UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549




FORM
10-Q/A




(Mark
One)




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


ACT
OF 1934




FOR
THE QUARTERLY PERIOD ENDED MARCH 31, 2008.




OR




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


OF
1934




FOR
THE TRANSITION FROM _______ TO ________.




COMMISSION
FILE NUMBER 000-27159




SUNWAY GLOBAL
INC.


(Exact
Name of Registrant as Specified in its Charter)




Nevada
                        
                        26-1650042(State
      or other jurisdiction of
                        
                        (I.R.S.
      Employerincorporation
      or organization)
                        
                        Identification
      No.)





Daqing Hi-Tech Industry
Development Zone, Daqing, Heilongjiang, People’s Republic of China,
163316


(Address
of principal executive offices) (Zip Code)





Issuer's
telephone Number: 86-459-604-6043




Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No o





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.


Large
      accelerated filer o
            Accelerated
      filer oNon-accelerated
      filer o
            Smaller
      reporting company T




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




APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS


DURING
THE PRECEDING FIVE YEARS




Indicate
by check mark whether the registrant filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court. Yes o No o




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 March 2, 2009, there were 18,499,736
outstanding shares of the Registrant's Common Stock, $0.0000001 par
value.









TABLE
OF CONTENTS





PagePART
      IItem
      1.
                      Financial
      Statements
                      
                      1Item
      2.
                      Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operation
                      
                      35Item
      3.
                      Quantitative
      and Qualitative Disclosures About Market Risk
                      
                      39Item
      4T
                      Controls
      and Procedures
                      
                      39PART
      IIItem
      1.
                      Legal
      Proceedings
                      
                      41Item
      1A.
                      Risk
      Factors
                      
                      41Item
      2.
                      Unregistered
      Sales of Equity Securities and Use of Proceeds
                      
                      41Item
      3.
                      Defaults
      Upon Senior Securities
                      
                      41Item
      4.
                      Submission
      of Matters to a Vote of Security Holders
                      
                      41Item
      5.
                      Other
      Information
                      
                      41Item
      6.
                      Exhibits
                      
                      41SIGNATURES
                      
                      42





EXPLANATORY
NOTE:


The
Registrant is hereby filing this Form 10-Q/A for the period ended March 31, 2008
to (i) restate consolidated balance sheets, consolidated income statements,
consolidated statements of stockholders’ equity and consolidated statement of
cash flows and accompanying notes and text as a result of the (a) improper use
of exchange rates of shareholders’ equity items and (b) incorrect par value of
the Series A and B Convertible Preferred Stock and common stock recorded, and
(c) the exclusion of the financial figures of the holding company, Sunway
Global, Inc.; (ii) restate the diluted weighted average number of common stock
because of the exclusion of the dilutive effects of the Series A and B
Convertible Preferred Stock and Warrants A, B, C, D and J; (iii) reclassify
restricted cash from current asset to non-current asset and the items in selling
expense and general and administrative expenses; and (iv) clarify principles of
consolidation, accounting policies of impairment of long-lived assets,
inventories, revenue recognition and expected warranty liabilities and the notes
of organization and principal activities, amount due from a director, Series B
Convertible Preferred stock and associated warrants, earnings per share and
segment information.










PART
I


FINANCIAL
INFORMATION




ITEM
1. FINANCIAL STATEMENTS





CONTENTS
              
              PAGESREPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
              
              1CONSOLIDATED
      BALANCE SHEETS
              
              2 -
      3CONSOLIDATED
      STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
              
              4CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ EQUITY
              
              5CONSOLIDATED
      STATEMENTS OF CASH FLOWS
              
              6 –
      7NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
              
              8 -
      34









ALBERT
      WONG & CO.
                    CERTIFIED
      PUBLIC ACCOUNTANTS
                    7th
      Floor, Nan Dao Commercial Building
                    359-361
      Queen’s Road Central
                    Hong
      Kong
                    Tel
      : 2851 7954
                    Fax:
      2545 4086
                    
                    ALBERT WONG
                    B.Soc.,
      Sc., LL.B., P.C.LL., Barrister-at-law, C.P.A.(Practising).





To:
              The
      board of directors and stockholders ofSunway
      Global Inc.





Report of Independent
Registered Public Accounting Firm





We have
reviewed the accompanying interim consolidated balance sheets of Sunway Global
Inc. as of March 31, 2008 and 2007, and the related consolidated statements of
income, stockholders’ equity and cash flows for the three month periods then
ended, in accordance with the standards of the Public Company Accounting
Oversight Board (United States). All information included in these financial
statements is the representation of the management of Sunway Global
Inc.





A review
consists principally of inquiries of company personnel and analytical procedures
applied to financial data. It is substantially less in scope than an audit in
accordance with the standards of the Public Company Accounting Oversight Board
(United States), the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.





Based on
our review, we are not aware of any material modifications that should be made
to the accompanying financial statements in order for them to be in conformity
with U.S. generally accepted accounting principles.





Since our
previous report dated May 10, 2008, it was determined that the consolidated
financial statements needed restatement to make corrections as described in note
19.





