FORM 10-K/A
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
            (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, 1998
                                       OR
          [ ] 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: _______
                  INTEGRATED TRANSPORTATION NETWORK GROUP INC.
             (Exact name of registrant as specified in its charter)


                  Delaware                                     13-3993618
                  --------                                     ----------
   (State or other jurisdiction of                          (I.R.S. Employer
   incorporation or organization)                          Identification No.)

  575 Lexington Avenue, Suite 410, New York, NY                   10022
  ---------------------------------------------                   -----
   (Address of principal executive offices)                    (Zip Code)

       Registrant's telephone number, including area code: (212) 840-8866

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


     Title of each class              Name of each exchange on which registered
            N/A
--------------------------            ------------------------------------------
--------------------------            ------------------------------------------
           Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, par value $.01
                          ----------------------------
                                 Title of class

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                 Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this form 10-K or any amendment to this
Form 10-K. [ ]

The  aggregate  market value of the voting stock held by  non-affiliates  of the
Registrant,  computed by reference to the closing  price of such stock as quoted
on the National Association of Securities Dealers,  Inc.'s OTC Bulletin Board as
of April 6, 1999, was approximately $30,059,051.  The number of shares of common
stock outstanding at that date was 12,467,945 shares, $.01 par value.


<PAGE>


ITEM 3.  LEGAL PROCEEDINGS

TAXI LICENSES

         A  significant  number  of  taxi  licenses  owned  by  subsidiaries  of
Jinzhenghua Transport,  ITN's subsidiary,  have been the subject of recent legal
proceedings.  These taxi licenses had been seized by certain Chinese Courts as a
result of being pledged as collateral  for bank loans granted to Zhenghua  Group
and its  affiliates  ("Zhenghua")  prior to the  reorganization  of  Jinzhenghua
Transport in March 1997.

         The first proceeding,  commencing May 1999, involved enforcement in the
Shenzhen  Intermediate  People's  Court (the  "Intermediate  Court") in favor of
Shenzhen  Cooperative  Bank  ("SCB") of certain  liens which the SCB was granted
against the Company's taxi licenses in connection with approximately $14,188,000
of loans SCB made to Zhenghua during 1994 to 1996.  These loans had been secured
by various assets of Zhenghua  Group,  which included 378 taxi licenses owned by
Jinzhenghua   Transport.   In  March,  1997  (prior  to  the  reorganization  of
Jinzhenghua  Transport),  Zhenghua  entered into an agreement  with  Jinzhenghua
Transport  pursuant to which Zhenghua agreed to contribute and transfer  various
assets including the 378 taxi licenses to Jinzhenghua Transport.

         In May 1997,  Zhenghua,  with its understanding  that the taxi licenses
were to be released as collateral,  entered into an agreement (the  "Agreement")
with SCB pursuant to which Zhenghua assumed sole responsibility for repaying the
outstanding  loans to SCB and  agreed  to  provide  certain  real  estate as new
collateral  to secure its debt to SCB.  Additionally,  in September,  1998,  2.1
million shares of the common stock of the Company (ITN),  owned by the principal
stockholder,  were pledged to SCB in support of certain guarantees given to SCB.
During the second quarter of 1999, the  Intermediate  Court advised  Jinzhenghua
Transport of the  foreclosure  of the SCB debt and the 378 licenses  were seized
under such  foreclosure.  During November 1999, the Intermediate  Court restored
the seized taxi licenses to Jinzhenghua Transport.

         Subsequent to that  restoration  of taxi  licenses by the  Intermediate
Court's action, the Company obtained written documentation from SCB in which SCB
confirmed   that  neither  the  Company  nor   Jinzhenghua   Transport  had  any
responsibility  or obligation to SCB in connection with any loans made by SCB to
Zhenghua.  The Company  also  obtained  written  confirmation  from the Shenzhen
Vehicle  Registration Bureau that the 378 taxi licenses are owned by Jinzhenghua
and no collateral or lien is registered thereon.

         The second  proceeding  related to an  additional  50 taxi  licenses of
Jinzhenghua  Transport.  In early 1999,  another  lender of  Zhenghua,  Shenzhen
Development  Bank,  sought to foreclose upon 50 of the  Jinzhenghua  Transport's
taxi licenses after  Zhenghua  defaulted on such loans.  In September  1999, the
Shenzhen Luohu District  People's Court reversed a prior  foreclosure  action on
these  taxi  licenses  and  ordered  the return of the 50 taxi  licenses  to the
Company based solely upon procedural errors in the foreclosure,  and the 50 taxi
licenses may be subject to further claims.

         Since these actions took place in a developing China legal system,  any
legal decisions relating to the Company's assets,  including the 378 and 50 taxi
licenses   discussed  above,  may  be  subject  to  further  claims,   liens  or
repossession  by  the  Court  or  the  Chinese  government.   Any  such  further
proceedings might result in a material adverse effect on the financial  position
of the  Company.  (Please also refer to Item 7, "Risk  Factors",  from the prior
submitted Form 10-K of the Company)

DAWSON SCIENCE CORPORATION
--------------------------

         In late 1997,  the United  States  Securities  and Exchange  Commission
commenced an informal inquiry  relating to public  disclosures in 1997 by Dawson
Science Corporation ("Dawson"),  the Company's former parent company. The public
disclosures  involved,  among  other  things,  press  releases  relating  to the
acquisition of Shenzhen Jinzhenghua Transport Industrial  Development Co., Ltd.,
the  value  of  Dawson's  assets,  Dawson's  financial  prospects  and  Dawson's
anticipated revenues and earnings (collectively,  the "Public Disclosures"). The
Company  engaged  counsel in  connection  with the inquiry.  The outcome of such
inquiry could materially and adversely affect the Company.

         On August 28, 1998,  David  Weightman,  a  stockholder  of the Company,
filed a class  action  complaint  in the United  States  District  Court for the
Southern District of New York naming the Company,  Dawson,  and their respective
executive  officers and directors as defendants.  The complaint alleges that the
Public Disclosures omitted or misrepresented material facts. The plaintiff seeks
unspecified  damages on behalf of himself and all other  persons  who  purchased
shares of Dawson  common  stock  between  March 25, 1997 and  December 30, 1997,
together with interest and costs,  including attorney fees, under sections 10(b)
and  20(a)  of the  Securities  and  Exchange  Act of  1934  and  Rule  10(b)(5)
thereunder.

<PAGE>

         The Company currently is engaged in settlement discussions with respect
to the class action referred to above. Based on these  discussions,  the Company
established  in the fourth  quarter of 1998 a liability  and  recorded a related
expense in the amount of $1.5 million in respect of the class action.  There can
be no assurance, however, that the settlement discussions will result in a final
settlement,  or that the liability of a final settlement will be limited to $1.5
million.  If  these  settlement  discussions  are  not  the  basis  for a  final
settlement,  the  liability  with respect to the class  action could  materially
exceed $1.5 million.


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

RESULTS OF OPERATIONS

General
-------

         The Company,  through its 92%-owned  subsidiary,  Shenzhen  Jinzhenghua
Transport Industrial Development Co., Ltd. ("Jinzhenghua Transport"),  primarily
operates  a group of  transportation  related  businesses  (the  "Transportation
Businesses").  The  Transportation  Businesses  are comprised of the  automobile
rental business (the "Rental Business"), the taxi business (the "Taxi Business")
and the automobile repair services business (the "Repair Business"). The Company
does not have any operating business other than the businesses  operated through
Jinzhenghua  Transport.  The Company has also been  developing a hotel business,
which is planned to  commence  operations  in year  2000.  All of the  Company's
revenue and profits are  attributable to Jinzhenghua  Transport's  businesses in
China. All the Company's  operations are located in China. The Company maintains
executive offices in both New York City (USA) and Shenzhen (China).

         For a description  of the Company's  reorganization  in June 1998,  see
Item 1, "Business - Overview".

         The Company's  transportation  businesses began with the acquisition of
taxi licenses in the first auction of such licenses in 1988 in Shenzhen,  China.
Jinzhenghua Transport has continued to acquire taxi licenses and expand its taxi
business into other cities and provinces.

         In 1994, Jinzhenghua Transport expanded its transportation  business to
include automobile repair services in Shenzhen.

         In 1997,  Jinzhenghua  Transport  further  expanded its  transportation
business to include  automobile  rental  services in the  Provinces  of Jiangxi,
Guangdong,  Jiangsu and Shaanxi.  The Rental Business began operations in August
1997 with the purchase of 350 new  automobiles and  establishment  of automobile
rental stations in Ganzhou, Guangzhou, Nanchang, Nanjing and Xian during 1997.

         During the fourth  quarter of 1998,  the Company raised an aggregate of
approximately  $1,600,000  through the sale of an  aggregate  609,523  shares of
Common  Stock,  at the share price of $2.625,  and warrants to purchase  500,000
shares of Common Stock.  In addition,  the company  issued  2,228,571  shares of
Common Stock and warrants to purchase  334,286  shares of Common  Stock,  all in
satisfaction  of   approximately   $3,900,000  in  indebtedness  of  Jinzhenghua
Transport.

         On a  consolidated  basis,  revenue,  net,  increased  $9,805,000  from
$12,538,000 in 1997 to $22,343,000 in 1998. Net income increased $1,983,000 from
$5,886,000 in 1997 to $7,869,000 in 1998.

         The Rental Business,  which began operations in August 1997,  accounted
for  $2,636,000,  or 21.0%,  of the Company's  total  revenue,  net, in 1997 and
$12,600,000,  or 56.4%,  of the Company's  total revenue,  net, in 1998. At both
December 1997 and 1998, the Rental Business had acquired 1,218  automobiles.  Of
the  aggregate  1,218  automobiles  acquired  by the  Rental  Business,  50 were
transferred  to the Taxi  Business and 1,168 are  currently  owned by the Rental
Business,  of which 750 have been placed in service and the  remaining  418 have
not yet been placed in service as the Company does not currently  have available
the funds necessary  (approximately  $2,500,000) to pay the expenses  related to
placing the cars in service  (license  fees,  taxes,  and  levies).  The Company
intends to place these cars in service as and when it has funds  available to do
so. See Item 7. "Management's  Discussion & Analysis of Financial  Condition and
Results of Operations - Liquidity and Capital  Resources."  The Rental  Business
contributed  27.2%, or $1,814,000,  to the Company's  $6,680,000 of total income
before  provision for income tax,  minority  interest and  cumulative  effect of
change  in  accounting  principle  in 1997  and  70.3%,  or  $9,274,000,  to the
Company's  $13,184,000  in income  before  provision  for income  tax,  minority
interest and cumulative effect of change in accounting  principle (and excluding
the $1,500,000 provision for


<PAGE>


class action  settlement) in 1998. See Note 17,  "Segment  Information,"  to the
consolidated  financial  statements  included  in  Part IV of  this  report  for
financial information concerning the Company's segments.

         The Taxi Business  accounted for $8,318,000,  or 37.2% of the Company's
 total revenue,  net, in 1998. At both December 1997 and 1998, the Taxi Business
 had deployed 728 taxis . The Taxi  Business  contributed  $5,161,000  to income
 before  provision for income tax,  minority  interest and cumulative  effect of
 change in accounting  principle in 1997 and $5,058,000 to the Company's  income
 before  provision for income tax,  minority  interest and cumulative  effect of
 change in accounting  principle  (and  excluding the  $1,500,000  provision for
 class action settlement) in 1998, representing 77.3% and 38.4 respectively. See
 Note  17,  "Segment  Information,"  to the  consolidated  financial  statements
 included in Part IV of this report for  financial  information  concerning  the
 Company's segments.

         The Repair Business accounted for $1,425,000,  or 6.4% of the Company's
 total  revenue,  net  and  $464,000,  or 3.5% of the  Company's  income  before
 provision for income tax,  minority interest and cumulative effect of change in
 accounting  principle (and excluding the $1,500,000  provision for class action
 settlement)  in 1998.  During the current year,  revenue,  net, from the Repair
 Business  was  $1,425,000,  compared  with  $1,477,000  in 1997,  a decrease of
 $52,000,  or 3.5%.  This  decrease  was  attributable  to a minor  decrease  in
 business in 1998,  compared to 1997. Taxi cab licenses are renewable every four
 years.  The Company expects income from taxi cab inspections to fluctuate based
 on the number of licenses to be renewed in a given year. See Note 17,  "Segment
 Information," to the consolidated  financial  statements included in Part IV of
 this report for financial information concerning the Company's segments.

         The Company's only  operations  besides the Rental  Business,  the Taxi
Business and the Repair  Business  relate to the hotel being  developed in Hunan
Province,  in respect of which  neither  revenue nor expenses  were  recorded in
1998.  All  expenditures  related to the hotel  before and during the year ended
December  31,  1998  have been  capitalized  and  recorded  as  construction  in
progress.

         During 1997 and 1998, the Company's  income before provision for income
tax, minority  interest and cumulative effect of change in accounting  principle
reflects  $822,000 and $750,000  respectively,  of  accounting,  legal and other
professional  and  advisory  expenses  that related  primarily to the  Company's
reorganization.

         During 1998, the Company had interest expense,  net of interest income,
of $660,000 which reflected  interest expense of $675,000 and interest income of
15,000.

         The Company had entered into two agreements to purchase an aggregate of
5,000 automobiles for an aggregate purchase price of approximately  $78,811,000.
One  contract,  which  was for 2,000  cars for an  aggregate  purchase  price of
$31,336,000,  has been terminated by the Company  without  liability or penalty.
The other purchase contract,  which was subsequently  cancelled during 1999 with
payment  of  penalties  and car  parking  charges,  was for  3,000  cars  for an
aggregate purchase price of $47,475,000.

         The Company plans to continue to expand the Rental  Business as rapidly
as the  Company's  capital  resources  permit.  The Company plans to continue to
expand the Taxi Business through selective  acquisitions in certain cities.  The
Company  plans to expand the Repair  Business as  necessary to  accommodate  the
expansion  of the  Rental  Business  and Taxi  Business.  However,  the  Company
currently does not have sufficient capital to expand its businesses. See Item 7.
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations - Liquidity and Capital Resources."

         The  Company  enjoys  preferential  tax  treatment  as a result  of its
location in  Shenzhen,  a Special  Economic  Zone.  Enterprises  in Shenzhen are
subject  to an income tax rate of 15%,  compared  with the  standard  enterprise
income tax rate of 33%. In addition,  Shenzhen enterprises in the transportation
service  industry have a 100% income tax credit for the first year in which they
have a profit and a 50%  income  tax  credit  for the  second  and third  years.
Various other localities in China provide similar tax incentives. As the Company
matures,  fewer  tax  incentives  are and  will  be  available  to the  Company.
Therefore,  the  Company's  effective tax rate is expected to increase in future
periods  which will  increase  income tax  expense  as a  percentage  of taxable
income.

<PAGE>


Year Ended December 31, 1998 Compared With Year Ended December 31, 1997
-----------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                 Year Ended                        Year Ended
                                                  December       Percentage of      December      Percentage of
                                                 31,  1998        Revenue, Net      31, 1997      Revenue, Net
                                                ------------   --------------     ------------   --------------
<S>                                             <C>             <C>               <C>           <C>
Revenue, net                                      $22,343,000      100.0%          $12,538,000        100.0
Total operating expenses                            8,499,000       38.0             5,132,000         40.9
Total expenses(1)                                  11,633,000       52.1             5,858,000         46.7
Income before provision for  income tax,
 minority interest and cumulative effect of
change in accounting principle(2)                  11,684,000       52.3             6,680,000         53.3
Income before minority interest and
cumulative effect of change in accounting
principle(2)                                        9,774,000       43.7             6,223,000         49.6
Net income(1)                                       7,869,000       35.2             5,886,000         46.9
</TABLE>


(1)      Includes in 1998  $2,474,000  in  expenses,  comprised  of a $1,500,000
         provision  for   settlement  of  class  action  lawsuit  and  $974,000,
         representing the cumulative effect of a change in accounting  principle
         related  to the write off of  organization  costs and  excludes  income
         taxes.

