<PAGE>
 
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                  FORM 10-QSB

[X]  Quarterly Report Under Section 13 or 15(d) of the
     Securities Exchange Act of 1934

     For the quarterly period ended September 30, 1996
                                    ------------------

[ ]  Transition Report Under Section 13 or 15(d) of the
     Securities Exchange Act of 1934

     For the transition period from _________ to _________

                        Commission file number:  0-8128
                                                 ------

                              FREMONT CORPORATION
--------------------------------------------------------------------------------
  (Exact name of small business issuer as specified in its charter)

            Delaware                             76-0402886
-------------------------------            ----------------------
(State or other jurisdiction of               (I.R.S. Employer
incorporation or organization)             Identification Number)

                       9454 Wilshire Boulevard, 6th Floor
                        Beverly Hills, California 90212
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

Issuer's telephone number, including area code:  (310) 358-1006
                                                 --------------

                                 Not applicable
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report.)

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

                              Yes   X     No 
                                  -----      -----     

     As of October 31, 1996, the issuer had 5,773,639 shares of its common stock
outstanding.

Transitional Small Business Disclosure Format:
                              Yes          No   X
                                  -----       -----

Total sequentially numbered pages in this document:  27.

                                       1
<PAGE>
 
                     FREMONT CORPORATION AND SUBSIDIARIES
                     ------------------------------------

                                     INDEX
                                     -----


PART 1.  FINANCIAL INFORMATION

     Item 1.  Financial Statements

              Condensed Consolidated Balance Sheets (Unaudited) -
              December 31, 1995 and September 30, 1996

              Condensed Consolidated Statements of Operations
              (Unaudited) -
              Three Months and Nine Months Ended September 30,
              1995 and 1996

              Condensed Consolidated Statements of Cash Flows
              (Unaudited) -
              Nine Months Ended September 30, 1995 and 1996

              Notes to Condensed Consolidated Financial
              Statements (Unaudited) -
              Three Months and Nine Months Ended September 30,
              1995 and 1996

     Item 2.  Management's Discussion and Analysis or Plan of
              Operation


PART II.  OTHER INFORMATION

     Item 6.  Exhibits and Reports on Form 8-K


SIGNATURES

                                       2
<PAGE>
 
                     FREMONT CORPORATION AND SUBSIDIARIES
               CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                            (Amounts in thousands,
                  except number of shares and per share data)

<TABLE>
<CAPTION>
 
 
                               December 31, 1995   September 30, 1996
                               ------------------  ------------------
                                RMB        USD        RMB       USD
                               -------     ------   -------   ------
<S>                           <C>         <C>          <C>       <C>
ASSETS
 
Current assets:
  Cash and cash
   equivalents                   6,507        781    20,754    2,491
  Accounts receivable,
   net (Note 4)                 83,502     10,024    73,097    8,775
  Inventories (Note 2)          35,469      4,258    57,982    6,961
  Due from related
   companies (Note 5)           43,501      5,222    27,703    3,326
  Other receivables             20,280      2,435    26,422    3,172
  Prepayments and
   other current assets          2,036        244     2,224      267
                               -------     ------   -------   ------
    Total current assets       191,295     22,964   208,182   24,992
                               -------     ------   -------   ------
 
Property, plant and
 equipment (Note 5)            256,107     30,745   148,169   17,787
Less accumulated
 depreciation                  (12,715)    (1,526)  (19,180)  (2,302)
                               -------     ------   -------   ------
                               243,392     29,219   128,989   15,485
                               -------     ------   -------   ------

Bank deposits                   20,800      2,497    20,800    2,497
Goodwill, net                   37,766      4,534    37,033    4,446
Deferred pre-operating
 costs, net (Note 3)             8,534      1,025     2,133      256
Prepaid rent (Note 5)                                26,200    3,145
Intangible assets, net           5,835        700     5,470      657
Other long-term assets           2,136        256     1,955      234
                               -------     ------   -------   ------
    Total assets               509,758     61,195   430,762   51,712
                               =======     ======   =======   ======
 
</TABLE>



                                  (continued)

                                       3
<PAGE>
 
                     FREMONT CORPORATION AND SUBSIDIARIES
         CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)(continued)
                            (Amounts in thousands,
                  except number of shares and per share data)
<TABLE>
<CAPTION>
                               December 31, 1995  September 30, 1996
                               -----------------  ------------------
                                 RMB        USD       RMB      USD
                               --------   -------   -------   ------
<S>                            <C>        <C>       <C>       <C>
LIABILITIES AND
SHAREHOLDERS' EQUITY
 
Current liabilities:
  Short-term bank loans
   (Note 5)                     161,278    19,361   163,300   19,604
  Other short-term
   borrowings                     6,656       799       625       75
  Accounts payable               31,124     3,736    17,771    2,133
  Accrued expenses and
   other liabilities             17,478     2,098    17,269    2,073
  Taxes payable                   7,712       926     8,423    1,011
  Long-term bank loans,
   current portion
   (Note 5)                      27,726     3,329
  Finance lease
   obligations, current
   portion                       10,817     1,299    10,817    1,299
                                -------    ------   -------   ------
    Total current
     liabilities                262,791    31,548   218,205   26,195
 
Long-term bank loans
 (Note 5)                        43,938     5,275       230       28
Finance lease
 obligations                     18,904     2,269    12,276    1,474
Loan from parent company
 (Note 6)                        33,280     3,995    33,280    3,995
Other long-term payables          9,755     1,171    16,956    2,035
                                -------    ------   -------   ------
    Total liabilities           368,668    44,258   280,947   33,727
                                -------    ------   -------   ------
 
Minority interests               11,864     1,424    12,422    1,491
                                -------    ------   -------   ------
 
</TABLE>

                                  (continued)

                                       4
<PAGE>
 
                     FREMONT CORPORATION AND SUBSIDIARIES
         CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)(continued)
                            (Amounts in thousands,
                  except number of shares and per share data)
<TABLE>
<CAPTION>
                            December 31, 1995  September 30, 1996
                            -----------------  ------------------
                               RMB      USD       RMB      USD
                             -------   ------   -------   ------
<S>                          <C>       <C>      <C>       <C>
LIABILITIES AND
SHAREHOLDERS' EQUITY