Hong
      Kong
            Albert
      Wong & Co.May
      10, 2008
            Certified
      Public Accountants


Except
for note 19 which is dated January 19, 2009




1




SUNWAY
      GLOBAL INC.CONSOLIDATED
      BALANCE SHEETSAS
      AT MARCH 31, 2008 AND DECEMBER 31, 2007(Stated
      in US Dollars)





Notes
                                                        
                                                        
                                                        March 31, 2008
                                                        
                                                        
                                                        December 31,
                                                          2007(Unaudited)
                                                        
                                                        
                                                        (Audited)ASSETSCurrent
      assetsCash
      and cash equivalents
                                                        
                                                        
                                                        
                                                        
                                                        $
                                                        6,456,669
                                                        
                                                        
                                                        $
                                                        5,820,100Trade
      receivables, net
                                                        
                                                        
                                                        6
                                                        
                                                        
                                                        
                                                        2,208,760
                                                        
                                                        
                                                        
                                                        1,525,201Inventories
                                                        
                                                        
                                                        9
                                                        
                                                        
                                                        
                                                        876,207
                                                        
                                                        
                                                        
                                                        766,933Advances
      to suppliers
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        421,542
                                                        
                                                        
                                                        
                                                        1,331,159Prepayments
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        595,282
                                                        
                                                        
                                                        
                                                        125,333Tender
      deposits
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        131,013Travel
      advances to shareholders
                                                        
                                                        
                                                        7
                                                        
                                                        
                                                        
                                                        39,137
                                                        
                                                        
                                                        
                                                        30,824Advances
      to employees
                                                        
                                                        
                                                        8
                                                        
                                                        
                                                        
                                                        398,153
                                                        
                                                        
                                                        
                                                        548,364Total
      current assets
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        $
                                                        10,995,750
                                                        
                                                        
                                                        $
                                                        10,278,927Amount
      due from a related company
                                                        
                                                        
                                                        4
                                                        
                                                        
                                                        
                                                        830
                                                        
                                                        
                                                        
                                                        585,678Restricted
      cash
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        467,954
                                                        
                                                        
                                                        
                                                        491,049Amount
      due from a director
                                                        
                                                        
                                                        5
                                                        
                                                        
                                                        
                                                        726,133
                                                        
                                                        
                                                        
                                                        1,028,474Deposit
      for acquisition of computer software
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        1,281,650
                                                        
                                                        
                                                        
                                                        -Property,
      plant and equipment, net
                                                        
                                                        
                                                        10
                                                        
                                                        
                                                        
                                                        5,396,525
                                                        
                                                        
                                                        
                                                        4,449,619Intangible
      assets, net
                                                        
                                                        
                                                        11
                                                        
                                                        
                                                        
                                                        7,021,134
                                                        
                                                        
                                                        
                                                        6,933,491TOTAL
      ASSETS
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        $
                                                        25,889,976
                                                        
                                                        
                                                        $
                                                        23,767,238LIABILITIES
      ANDSTOCKHOLDERS’
      EQUITYCurrent
      liabilitiesAccounts
      payable
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        245,917Income
      tax payable
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        282,820
                                                        
                                                        
                                                        
                                                        157,877Turnover
      and other taxes
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        235,056
                                                        
                                                        
                                                        
                                                        143,857Expected
      warranty liabilities
                                                        
                                                        
                                                        12
                                                        
                                                        
                                                        
                                                        57,651
                                                        
                                                        
                                                        
                                                        55,351Customers
      deposits
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        208,274Accrued
      liabilities
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        373,251
                                                        
                                                        
                                                        
                                                        323,464Other
      payables
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        30,367
                                                        
                                                        
                                                        
                                                        35,984Total
      current liabilities
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        $
                                                        979,145
                                                        
                                                        
                                                        $
                                                        1,170,724TOTAL
      LIABILITIES
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        $
                                                        979,145
                                                        
                                                        
                                                        $
                                                        1,170,724





See notes
to consolidated financial statements




2





SUNWAY
      GLOBAL INC.CONSOLIDATED
      BALANCE SHEETS (Continued)AS
      AT MARCH 31, 2008 AND DECEMBER 31, 2007(Stated
      in US Dollars)





Notes
                                                                                  
                                                                                  
                                                                                  March 31, 2008
                                                                                  
                                                                                  
                                                                                  December 31, 2007(Unaudited)
                                                                                  
                                                                                  
                                                                                  (Audited)STOCKHOLDERS’
      EQUITYSeries
      A Convertible PreferredStock
      $0.0000001 par value; 400,000 sharesauthorized;
      Nil and 228,531 sharesissued
      and outstanding at March 31, 2008and
      December 31, 2007 respectively
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  $
                                                                                  -
                                                                                  
                                                                                  
                                                                                  $
                                                                                  1Series
      B Convertible PreferredStock
      $0.0000001 par value; 400,000shares
      authorized; 165,432shares
      issued and outstandingat
      March 31, 2008 and December 31, 2007
                                                                                  
                                                                                  
                                                                                  13
                                                                                  
                                                                                  
                                                                                  
                                                                                  1
                                                                                  
                                                                                  
                                                                                  
                                                                                  1Common
      stock at $0.0000001 par value;100,000,000
      shares authorized;13,935,489
      and 223,658 shares issued andoutstanding
      at March 31, 2008and
      December 31, 2007 respectively
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  1
                                                                                  
                                                                                  
                                                                                  
                                                                                  1Additional
      paid-in capital
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  16,099,966
                                                                                  
                                                                                  
                                                                                  
                                                                                  16,099,965Statutory
      reserves
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  2,127,978
                                                                                  
                                                                                  
                                                                                  
                                                                                  2,127,978Retained
      earnings
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  4,565,691
                                                                                  
                                                                                  
                                                                                  
                                                                                  3,188,280Accumulated
      other comprehensive income
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  2,117,194
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,180,288$
                                                                                  24,910,831
                                                                                  
                                                                                  
                                                                                  $
                                                                                  22,596,514TOTAL
      LIABILITIES ANDSTOCKHOLDERS’
      EQUITY
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  $
                                                                                  25,889,976
                                                                                  
                                                                                  
                                                                                  $
                                                                                  23,767,238





