U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C.
                                      20549

                                   FORM 10-QSB

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


                    For the quarter ended September 30, 2004

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from_________________ to________________

Commission File No. 000-49630

                              CHINA AUTOPARTS, INC.
        -----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

         Delaware                                          13-4168913
--------------------------------------------------------------------------------
(State or other jurisdiction of                     (IRS Employer Identification
incorporation or organization)                                  No.)

                  276 Fifth Ave., Suite 703, New York, NY 10001
                  ---------------------------------------------
                    (Address of principal executive offices)

                                  212-684-3760
                           (Issuer's telephone number)

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

State the number of shares outstanding of each of the issuer's classes of common
equity,  as of the latest  practicable  date: as of November 12, 2004 there were
9,090,910 shares outstanding.

Transitional Small Business Format: Yes [_]  No [X]


                                                                               1
<PAGE>

                         PART I -- FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                    CHINA AUTOPARTS, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                AS OF SEPTEMBER 30, 2004 AND DECEMBER 31, 2003

                                  A S S E T S
                                                                                            September 30,    December 31,
                                                                                                2004             2003
                                                                                            ------------     ------------
                                                                                             (Unaudited)        (Audited)
                                                                                            ------------     ------------
<S>                                                                                        <C>              <C>
CURRENT ASSETS:
    Cash                                                                                    $    142,049     $    488,001
    Cash - restricted                                                                          1,755,763        2,057,000
    Accounts receivable, trade, net of allowance for doubtful
      accounts of $20,430 as of September 30, 2004 and December 31, 2003                       6,392,036        6,789,525
    Accounts receivable, trade special                                                         3,372,300          943,800
    Other receivables, net of allowance for doubtful accounts of $278,300
      as of September 30, 2004 and December 31, 2003                                             291,206          407,470
    Other receivables - related party                                                          3,023,801        5,462,785
    Prepaid expense                                                                            1,995,709        1,030,156
    Prepaid expense-related party                                                                 16,048               --
    Inventories                                                                                1,400,822        2,136,674
                                                                                            ------------     ------------
      Total current assets                                                                    18,389,734       19,315,411
                                                                                            ------------     ------------

PLANT AND EQUIPMENT, net                                                                       2,672,172        2,554,007
                                                                                            ------------     ------------

OTHER ASSETS:
    Intangible asset, net                                                                        149,938          162,790
    Employee advances                                                                            125,119          333,247
                                                                                            ------------     ------------
      Total other assets                                                                         275,057          496,037
                                                                                            ------------     ------------
        Total assets                                                                        $ 21,336,963     $ 22,365,455
                                                                                            ============     ============

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

CURRENT LIABILITIES:
    Accounts payable                                                                        $    796,626     $  1,854,085
    Accounts payable - related party                                                                  --           15,675
    Advances from customers                                                                       58,416           54,934
    Wages and benefits payable                                                                   304,559          689,225
    Income and other taxes payable                                                               398,595          527,011
    Accrued liabilities                                                                          520,478          379,689
    Other payables                                                                             2,226,642        1,333,471
    Other payables - related party                                                                    --          242,000
    Dividend payable                                                                             497,804               --
    Notes payable - bank                                                                       3,025,000        5,445,000
    Short-term loans payable - bank                                                            4,840,000        4,840,000
                                                                                            ------------     ------------
      Total current liabilities                                                               12,668,120       15,381,090
                                                                                            ------------     ------------
CONTINGENCIES                                                                                         --               --
                                                                                            ------------     ------------

SHAREHOLDERS' EQUITY:
    Preferred stock, $.0001 par value, 1,000,000 shares authorized,
    none issued,Common stock, $.0001 par value, 20,000,000
    shares authorized,
    9,090,910 and 500,000 shares issued and outstanding, respectively                                959              100
    Paid-in-capital                                                                              336,372          312,971
    Statutory reserve                                                                          1,561,222        1,561,222
    Retained earnings                                                                          6,757,871        5,101,798
    Accumulated other comprehensive income                                                        12,419            8,274
                                                                                            ------------     ------------
      Total shareholders' equity                                                               8,668,843        6,984,365
                                                                                            ------------     ------------
        Total liabilities and shareholders' equity                                          $ 21,336,963     $ 22,365,455
                                                                                            ============     ============
</TABLE>

The accompanying notes are an integral part of this statement.


                                                                               2
<PAGE>

<TABLE>
<CAPTION>
                     CHINA AUTOPARTS, INC. AND SUBSIDIARIES

        CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003


                                                          Three months ended             Nine months ended
                                                    --------------------------    ---------------------------
                                                             September 30,                September 30,
                                                    --------------------------    ---------------------------
                                                       2004           2003           2004           2003
                                                    ------------   ------------   ------------   ------------
                                                     (Unaudited)    (Unaudited)    (Unaudited)    (Unaudited)
                                                    ------------   ------------   ------------   ------------
<S>                                                 <C>            <C>            <C>            <C>
REVENUES                                            $  3,823,660   $  3,534,462   $ 13,207,879   $ 12,283,108

COST OF SALES                                          2,743,539      2,310,551      8,912,900      7,160,737
                                                    ------------   ------------   ------------   ------------

GROSS PROFIT                                           1,080,121      1,223,911      4,294,979      5,122,371

OTHER OPERATING INCOME                                    50,479         84,969        132,493        316,151
SELLING, GENERAL AND  ADMINISTRATIVE EXPENSES            474,567        251,027      1,333,581      1,147,374
                                                    ------------   ------------   ------------   ------------

INCOME  FROM OPERATIONS                                  656,033      1,057,853      3,093,891      4,291,148

OTHER EXPENSE, net of other income                        95,830         42,936        222,249        330,288
                                                    ------------   ------------   ------------   ------------

INCOME BEFORE INCOME TAXES                               560,203      1,014,917      2,871,642      3,960,860

PROVISION FOR INCOME TAXES                                42,211        106,957        215,569        297,065
                                                    ------------   ------------   ------------   ------------

NET INCOME                                               517,992        907,960      2,656,073      3,663,795

OTHER COMPREHENSIVE INCOME (LOSS):
    Foreign currency translation adjustment                    1          4,780          4,145           (515)
                                                    ------------   ------------   ------------   ------------

COMPREHENSIVE INCOME                                $    517,993   $    912,740   $  2,660,218   $  3,663,280
                                                    ============   ============   ============   ============

EARNINGS PER SHARE, BASIC AND DILUTE$                       0.06   $       1.83   $       0.48   $       7.33

                                                    ============   ============   ============   ============

WEIGHTED AVERAGE NUMBER OF SHARES                      9,090,910        500,000      5,579,297        500,000
                                                    ============   ============   ============   ============
</TABLE>

The accompanying notes are an integral part of this statement.


                                                                               3
<PAGE>


<TABLE>
<CAPTION>
                     CHINA AUTOPARTS, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003


                                                  Number         Common       Paid in          Statutory         Retained
                                                of shares        stock        capital          reserves          earnings
                                               -----------   -------------  ---------------  ---------------  ----------------
                                               (Unaudited)     (Unaudited)   (Unaudited)       (Unaudited)      (Unaudited)
                                               -----------   -------------  ---------------  ---------------  ----------------
<S>                                              <C>        <C>            <C>              <C>              <C>
BALANCE, January 1, 2003, audited                  500,000   $        100   $      280,624   $   1,174,549    $     5,253,143
   Net income                                                                                                       3,663,795
   Land use right                                                                   24,260
   Foreign currency translation adjustments
                                               -----------   ------------   --------------   -------------    ---------------
BALANCE, September 30, 2003                        500,000            100          304,884       1,174,549          8,916,938
   Net income                                                                                                         209,623
   Land use right                                                                    8,087
   Adjustment to statutory reserve                                                                 386,673           (386,673)
   Dividend distributions                                                                                          (3,638,090)
   Foreign currency translation adjustments
                                               -----------   ------------   --------------   -------------    ---------------
BALANCE, December 31, 2003, audited                500,000            100          312,971       1,561,222          5,101,798
   Issuance of common stock to Rhohan
      shareholders due to reorganization         8,590,910            859             (859)
   Net income                                                                                                       2,656,073
   Land use right                                                                   24,260
   Dividend distribution                                                                                           (1,000,000)
   Foreign currency translation adjustments
                                               -----------   ------------   ---------------  --------------   ----------------
BALANCE, September 30, 2004                      9,090,910   $        959   $      336,372   $   1,561,222    $     6,757,871
                                               ===========   ============   ===============  ==============   ================