Shareholders' equity
 (Note 8):
 Common stock, par value
  US$ .001 per share;
  authorized -
  100,000,000 shares;
  issued and
  outstanding -
  5,602,639 shares at
  December 31, 1995 and
  5,773,639 shares at
  September 30, 1996              47        6        48        6
 Additional paid-in
  capital                    112,145   13,462   116,001   13,926
 Dedicated capital            10,213    1,226    10,213    1,226
 Retained earnings             6,821      819    11,131    1,336
                             -------   ------   -------   ------
    Total shareholders'
     equity                  129,226   15,513   137,393   16,494
                             -------   ------   -------   ------
    Total liabilities
     and shareholders'
     equity                  509,758   61,195   430,762   51,712
                             =======   ======   =======   ======
 
</TABLE>

                           See accompanying notes to
                  condensed consolidated financial statements.

                                       5
<PAGE>
 
                     FREMONT CORPORATION AND SUBSIDIARIES
          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                             (Amounts in thousands,
                  except number of shares and per share data)
<TABLE>
<CAPTION> 
                                            Three Months Ended September 30,
                                           -----------------------------------
                                             1995                1996
                                           ---------    ----------------------
                                              RMB          RMB          USD
                                           ---------    ---------    ---------
<S>                                        <C>          <C>          <C>
Sales, including
 approximately RMB 22,950 in
 1995 and RMB 2,104 in 1996
 to companies related to SCH                  45,156       56,672        6,803
Costs of goods sold                           36,055       45,527        5,465
                                           ---------    ---------    ---------
  Gross profit                                 9,101       11,145        1,338
 
Selling, general and
  administrative expenses                      4,002        4,607          553
 
Amortization of deferred
  pre-operating costs (Note 3)                              2,134          256
 
Interest expense, net                          1,141        2,043          245
 
Other (income) expense, net                       (8)         (84)         (10)
                                           ---------    ---------    ---------
  Income before income taxes                   3,950        2,445          294
 
Provision for income taxes                      (250)        (250)         (30)
                                           ---------    ---------    ---------
  Income before minority
   interests                                   3,700        2,195          264
 
Minority interests                            (1,117)      (1,329)        (160)
                                           ---------    ---------    ---------
  Net income                                   2,583          866          104
                                           =========    =========    =========
 
Net income per common share                      .46          .15          .02
                                           =========    =========    =========
 
Weighted average number of
  common shares (Note 1)                   5,602,639    5,902,514    5,902,514
                                           =========    =========    =========
                                           
</TABLE>

                           See accompanying notes to
                  condensed consolidated financial statements.

                                       6
<PAGE>
 
                     FREMONT CORPORATION AND SUBSIDIARIES
          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                            (Amounts in thousands,
                  except number of shares and per share data)
<TABLE>
<CAPTION>
 
                                             Nine Months Ended September 30,
                                           -----------------------------------
                                             1995                1996
                                           ---------    ----------------------
                                              RMB          RMB          USD
                                           ---------    ---------    ---------
<S>                                        <C>          <C>          <C>
Sales, including
 approximately RMB 30,340 in
 1995 and RMB 27,104 in 1996
 to companies related to SCH                 127,310      139,650       16,765
Costs of goods sold                          102,340      111,984       13,444
                                           ---------    ---------    ---------
  Gross profit                                24,970       27,666        3,321
 
Selling, general and
 administrative expenses                      10,144       10,139        1,217
 
Amortization of deferred
 pre-operating costs (Note 3)                               6,401          768
 
Interest expense, net                          3,702        4,957          595
 
Other (income) expense, net                        1           51            6
 
Non-recurring recapitalization
 cost (Note 8)                                 6,407
                                           ---------    ---------    ---------
  Income before income taxes                   4,718        6,118          735
 
Provision for income taxes                      (750)      (1,250)        (150)
                                           ---------    ---------    ---------
  Income before minority
   interests                                   3,968        4,868          585
 
Minority interests                            (1,072)        (558)         (67)
                                           ---------    ---------    ---------
  Net income                                   2,896        4,310          518
                                           =========    =========    =========
 
Net income per common share                      .55          .74          .09
                                           =========    =========    =========

Weighted average number of
  common shares (Note 1)                   5,260,417    5,829,150    5,829,150
                                           =========    =========    =========
</TABLE>

                           See accompanying notes to
                  condensed consolidated financial statements.

                                       7
<PAGE>
 
                     FREMONT CORPORATION AND SUBSIDIARIES
          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                             (Amounts in thousands)
<TABLE>
<CAPTION>
 
                                            Nine Months Ended September 30,
                                            -------------------------------
                                             1995               1996
                                            -------       -----------------
                                              RMB           RMB        USD
                                            -------       -------    ------
                                                     
<S>                                         <C>           <C>        <C>
Cash flows from operating                            
 activities:                                         
 Net income                                   2,896         4,310       518
  Adjustments to reconcile net                       
   income to net cash used in                        
   operating activities:                             
    Depreciation                              7,493         6,464       776
    Amortization                                733         9,299     1,116
    Non-recurring                                    
     recapitalization cost                    6,407  
    Minority interests                        1,072           558        67
    Foreign exchange loss                        15  
    Changes in operating                             
     assets and liabilities:                         
     (Increase) decrease in -                        
      Accounts receivable, net               (7,802)       (2,715)     (326)
      Inventories                           (17,754)      (22,513)   (2,703)
      Due from related                               
       companies                                          (12,202)   (1,465)
      Other receivables                                    (6,142)     (737)
      Prepayments and other                          
       current assets                        (3,244)         (190)      (23)
      Other long-term assets                     93           183        22
     Increase (decrease) in -                        
      Accounts payable                          918       (13,410)   (1,610)
      Accrued expenses and                           
       other liabilities                      5,272          (153)      (18)
      Taxes payable                           3,820           711        85
      Other long-term payables                              7,201       865
                                            -------       -------    ------
       Net cash used in                              
        operating activities                    (81)      (28,599)   (3,433)
                                            -------       -------    ------
Cash flows from investing                            
 activities:                                         
  Additions to property, plant                       
   and equipment                            (41,041)      (23,528)   (2,825)
                                            -------       -------    ------
       Net cash used in                              
        investing activities                (41,041)      (23,528)   (2,825)
                                            -------       -------    ------
</TABLE>
                                  (continued)

