BALANCE
SHEETS
 
 ITEMS
                                  
                                  Original
                                  
                                  
                                  RestatedDecember 31,2007
                                  
                                  
                                  2007ASSETSCurrent
      assetsCash
      and cash equivalents
                                  
                                  $
                                  5,820,100
                                  
                                  
                                  $
                                  5,820,100Restricted
      cash
                                  
                                  
                                  491,049
                                  
                                  
                                  
                                  -Short
      term investments
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Trade
      receivables, net
                                  
                                  
                                  1,525,201
                                  
                                  
                                  
                                  1,525,201Inventories
                                  
                                  
                                  766,933
                                  
                                  
                                  
                                  766,933Advances
      to suppliers
                                  
                                  
                                  1,331,159
                                  
                                  
                                  
                                  1,331,159Prepayments
                                  
                                  
                                  125,333
                                  
                                  
                                  
                                  125,333Tender
      deposits
                                  
                                  
                                  131,013
                                  
                                  
                                  
                                  131,013Travel
      advances to shareholders
                                  
                                  
                                  30,824
                                  
                                  
                                  
                                  30,824Advances
      to employees
                                  
                                  
                                  548,364
                                  
                                  
                                  
                                  548,364Total
      current assets
                                  
                                  $
                                  10,769,976
                                  
                                  
                                  $
                                  10,278,927Restricted
      cash
                                  
                                  
                                  -
                                  
                                  
                                  
                                  491,049Amount
      due from a related company
                                  
                                  
                                  585,678
                                  
                                  
                                  
                                  585,678Amount
      due from a director
                                  
                                  
                                  1,028,474
                                  
                                  
                                  
                                  1,028,474Property,
      plant and equipment, net
                                  
                                  
                                  4,449,619
                                  
                                  
                                  
                                  4,449,619Intangibles,
      net
                                  
                                  
                                  6,933,491
                                  
                                  
                                  
                                  6,933,491TOTAL
      ASSETS
                                  
                                  $
                                  23,767,238
                                  
                                  
                                  $
                                  23,767,238LIABILITIES AND STOCKHOLDERS’
      EQUITYCurrent
      liabilitiesShort
      term bank loans
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -Accounts
      payable
                                  
                                  
                                  245,917
                                  
                                  
                                  
                                  245,917Income
      tax payable
                                  
                                  
                                  157,877
                                  
                                  
                                  
                                  157,877Turnover
      and other taxes
                                  
                                  
                                  143,857
                                  
                                  
                                  
                                  143,857Expected
      warranty liabilities
                                  
                                  
                                  55,351
                                  
                                  
                                  
                                  55,351Customers
      deposits
                                  
                                  
                                  208,274
                                  
                                  
                                  
                                  208,274Accrued
      liabilities
                                  
                                  
                                  323,464
                                  
                                  
                                  
                                  323,464Other
      payables
                                  
                                  
                                  35,984
                                  
                                  
                                  
                                  35,984Total
      current liabilities
                                  
                                  $
                                  1,170,724
                                  
                                  
                                  $
                                  1,170,724TOTAL
      LIABILITIES
                                  
                                  $
                                  1,170,724
                                  
                                  
                                  $
                                  1,170,724
  F-27
  SUNWAY
GLOBAL INC.
 
 BALANCE
SHEETS (Continued)
 
 ITEMS
                                
                                Original
                                
                                
                                RestatedDecember 31,2007
                                
                                
                                2007STOCKHOLDERS’
      EQUITYSeries
      A Convertible Preferred Stock $0.0000001 par value; 400,000 shares
      authorized; 228,531 shares issued and outstanding at Dec 31, 2007 and
      2006
                                
                                $
                                246
                                
                                
                                $
                                1Series
      B Convertible Preferred Stock $0.0000001 par value; 400,000 shares
      authorized; 165,432 shares issued and outstanding at Dec 31, 2007 and
      2006
                                
                                
                                165
                                
                                
                                
                                1Common
      stock at $0.0000001 par value; 100,000,000 shares authorized; 223,658
      shares issued and outstanding at Dec 31, 2007 and 2006
                                
                                
                                224
                                
                                
                                
                                1Additional
      paid-in capital - Note 22(a)
                                
                                
                                16,352,833
                                
                                
                                
                                11,244,325Statutory
      reserves
                                
                                
                                2,165,287
                                
                                
                                
                                2,127,978Retained
      earnings - Note 22(a)
                                
                                
                                3,317,141
                                
                                
                                
                                8,043,920Accumulated
      other comprehensive incomeUnrealised
      gain on investment
                                
                                
                                -
                                
                                
                                
                                -Foreign
      currency translation
                                
                                
                                760,618
                                
                                
                                
                                1,180,288$
                                22,596,514
                                
                                
                                $
                                22,596,514TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                                
                                $
                                23,767,238
                                
                                
                                $
                                23,767,238
  F-28
  SUNWAY
GLOBAL INC.
 
 BALANCE
SHEETS
 
 ITEMS
                                  
                                  Original
                                  
                                  
                                  RestatedDecember 31,2006
                                  
                                  
                                  2006ASSETSCurrent
      assetsCash
      and cash equivalents
                                  
                                  $
                                  1,757,388
                                  
                                  
                                  $
                                  1,749,048Restricted
      cash
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Short
      term investments
                                  
                                  
                                  1,702,718
                                  
                                  
                                  
                                  1,702,718Trade
      receivables, net
                                  
                                  
                                  1,467,963
                                  
                                  
                                  
                                  1,467,963Inventories
                                  
                                  
                                  376,708
                                  
                                  
                                  
                                  376,708Advances
      to suppliers
                                  
                                  
                                  294,535
                                  
                                  
                                  
                                  294,535Prepayments
                                  
                                  
                                  334,658
                                  
                                  
                                  
                                  334,658Tender
      deposits
                                  
                                  
                                  42,924
                                  
                                  
                                  
                                  42,924Travel
      advances to shareholders
                                  
                                  
                                  7,288
                                  
                                  
                                  
                                  6,457Advances
      to employees
                                  
                                  
                                  54,992
                                  
                                  
                                  
                                  54,992Total
      current assets
                                  
                                  $
                                  6,039,174
                                  
                                  
                                  $
                                  6,030,003Amount
      due from a related company
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Amount
      due from a director
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Property,
      plant and equipment, net
                                  
                                  
                                  4,715,150
                                  
                                  
                                  
                                  4,715,150Intangibles,
      net
                                  
                                  
                                  1,157,950
                                  
                                  
                                  
                                  1,157,950TOTAL
      ASSETS
                                  
                                  $
                                  11,912,274
                                  
                                  
                                  $
                                  11,903,103LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilitiesShort
      term bank loans
                                  
                                  $
                                  191,877
                                  
                                  
                                  $
                                  191,877Accounts
      payable
                                  
                                  
                                  57,289
                                  
                                  
                                  
                                  57,289Income
      tax payable
                                  
                                  
                                  249,844
                                  
                                  
                                  
                                  249,843Turnover
      and other taxes
                                  
                                  
                                  110,886
                                  
                                  
                                  
                                  110,886Expected
      warranty liabilities
                                  
                                  
                                  22,811
                                  
                                  
                                  
                                  22,811Customers
      deposits
                                  
                                  
                                  67,157
                                  
                                  
                                  
                                  67,157Accrued
      liabilities
                                  
                                  
                                  164,537
                                  
                                  
                                  
                                  164,537Other
      payables
                                  
                                  
                                  3,108
                                  
                                  
                                  
                                  3,110Total
      current liabilities
                                  
                                  $
                                  867,509
                                  
                                  
                                  $
                                  867,510TOTAL
      LIABILITIES
                                  
                                  $
                                  867,509
                                  
                                  
                                  $
                                  867,510
  F-29
  SUNWAY
GLOBAL INC.
 