(2)      Includes in 1998 a $1,500,000  provision for settlement of class action
         lawsuit.

         Revenue,  net was  $22,343,000  in 1998,  an  increase  of  78.2%  from
$12,538,000  in 1997.  The increase was primarily due to increased  revenue from
the Rental  Business  of  $9,964,000.  The Taxi,  Rental  and Repair  Businesses
contributed  $8,318,000  (37.2%),  $12,600,000  (56.4%) and  $1,425,000  (6.4%),
respectively,  to  revenue,  net, in 1998,  compared  with  $8,425,000  (67.2%),
$2,636,000 (21.0%), and $1,477,000 (11.8%), respectively, in 1997. Revenue, net,
from the Taxi Business  decreased from $8,425,000 in 1997 to $8,318,000 in 1998,
a 1.3% decrease.  Revenue,  net, for the Repair Business was $1,425,000 in 1998,
compared to $1,477,000 in the 1997 period, a 3.5% decrease.

         Total expenses  (excluding  income taxes) were  $11,633,000 in 1998, an
increase of $5,775,000  or 98.6% from  $5,858,000  in 1997.  During 1998,  total
expenses as a percentage of revenue,  net, increased to 52.1%, compared to 46.7%
in 1997. The increase in the amount of total expenses was comprised primarily of
a $1,543,000 increase in depreciation of revenue earning equipment,  a 1,823,000
increase in other operating  expenses,  a $1,500,000  provision for class action
settlement,  and a one time charge of $974,000  associated  with the  cumulative
effect of a change in accounting  principle related to write off of organization
costs.

         Operating  expenses were  $8,499,000 in 1998, an increase of $3,367,000
or  65.6%  from  $5,132,000  in  1997.  During  1998,  operating  expenses  as a
percentage of revenue,  net, decreased to 38.0%,  compared to 40.9% in 1997. The
increase in operating expenses was comprised  primarily of a $1,543,000 increase
in depreciation of revenue earning  equipment and a 1,823,000  increase in other
operating expenses.

         Depreciation and Amortization  Expense.  During 1998,  Depreciation and
amortization  expense was  $4,234,000,  compared  with  $2,883,000  in 1997,  an
increase of $1,351,000.  During 1998, the depreciation and amortization  expense
associated  with the Rental  Business,  Taxi Business,  and Repair  Business was
$2,087,000,  2,068,000, and 78,000, respectively.  Depreciation and amortization
expense,  as a percentage  of revenue,  net,  decreased  during 1998,  to 19.0%,
compared  to 23.0%  during  1997.  The  decrease  in  depreciation  expense as a
percentage  of revenue,  net, was due  primarily to the  expansion of the Rental
Business which has lower depreciation, as a percentage of revenue, than the Taxi
Business.  The  increase  in the amount of  depreciation  and  amortization  was
primarily due to a $1,600,000 increase in depreciation on new rental cars.

         Other Operating  Expenses.  Other operating  expenses  includes traffic
regulation  fees, road maintenance  fees,  insurance,  salaries,  rent, costs of
materials,  depreciation  (non-revenue  earning equipment) and other general and
administrative expenses.  During 1998, other operating expenses were $4,515,000,
compared with  $2,692,000  during 1997, an increase of $1,823,000.  During 1998,
other operating expenses,  as a percentage of revenue,  net, decreased to 20.2%,
compared with 21.5% for 1997. The decrease in operating expenses as a percentage
of revenue,  net, was due primarily to cost control measurers implemented in the
Taxi Business and expansion of the Rental  Business  (which has lower  operating
costs, as a percentage of revenue, than the Taxi Business).  The increase in the
amount of other operating  expenses was primarily due to a $971,000  increase in
expenses related to the new Rental Business,


<PAGE>


$245,000  in losses due to  disposal of revenue  earning  equipment  by the Taxi
Business, and a bad debt write-off of $240,000 by the Repair Business.

         Income  before  provision  for  income  tax,   minority   interest  and
cumulative  effective of change in accounting principle was $11,684,000 in 1998,
an  increase  of 74.9% from  $6,680,000  in 1997.  Before  deducting  $3,112,000
(consisting  of $1,412,000 in general and  administrative  expenses,  $1,500,000
provision  for class action  settlement,  and $200,000 in interest  expense) and
$934,000  of  expenses of the parent  company  (unconsolidated)  during 1998 and
1997,   respectively,   the  Rental,  Taxi  and  Repair  Businesses  contributed
$9,274,000,  $5,058,000,  and  $464,000,  respectively,  to total income  before
provision for income tax,  minority  interest and cumulative effect of change in
accounting  principle  in  1998,  compared  with  $1,814,000,   $5,161,000,  and
$639,000,  respectively,  in 1997.  The increase in income before  provision for
income tax,  minority  interest and  cumulative  effect of change in  accounting
principle  is primarily  attributable  to  increased  income from the  Company's
Rental Business,  partially  offset by a $1,500,000  provision for settlement of
class action lawsuit and increases in accounting,  legal and other  professional
and advisory expenses related to the Reorganization.

         Provision for income tax was $1,910,000 in 1998 (14.5% of income before
provision for income tax,  minority  interest and cumulative effect of change in
accounting  principle (and excluding the $1,500,000  provision for settlement of
class action),  compared with $457,000 in 1997 (6.8% of income before  provision
for income tax and minority  interest).  The increase was  primarily a result of
increased taxable income.

         Minority interest was $931,000 in 1998, compared with $337,000 in 1997,
which reflects the fact that the Company entered into new joint venture projects
in 1997, which have generated increased income during 1998.

         As a result  of the  foregoing,  net  income  was  $7,869,000  in 1998,
compared with $5,886,000 in 1997.

         For the year  ended  December  31,  1998,  excluding  the $1.5  million
provision for class action settlement, $975,000 in expense related to the change
in accounting  principle regarding write off of organization costs, and $750,000
in professional fees related to the Reorganization, the Company's net income was
$11,093,000,  an  increase  of  $5,207,000  or 88.5%,  compared to net income of
$5,886,000 in 1997.


<PAGE>


1997 Compared With 1996
-----------------------




<TABLE>
<CAPTION>

                                                                  Percentage
                                                                  of Revenue,                   Percentage of
                                                     1997            Net            1996        Revenue, Net
                                                  ------------   ------------   -----------     -------------
<S>                                               <C>           <C>            <C>             <C>
Revenue, net                                       $12,538,000      100.0%       $9,211,000         100.0%
Operating Expenses                                   5,132,000       40.9         3,487,000          37.9
Total expenses(1)                                    5,858,000       46.7         4,091,000          44.4
Income before provision for  income tax,
  minority interest and cumulative
  effect of change in accounting principle           6,680,000       53.3         5,120,000          55.6
Income before minority interest and
  cumulative effect of change in
  accounting principle                               6,223,000       49.6         4,720,000          51.2
Net income                                           5,886,000       46.9         4,563,000          49.5

</TABLE>

         (1)      Excludes income taxes.


         Revenue,  net,  was  $12,538,000  in 1997,  an  increase  of 36.1% from
$9,211,000  in 1996.  The  increase was  primarily  due to the  contribution  of
$2,636,000  in 1997 from the new Rental  Business  started in August  1997.  The
Taxi,  Rental  and  Repair  Businesses   contributed  67.2%,  21.0%  and  11.8%,
respectively,  to revenue,  net,  in 1997,  compared  with 83.8%,  0% and 16.2%,
respectively,  in  1996.  Revenue,  net,  from the Taxi  Business  increased  to
$8,425,000 in 1997 from  $7,722,000 in 1996, a 9.1%  increase.  The increase was
primarily  due to $151,000 of revenue from 50  additional  taxi cabs in Ganzhou,
$180,000 of revenue  from  increases  in  night-shift  taxi  driver  activities,
$262,000  of revenue  from  renewals of taxi driver  contracts  and  $110,000 of
revenue from  increases in monthly.


<PAGE>


rental  payments from taxi drivers.  Revenue,  net, from the Repair Business was
$1,477,000 in 1997, an immaterial change from $1,489,000 in 1996.

         Total  expenses  (excluding  income taxes) were  $5,858,000 in 1997, an
increase of $1,767,000,  or 43.2%,  from  $4,091,000 in 1996. The increase,  was
primarily attributable to a $419,000 increase in depreciation of revenue earning
equipment,  a  $122,000  increase  in net  interest  expense,  and a  $1,224,000
increase in other  operating  expenses.  The increase in depreciation of revenue
earning  equipment was primarily due to $385,000 of  depreciation on rental cars
related to the new Rental  Business.  The increase in net  interest  expense was
primarily due to fees paid to banks for the extention of short-term loans and an
increase in interest-bearing  debt. The increase in other operating expenses was
primarily due to $403,000 of expenses related to the new Rental Business,  which
commenced operations in August 1997, and $934,000 of accounting, legal and other
professional and advisory  expenses that began to accrue in mid-1997 and related
primarily to the Reorganization.  See "General" above. In addition, increases in
direct  fixed  costs and  management  expenses  related to the  Repair  Business
($123,000)  and  increases  in  operating  costs  due to  expansion  of the Taxi
Business  ($95,000) were offset by  efficiencies  in office  expenses,  rent and
maintenance  charges in the Taxi and Repair  Businesses.  The  Rental,  Taxi and
Repair Businesses  contributed  15.1%,  82.2% and 2.7%,  respectively,  to total
depreciation  and  amortization  in  1997,  compared  to  0%,  96.2%  and  3.8%,
respectively, in 1996.

         Income  before  provision  for  income  tax,   minority   interest  and
cumulative  effect of change in  accounting  principle  was  $6,680,000  in 1997
(53.3% of revenue,  net), an increase of 30.5% from $5,120,000 in 1996 (55.6% of
revenue net). The Rental,  Taxi and Repair Businesses  contributed  27.2%, 77.3%
and 9.6%,  respectively,  to total  income  before  provision  for  income  tax,
minority  interest and  cumulative  effect of change in accounting  principle in
1997, compared with 0%, 84.9% and 15.1%, respectively,  in 1996. The increase in
income before provision for income tax,  minority interest and cumulative effect
of change in accounting  principle is primarily  attributable to income from the
Company's new Rental Business, revenue generated from 50 additional taxi cabs in
Ganzhou,  additional  income  generated by increases in night-shift  taxi driver
activities,  additional  income  from  renewals  of taxi  driver  contracts  and
efficiencies in office  expenses,  rent and maintenance  charges in the Taxi and
Repair  Businesses.  The  increase in income  before  provision  for income tax,
minority  interest and cumulative  effect of change in accounting  principle was
partially  offset by  increases in direct  fixed costs and  management  expenses
associated with the Repair Business. The decrease in income before provision for
income tax,  minority  interest and  cumulative  effect of change in  accounting
principle  as a  percentage  of  revenue,  net,  was  primarily  the  result  of
parent-company  accounting,  legal and other professional and advisory costs and
expenses  incident  to the  Reorganization  and  related  matters  beginning  in
mid-1997.

         Provision  for income tax was  $457,000 in 1997 (6.8% of income  before
provision for income tax and minority interest),  compared with $400,000 in 1996
(7.8% of income  before  provision  for income tax and minority  interest).  The
increase was primarily a result of increased taxable income.

         Minority  interest  was  $337,000  in 1997,  an increase of 114.6% from
$157,000 in 1996,  which  reflects  the Company  having  entered  into new joint
venture projects in 1997.

         As a result of the  foregoing,  net income was  $5,886,000  in 1997, an
increase of 29.0% from $4,563,000 in 1996.


LIQUIDITY AND CAPITAL RESOURCES

         Generally, the Rental and Taxi Businesses are cash flow businesses that
do not  require  significant  amounts of working  capital;  but they are capital
intensive and require  substantial  capital  expenditures for revenue  producing
equipment. Working capital for the Repair Business was initially financed mainly
by cash flow from the Taxi Business.

         At December 31, 1998, the Company had trade receivables  ($105,000) and
cash and cash equivalents  ($4,910,000)  aggregating  $5,015,000.  The Company's
liabilities due within a year aggregated  $8,549,000.  Accordingly,  at December
31, 1998,  the  Company's  liabilities  due within a year exceeded cash and cash
equivalents  and  receivables  by  $3,534,000,  compared  with  $12,157,000,  at
December 31, 1997.  This was primarily  attributable  to an overall  decrease in
liabilities due within a year of approximately $9,050,000,  consisting primarily
of decreases in bank loans ($1.4  million),  notes payable (4.0 million) and due
to affiliates ($6.1 million), partially offset by increased accrued expenses and
income taxes ($3.1 million).

         As the Company's  financial  resources  permit,  the Company intends to
make capital expenditures, primarily for the purchase of new automobiles for the
Taxi and Rental  Businesses.  The Company  contracted  with a car  manufacturing
company in early 1998 to acquire  3,000 cars for car rental  business  purposes.
The contracted  amount for such agreement was  $47,475,000  and the  outstanding


<PAGE>


commitment  was  $36,000,000  after  deduction of deposits paid of  $11,475,000.
Subsequently,  the Company entered into a  supplementary  agreement with the car
supplier to extend the payment due date under the  contract.  During 1999,  as a
result of the Company not performing its  obligations  under such contract,  the
Company has entered  into a third  agreement  with the car supplier to terminate
the above two  agreements  by  compensating  the car  supplier  with  payment of
penalties  and car  parking  charges.  Under that  cancellation  agreement,  the
Company  was  subject  to a penalty of  $1,812,000  and car  parking  charges of
$884,000 (aggregating $2,696,000), the amount of which was charged to operations
during the quarter ended June 30, 1999.  $6,847,000 of the deposits paid will be
applied by delivery of 390 cars by early year 2000 and the balance of $1,932,000
is treated as prepayment for purchase of spare parts from the car supplier.

         Additionally, the Company has contracted with two car suppliers in June
1999 to acquire 300 cars for its Taxi Business.  The contracted  amount for such
agreements  were  $4,168,000.  A down payment of $2,175,000 has been made to the
supplier as of September 30, 1999.

         At December 31, 1998, the estimated cost of completing  construction of
the hotel  project was  approximately  $4.0  million.  The Company has suspended
construction  of the hotel  project,  as the  Company  does not  currently  have
sufficient capital to fund the construction of such project. The Company intends
to resume  construction  on the hotel  project at such time as the  Company  has
sufficient capital to do so.

         The Company has  defaulted on payment of existing  indebtedness  in the
aggregate  principal amount of $320,000 which was due and payable in April 1998.
The Company is currently negotiating to restructure this debt. In addition,  the
Company  has  existing   indebtedness  in  the  aggregate  principal  amount  of
approximately  $2.7  million,  which was due and  payable  in March,  1999.  The
Company  was unable to pay by the due date the  amount due with  respect to this
indebtedness.  The Company has  negotiated  an  agreement to extend the time for
payment for this $2.7 million in indebtedness to April, 2000.

         As described  under Item 3, "Legal  Proceedings,"  based on  settlement
discussions  with  respect to the class  action  lawsuit  against  the  Company,
liability  and  recorded  a related  expense  in the  amount of $1.5  million in
respect  of such  lawsuit.  If these  discussions  do not form the basis for any
final settlement, the liability arising out of the class action could materially
exceed $1.5 million.  The Company  expects to satisfy any amounts owing pursuant
to any settlement  through issuance of shares of common stock. If, however,  the
Company is required  to pay any  settlement  in cash,  there could be a material
adverse effect on the Company's financial condition.

         Pursuant  to  Jinzhenghua  Transport's  organizational  documents,  the
Company and the  minority  owners of  Jinzhenghua  Transport  were  obligated to
contribute $9.2 Million and $800,000 (in cash or assets),  respectively,  to the
registered  capital of Jinzhenghua  Transport.  In  particular,  the Company was
obligated to make its capital contribution to Jinzhenghua Transport in two equal
installments  of $4.6  Million,  the first of which was due October 30, 1998 and
the second of which will be due  December 26,  1999.  The  minority  owners were
obligated to contribute $340,000 by October 30, 1998 and the balance by December
26, 1999. To date,  the Company has  contributed  approximately  $300,000 of its
aggregate  $9.2  Million  obligation  to the capital of  Jinzhenghua  Transport.
Accordingly,  the Company has not performed on its obligation to contribute $4.2
Million to Jinzhenghua  Transport by October 30, 1998. The minority  owners also
did not perform on their  obligations  to contribute  the aggregate  $340,000 by
October 30, 1998.