                                       8
<PAGE>
 
                     FREMONT CORPORATION AND SUBSIDIARIES
          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                  (continued)
                             (Amounts in thousands)
<TABLE>
<CAPTION>
 
                                       Nine Months Ended September 30,
                                       -------------------------------
                                        1995              1996
                                       ------      -------------------
                                        RMB          RMB         USD
                                       ------      -------      ------
<S>                                  <C>         <C>          <C>
Cash flows from financing
 activities:
  Net proceeds from short-term
   bank loans                          17,868      102,901      12,353
  Net proceeds from other
   short-term borrowings                               625          75
  Repayment of other short-term
   borrowings                                       (6,656)       (799)
  Net proceeds from (repayments
   of) long-term bank loans            27,380      (27,726)     (3,328)
  Payments of finance lease
   obligations                         (8,438)      (6,628)       (796)
  Sale of common stock and
   warrants, net of costs                            3,733         448
  Exercise of warrants                                 125          15
                                       ------      -------      ------
    Net cash provided by
     financing activities              36,810       66,374       7,968
                                       ------      -------      ------
Cash and cash equivalents:
  Net increase (decrease)              (4,312)      14,247       1,710
  At beginning of period                8,275        6,507         781
                                       ------      -------      ------
  At end of period                      3,963       20,754       2,491
                                       ======      =======      ======
</TABLE>

                           See accompanying notes to
                  condensed consolidated financial statements.

                                       9
<PAGE>
 
                     FREMONT CORPORATION AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
         THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996


1.  ORGANIZATION AND BASIS OF PRESENTATION

Organization - Fremont Corporation, a Delaware corporation (the "Company"), was
------------                                                                   
incorporated in the State of Utah on April 22, 1955, as Fremont Uranium
Corporation.  As of July 1, 1993, a change of domicile merger was effected, the
result of which was that the Company changed its name to Fremont Corporation and
became incorporated in the State of Delaware.

Reverse Acquisition - From 1989 through April 28, 1995, the Company was engaged
-------------------                                                            
in acquiring interests in oil and natural gas properties and in seeking
potential acquisition or merger opportunities.  The Company entered into a Share
Exchange Agreement dated as of March 23, 1995, and as amended on March 30, 1995,
with Million Treasure Enterprises Limited ("MTE") and Winfill Holdings
International Limited ("Winfill"), both of which are British Virgin Islands
corporations.  Pursuant to the Share Exchange Agreement, on April 28, 1995, the
Company acquired from MTE 41,000 shares of common stock of Winfill, representing
all of the issued and outstanding capital stock of Winfill, in exchange for the
issuance of 4,760,000 shares of the Company's common stock, together with a
warrant which allows MTE and/or its designee to receive up to 2,000,000 shares
of Class B common stock in exchange for an equivalent number of shares of common
stock.  The terms of the Class B common stock are identical to that of the
common stock (which will be designated Class A common stock) except that the
holder thereof will be entitled to three votes per share.  The warrant can be
exercised after the Company's Certificate of Incorporation is amended to
authorize the Class B common stock.

     Immediately prior to this transaction, the Company had a total of 842,639
shares of common stock issued and outstanding, after a 1-for-100 reverse stock
split effective April 28, 1995.  The 4,760,000 shares of common stock
represented approximately 85% of the outstanding shares of common stock of the
Company, after all shares were issued and the 1-for-100 reverse stock split was
effected as set forth in the Share Exchange Agreement.  All common share and per
share data in the accompanying condensed consolidated financial statements have
been restated to reflect this reverse stock split.

     South China Bicycles Winfill Limited ("SCBW") is a Sino-foreign joint
venture formed to engage in the design, manufacture and marketing of bicycles,
bicycle parts and components, steel tubes, and exercise equipment.  Winfill owns
a 98% equity interest in SCBW and South China Bicycles Company (Holdings)

                                       10
<PAGE>
 
Limited ("SCH"), a state-owned enterprise incorporated in the People's Republic
of China, owns the remaining 2% equity interest in SCBW.  Winfill and SCH formed
SCBW effective July 1, 1994, to acquire and operate the bicycle, bicycle parts
and components and steel tube manufacturing operations of SCH at a consideration
of RMB 152,076,000.  Except for a 69% interest in South China Bicycles Co., Ltd.
("SCB"), SCBW owns 100% interests in its principal operating subsidiaries, all
of which are organized in the People's Republic of China.  The factory
operations of SCBW's subsidiaries are located at several sites in Zhaoqing City,
Guangdong Province, People's Republic of China.  For accounting purposes, the
transaction has been treated as a recapitalization of Winfill with Winfill as
the acquiror (reverse acquisition).  The historical financial statements prior
to April 28, 1995 are those of Winfill.  The consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
in the United States of America.

     Pursuant to the terms of the Share Exchange Agreement, the Company
transferred to Joseph W. Petrov, the Company's former president and controlling
shareholder, all of its operating assets existing immediately subsequent to the
closing of the previously described transaction (excluding the shares of
Winfill) in exchange for the assumption by Mr. Petrov of all of the liabilities
of the Company as of the closing and the delivery of a release of all
obligations owed by the Company to an affiliate of Mr. Petrov.  In addition, at
the closing, each member of the Company's Board of Directors resigned, and was
replaced by representatives of MTE and Winfill.

Foreign Currency Translation - In preparing the consolidated financial
----------------------------                                          
statements, the financial statements of the Company are measured using Renminbi
("RMB") as the functional currency.  All foreign currency transactions are
translated into RMB using the applicable floating rates of exchange as quoted by
the People's Bank of China prevailing at the date of the transactions.  Monetary
assets and liabilities denominated in foreign currencies are translated into RMB
using the applicable exchange rates prevailing at the balance sheet dates.  The
resulting exchange gains or losses are recorded in the consolidated statements
of operations for the periods in which they occur.