 BALANCE
SHEETS (Continued)
 
 ITEMS
                                      
                                      Original
                                      
                                      
                                      RestatedDecember 31,2006
                                      
                                      
                                      2006STOCKHOLDERS’
      EQUITYSeries
      A Convertible Preferred Stock $0.0000001 par value; 400,000 shares
      authorized; 228,351 shares issued and outstanding at Dec 31, 2007 and
      2006
                                      
                                      $
                                      246
                                      
                                      
                                      $
                                      1Series
      B Convertible Preferred Stock $0.0000001 par value; 400,000 shares
      authorized; 165,432 shares issued and outstanding at Dec 31, 2007 and
      2006
                                      
                                      
                                      -
                                      
                                      
                                      
                                      1Common
      stock at $0.0000001 par value; 100,000,000 shares authorized; 223,658
      shares issued and outstanding at Dec 31, 2007 and 2006
                                      
                                      
                                      224
                                      
                                      
                                      
                                      1Additional
      paid-in capital
                                      
                                      
                                      4,476,665
                                      
                                      
                                      
                                      4,223,632Statutory
      reserves
                                      
                                      
                                      1,161,382
                                      
                                      
                                      
                                      1,124,073Retained
      earnings
                                      
                                      
                                      4,973,541
                                      
                                      
                                      
                                      4,844,680Accumulated
      other comprehensive income
                                      
                                      
                                      432,707
                                      
                                      
                                      
                                      -Unrealised
      gain on investment
                                      
                                      
                                      -
                                      
                                      
                                      
                                      423,537Foreign
      currency translation
                                      
                                      
                                      -
                                      
                                      
                                      
                                      419,668$
                                      11,044,765
                                      
                                      
                                      $
                                      11,035,593TOTAL LIABILITIES AND
      STOCKHOLDERS’
      EQUITY
                                      
                                      $
                                      11,912,274
                                      
                                      
                                      $
                                      11,903,103
  F-30
  SUNWAY
GLOBAL INC.
 
 STATEMENTS
OF INCOME
 
 ITEMS
                                
                                Original
                                
                                
                                RestatedFor Year Ended December 31,2007
                                
                                
                                2007Net
      revenues
                                
                                $
                                11,865,138
                                
                                
                                $
                                11,865,138Cost
      of net revenues
                                
                                
                                (3,473,411
                                )
                                
                                
                                (3,473,411
                                )Gross
      profit
                                
                                $
                                8,391,727
                                
                                
                                $
                                8,391,727Selling
      expenses
                                
                                
                                (234,792
                                )
                                
                                
                                (234,792
                                )General
      and administrative expenses
                                
                                
                                (2,327,207
                                )
                                
                                
                                (2,327,207
                                )Operating
      income
                                
                                $
                                5,829,728
                                
                                
                                $
                                5,829,728Interest
      income/(expenses), net
                                
                                
                                51,852
                                
                                
                                
                                51,852Gain
      on disposal of investments
                                
                                
                                1,346,989
                                
                                
                                
                                1,346,989Income
      before income taxes
                                
                                $
                                7,228,569
                                
                                
                                $
                                7,228,569Income
      taxes
                                
                                
                                (1,181,064
                                )
                                
                                
                                (1,181,064
                                )Net
      income
                                
                                $
                                6,047,505
                                
                                
                                $
                                6,047,505Foreign
      currency translation
                                
                                
                                713,324
                                
                                
                                
                                760,620Unrealized
      gain on investments
                                
                                
                                -
                                
                                
                                
                                -Reclassification
      adjustment
                                
                                
                                (423,537
                                )
                                
                                
                                (423,537
                                )Comprehensive
      income
                                
                                $
                                6,337,292
                                
                                
                                $
                                6,384,588Net
      income per share:-Basic
                                
                                $
                                27.04
                                
                                
                                $
                                18.79-Diluted
                                
                                $
                                0.41
                                
                                
                                $
                                0.28Weighted
      average number of common stock-Basic
                                
                                
                                223,653
                                
                                
                                
                                223,658-Diluted
                                
                                
                                14,814,953
                                
                                
                                
                                14,814,958
  F-31
  SUNWAY
GLOBAL INC.
 
 STATEMENTS
OF INCOME
 
 ITEMS
                                
                                Original
                                
                                
                                RestatedFor Year Ended December31,2006
                                
                                
                                2006Net
      revenues
                                
                                $
                                8,914,139
                                
                                
                                $
                                8,914,139Cost
      of net revenues
                                
                                
                                (2,386,996
                                )
                                
                                
                                (2,386,996
                                )Gross
      profit
                                
                                $
                                6,527,143
                                
                                
                                $
                                6,527,143Selling
      expenses
                                
                                
                                (238,212
                                )
                                
                                
                                (238,212
                                )General
      and administrative expenses
                                
                                
                                (1,405,232
                                )
                                
                                
                                (1,463,418
                                )Operating
      income
                                
                                $
                                4,883,699
                                
                                
                                $
                                4,825,513Interest
      income/(expenses), net
                                
                                
                                33,421
                                
                                
                                
                                (5,175
                                )Loss
      on disposal of fixed assets
                                
                                
                                (58,186
                                )
                                
                                
                                -Income
      before income taxes
                                
                                $
                                4,858,934
                                
                                
                                $
                                4,820,338Income
      taxes
                                
                                
                                (790,785
                                )
                                
                                
                                (790,785
                                )Net
      income
                                
                                $
                                4,068,149
                                
                                
                                $
                                4,029,553Foreign
      currency translation
                                
                                
                                261,267
                                
                                
                                
                                290,692Unrealized
      gain on investments
                                
                                
                                423,537
                                
                                
                                
                                423,537Reclassification
      adjustment
                                
                                
                                -
                                
                                
                                
                                -Comprehensive
      income
                                
                                $
                                4,752,953
                                
                                
                                $
                                4,743,782Net
      income per share:-Basic
                                
                                $
                                18.19
                                
                                
                                $
                                18.02-Diluted
                                
                                $
                                18.19
                                
                                
                                $
                                18.02Weighted
      average number of common stock-Basic
                                
                                
                                223,653
                                
                                
                                
                                223,658-Diluted
                                
                                
                                223,653
                                
                                
                                
                                223,658
  F-32
  SUNWAY
GLOBAL INC.
 