See notes
to consolidated financial statements





3





SUNWAY
      GLOBAL INC.CONSOLIDATED
      STATEMENTS OF INCOME AND COMPREHENSIVE INCOMEFOR
      THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007(Stated
      in US Dollars)(Unaudited)





Three months ended March 31,2008
                                                                            
                                                                            
                                                                            2007NotesNet
      revenues
                                                                            
                                                                            
                                                                            17
                                                                            
                                                                            
                                                                            $
                                                                            3,604,034
                                                                            
                                                                            
                                                                            $
                                                                            2,467,228Cost
      of net revenues
                                                                            
                                                                            
                                                                            17
                                                                            
                                                                            
                                                                            
                                                                            (1,141,745
                                                                            )
                                                                            
                                                                            
                                                                            (644,247
                                                                            )Gross
      profit
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            $
                                                                            2,462,289
                                                                            
                                                                            
                                                                            $
                                                                            1,822,981Selling
      expenses
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            (25,237
                                                                            )
                                                                            
                                                                            
                                                                            (13,580
                                                                            )General
      and administrative expenses
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            (786,242
                                                                            )
                                                                            
                                                                            
                                                                            (387,513
                                                                            )Income
      from operation
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            1,650,810
                                                                            
                                                                            
                                                                            
                                                                            1,421,888Interest
      expenses
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            (3,040
                                                                            )Interest
      income
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            143
                                                                            
                                                                            
                                                                            
                                                                            1,457Income
      before income taxes
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            $
                                                                            1,650,953
                                                                            
                                                                            
                                                                            $
                                                                            1,420,305Income
      taxes
                                                                            
                                                                            
                                                                            15
                                                                            
                                                                            
                                                                            
                                                                            (273,542
                                                                            )
                                                                            
                                                                            
                                                                            (233,274
                                                                            )Net
      income
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            $
                                                                            1,377,411
                                                                            
                                                                            
                                                                            $
                                                                            1,187,031Foreign
      currency translation
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            936,906
                                                                            
                                                                            
                                                                            
                                                                            76,577Unrealized
      gain on investments
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            246,153Comprehensive
      income
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            $
                                                                            2,314,317
                                                                            
                                                                            
                                                                            $
                                                                            1,509,761Net
      income per share:-Basic
                                                                            
                                                                            
                                                                            14
                                                                            
                                                                            
                                                                            $
                                                                            0.16
                                                                            
                                                                            
                                                                            $
                                                                            5.31-Diluted
                                                                            
                                                                            
                                                                            14
                                                                            
                                                                            
                                                                            $
                                                                            0.05
                                                                            
                                                                            
                                                                            $
                                                                            5.31Weighted
      average number of common stock-Basic
                                                                            
                                                                            
                                                                            14
                                                                            
                                                                            
                                                                            $
                                                                            8,360,349
                                                                            
                                                                            
                                                                            $
                                                                            223,658-Diluted
                                                                            
                                                                            
                                                                            14
                                                                            
                                                                            
                                                                            $
                                                                            27,642,747
                                                                            
                                                                            
                                                                            $
                                                                            223,658





See notes
to consolidated financial statements





4





SUNWAY
      GLOBAL INC.CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ EQUITYFOR
      THE YEAR ENDED DECEMBER 31, 2007 AND THREE MONTHS ENDEDMARCH
      31, 2008(Stated
      in US Dollars)(Unaudited)





Additional
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          AccumulatedPreferred
                                                          
                                                          
                                                          Preferred
                                                          
                                                          
                                                          No.
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          paid
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          otherSeries
                                                          
                                                          
                                                          Series
                                                          
                                                          
                                                          shares
                                                          
                                                          
                                                          Common
                                                          
                                                          
                                                          in
                                                          
                                                          
                                                          Statutory
                                                          
                                                          
                                                          Retained
                                                          
                                                          
                                                          comprehensiveA
                                                          
                                                          
                                                          B
                                                          
                                                          
                                                          outstanding
                                                          
                                                          
                                                          stock
                                                          
                                                          
                                                          capital
                                                          
                                                          
                                                          reserves
                                                          
                                                          
                                                          earnings
                                                          
                                                          
                                                          income
                                                          
                                                          
                                                          TotalBalance,
      January 1, 2007
                                                          
                                                          $
                                                          1
                                                          
                                                          
                                                          $
                                                          1
                                                          
                                                          
                                                          
                                                          223,658
                                                          
                                                          
                                                          $
                                                          1
                                                          
                                                          
                                                          $
                                                          4,223,632
                                                          
                                                          
                                                          $
                                                          1,124,073
                                                          
                                                          
                                                          $
                                                          4,844,680
                                                          
                                                          
                                                          $
                                                          843,205
                                                          
                                                          
                                                          $
                                                          11,035,593Reversal
      of realized gain oninvestment
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          (423,537
                                                          )
                                                          
                                                          
                                                          (423,537
                                                          )Net
      income
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          6,047,505
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          6,047,505Appropriation
      to statutory reserves
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          1,003,905
                                                          
                                                          
                                                          
                                                          (1,003,905
                                                          )
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -Issuance
      to Vision re: Debentures
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          199,200
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          199,200Issuance
      of Series B ConvertiblePreferred
      Stock
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          11,677,133
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          (6,700,000
                                                          )
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          4,977,133Foreign
      currency translationadjustment
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          760,620
                                                          
                                                          
                                                          
                                                          760,620Balance,
      December 31,2007
                                                          
                                                          $
                                                          1
                                                          
                                                          
                                                          $
                                                          1
                                                          
                                                          
                                                          
                                                          223,658
                                                          
                                                          
                                                          $
                                                          1
                                                          
                                                          
                                                          $
                                                          16,099,965
                                                          
                                                          
                                                          $
                                                          2,127,978
                                                          
                                                          
                                                          $
                                                          3,188,280
                                                          
                                                          
                                                          $
                                                          1,180,288
                                                          
                                                          
                                                          $
                                                          22,596,514Balance,
      January 1, 2008
                                                          