     The Company's share capital is denominated in United States dollars ("USD"
or "US$") and the reporting currency is the RMB.  For financial reporting
purposes, the USD share capital amounts have been translated into RMB at the
applicable rates prevailing on the transaction dates.

     Translation of amounts from RMB into USD for the convenience of the reader
has been made at the noon buying rate in New York City for cable transfers in
foreign currencies as certified for customs purposes by the Federal Reserve Bank
of New York on

                                       11
<PAGE>
 
September 30, 1996 of US$1.00 = RMB 8.33.  No representation is made that the
RMB amounts could have been, or could be, converted into USD at that rate or at
any other certain rate.

Basis of Presentation - The accompanying consolidated financial statements are
---------------------                                                         
unaudited but, in the opinion of management of the Company, contain all
adjustments necessary to present fairly the financial position at September 30,
1996, the results of operations for the three months and nine months ended
September 30, 1995 and 1996, and the changes in cash flows for the nine months
ended September 30, 1995 and 1996.  These adjustments are of a normal recurring
nature.  The consolidated balance sheet as of December 31, 1995 is derived from
the Company's audited financial statements.  The accompanying consolidated
financial statements include the operations of the Company and its subsidiaries.
All significant intercompany accounts and transactions have been eliminated in
consolidation.

     Certain information and footnote disclosures normally included in financial
statements that have been prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission, although management of
the Company believes that the disclosures contained in these financial
statements are adequate to make the information presented therein not
misleading.  For further information, refer to the consolidated financial
statements and notes thereto included in the Company's Annual Report on Form 10-
KSB for the fiscal year ended December 31, 1995, as filed with the Securities
and Exchange Commission.

     The results of operations for the three months and nine months ended
September 30, 1996 are not necessarily indicative of the results of operations
to be expected for the full fiscal year ending December 31, 1996.

Net Income (Loss) Per Common Share - During April 1995, the Company issued new
----------------------------------                                            
shares of common stock in consideration for the acquisition of all of the
capital stock of Winfill, in a transaction which has been accounted for as a
reverse acquisition.  As a result, for nine months ended September 30, 1995, net
income per common share is presented on a pro forma basis, and has been
calculated using the shares of common stock as if the existing and new common
shares had been outstanding throughout the period, except for the common shares
issued to consultants related to the non-recurring recapitalization cost, which
were appropriately weighted in the calculation.  Net income per common share for
the three months ended September 30, 1995, and the three months and nine months
ended September 30, 1996, is based on the weighted average number of shares of
common stock outstanding, including common stock equivalents.  Common stock
equivalents consist of outstanding common stock purchase

                                       12
<PAGE>
 
warrants.


2.  INVENTORIES

     Inventories consisted of the following at December 31, 1995 and September
30, 1996:

<TABLE>
<CAPTION>
                          December 31, 1995                 September 30, 1996
                        ---------------------             ---------------------
                           RMB         USD                   RMB         USD
                        ----------  ---------             ----------  ---------
<S>                     <C>         <C>                   <C>         <C> 
Raw materials           18,743,000  2,250,000             21,213,000  2,547,000
Work-in-progress         3,075,000    369,000             10,868,000  1,305,000
Finished goods          13,651,000  1,639,000             25,901,000  3,109,000
                        ----------  ---------             ----------  ---------
                        35,469,000  4,258,000             57,982,000  6,961,000
                        ==========  =========             ==========  =========
</TABLE>


3.  DEFERRED PRE-OPERATING COSTS

     Deferred pre-operating costs represent organization and certain start-up
costs (excluding capital expenditures) related to the new production facility.
Through December 31, 1995, such deferred pre-operating costs aggregated RMB
8,534,000, and are being amortized on the straight line basis over one year
commencing January 1, 1996, the date of commencement of commercial production
from the new production facility.  Amortization expense was RMB 2,134,000 and
RMB 6,401,000 for the three months and nine months ended September 30, 1996,
respectively.


4.  TRANSFER OF ACCOUNTS RECEIVABLE

     In conjunction with the formation of SCBW and the transfer of the operating
assets of SCH to SCBW effective July 1, 1994, SCBW was granted an option to
transfer to SCH certain accounts receivable outstanding as of July 1, 1994 at
cost, should such accounts receivable remain uncollected as of June 30, 1996.
As of December 31, 1995, the amount of such outstanding accounts receivable was
RMB 13,120,000.  The parties elected to modify the option's transfer date, and
accordingly, as of January 1, 1996, SCBW transferred to SCH RMB 13,120,000 of
accounts receivable, and SCH assumed an equivalent amount of SCBW's short-term
bank debt.


5.  SALE/LEASEBACK

     Effective as of January 1, 1996, SCBW entered into a

                                       13
<PAGE>
 
sale/leaseback transaction with SCH.  Pursuant to this transaction, SCBW sold
the new production facility's buildings and land with net book values of RMB
83,507,000 and RMB 47,960,000, respectively (aggregate net book value of RMB
131,467,000), to SCH in exchange for RMB 131,467,000.  SCH paid such
consideration by assuming RMB 87,759,000 of SCBW's short-term bank debt and RMB
43,708,000 of SCBW's long-term bank debt.  This transaction did not result in
any gain or loss.  In the opinion of management, this transaction was at fair
value.

     SCBW leased back the buildings from SCH for a period of 20 years under an
operating lease agreement that provides for escalating minimum rental payments
during the first five years of the lease, and also an escalating minimum usage
rate, of RMB 28,000,000. The escalating minimum usage rate increases from 30% in
1996 to 70% in 2000, and to the extent that the usage rate is between the
respective annual rate and 70%, such portion of rent expense payable will be
deferred. SCBW prepaid the first five years of rent to SCH, assuming a usage
rate of 70%, of RMB 28,000,000 by reducing its accounts receivable due from SCH
by an equal amount. To the extent that the utilization rate is less than 70% in
any year during the five year period ending December 31, 2000, the unused
prepaid rent can be carried forward during the first four years of such five
year period. The Company estimates that rent expense for 1996 will be RMB
2,400,000. In the opinion of management, the prepaid rent will be fully utilized
during the five years ending December 31, 2000.