 STATEMENT
OF CASH FLOWS
 
 ITEMS
                                                
                                                Original
                                                
                                                
                                                RestatedFor
      Year Ended December 31,2007
                                                
                                                
                                                2007Cash
      flows from operating activitiesNet
      income
                                                
                                                $
                                                6,047,505
                                                
                                                
                                                $
                                                6,047,505Depreciation
                                                
                                                
                                                1,186,203
                                                
                                                
                                                
                                                1,186,203Amortization
                                                
                                                
                                                218,260
                                                
                                                
                                                
                                                218,260Profit
      on disposal of investments
                                                
                                                
                                                (1,346,989
                                                )
                                                
                                                
                                                (1,346,989
                                                )Adjustments
      to reconcile net income  to net cash provided by operating
      activities:Trade
      receivables, net
                                                
                                                
                                                42,054
                                                
                                                
                                                
                                                42,054Inventories
                                                
                                                
                                                (349,802
                                                )
                                                
                                                
                                                (349,802
                                                )Advances
      to suppliers
                                                
                                                
                                                (975,910
                                                )
                                                
                                                
                                                (975,910
                                                )Prepayments
                                                
                                                
                                                223,112
                                                
                                                
                                                
                                                223,112Tender
      deposits
                                                
                                                
                                                (81,747
                                                )
                                                
                                                
                                                (81,747
                                                )Travel
      advances to shareholders
                                                
                                                
                                                (21,764
                                                )
                                                
                                                
                                                (21,764
                                                )Advances
      to employees
                                                
                                                
                                                (470,106
                                                )
                                                
                                                
                                                (470,106
                                                )Accounts
      payable
                                                
                                                
                                                178,921
                                                
                                                
                                                
                                                178,921Income
      tax payable
                                                
                                                
                                                (104,819
                                                )
                                                
                                                
                                                (104,819
                                                )Turnover
      and other taxes
                                                
                                                
                                                24,330
                                                
                                                
                                                
                                                24,330Expected
      warranty liabilities
                                                
                                                
                                                29,737
                                                
                                                
                                                
                                                29,737Customers
      deposits
                                                
                                                
                                                131,064
                                                
                                                
                                                
                                                131,064Accrued
      liabilities
                                                
                                                
                                                141,730
                                                
                                                
                                                
                                                141,730Other
      payables
                                                
                                                
                                                31,362
                                                
                                                
                                                
                                                31,362Net
      cash provided by operating activities
                                                
                                                $
                                                4,903,141
                                                
                                                
                                                $
                                                4,903,141Cash
      flows from investing activitiesSale
      of plant and equipment
                                                
                                                $
                                                -
                                                
                                                
                                                $
                                                -Sale
      of short term investments
                                                
                                                
                                                6,073,136
                                                
                                                
                                                
                                                6,073,136Restricted
      cash
                                                
                                                
                                                (491,049
                                                )
                                                
                                                
                                                (491,049
                                                )Advances
      to related company
                                                
                                                
                                                (562,406
                                                )
                                                
                                                
                                                (562,406
                                                )Advances
      to a director
                                                
                                                
                                                (988,757
                                                )
                                                
                                                
                                                (988,757
                                                )Purchase
      of short term investments
                                                
                                                
                                                (3,413,328
                                                )
                                                
                                                
                                                (3,413,328
                                                )Purchase
      of plant and equipment
                                                
                                                
                                                (619,627
                                                )
                                                
                                                
                                                (619,627
                                                )Purchase
      of intangibles assets
                                                
                                                
                                                (5,687,457
                                                )
                                                
                                                
                                                (5,687,457
                                                )Net
      cash used in investing activities
                                                
                                                $
                                                (5,689,488
                                                )
                                                
                                                $
                                                (5,689,488
                                                )Cash
      flows from financing activitiesProceeds
      from vision re: Debentures
                                                
                                                $
                                                199,202
                                                
                                                
                                                $
                                                199,202Preference
      Stock
                                                
                                                
                                                4,977,133
                                                
                                                
                                                
                                                4,977,133Bank
      borrowings
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Bank
      loan repayments
                                                
                                                
                                                (196,923
                                                )
                                                
                                                
                                                (196,923
                                                )Net
      cash provided by financing activities
                                                
                                                $
                                                4,979,412
                                                
                                                
                                                $
                                                4,979,412
  F-33
  SUNWAY
GLOBAL INC.
 
 STATEMENT
OF CASH FLOWS (Continued)
 
 ITEMS
                                
                                Original
                                
                                
                                RestatedFor Year Ended December 31,2007
                                
                                
                                2007Net
      in cash and cash equivalents sourced
                                
                                $
                                4,193,065
                                
                                
                                $
                                4,193,065Effect
      of foreign currency translation on cash and cash
    equivalents
                                
                                
                                (130,353
                                )
                                
                                
                                (122,013
                                )Cash
      and cash equivalents-beginning of year
                                
                                
                                1,757,388
                                
                                
                                
                                1,749,048Cash
      and cash equivalents-end of year
                                
                                $
                                5,820,100
                                
                                
                                $
                                5,820,100
 
 2007
                                  
                                  
                                  2007Supplementary
      cash flow information:Tax
      paid
                                  
                                  $
                                  1,117,678
                                  
                                  
                                  $
                                  1,117,678Interest
      received
                                  
                                  
                                  61,983
                                  
                                  
                                  
                                  61,983Interest
      paid
                                  
                                  
                                  9,442
                                  
                                  
                                  
                                  9,442
  F-34
  SUNWAY
GLOBAL INC.
 
 STATEMENT
OF CASH FLOWS
 
 ITEMS
                                                      
                                                      Original
                                                      
                                                      
                                                      RestatedFor
      Year Ended December 31,2006
                                                      
                                                      
                                                      2006Cash
      flows from operating activitiesNet
      income
                                                      
                                                      $
                                                      4,068,149
                                                      
                                                      
                                                      $
                                                      4,029,553Depreciation
                                                      
                                                      
                                                      874,376
                                                      
                                                      
                                                      
                                                      874,376Amortization
                                                      
                                                      
                                                      24,745
                                                      
                                                      
                                                      
                                                      24,745Provision
      for bad debs
                                                      
                                                      
                                                      2,891
                                                      
                                                      
                                                      
                                                      2,891Loss
      on disposal of fixed assets
                                                      
                                                      
                                                      58,186
                                                      
                                                      
                                                      
                                                      58,186Adjustments
      to reconcile net income to net cash provided by operating
      activities:Trade
      receivables, net
                                                      
                                                      
                                                      (578,245
                                                      )
                                                      
                                                      
                                                      (578,245
                                                      )Inventories
                                                      
                                                      
                                                      205,365
                                                      
                                                      
                                                      
                                                      205,365Advances
      to suppliers
                                                      
                                                      
                                                      48,209
                                                      
                                                      
                                                      
                                                      48,209Prepayments
                                                      
                                                      
                                                      (68,507
                                                      )
                                                      
                                                      
                                                      (68,507
                                                      )Tender
      deposits
                                                      
                                                      
                                                      (42,040
                                                      )
                                                      
                                                      
                                                      (42,040
                                                      )Travel
      advances to shareholders
                                                      
                                                      
                                                      (3,588
                                                      )
                                                      
                                                      
                                                      (3,588
                                                      )Advances
      to employees
                                                      
                                                      
                                                      (53,859
                                                      )
                                                      
                                                      
                                                      (53,859
                                                      )Accounts
      payable
                                                      
                                                      
                                                      (286,297
                                                      )
                                                      
                                                      
                                                      (286,297
                                                      )Income
      tax payable
                                                      
                                                      
                                                      154,564
                                                      
                                                      
                                                      
                                                      154,564Turnover
      and other taxes
                                                      
                                                      
                                                      50,234
                                                      
                                                      
                                                      
                                                      50,234Expected
      warranty liabilities
                                                      
                                                      
                                                      22,341
                                                      
                                                      
                                                      
                                                      22,341Customers
      deposits
                                                      
                                                      
                                                      (331,002
                                                      )
                                                      
                                                      
                                                      (331,002
                                                      )Accrued
      liabilities
                                                      
                                                      
                                                      66,702
                                                      
                                                      
                                                      
                                                      66,702Other
      payables
                                                      
                                                      
                                                      (12,247
                                                      )
                                                      
                                                      
                                                      (12,247
                                                      )Net
      cash provided by operating activities
                                                      
                                                      $
                                                      4,199,977
                                                      
                                                      
                                                      $
                                                      4,161,381Cash
      flows from investing activitiesSale
      of plant and equipment
                                                      
                                                      $
                                                      48,359
                                                      
                                                      
                                                      $
                                                      48,359Advances
      to a director
                                                      