         The  organizational  documents  were amended under date of November 22,
1999.  Under the amended  documents,  the Company  will be obligated to make its
capital contribution to Jinzhenghua  Transport in two equal instalments of $4.45
million,  the first of which  will be due  December  31,  2000 and the second of
which will be due August  28,2001.  The  minority  owners will be  obligated  to
contribute  $22,000 by February  29, 2000,  $329,000 by December  31, 2000,  and
$449,000 by August 28,2001. In the same amendment, Jinzhenghua Transport changed
its  corporate  name to  Shenzhen  Yunrun  Transport  Group Co.,  Ltd.  ("Yunrun
Transport").  The amendment was approved by the appropriate  Chinese authorities
on December 17,  1999.  On December 27,  1999,  the Chinese  government  renewed
Yunrun Transport's business license to August 28, 2001.

         The Company  expects  that it will be  required  to make the  remaining
capital  contribution  to Yunrun ($8.9  Million) by the  appropriate  due dates.
Although there can be no assurance, the Company believes that it will be able to
raise sufficient capital from additional  financings to contribute the remaining
balance of $8.9 Million to the capital of Yunrun by the  appropriate  due dates.
If the Company fails timely to make any of the required contribution or fails to
obtain an extension  approved by the  government,  the  government may cancel or
refuse to renew Yunrun's business license,  which would materially and adversely
affect the Company.


<PAGE>


         The  Company  believes  that  through a  combination  of cash flow from
operations and proceeds from potential  financings,  the Company will be able to
repay existing  indebtedness  and finance  capital  expenditures,  including the
purchase of some new  automobiles.  At present,  the Company has no  commitments
from third parties to finance  capital  expenditures  or to refinance any of its
existing indebtedness, and does not have sufficient resources to finance planned
capital  expenditures or to repay such  indebtedness  without  refinancing.  The
Company expects to generate  significant cash flow from operations and will seek
to obtain capital from the sale of securities,  borrowings, and vendor financing
arrangements.  There can be no  assurance  the  Company  will be  successful  in
raising additional capital,  or, if it raises additional  capital,  the terms on
which such capital will be raised.


<PAGE>


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





                            INTEGRATED TRANSPORTATION
                                   NETWORK GROUP INC.
                                     AND SUBSIDIARIES








                                               CONSOLIDATED FINANCIAL STATEMENTS
                                    YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998


<PAGE>


-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                                                       CONTENTS
-------------------------------------------------------------------------------



        REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                    31

        CONSOLIDATED FINANCIAL STATEMENTS:
           Balance sheets                                                     32
           Statements of operations                                           33
           Statements of shareholders' equity                                 34
           Statements of cash flows                                           35
           Notes to consolidated financial statements                    36 - 57


<PAGE>


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Integrated Transportation Network Group Inc.
New York, New York

We have  audited the  accompanying  consolidated  balance  sheets of  Integrated
Transportation  Network Group Inc. and  subsidiaries  ("ITN") as of December 31,
1997  and  1998,  and  the  related   consolidated   statements  of  operations,
shareholders'  equity  and cash  flows for each of the  years in the  three-year
period  ended   December  31,  1998.   These   financial   statements   are  the
responsibility of ITN's management.
Our responsibility is to express an opinion on the financial statements based on
our audits.

We conducted our audits in  accordance  with United  States  generally  accepted
auditing  standards.  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.

As more fully discussed in Note 12(a) to the consolidated  financial statements,
during the months of May to November 1999,  uncertainties  arose as to whether a
total of 528 taxi  licenses  owned by the  Company in the  People's  Republic of
China  collateralize  borrowings by entities  controlled  by Shenzhen  Transport
Zhenghua  Group Co. Ltd.,  an affiliate of the Company.  Such  borrowings  arose
prior to the  reorganization  discussed in Note 1. Ownership of the licenses had
reverted back to the Company as a result of legal and other proceedings.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in  all  material  respects,   the  financial  position  of  Integrated
Transportation  Network Group Inc. and  subsidiaries as of December 31, 1997 and
1998,  and the results of their  operations and their cash flows for each of the
years in the  three-year  period ended  December 31, 1998,  in  conformity  with
United States generally accepted accounting principles.

As  discussed  in Note 1 to the  consolidated  financial  statements,  effective
January 1, 1998, ITN changed its method of accounting for organization costs.

/s/ BBO International
BDO International

Hong Kong

April 12, 1999 (except for Note 12, which is as of December 27, 1999)


<PAGE>


-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                                     CONSOLIDATED BALANCE SHEETS
                                                       (US DOLLARS IN THOUSANDS)
-------------------------------------------------------------------------------


<TABLE>
<CAPTION>

<S>                                                                                <C>              <C>
 December 31,                                                                                  1997             1998
 ---------------------------------------------------------------------------------- ---------------- -----------------
 ASSETS
 Cash and cash equivalents                                                                 $  4,723         $  4,910
 Trade receivables, net of allowance of $67 and $-0-, respectively                              719              105
 Prepayments and other assets (Note 6)                                                          366           17,077
 Inventories (Note 9)                                                                            97               38
 Property and equipment, net (Notes 2 and 9)                                                  1,363            1,136
 Revenue-earning equipment, net (Notes 3 and 8)                                              31,488           29,379
 Taxi licenses, net (Notes 4 and 8 and 12)                                                   12,093           11,814
 Construction-in-progress (Note 5)                                                            2,321            2,263
 Organization costs, net                                                                        847                -
 Deposit (Note 12)                                                                            1,937            1,935
 ---------------------------------------------------------------------------------- ---------------- -----------------
                                                                                            $55,954          $68,657
 ---------------------------------------------------------------------------------- ---------------- -----------------
 LIABILITIES AND SHAREHOLDERS' EQUITY
 LIABILITIES:
    Bank loans (Note 8)                                                                    $  3,776         $  2,402
    Notes payable (Note 9)                                                                    4,320              320
    Trade payables                                                                            1,619            1,167
    Other payables (Note 7)                                                                   3,522            5,160
    Due to directors                                                                            286               71
    Due to affiliate, Zhenghua (Note 10(b))                                                   6,220              149
    Due to minority shareholders, net (Note 10(a))                                               19               19
    Deferred revenue                                                                          2,983            3,001
    Accrued expenses                                                                            476            1,770
    Income tax payable                                                                          883            2,651
    Deferred income taxes (Note 11)                                                             102              247
 ---------------------------------------------------------------------------------- ---------------- -----------------
               TOTAL LIABILITIES                                                             24,206           16,957
 ---------------------------------------------------------------------------------- ---------------- -----------------
 MINORITY INTEREST                                                                            1,567            2,919
 ---------------------------------------------------------------------------------- ---------------- -----------------
 COMMITMENTS AND CONTINGENCIES (NOTES 12 AND 13)
 SHAREHOLDERS' EQUITY:
    Common stock, $.01 par value - authorized 50,000,000 shares; issued and                      60              104
       outstanding 6,041,573 shares at December 31, 1997 and 10,435,030 shares at
       December 31, 1998
    Additional paid-in capital                                                               12,665           23,385
    Retained earnings                                                                        17,050           24,919
    Accumulated other comprehensive income - foreign currency translation                       406              373
       adjustments
 ---------------------------------------------------------------------------------- ---------------- -----------------
               TOTAL SHAREHOLDERS' EQUITY                                                    30,181           48,781
 ---------------------------------------------------------------------------------- ---------------- -----------------
                                                                                            $55,954          $68,657
 ---------------------------------------------------------------------------------- ---------------- -----------------
</TABLE>
                   See  accompanying notes to consolidated financial statements.


<PAGE>


-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                           CONSOLIDATED STATEMENTS OF OPERATIONS
                   (US DOLLARS AND SHARES IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>


  Year ended December 31,                                                     1996             1997              1998
 <S>                                                                     <C>               <C>               <C>
  ---------------------------------------------------------------------------------------------------------------------
  REVENUE, NET                                                            $  9,211          $12,538           $22,343
  ---------------------------------------------------------------------------------------------------------------------
  OPERATING EXPENSES:
     Depreciation of revenue-earning equipment                               1,755            2,174             3,717
     Amortization of taxi licenses                                             264              266               267
     Other operating expenses                                                1,468            2,692             4,515
  ---------------------------------------------------------------------------------------------------------------------
             TOTAL OPERATING EXPENSES                                        3,487            5,132             8,499
  ---------------------------------------------------------------------------------------------------------------------
             OPERATING INCOME                                                5,724            7,406            13,844
  OTHER EXPENSES:
     Interest expense, net of interest income                                 (604)            (726)             (660)
     Provision for class action lawsuit (Note 12 and 19)                         -                -            (1,500)
  ---------------------------------------------------------------------------------------------------------------------
             INCOME BEFORE PROVISION FOR INCOME TAX, MINORITY                5,120            6,680            11,684
                INTEREST AND CUMULATIVE EFFECT OF CHANGE IN
                ACCOUNTING PRINCIPLE
  PROVISION FOR INCOME TAX (NOTE 11)                                           400              457             1,910
  ---------------------------------------------------------------------------------------------------------------------
             INCOME BEFORE MINORITY INTEREST AND CUMULATIVE                  4,720            6,223             9,774
                EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
  MINORITY INTEREST                                                            157              337               931
  ---------------------------------------------------------------------------------------------------------------------
             INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN                    4,563            5,886             8,843
                ACCOUNTING PRINCIPLE
  CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE -                          -                -               974
     WRITE-OFF OF ORGANIZATION COSTS (NOTE 1 AND 19)
  ---------------------------------------------------------------------------------------------------------------------
  NET INCOME                                                                 4,563            5,886             7,869
  OTHER COMPREHENSIVE INCOME (LOSS) - FOREIGN CURRENCY                          39               59               (33)
     TRANSLATION ADJUSTMENTS
  ---------------------------------------------------------------------------------------------------------------------
  COMPREHENSIVE INCOME                                                    $  4,602         $  5,945          $  7,836
  ---------------------------------------------------------------------------------------------------------------------
  NET INCOME PER COMMON SHARE (NOTE 14):
     Before cumulative effect of change in accounting principle:
          Basic                                                        $      .76        $     .97         $    1.21
          Diluted                                                             .76              .97              1.17
     After cumulative effect of change in accounting principle:
          Basic                                                        $      .76        $     .97         $    1.07
          Diluted                                                             .76              .97              1.04
  ---------------------------------------------------------------------------------------------------------------------
  WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (NOTE 14):
        Basic                                                                6,042            6,042             7,321
        Diluted                                                              6,042            6,132             7,648
  ---------------------------------------------------------------------------------------------------------------------
</TABLE>

                    See accompanying notes to consolidated financial statements.


<PAGE>


-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                                       (US DOLLARS IN THOUSANDS)
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>


 Years ended December 31, 1996, 1997 and 1998
 ---------------------------------------------------------------------------------------------------------------------
                                                                Additional   Retained    Accumulated        Total
                                                                  paid-in    earnings       other       shareholders'
                                                                  capital               comprehensive      equity
                                                                                           income -
                                                                                           foreign
                                                                                           currency
                                                                                         translation
                                                                                         adjustments
                                             Common stock
                                          Shares      Amount
 ---------------------------------------------------------------------------------------------------------------------
<S>                                      <C>         <C>        <C>          <C>              <C>         <C>
 BALANCE, DECEMBER 31, 1995                      -     $     -   $  5,142     $  6,601         $ 308         $12,051
 Contribution of capital                         -           -        107            -             -             107
 Foreign currency translation                    -           -          -            -            39              39
    adjustments
 Net income                                      -           -          -        4,563             -           4,563
 ---------------------------------------------------------------------------------------------------------------------
 BALANCE, DECEMBER 31, 1996                      -           -      5,249       11,164           347          16,760
 Contribution of capital (Notes 10               -           -      7,476            -             -           7,476
    and 16)
 Reorganization-March 1997 (Note 1)      6,041,573          60        (60)           -             -               -
 Foreign currency translation                    -           -          -            -            59              59
    adjustments
 Net income                                      -           -          -        5,886             -           5,886
 ---------------------------------------------------------------------------------------------------------------------
 BALANCE, DECEMBER 31, 1997              6,041,573          60     12,665       17,050           406          30,181
 Issuance of shares for consulting           7,500           -         33            -             -              33
    services (Note 12)
 Issuance of shares for liquidated          17,268           1        163            -             -             164
    damages under financing agreement
    (Note 9(a))
 Issuance of shares with respect to      1,324,345          13      4,227            -             -           4,240
    conversion of promissory notes
    (Note 9(b))
 Issuance of shares in connection          206,250           2        673            -             -             675
    with private placement during May
    1998, net of issuance costs
    (Note 13(a))
 Issuance of shares in connection          609,523           6      1,434            -             -           1,440
    with private placement during
    December 1998, net of issuance
    costs (Note 13(b))
 Conversion of debt to equity            2,228,571          22      3,878            -             -           3,900
    (Note 13(c))
 Receipt of promissory note from                 -           -        312            -             -             312
    minority shareholder (Note 13(d))
 Foreign currency translation                    -           -          -            -           (33)            (33)
    adjustments
 Net income                                      -           -          -        7,869             -           7,869
 ---------------------------------------------------------------------------------------------------------------------
 BALANCE, DECEMBER 31, 1998             10,435,030        $104    $23,385      $24,919         $ 373         $48,781
 ---------------------------------------------------------------------------------------------------------------------
</TABLE>

                 See   accompanying notes to consolidated financial statements.


<PAGE>




-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------


<TABLE>
<CAPTION>


 Year ended December 31,                                                         1996            1997            1998
 ---------------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>            <C>            <C>
 CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                                $ 4,563        $  5,886       $   7,869
    Adjustments to reconcile net income to net cash provided by
       operating activities:
         Depreciation and amortization of property, equipment and               1,884           2,617           3,967
            revenue-earning equipment
         Amortization of taxi licenses                                            264             266             267
         Minority interest                                                        244             703           1,352
         Amortization and write-off of organization costs                          35              50             974
         Deferred income tax                                                       56              27             145
         Exchange adjustment                                                      (18)            (10)             15
         Loss on disposal of fixed assets                                           -               -             275
         Changes in assets and liabilities:
            (Increase) decrease in trade and other receivables                   (428)           (204)            375
            (Increase) decrease in inventories                                    (29)            (68)             58
            (Decrease) increase in trade and other payables                      (200)          2,669             679
            Increase in accrued expenses                                           17             459           1,560
            Increase in income tax payable                                        361             391           1,768
            (Decrease) increase in deferred income                               (764)            830              18
 ---------------------------------------------------------------------------------------------------------------------
               NET CASH PROVIDED BY OPERATING ACTIVITIES                        5,985          13,616          19,322
 ---------------------------------------------------------------------------------------------------------------------
 CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of property, equipment and revenue-earning equipment             (608)         (1,489)         (2,028)
    Proceeds from sale of property, equipment and revenue-earning                  94               -               -
       equipment
    Organization costs                                                            (51)           (735)           (127)
    Prepayment for acquisition of revenue-earning equipment                         -               -         (15,704)
 ---------------------------------------------------------------------------------------------------------------------
               NET CASH USED IN INVESTING ACTIVITIES                             (565)         (2,224)        (17,859)
 ---------------------------------------------------------------------------------------------------------------------
 CASH FLOWS FROM FINANCING ACTIVITIES:
    Borrowing on bank loans                                                       200             605               -
    Repayments of bank loans                                                        -            (926)         (1,169)
    Repayments of amount due to affiliates                                     (5,210)        (11,565)         (2,457)
    Amount due from (to) minority shareholder                                      20            (362)              -
    Proceeds from notes payable                                                     -           4,320               -
    Proceeds from issuance of common stock, net                                     -               -           2,350
 ---------------------------------------------------------------------------------------------------------------------
               NET CASH USED IN FINANCING ACTIVITIES                           (4,990)         (7,928)         (1,276)
 ---------------------------------------------------------------------------------------------------------------------
 NET INCREASE IN CASH AND CASH EQUIVALENTS                                        430           3,464             187
 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                   829           1,259           4,723
 ---------------------------------------------------------------------------------------------------------------------
 CASH AND CASH EQUIVALENTS, END OF PERIOD                                     $ 1,259       $   4,723       $   4,910
 ---------------------------------------------------------------------------------------------------------------------
</TABLE>

                  See  accompanying notes to consolidated financial statements.