6.  LOAN FROM PARENT COMPANY

     The unsecured loan of RMB 33,280,000 from MTE, the parent company, is
denominated in USD, bears no interest, and has no fixed repayment terms.


7.  SALE OF SECURITIES

     During March 1996, the Company sold 166,000 units, each unit consisting of
one share of common stock and one common stock purchase warrant, generating net
proceeds of RMB 3,733,000 (USD 448,000).  Each common stock purchase warrant
entitles the holder to purchase one share of common stock for US$3.00 per share
on or before February 28, 1998.  During August 1996, 5,000 common stock purchase
warrants were exercised, generating net proceeds of RMB

                                       14
<PAGE>
 
125,000 (USD 15,000), and resulting in the issuance of 5,000 shares of common
stock.  For each common stock purchase warrant exercised in August 1996, the
Company issued an identical common stock purchase warrant.


8.  NON-RECURRING RECAPITALIZATION COST

     On April 5, 1995, the Company issued 770,000 shares of common stock to
certain consultants in conjunction with the reverse acquisition. The Company
accounted for the value of the 770,000 shares as a non-recurring
recapitalization cost during the nine months ended September 30, 1995, and
recorded a charge to operations of RMB 6,407,000 as management's estimate of the
fair value of the consideration paid.


9.  ANTI-DUMPING INVESTIGATION

     The Company manufactures bicycles in the People's Republic of China (the
"PRC" or "China") through its subsidiary, SCBW, and exports to the United States
through various distributors and trade intermediaries.  Although there are other
markets for SCBW's products, the United States market is considered an important
market for SCBW.

     Pursuant to a petition filed by three United States bicycle manufacturers
in early 1995, the U.S. International Trade Commission (the "ITC") launched an
anti-dumping investigation against companies which manufacture bicycles in the
PRC for import into the United States.  In May 1995, the ITC found a reasonable
indication that "a U.S. industry is materially injured or threatened with
material injury by reason of imports of bicycles (from the PRC) allegedly sold
at less than fair value."  After the ITC's initial determination, the U.S.
Department of Commerce ("Commerce") began its investigation of the PRC bicycle
manufacturing industry, requesting financial and other information from several
Chinese bicycle manufacturers (not including SCBW), in order to calculate
dumping margins and impose anti-dumping duties.

     During November 1995, Commerce issued a preliminary determination which
calculated a 61.67% dumping margin on bicycles manufactured by SCBW and all but
nine Chinese bicycle manufacturers.  As a result, each Chinese bicycle
manufacturer which continued to export product to the United States was required
to post a "single-entry bond" equal to the estimated potential duty on bicycles
exported to the United States from the date of the preliminary notice until the
date of the final determination.

                                       15
<PAGE>
 
     In April 1996, Commerce finalized this dumping margin and the ITC began its
investigation of Chinese bicycle manufacturers.  An affirmative ITC injury or
threat of material injury determination would have resulted in the imposition of
the Department's dumping margin.  Throughout the investigations by Commerce and
the ITC, SCBW has maintained that it has not engaged in "dumping" bicycles in
the United States market and has opposed the imposition of the anti-dumping
duty.  In this regard, SCBW and other PRC bicycle manufacturers retained legal
counsel to protect their legal rights and to investigate and pursue several
alternative solutions.

     On June 4, 1996, the ITC made a negative final determination in its anti-
dumping investigation on imports of bicycles from China.  The negative ITC
determination means that the ITC found that there is not a reasonable indication
that a United States industry is materially injured or threatened with material
injury by reason of imports of bicycles from China.  The negative ITC
determination allows SCBW to resume its normal operations and export to the
United States without the imposition of an anti-dumping duty.

     The United States bicycle manufacturers appealed the determinations of both
Commerce and the ITC in the United States Court of International Trade on June
30, 1996 and July 19, 1996, respectively.  Legal counsel for SCBW is responding
to such appeals, and, in addition, has filed its own action to challenge
Commerce's calculation methodologies with respect to the 61.67% dumping margin.
The resolution of the appeals will take approximately one year to complete.  The
Company is unable to predict the ultimate resolution of this matter.

                                       16
<PAGE>
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Overview:

     Effective April 28, 1995, the Company acquired Winfill.  Winfill owns a 98%
interest in SCBW, a Sino-foreign joint venture engaged in the design,
manufacture and marketing of bicycles, bicycle parts and components, steel
tubes, and exercise equipment.  Winfill commenced operations effective July 1,
1994.  Except for a 69% interest in SCB, SCBW owns 100% interests in its
principal operating subsidiaries, all of which are organized in the People's
Republic of China.  The factory operations of SCBW's subsidiaries are located at
several sites in Zhaoqing City, Guangdong Province, People's Republic of China.

     For accounting purposes, the transaction has been treated as a
recapitalization of Winfill with Winfill as the acquiror (reverse acquisition).
The historical financial statements prior to April 28, 1995 are those of
Winfill.

     All amounts in the following discussion are in RMB.


Anti-Dumping Investigation:

     The Company manufactures bicycles in the People's Republic of China (the
"PRC" or "China") through its subsidiary, SCBW, and exports to the United States
through various distributors and trade intermediaries. Although there are other
markets for SCBW's products, the United States market is considered an important
market for SCBW.

     Pursuant to a petition filed by three United States bicycle manufacturers
in early 1995, the U.S. International Trade Commission (the "ITC") launched an
anti-dumping investigation against companies which manufacture bicycles in the
PRC for import into the United States.  In May 1995, the ITC found a reasonable
indication that "a U.S. industry is materially injured or threatened with
material injury by reason of imports of bicycles (from the PRC) allegedly sold
at less than fair value."  After the ITC's initial determination, the U.S.
Department of Commerce ("Commerce") began its investigation of the PRC bicycle
manufacturing industry, requesting financial and other information from several
Chinese bicycle manufacturers (not including SCBW), in order to calculate
dumping margins and impose anti-dumping duties.