                                                      
                                                      (2,736
                                                      )
                                                      
                                                      
                                                      (2,736
                                                      )Purchase
      of short term investments
                                                      
                                                      
                                                      (1,301,195
                                                      )
                                                      
                                                      
                                                      (1,301,195
                                                      )Purchase
      of plant and equipment
                                                      
                                                      
                                                      (2,261,375
                                                      )
                                                      
                                                      
                                                      (2,261,375
                                                      )Purchase
      of intangibles assets
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -Net
      cash used in investing activities
                                                      
                                                      $
                                                      (3,516,947
                                                      )
                                                      
                                                      $
                                                      (3,516,947
                                                      )Cash
      flows from financing activitiesBank
      borrowings
                                                      
                                                      $
                                                      375,851
                                                      
                                                      
                                                      $
                                                      375,851Bank
      loan repayments
                                                      
                                                      
                                                      (451,021
                                                      )
                                                      
                                                      
                                                      (451,021
                                                      )Net
      cash used in financing activities
                                                      
                                                      $
                                                      (75,170
                                                      )
                                                      
                                                      $
                                                      (75,170
                                                      )
  F-35
  SUNWAY
GLOBAL INC.
 
 STATEMENT
OF CASH FLOWS (Continued)
 
 Original
                                
                                
                                RestatedFor Year Ended December 31,2006
                                
                                
                                2006Net
      in cash and cash equivalents sourced
                                
                                $
                                607,860
                                
                                
                                $
                                569,264Effect
      of foreign currency translation on cash and cash
    equivalents
                                
                                
                                (38,797
                                )
                                
                                
                                (8,541
                                )Cash
      and cash equivalents-beginning of year
                                
                                
                                1,188,325
                                
                                
                                
                                1,188,325Cash
      and cash equivalents-end of year
                                
                                $
                                1,757,388
                                
                                
                                $
                                1,749,048
 
 2006
                              
                              
                              2006Supplementary
      cash flow information:Tax
      paid
                              
                              $
                              965,229
                              
                              
                              $
                              965,229Interest
      received
                              
                              
                              62,688
                              
                              
                              
                              24,092Interest
      paid
                              
                              
                              28,863
                              
                              
                              
                              28,863
  F-36
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006
 (Stated
in US Dollars)
 
 22.
              RESTATEMENTS
 
 During
the course of internal evaluation, our accounting staff discovered some
misstatements in our financial statements for the year ended December 31, 2007
that required correction relating to the improper classification of additional
paid in capital items. To correct this error, the overstated additional paid-in
capital was adjusted down by $4,855,640, and understated retained earnings were
adjusted up by $4,855,640. The earnings for the purpose of basic earnings per
share also changed owing to the reduction of 1,844,360 in Note 17 as complied to
ASC 470-20-35-7 (c). The changes are shown in the following Note
22(a):
  Note
22(a)
  BALANCE
SHEETS
 
 ITEMS
 
 2007ADDITIONAL
      PAID-IN CAPITALOriginal
      as reported on April 8, 2008
                    
                    $
                    16,352,833Amended
      on January 19, 2009
                    
                    
                    (252,868
                    )Amendment
      as at January 19, 2009
                    
                    $
                    16,099,965Amendment
      on reclassification of warrant beneficiary conversion
    features
                    
                    
                    (4,855,640
                    )$
                    11,244,325RETAINED
      EARNINGSOriginal
      as reported on April 8, 2008
                    
                    $
                    3,317,141Amended
      on January 19, 2009
                    
                    
                    (128,861
                    )Amendment
      as at January 19, 2009
                    
                    $
                    3,188,280Amendment
      on reclassification of warrant beneficiary conversion
    features
                    
                    
                    4,855,640$
                    8,043,920
 
 As a
result of the restatement of the consolidated balance sheet as of December 31,
2007, additional paid-in capital decreased from $16,099,965 to $11,244,325. The
retained earnings increased from $3,188,280 to $8,043,920. The assets,
liabilities and total stockholders’ equity have no changes.
 
  STATEMENT
OF INCOME
 
 ITEMS
                            
                            
                            
                            
                            2007
                            
                            
                            2007Original
                            
                            
                            RestatedNet
      income per share:-  
      Basic
                            
                            16
                            
                            
                            $
                            27.04
                            
                            
                            $
                            18.79-  
      Diluted
                            
                            16
                            
                            
                            
                            0.41
                            
                            
                            
                            0.28
 
 As a
result of adding of $1,844,360 beneficial conversion feature of convertible
preferred stock earnings deduction in 2007 of Note 16, the basic earnings per
share calculation of 2007, was changed from $6,047,505 to $4,203,145. The basic
and diluted earnings per share of 2007 were changed from $27.04 to $18.79 and
from $0.41to $0.28 accordingly.
 
 
 23.
              SUBSEQUENT
      EVENT
 
 On
February 7, 2008, 12 shareholders of Preferred Series A converted 228,531 shares
into 13,711,831 shares of common stock, in which Rise Elite International
Limited, Vision Opportunity Master Fund, Ltd and Kuhns Brothers, Inc converted
210,886, 7,990 and 2,647 shares of Preferred Series A into 12,653,160, 479,400
and 158,820 shares of common stock respectively.
  F-37
  ITEM 9 - CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
 
 On May
31, 2007, the Company’s board of directors approved the dismissal of Bagell
Josephs Levine & Co. (“Bagell Josephs Levine”) as our registered independent
certified public accounting firm effective on June 11, 2007. At the same time,
the Company’s board of directors appointed Samuel H. Wong & Co., LLP (“SWC”)
as its new registered independent certified public accounting firm.
 
 The
reason for the change in accounting firm was that Sunway’s operating businesses
had previously been audited by SWC, and our new management elected to continue
this existing relationship. During the fiscal years ended September 30, 2005 and
2006, there were no disagreements between our company and Bagell Josephs Levine
on any matter listed under Item 304 Section (a)(1)(iv) A to E of Regulation S-B,
including accounting principles or practices, financial statement disclosure or
auditing scope or procedure which, if not resolved to the satisfaction of Bagell
Josephs Levine would have caused Bagell Josephs Levine to make reference to the
matter in its reports on our financial statements.
 
 Bagell
Josephs Levine’s audit opinions on the financial statements for the fiscal years
ended September 30, 2005 and 2006 did not contain an adverse opinion or
disclaimer of opinion, nor was either opinion qualified or modified as to
uncertainty, audit scope or accounting principles, except that the reports of
Bagell Josephs Levine for the fiscal years ended December 31, 2005 and 2006
indicated conditions which raised substantial doubt about the Company's ability
to continue as a going concern.
 
 Prior to
engaging Bagell Josephs Levine, Bagell Josephs Levine did not provide our
company with either written or oral advice that was an important factor
considered by our company in reaching a decision to change our independent
registered public accounting firm from Bagell Josephs Levine to
SWC.
 
 On
January 28, 2008, Sunway Global Inc. (the “Company”) notified SWC that it was
being terminated as the Company’s independent registered public accounting firm.
The decision to dismiss SWC  as
the Company’s independent registered public accounting firm was approved by the
Company’s Board of Directors on January 28, 2008. At the same time, the
Company’s Board of Directors approved the engagement Albert Wong & Co. LLP
(“Albert Wong & Co.”) as its independent registered public accounting firm
for the Company’s fiscal year ended December 31, 2007.
 