<PAGE>


-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------


1.   ORGANIZATION AND      Basis of Presentation and Reorganization
     SUMMARY OF
     SIGNIFICANT
     ACCOUNTING POLICIES

                           On January 25, 1998, the  controlling  shareholder of
                           Dawson Science  Corporation  ("Dawson")  formed a new
                           Delaware   corporation,   Integrated   Transportation
                           Network   Group  Inc.   ("ITN"  or  the   "Company").
                           Subsequently,     that    controlling     shareholder
                           contributed  all  the  outstanding  shares  in ITN to
                           Dawson.   Dawson   caused   this   new   wholly-owned
                           subsidiary   to  acquire  the  assets  and  disclosed
                           liabilities  of Dawson,  including  all the equity in
                           Dawson's  92%-owned  Chinese   subsidiary,   Shenzhen
                           Jinzhenghua Transport Industrial Development Co. Ltd.
                           ("Jinzhenghua Transport" or "Jinzhenghua").  Upon the
                           effectiveness  on June  29,  1998  of a  registration
                           statement  filed  with the  Securities  and  Exchange
                           Commission, Dawson effected a plan of reorganization,
                           and the  shares of ITN were  distributed  pro rata to
                           the   common   shareholders   of   Dawson.   In   the
                           distribution,  each  holder  of  record  of shares of
                           Dawson  common stock at the close of business on June
                           30,  1998  received,  for each four  shares of Dawson
                           common  stock,  one  share  of the  Company's  common
                           stock.   The  accompanying   consolidated   financial
                           statements give effect to this  reorganization  as if
                           it had occurred as of the earliest  date reported and
                           all  references  to the number of shares  outstanding
                           and per  share  amounts  have been  restated  for all
                           periods to reflect this.

                           Reverse Acquisition

                           On March 19, 1997, Dawson exchanged 10,000,000 shares
                           of its  common  stock  and  2,100,000  shares  of its
                           convertible preferred stock (which was converted into
                           10,500,000  shares of common  stock on June 29, 1998)
                           for 92% of the equity of  Jinzhenghua  Transport (the
                           "Exchange").

                           The   Jinzhenghua   Transport   acquisition  and  the
                           exchange of common stock with the former  Jinzhenghua
                           Transport   shareholders  resulted  in  those  former
                           shareholders  obtaining a majority voting interest in
                           Dawson.   Generally  accepted  accounting  principles
                           require that the company  whose  shareholders  retain
                           the  majority  interest  in a  combined  business  be
                           treated as the acquiror for accounting purposes. As a
                           consequence,  the Jinzhenghua  Transport  acquisition
                           has been accounted for as a "reverse acquisition" for
                           financial    reporting   purposes   and   Jinzhenghua
                           Transport  is deemed to have  acquired a 92% interest
                           in  Dawson,  as of the date of the  acquisition.  The
                           reverse  acquisition  process  utilizes  the  capital
                           structure of Dawson and the assets and liabilities of
                           Jinzhenghua  Transport  are  recorded at  predecessor
                           cost.


<PAGE>


-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------

                           Jinzhenghua  Transport  is the  continuing  operating
                           entity  for  financial  reporting  purposes,  and the
                           financial   statements   prior  to  March  19,   1997
                           represent Jinzhenghua  Transport's financial position
                           and results of  operations.  The assets,  liabilities
                           and results of  operations  of Dawson are included as
                           of  March  19,  1997.   General  and   administrative
                           expenses of $822 and $1,412, interest expense of $112
                           and $200 and  provision  for class action  lawsuit of
                           $-0- and $1,500 were  incurred  in the United  States
                           during the nine and one-half  months  ended  December
                           31,  1997  and the  year  ended  December  31,  1998,
                           respectively.   Although  Jinzhenghua   Transport  is
                           deemed to be the acquiring  corporation for financial
                           accounting and reporting  purposes,  the legal status
                           of  Dawson  as  the  surviving  corporation  did  not
                           change.

                           Reorganization of Jinzhenghua Transport

                           Jinzhenghua  Transport was  registered as a privately
                           owned limited liability company under the laws of the
                           People's  Republic of China  ("PRC") on December  26,
                           1994.  During March 1997,  Jinzhenghua  Transport was
                           reorganized  by combining with the majority of equity
                           interests of seven subsidiaries of Shenzhen Transport
                           Zhenghua Group Co. Ltd. ("Zhenghua"), which was owned
                           by  substantially  the  same  owners  of  Jinzhenghua
                           Transport. The seven subsidiaries are as follows:
<TABLE>
<CAPTION>

                           Subsidiary                                  Industry   Jinzhenghua's
                                                                                 equity interest
                           -----------------------------------------------------------------------
                          <S>                                        <C>               <C>

                           Shenzhen Aorun Taxi Co. Ltd.               Taxi leasing       97%
                           Shenzhen Guorun Taxi Co. Ltd.              Taxi leasing       95
                           Shenzhen Anrun Taxi Co. Ltd.               Taxi leasing       97
                           Shenzhen  Yunhua Taxi Co. Ltd.             Taxi leasing       97
                           Shimen Zhenghua Taxi Co. Ltd.              Taxi leasing       98
                           Shenzhen Junpeng Auto Repair Plant Co.
                               Co. Ltd.                               Auto repair       100
                           Shimen Yindu Hotel Co. Ltd.                Hotel              56
                           -----------------------------------------------------------------------
</TABLE>


<PAGE>


-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------


                           Subsequent  to  the  aforementioned   reorganization,
                           Jinzhenghua    Transport    has    established    new
                           subsidiaries as follows:
<TABLE>
<CAPTION>


                           Subsidiary                                    Industry         Jinzhenghua's
                                                                                         equity interest
                           -----------------------------------------------------------------------------
                          <S>                                         <C>                        <C>
                           Guangzhou Jinzhenghua Transportation        Car rental                   98%
                             Co. Ltd.
                           Jiangxi Gannan Jinzhenghua                  Car rental                   70
                             Transportation Co. Ltd
                           Yueyang Jinzhenghua Transportation Co.      Car rental                   90
                             Ltd.
                           Shaanxi Jinzhenghua Transportation Co.      Car rental                  100
                             Ltd.
                           Nanchang Jinzhenghua Transportation Co.     Car rental                   98
                             Ltd.
                           Jiangsu Jinzhenghua Automobile Lease Co.    Car rental                  100
                           Hunan Jinzhenghua Automobile Lease Co.      Car rental                   75
                             Ltd.
                           Henan Jinzhenghua Automobile Lease Co.      Car rental                   51
                             Ltd.
                           Changde Jinzhenghua Automobile Lease        Car rental                   75
                             Co. Ltd.
                           Guangxi Jinzhenghua Automobile Lease        Car rental                   80
                             Co. Ltd.
                           -----------------------------------------------------------------------------
</TABLE>


                           Businesses

                           The Company mainly conducts taxi leasing, car rental,
                           and auto repair businesses in the PRC and has a hotel
                           under  construction  which is  located  in the  Hunan
                           Province, PRC.

                           Basis of Accounting

                           The consolidated financial statements are prepared in
                           accordance   with   generally   accepted   accounting
                           principles in the United States of America.

                           Principles of Consolidation

                           The  consolidated  financial  statements  include the
                           accounts  of the Company  and its  subsidiaries.  All
                           material   intercompany    transactions   have   been
                           eliminated. The consolidated financial statements are
                           presented in U.S. dollars.


<PAGE>


-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------

                           Foreign Currency Translation and Transactions

                           The Company's foreign  subsidiaries use Renminbi yuan
                           ("RMB"),  as  the  functional  currency.  Assets  and
                           liabilities of these  subsidiaries  are translated at
                           the exchange rate in effect at each year-end.  Income
                           statement accounts are translated at the average rate
                           of exchange  prevailing during the year.  Translation
                           adjustments   arising   from  the  use  of  differing
                           exchange  rates from period to period are included as
                           a component of  shareholders'  equity as "Accumulated
                           other   comprehensive   income  -  foreign   currency
                           translation adjustments".  Gains and losses resulting
                           from foreign  currency  transactions  are included in
                           other income (expense).

                           Revenue Recognition

                           Taxi  leasing  and car rental  revenue is  recognized
                           when   rents   (net  of   business   tax)   are  due.
                           Nonrefundable   deposit   revenue  is  deferred   and
                           recognized on a straight-line  basis over the term of
                           the  relevant  taxi  lease.  Revenue  from car repair
                           services is recognized when services are rendered.

                           Inventories

                           Inventories,     which    consist     primarily    of
                           transportation  equipment  spare parts and consumable
                           stores,  are  stated at the lower of cost  (first-in,
                           first-out method) or market.

                           Revenue  Earning  Equipment,  Property and Equipment,
                           and Depreciation

                           Revenue earning equipment, property and equipment are
                           stated at cost. Depreciation is computed by utilizing
                           the  straight-line  method over the estimated  useful
                           lives of the assets as follows:

<TABLE>
<CAPTION>

                                                                                          Estimated useful
                                                                                           life (in years)
                           -------------------------------------------------------------------------------
                            <S>                                                            <C>
                           Revenue - earning equipment:
                              Taxi vehicles and rental cars                                    6-8
                              Repair shop equipment                                            5-10
                           Property and equipment:
                              Land usage rights                                                   40
                              Furniture and fixtures                                           5-10
                              Transportation equipment                                         6-10
                              Other equipment                                                  5-10
                           -------------------------------------------------------------------------------
</TABLE>


                           Maintenance,  repairs and minor  renewals are charged
                           directly  to  expense  as  incurred.   Additions  and
                           betterments    to   property   and    equipment   are
                           capitalized. When assets are disposed of, the related
                           cost and accumulated depreciation thereon are removed
                           from the accounts and any  resulting  gain or loss is
                           included in operations.


<PAGE>
-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------


                           Taxi Licenses

                           Taxi  licenses  are stated at cost.  Amortization  is
                           computed utilizing the straight-line  method over the
                           taxi license term of 50 years.

                           Organization Costs

                           Organization   costs   represent  costs  incurred  in
                           connection with the setting up of the Company and its
                           subsidiaries  in order  to  operate  on a  commercial
                           basis. The Company has been  capitalizing  such costs
                           and they were being  amortized  over a period of five
                           years  from the date of  commencement  of  commercial
                           operation.

                           During the year ended  December 31, 1998, the Company
                           adopted the provisions of AICPA Statement of Position
                           98-5, "Reporting on the Costs of Start-up Activities"
                           ("SOP  98-5") which  requires  that costs of start-up
                           activities, including organization costs, be expensed
                           as  incurred.   In  accordance  with  SOP  98-5,  the
                           unamortized balance of capitalized organization costs
                           of  $847  at   January   1,   1998   and   additional
                           organization  costs of $127 incurred during 1998 were
                           charged  to  expense  as the  cumulative  effect of a
                           change in  accounting  principle.  The effect of this
                           change in  accounting  principle  was to decrease net
                           income for the year ended December 31, 1998 by $974.

                           Income Taxes

                           The  Company  accounts  for  income  taxes  using the
                           liability   method,   which  requires  an  entity  to
                           recognize   deferred  tax   liabilities  and  assets.
                           Deferred  income  taxes are  recognized  based on the
                           differences  between  the tax  bases  of  assets  and
                           liabilities   and  their  reported   amounts  in  the
                           financial  statements which will result in taxable or
                           deductible  amounts  in future  years.  Further,  the
                           effects  of  enacted  tax  laws or rate  changes  are
                           included as part of deferred tax expenses or benefits
                           in the period  that  covers  the  enactment  date.  A
                           valuation  allowance  is  recognized  if it  is  more
                           likely  than  not  that  some  portion,  or all of, a
                           deferred tax asset will not be realized.

                           The  Company  does not  provide  taxes on  unremitted
                           earnings  of  its  Chinese   subsidiaries  since  the
                           Company's  intention is to reinvest  these  earnings.
                           Jinzhenghua  has  unremitted   retained  earnings  at
                           December 31, 1998 of $28,965.

                           Deferred Revenue

                           Deferred  revenue,  which represents the non-utilized
                           portion of  non-refundable  deposit revenue collected
                           from  contractual  taxi  drivers,  is  recognized  as
                           revenue over unexpired taxi lease terms.


<PAGE>


-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------


                           Net Income Per Common Share

                           In 1997,  the Financial  Accounting  Standards  Board
                           ("FASB")  issued  Statement of  Financial  Accounting
                           Standards  ("SFAS")  No. 128,  "Earnings  per Share".
                           SFAS No. 128 replaced the  calculation of primary and
                           fully  diluted  earnings  per  share  with  basic and
                           diluted  earnings per share.  Unlike primary earnings
                           per share,  basic  earnings  per share  excludes  any
                           dilutive effects of options, warrants and convertible
                           securities.   Diluted  earnings  per  share  is  very
                           similar  to the  previously  reported  fully  diluted
                           earnings per share.  All net income per share amounts
                           for  all  periods  have  been  presented  and,  where
                           appropriate,  restated  to  conform  to SFAS No.  128
                           requirements.

                           Use of Estimates

                           The preparation of financial statements in accordance
                           with   generally   accepted   accounting   principles
                           requires management to make estimates and assumptions
                           that   affect   reported   amounts   of  assets   and
                           liabilities  and disclosure of contingent  assets and
                           liabilities  at the date of the financial  statements
                           and the  reported  amounts of revenues  and  expenses
                           during   the   reporting   period.   Among  the  more
                           significant  estimates  included  in these  financial
                           statements  are the estimated  allowance for doubtful
                           accounts  receivable,  and  the  deferred  tax  asset
                           valuation allowance. Actual results could differ from
                           those estimates and other estimates.

                           Fair Value of Financial Instruments

                           The   carrying    amounts   of   certain    financial
                           instruments,  including cash,  trade  receivables and
                           trade and other payables approximate fair value as of
                           December 31, 1997 and 1998 because of the  relatively
                           short-term   maturity  of  these   instruments.   The
                           carrying  value of notes  payable  approximates  fair
                           value as of December 31, 1997 and 1998 based upon the
                           borrowing  rates  currently  available to the Company
                           for  bank  loans  with  similar   terms  and  average
                           maturities.  Fair value of the amounts due to or from
                           affiliates  cannot be readily  determined  because of
                           the nature of the terms.

                           Accounting for Stock-Based Compensation

                           In  connection  with its  adoption  of SFAS No.  123,
                           "Accounting   for  Stock-Based   Compensation",   the
                           Company  will  adopt the  intrinsic  value  method of
                           accounting for employee  stock options,  and disclose
                           the pro forma  impact on net income and  earnings per
                           share  as if the  fair  value-based  method  had been
                           applied.  Through  December 31,  1998,  no such stock
                           options  had been  granted.  For equity  instruments,
                           including  stock  options  issued  to  non-employees,
                           including  directors,  the fair  value of the  equity
                           instruments   issued   or  the  fair   value  of  the
                           consideration  received,  whichever  is more  readily
                           determinable,  is  used to  determine  the  value  of
                           services  or  goods  received  and the  corresponding
                           charge to operations.


<PAGE>

-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------

                           Comprehensive Income

                           As of January 1, 1998,  the Company  adopted SFAS No.
                           130 ("Reporting  Comprehensive Income"). The adoption
                           of this  statement had no impact on the Company's net
                           income  or   shareholders'   equity.   SFAS  No.  130
                           establishes  new rules for the  reporting and display
                           of   comprehensive   income   and   its   components.
                           Comprehensive  income is  comprised of net income and
                           all changes to shareholders' equity, except those due
                           to investments by owners (changes in paid-in capital)
                           and distributions to owners (dividends).