     During November 1995, Commerce issued a preliminary determination which
calculated a 61.67% dumping margin on bicycles manufactured by SCBW and all but
nine Chinese bicycle manufacturers.  As a result, each Chinese bicycle
manufacturer which continued to export product to the United States was

                                       17
<PAGE>
 
required to post a "single-entry bond" equal to the estimated potential duty on
bicycles exported to the United States from the date of the preliminary notice
until the date of the final determination.

     In April 1996, Commerce finalized this dumping margin and the ITC began its
investigation of Chinese bicycle manufacturers.  An affirmative ITC injury or
threat of material injury determination would have resulted in the imposition of
the Department's dumping margin.  Throughout the investigations by Commerce and
the ITC, SCBW has maintained that it has not engaged in "dumping" bicycles in
the United States market and has opposed the imposition of the anti-dumping
duty.  In this regard, SCBW and other PRC bicycle manufacturers retained legal
counsel to protect their legal rights and to investigate and pursue several
alternative solutions.

     On June 4, 1996, the ITC made a negative final determination in its anti-
dumping investigation on imports of bicycles from China.  The negative ITC
determination means that the ITC found that there is not a reasonable indication
that a United States industry is materially injured or threatened with material
injury by reason of imports of bicycles from China.  The negative ITC
determination allows SCBW to resume its normal operations and export to the
United States without the imposition of an anti-dumping duty.

     The United States bicycle manufacturers appealed the determinations of both
Commerce and the ITC in the United States Court of International Trade on June
30, 1996 and July 19, 1996, respectively.  Legal counsel for SCBW is responding
to such appeals, and, in addition, has filed its own action to challenge
Commerce's calculation methodologies with respect to the 61.67% dumping margin.
The resolution of the appeals will take approximately one year to complete.  The
Company is unable to predict the ultimate resolution of this matter.

Consolidated Results of Operations:

     Three Months Ended September 30, 1995 and 1996 -

     Sales for the three months ended September 30, 1996 were RMB 56,672,000, as
compared to RMB 45,156,000 for the three months ended September 30, 1995, an
increase of RMB 11,516,000 or 25.5%. Sales to companies related to SCH, a
related entity, for the three months ended September 30, 1996 were approximately
RMB 2,104,000 or 3.7% of sales, as compared to RMB 22,950,000 or 50.8% of sales
for the three months ended September 30, 1995. The increase in sales in 1996 as
compared to 1995 was a result of the following factors: (1) the development of
new distribution channels in the domestic bicycle market in China; (2) the
recent resolution of the anti-

                                       18
<PAGE>
 
dumping investigation, which allowed the Company to resume export sales to the
United States during the three months ended September 30, 1996; and (3) the
recent introduction of an exercise equipment product line, which was developed
for export to the United States and Canada.  Export sales to the United States
aggregated approximately RMB 22,000,000 during the three months ended September
30, 1996.

     The Company has focused its recent sales efforts on not only increasing
domestic sales in China under its "Seven Stars" brand, but also on concurrently
developing distribution channels to markets outside North America, including
Southeast Asia and Australia, and on establishing an exercise equipment product
line.

     Gross profit for the three months ended September 30, 1996 was RMB
11,145,000 or 19.7% of sales, as compared to RMB 9,101,000 or 20.2% of sales for
the three months ended September 30, 1995.

     Selling, general and administrative expenses for the three months ended
September 30, 1996 were RMB 4,607,000 or 8.1% of sales, as compared to RMB
4,002,000 or 8.9% of sales for the three months ended September 30, 1995, an
increase of RMB 605,000 or 15.1%.  Selling, general and administrative expenses
increased on an absolute basis in 1996 as compared to 1995 primarily as a result
of additional shipping costs incurred with respect to increased export sales in
1996, and additional costs in 1996 related to the operation of a public company.

     Amortization of deferred pre-operating costs for the three months ended
September 30, 1996 was RMB 2,134,000.  Deferred pre-operating costs represent
organization and certain start-up costs (excluding capital expenditures) related
to the new production facility.  Through December 31, 1995, such deferred pre-
operating costs aggregated RMB 8,534,000, and are being amortized on the
straight line basis over one year commencing January 1, 1996, the date of
commencement of commercial production from the new production facility.

     Interest expense, net of amounts capitalized in 1995, for the three months
ended September 30, 1996 was RMB 2,043,000 or 3.6% of sales, as compared to RMB
1,141,000 or 2.5% of sales for the three months ended September 30, 1995.  The
increase in interest expense was primarily a result of an increase in bank loans
utilized to finance working capital requirements in 1996 as compared to 1995.

     As a result of the aforementioned factors, for the three months ended
September 30, 1996, net income was RMB 866,000 (per share - RMB .15; USD .02) or
1.5% of sales; excluding the amortization of deferred pre-operating costs of RMB
2,134,000, pro forma net income would have been RMB 3,000,000 (per share - RMB
 .51; USD .06) or 5.3% of sales. For the three months ended September 30, 1995,
net income was RMB 2,583,000 (RMB .46 per share) or 5.7% of sales.

                                       19
<PAGE>
 
     Nine Months Ended September 30, 1995 and 1996 -

     Sales for the nine months ended September 30, 1996 were RMB 139,650,000, as
compared to RMB 127,310,000 for the nine months ended September 30, 1995, an
increase of RMB 12,340,000 or 9.7%. Sales to companies related to SCH, a related
entity, for the nine months ended September 30, 1996 were approximately RMB
27,104,000 or 19.4% of sales, as compared to RMB 30,340,000 or 23.8% of sales
for the nine months ended September 30, 1995. The increase in sales in 1996 as
compared to 1995 occurred primarily during the three months ended September 30,
1996, and was a result of the following factors: (1) the development of new
distribution channels in the domestic bicycle market in China; (2) the recent
resolution of the anti-dumping investigation, which allowed the Company to
resume export sales to the United States during the three months ended September
30, 1996; and (3) the recent introduction of an exercise equipment product line,
which was developed for export to the United States and Canada.

     The Company has focused its recent sales efforts on not only increasing
domestic sales in China under its "Seven Stars" brand, but also on concurrently
developing distribution channels to markets outside North America, including
Southeast Asia and Australia, and on establishing an exercise equipment product
line.