 The
Company engaged SWC from May 31, 2007 through January 28, 2008 (the “Engagement
Period”). During the Engagement Period, SWC did not issue any reports on the
Company’s financial statements for either of the Company’s two most recent
fiscal years that contained an adverse opinion or a disclaimer of opinion or was
qualified or modified as to uncertainty, audit scope or accounting principles.
During the Engagement Period, the Company did not have any disagreements with
SWC on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which disagreements, if not resolved
to SWC’s satisfaction, would have caused them to make reference thereto in their
reports on the Company’s financial statements for such years.
 
 The
Company has provided SWC with a copy of its disclosures on Form 8-K/A dated as
of February 20, 2008 prior to the filing of these disclosures and has requested
that SWC furnish a letter addressed to the Securities and Exchange Commission
stating whether or not SWC agrees with the statements made herein above and, if
not, stating in which respects SWC does not agree. The Company will file an
amendment to this Report to file as an exhibit a copy of the requested letter
from SWC upon receipt.
 
 During
the fiscal year ended December 31, 2007, the Company did not consult with Albert
Wong & Co. regarding (i) the application of accounting principles to a
specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on the Company’s financial statements, and no
written report or oral advice was provided to the Company that was an important
factor to be considered by the Company in reaching a decision as to an
accounting, auditing or financial reporting issue; or (ii) any matter or event
that was the subject of disagreement, as that term is defined in Item
304(a)(1)(v) of Regulation S-B and the related instructions to Item 304 of
Regulation S-B.
 
 Prior to
engaging Albert Wong & Co., Albert Wong & Co. did not provide our
company with either written or oral advice that was an important factor
considered by our company in reaching a decision to change our independent
registered public accounting firm from SWC to Albert Wong & Co.
 
 ITEM
9A – CONTROLS AND PROCEDURES
 
 Evaluation
of Disclosure Controls and Procedures
 
 The
Company maintains a set of disclosure controls and procedures designed to ensure
that information required to be disclosed by the Company in the reports filed
under the Securities Exchange Act, is recorded, processed, summarized and
reported within the time periods specified by the SEC's rules and forms.
Disclosure controls are also designed with the objective of ensuring that this
information is accumulated and communicated to the Company's management,
including the Company's chief executive officer and chief financial officer, as
appropriate, to allow timely decisions regarding required
disclosure.
  30
  During
the course of internal evaluation, our accounting staff found misstatements in
our previously reported financial statements for the fiscal years ended December
31, 2006 that required correction relating to: (1) the improper use of exchange
rates of shareholders’ equity items. In specific, Series A Convertible Preferred
Stock, additional paid-in capital, statutory reserves, and retained earnings
were overstated by $18, $253,647, $37,309 and $128,861 respectively, and common
stock and accumulated other comprehensive income were understated by $165 and
$410,498 respectively and (2) other misstatements identified, which were
individually not material, including amounts related to cash and cash
equivalents ,travel advances to directors, other payables, general and
administrative expenses and interest expenses items. The impacts have made the
changes in figures as of December 31, 2006 by a decrease of $8,340 and $831 of
cash and cash equivalents and travel advances to shareholders respectively, an
increase of $2 of other payables and a decrease of $38,596 and $29,425 of net
income and foreign currency translation respectively.
 
 In
addition, there was a correction for the basic and diluted weighted average
number of common stock from 223,653 to 223,658 for the year ended December 31,
2006.
 
 There
were misstatements in 2007 due to the improper use of exchange rate of
shareholders’ equity items by overstating the Series A Convertible Preferred
Stock by $18, additional paid-in capital by $253,482, statutory reserves by
$37,309, retained earnings by $128,861, and by understating the accumulated
other comprehensive income and foreign currency translation by $419,670 and
$47,296 respectively for the year ended December 31, 2007.
 
 Moreover,
during the course of internal evaluation, there was a reclassification of
restricted cash $491,049 from current asset to non current asset and there was a
correction for the basic and diluted weighted average number of common stock
from 223,653 to 223,658 and from 14,814,953 to 14,814,958 respectively for the
year ended December 31, 2007.
  In
addition, during the course of internal evaluation, management identified an
improper classification of additional paid in capital items for the year ended
December 31, 2007; overstated additional paid-in capital was adjusted down by
$4,855,640, and understated retained earnings were adjusted up by $4,855,640.
The earnings for the purpose of basic earnings per share of 2007 in Note 17 also
changed owing to the reduction of 1,844,360 as complied to ASC 470-20-35-7 ( c).
The basic and diluted earnings per share of 2007 are changed
accordingly.
 
 Based
upon their evaluation as of the end of the period covered by this report, the
Company's chief executive officer and chief financial officer concluded that,
the Company's disclosure controls and procedures are not effective to ensure
that information required to be included in the Company's periodic SEC filings
is recorded, processed, summarized, and reported within the time periods
specified in the SEC rules and forms.
 
 Management’s
Report on Internal Control over Financial Reporting
 
 The
Company’s management is responsible for establishing and maintaining adequate
internal control over financial reporting. The Company’s internal control system
was designed to provide reasonable assurance to our management and Board of
Directors regarding the preparation and fair presentation of published financial
statements.
 
 The
Company’s management assessed the effectiveness of our internal control over
financial reporting as of December 31, 2007. In making this assessment, it used
the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control—Integrated
Framework   Based on its assessment the Company’s management
believes that, as of December 31, 2007, the Company’s internal control over
financial reporting is effective based on those criteria.
 
 A
material weakness (within the meaning of PCAOB Auditing Standard No. 5) is a
deficiency, or a combination of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibility that a material
misstatement of our annual or interim financial statements will not be prevented
or detected on a timely basis. A significant deficiency is a deficiency, or a
combination of deficiencies, in internal control over financial reporting that
is less severe than a material weakness, yet important enough to merit attention
by those responsible for oversight of the company's financial
reporting.
  Our
management is not aware of any material weaknesses in our internal control over
financial reporting, and nothing has come to the attention of management that
causes them to believe that any material inaccuracies or errors exist in our
financial statements as of December 31, 2007. The reportable conditions and
other areas of our internal control over financial reporting identified by us as
needing improvement have not resulted in a material restatement of our financial
statements. Nor are we aware of any instance where such reportable conditions or
other identified areas of weakness have resulted in a material misstatement of
omission in any report we have filed with or submitted to the Commission.
Accordingly, we believe that our internal control over financial reporting were
effective.
  Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies and procedures may deteriorate.
 
 This
annual report does not include an attestation report of the Company’s registered
accounting firm regarding internal control over financial reporting. The
management’s report was not subject to attestation by the Company’s registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission.
 
 Changes
in Internal Control over Financial Reporting
 
 No
changes in the Company's internal control over financial reporting have come to
management's attention during the Company's last fiscal quarter that have
materially affected, or are likely to materially affect, the Company's internal
control over financial reporting.
 
 Limitations
on Controls
 
 Management
does not expect that our disclosure controls and procedures or our internal
control over financial reporting will prevent or detect all error and fraud. Any
control system, no matter how well designed and operated, is based upon certain
assumptions and can provide only reasonable, not absolute, assurance that its
objectives will be met. Further, no evaluation of controls can provide absolute
assurance that misstatements due to error or fraud will not occur or that all
control issues and instances of fraud, if any, within the Company have been
detected.
  ITEM
9B – OTHER INFORMATION
 
 In
December 2006, Sun Weishan was appointed as the Company’s Chief Operating
Officer and on December 1, 2007 was appointed as the Company’s
Secretary.
  31
  PART
III
 
 ITEM
10 – DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
 
 Set forth
below is certain information regarding our directors and executive
officers.  Our Board of Directors is comprised of two directors. 
There are no family relationships between any of our directors or executive
officers. Each of our directors is elected to serve until the next annual
meeting of our shareholders and until his successor is elected and qualified or
until such director’s earlier death, removal or termination.
 