                           SFAS No. 130 requires  foreign  currency  translation
                           adjustments which,  prior to adoption,  were reported
                           separately in shareholders' equity, to be included in
                           other comprehensive  income.  Amounts for all periods
                           have   been   presented   and,   where   appropriate,
                           reclassified to conform to SFAS No. 130 requirements.

                           Segment Information

                           On January 1, 1998, the Company adopted SFAS No. 131,
                           "Disclosures  about  Segments  of an  Enterprise  and
                           Related  Information",  which supersedes SFAS No. 14,
                           "Financial   Reporting   Segments   of   a   Business
                           Enterprise",  and  establishes  standards for the way
                           that  public  enterprises  report  information  about
                           operating segments in financial  statements.  It also
                           establishes   standards  for  disclosures   regarding
                           products  and  services,  geographic  areas and major
                           customers. SFAS No. 131 defines operating segments as
                           components  of an  enterprise  about  which  separate
                           financial  information is available that is evaluated
                           regularly by the chief  operating  decision  maker in
                           deciding how to allocate  resources  and in assessing
                           performance.

                           New Accounting Standards Not Yet Adopted

                           In  February   1998,   SFAS  No.   132,   "Employer's
                           Disclosures  about Pensions and Other  Postretirement
                           Benefits"  amended the  disclosure  requirements  for
                           pensions  and  other  postretirement   benefits.  The
                           Company   does  not  expect  the   adoption  to  have
                           significant   change  on  the   Company's   financial
                           statement disclosures.

                           In  June  1998,   the  FASB   issued  SFAS  No.  133,
                           "Accounting  for Derivative  Instruments  and Hedging
                           Activities".  SFAS  No.  133  requires  companies  to
                           recognize all derivatives  contracts as either assets
                           or  liabilities  in the balance  sheet and to measure
                           them at fair value. If certain  conditions are met, a
                           derivative may be specifically designated as a hedge,
                           the objective of which is to match the timing of gain
                           or loss  recognition on the hedging  derivative  with
                           the  recognition of (i) the changes in the fair value
                           of  the   hedged   asset   or   liability   that  are
                           attributable  to the hedged risk or (ii) the earnings
                           effect of the hedged  forecasted  transaction.  For a
                           derivative  not  designated as a hedging  instrument,
                           the  gain or  loss is  recognized  in  income  in the
                           period of change.  SFAS No. 133 is effective  for all
                           fiscal  quarters of fiscal years beginning after June
                           15, 1999.


<PAGE>
-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------

                           Historically,   the  Company  has  not  entered  into
                           derivatives  contracts either to hedge existing risks
                           or for speculative purposes. Accordingly, the Company
                           does  not  expect  adoption  of the new  standard  on
                           January 1, 2000 to affect its financial statements.

<TABLE>
<CAPTION>

         PROPERTY AND      Property and equipment consists of:
         EQUIPMENT
                           December 31,                                            1997             1998
                           --------------------------------------------------------------------------------
                           <S>                                                 <C>              <C>
                           Land usage rights                                    $   362          $   362
                           Furniture and fixtures                                    11                3
                           Transportation equipment                               1,324            1,088
                           Other equipment                                          488              579
                           --------------------------------------------------------------------------------
                                                                                  2,185            2,032
                           Less:  Accumulated depreciation and                     (822)            (896)
                                     amortization
                           --------------------------------------------------------------------------------
                                                                                 $1,363           $1,136
                           --------------------------------------------------------------------------------
</TABLE>


                           Depreciation and  amortization  charged to
                           operations  was  $128,  $443  and  $250 in
                           1996, 1997 and 1998, respectively.
<TABLE>
<CAPTION>

3.       REVENUE-EARNING   Revenue-earning equipment consists of:
         EQUIPMENT
                           December 31,                                             1997             1998
                           --------------------------------------------------------------------------------
                          <S>                                                   <C>              <C>
                           Taxi vehicles                                         $14,570          $14,824
                           Rental cars                                            24,067           24,230
                           Repair shop equipment                                     200              206
                           --------------------------------------------------------------------------------
                                                                                  38,837           39,260
                           Less:  Accumulated depreciation                        (7,349)          (9,881)
                           --------------------------------------------------------------------------------
                                                                                 $31,488          $29,379
                           --------------------------------------------------------------------------------
</TABLE>

                           Depreciation charged to operations was $1,756, $2,174
                           and $3,717 in 1996, 1997 and 1998, respectively.


<PAGE>

-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------



4.       TAXI LICENSES      The  Company  has a total of 728 taxi  licenses (see
                            Note 12(a)) as of  December  31,  1998, all of which
                            were acquired  through public auction. Taxi licenses
                            consist of:


<TABLE>

<CAPTION>

                                     December 31,                                            1997             1998
                                     --------------------------------------------- ---------------- -----------------
<S>                                                                                       <C>              <C>
                                     Taxi licenses, at cost                               $13,381          $13,368
                                     Less:  Accumulated amortization                       (1,288)          (1,554)
                                     --------------------------------------------- ---------------- -----------------
                                                                                          $12,093          $11,814
                                     --------------------------------------------- ---------------- -----------------

</TABLE>


                           Amortization charged to operations was $264, $266 and
                           $267 in 1996, 1997 and 1998, respectively.


5.       CONSTRUCTION-IN-  Construction-in-progress  represents a hotel  project
         PROGRESS          located in the Hunan Province,  PRC. The construction
                           work of the  hotel  has been  temporarily  suspended.
                           Management  considers that the construction work will
                           be continued in the near future and no provision  for
                           loss as a result of such  suspension is  anticipated.
                           The  construction-in-progress  is stated at cost. All
                           direct  costs  relating  to the  construction  of the
                           hotel  are  capitalized  as  long-term   assets.   No
                           interest has been capitalized.






6.       PREPAYMENTS AND   Prepayments and other assets  includes  deposits paid
         OTHER ASSETS      totaling   $11,476  for  the   acquisition  of  3,000
                           automobiles  for car  rental  purposes  (Note 12) and
                           $4,228  for the  acquisition  of 300  cars  for  taxi
                           replacement purposes.




<TABLE>
<CAPTION>

7.       OTHER PAYABLES    December 31,                                          1997               1998
                           --------------------------------------------------------------------------------
                          <S>                                                 <C>                <C>
                           Deposit from rental car customers                   $   332            $   435
                           Deposits from taxi drivers                            1,042              1,420
                           Taxi car maintenance fund                               273                188
                           Due to Traffic Authority                                774                652
                           Receipts in advance from taxi drivers                   436              1,726
                           Other, including car suppliers,                         665                739
                             value-added tax and insurance
                           --------------------------------------------------------------------------------
                                                                                $3,522             $5,160
                           --------------------------------------------------------------------------------
</TABLE>


8.       BANK LOANS       The  Company  obtained  various lines of credit from
                          creditworthy commercial banks in China to finance its
                          operations.  These  loans were  secured by certain of
                          the  Company's  assets.  All the  lending  banks  are
                          Chinese.  Except  for  $200  of US  dollar  loans  at
                          December 31, 1997, all loans are  denominated in RMB.
                          Bank loans consist of the following:


<PAGE>


-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------


<TABLE>
<CAPTION>

                           December 31, 1997
                           --------------------------------------------------------------------------------
                             Principal     Interest rate       Maturity                Collateral
                           --------------------------------------------------------------------------------
                          <S>             <C>                 <C>            <C>
                               $   200          16.2%              4/98       Properties of affiliates
                                   605          18.0               3/99       50 taxi vehicles
                                 2,971          15.1               3/99       150 taxi vehicles and 100
                                                                                 taxi licenses
                           --------------------------------------------------------------------------------
                                $3,776
                           --------------------------------------------------------------------------------

                           December 31, 1998
                           --------------------------------------------------------------------------------
                             Principal     Interest rate       Maturity                Collateral
                           --------------------------------------------------------------------------------
                              $2,402            15.1%              4/00       150 taxi vehicles and 100
                                                                                 taxi licenses
                           --------------------------------------------------------------------------------
</TABLE>


<PAGE>

-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------


9.       NOTES PAYABLE     Notes payable consist of the following:
<TABLE>
<CAPTION>

                           December 31, 1997
                           --------------------------------------------------------------------------------
                             Principal      Interest rate             Maturity               Collateral
                           --------------------------------------------------------------------------------
                          <S>              <C>              <C>                         <C>
                              $  320             8.0%                  4/02/98            (a)
                                 500            12.0                   3/18/98            (b)
                               1,500            12.0                   3/29/98            (b)
                               2,000            12.0                   5/02/98            (b)
                           --------------------------------------------------------------------------------
                              $4,320
                           --------------------------------------------------------------------------------


                           December 31, 1998
                           --------------------------------------------------------------------------------
                             Principal      Interest rate             Maturity               Collateral
                           --------------------------------------------------------------------------------
                           $320                  8.0%        4/02/98 (in default)         (a)
                           --------------------------------------------------------------------------------
</TABLE>

                           --------------

                           (a)      On July 3, 1997, the Company  entered into a
                                    financing   agreement   which  provides  for
                                    borrowings  of up to  $1,000.  Advances  are
                                    payable monthly.  The loan is collateralized
                                    by the  Company's  inventory,  equipment and
                                    machinery, existing or acquired. The balance
                                    outstanding   at   December   31,  1997  and
                                    December 31, 1998 was $320. The note was due
                                    April 2, 1998 and is in default.

                                    Under  the  terms of the  agreement,  if the
                                    Company   did   not   file  a   registration
                                    statement  with the  Securities and Exchange
                                    Commission  declared effective by October 2,
                                    1997,  certain  shares of common  stock were
                                    due the lender as liquidated  damages. As of
                                    December 31, 1997, these shares had not been
                                    issued but the  liability  for such issuance
                                    was included in accrued expenses at December
                                    31, 1997.  The Company  issued 17,268 shares
                                    as liquidated damages on March 31, 1998.

                           --------------

                           (b)      On September  19,  September 30 and November
                                    3,  1997,  the  Company  issued  convertible
                                    promissory notes to three entities. Interest
                                    accrued  at 12% per  annum  and was  payable
                                    monthly. At any time after the maturity date
                                    and prior to  repayment  of all amounts due,
                                    the  notes,  at the  option of the  holders,
                                    were   convertible   into   shares   of  the
                                    Company's  common  stock  equal to an amount
                                    determined  by formula,  as defined,  in the
                                    agreement.  The notes were collateralized by
                                    1,000,000  shares  of common  stock  pledged
                                    personally  by a principal  shareholder.  On
                                    March 31,  1998,  upon  default  under these
                                    notes due to  non-payment  of  interest  and
                                    principal, the holders opted to convert such
                                    debt  ($4,000) and accrued  interest  ($240)
                                    into shares of the  Company's  common stock.
                                    Accordingly,  under  the  terms of the three
                                    agreements, 1,324,345 shares of common stock
                                    were   issued   in    settlement   of   such
                                    obligations.
<PAGE>


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                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------





  10.       RELATED PARTY  (f)      The  amount  due  to  minority  shareholders
            TRANSACTIONS            represents   the  net  balance  due  to  two
                                    minority shareholders.


                                    The amount due to a minority  shareholder of
                                    the hotel  project  was $381 as of  December
                                    31,   1997  and   1998,   as  the   minority
                                    shareholder  contributed  excessive  amounts
                                    over  its  necessary  share  of  contributed
                                    capital  in the form of land  usage  rights.
                                    The  amount  did not bear any  interest  and
                                    also did not have clearly  defined  terms of
                                    repayment.   In  late  1997,   the   Company
                                    advanced $362 to a minority  shareholder  in
                                    Jiangxi Gannan  Transportation  Co. Ltd. The
                                    advance  does not bear any  interest and did
                                    not clearly specify terms of repayment.

                           (b)      The  Company,  from  time to time,  receives
                                    funding from or provides funding to Zhenghua
                                    (see Note 12). All advances are  noninterest
                                    bearing  and are  without  stated  terms  of
                                    repayment. The following is a summary of the
                                    balance of the amounts due to Zhenghua:


<TABLE>
<CAPTION>


                                    December 31,                                         1997          1998
                                    --------------------------------------------- ------------- -------------
                                   <S>                                             <C>             <C>
                                    Beginning balance                               $   2,150       $ 6,220
                                    Acquisition of revenue earning equipment           24,067             -
                                    Acquisition of taxi licenses                          115             -
                                    Exchange difference                                     8            (8)
                                    Construction costs, hotel                            (455)          (56)
                                    Repayments of advances                            (11,565)       (2,220)
                                    Expenses paid on behalf of Zhenghua (net)            (624)            -
                                    Transferred to additional paid-in capital          (7,476)            -
                                    Property and equipment transferred to                   -           (87)
                                      Zhenghua
                                    Conversion of debt to equity (Note 13(c))               -        (3,900)
                                    Bank loan undertaken by Zhenghua                        -           200
                                    --------------------------------------------- ------------- -------------
                                    Ending balance                                  $   6,220      $    149
                                    --------------------------------------------- ------------- -------------
</TABLE>


                           (c)      Other assets include  advances to directors,
                                    Mr.  Peng  Jun  and Ms.  Wu Qi  Mei,  in the
                                    amount of $188 at  December  31,  1998.  All
                                    advances  do not  bear  interest  and do not
                                    have any clearly defined terms of repayment.
                                    A  $312  promissory  note  from  a  minority
                                    shareholder (Note 13(d)) is also included in
                                    other assets.


<PAGE>


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                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------

11.      INCOME TAXES              The standard  enterprise  income tax rate in
                                   China is 33% of which 30% is  attributed  to
                                   central  government  and  3%  to  provincial
                                   government.   Enterprises  in  Shenzhen,   a
                                   Special  Economic  Zone,  receive  a special
                                   income tax  incentive  program in which they
                                   are  charged a lower  income tax rate of 15%
                                   in  accordance   with   Shenzhen   municipal
                                   government    regulations.    In   addition,
                                   enterprises  in the  transportation  service
                                   industry in Shenzhen  enjoy another  special
                                   income tax incentive  program  composed of a
                                   100%  income  tax  credit for the first year
                                   and a 50% income tax credit for the next two
                                   years  starting from the first profit taking
                                   year.  Certain other provincial  governments
                                   have  also  stipulated   similar   incentive
                                   programs.  The Company's subsidiaries are in
                                   different    stages    of    enjoying    the
                                   aforementioned types of income tax incentive
                                   programs.  Accordingly,  the  provision  for
                                   income taxes consists of the following:

<TABLE>
<CAPTION>

                                    December 31,                              1996            1997            1998
                                    --------------------------------------------------------------------------------
                                   <S>                               <C>              <C>             <C>
                                    Current income taxes                      $344            $430          $1,765
                                    Deferred income taxes                       56              27             145
                                    --------------------------------------------------------------------------------
                                                                              $400            $457          $1,910
                                    --------------------------------------------------------------------------------
</TABLE>

                                      As a result of  implementing  these income
                                      tax  incentive  programs,   the  effective
                                      income   tax  rate  for  the   Company  is
                                      different  from the  standard  income  tax
                                      rate. The following  reconciliation  shows
                                      the differences  between the effective and
                                      standard rates.
<TABLE>
<CAPTION>

                                     December 31,                              1996            1997            1998
                                    --------------------------------------------------------------------------------
                                     <S>                              <C>               <C>            <C>
                                     Standard income tax rate                 33%             33%             33%
                                     Result of income tax incentive           (24)            (26)            (20)
                                       programs
                                     Other                                     (1)              -               -
                                    --------------------------------------------------------------------------------
                                     Effective income tax rate                 8%              7%             13%
                                    --------------------------------------------------------------------------------
</TABLE>


                                      The types of temporary differences between
                                      the tax  bases of assets  and  liabilities
                                      and their financial reporting amounts that
                                      give rise to the net  deferred  tax assets
                                      and liabilities and their  approximate tax
                                      effects are as follows:

<TABLE>
<CAPTION>

                                     December 31,                                         1997                1998
                                    --------------------------------------------------------------------------------
<S>                                                                                      <C>               <C>
                                     Bad debt reserves                                   $  (8)            $     -
                                     Depreciation and amortization                         110                 247
                                    --------------------------------------------------------------------------------
                                                                                          $102                $247
                                    --------------------------------------------------------------------------------
</TABLE>


<PAGE>


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                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------


12.       COMMITMENTS AND  (a)      Taxi Licenses
          CONTINGENCIES
                               (i)  A significant  number of taxi licenses owned
                                    by  subsidiaries  of  Jinzhenghua  Transport
                                    ("Jinzhenghua"), ITN's subsidiary, have been
                                    the  subject  of recent  legal  proceedings.
                                    These  taxi  licenses  had  been  seized  by
                                    certain  Chinese Courts as a result of being
                                    pledged as collateral for bank loans granted
                                    to   Zhenghua   Group  and  its   affiliates
                                    ("Zhenghua"  or "Zhenghua  Group")  prior to
                                    the   reorganization   of   Jinzhenghua   as
                                    discussed in Note 1.