                                                          $
                                                          1
                                                          
                                                          
                                                          $
                                                          1
                                                          
                                                          
                                                          
                                                          223,658
                                                          
                                                          
                                                          $
                                                          1
                                                          
                                                          
                                                          $
                                                          16,099,965
                                                          
                                                          
                                                          $
                                                          2,127,978
                                                          
                                                          
                                                          $
                                                          3,188,280
                                                          
                                                          
                                                          $
                                                          1,180,288
                                                          
                                                          
                                                          $
                                                          22,596,514Conversion
      of Preferred Series A into Common Stock
                                                          
                                                          
                                                          (1
                                                          )
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          13,711,831
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          1
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -Net
      income
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          1,377,411
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          1,377,411Foreign
      currency translationadjustment
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          936,906
                                                          
                                                          
                                                          
                                                          936,906Balance,
      March 31,2008
                                                          
                                                          $
                                                          -
                                                          
                                                          
                                                          $
                                                          1
                                                          
                                                          
                                                          
                                                          13,935,489
                                                          
                                                          
                                                          $
                                                          1
                                                          
                                                          
                                                          $
                                                          16,099,966
                                                          
                                                          
                                                          $
                                                          2,127,978
                                                          
                                                          
                                                          $
                                                          4,565,691
                                                          
                                                          
                                                          $
                                                          2,117,194
                                                          
                                                          
                                                          $
                                                          24,910,831





See notes
to consolidated financial statements




5





SUNWAY
      GLOBAL INC.CONSOLIDATED
      STATEMENTS OF CASH FLOWSFOR
      THE THREE MONTHS MARCH 31, 2008 AND 2007(Stated
      in US Dollars)(Unaudited)





Three months ended March 31,2008
                            
                            
                            2007Cash flows
      from operating activitiesNet
      income
                            
                            $
                            1,377,411
                            
                            
                            $
                            1,187,031Depreciation
                            
                            
                            177,687
                            
                            
                            
                            227,562Amortization
                            
                            
                            196,280
                            
                            
                            
                            41,869Adjustments
      to reconcile net incometo
      net cash provided by operating activities:Trade
      receivables, net
                            
                            
                            (620,159
                            )
                            
                            
                            (694,156
                            )Inventories
                            
                            
                            (77,394
                            )
                            
                            
                            (115,467
                            )Advances
      to suppliers
                            
                            
                            964,951
                            
                            
                            
                            -Prepayments
                            
                            
                            383,008
                            
                            
                            
                            (493,761
                            )Travel
      advances to shareholders
                            
                            
                            (39,137
                            )
                            
                            
                            -Advances
      to employees
                            
                            
                            (398,153
                            )
                            
                            
                            -Accounts
      payable
                            
                            
                            (254,484
                            )
                            
                            
                            (31,364
                            )Income
      tax payable
                            
                            
                            118,380
                            
                            
                            
                            -Turnover
      and other taxes
                            
                            
                            85,220
                            
                            
                            
                            177,708Loans
      from unrelated parties
                            
                            
                            1,572,360
                            
                            
                            
                            -Amount
      due from a director
                            
                            
                            (726,133
                            )
                            
                            
                            -Customers
      deposits
                            
                            
                            (216,932
                            )
                            
                            
                            -Accrued
      liabilities
                            
                            
                            36,341
                            
                            
                            
                            -Other
      payables
                            
                            
                            (7,113
                            )
                            
                            
                            57,797Net
      cash provided by operating activities
                            
                            $
                            2,572,133
                            
                            
                            $
                            357,219Cash
      flows from investing activitiesPurchase
      of plant and equipment
                            
                            $
                            (939,630
                            )
                            
                            $
                            -Restricted
      cash
                            
                            
                            23,095
                            
                            
                            
                            -Deposit
      for acquisition of computer software
                            
                            
                            (1,281,650
                            )
                            
                            
                            -Disposal
      of plant and equipment
                            
                            
                            -
                            
                            
                            
                            33,645Net
      cash (used in) provided by investing activities
                            
                            $
                            (2,198,185
                            )
                            
                            $
                            33,645Cash
      flows from financing activities
                            
                            $
                            -
                            
                            
                            $
                            -




6





SUNWAY
      GLOBAL INC.CONSOLIDATED
      STATEMENTS OF CASH FLOWS (Continued)FOR
      THE THREE MONTHS MARCH 31, 2008 AND 2007(Stated
      in US Dollars)(Unaudited)




Three months ended March 31,2008
                            
                            
                            2007Net
      in cash and cash equivalents sourced
                            
                            $
                            373,948
                            
                            
                            $
                            390,864Effect
      of foreign currency translation oncash
      and cash equivalents
                            
                            
                            262,621
                            
                            
                            
                            (49,918
                            )Cash
      and cash equivalents-beginning of year
                            
                            
                            5,820,100
                            
                            
                            
                            1,749,048Cash
      and cash equivalents-end of year
                            
                            $
                            6,456,669
                            
                            
                            $
                            2,089,994Supplementary
      cash flow information:Tax
      paid
                            
                            $
                            1,364,381
                            
                            
                            $
                            937,036Interest
      received
                            
                            
                            143
                            
                            
                            
                            1,457Interest
      paid
                            
                            
                            -
                            
                            
                            
                            3,040




See notes
to consolidated financial statements




7


SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
 (Stated in US Dollars )(Unaudited)
 
 1.
              ORGANIZATION AND PRINCIPAL
      ACTIVITIES
 
 Sunway
Global Inc. (the “Company”) was incorporated in the state of Nevada on October
18, 1971. Prior to June 6, 2007 the company has only nominal operations and
assets.
 