 The
following table sets forth certain information with respect to our directors and
executive officers.
  Directors and Executive Officers
                
                Position/Title
                
                AgeLiu
      Bo
                
                President,
      Chief Executive Officer and Director
                
                42Samuel
      Sheng
                
                Chief
      Financial Officer
                
                37Sun
      Weishan
                
                Chief
      Operating Officer and Secretary
                
                46Liang
      Deli
                
                Director
                
                45
 
 There are
no family relationships among our directors or executive officers.
 
 Our
directors hold office until the next annual meeting of our shareholders, and
until their successors have been qualified after being elected or appointed. Our
officers serve at the discretion of our Board of Directors.
 
 Set forth
below is biographical information about our current directors and executive
officers:
 
 Liu Bo , our President and
Chief Executive Officer and a director, has been Chairman of the Board, CEO and
a director of Daqing Sunway since March 1993. Sunway is an affiliate of Rise
Elite and WTL. Mr. Liu has a Bachelors degree in the field of Automatic Systems
Engineering from Qiqihaer University in Heilongjiang Province, China in
1986.
 
 Liang Deli became a director
upon the resignation of Richard Astrom in June 2007. He has been Vice President
of Sunway since August 1997, and is under contract to serve in that position
until 2017. Mr. Liang’s area of focus is Sunway’s technology and market
operations. Mr. Liang received a Bachelors degree in the field of Automatic
Systems Design and Control from Shenyang Industry University in Liaoning
Province, China in 1983.
 
 Samuel Sheng has been Chief
Financial Officer since November 2007. Mr. Sheng has held numerous management
positions requiring expertise in financial and accounting matters. From 2004
until his appointment with the Company, he served as the Chief Financial Officer
of American Lorain Corp, and from 2002 through 2004 he served as President and
Chief Financial Officer of Linyi Jiangxing Steel Ltd.
  Sun Weishan has been Secretary
and Chief Operating Officer since December 2007. Prior to joining the Company,
from April 2001 to December 2006 Mr. Sun served as Executive Director, Vice
President, Assistant General Manager, and Secretary of the Board of Directors
for Daqing Sunway. Mr. Sun graduated from Yenshan University and Daqing
Petroleum Institute with degrees in mechanical engineering and chemical
engineering, respectively.
 
 To our
knowledge, during the last five years, none of our directors and executive
officers (including those of our subsidiaries) has:
 
 ·
              Had a bankruptcy petition filed
      by or against any business of which such person was a general partner or
      executive officer either at the time of the bankruptcy or within two years
      prior to that time.
 
 ·
              Been convicted in a criminal
      proceeding or been subject to a pending criminal proceeding, excluding
      traffic violations and other minor
  offenses.
 
 ·
              Been subject to any order,
      judgment or decree, not subsequently reversed, suspended or vacated, of
      any court of competent jurisdiction, permanently or temporarily enjoining,
      barring, suspending or otherwise limiting his involvement in any type of
      business, securities or banking
  activities.
 
 ·
              Been found by a court of
      competent jurisdiction (in a civil action), the SEC, or the Commodities
      Futures Trading Commission to have violated a federal or state securities
      or commodities law, and the judgment has not been reversed, suspended or
      vacated.
  32
  Audit
Committee Financial Expert
 
 Our board
of directors currently acts as our audit committee. Because we only recently
consummated the Reverse Merger and appointed the current members of our board of
directors, our board of directors has not yet determined whether we have a
member who qualifies as an "audit committee financial expert" as defined in Item
401(e) of Regulation S-B, and is "independent" as the term is used in Item
7(d)(3)(iv) of Schedule 14A under the Exchange Act. Our board of directors is in
the process of searching for a suitable candidate for this
position.
 
 Audit
Committee
 
 We have
not yet appointed an audit committee, and our board of directors currently acts
as our audit committee. At the present time, we believe that the members of
board of directors are collectively capable of analyzing and evaluating our
financial statements and understanding internal controls and procedures for
financial reporting. Our company, however, recognizes the importance of good
corporate governance and intends to appoint an audit committee comprised
entirely of independent directors, including at least one financial expert,
during our 2008 fiscal year.
 
 Section
16 Beneficial Ownership Compliance
 
 Section
16(a) of the Securities and Exchange Act of 1934, as amended, requires our
executive officers and directors, and persons who beneficially own more than 10%
of the Company’s common stock, to file initial reports of ownership and reports
of changes in ownership of our common stock with the SEC.
 
 Based
solely on the reports received by the Company and on written representations
from certain reporting persons, we believe that the directors, executive
officers and persons who beneficially own more than 10% of the Company’s common
stock during the fiscal year ended December 31, 2007 have been in compliance
with Section 16(a), except that Liu Bo, Liang Deli and David Wang did not timely
file Form 3s on one occasion with respect to the reverse merger that occurred on
June 6, 2007, and Samuel Sheng and Sun Weishan did not timely file Form 3s with
respect to their appointment as chief operating officer and chief financial
officer on December 1, 2007 and November 31, 2007, respectively..
 
 ITEM
11 – EXECUTIVE COMPENSATION
 
 The
following table sets forth information concerning the total compensation that we
have paid or that has accrued on behalf of our Chief Executive Officer and other
executive officers during the years ended December 31, 2007 and
2006.
 
 Summary
Compensation Table
 
 The
following is a summary of the compensation paid by us to the individuals who
have served as our CEO and any executive officers who have received compensation
in excess of $100,000 for the two years ended December 31, 2007 and
2006.
 
 Salary
                                                                                          (cash or
                                                                                          non-cash)
                                                                                        
                                                                                        
                                                                                        Bonus
                                                                                          (cash or
                                                                                          non-cash)
                                                                                        
                                                                                        
                                                                                        Stock
                                                                                          Awards
                                                                                        
                                                                                        
                                                                                        Option
                                                                                          Awards
                                                                                        
                                                                                        
                                                                                        Non-Equity
                                                                                          Incentive Plan
                                                                                          Compensation
                                                                                        
                                                                                        
                                                                                        Non-Qualified
                                                                                          Deferred
                                                                                          Compensation
                                                                                          Earnings
                                                                                        
                                                                                        
                                                                                        All Other
                                                                                          Compensation
                                                                                        
                                                                                        
                                                                                        TotalName and Principal Position
                                                                                        
                                                                                        Year
                                                                                        
                                                                                        ($)
                                                                                        
                                                                                        
                                                                                        ($)
                                                                                        
                                                                                        
                                                                                        ($)
                                                                                        
                                                                                        
                                                                                        ($)
                                                                                        
                                                                                        
                                                                                        ($)
                                                                                        
                                                                                        
                                                                                        ($)
                                                                                        
                                                                                        
                                                                                        ($)
                                                                                        
                                                                                        
                                                                                        ($)Liu
      BoCEO
      and Director (current)
                                                                                        
                                                                                        2007
                                                                                        
                                                                                        
                                                                                        63,158
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        63,1582006
                                                                                        
                                                                                        
                                                                                        46,068
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        46,068Richard
      AstromCEO
      (former)
                                                                                        
                                                                                        2007
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -2006
                                                                                        
                                                                                        
                                                                                        13,734
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        13,734Samuel
      ShengCFO
      (current)
                                                                                        
                                                                                        2007
                                                                                        
                                                                                        
                                                                                        3,378
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        3,3782006
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -David
      WangCFO
      (former)
                                                                                        
                                                                                        2007
                                                                                        
                                                                                        
                                                                                        39,473
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        394732006
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
  33
  Outstanding
Equity Awards at Fiscal Year-End
 
 As of our
fiscal years ended December 31, 2007 and 2006, we did not have any stock option
plan or stock incentive plan and there were no outstanding equity awards as of
our fiscal years ended December 31, 2007 and 2006. No equity awards were granted
during the year ended December 31, 2007.
 