                                    The first  proceeding,  commencing May 1999,
                                    involved   enforcement   in   the   Shenzhen
                                    Intermediate     People's     Court     (the
                                    "Intermediate  Court") in favor of  Shenzhen
                                    Cooperative  Bank  ("SCB") of certain  liens
                                    which  the  SCB  was  granted   against  the
                                    Company's  taxi licenses in connection  with
                                    approximately  $14,188  of loans SCB made to
                                    Zhenghua  Group  during 1994 to 1996.  These
                                    loans had been secured by various  assets of
                                    Zhenghua  Group  and 378 taxi  licenses  and
                                    corporate  guarantees from  Jinzhenghua.  No
                                    registration  of  such  pledges   (including
                                    pledges  made  after the  effective  date of
                                    laws  providing for lien  registration)  was
                                    made at the  Shenzhen  Vehicle  Registration
                                    Bureau.   In  March,   1997  (prior  to  the
                                    reorganization  of  Jinzhenghua as discussed
                                    in  Note  1),   Zhenghua   entered  into  an
                                    agreement with Jinzhenghua pursuant to which
                                    Zhenghua  agreed to contribute  and transfer
                                    various  assets  including the taxi licenses
                                    to Jinzhenghua.

                                    In   May    1997,    Zhenghua,    with   its
                                    understanding that the taxi licenses were to
                                    be released as  collateral,  entered into an
                                    agreement   (the   "Agreement")   with   SCB
                                    pursuant   to   which    Zhenghua    assumed
                                    responsibility  for repaying the outstanding
                                    loans to SCB and agreed to  provide  certain
                                    real estate as new  collateral to secure its
                                    debt to  SCB.  Additionally,  in  September,
                                    1998, 2.1 million shares of the common stock
                                    of the Company (ITN), owned by the principal
                                    stockholder,  were pledged to SCB in support
                                    of certain  guarantees  given to SCB. During
                                    the second quarter of 1999, the Intermediate
                                    Court advised Jinzhenghua of the foreclosure
                                    of the SCB  debt and the 378  licenses  were
                                    seized   under  such   foreclosure.   During
                                    November   1999,  the   Intermediate   Court
                                    restored  the seized  taxi  licenses  to the
                                    Company.


                                    Subsequent  to  that   restoration  of  taxi
                                    licenses by the Intermediate Court's action,
                                    the Company obtained  written  documentation
                                    from SCB in which SCB confirmed that neither
                                    the   Company   nor   Jinzhenghua   had  any
                                    responsibility   or  obligation  to  SCB  in
                                    connection  with  any  loans  made by SCB to
                                    Zhenghua.  The Company also obtained written
                                    confirmation   from  the  Shenzhen   Vehicle
                                    Registration   Bureau   that  the  378  taxi
                                    licenses  are  owned by  Jinzhenghua  and no
                                    collateral or lien is registered thereon.


<PAGE>


-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------


                                    Management  believes  that  based on various
                                    agreements  with  the  lenders  and  actions
                                    taken  by  relevant  parties,   the  subject
                                    licenses are free from any encumbrances.

                                    The   second   proceeding   related   to  an
                                    additional  pledge  of 50 taxi  licenses  of
                                    Jinzhenghua.  No registration of such pledge
                                    (which  was  permissible  under  laws  which
                                    became  effective  shortly  after the making
                                    thereof)  was made at the  Shenzhen  Vehicle
                                    Registration  Bureau. In early 1999, another
                                    lender  of  Zhenghua  Group,   the  Shenzhen
                                    Development   Bank   ("SDB"),    sought   to
                                    foreclose upon 50 of the Jinzhenghua's  taxi
                                    licenses after  Zhenghua Group  defaulted on
                                    its loans.  In September  1999, the Shenzhen
                                    Luohu  District  People's  Court  reversed a
                                    prior  foreclosure   action  on  these  taxi
                                    licenses  and  ordered  the return of the 50
                                    taxi  licenses to the Company  based  solely
                                    upon procedural  errors in the  foreclosure.
                                    Management  is not aware of any  renewal  by
                                    SDB of  efforts  to  foreclose  on the  taxi
                                    licenses.

                                    Since   these   actions   took  place  in  a
                                    developing  China  legal  system  (including
                                    developing lien  registration  practices and
                                    procedures), any legal decisions relating to
                                    the Company's assets,  including the 378 and
                                    50 taxi  licenses  discussed  above,  may be
                                    subject   to   further   claims,   liens  or
                                    repossession  by the  Court  or the  Chinese
                                    government.  Any  such  further  proceedings
                                    might result in a material adverse effect on
                                    the financial position of the Company.

                           (ii)     Prior to the  reorganization  of Jinzhenghua
                                    as  discussed  in Note 1, an  agreement  was
                                    signed  on  December  29,  1995 to pledge an
                                    aggregate  of 528 taxi  licenses,  including
                                    the 378 and 50 taxi  licenses  discussed  in
                                    (i) above,  as  collateral  to the Guangdong
                                    Overseas    Chinese   Trust   &   Investment
                                    Cooperation  (the "Trust") in support of the
                                    obligations  of the  Zhenghua  Group  to the
                                    Trust  arising out of the Trust's  agreement
                                    to  guarantee  repayment  of a  loan  in the
                                    amount of $846 given by  Everbright  Bank of
                                    China Shenzhen  Branch.  No  registration of
                                    such pledges  (which was  permissible  under
                                    laws which became  effective  shortly before
                                    the making thereof) was made at the Shenzhen
                                    Vehicle  Registration  Bureau. The loan went
                                    into  default  and the Trust  made  payment.
                                    Partial repayments were made by the Zhenghua
                                    Group  to the  Trust  subsequently,  and the
                                    Trust  entered  into  an  agreement  with an
                                    affiliate  of  Zhenghua  Group on August 30,
                                    1999 to take title to certain real estate in
                                    satisfaction  of  the  remaining   principal
                                    balance plus interest and costs in the total
                                    of  $395.  In  mid-1999,  100 out of the 528
                                    taxi licenses were  physically  deposited at
                                    the Trust and were subsequently  returned on
                                    November 11, 1999, after the transfer of the
                                    real  estate  was  completed.   The  Company
                                    obtained  written   confirmation   from  the
                                    Shenzhen Vehicles  Registration  Bureau that
                                    no  collateral  or lien is registered on the
                                    licenses.  Management  believes that the 528
                                    licenses  are free of any  liens in favor of
                                    the Trust.


<PAGE>


-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------


                                    (b) Related Party Loan Agreements

                                    Prior to the  reorganization  of Jinzhenghua
                                    (as  discussed in Note 1),  Zhenghua  caused
                                    Jinzhenghua  to  borrow  funds   aggregating
                                    $8,872.   No  assets  of  Jinzhenghua   were
                                    pledged as  collateral  for these loans.  On
                                    December 26,  1997,  each of the lenders and
                                    the respective  borrowers  (Jinzhenghua  and
                                    Zhenghua)  entered into agreements  pursuant
                                    to which Jingzhenghua had been released from
                                    its  various  obligations  as to these loans
                                    and  the   obligations   were   assumed   by
                                    Zhenghua.


                                    (c) Related Party Loan Agreements

                                    Minimum  lease  payments   under   operating
                                    leases  with  noncancelable  lease  terms in
                                    excess of one year are as follows:

                                    Year ended December 31,   Operating leases
                                    --------------------------------------------
                                    1999                                $220
                                    2000                                 206
                                    2001                                 181
                                    2002                                 139
                                    2003                                  51
                                    Thereafter                            51
                                    --------------------------------------------
                                                                        $848
                                    --------------------------------------------



                                    Rent  expense for the years  ended  December
                                    31, 1996,  1997 and 1998 was $104,  $200 and
                                    $249, respectively.

                                    (d) Contractual Obligations

                                    The  Company   contracted  with  a  building
                                    contractor  in 1996 to construct the group's
                                    hotel  in  Hunan,  PRC  (see  Note  5).  The
                                    budgeted  costs  of the  whole  project  are
                                    estimated to be $4,073. Through December 31,
                                    1998,  the  Company  has made  hotel-related
                                    expenditures  of  $2,263.  Due to  financial
                                    constraints,   the  Company  has   suspended
                                    construction  of  the  hotel  project.   The
                                    Company  intends to resume  construction  of
                                    the  hotel  as  soon  as it  has  sufficient
                                    capital to do so.


<PAGE>

-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------

                                    The   Company    contracted   with   a   car
                                    manufacturing   company  in  early  1998  to
                                    acquire  3,000 cars for car rental  business
                                    purposes.  The  contracted  amount  for such
                                    agreement  was $47,475  and the  outstanding
                                    commitment  was $36,000  after  deduction of
                                    deposits paid of $11,475.  Subsequently, the
                                    Company   entered   into   a   supplementary
                                    agreement  with the car  supplier  to extend
                                    the  payment  due date  under  the  contract
                                    During 1999,  as a result of the Company not
                                    performing   its   obligations   under  such
                                    contract,  the Company  has  entered  into a
                                    third  agreement  with the car  supplier  to
                                    terminate   the  above  two   agreements  by
                                    compensating  the car supplier with payments
                                    of penalties and car parking charges.  Under
                                    that cancellation agreement, the Company was
                                    subject  to a  penalty  of  $1,812  and  car
                                    parking   charges   of   $884   (aggregating
                                    $2,696),  the amount of which was charged to
                                    operations during the quarter ended June 30,
                                    1999.  $6,847 of the  deposits  paid will be
                                    applied  by  delivery  of 390  cars by early
                                    year  2000  and the  balance  of  $1,932  is
                                    treated as prepayment  for purchase of spare
                                    parts from the car supplier.

                                    The Company has  contracted  with a building
                                    developer  for  the   acquisition  of  villa
                                    houses located in Shenzhen,  PRC for $2,114.
                                    The  outstanding  commitment at December 31,
                                    1998 is $181 after  deducting a deposit paid
                                    of $1,933.

                                    (e) Legal Matters

                                    In early 1998, the United States  Securities
                                    and   Exchange   Commission,   commenced  an
                                    informal    inquiry   relating   to   public
                                    disclosures  in 1997 by  Dawson.  The public
                                    disclosures  involved,  among other  things,
                                    press releases  relating to the  acquisition
                                    of Shenzhen Jinzhenghua Transport Industrial
                                    Development Co., Ltd., the value of Dawson's
                                    assets,  Dawson's  financial  prospects  and
                                    Dawson's  anticipated  revenues and earnings
                                    (collectively, the "Public Disclosures").

                                    In August 1998, a stockholder of the Company
                                    filed a class action complaint in the United
                                    States   District  Court  for  the  Southern
                                    District  of New York  naming  the  Company,
                                    Dawson,   and  their  respective   executive
                                    officers and  directors as  defendants.  The
                                    complaint    alleges    that   the    Public
                                    Disclosures    omitted   or   misrepresented
                                    material   facts.    The   plaintiff   seeks
                                    unspecified damages on behalf of himself and
                                    all other  persons who  purchased  shares of
                                    Dawson's common stock between March 25, 1997
                                    and  December  30,   1997,   together   with
                                    interest and costs, including attorney fees,
                                    under   section   10(b)  and  20(a)  of  the
                                    Securities and Exchange Act of 1934 and Rule
                                    10(b)(5) thereunder.


<PAGE>


-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------

                                    The   Company   currently   is   engaged  in
                                    settlement  discussions  with respect to the
                                    class  action  referred  to above.  Based on
                                    these    discussions,    the   Company   has
                                    established a $1,500  liability with respect
                                    to  the  class  action.   There  can  be  no
                                    assurance,   however,  that  the  settlement
                                    discussions   will   result   in   a   final
                                    settlement, or that the liability of a final
                                    settlement  will be limited  to  $1,500.  If
                                    these  settlement  discussions  are  not the
                                    basis for a final settlement,  the liability
                                    with  respect  to  the  class  action  could
                                    materially exceed this amount.


<PAGE>

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                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------

                                    (f) Capital Investment Obligation

                                    Pursuant    to    Jinzhenghua    Transport's
                                    organizational  documents,  the  Company and
                                    the minority owners of Jinzhenghua Transport
                                    were obligated to contribute $9,200 and $800
                                    (in cash or  assets),  respectively,  to the
                                    registered capital of Jinzhenghua Transport.
                                    In particular,  the Company was obligated to
                                    make its capital contribution to Jinzhenghua
                                    Transport  in  two  equal   installments  of
                                    $4,600,  the first of which was due  October
                                    30,  1998 and the  second  of which  was due
                                    December 26, 1999. The minority  owners were
                                    obligated to contribute  $340 by October 30,
                                    1998 and the balance by December  26,  1999.
                                    To  date,   the  Company   has   contributed
                                    approximately  $300 of its aggregate  $9,200
                                    obligation  to the  capital  of  Jinzhenghua
                                    Transport.  Accordingly, the Company has not
                                    performed on its  obligation  to  contribute
                                    $4,200 to  Jinzhenghua  Transport by October
                                    30, 1998.  The minority  owners also did not
                                    perform on their  obligations  to contribute
                                    the aggregate $340 by October 30, 1998.

                                    The  organizational  documents  were amended
                                    under date of November 22,  1999.  Under the
                                    amended  documents,   the  Company  will  be
                                    obligated  to make its capital  contribution
                                    to   Jinzhenghua   Transport  in  two  equal
                                    installments  of $4,450,  the first of which
                                    will be due December 31, 2000 and the second
                                    of which  will be due  August  28,2001.  The
                                    minority   owners  will  be   obligated   to
                                    contribute $22 by February 29, 2000, $329 by
                                    December  31,  2000,   and  $449  by  August
                                    28,2001. In the same amendment,  Jinzhenghua
                                    Transport  changed  its  corporate  name  to
                                    Shenzhen  Yunrun  Transport  Group Co., Ltd.
                                    ("Yunrun  Transport").   The  amendment  was
                                    approved   by   the   appropriate    Chinese
                                    authorities   on  December  17,   1999.   On
                                    December  27, 1999,  the Chinese  government
                                    renewed Yunrun Transport's  business license
                                    to August 28, 2001.

                                    If the Company  fails  timely to make any of
                                    the  required   contributions  or  fails  to
                                    obtain   an   extension   approved   by  the
                                    government,  the  government  may  cancel or
                                    refuse to renew Yunrun's  business  license,
                                    which would  materially and adversely affect
                                    the Company


<PAGE>


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                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------


                                    (g) Consulting Agreements

                                    As  described  in  Note  9(a),  the  Company
                                    entered into an  agreement  with a financial
                                    consultant to introduce prospective offshore
                                    investors.  The Company  agreed to pay a fee
                                    of  5%  of  the  gross  securities  sold  in
                                    addition  to issuing 25 warrants to purchase
                                    shares of common  stock of Dawson per $2,500
                                    of  financing  secured to buy the  Company's
                                    common stock for a period of five years from
                                    the  closing  date  of the  first  sale at a
                                    strike  price of 120% of the market price at
                                    the  time  of  closing.  The  agreement  has
                                    expired.