 On June
6, 2007, the Company executed a reverse-merger with Rise Elite International
Limited (“Rise Elite (BVI)”) by an exchange of shares whereby the Company issued
210,886 shares of the Company’s Series A Convertible Preferred Stock, par value
$0.0000001 per share in exchange for all shares in World Through Limited, a
British Virgin Islands corporation (“World Through (BVI)”).
 
 World Through (BVI) holds Sunway World
Through Technology (Daqing) Co Ltd (“SWT” or “WFOE”), which entered into a
series of agreements with Daqing Sunway Technology Co., Ltd (“Sunway”) including
but not limited to management, loan, purchase option, consignment, trademark
licensing, non-competition, etc. As a result of entering the abovementioned
agreements, WFOE deems to control Sunway as a Variable Interest Entity as
required by FASB Interpretation No. 46 (revised December 2003) Consolidated of
Variable Interest Entities, an Interpretation of ARB No. 51 since SWT was the
primary beneficiary.On March 16, 2008, SWT acquired Beijing
Sunway New-force Medical Treatment Tech Co., Ltd (“Beijing Sunway”) as its
wholly-owned subsidiary.  Beijing Sunway was incorporated in Beijing,
PRC on May 24, 2007.
 
 The
Company, through its subsidiaries and Sunway, (hereinafter, collectively
referred to as “the Group”), is now in the business of designing, manufacturing
and selling logistic transport systems and medicine dispensing systems and
equipment.
 
 On
February 7, 2008, the Company changed its name from National Realty and
Mortgage, Inc. to Sunway Global Inc.
 
 2.
              SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES
 
 (a)
              Method of
      Accounting
 
 The
Company maintains its general ledger and journals with the accrual method
accounting for financial reporting purposes. The financial statements and notes
are representations of management. Accounting policies adopted by the Company
conform to generally accepted accounting principles in the United States of
America and have been consistently applied in the presentation of financial
statements.
  8
 
 SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
 (Stated
in US Dollars)(Unaudited)
 
 2.
              SUMMARY OF
      SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 (b)
              Principles of
      Consolidation
 
 The
consolidated financial statements, which include the Company and its
subsidiaries, are complied in accordance with generally accepted accounting
principles in the United States of America. All significant inter-company
accounts and transactions have been eliminated. The consolidated financial
statements include 100% of assets, liabilities, and net income or loss of those
wholly-owned subsidiaries.
 
 The
company owned the three subsidiaries since its reverse-merger on June 6, 2007.
The detailed identities of the consolidating subsidiaries would have been as
follows:
  Name of Company
              
              Place of
                incorporation
              
              Attributable
                interestWorld
      Through Ltd
              
              British
      Virgin
                Islands
              
              
              100
              %Sunway
      World Through Technology (Daqing) Co Ltd
              
              PRC
              
              
              100
              %*Daqing
      Sunway Technology Co Ltd
              
              PRC
              
              
              100
              %Beijing
      Sunway New-force Medical Treatment Tech Co.,Ltd
              
              PRC
              
              
              100
              %*Note:Deemed
      variable interest entity
 
 (c)
              Use of
      estimates
 
 The
preparation of the financial statements in conformity with generally accepted
accounting principles in the United States of America requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Management makes these estimates using the best
information available at the time the estimates are made; however actual results
could differ materially from those estimates.
 
 (d)
              Economic and political
      risks
 
 The
Group’s operations are conducted in the PRC. Accordingly, the Company’s
business, financial condition and results of operations may be influenced by the
political, economic and legal environment in the PRC, and by the general state
of the PRC economy.
  The
Group’s operations in the PRC are subject to special considerations and
significant risks not typically associated with companies in North America and
Western Europe. These include risks associated with, among others, the
political, economic and legal environment and foreign currency exchange. The
Group’s results may be adversely affected by changes in the political and social
conditions in the PRC, and by changes in governmental policies with respect to
laws and regulations, anti-inflationary measures, currency conversion,
remittances abroad, and rates and methods of taxation, among other
things.
  9
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
 (Stated
in US Dollars)(Unaudited)
 
 2.
              SUMMARY OF
      SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 (e)
              Intangibles
 
 Intangibles
are stated at cost less accumulated amortisation. Amortisation is provided over
the respective useful lives, using the straight-line method. Estimated useful
lives of the intangibles are as follows:
  Land
      use rights
                  47
      yearsTechnology-based
      design
                  10
      years
 
 (f)
              Accounting for software
      systems
 
 The
Company adopts FASB No. 86 for accounting of software systems, in that all
expenditures incurred from start-up to completion of feasibility are expensed;
development costs, after the feasibility study through system completion, are
capitalized, and are depreciated over a useful life of three years. Expenditures
incurred after completion are expensed as repairs and maintenance.
 
 (g)
              Property, plant and
      equipment
 
 Plant and
equipment are carried at cost less accumulated depreciation. Depreciation is
provided over their estimated useful lives, using the straight-line method.
Estimated useful lives of the plant and equipment are as follows:
 
 Buildings
                            20 yearsMachinery and equipment
                            6 yearsMolding
                            10 yearsComputer software
                            3 yearsOffice equipment and motor vehicles
                            6 - 10 years
 
 The cost
and related accumulated depreciation of assets sold or otherwise retired are
eliminated from the accounts and any gain or loss is included in the statement
of income.
 
 (h)
              Maintenance and
      repairs
 
 The cost
of maintenance and repairs is charged to income as incurred, whereas significant
renewals and betterments are capitalized.
 