<CAPTION>
                                                   Accumulated
                                                     other
                                                  comprehensive
                                                  income (loss)        Totals
                                                ---------------- ---------------
                                                 (Unaudited)      (Unaudited)
                                                ---------------- ---------------
<S>                                             <C>              <C>
BALANCE, January 1, 2003, audited               $       8,213    $   6,716,629
   Net income                                                        3,663,795
   Land use right                                                       24,260
   Foreign currency translation adjustments              (515)            (515)
                                                ---------------  --------------
BALANCE, September 30, 2003                             7,698       10,404,169
   Net income                                                          209,623
   Land use right                                                        8,087
   Adjustment to statutory reserve                                          ~~
   Dividend distributions                                           (3,638,090)
   Foreign currency translation adjustments               576              576
                                                ---------------  --------------
BALANCE, December 31, 2003, audited                     8,274        6,984,365
   Issuance of common stock to Rhohan
      shareholders due to reorganization                                   --
   Net income                                                        2,656,073
   Land use right                                                       24,260
   Dividend distribution                                            (1,000,000)
   Foreign currency translation adjustments             4,145            4,145
                                                ---------------  --------------
BALANCE, September 30, 2004                     $      12,419    $   8,668,843
                                                ===============  ==============

</TABLE>

The accompanying notes are an integral part of this statement.


                                                                               4
<PAGE>

<TABLE>
<CAPTION>
                     CHINA AUTOPARTS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

                                                                             2004           2003
                                                                         -----------    -----------
                                                                         (Unaudited)    (Unaudited)
                                                                         -----------    -----------
<S>                                                                      <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income                                                          $ 2,656,073    $ 3,663,795
     Adjustments to reconcile net income to cash
        provided by (used in) operating activities:
          Foreign currency translation adjustments                             4,145           (515)
          Depreciation                                                       161,680        104,254
          Loss on disposal of equipment                                           --          3,557
          Amortization                                                        12,852          3,029
          Land use right                                                      24,260         24,260
        (Increase) decrease in assets:
          Change in restricted cash                                          301,237     (1,694,000)
          Accounts receivable - trade                                        397,489       (378,335)
          Accounts receivable - trade special                             (2,428,500)       (39,049)
          Other receivables                                                  116,264       (892,615)
          Other receivables - related party                                2,438,984     (2,022,855)
          Prepaid expenses                                                  (965,553)      (844,546)
          Prepaid expense-related party                                      (16,048)            --
          Inventories                                                        735,852       (510,980)
          Employee advances                                                  208,128       (226,220)
        Increase (decrease) in liabilities:
          Accounts payable                                                (1,057,459)     1,867,727
          Accounts payable - related party                                   (15,675)            --
          Advances from customers                                              3,482         28,034
          Wages and benefits payable                                        (384,666)      (258,147)
          Income and other taxes payable                                    (128,416)       499,545
          Accrued liabilities                                                140,789         41,948
          Income and other payables                                          893,171       (707,468)
          Other payables - related party                                    (242,000)      (544,500)
                                                                         -----------    -----------
             Net cash provided by (used in) operating activities           2,856,089     (1,883,081)
                                                                         -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of intangible asset - land use right                                --       (117,558)
     Purchase of fixed assets                                               (182,687)       (81,511)
     Sale of fixed assets                                                         --          3,630
     (Increase) in fixed assets from Donation                                (15,464)            --
     (Increase) in construction in progress                                  (81,694)    (1,534,506)
                                                                         -----------    -----------
             Net cash used in investing activities                          (279,845)    (1,729,945)
                                                                         -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Borrowings net of payments on short term notes payable               (2,420,000)     3,630,000
     Decrease in bank overdraft                                                   --        (16,974)
     Dividends paid                                                         (502,196)            --
                                                                         -----------    -----------
             Net cash provided by (used in) financing activities          (2,922,196)     3,613,026
                                                                         -----------    -----------

DECREASE IN CASH                                                            (345,952)            --

CASH, beginning of period                                                    488,001             --
                                                                         -----------    -----------

CASH, end of period                                                      $   142,049    $        --
                                                                         ===========    ===========
</TABLE>

The accompanying notes are an integral part of this statement.


                                                                               5
<PAGE>

                     CHINA AUTOPARTS, INC. AND SUBSIDIARIES

            CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Summary of significant accounting policies

Background

On May 13, 2004, China Autoparts,  Inc.  (formerly known as Talram  Corporation)
(referred  to as  CHINA  AUTOPARTS  or the  Company),  a  Delaware  corporation,
completed  a "reverse  acquisition"  transaction  in which it  acquired  all the
outstanding stock of Rhohan Holdings Limited (referred to as RHOHAN),  a British
Virgin  Islands  (BVI)  corporation,  in  consideration  for the  issuance  of a
majority of CHINA AUTOPARTS's common shares.

The reverse  acquisition  was  completed  pursuant to a Capital  Stock  Exchange
Agreement  dated April 22,  2004.  Concurrently  with the closing of the reverse
acquisition,   Talram's   shareholders  changed  the  Company's  name  to  China
Autoparts,  Inc., its directors  appointed designees of Double Unity Investments
Limited  (100%  shareholder  of  RHOHAN)  as  directors  and  then  resigned  as
directors,   for  further  explanation  of  the  transaction;   these  financial
statements  should be read in  conjunction  with the Company's form 8K dated May
13, 2004.

China Autoparts,  Inc. was incorporated in the State of Delaware on May 1, 2001.
Up until  the  reorganization,  CHINA  AUTOPARTS  had only  nominal  assets  and
liabilities  and was a  development  stage  company  attempting  to  locate  and
consummate a merger with an ongoing business. As a result of the reorganization,
CHINA AUTOPARTS will continue the business operations of RHOHAN.

Rhohan Holdings  Limited was  incorporated on September 9, 1999 in the territory
of the British Virgin Islands. The Company,  through its wholly owned subsidiary
Chengdu Tonglin Casting Industrial Co., Ltd.  (TONGLIN),  principally engages in
the development,  production,  sales and related  technical service provision of
various types of petrol engine  cylinder body and other casting  products in the
People's Republic of China (PRC).

Chengdu Tonglin  Casting  Industrial Co., Ltd. was established in Dayi County of
Chengdu by Chengdu Rongxin  Enterprises Co., Ltd.  (Rongxin) and Rhohan Holdings
Limited  (RHOHAN) as a  Sino-foreign  equity joint  venture on January 21, 2000.
TONGLIN was classified as a Foreign Invested  Enterprise (FIE) in the PRC and is
subject  to the FIE laws of the PRC.  TONGLIN  is a Chinese  registered  limited
liability company with a legal structure similar to a regular  corporation and a
limited  liability  company  organized  under state laws in the United States of
America.  The Articles of Association  provides for a 50 year term with original
registered capital of approximately  $2,005,000.  RHOHAN was formerly owned 100%
by Double Unity  Investments  Limited  (referred to as Double Unity),  a British
Virgin Islands  corporation.  Double Unity Investments  Limited is 100% owned by
Mr. Li  Yungao.  Rongxin  is 100%  owned by the  Company's  shareholder,  Mr. Li
Yungao.