 Employment
Contracts and Termination of Employment and Change-In-Control
Arrangements
  We have
the following employment contracts with the named executive
officers:
 
 Sun
Weishan has an employment agreement with the Company. Pursuant to this
employment agreement, Mr. Sun shall receive an annual base salary of $40,540
(RMB300,000) and may also receive a year-end performance bonus to be determined
by the Board. Mr. Sun’s initial term as Secretary terminates December 30, 2010.
If the Mr. Sun and the Company have not agreed to new employment terms within a
month of expiration of the term, Mr. Sun’s terms of employment will be extended,
and Mr. Sun will continue to serve as Secretary under the original terms of the
employment agreement for up to three years thereafter.
 
 Samuel
Sheng has an employment agreement with the Company for a renewable three-year
term beginning December 1, 2007. Pursuant to this employment agreement, Mr.
Sheng shall receive an annual base salary of $40,540 (RMB300,000), subject to a
year-end bonus to be determined by the Board of Directors.
 
 Director
Compensation
 
 Other
than as disclosed in the Summary Compensation Table above, Liang Deli received
$46,068 for his services as a member of the Board of Directors for an initial
term expiring on June 30, 2012. Our directors are also reimbursed for reasonable
travel and other expenses incurred in connection with attending meetings of the
board and its committees, if any.
 
 ITEM 12- SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
 
 The
following table lists stock ownership of our common stock as of July 24,
2008.  The information includes beneficial ownership by (i) holders of more
than 5% of our common stock, (ii) each of our current directors and executive
officers and (iii) all of our directors and executive officers as a
group.
 
 The
information is determined in accordance with Rule 13d-3 promulgated under the
Exchange Act based upon information furnished by the persons listed or contained
in filings made by them with the Commission. Except as noted below, to our
knowledge, each person named in the table has sole voting and investment power
with respect to all shares of our common stock beneficially owned by
them.
  Amount
and Nature of Beneficial Ownership
  Name and Address of
                                Beneficial Owner
                              
                              Director/Officer
                              
                              Amount and Nature of
                                Beneficial Ownership (1)
                              
                              
                              Percentage
                                of Class (2)Rise
      Elite International Limited
                              
                              
                              
                              
                              12,653,160
                              (2)
                              
                              
                              66.96
                              %Vision
      Opportunity Master Fund, Ltd.
                              
                              
                              
                              
                              5,205,369
                              (3)
                              
                              
                              28.22
                              %Liu
      Bo
                              
                              President, Chief Scientific
      Officer and Director
                              
                              
                              8,906,580
                              (2)
                              
                              
                              47.13
                              %Liang
      Deli
                              
                              Vice President and
      Director
                              
                              
                              969,240
                              (2)(4)
                              
                              
                              5.13
                              %Samuel
      Sheng
                              
                              Chief Financial 
      Officer
                              
                              
                              -
                              (5)
                              
                              
                              -Sun
      Weishan
                              
                              Chief Operating Officer
      and Secretary
                              
                              
                              -
                              (5)
                              
                              
                              -All
      directors and officers as a
                                group
                              
                              
                              
                              
                              9,875,820
                              
                              
                              
                              52.26
                              %
  34
  (1)
Applicable percentage ownership is based on 18,446,045 shares of common stock
outstanding as of June 26, 2008, together with securities exercisable or
convertible into shares of common stock within 60 days of June 26, 2008 for each
stockholder. Beneficial ownership is determined in accordance with the rules of
the Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of common stock that are
currently exercisable or exercisable within 60 days of July 24, 2008 are deemed
to be beneficially owned by the person holding such securities for the purpose
of computing the percentage of ownership of such person, but are not treated as
outstanding for the purpose of computing the percentage ownership of any other
person.
 
 (2) Liu
Bo and Liang Deli are shareholders of Rise Elite, holding 70.39% and 7.66%
ownership interest in Rise Elite, respectively. Neither Mr. Liu or Mr. Liang
hold any shares in their own right.
 
 (3) Adam
Benowitz, Managing Member holds the power to vote and dispose of the subject
shares.
 
 (4) Liang
Deli was appointed and Richard Astrom resigned as a director of the Company
in connection with the consummation of the Share Exchange Agreement effective on
the tenth day following the mailing of an information statement on Schedule
14F-1 relating to the change in control of our board of directors, which we
filed with the SEC on June 4, 2007..
 
 (5)
Samuel Sheng was appointed as Chief Financial Officer and Sun Weishan was
appointed as Secretary to replace David Wang, who resigned as Chief Financial
Officer and Secretary on November 6, 2007.
 
 ITEM 13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS, AND DIRECTOR   INDEPENDENCE
 
 Certain
Relationships and Related Transactions
 
 Except as
in the transactions related to the June 2007 reverse merger set forth below,
there have been no material transactions during the past two years between us
and any officer, director or any shareholder owning greater than 5% of our
outstanding shares, or any of their immediate family members:
 
 Share
Exchange Agreement
 
 On June
6, 2007, we acquired WTL through a share exchange transaction with WTL and Rise
Elite, the owner of 100% of the outstanding voting stock of WTL. Our President
and Chief Executive Officer, Liu Bo and our director, Liang Deli, hold 70.39%
and 7.66% ownership interests, respectively, in Rise Elite. As part of the
reverse merger transaction, Rise Elite and the Company consummated a share
exchange transaction on June 5, 2007, in which Rise Elite exchanged all its
ownership interest in SWT for 210,886 shares of our Series A Preferred pursuant
to the Share Exchange Agreement. In addition, up to 166,667 shares of Series A
Preferred will be issued to Rise Elite if the Company meets certain earnings
targets in 2007. As a result of the transactions described in this report,
Vision owns 97% of our Series B Preferred and 66.3% of our common
stock.
 
 Securities
Escrow Agreement
 
 Based on
their ownership of shares of Rise Elite, Liang Deli and Liu Bo also had
interests in the arrangement under the Securities Escrow Agreement, in which
Rise Elite will either forfeit or take delivery of a number of shares of Series
A Preferred based on whether the Company meets performance targets for 2007 and
2008.
 
 Shell
Purchase Agreement
 
 Liu Bo,
Liang Deli, and David Wang, our former Secretary and Chief Financial Officer,
were officers and directors of Rise Elite. Each of them had an interest in the
shell purchase transaction because in that transaction, Rise Elite, and
indirectly its directors and officers, acquired the right to determine all of
our directors. Mr. Wang subsequently resigned as Secretary and Chief Financial
Officer on November 6, 2007.
 
 Also
under the Shell Purchase Agreement, Vision purchased, for $199,202 in cash, an
outstanding debenture, payable by the Company in the amount of $199,202 with
payment due in 2003, from its three holders, Sea Lion Investors LLC, Myrtle
Holdings LLC, and Equity Planners LLC. The debenture was converted into
12,734,689 shares of our Common Stock at the closing of the private financing
transaction.
 
 Series
B Purchase Agreement
 
 Under the
Series B Purchase Agreement, Vision purchased 160,494 shares of our newly-issued
Series B Preferred for $6.5 million, making Vision the holder of 97% of that
class of stock.
  35
  Lock-Up
Agreement
 
 Under a
Lock-Up Agreement dated June 5, 2007 by and between the Company and Rise Elite,
Rise Elite agreed that it will not sell or transfer any shares of our common
stock, Preferred Series A or Preferred Series B until at least 18 months after
the effective date of the initial registration statement to register the shares
of our common stock issuable upon conversion of our Series B Preferred, and it
will not sell or transfer more than one-twelfth of its total holdings of our
common stock, Preferred Series A or Preferred Series B during any one month
until at least 24 months after the effective date of the registration
statement.
 