 (i)
              Accounting for the impairment of
      long-lived assets
 
 The Group
periodically evaluates the carrying value of long-lived assets to be held and
used, including intangible assets subject to amortization, when events and
circumstances warrant such a review, pursuant to the guidelines established in
SFAS No. 144. The carrying value of a long-lived asset is considered impaired
when the anticipated undiscounted cash flow from such asset is separately
identifiable and is less than its carrying value. In that event, a loss is
recognised based on the amount by which the carrying value exceeds the fair
market value of the long-lived asset. Fair market value is determined primarily
using the anticipated cash flows discounted at a rate commensurate with the risk
involved. Losses on long-lived assets to be disposed of are determined in a
similar manner, except that fair market values are reduced for the cost to
dispose.
 
 During
the reporting period, there was no impairment loss.
  10
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
 (Stated
in US Dollars)(Unaudited)
 
 2.
              SUMMARY OF
      SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 (j)
              Inventories
 
 Inventories
consist of finished goods and raw materials, and stated at the lower of cost or
market value. Substantially all inventory costs are determined using the
weighted average basis. Finished goods are comprised of direct materials, direct
labor and an appropriate proportion of overhead. The management regularly
evaluates the composition of its inventory to identify slow-moving and obsolete
inventories to determine if additional write-downs are required.
 
 (k)
              Trade
      receivables
 
 Trade
receivables are recognized and carried at the original invoice amount less
allowance for any uncollectible amounts. An allowance for doubtful accounts is
maintained for all customers based on a variety of factors, including the length
of time the receivables are past due, significant one-time events and historical
experience. Bad debts are written off as incurred. During the reporting years,
there were no bad debts.
 
 Outstanding
accounts balances are reviewed individually for collectability. The Company do
not charge any interest income on trade receivables.  Accounts
balances are charged off against the allowance after all means of collection
have been exhausted and the potential for recovery is considered remote. To
date, the Company has not charged off any balances as it has yet to exhaust all
means of collection.
 
 (l)
              Cash and cash
      equivalents
 
 The
Company considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents. The Company maintains
bank accounts only in the PRC. The Company does not maintain any bank accounts
in the United States of America.
 
 March 31, 2008
                          
                          
                          December 31,
                            2007Bank
      of Communications, Branch of DaqingCity
      Economic Zone
                          
                          $
                          5,523,397
                          
                          
                          $
                          5,398,866Agricultural
      Bank of China
                          
                          
                          514,746
                          
                          
                          
                          -Daqing
      City Commercial Bank
                          
                          
                          75,858
                          
                          
                          
                          72,690HSBC
                          
                          
                          298,362
                          
                          
                          
                          348,362Cash
      on hand
                          
                          
                          44,306
                          
                          
                          
                          182$
                          6,456,669
                          
                          
                          $
                          5,820,100
  (m)
              Restricted
      cash
 
 Restricted
cash are pledged deposits in an escrow account for investor relations
purpose.
 
 (n)
              Revenue
      recognition
 
 Revenue
represents the invoiced value of goods sold recognized upon the delivery of
goods to customers. Revenue is recognized when all of the following criteria are
met:
 -
Persuasive evidence of an arrangement exists;
 -
Delivery has occurred or services have been rendered;
  11
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
 (Stated
in US Dollars)(Unaudited)
 
 2.
              SUMMARY OF
      SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 (n)
              Revenue
      recognition (continued)
 
 - The
seller’s price to the buyer is fixed or determinable, and
 -
Collection is reasonably assured.
 
 Contract
revenues are recognized when the manufacturing and installation of the medical
equipments is completed.  Generally, the company receives total
contract sum from clients in 3 installments. Deposit of 30% is received from
client when the contract is signed.  Second payment of 30% is received
when the project commenced.  The final sum of the remaining portion is
received after the construction is completed within 4 months.
 
 (o)
              Expected warranty
      liabilities
 
 The
Company warrants its products against defects in design, materials, and
workmanship generally for one year. A provision for estimated future costs
relating to warranty expense are recorded when products are shipped, and the
provision is based upon our own historical claim experience.
 
 (p)
              Cost of
    sales
 
 Cost of
sales consists primarily of material costs, employee compensation, depreciation
and related expenses, which are directly attributable to the production of
products. All inbound freight charges, purchasing and receiving costs,
inspection costs, warehousing costs, internal transfer costs, and the other
costs of distribution network are also included. Write-down of inventory to
lower of cost or market is also recorded in cost of revenues.
  (q)
              Leases
  The Group
did not have any lease which met the criteria of a capital lease. Leases which
do not qualify as capital leases are classified as operating leases. Operating
lease rental payments that were included in general and administrative expenses
were $4,853 and nil for the three months ended March 31, 2008 and 2007,
respectively.
  (r)
              Advertising
 
 The Group
expensed all advertising costs as incurred. Advertising expenses included in
selling expenses were $20,979 and $5,996 for the three months ended March 31,
2008 and 2007 respectively.
 
 (s)
              Shipping and
      handling
 
 All
shipping and handling are expensed as incurred. Shipping and handling expenses
included in selling expenses were $3,881 and $4,267 for the three months ended
March 31, 2008 and 2007 respectively.
 
 (t)
              Research and
      development
 
 All
research and development costs are expensed as incurred. The research and
development costs included in general and administrative expenses were $377 and
$2,520 and for the three months ended March 31, 2008 and 2007
respectively.
 