                                    On  September 1, 1997,  the Company  entered
                                    into a consulting agreement with a financial
                                    institution to provide business  development
                                    services   for  $12   monthly.   Options  to
                                    purchase  250,000  shares  of the  Company's
                                    common stock at an exercise  price of $50.00
                                    per share  were also  granted  and expire on
                                    September  30, 2002.  The agreement has been
                                    terminated;   the  options   have  not  been
                                    canceled.

                                    On March 31, 1998,  the Company issued 7,500
                                    shares to a consultant as consideration  for
                                    provision  of   consulting   services.

13.      SHAREHOLDER'S     (a)      During May 1998, the Company issued,  for an
         EQUITY                     aggregate of  $750  (less  issuance costs of
                                    $75),  206,250  shares  of common  stock and
                                    warrants to purchase an aggregate of 220,000
                                    shares  of common stock to  certain  private
                                    investors.

                           (b)      During  December 1998,  the Company  issued,
                                    for an aggregate  of $1,600  (less  issuance
                                    costs of  $160),  609,523  shares  of common
                                    stock and  warrants to purchase an aggregate
                                    of 500,000 shares of common stock to certain
                                    private investors. Additionally, as finder's
                                    compensation, the Company issued warrants to
                                    purchase an aggregate  of 560,000  shares of
                                    common stock to an unrelated  third parties.

                           (c)      In  December   1998,   the  Company   issued
                                    2,228,571  shares of  common  stock at $1.75
                                    per share and  warrants to purchase  334,286
                                    shares of common  stock in  cancellation  of
                                    $3,900  of  indebtedness  of  the  Company's
                                    subsidiary, Jinzhenghua (Note 10(b)).

                           (d)      In  connection  with  the   cancellation  of
                                    Jinzhenghua's  indebtedness ((c) above), and
                                    in  consideration of the benefit received by
                                    the  minority  owner  of  Jinzhenghua  as  a
                                    result of the issuance of common stock,  the
                                    Company  received a $312,000,  8% promissory
                                    note from the minority owner of Jinzhenghua.


<PAGE>

-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------


14. EARNINGS PER SHARE              The   following   table   sets   forth   the
                                    computation  of basic and  diluted  earnings
                                    per share:
<TABLE>
<CAPTION>


                                     December 31,                                    1996           1997       1998
                                     --------------------------------------------------------------------------------
                                    <S>                                          <C>          <C>          <C>
                                     Numerator:
                                        Net income, numerator for basic            $4,563      $5,886        $7,869
                                          earnings per share - income
                                          available to common shareholders
                                     Effect of diluted securities:                      -          63           108
                                       Interest on convertible debt after
                                       tax
                                     --------------------------------------------------------------------------------
                                     Numerator for diluted earnings per            $4,563      $5,949        $7,977
                                       share-income available to common
                                       shareholders
                                     --------------------------------------------------------------------------------
                                     Denominator:
                                        Denominator for basic earnings per          6,042       6,042         7,321
                                          share-weighted average shares
                                     Effect of diluted securities:
                                           Convertible debt                             -          90           327
                                     --------------------------------------------------------------------------------
                                     Dilutive potential common shares:
                                        Denominator for dilutive earnings           6,042       6,132         7,648
                                          per share-adjusted weighted
                                          average shares
                                     --------------------------------------------------------------------------------
                                     Basic earnings per share                    $    .76   $    .97          $1.07
                                     --------------------------------------------------------------------------------
                                     Diluted earnings per share                  $    .76   $    .97          $1.04
                                     --------------------------------------------------------------------------------
</TABLE>


15.      FUTURE RENTAL INCOME       Rental  income  from  taxi  drivers  under
                                    noncancelable  taxi lease  terms in  excess
                                    of one year is as follows:


                                     Year ended December 31,
                                     -------------------------------------------
                                     1999                               $13,666
                                     2000                                 5,409
                                     2001                                 3,686
                                     2002                                 2,057
                                     2003                                 1,033
                                     Thereafter                           3,867
                                     -------------------------------------------
                                                                        $29,718
                                     -------------------------------------------


<PAGE>
-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------


16.       STATEMENTS OF CASH   Supplemental Disclosures of Cash Flow Information
          FLOWS

<TABLE>
<CAPTION>


                                     Year ended December 31,                    1996           1997           1998
                                     --------------------------------------------------------------------------------
                                    <S>                                       <C>            <C>            <C>
                                     Cash paid for:
                                        Interest                                $604           $587           $675
                                        Taxes                                      -             39              -
                                     --------------------------------------------------------------------------------


                                     Supplemental Disclosures of Noncash Investing and Financing Activities


                                     December 31,                                 1996          1997          1998
                                     --------------------------------------------------------------------------------
                                     Acquisition of property and               $   361       $24,067    $        -
                                       equipment and revenue earning
                                       equipment from affiliates
                                     Acquisition of taxi licenses                    -           115             -
                                     Construction-in-progress financed by        2,302          (455)            -
                                       affiliates
                                     Additional paid-in capital                      -         7,476             -
                                       contributed by shareholder
                                     Disposal of hotel construction items            -             -            56
                                       to affiliates
                                     Disposal of property and equipment              -             -            87
                                       to affiliates
                                     Bank loan through related parties               -             -           200
                                     Issuance of shares for consulting               -             -           197
                                       services and liquidated damages
                                     Issuance of shares from conversion              -             -         4,240
                                       of debt and accrued interest
                                     Receipt of promissory note from                 -             -           312
                                       minority shareholder
                                     Issuance of shares from conversion              -             -         3,900
                                       of debt to Zhenghua
                                     --------------------------------------------------------------------------------
</TABLE>

17.      SEGMENT INFORMATION        The Company's  operations are comprised of
                                    taxi,   car   rental,   and  auto   repair
                                    businesses   and  a   hotel   project   in
                                    Guangdong,  Hunan and other  provinces  in
                                    PRC. The Company also maintains  executive
                                    offices   in  New  York  City   (USA)  and
                                    Shenzhen   (PRC).   The   industrial   and
                                    geographical     information     regarding
                                    revenue,   income   before   income   tax,
                                    minority  interest,  and cumulative effect
                                    of change in accounting  principle,  total
                                    assets,   addition  of  long-term  assets,
                                    depreciation   and  amortization  for  the
                                    years ended  December 31,  1996,  1997 and
                                    1998, are as follows:


<PAGE>
-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------


                                    Industrial Segments
<TABLE>
<CAPTION>


                                     Year ended December 31, 1996
                                     --------------------------------------------------------------------------------
                                                                   Taxi     Car Rental   Car         Other      Total
                                                                                       repairs
                                     --------------------------------------------------------------------------------
                                    <S>                           <C>           <C>     <C>      <C>       <C>
                                     Revenue, net                 $  7,722         $-    $1,489   $      -  $  9,211
                                     Income before provision         4,349          -       771          -     5,120
                                      for income tax, minority
                                      interest and cumulative
                                      effect of change in
                                      accounting principle
                                     Total assets as at             25,120          -       692      3,287    29,099
                                      December 31, 1996
                                     Additions of productive           141          -       463      2,667     3,271
                                      long-term assets
                                     Depreciation and                2,066          -        81          1     2,148
                                      amortization of property
                                      and equipment,
                                      revenue-earning
                                      equipment and
                                      amortization of taxi
                                      licenses
                                     --------------------------- ---------- --------- ---------- --------- ----------

                                     Year ended December 31, 1997
                                     --------------------------------------------------------------------------------
                                                                   Taxi     Car       Car         Other      Total
                                                                             rental    repairs
                                     --------------------------- ---------- --------- ---------- --------- ----------
                                     Revenue, net                   $8,425     $2,636    $1,477         $-   $12,538
                                     Income before provision         5,161      1,814       639       (934)    6,680
                                      for income tax, minority
                                      interest and cumulative
                                      effect of change in
                                      accounting principle
                                     Total assets as at             27,630     24,772       791      2,761    55,954
                                      December 31, 1997
                                     Additions of productive         1,580     24,085         4          -    25,669
                                      long-term assets
                                     Depreciation and                2,370        434        78          1     2,883
                                      amortization of property
                                      and equipment,
                                      revenue-earning
                                      equipment and
                                      amortization of taxi
                                      licenses
                                     --------------------------- ---------- --------- ---------- --------- ----------


                                     Year ended December 31, 1998
                                     --------------------------------------------------------------------------------
                                                                   Taxi     Car       Car         Other      Total
                                                                             rental    repairs
                                     --------------------------- ---------- --------- ---------- --------- ----------
                                     Revenue, net                $  8,318    $12,600    $1,425   $        - $22,343
                                     Income before provision        5,058      9,274       464     (3,112)   11,684
                                      for income tax, minority
                                      interest and cumulative
                                      effect of change in
                                      accounting principle
                                     Total assets as at            25,621     38,727       691      3,618    68,657
                                      December 31, 1998
                                     Additions of productive        1,834        184         8          -     2,026
                                      long-term assets
                                     Depreciation and               2,068      2,087        78          1     4,234
                                      amortization of property
                                      and equipment,
                                      revenue-earning
                                      equipment and
                                      amortization of taxi
                                      licenses
                                     --------------------------------------------------------------------------------
</TABLE>


<PAGE>


-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------


<TABLE>
<CAPTION>

                                     Geographical Segments


                                     Year ended December 31, 1996
                                     --------------------------------------------------------------------------------
                                                               Guangdong       Hunan         Others        Total
                                     --------------------------------------------------------------------------------
                                <S>                           <C>             <C>           <C>         <C>
                                     Revenue, net              $  7,983        $1,228            $-      $  9,211
                                     Income before                4,553           567             -         5,120
                                       provision for income
                                       tax, minority
                                       interest and
                                       cumulative effect of
                                       change in accounting
                                       principle
                                     Total assets                22,671         6,428             -        29,099
                                     --------------------------------------------------------------------------------


                                     Year ended December 31, 1997
                                     --------------------------------------------------------------------------------
                                                               Guangdong       Hunan         Others        Total
                                     --------------------------------------------------------------------------------
                                     Revenue, net              $  9,525      $  1,344      $  1,669       $12,538
                                     Income before                5,858           647           175         6,680
                                       provision for income
                                       tax, minority
                                       interest and
                                       cumulative effect of
                                       change in accounting
                                       principle
                                     Total assets                28,590        14,436        12,928        55,954
                                     --------------------------------------------------------------------------------
</TABLE>


<PAGE>


-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------


<TABLE>
<CAPTION>


                                     Year ended December 31, 1998
                                     --------------------------------------------------------------------------------
                                                               Guangdong       Hunan         Others        Total
                                     --------------------------------------------------------------------------------
                                    <S>                        <C>          <C>           <C>            <C>
                                     Revenue, net               $12,329      $  2,136      $  7,878       $22,343
                                     Income before                7,133         1,235         3,316        11,684
                                       provision for income
                                       tax, minority
                                       interest and
                                       cumulative effect of
                                       change in accounting
                                       principle
                                     Total assets                42,985        12,879        12,793        68,657
                                     --------------------------------------------------------------------------------

</TABLE>


18.      SUBSEQUENT EVENTS          On January 1, 1999,  the  Company  adopted a
                                    stock  option plan and reserved for issuance
                                    2,500,000 shares of common stock. As of that
                                    date,   the  Company   granted   options  to
                                    purchase an  aggregate  2,210,000  shares of
                                    common  stock to  certain  of the  Company's
                                    officers and directors.  The options have an
                                    exercise price of $2.00 per share, which was
                                    above the quoted  price of the common  stock
                                    as reported on the National  Association  of
                                    Securities  Dealers,   Inc.'s  OTC  Bulletin
                                    Board at the time of grant.

                                    During  January  1999,  the  Company  issued
                                    152,381  shares of common stock to a private
                                    investor  for an  aggregate  of  $400  (less
                                    issuance  costs of $40).  Additionally,  the
                                    Company  issued   warrants  to  purchase  an
                                    aggregate of 240,000  shares of common stock
                                    to an unrelated third party.

                                    On January  29,  1999,  the  Company  issued
                                    warrants to purchase  3,000 shares of common
                                    stock to a business and financial consultant
                                    as consideration for consulting services.

                                    During  February 1999, the Company issued 5%
                                    notes   convertible   into   shares  of  the
                                    Company's  common  stock  at par  value to a
                                    private investor for an aggregate of $2,000.

                                    During  March  1999,   the  Company   issued
                                    2,000,000  shares of common stock to private
                                    investors for an aggregate of $4,000.

                                    On March 12, 1999, the Company issued 20,000
                                    shares  of  common  stock  and  warrants  to
                                    purchase  30,000 shares of common stock to a
                                    financial  consultant as  consideration  for
                                    consulting services.

                                    On  March  25,  1999,   the  Company  issued
                                    warrants to purchase 30,000 shares of common
                                    stock   to   a   financial   consultant   as
                                    consideration for consulting services.

19.      FOURTH QUARTER             In the fourth  quarter of 1998,  the Company
         ADJUSTMENTS                recorded    the    following     significant
                                    adjustments:

                                    1.       A  $1,500  provision  for  a  class
                                             action lawsuit (Note 12)

                                    2.       Cumulative  effect  of a change  in
                                             accounting  principle  (Note  1) of
                                             $974.
<PAGE>


-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------


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

         Not Applicable.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS

         Information  concerning the Company's  executive  officers  required by
this Item is  incorporated by reference to the text appearing under Part I, Item
1 - Business under the caption "Executive Officers".  Information concerning the
Company's directors and compliance with Section 16(a) of the Securities Exchange
Act of 1934 is  incorporated  by reference  to the  Company's  Definitive  Proxy
Statement for the Annual Meeting of Stockholders to be held May 28, 1999.


ITEM 11.  EXECUTIVE COMPENSATION

         Information required by this Item is incorporated by reference from the
Company's  Definitive  Proxy Statement for the Annual Meeting of Stockholders to
be held on May 28, 1999.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Information required by this Item is incorporated by reference from the
Company's  Definitive  Proxy Statement for the Annual Meeting of Stockholders to
be held on May 28, 1999.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information required by this Item is incorporated by reference from the
Company's  Definitive  Proxy Statement for the Annual Meeting of Stockholders to
be held on May 28, 1999.

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8K

  (a) The following documents are filed as part of this report:

         (1)  Financial Statements

         Report of Independent Certified Public Accountants

         Consolidated Balance Sheets as of December 31, 1998 and 1997.

         Consolidated  Statements  of  Operations  for each of the  years  ended
         December 31, 1998, 1997 and 1996.

         Consolidated  Statements of  Shareholders  Equity for each of the years
         ended December 31, 1998, 1997 and 1996.

         Consolidated  Statements  of Cash  Flows  for each of the  years  ended
         December 31, 1998, 1997 and 1996.

         Notes to Consolidated Financial Statements


<PAGE>

-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------

         (2)  Financial Statement Schedules

         Schedule 1--Condensed financial information of Registrant for the years
         ended December 31, 1998 and 1997.