 Other
 
 Vision
received 7,990 of the shares of Series A Preferred to which Kuhns Brothers was
entitled under the Placement Agent Engagement Agreement. Kuhns Brothers was
engaged by us to provide financial advisory and other services to Sunway,
including assistance in identifying a shell company that was an appropriate
target for a reverse merger transaction through which Sunway could become a
public company. Kuhns Brothers assigned these shares to Vision as an incentive
to Vision to serve as lead investor in the private financing
transaction.
  Director
Independence
 
 The
Company currently has two directors, Liu Bo and Liang Deli. Neither director
qualifies as an “independent” director as that term is defined under the
National Association of Securities Dealers Automated Quotation system. Our
company, however, recognizes the importance of good corporate governance and
intends to appoint an audit committee comprised entirely of independent
directors, including at least one financial expert, during our 2008 fiscal
year.
  ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
 Audit
Fees. The aggregate fees incurred by the Company’s independent registered public
accounting firms, for professional services rendered for the audit of our annual
financial statements for the years ended December 31, 2007 and December 31,
2006, and for the reviews of the financial statements included in our Quarterly
Reports on Form 10-QSB and other SEC filings during those fiscal years were
approximately $15,000 (SWC) and $50,000 (Albert Wong),
respectively.
 
 Audit-Related
Fees. The aggregate fees incurred by the Company’s independent registered public
accounting firms were $ 22,610 ( SWC) and $1615 (Albert Wong), respectively, for
audit-related services during the years ended December 31, 2007 and December 31,
2006.
 
 Tax Fees.
The Company did not incur any other fees from its independent registered public
accounting firms for services rendered to the Company, other than the services
covered in "Audit Fees" for the fiscal years ended December 31, 2007 and
December 31, 2006.
 
 All Other
Fees. The Company did not incur any other fees from its independent registered
public accounting firms for services rendered to the Company, other than the
services covered in "Audit Fees" for the fiscal years ended December 31, 2007
and December 31, 2006.
 
 ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 
 Exhibits:
 
 Exhibit
                        No.
                      
                      Description of Exhibit3.1
                      
                      Articles
      of Incorporation, as amended and corrected.*3.2
                      
                      Bylaws.**3.3
                      
                      Specimen
      of Common Stock certificate.*3.4
                      
                      Certificate
      of Designations authorizing the Series A Convertible Preferred Stock, as
      amended and corrected.*3.5
                      
                      Certificate
      of Designations authorizing the Series B Convertible Preferred Stock, as
      amended and corrected.*4.1
                      
                      Series
      B Stock Purchase Agreement, dated as of June 5, 2007, by and among the
      Company, Vision Opportunity Master Fund, Ltd. and each of the other
      investors party thereto.*4.2
                      
                      Registration
      Rights Agreement, dated as of June 5, 2007, by and between the Company and
      Vision Opportunity Master Fund, Ltd.*4.3
                      
                      Lock-Up
      Agreement, dated as of June 5, 2007, by and among the Company and Rise
      Elite.*4.4
                      
                      Form
      of Series A Warrant.*4.5
                      
                      Form
      of Series B Warrant.*4.6
                      
                      Form
      of Series C Warrant.*4.7
                      
                      Form
      of Series D Warrant.*4.8
                      
                      Form
      of Series J Warrant.*4.9
                      
                      Form
      of Series E Warrant issued to Kuhns
Brothers.*
  36
  10.1
                
                Share
      Exchange Agreement, dated as of June 5, 2007, by and between the Company,
      Rise Elite and World Through Limited.*10.2
                
                Securities
      Purchase Agreement, dated as of June 5, 2007, by and between the Company,
      Rise Elite, Vision Opportunity Master Fund, Richard Astrom, Christopher
      Astrom, and certain other parties signatory thereto.*10.3
                
                Form
      of Escrow Agreement, dated June 5, 2007, by and between the Company, Rise
      Elite, Vision and Loeb and Loeb LLP.***10.4
                
                Engagement
      Letter Agreement, dated September 1, 2006, by and
      between Sunway and Kuhns Brothers, Inc.*10.5
                
                Form
      of Securities Escrow Agreement, dated June 5, 2007, by and between the
      Company, Vision Opportunity Master Fund, Ltd., Rise Elite and Loeb and
      Loeb LLP.*10.6
                
                Form
      of Consignment Agreement, dated as of June 5, 2007, between Rise Elite and
      the Shareholders of Sunway.***10.7
                
                Form
      of Consignment Transfer Agreement, dated as of June 5, 2007, between Rise
      Elite and WTL.***10.8
                
                Exclusive
      Purchase Option Agreement, dated as of June 5, 2007, between shareholders
      of Sunway and WTL.***10.9
                
                Intellectual
      Property Transfer Agreement, dated as of June 5, 2007, between Sunway and
      SWT.***10.10
                
                Intellectual
      Property Licensing Agreement, dated as of June 5, 2007, between Sunway and
      SWT.***10.11
                
                Consigned
      Management Agreement, dated as of June 5, 2007, between SWT, Sunway, and
      the shareholders of Sunway.***10.12
                
                Loan
      Agreement, dated as of June 5, 2007, between Sunway and
      SWT.***10.13
                
                Equipment
      Lease Agreement, dated as of June 5, 2007, between Sunway and
      SWT.***10.14
                
                Amendment
      to Registration Rights Agreement dated July 24, 2007 by and between the
      Company, Vision Opportunity Master Fund, Ltd., and Columbia China Capital
      Group, Inc.****21.1
                
                List
      of Subsidiaries.*31.1
                
                Certification
      by Chief Executive Officer pursuant to Sarbanes Oxley Act of 2002 Section
      302.31.2
                
                Certification
      by Chief Financial Officer pursuant to Sarbanes Oxley Act of 2002 Section
      302.32.1
                
                Certification
      by Chief Executive Officer pursuant to Sarbanes-Oxley Act of 2002 Section
      906.32.2
                
                Certification
      by Chief Financial Officer pursuant to Sarbanes-Oxley Act of 2002 Section
      906.
 
 *
Incorporated by reference to the exhibit of the same number to our report on
form 8-K filed with the SEC on June 12, 2007.
 **
Incorporated by reference to the exhibit of the same number to our report on
form 8-K/A filed with the SEC on June 20, 2007.
 ***
Incorporated by reference to the exhibit of the same number to our report on
form 8-K/A filed with the SEC on June 27, 2007.
 ***
Incorporated by reference to the exhibit of the same number to our registration
statement on form S-1 filed with the SEC on September 23, 2008.
  37
  SIGNATURES
 
 In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
  SUNWAY
      GLOBAL INC.February
      14, 2011
                By:
                /s/ Liu BoLiu
      BoChief
      Executive Officer and Chairman (principal executive
    officer)
  In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
 
 Name
                
                Title
                
                Date/s/ Liu Bo
                
                Chief
      Executive Officer and Chairman of the
                
                February
      14, 2011Liu
      Bo
                
                Board
      of Directors/s/ Samuel Sheng
                
                Chief
      Financial Officer (principal financial
                
                February
      14, 2011Samuel
      Sheng
                
                and
      accounting officer)/s/ Liang Deli
                
                Director
                
                February
      14, 2011Liang
      Deli
  38