 (u)
              Retirement
      benefits
 
 Retirement
benefits in the form of contributions under defined contribution retirement
plans to the relevant authorities are charged to the statements of income as
incurred. The retirement benefit expenses included in general and administrative
expenses were $10,118 and $13,576 for the three months ended March 31, 2008 and
2007 respectively.
  12
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
 (Stated
in US Dollars)(Unaudited)
 
 2.
              SUMMARY OF
      SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 (v)
              Income
    taxes
 
 The Group
accounts for income tax using an asset and liability approach and allows for
recognition of deferred tax benefits in future years. Under the asset and
liability approach, deferred taxes are provided for the net tax effects of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. A
valuation allowance is provided for deferred tax assets if it is more likely
than not these items will either expire before the Group is able to realize
their benefits, or that future realization is uncertain.
 
 (w)
              Foreign currency
      translation
 
 The
accompanying financial statements are presented in United States dollars. The
reporting currency of the Group is the U.S. dollar ($). SWT, Sunway and Beijing
Sunway use its local currency, Renminbi (RMB), as its functional currency.
Results of operations and cash flow are translated at average exchange rates
during the period, and assets and liabilities are translated at the end of
period exchange rates. Translation adjustments resulting from this process are
included in accumulated other comprehensive income in stockholders’ equity.
Transaction gains and losses that arise from exchange rate fluctuations from
transactions denominated in a currency other than the functional currency are
included in the results of operations as incurred.
 
 The PRC
government imposes significant exchange restrictions on fund transfers out of
the PRC that are not related to business operations. These restrictions have not
had a material impact on the Group because it has not engaged in any significant
transactions that are subject to the restrictions.
 
 The
exchange rates used to translate amounts in RMB into USD for the purposes of
preparing the consolidated financial statements were as follows:
 
 March 31, 2008
                                    
                                    December 31,
                                      2007
                                    
                                    March 31, 2007Twelve
      months ended
                                    
                                    
                                    -
                                    
                                    7.3141
                                    
                                    
                                    -RMB
      : USD exchange rateThree
      months ended
                                    
                                    
                                    7.0222
                                    
                                    -
                                    
                                    
                                    7.7410RMB
      : USD exchange rateAverage
      three months ended
                                    
                                    
                                    7.1757
                                    
                                    -
                                    
                                    
                                    7.7714RMB
      : USD exchange rate
  The RMB
is not freely convertible into foreign currency and all foreign exchange
transactions must take place through authorized institutions. No representation
is made that the RMB amounts could have been, or could be, converted into USD at
the rates used in translation.
  13
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
 (Stated
in US Dollars)(Unaudited)
 
 2.
              SUMMARY OF
      SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 (x)
              Statutory
      reserves
 
 As
stipulated by the PRC’s Company Law and as provided in the SWT, and Sunway’s
Articles of Association, SWT and Sunway’s net income after taxation can only be
distributed as dividends after appropriation has been made for the
following:
 
 (i)
              Making
      up cumulative prior years’ losses, if
any;
 (ii)
              Allocations
      to the “Statutory surplus reserve” of at least 10% of income after tax, as
      determined under PRC accounting rules and regulations, until the fund
      amounts to 50% of the Company's registered capital, which is restricted
      for set off against losses, expansion of production and operation or
      increase in registered capital;
 (iii)
              Allocations
      of 5-10% of income after tax, as determined under PRC accounting rules and
      regulations, to the Company's “Statutory common welfare fund”, which is
      restricted for capital expenditure for the collective benefits of the
      Company's employees; and
 (iv)
              Allocations
      to the discretionary surplus reserve, if approved in the shareholders’
      general meeting.
 
 (y)
              Comprehensive
      income
 
 Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, all
items that are required to be recognized under current accounting standards as
components of comprehensive income are required to be reported in a financial
statement that is presented with the same prominence as other financial
statements. The Group’s current component of other comprehensive income is the
foreign currency translation adjustment and the unrealised gain on investment
held for resale.
 
 (z)
              Recent accounting
      pronouncements
 
 In
February 2007, FASB issued Statement of Financial Accounting Standards No.
(“SFAS”) 159, “The Fair Value Option for Financial Assets and Financial
Liabilities - Including an Amendment of FASB Statement No. 115” (“SFAS 159”).
SFAS 159 permits entities to choose to measure many financial instruments and
certain other items at fair value. Entities that elect the fair value option
will report unrealized gains and losses in earnings at each subsequent reporting
date. The fair value option may be elected on an instrument-by-instrument basis,
with a few exceptions. SFAS 159 also establishes presentation and disclosure
requirements to facilitate comparisons between entities that choose different
measurement attributes for similar assets and liabilities. The requirements of
SFAS 159 are effective for our fiscal year beginning on January 1,
2008.
 The
Company does not anticipate that the adoption of this standard will have a
material impact on these consolidated financial statements.
  14
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
 (Stated
in US Dollars)(Unaudited)
 
 2.
              SUMMARY OF
      SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 (z)
              Recent accounting pronouncements
      (continued)
 
 In
December 2007, the SEC issued Staff Accounting Bulletin No. 110 (“SAB 110”). SAB
110 permits companies to continue to use the simplified method, under certain
circumstances, in estimating the expected term of “plain vanilla” options beyond
December 31, 2007. SAB 110 updates guidance provided in SAB 107 that previously
stated that the Staff would not expect a company to use the simplified method
for share option grants after December 31, 2007. Adoption of SAB 110 is not
expected to have a material impact on the Company’s consolidated financial
statements.
 
 In
December 2007, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard (“SFAS”) No. 160, "Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51”. SFAS 160
establishes accounting and reporting standards for the noncontrolling interest
in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is
effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008. As such, the Company is required to
adopt these provisions at the beginning of the fiscal year ended December 31,
2009. The Company is currently evaluating the impact of SFAS 160 on its
consolidated financial statements but does not expect it to have a material
effect.
 