     Gross profit for the nine months ended September 30, 1996 was RMB
27,666,000 or 19.8% of sales, as compared to RMB 24,970,000 or 19.6% of sales
for the nine months ended September 30, 1995.

     Selling, general and administrative expenses for the nine months ended
September 30, 1996 were RMB 10,139,000 or 7.3% of sales, as compared to RMB
10,144,000 or 8.0% of sales for the nine months ended September 30, 1995.

     Amortization of deferred pre-operating costs for the nine months ended
September 30, 1996 was RMB 6,401,000.  Deferred pre-operating costs represent
organization and certain start-up costs (excluding capital expenditures) related
to the new production facility.  Through December 31, 1995, such deferred pre-
operating costs aggregated RMB 8,534,000, and are being amortized on the
straight line basis over one year commencing January 1, 1996, the date of
commencement of commercial production from the new production facility.

                                       20
<PAGE>
 
      On April 5, 1995, the Company issued 770,000 shares of common stock to
certain consultants in conjunction with the reverse acquisition.  The Company
accounted for the value of the 770,000 shares as a non-recurring
recapitalization cost during the nine months ended September 30, 1995, and
recorded a charge to operations of RMB 6,407,000 as management's estimate of the
fair value of the consideration paid.

     Interest expense, net of amounts capitalized in 1995, for the nine months
ended September 30, 1996 was RMB 4,957,000 or 3.5% of sales, as compared to RMB
3,702,000 or 2.9% of sales for the nine months ended September 30, 1995.  The
increase in interest expense was primarily a result of an increase in bank loans
utilized to finance working capital requirements in 1996 as compared to 1995.

     As a result of the aforementioned factors, for the nine months ended
September 30, 1996, net income was RMB 4,310,000 (per share - RMB .74; USD .09)
or 3.1% of sales; excluding the amortization of deferred pre-operating costs of
RMB 6,401,000, pro forma net income would have been RMB 10,711,000 (per
share - RMB 1.84; USD .22) or 7.7% of sales. For the nine months ended September
30, 1995, net income was RMB 2,896,000 (RMB .55 per share) or 2.3% of sales;
excluding the non-recurring recapitalization cost of RMB 6,407,000, pro forma
net income would have been RMB 9,303,000 (RMB 1.77 per share) or 7.3% of sales.

Consolidated Financial Condition - September 30, 1996:

     Liquidity and Capital Resources -

     For the nine months ended September 30, 1996, the Company's operations
utilized cash resources of RMB 28,599,000.  The most significant components of
the cash utilized by operations in 1996 were the increase in inventories of RMB
22,513,000, the increase in due from related companies (as a result of sales to
companies related to SCH) of RMB 12,202,000, the increase in other receivables
of RMB 6,142,000, and the decrease in accounts payable of RMB 13,410,000, which
was partially offset by an increase of RMB 7,201,000 in other long-term
payables.

     Through December 31, 1995, the Company relied primarily on short-term bank
loans to finance the construction of its new production facility, resulting in a
net working capital deficit of RMB 71,496,000 at December 31, 1995.  However,
primarily as a result of the sale/leaseback transaction described below, the
Company had reduced its net working capital deficit to RMB 10,023,000 at
September 30, 1996.  As a result, the Company's

                                       21
<PAGE>
 
current ratio at September 30, 1996 was .95:1, as compared to .73:1 at December
31, 1995.

     Except with regard to the initial transaction pursuant to which SCBW was
organized and capitalized and the sale of the Company's equity securities during
March and August 1996, the Company's primary method of financing its capital
requirements has been bank loans.  Short-term bank loans are unsecured,
repayable within one year, have interest rates ranging from 9.9% to 13.0%, and
have been utilized for working capital purposes and to finance the expansion of
the production facility and the purchase of equipment.  Long-term bank loans are
secured by property, plant and equipment and long-term bank deposits, have
interest rates ranging from 5.4% to 13.2%, are guaranteed by related enterprises
of SCH, and have been utilized to finance the expansion of the production
facility and the purchase of equipment.

     Exclusive of the reduction in short-term and long-term bank loans as a
result of the sale/leaseback with SCH and the transfer of accounts receivable to
SCH as discussed below, during the nine months ended September 30, 1996, short-
term bank loans increased by RMB 102,901,000, which were utilized to repay other
short-term borrowings of RMB 6,656,000, payments of finance lease obligations of
RMB 6,628,000 and long-term bank loans (including the current portion) of RMB
27,726,000.

     During March 1996, the Company raised net proceeds of RMB 3,733,000 (USD
448,000) through the sale of 166,000 units, each unit consisting of one share of
common stock and one common stock purchase warrant.  Each common stock purchase
warrant entitles the holder to purchase one share of common stock for US$3.00
per share on or before February 28, 1998.  During August 1996, 5,000 common
stock purchase warrants were exercised, generating net proceeds of RMB 125,000
(USD 15,000), and resulting in the issuance of 5,000 shares of common stock.
For each common stock purchase warrant exercised in August 1996, the Company
issued an identical common stock purchase warrant.

     During the nine months ended September 30, 1996, the net cash provided by
financing activities of RMB 66,374,000 was utilized to fund additions to
property, plant and equipment of RMB 23,528,000 and operating cash flow
requirements.

     SCBW is considered by the government of China as an important component of
the bicycle production and exporting base of China, and has been designated for
continuing financial support by the Zhaoqing Branch of the Bank of China.  SCBW
has utilized borrowings from the Bank of China to support increases in
production and sales, and to finance the expansion of the production facility
and to purchase equipment.  Pursuant to guidelines issued by the government of
China, SCBW increased its

                                       22
<PAGE>
 
short-term borrowings during 1995 and 1996 from the Bank of China with loans
having maturities ranging from one to three months.  The working capital loans
that the Bank of China makes to SCBW are renewed so long as SCBW's production
and business operations continue to meet certain operating and financial
criteria.  Management believes that the Bank of China will continue to renew
SCBW's existing borrowings and increase its borrowing base as necessary to
support operations at current levels.