Originally  Rongxin owned 40% and RHOHAN owned 60% of TONGLIN.  On July 5, 2001,
the registered capital of TONGLIN was increased to approximately  $3,214,000 and
RHOHAN's  ownership in TONGLIN  increased  to 75% and  Rongxin's  ownership  was
reduced to 25%.  RHOHAN paid for its increase in capital  through its portion of
undistributed  earnings.  In  October  2002,  Rongxin  agreed  to  transfer  its
remaining 25% ownership in TONGLIN to RHOHAN for approximately  $2,178,000 which
was paid from dividends distributed by TONGLIN.


                                                                               6
<PAGE>

Note 1 - Summary of significant accounting policies, (continued)

On November 20, 2003, this transfer was approved by the State Administration for
Industry and Commerce of the PRC. As a result of this transfer  TONGLIN became a
wholly foreign owned enterprise (WFOE).

As of April 22, 2004, China Autoparts, Inc. owns the following subsidiaries:

                                                          Percentage
      Subsidiary                                          Ownership
-----------------------------------------------------     ----------------
Rhohan Holdings Limited (BVI company) 100%                   100%
      owned by China Autoparts, Inc.
Chengdu Tonglin Casting Industrial Co., Ltd                  100%
      (Chinese registered limited liability
      company), owned 100% by
      Rhohan Holdings Limited

The reporting entity

The  financial  statements  in the fillings of CHINA  AUTOPARTS  become those of
RHOHAN.  The  consolidated  financial  statements of China  Autoparts,  Inc. and
subsidiaries  represent the  activities of its 100% owned  subsidiaries,  Rhohan
Holdings  Limited and Chengdu  Tonglin  Casting  Industrial  Co., Ltd.  Talram's
continuing  operations  and balance  sheet are  insignificant  and therefore not
included in these financial statements.

Basis of presentation

Prior to April 22,  2004  Talram  was  considered  to be a  "development  stage"
enterprise  and its financial  statements  from December 31, 2003 and prior were
presented in accordance with Statement of Financial  Accounting Standards (SFAS)
No. 7, "Accounting and Reporting by Development Stage Enterprises".  As a result
of the reverse acquisition of Rhohan Holdings Limited,  the Company is no longer
considered to be a "development  stage  enterprise" and is no longer required to
report its financial statements in accordance with SFAS No. 7.

The consolidated  financial  statements  represent the activities of the Company
and its wholly  owned  subsidiaries.  The  Company's  financial  statements  are
prepared in conformity  with  accounting  principles  generally  accepted in the
United States of America.

Foreign currency translation

The reporting  currency of the Company is the US dollar.  TONGLIN uses its local
currency,  Renminbi, as its functional currency.  Results of operations and cash
flow are translated at average exchange rates during the period,  and assets and
liabilities  are  translated at the end of period  exchange  rates.  Translation
adjustments  resulting  from this  process  are  included in  accumulated  other
comprehensive income in the consolidated statement of shareholders' equity.


                                                                               7
<PAGE>

Note 1 - Summary of significant accounting policies, (continued)

Foreign currency translation (continued)

Transaction  gains and losses  that arise from  exchange  rate  fluctuations  on
transactions  denominated in a currency  other than the functional  currency are
included  in the  results of  operations  as  incurred.  These  amounts  are not
material to the consolidated financial statements.

Revenue recognition

Product  sales are  recognized  when the  products are  delivered  and title has
passed. The Company offers no warranties on its products. However, the customers
have 3-5 days to inspect  the goods and to notify  the  Company if there are any
products that do not meet the quality  standards  set forth in their  contracts.
The Company at this time  replaces the defective  goods with new  products.  The
defective  goods are  returned to the Company and are  reworked  and returned to
inventory.

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

Plant and equipment, net

Plant and equipment  are recorded at cost.  Depreciation  is computed  using the
straight-line method over the estimated useful lives of the assets. Depreciation
expense  for the nine  months  ended  September  30,  2004 and 2003  amounted to
$161,680 and $104,254, respectively. Estimated useful lives of the assets are as
follows:

                                                   Estimated Useful Life
Buildings                                               20-30 years
Machinery and equipment                                 10-15 years
Furniture and fixtures                                   5-10 years

Construction in progress includes  engineering  costs,  insurance costs,  wages,
interest  and other costs  relating to  construction  in  progress.  Balances in
construction  in progress are  transferred  to equipment when the related assets
are  ready  for  their  intended  use.  No   depreciation  is  provided  for  on
construction in progress.

Maintenance,  repairs and minor  renewals  are  charged  directly to expenses as
incurred.   Major  additions  and  betterment  to  property  and  equipment  are
capitalized.

Long-term  assets of the  Company  are  reviewed  annually  as to whether  their
carrying value has become impaired.  The Company considers assets to be impaired
if  the  carrying  value  exceeds  projected  future  cash  flows  from  related
operations.  The  Company  also  re-evaluates  the  periods of  amortization  to
determine whether subsequent events and circumstances  warrant revised estimates
of useful lives.  As of September 30, 2004, the Company  expects these assets to
be fully recoverable.


                                                                               8
<PAGE>

Note 1 - Summary of significant accounting policies, (continued)

Plant and equipment consist of the following:

                                                  September 30,    December 31,
                                                     2004              2003
                                                  -----------       -----------
                                                   (Unaudited)        (Audited)
                                                  -----------       -----------
Buildings and improvements                        $ 1,187,128       $ 1,187,128
Machinery and equipment                             2,372,846         2,064,257
Construction in progress                               36,070            64,850
                                                  -----------       -----------
      Totals                                        3,596,044         3,316,235
Accumulated depreciation                             (923,872)         (762,228)
                                                  -----------       -----------
      Property and equipment, net                 $ 2,672,172       $ 2,554,007
                                                  ===========       ===========

In the year 2000,  Rongxin,  as part of its  original  capital  contribution  to
TONGLIN,  contributed certain buildings,  machinery, and equipment in the amount
of RMB 5,111,248,  or  approximately  $618,500.  The buildings,  machinery,  and
equipment were  originally  purchased by Rongxin through  financing  provided by
Rongxin's banking  institution and were pledged as collateral for this loan. The
term of this loan  commenced  on August 31, 1999 and expired on August 30, 2004.
The titles of the buildings,  machinery,  and equipment are still in the name of
Rongxin. Currently,  Rognxin is in the process of transferring to TONGLIN. As of
the date of this  report,  the  titles  of the said  buildings,  machinery,  and
equipment (net book value of $131,393) have not been transferred to TONGLIN.

Use of estimates

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

Cash and concentration of risk

Cash  includes  cash on hand and demand  deposits  in accounts  maintained  with
state-owned  banks  within  the  People's  Republic  of  China.  Total  cash  in
state-owned  banks at  September  30, 2004 and  December  31,  2003  amounted to
$1,889,214  and  $2,500,000,  respectively,  of which no deposits are covered by
insurance.  The  Company has not  experienced  any losses in such  accounts  and
believes it is not exposed to any risks on its cash in bank accounts.

The Company has a  concentration  of sales risk where five customers  represents
91.6% or  $12,100,957  of total sales for the nine months  ended  September  30,
2004, as compared to 93.5% or $11,478,709  for five customers in the nine months
ended  September  30, 2003.  Total  outstanding  accounts  receivable  for these
customers  amounted to  $5,332,862  and  $4,959,943 as of September 30, 2004 and
December 31, 2003, respectively.


                                                                               9
<PAGE>

Note 1 - Summary of significant accounting policies, (continued)

Cash-restricted

The Company through its bank agreements is required to keep certain cash amounts
on deposit which are subject to withdrawal restrictions.  The restricted amounts
are  $1,755,763  and  $2,057,000 as of September 30, 2004 and December 31, 2003,
respectively.