<PAGE>


         (3)  Listing of Exhibits
<TABLE>
<CAPTION>

         ----------------- ------------------------------------------------------------------------------------------------
         Exhibit No.       Description of Exhibit
         -----------       ----------------------

         ----------------- ------------------------------------------------------------------------------------------------
        <S>               <C>
         2.1(1)            Agreement and Plan of Reorganization.
         ----------------- ------------------------------------------------------------------------------------------------
         3.1(1)            Certificate of Incorporation of the Company, as Amended.
         ----------------- ------------------------------------------------------------------------------------------------
         3.2(1)            Bylaws of the Company.
         ----------------- ------------------------------------------------------------------------------------------------
         4.1(2)            Assignment of Indebtedness,  dated December 11, 1998 by Shenzhen  Zhenghua Group Co. Ltd. to Wu
                           Zhi Jian, New Century International S.R.L., Billy Yung and Chusa International Ltd.
         ----------------- ------------------------------------------------------------------------------------------------
         4.2(2)            Subscription  Agreement,  dated December 11, 1998,  between Integrated  Transportation  Network
                           Group Inc. and Wu Zhi Jian.
         ----------------- ------------------------------------------------------------------------------------------------
         4.3(2)            Stock Purchase Warrant, dated December 11, 1998 in favor of Wu Zhi Jian.
         ----------------- ------------------------------------------------------------------------------------------------
         4.4(2)            Subscription  Agreement,  dated December 11, 1998,  between Integrated  Transportation  Network
                           Group Inc. and New Century International S.R.L.
         ----------------- ------------------------------------------------------------------------------------------------
         4.5(2)            Stock Purchase Warrant, dated December 11, 1998 in favor of New Century International S.R.L.
         ----------------- ------------------------------------------------------------------------------------------------
         4.6(2)            Subscription  Agreement,  dated December 11, 1998,  between Integrated  Transportation  Network
                           Group Inc. and Chusa International Limited.
         ----------------- ------------------------------------------------------------------------------------------------
         4.7(2)            Stock Purchase Warrant, dated December 11, 1998 in favor of Chusa International Limited.
         ----------------- ------------------------------------------------------------------------------------------------
         4.8(2)            Subscription  Agreement,  dated December 11, 1998,  between Integrated  Transportation  Network
                           Group Inc. and Yeung Shu Kin
         ----------------- ------------------------------------------------------------------------------------------------
         4.9(2)            Subscription  Agreement,  dated December 11, 1998,  between Integrated  Transportation  Network
                           Group Inc. and Surewin International Limited.
         ----------------- ------------------------------------------------------------------------------------------------
         4.10(2)           Stock Purchase Warrant, dated December 11, 1998 in favor of Surewin International Limited.
         ----------------- ------------------------------------------------------------------------------------------------
         4.11(2)           Subscription  Agreement,  dated December 17, 1998,  between Integrated  Transportation  Network
                           Group Inc. and Kwok Kee Billy Yung.
         ----------------- ------------------------------------------------------------------------------------------------
         4.12(2)           Stock Purchase Warrant, dated December 11, 1998 in favor of Kwok Kee Billy Yung.
         ----------------- ------------------------------------------------------------------------------------------------
         4.13(2)           Subscription  Agreement,  dated December 23, 1998,  between Integrated  Transportation  Network
                           Group Inc. and Kwok Kee Billy Yung.
         ----------------- ------------------------------------------------------------------------------------------------
         10.1(1)           Letter of Agreement,  dated March 19, 1997 between Dawson Science Corporation and Shenzhen City
                           Zhenghua Traffic and Transportation Main Company, Ltd.
         ----------------- ------------------------------------------------------------------------------------------------
         10.2(1)           Letter  Agreement,  dated June 27, 1997 between Dawson Science  Corporation and Wharton Capital
                           Partners Ltd.
         ----------------- ------------------------------------------------------------------------------------------------
         10.3(1)           Consulting  Agreement,  dated February 11, 1998 between Dawson Science  Corporation  and R.I.P.
                           Consultants.
         ----------------- ------------------------------------------------------------------------------------------------
         10.4(1)           Contract for Chinese  Foreign  Equity Joint  Venture,
                           dated   October  8,  1997  between   Dawson   Science
                           Corporation  and Wu  Qui  Mei  (Shenzhen  Jinzhenghua
                           Transport Industrial Development Co.
                           Ltd.).
         ----------------- ------------------------------------------------------------------------------------------------
         10.5(1)           Regulations  for Chinese  Foreign  Equity Joint  Venture,  dated October 8, 1997 between Dawson
                           Science Corporation and Shenzhen Jinzhenghua Transport Industrial Development Co. Ltd.
         ----------------- ------------------------------------------------------------------------------------------------


<PAGE>



         ----------------- ------------------------------------------------------------------------------------------------
         Exhibit No.       Description of Exhibit
         -----------       ----------------------

         ----------------- ------------------------------------------------------------------------------------------------

         10.6(1)           Business  Loan  and  Security  Agreement,   dated  November  3,  1997  between  Dawson  Science
                           Corporation and Yeung Ming-Sum.
         ----------------- ------------------------------------------------------------------------------------------------
         10.7(1)           Business  Loan and  Security  Agreement,  dated  September  19,  1997  between  Dawson  Science
                           Corporation and Yeung Shu-kin.
         ----------------- ------------------------------------------------------------------------------------------------
         10.8(1)           Business  Loan and  Security  Agreement,  dated  September  30,  1997  between  Dawson  Science
                           Corporation and Neolite Neon Co. Pty. Ltd.
         ----------------- ------------------------------------------------------------------------------------------------
         10.9(1)           Grid Promissory Note, dated July 3, 1997, payable to Wharton Capital Partners, Ltd.
         ----------------- ------------------------------------------------------------------------------------------------
         10.10(1)          Agreement,  dated May 28, 1998 between Dawson Science  Corporation,  Integrated  Transportation
                           Network Group Inc. and R.I.P. Consultants.
         ----------------- ------------------------------------------------------------------------------------------------
         10.11(2)          Agreement to purchase 2000 automobiles,  between Sun Loong and Shenzhen  Jinzhenghua  Transport
                           Industrial Development Co., Ltd. (terminated)
         ----------------- ------------------------------------------------------------------------------------------------
         10.12(2)          Agreement to purchase 3000  automobiles,  between  First  Automobile  and Shenzhen  Jinzhenghua
                           Transport Industrial Development Co., Ltd.
         ----------------- ------------------------------------------------------------------------------------------------
         21                List of Subsidiaries
         ----------------- ------------------------------------------------------------------------------------------------
         27.1              Financial Data Schedule.
         ----------------- ------------------------------------------------------------------------------------------------
</TABLE>

---------------------
         (1)      Filed  as  an  Exhibit,  with  the  same  Exhibit  number,  to
                  Amendment No. 3 to the Registrant's  registration statement on
                  Form S-1 filed with the Securities and Exchange  Commission on
                  June 29, 1998, and incorporated herein by this reference

         *        Filed as an  Exhibit,  with the same  Exhibit  number,  to its
                  Annaul  Report on Form  10-K,  filed with the  Securities  and
                  Exchange Commission on April 15, 1999, and incorporated herein
                  by this reference.

(b) The Company did not file a Current Report on Form 8-K during the 4th Quarter
of fiscal 1998.


<PAGE>


                                   SIGNATURES


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

                                   INTEGRATED TRANSPORTATION NETWORK
                                   GROUP INC.,

                                   Registrant



                                   By:      /s/Andrew Lee
                                     ------------------------------
                                          Andrew Lee, President



Date: March 8, 2000

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

<TABLE>
<CAPTION>

SIGNATURE                                     TITLE                                       DATE
---------                                     -----                                       ----

<S>                                          <C>                                        <C>
         /s/ Wu Zhi Jian                      Chairman of the Board, Director            March 8, 2000
------------------------------------          (Principal Executive Officer)
Wu Zhi Jian


         /s/ Andrew Lee                       President and Director                    March 8, 2000
------------------------------------
Andrew Lee


         /s/ Willy Wu                         Executive Vice President,                 March 8, 2000
------------------------------------          Chief Financial Officer
Willy Wu                                      (Principal Financial Officer)



         /s/ Peng Jun                         Executive Vice President,                  March 8, 2000
------------------------------------          Treasurer, Director
Peng Jun                                      (Principal Accounting Officer)



         /s/ Zhang Li Wei                     Director                                   March 8, 2000
------------------------------------
Zhang Li Wei


<PAGE>



         /s/ Lewis Burridge                   Director                                   March 8, 2000
------------------------------------
Lewis Burridge



         /s/ Robert L. Stewart                Director                                   March 8, 2000
------------------------------------
Robert L. Stewart



</TABLE>





                                   SIGNATURES


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

                                   INTEGRATED TRANSPORTATION NETWORK
                                   GROUP INC.,

                                   Registrant



                                   By:
                                     ------------------------------
                                          Andrew Lee, President



Date:  ____________, 2000

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

<TABLE>
<CAPTION>

SIGNATURE                                     TITLE                                       DATE
---------                                     -----                                       ----

<S>                                          <C>                                        <C>
                                              Chairman of the Board, Director             ___________, 2000
------------------------------------          (Principal Executive Officer)
Wu Zhi Jian


                                               President and Director                      ____________, 2000
------------------------------------
Andrew Lee


                                              Executive Vice President,                   ____________, 2000
------------------------------------          Chief Financial Officer
Willy Wu                                      (Principal Financial Officer)



                                              Executive Vice President,                   ____________, 2000
------------------------------------          Treasurer, Director
Peng Jun                                      (Principal Accounting Officer)



                                               Director                                    ____________, 2000
------------------------------------
Zhang Li Wei


<PAGE>






                                              Director                                    ____________, 2000
------------------------------------
Lewis Burridge



                                              Director                                    ____________, 2000
------------------------------------
Robert L. Stewart

</TABLE>



<PAGE>

<TABLE>
<CAPTION>

                                  EXHIBIT INDEX

         ----------------- ------------------------------------------------------------------------------------------------
         Exhibit No.       Description of Exhibit
         -----------       ----------------------

         ----------------- ------------------------------------------------------------------------------------------------
        <S>               <C>
         2.1(1)            Agreement and Plan of Reorganization.
         ----------------- ------------------------------------------------------------------------------------------------
         3.1(1)            Certificate of Incorporation of the Company, as Amended.
         ----------------- ------------------------------------------------------------------------------------------------
         3.2(1)            Bylaws of the Company.
         ----------------- ------------------------------------------------------------------------------------------------
         4.1(2)            Assignment of Indebtedness,  dated December 11, 1998 by Shenzhen  Zhenghua Group Co. Ltd. to Wu
                           Zhi Jian, New Century International S.R.L., Billy Yung and Chusa International Ltd.
         ----------------- ------------------------------------------------------------------------------------------------
         4.2(2)            Subscription  Agreement,  dated December 11, 1998,  between Integrated  Transportation  Network
                           Group Inc. and Wu Zhi Jian.
         ----------------- ------------------------------------------------------------------------------------------------
         4.3(2)            Stock Purchase Warrant, dated December 11, 1998 in favor of Wu Zhi Jian.
         ----------------- ------------------------------------------------------------------------------------------------
         4.4(2)            Subscription  Agreement,  dated December 11, 1998,  between Integrated  Transportation  Network
                           Group Inc. and New Century International S.R.L.
         ----------------- ------------------------------------------------------------------------------------------------
         4.5(2)            Stock Purchase Warrant, dated December 11, 1998 in favor of New Century International S.R.L.
         ----------------- ------------------------------------------------------------------------------------------------
         4.6(2)            Subscription  Agreement,  dated December 11, 1998,  between Integrated  Transportation  Network
                           Group Inc. and Chusa International Limited.
         ----------------- ------------------------------------------------------------------------------------------------
         4.7(2)            Stock Purchase Warrant, dated December 11, 1998 in favor of Chusa International Limited.
         ----------------- ------------------------------------------------------------------------------------------------
         4.8(2)            Subscription  Agreement,  dated December 11, 1998,  between Integrated  Transportation  Network
                           Group Inc. and Yeung Shu Kin
         ----------------- ------------------------------------------------------------------------------------------------
         4.9(2)            Subscription  Agreement,  dated December 11, 1998,  between Integrated  Transportation  Network
                           Group Inc. and Surewin International Limited.
         ----------------- ------------------------------------------------------------------------------------------------
         4.10(2)           Stock Purchase Warrant, dated December 11, 1998 in favor of Surewin International Limited.
         ----------------- ------------------------------------------------------------------------------------------------
         4.11(2)           Subscription  Agreement,  dated December 17, 1998,  between Integrated  Transportation  Network
                           Group Inc. and Kwok Kee Billy Yung.
         ----------------- ------------------------------------------------------------------------------------------------
         4.12(2)           Stock Purchase Warrant, dated December 11, 1998 in favor of Kwok Kee Billy Yung.
         ----------------- ------------------------------------------------------------------------------------------------
         4.13(2)           Subscription  Agreement,  dated December 23, 1998,  between Integrated  Transportation  Network
                           Group Inc. and Kwok Kee Billy Yung.
         ----------------- ------------------------------------------------------------------------------------------------
         10.1(1)           Letter of Agreement,  dated March 19, 1997 between Dawson Science Corporation and Shenzhen City
                           Zhenghua Traffic and Transportation Main Company, Ltd.
         ----------------- ------------------------------------------------------------------------------------------------
         10.2(1)           Letter  Agreement,  dated June 27, 1997 between Dawson Science  Corporation and Wharton Capital
                           Partners Ltd.
         ----------------- ------------------------------------------------------------------------------------------------
         10.3(1)           Consulting  Agreement,  dated February 11, 1998 between Dawson Science  Corporation  and R.I.P.
                           Consultants.
         ----------------- ------------------------------------------------------------------------------------------------
         10.4(1)           Contract for Chinese  Foreign  Equity Joint  Venture,
                           dated   October  8,  1997  between   Dawson   Science
                           Corporation  and Wu  Qui  Mei  (Shenzhen  Jinzhenghua
                           Transport Industrial Development Co.
                           Ltd.).
         ----------------- ------------------------------------------------------------------------------------------------
         10.5(1)           Regulations  for Chinese  Foreign  Equity Joint  Venture,  dated October 8, 1997 between Dawson
                           Science Corporation and Shenzhen Jinzhenghua Transport Industrial Development Co. Ltd.
         ----------------- ------------------------------------------------------------------------------------------------


<PAGE>


-------------------------------------------------------------------------------
                                   INTEGRATED TRANSPORTATION NETWORK GROUP INC.
                                                               AND SUBSIDIARIES


                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   US DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
-------------------------------------------------------------------------------


         ----------------- ------------------------------------------------------------------------------------------------
         Exhibit No.       Description of Exhibit
         -----------       ----------------------

         ----------------- ------------------------------------------------------------------------------------------------

         10.6(1)           Business  Loan  and  Security  Agreement,   dated  November  3,  1997  between  Dawson  Science
                           Corporation and Yeung Ming-Sum.
         ----------------- ------------------------------------------------------------------------------------------------
         10.7(1)           Business  Loan and  Security  Agreement,  dated  September  19,  1997  between  Dawson  Science
                           Corporation and Yeung Shu-kin.
         ----------------- ------------------------------------------------------------------------------------------------
         10.8(1)           Business  Loan and  Security  Agreement,  dated  September  30,  1997  between  Dawson  Science
                           Corporation and Neolite Neon Co. Pty. Ltd.
         ----------------- ------------------------------------------------------------------------------------------------
         10.9(1)           Grid Promissory Note, dated July 3, 1997, payable to Wharton Capital Partners, Ltd.
         ----------------- ------------------------------------------------------------------------------------------------
         10.10(1)          Agreement,  dated May 28, 1998 between Dawson Science  Corporation,  Integrated  Transportation
                           Network Group Inc. and R.I.P. Consultants.
         ----------------- ------------------------------------------------------------------------------------------------
         10.11(2)          Agreement to purchase 2000 automobiles,  between Sun Loong and Shenzhen  Jinzhenghua  Transport
                           Industrial Development Co., Ltd. (terminated)
         ----------------- ------------------------------------------------------------------------------------------------
         10.12(2)            Agreement to purchase 3000  automobiles,  between  First  Automobile  and Shenzhen  Jinzhenghua
                           Transport Industrial Development Co., Ltd.
         ----------------- ------------------------------------------------------------------------------------------------
         21                List of Subsidiaries
         ----------------- ------------------------------------------------------------------------------------------------
         27.1              Financial Data Schedule.
         ----------------- ------------------------------------------------------------------------------------------------
</TABLE>

---------------------
         (1)      Filed  as  an  Exhibit,  with  the  same  Exhibit  number,  to
                  Amendment No. 3 to the Registrant's  registration statement on
                  Form S-1 filed with the Securities and Exchange  Commission on
                  June 29, 1998, and incorporated herein by this reference

         (2)      Filed  as an Exhibit, with  the  same  exhibit  number, to the
                  Company's Annual Report on Form 10-K filed with the Securities
                  and  Exchange  Commission  on  _____________, and incorporated
                  herein by this reference.