     In connection with the formation of SCBW as a Sino-foreign joint venture
between SCH and Winfill in June 1994, Winfill issued a note payable to MTE for
RMB 34,800,000.  The unsecured note is denominated in United States dollars,
bears no interest, has no fixed repayment terms, and had a balance of RMB
33,280,000 at September 30, 1996.  There have been no payments on this note,
with the principal balance changing only as a result of changes in the currency
conversion rates between the Chinese Renminbi and the United States dollar.  The
Company believes that the existing terms of this note will continue until
substantial full-scale production at the new facility is reached.  Although the
new production facility has been completed and is expected to become fully
operational in 1996, substantial full-scale production is expected to take at
least two years to attain.

     Through the end of 1997, SCBW currently plans to expend approximately RMB
40,000,000 with respect to the second phase of development of the new production
facility, including the tube production line and the spare parts welding line,
which is expected to be funded through long-term debt, to the extent available,
and/or the sale of the Company's equity securities.

     In conjunction with the formation of SCBW and the transfer of the operating
assets of SCH to SCBW effective July 1, 1994, SCBW was granted an option to
transfer to SCH certain accounts receivable outstanding as of July 1, 1994 at
cost, should such accounts receivable remain uncollected as of June 30, 1996.
As of December 31, 1995, the amount of such outstanding accounts receivable was
RMB 13,120,000.  The parties elected to modify the option's transfer date, and
accordingly, effective as of January 1, 1996, SCBW transferred to SCH RMB
13,120,000 of accounts receivable, and SCH assumed an equivalent amount of
SCBW's short-term bank debt.

     Effective as of January 1, 1996, SCBW entered into a sale/leaseback
transaction with SCH.  Pursuant to this transaction, SCBW sold the new
production facility's buildings and land, with net book values of RMB 83,507,000
and RMB 47,960,000, respectively (aggregate net book value of RMB 131,467,000),
to SCH in exchange for RMB 131,467,000.  SCH paid such consideration by assuming
RMB 87,759,000 of SCBW's short-term bank debt and RMB 43,708,000 of SCBW's long-
term bank debt.  This transaction did not result in any gain or loss.  In the

                                       23
<PAGE>
 
opinion of management, this transaction was at fair value.

     SCBW leased back the buildings from SCH for a period of 20 years under an
operating lease agreement that provides for escalating minimum rental payments
during the first five years of the lease, and also an escalating minimum usage
rate, of RMB 28,000,000. The escalating minimum usage rate increases from 30% in
1996 to 70% in 2000, and to the extent that the usage rate is between the
respective annual rate and 70%, such portion of rent expense payable will be
deferred. SCBW prepaid the first five years of rent to SCH, assuming a usage
rate of 70%, of RMB 28,000,000 by reducing its accounts receivable due from SCH
by an equal amount. To the extent that the utilization rate is less than 70% in
any year during the five year period ending December 31, 2000, the unused
prepaid rent can be carried forward during the first four years of such five
year period. The Company estimates that rent expense for 1996 will be RMB
2,400,000. In the opinion of management, the prepaid rent will be fully utilized
during the five years ending December 31, 2000. As a result of this
sale/leaseback transaction, the Company has been able to substantially reduce
future depreciation expense related to the new production facility and interest
expense related to the debt that had been incurred to build the new production
facility.

     The Company believes that its cash flow provided by operations, combined
with short-term borrowings, will be sufficient to support operations at current
levels.  However, in order to increase sales and fully utilize the expanded
production capacity of the new production facility, the Company will require
operating capital substantially in excess of that available from domestic
sources in China.  The availability of working capital represents a substantial
limitation on the ability of the Company to finance increased production levels.
As a result of the Company's existing capital structure and reliance on
borrowings, such additional operating capital would most likely be in the form
of some type of an equity investment.

                                       24
<PAGE>
 
     Inflation and Currency Matters -

     In recent years, the Chinese economy has experienced periods of rapid
economic growth as well as high rates of inflation, which in turn has resulted
in the periodic adoption by the Chinese government of various corrective
measures designed to regulate growth and contain inflation.  During the nine
months ended September 30, 1996, the general inflation rate in China was in
excess of 10% on an annualized basis.  Since 1993, the Chinese government has
implemented an economic program designed to control inflation, which has
resulted in the tightening of working capital available to Chinese business
enterprises.  The success of the Company depends in substantial part on the
continued growth and development of the Chinese economy.

     Foreign operations are subject to certain risks inherent in conducting
business abroad, including price and currency exchange controls, and
fluctuations in the relative value of currencies.  Changes in the relative value
of currencies occur periodically and may, in certain instances, materially
affect the Company's results of operations.

     A substantial portion of the Company's revenues are denominated in RMB.  As
a result, devaluation of the RMB against the USD would adversely affect the
Company's financial performance when measured in USD, and could have material
adverse effects upon the results of operations and financial position.  In
addition, a significant portion of revenues will need to be converted into USD
on a continuing basis to meet foreign currency obligations.  Although prior to
1994 the RMB experienced significant devaluation against the USD, the RMB has
remained fairly stable since late 1994.  The unified exchange rate was US$1.00
to RMB 8.70 at December 31, 1993, RMB 8.45 at December 31, 1994, RMB 8.32 at
December 31, 1995, and RMB 8.33 at September 30, 1996.

                                       25
<PAGE>
 
                                 PART II.  OTHER INFORMATION
                                 ---------------------------


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits -

           27  Financial Data Schedule (electronic filing only)

     (b)  Reports on Form 8-K -

           Three Months Ended September 30, 1996:  None.

                                       26
<PAGE>
 
                                 SIGNATURES
                                 ----------


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



                                        FREMONT CORPORATION
                                        -------------------
                                            (Registrant)



Date:  November 13, 1996           By:  /s/ WINSTON WU
                                        ________________________
                                        Winston Wu
                                        President
                                        (Duly Authorized Officer)



Date:  November 13, 1996                /s/ ROBERT N. WEINGARTEN
                                   By:  ________________________
                                        Robert N. Weingarten
                                        Chief Financial Officer
                                        (Principal Financial
                                         Officer)

                                       27