Inventories

Inventories are stated at the lower of cost or market on the first in first out
method of accounting and consist of the following:

                                       September 30,  December 31,
                                          2004           2003
                                       ----------     ----------
                                       (Unaudited)    (Audited)
                                       ----------     ----------
Raw materials                          $  132,592     $  936,619
Finished goods                          1,268,230      1,200,055
                                       ----------     ----------
      Totals                           $1,400,822     $2,136,674
                                       ==========     ==========

Financial instruments

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

Accounts receivable, trade

The Company conducts its business  operations in the People's Republic of China.
During the normal course of business,  the Company extends  unsecured  credit to
its customers.  Management reviews its accounts receivable on a regular basis to
determine if the bad debt allowance is adequate at each year-end.  However,  the
Company records a provision for accounts  receivable trade that ranges from 0.3%
to 1.0% of the  outstanding  accounts  receivable  balance  in  accordance  with
generally accepted accounting  principles in the PRC. The allowance for doubtful
accounts as of September 30, 2004 and December 31, 2003 amounted to $20,430.

Accounts receivable, trade special

This amount represents trade accounts  receivable due from various customers for
which the customers'  banks have  guaranteed  payments of the  receivable.  This
amount is non-interest  bearing and is normally paid within three to six months.
The Company  has the  ability to submit a request for payment to the  customer's
bank  earlier than the  scheduled  payment  date;  however,  the Company  incurs
interest and processing fee in such instances.


                                                                             10
<PAGE>

Note 1 - Summary of significant accounting policies, (continued)

Intangible assets

All land in the People's Republic of China is owned by the government and cannot
be sold to any individual or company.  However, the government grants the user a
"land use right" (the Right) to use the land.  In 2003,  TONGLIN  purchased  the
Right to use the land for 50 years from the  government  for a fee in the amount
of $171,358.

The Right is being  amortized over a minimum life of 10 years in accordance with
generally  accepted  accounting  principles in the PRC. The expense for the nine
months  ended  September  30,  2004 and 2003  amounted  to $12,852  and  $3,029,
respectively.  However,  the Certificate of Land Use Right for this land is held
in the name of Chengdu Rongxin  Industrial  Co., Ltd., a related party.  TONGLIN
has applied for a name change on the  Certificate  of the Land Use Right.  As of
the date of this report this process has not been finalized.

The  Certificates  of Land Use Rights of  approximately  57,347 Chinese acres of
land are occupied by buildings  operated by TONGLIN,  which are held in the name
of Chengdu Rongxin  Industrial  Co., Ltd., a related party.  The land use rights
have been  acquired  from  1998  through  2000 for a life of 50  years.  Chengdu
Rongxin Industrial Co., Ltd. has verbally agreed to let TONGLIN use the property
for agreed upon purposes through the life of the Land Use Rights.  However,  the
Land Use Rights  remains in the name of Chengdu  Rongxin  Industrial  Co.,  Ltd.
TONGLIN is not charged  for the use of the land nor has an asset been  reflected
on TONGLIN's  balance sheet for these rights.  The original cost of the land use
rights  amounted to $324,076.  In order to better report the actual  expenses of
the  operations  the  Company  has  reported  in the  accompanying  consolidated
statements  of income an  expense  for the use of the land with a  corresponding
entry to  paid-in-capital.  The Rights are being  amortized  over 10 years based
upon the  original  cost of the rights and the expense for the nine months ended
September 30, 2004 and 2003 amounted to $24,260.

Chengdu Rongxin Industrial Co., Ltd. has not indicated to TONGLIN that they will
need  the use of the  land  within  the  next  year.  However,  Chengdu  Rongxin
Industrial Co., Ltd. has the right to occupy the land once notification is given
to TONGLIN.

Income taxes

The Company has adopted  Statement of Financial  Accounting  Standards  No. 109,
"Accounting  for Income Taxes" (SFAS 109).  SFAS 109 requires the recognition of
deferred  income  tax  liabilities  and  assets  for  the  expected  future  tax
consequences  of temporary  differences  between  income tax basis and financial
reporting basis of assets and  liabilities.  Provision for income taxes consists
of taxes  currently due plus deferred  taxes.  There are no deferred taxes as of
September 30, 2004 and 2003.

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


                                                                              11
<PAGE>

Note 1 - Summary of significant accounting policies, (continued)

Income taxes, (continued)

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

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

Deferred  tax is  calculated  at the tax rates that are expected to apply to the
period when the asset is realized or the  liability is settled.  Deferred tax is
charged or  credited  in the income  statement,  except when it related to items
credited or charged  directly to equity,  in which case the deferred tax is also
dealt with in equity. Deferred tax assets and liabilities offset each other when
they  relate  to income  taxes  levied by the same  taxation  authority  and the
Company intends to settle its current tax assets and liabilities on a net basis.

The Company through its subsidiary,  TONGLIN,  is governed by the Income Tax Law
of  the  People's  Republic  of  China  (PRC)  concerning   Foreign   Investment
Enterprises  and  Foreign  Enterprises  and various  local  income tax laws (the
Income  Tax  Laws).  Income  Tax  Law of the  People's  Republic  of  China  for
Enterprises  with  Foreign  Investments  and Foreign  Enterprises  states,  "Any
enterprise with foreign  investments of a production nature scheduled to operate
for a period of not less than ten years shall, upon examination and verification
by the tax authorities in the year the company begins to make a profit,  will be
exempted  from  income  taxes in the first and second  years and allowed a fifty
percent reduction in the standard tax rates in the third to fifth years."

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

The Company was exempt from income tax from 2000 to 2001.  TONGLIN is located in
a Special  Economic  Zone and the PRC tax  authorities  have  approved a special
income tax rate of 15% for this area. In addition,  TONGLIN in  accordance  with
the Circular of  Transmission  the State  Administration  of Taxation of Sichuan
Province on  Implementing  the Relevant Tax Policies of  Development of the West
Regions and Implementation of the Suggested Policies of State  Administration of
Taxation,  "the enterprise income tax of the foreign  investment  enterprises in
the legal tax  reduction  period  shall be reduced by 7.5%."  TONGLIN  generated
profits in the year ended  December 31,  2000.  Effective  January 1, 2002,  the
two-year  100%  exemption for income taxes had expired for TONGLIN and it became
subject to income tax at a reduced  rate of 7.5%.  The Company is not subject to
any local income tax of 3% until the exemption and reduction  periods  expire in
2005.


                                                                              12
<PAGE>

Note 1 - Summary of significant accounting policies, (continued)

Income taxes, (continued)

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

                                               2004        2003
                                             --------    --------
Provision for China income tax               $215,569    $297,065
Provision for China local tax                      --          --
Deferred taxes                                     --          --
                                             --------    --------
      Total provision for income taxes       $215,569    $297,065
                                             ========    ========

The  following  table  reconciles  the U.S.  statutory  rates  to the  Company's
effective tax rate:

                                                2004        2003
                                              ------      ------
U.S. Statutory rates                            34.0%       34.0%
Foreign income not recognized in USA           (34.0)      (34.0)
China income taxes                               7.5         7.5
                                              ------      ------
      Totals                                     7.5%        7.5%
                                              ======      ======

The Company has recorded an allowance for bad debts in the amount of $278,300 as
further  described  in note 5. This  amount has been  recorded as an expense for
financial statement purposes. However, the ultimate deduction for Chinese income
tax  purposes  has not been  determined  and the amount to be  deducted  must be
approved by the appropriate Chinese taxing authority.  A valuation allowance for
the entire amount has been  established  due to the uncertainty of realizing the
deduction  of  this  expense  for  income  tax  purposes  as a  result  of  this
uncertainty no deferred taxes has been provided in the accompanying consolidated
financial statements.

Value added tax

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

From TONGLIN's inception in the year 2000 through the year 2002, TONGLIN adopted
the Tax Package  Policy  issued by the Dayi County  Government,  which  requires
TONGLIN to pay its tax to the appropriate taxing authority based upon the annual
fixed amount set forth by the Dayi County  Government.  The fixed tax amount set
forth for TONGLIN in 2002 amounted to RMB 8,000,000.  The Tax Package Policy was
terminated on January 1, 2003.  The Company is subject to the value added tax at
the standard  rate of 17% on the gross sales price of all  products  sold within
the PRC.

On August 14, 2003,  the State  Taxation  Administration  of Dayi County Sichuan
Province  issued a certificate  stating that the income tax and valued added tax
of TONGLIN from  inception  through the year ending  December 31, 2002 have been
fully paid.


                                                                              13
<PAGE>

Note 2 - Condensed financial statements and footnotes

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

These  consolidated  financial  statements have been prepared in accordance with
generally  accepted  accounting  principles  in the United  States  for  interim
financial  information  and the  instructions  for Form 10-QSB and Article 10 of
Regulation S-X. Certain  information and footnote  disclosures that are normally
included in financial statements presented in accordance with generally accepted
accounting principles have been condensed or omitted.  Management of the Company
believes the disclosures made are adequate to make the information presented not
misleading.  The condensed  consolidated  financial statements should be read in
conjunction with CHINA AUTOPARTS' audited financial  statements  included in its
Annual  Report  on Form  10-KSB  dated  March  19,  2004  and  RHOHAN's  audited
consolidated financial statements for the year ended December 31, 2003 and notes
thereto included in CHINA  AUTOPARTS'  Current Report on Form 8-K, dated May 13,
2004.

In the opinion of management,  the unaudited  condensed  consolidated  financial
statements   reflect  all  adjustments  (which  include  only  normal  recurring
adjustments)  necessary to present fairly the financial  position of the Company
as  of  September  30,  2004,  and  the  results  of   operations,   changes  in
shareholders' equity and cash flows for the nine months ended September 30, 2004
and  2003.  Interim  results  are  not  necessarily   indicative  of  full  year
performance because of the impact of seasonal and short-term variations.

Note 3 - Supplemental disclosure of cash flow information

Income  taxes paid  amounted to $182,002  and $219,845 for the nine months ended
September 30, 2004 and 2003,  respectively.  Interest paid  (including  interest
paid to related  parties) for the nine months ended  September 30, 2004 and 2003
amounted to $221,666 and $212,755 respectively.

In 2003,  TONGLIN made a non-cash  shareholders'  distribution  of $3,638,090 to
offset other receivables/payables due from/to related parties.

In April,  2004,  RHOHAN  declared a $1,000,000  dividend  distribution of which
$502,196 was paid by September 30, 2004 with the remaining  $497,804 recorded as
a dividend payable on the accompanying balance sheet.

On April 22,  2004,  the Company  issued  8,590,910  shares of common stock in a
reverse acquisition transaction for no cash.


                                                                             14
<PAGE>

Note 4 - Earnings per share

The  Company  adopted  Statement  of  Financial  Accounting  Standards  No. 128,
"Earnings Per Share" (SFAS 128). SFAS 128 requires the  presentation of earnings
per share (EPS) as Basic EPS and Diluted EPS. There are no  differences  between
Basic and  Diluted  EPS for the nine months  ended  September  30, 2004 and 2003
(5,579,297  was the weighted  average number of shares used to calculate EPS for
the nine months  ended  September  30, 2004 and 500,000 was the number of shares
used to calculate EPS for the nine months ended September 30, 2003.)

The weighted  average number of shares used to calculate EPS for the nine months
ended  September 30, 2003 reflects only the 500,000 shares  outstanding for that
period and does not include the 8,590,910 shares issued on April 22, 2004 in the
reverse acquisition transaction.

Weighted  average  number of shares  outstanding  as of  September  30,  2004 is
computed as follows:

<TABLE>
<CAPTION>
         Dates                            Shares                     Weighted -
      Outstanding                      Outstanding      Days        Average Shares
------------------------              -------------   ---------   ----------------
Year - 2004
------------------------
<S>                                        <C>             <C>       <C>
January 1 - September 30                   500,000         274       137,000,000
April 22 - September 30                  8,590,910         162     1,391,727,420
                                                      ---------   ---------------
Totals                                                     274     1,528,727,420
                                                      =========   ===============

Weighted-average shares - 9 months                                     5,579,297
                                                                  ===============

July 1 - September 30                      500,000          90        45,000,000
July 1 - September 30                    8,590,910          90       773,181,900
                                                      ---------   ---------------
Totals                                                      90       818,181,900
                                                      =========   ===============

Weighted-average shares - 3 months                                     9,090,910
                                                                  ===============
</TABLE>

Note 5 - Other receivables

In 2003 the Company made a prepayment  of $278,300 to purchase  several molds to
be used in its  operations.  As of  December  31,  2003,  the molds  were  never
delivered by the vendor. The Company is currently in litigation with the vendor.

Management intends to pursue collection of this receivable;  however, management
is  uncertain  that they will prevail in  collecting  the entire  amount.  As of
September  30,  2004,  management  has decided to fully  reserve  this amount as
uncollectible.


                                                                             15
<PAGE>

Note 6 - Notes payable - bank

The Company has the following lines of credit outstanding:

<TABLE>
<CAPTION>
                                                                              September 30,           December 31,
                                                                                   2004                   2003
                                                                            ---------------         ---------------
                                                                                Unaudited                Audited
                                                                            ---------------         ---------------
<S>                                                                         <C>                      <C>
Shanghai Pu Dong Development Bank, Chengdu Branch
              due June 2004, transaction fee at 0.05%
              restricted cash requirement of 30% or $363,000
              Chengdu Rongxin Ruigao Machinery Co., Ltd.
              guaranteed the difference between the cash
              amount deposited and the credit line amount                   $          -             $   1,210,000

Chengdu City Commercial Bank, Dayi Branch
              due May 2004,  transaction fee at 0.05%
              restricted cash requirement of 40% or $726,000
              Chengdu Rongxin Industrial Co., Ltd. guaranteed the
              difference between the cash amount deposited
              and the credit line amount                                    $          -             $   1,815,000

Chengdu City Commercial Bank, Dayi Branch
              due June 2004, transaction fee at 0.05%
              restricted cash requirement of 40% or $968,000
              Chengdu Rongxin Industrial Co., Ltd. guaranteed the
              difference between the cash amount deposited                             -                 2,420,000
              and the credit line amount

Chengdu City Commercial Bank, Dayi Branch
              due Jan 2005, transaction fee at 0.05%
              restricted cash requirement of 30% or $544,500
              Chengdu Rongxin Industrial Co., Ltd. guaranteed the
              difference between the cash amount deposited
              and the credit line amount                                          1,815,000                    -

Chengdu City Commercial Bank, Dayi Branch
              due Feb 2005, transaction fee at 0.05%
              restricted cash requirement of 100% or $1,210,000                   1,210,000
                                                                            ---------------         --------------
                          Totals                                            $     3,025,000          $   5,445,000
                                                                            ===============         ==============
</TABLE>

The proceeds of the above debt as of December  31, 2003,  were loaned to Chengdu
Taichang  Metals Co.,  Ltd., a related party.  In return for this loan,  Chengdu
Taichang  Metals Co.  Ltd.  deposited  $242,000  cash with  TONGLIN as a partial
guarantee for the loan repayment.  The amount loaned to Chengdu  Taichang Metals
Co.  Ltd. is recorded  in other  receivables-related  party on the  accompanying
consolidated balance sheet and is further explained in Note 8.

This amount is non interest bearing and is due and payable in May 2004. On April
1, 2004, Chengdu Taichang Metals Co., Ltd. repaid this amount in full.


                                                                             16
<PAGE>

Note 7 - Short-term loans payable - bank

The Company has the following short-term loans payable:

<TABLE>
<CAPTION>
                                                                             September 30,        December 31,
                                                                                 2004                 2003
                                                                            ---------------     ---------------
                                                                               Unaudited             Audited
                                                                            ---------------     ---------------
<S>                                                                         <C>                  <C>
Chengdu City Commercial Bank, Dayi Branch
      due January 15, 2005 and January 29, 2004, respectively,
      monthly interest only payment at 0.57525%, guaranteed
      by Chengdu High Pressure Valve Plant, a related party                 $ 1,210,000          $ 1,210,000

Shanghai Pu Dong Development Bank, Chengdu Branch
      due March 29, 2005 and March 9, 2004, respectively,
      monthly interest only payment at 0.48675%, guaranteed
      by Chengdu Rongxin Ruigao Machinery Co., Ltd., a
      related party                                                           3,630,000            3,630,000
                                                                            ---------------     ---------------
          Totals                                                            $ 4,840,000          $ 4,840,000
                                                                            ===============     ===============
</TABLE>

In 2004 the above loans have been refinanced  into  short-term  loans due within
one year in the amount of $4,840,000.

Total interest expense on all bank debt for the nine months ending September 30,
2004 and 2003 amounted to $221,666 and $173,478 respectively.

Note 8 - Related party transactions and contingencies

The  following  is a list  of  related  parties  described  in the  accompanying
consolidated financial statements:

Chengdu Rongxin Enterprises Co., Ltd. is owned 100% by Mr. Li Yungao.

Chengdu  Rongxin  Industrial Co., Ltd. is owned by Mr. Li Yungao and a number of
managers and directors of TONGLIN.

Chengdu  Rongxin  Ruigao  Machinery Co., Ltd. is owned 70% by Mr. Li Yungao with
the remaining 30% owned by a number of managers and directors of TONGLIN.

Chengdu Begin Pipeline Co., Ltd. is owned 75% by Chengdu Rongxin Industrial Co.,
Ltd. and 25% by Chengdu Begin Technology Development Co., Ltd.

Chengdu  High  Pressure  Valve  Plant is owned by Mr. Li Yungao  and a number of
managers and directors of TONGLIN.

Chengdu Taichang Metals Co., Ltd. is 95% owned by Mr. Li Jing, who is the son of
Mr. Li Yungao.

Note 8 - Related party transactions and contingencies, (continued)

During the nine months ended  September 30, 2004 and 2003,  the Company  entered
into the following transactions with related parties:

Sales, purchases and other expenses


                                                                             17
<PAGE>

                                                   Setpetmber 30,   December 31,
                                                       2004             2003
                                                   -------------   -------------

                                                     (Unaudited)     (Audited)
                                                   -------------   -------------
Sales
Chengdu Rongxin Ruigao Machinery Co., Ltd.           $    7,147     $    9,577
                                                     ==========     ==========

Cost of sales
Chengdu Rongxin Ruigao Machinery Co., Ltd.           $    6,939     $    8,784
                                                     ==========     ==========

Interest expense
Chengdu Rongxin Ruigao Machinery Co., Ltd.           $      --      $   39,277
                                                     ==========     ==========

Lease expense
Chengdu Rongxin Ruigao Machinery Co., Ltd.           $   90,750     $   90,750
                                                     ==========     ==========

                                                   September 30,   December 31,
                                                       2004           2003
                                                   -------------   -------------

                                                     (Unaudited)   (Audited)
                                                   -------------   -------------
Other receivables - related party:
      Chengdu Rongxin Ruigao Machinery Co., Ltd.     $2,941,575    $   17,785
      Chengdu High Pressure Valve Plant                  82,226            --
      Chengdu Taichang Metals Co., Ltd.                      --     5,445,000
                                                     ----------    ----------
                                         Totals      $3,023,801    $5,462,785
                                                     ==========    ==========

Prepaid expense - related party:
      Chengdu Taichang Metals Co., Ltd.              $   16,048    $       --
                                                     ==========    ==========

Other payables - related party:
      Chengdu Taichang Metals Co., Ltd.              $       --    $  242,000
                                                     ==========    ==========

On May 20, 2003,  TONGLIN entered into an agreement with Chengdu Taichang Metals
Co.,  Ltd.  to make a  12-month  loan in the  amount of  $3,025,000  to  Chengdu
Taichang  Metals Co., Ltd. using the proceeds from TONGLIN's bank line of credit
described  in Note 6. In  addition,  TONGLIN  paid  $1,089,000  to their bank as
restricted cash deposit as required by the loan agreement.

Note 8 - Related party transactions and contingencies, (continued)

The  $3,025,000  was required to be paid to TONGLIN upon maturity  together with
interest  calculated  based on the amount of  restricted  cash deposit using the
bank's monthly interest rate of 0.4425%.  Chengdu Taichang Metals Co., Ltd. will
pay a  consultation  fee of $121,000 to TONGLIN  upon  maturity of the loan.  On
April 1, 2004, Chengdu Taichang Metals Co., Ltd. repaid these amounts in full.

On May 29, 2003,  TONGLIN entered into an agreement with Chengdu Taichang Metals
Co., Ltd. to make a loan in the amount of $2,420,000 to Chengdu  Taichang Metals
Co., Ltd.  using the proceeds from  TONGLIN's  bank line of credit  described in
Note 6. In addition,  TONGLIN paid $968,000 to its bank as the  restricted  cash
deposit as required by the loan agreement.


                                                                              18
<PAGE>

The  $2,420,000  was required to be paid to TONGLIN upon maturity  together with
interest  calculated  based on the amount of  restricted  cash deposit using the
bank's monthly  interest rate of 0.4425%.  Chengdu Taichang Metals Co., Ltd. was
required to pay a fee of $77,101 to TONGLIN upon  maturity of the loan. On April
1, 2004, Chengdu Taichang Metals Co., Ltd. repaid these amounts in full.

As part of the  above  loan  transactions  Chengdu  Taichang  Metals  Co.,  Ltd.
deposited  $242,000 of cash with  TONGLIN as a partial  guarantee to ensure that
the loans would be paid in full at maturity.

The other amounts due from related parties are generated from the Company making
various  cash  advances  and short  term  loans and the  allocation  of  various
expenses to related parties.  These  transactions are re-occurring in nature and
are generally  repaid during the current year on a revolving  basis. The Company
does not charge interest on these receivables.

On January 1, 2000,  TONGLIN and Chengdu Rongxin  Enterprises  Co., Ltd. entered
into a Working Ground and  Transportation  Equipment  Leasing  Agreement,  under
which TONGLIN leases office  building  space,  living areas and vehicles with an
annual rent of $121,000.

Short-term  loans from Chengdu  Rongxin  Ruigao  Machinery  Co., Ltd.  (formerly
Chengdu  Rongxin  Enterprises  Co., Ltd.)  amounted to $544,500  during the year
ending  December 31, 2002.  This loan  included  interest at rates  ranging from
7.49% to 12.10% per annum and was paid off in 2003.  Interest  paid for the nine
months  ended   September   30,  2004  and  2003  amounted  to  $0  and  $39,277
respectively.

On November 4, 2003, TONGLIN and Industrial and Commercial Bank of China Dayi
County Branch entered into the "Intangible Right Security Agreement", under
which TONGLIN has guaranteed a $1,089,000 bank line of credit issued to Chengdu
Rognxin Ruigao Machinery Co., Ltd. The term of this bank line of credit expired
on April 29, 2004. As of September 30, 2004, this guarantee of the bank line of
credit was released.

Note 9 - Leases

The Company leases office building  space,  living  quarters,  and vehicles from
Chengdu Rongxin Ruigao Machinery Co., Ltd, formerly Chengdu Rongxin  Enterprises
Co.,  Ltd.,  a related  party,  in the amount of  $121,000  per year.  The lease
expenses paid for the nine months ended  September 30, 2004 and 2003 amounted to
$90,750 and $90,750,  respectively.  Chengdu Rongxin  Enterprises  Co., Ltd. was
dissolved in October 2002.  All of the assets,  including  the lease  agreement,
were taken over by Chengdu Rongxin Ruigao  Machinery Co., Ltd., a related party.
This agreement has no expiration date at this time.

The Company also leases office space in the United  States.  The monthly rent is
$500 per month  commencing on July 1, 2004 through June 30, 2005.  The lease can
be  renewed  annually  subject  to a rental  rate  adjustment.  The lease can be
terminated by either party with a 30 day notice.


                                                                             19
<PAGE>

Note 10 - Other operating income

The Company has entered into various contractual arrangements to act as an agent
for Chengdu  Zhengheng  Engine  Parts Co.,  Ltd.  where the  Company  receives a
commission on sales of products  purchased from Chengdu  Zhengheng  Engine Parts
Co.,  Ltd. For the nine months ending  September 30, 2004 and 2003,  this income
amounted to $132,493 and $316,151 respectively.

Note 11 - Dividend distribution

Before the  Company  entered  into the Stock  Exchange  Agreement,  the  Company
declared a $1,000,000  dividend  distribution  to Double Unity  Investments.  As
September  30, 2004,  $502,196 was paid with the  remaining  balance of $497,804
recorded as a dividend payable on the accompanying balance sheet.


                                                                             20
<PAGE>

Item 2.

MANAGEMENT'S DISCUSSIONS AND ANALYSIS OR PLAN OF OPERATION

Overview

      China  Autoparts,  Inc. (the  "Company") was  incorporated in the State of
Delaware on May 1, 2001 and it is a holding company for Rhohan Holdings Limited,
a British Virgin Islands  company  ("Rhohan").  Rhohan is a holding company for,
and owns 100% of, Chengdu  Tonglin  Casting  Industrial  Co., Ltd.  ("Tonglin").
Tonglin is a  manufacturer  of engine  blocks in the People's  Republic of China
("PRC") which currently  manufactures and is developing over 20 different engine
blocks which  accommodate  three or four cylinders for cars, mini vans and light
trucks manufactured in the PRC.

      On May 13, 2004, the Company  acquired 100% of Rhohan pursuant to an April
22, 2004 Capital Stock  Exchange  Agreement in exchange for 8,590,910  shares of
the Company's $.0001 par value per share common stock.

      Tonglin sells its products  through an internal  sales staff and primarily
to five  customers.  For the nine months ended  September 30, 2004 and September
30, 2003,  those five  customers  accounted  for 91.6% and 93.5% of total sales,
respectively.  The loss of any of these  customers and Tonglin's  lack of a very
large customer base could adversely impact its business.

      Tonglin  does not  recognize  sales until its products are accepted by its
customers.  Pursuant to the terms of its contracts  with  customers,  Tonglin is
responsible  for the shipments of its products and bears the risk of loss during
those  shipments.  In addition,  the terms of the contracts  also stipulate that
upon the delivery of each shipment at the customer's facility,  the customer and
a Tonglin  representative  must  jointly  inspect  the newly  arrived  products.
Customer  rejections due to defective products or nonconformity with orders must
be agreed upon by both parties at the end of the inspection.

      Products  that are  rejected by  customers  are  repaired  and returned to
inventory. Tonglin has not experienced returns in material quantities for any of
its products  during the nine months ended  September 30, 2004,  and  therefore,
does not  believe  that it is  subject to  material  risk of  inventory  buildup
attributable to returns.

      Over the previous  two years,  Tonglin has  expanded  its  operations  and
production facilities in order to meet increased demand from existing customers,
which have expressed  satisfaction with Tonglin's products.  In the fiscal years
ended  December  31, 2003 and December  31,  2002,  Tonglin  invested a total of
approximately $2.1 million on improvements of existing production facilities and
the acquisition of new equipment.  These expenditures resulted in an increase in
Tonglin's  production  capacity  from  approximately  400,000  to  approximately
700,000 engine blocks during the same period.

      Tonglin operates in a highly competitive  environment.  The competition is
expected  to  intensify   with  the  PRC's   admission   into  the  World  Trade
Organization.  We  expect  to see an  influx of  foreign  products  and  further
dilution of the autoparts  market in the PRC.  Tonglin believes that the selling
prices for its products may decrease in future periods,  although the timing and
amounts of these decreases cannot be predicted with any certainty at the present
time.  These decreases may be offset by the introduction of new products and the
increase in sales volumes.


                                                                              21
<PAGE>

Results of Operations

Net Sales and Gross Profit

      Net sales for the nine months ended September 30, 2004 were  approximately
$13.2 million, compared to approximately $12.3 million for the nine months ended
September 30, 2003, an increase of approximately 7.3%. The increase in net sales
resulted primarily from increased demand for several products.

      Gross   profit  for  the  nine  months  ended   September   30,  2004  was
approximately $4.3 million,  a decrease of approximately  15.7% or approximately
$0.8 million from approximately $5.1 million for the prior year. The decrease in
gross  profit was  primarily  due to an increase in the cost of iron used in the
production of Tonglin's  engine blocks.  Iron increased from $207 per ton during
the nine months ended  September 30, 2003 to $310 per ton during the nine months
ended September 30, 2004.

      During the nine months ended  September  30, 2004 and  September  30, 2003
there was a  substantial  concentration  of sales.  During the nine months ended
September  30, 2004,  approximately  91.6% of sales were to five  customers  and
approximately 80.2% of sales were to three customers.  For the nine months ended
September  30, 2003,  approximately  93.5% of sales were to five  customers  and
approximately 67.4% of sales were to three customers.

Cost of Sales

      Cost of sales increased to  approximately  $8.9 million in the nine months
ended September 30, 2004, or approximately 23.6% from approximately $7.2 million
in the prior  year,  primarily  due to the  increase  in the cost of iron  noted
above.

      Cost of sales also  increased  due to increased  production  that resulted
from increasing  orders.  Tonglin  increased sales of the 465Q and 462Q products
from 148,369  units during the nine months ended  September  30, 2003 to 222,704
units for the nine months ended September 30, 2004.

Selling, General and Administrative

      Selling,  general and  administrative  expenses  were  approximately  $1.3
million during the nine months ended September 30, 2004, or approximately  10.1%
of net sales,  compared to approximately $1.1 million,  or approximately 9.3% of
net sales, for the nine months ended September 30, 2003.

      Selling,  general and  administrative  expenses  for the nine months ended
September 30, 2004 were primarily  made up of salaries and wages  ($471,909) and
engine block assembly and delivery charges ($284,500).  The increase in selling,
general and  administrative  expenses was primarily due to the increased  salary
and benefits  expense  with the  increase in  production  and  increased  travel
expenses incurred in order to develop new business.

Income Taxes

      The Company did not carry on any  business and did not maintain any branch
office in the United States  during the nine months ended  September 30, 2004 or
the  nine  months  ended  September  30,  2003.

Therefore,  no provision for  withholding  or U.S.  federal  income taxes or tax
benefits on the  undistributed  earnings  and/or  losses of the Company has been
made.


                                                                              22
<PAGE>

      Pursuant to the relevant laws and  regulations in the PRC,  Tonglin,  as a
wholly foreign owned enterprise in the PRC, is entitled to an exemption from the
PRC enterprise income tax for two years commencing from its first  profit-making
year,  after all loss  carry-forwards  from the  previous  five  years have been
utilized.  Tonglin is  profitable  and all losses were utilized as of January 1,
2002.  Beginning on that date,  Tonglin,  as a wholly foreign owned  enterprise,
became  entitled  to 50%  relief  from  the PRC  enterprise  income  tax for the
following three years.

      Because  Tonglin is located in a Special  Economic Zone  designated by the
PRC government,  it is entitled to a special  discounted  enterprise  income tax
rate of 15%.  Therefore  Tonglin's  income  tax rate for the nine  months  ended
September 30, 2004 and September 30, 2003 is 50% of the  discounted  tax rate of
15%, or,  7.5%.  Tonglin's  income tax rate will remain 7.5% until  December 31,
2004, at which time the full rate of 15% will come into effect.

      Tonglin is also  exempt  from local  income  taxes of 3% until  January 1,
2005.

Plan of Operation

      Tonglin's  current plan of operation centers on continuing to increase its
sales and production.  Tonglin has already made capital  investments which allow
it to produce an additional  250,000 more engine  blocks than  production in the
fiscal year ended December 31, 2003. Now, it is focusing on marketing additional
products to its existing  customers and adding new customers  through  increased
advertising  and  calls on  potential  customers.  Tonglin  recently  added  the
following new customers:  Shenyang  Xinguang,  SAIC-Chery and Sichuan  Fangxiang
Autoparts Co., Ltd..

      In order to increase  its sales to existing  customers,  Tonglin  plans to
increase its sales and service personnel, particularly personnel who are on site
at Tonglin's  customers.  In addition,  Tonglin plans to continue working on its
new products under development,  including five products which have already been
sent to customers for testing,  and also plans to put at least two more products
into its development  pipeline prior to the end of fiscal 2004.  Currently there
are two new products in the process of development.

      Tonglin  believes  that it will be able to execute  its plan of  operation
over  the  next 12  months  using  its  existing  income,  earnings  and  credit
facilities without having to raise capital from outside sources.

Liquidity and Capital Resources

      Since Tonglin's inception,  it has financed its operations and met capital
expenditure  requirements  primarily  through cash flows from  operations,  bank
loans and  lines of  credit,  and  capital  from its  shareholders  and  related
parties. Although Tonglin is, and has been profitable, it currently needs to use
short-term loans to finance its operations.  Because of the seasonal fluctuation
of the automobile market in the PRC (which tends to be slow in the summer months
and then peaks in February and March when PRC  automobile  purchases  tend to be
made) and a slower  payment cycle than in the U.S.,  Tonglin  extends  unsecured
credit to its customers  during the fiscal year and finances its operations with
short term bank loans and loans from related parties.

      Tonglin  believes that over the next 12 months it will continue to rely on
short term bank loans to finance  its  operations.  As of  September  30,  2004,
Tonglin had the following short term loans outstanding with the following terms:


                                                                              23
<PAGE>

Lender   and Terms
Amount Due

Chengdu City Commercial Bank, Dayi Branch                      $1,210,000
Due January 15, 2005
Monthly interest only payment at 0.57525%.
Guaranteed by Chengdu High Pressure Valve
Plant, a related party

Shanghai Pu Dong Development Bank, Chengdu Branch              $3,630,000
Due March 29, 2005
Monthly interest only payment at 0.48675%
Guaranteed by Chengdu Rongxin Ruigao
Machinery Co., Ltd, a related party

Accounts Receivable

      The  decrease  in trade  accounts  receivable  from  December  31, 2003 to
September  30, 2004 is  primarily  attributable  to faster  collections  and the
transfer  of more  receivables  into  arrangements  where  the  customer's  bank
guarantees  payment  of the  receivables  within a three to six month  period as
explained in Note 1 to the Company's Consolidated Financial Statements.

      The  decrease in Other  Receivables  to  approximately  $3.0 million as of
September 30, 2004 from  approximately $5.5 million as of December 31, 2003, was
primarily due to the repayment  from a related party - Chengdu  Taichang  Metals
Co., Ltd.

Inventory

      Inventories  of finished  goods  increased  between  December 31, 2003 and
September  30,  2004 from  approximately  $1.2  million  to  approximately  $1.3
million.  Inventories of raw materials  decreased  between December 31, 2003 and
September  30,  2004 from  approximately  $0.9  million  to  approximately  $0.1
million.  As a whole,  the decrease in inventory of raw  materials was primarily
attributable to the increase in the cost of iron.

Accounts Payable

      Accounts  payable  decreased from December 31, 2003 to September 30, 2004,
which was primarily attributable to faster payment of suppliers.

      The increase of other payables resulted from a Value Added Tax
("VAT")refund received in 2004 which is required to be used for research and
development. The decrease of wages and salaries payable was due to the payment
of accrued bonuses.


                                                                              24
<PAGE>

Cash

      The  decrease in cash from  December  31, 2003 to  September  30, 2004 was
primarily attributable to the repayment of notes payable banks.

Critical Accounting Policies

Management's  discussion and analysis of its financial  condition and results of
operations are based upon the Company's consolidated financial statements, which
have been prepared in accordance with accounting  principles  generally accepted
in the United States. The Company's  financial  statements reflect the selection
and  application  of  accounting  policies  which  require  management  to  make
significant  estimates and judgments.  See note 1 to the Company's  consolidated
financial statements,  "Summary of Significant  Accounting Policies." Management
bases its estimates on historical  experience  and on various other  assumptions
that are believed to be reasonable under the  circumstances.  Actual results may
differ from these  estimates  under  different  assumptions or  conditions.  The
Company  believes  that  the  following  reflect  the more  critical  accounting
policies that currently affect the Company's  financial condition and results of
operations.

Revenue recognition

Product  sales are  recognized  when the  products are  delivered  and title has
passed. The Company offers no warranties on its products.  However the customers
have 3-5 days to inspect  the goods and to notify  the  Company if there are any
products that do not meet the quality standards set forth in their contract. The
Company at this time  replaces  the goods with new  products  and the  defective
goods are returned to the Company and are reworked and returned to inventory.

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

Accounting for long-lived assets

Plant and equipment  are recorded at cost.  Depreciation  is computed  using the
straight-line method over the estimated useful lives of the assets. Depreciation
is recorded  utilizing  the  straight-line  method over the  estimated  original
useful life ranging from 5-30 years.

Long-term  assets of the  Company  are  reviewed  annually  as to whether  their
carrying value has become impaired.  The Company considers assets to be impaired
if the  carrying  value  exceeds the future  projected  cash flows from  related
operations.  The  Company  also  re-evaluates  the  periods of  amortization  to
determine whether subsequent events and circumstances  warrant revised estimates
of useful lives.  As of September 30, 2004, the Company  expects these assets to
be fully recoverable.

Bad debts

The Company's  business  operations  are  conducted in the People's  Republic of
China.  During the normal  course of  business,  the Company  extends  unsecured
credit to its customers. Management reviews its accounts receivable on a regular
basis to  determine  if the bad debt  allowance  is adequate  at each  year-end.
However,  the Company  records a provision for accounts  receivable  trade which
ranges  from 0.3% to 1.0% of the  outstanding  accounts  receivable  balance  in
accordance with generally accepted accounting principles in the PRC.


                                                                              25
<PAGE>

Item 3.            Controls and Procedures
-------            -----------------------

      As of November 2, 2004 we carried out an evaluation, under the supervision
and with the  participation of our management,  including our Chairman and Chief
Executive Officer,  and our Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures.  Based upon that
evaluation,  the Chairman and Chief  Executive  Officer and the Chief  Financial
Officer, concluded that our disclosure controls and procedures were effective in
alerting them in a timely manner to information relating to the Company required
to be disclosed in this report.

                           PART II - OTHER INFORMATION

EXHIBIT NUMBER    DESCRIPTION
--------------    -----------

  2.1             April 22, 2004 Capital Stock Exchange Agreement (1)

  3.1             Amended Certificate  of  Incorporation (1, 2)

  3.2             Amended By-Laws (1)

  3.3             Specimen  stock  certificate (2)

 21.1             List of Subsidiaries

 31.1             Certification  of Li Yungao  pursuant  to Exchange
                  Act Rules  13a-14(a)  and  15d-14(a),  as  adopted
                  pursuant to Section 302 of the  Sarbanes-Oxley Act
                  of 2002;

 31.2             Certification of Chen Weisheng pursuant to
                  Exchange Act Rules 13a-14(a) and 15d-14(a),
                  as adopted pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002;

 32.1             Certification of Li Yungao pursuant to 18 U.S.C. 1350;

 32.2             Certification Chen Weisheng pursuant to 18 U.S.C. 1350.

(1) Filed as an exhibit to our Current Report on Form 8-K filed on May 13, 2004.
(2) Filed as an exhibit to our Registration  Statement Form 10 filed on February
13, 2002.


                                                                              26
<PAGE>

                                   SIGNATURES

      In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                   CHINA AUTOPARTS, INC.

Date: November 12, 2004             /s/ Chen Weisheng
                                   ------------------------------------------
                                   By: Chen Weisheng, CFO


                                                                              27
<PAGE>



                                  CERTIFICATION

I, Chen Weisheng, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of China Autoparts,
Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

      a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

      b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

      c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

      a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

      b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: November 12, 2004

/s/ Chen Weisheng
-------------------------
Chen Weisheng
CFO
                                                                              28