 In
December 2007, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard (“SFAS”) No. 141(R), "Business Combinations”. SFAS
141(R) establishes principles and requirements for how the acquirer recognizes
and measures in its financial statements the identifiable assets acquired, the
liabilities assumed, an any noncontrolling interest in the acquiree, recognizes
and measures the goodwill acquired in the business combination or a gain from a
bargain purchase, and determines what information to disclose to enable users of
the financial statements to evaluate the nature and financial effects of the
business combination. SFAS 141(R) is effective for fiscal years, and interim
periods within those fiscal years, beginning on or after December 15, 2008. As
such, the Company is required to adopt these provisions at the beginning of the
fiscal year ended December 31, 2009. The Company is currently evaluating the
impact of SFAS 141(R) on its consolidated financial statements but does not
expect it to have a material effect.
  15
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
 (Stated
in US Dollars)(Unaudited)
 
 3.
              CONCENTRATIONS OF CREDIT RISK AND
      MAJOR CUSTOMERS
 
 Financial
instruments which potentially expose the Group to concentrations of credit risk,
consists of cash and trade receivables as of March 31, 2008 and December 31,
2007. The Group performs ongoing evaluations of its cash position and credit
evaluations to ensure collections and minimize losses.
 
 As of
March 31, 2008 and December 31, 2007, the Group’s bank deposits were all placed
with banks in the PRC where there is currently no rule or regulation in place
for obligatory insurance of bank accounts.
 
 For the
three-months ended March 31, 2008 and 2007, all of the Group’s sales were
generated from the PRC. In addition, all trade receivables as of March 31, 2008
and December 31, 2007 also arose in the PRC.
 
 The
maximum amount of loss due to credit risk that the Group would incur if the
counter parties to the financial instruments failed to perform is represented
the carrying amount of each financial asset in the balance sheet.
 
 Normally
the Group does not obtain collateral from customers or debtors.
 
 Details
of the customers accounting for 10% or more of the Group’s revenue are as
follows:
 
 For the three-months ended March 31,2008
                        
                        
                        2007Customer
      A
                        
                        $
                        529,567
                        
                        
                        $
                        -Customer
      B
                        
                        
                        453,616
                        
                        
                        
                        -Customer
      C
                        
                        
                        438,983
                        
                        
                        
                        -Customer
      D
                        
                        
                        370,697
                        
                        
                        
                        -Customer
      E
                        
                        
                        -
                        
                        
                        
                        382,816Customer
      F
                        
                        
                        -
                        
                        
                        
                        310,756
 
 Details
of customers accounting for 10% or more of the Group’s trade receivables are as
follows:
 
 March 31, 2008
                          
                          
                          December 31,
                            2007Customer
      A
                          
                          $
                          633,135
                          
                          
                          $
                          275,851Customer
      B
                          
                          
                          -
                          
                          
                          
                          269,861Customer
      D
                          
                          
                          223,930
                          
                          
                          
                          235,149Customer
      H
                          
                          
                          -
                          
                          
                          
                          221,510Customer
      I
                          
                          
                          -
                          
                          
                          
                          159,005Customer
      J
                          
                          
                          -
                          
                          
                          
                          146,688Customer
      K
                          
                          
                          244,923
                          
                          
                          
                          -
  16
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
 (Stated
in US Dollars)(Unaudited)
 
 4.
              AMOUNT DUE FROM A RELATED
      COMPANY
 
 Amount
due from Rise Elite International Ltd (Rise Elite), a related company where Mr.
Liu Bo, the director of the Group is a shareholder.   The amount
is unsecured, interest free and repayable on demand. The amount is held by Rise
Elite for the initial setup expenses.
 
 5.
              AMOUNT DUE FROM A
      DIRECTOR
 
 Amount
due from Mr. Liu Bo, the director of the company is unsecured, interest free and
repayable on demand. The amount is held for the proposed development of
representative offices in Hang Zhou, Xi’an & Shanghai. This leads to a
better working capital arrangement.
 
 6.
              TRADE RECEIVABLES,
      NET
  March 31, 2008
                          
                          
                          December 31,
                            2007Trade
      receivables, gross
                          
                          $
                          2,216,972
                          
                          
                          $
                          1,533,085Provision
      for doubtful debts
                          
                          
                          (8,212
                          )
                          
                          
                          (7,884
                          )$
                          2,208,760
                          
                          
                          $
                          1,525,201
  All of
the above trade receivables are due within one year of aging.
 
 An
analysis of the allowance for doubtful accounts for the three months ended March
31, 2008 and December 31, 2007 is as follows:
  March 31, 2008
                        
                        
                        December 31, 2007Balance
      at beginning of period/year
                        
                        $
                        7,884
                        
                        
                        $
                        7,377Foreign
      exchange adjustment
                        
                        
                        328
                        
                        
                        
                        507Balance
      at end of period/year
                        
                        $
                        8,212
                        
                        
                        $
                        7,884
 
 Allowance
was made when collection of the full amount is no longer probable. Management
reviews and adjusts this allowance periodically based on historical experience,
current economic climate as well as its evaluation of the collectability of
outstanding accounts. The Group evaluates the credit risks of its customers
utilizing historical data and estimates of future performance.
  17





SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007


(Stated
in US Dollars)(Unaudited)








7.
              TRAVEL
      ADVANCES TO SHAREHOLDERS
  Travel
advances were made to certain Shareholders. These shareholders are also the
management of the Company and these advances are used to enable their execution
of operational duties such as marketing and sales promotion. The following table
provides an analysis of the outstanding accounts.




March
      31, 2008
                          
                          
                          December
      31, 2007Bo
      Liu
                          
                          $
                          14,389
                          
                          
                          $
                          4,244Qichai
      Zhao
                          
                          
                          -
                          
                          
                          
                          700Deli
      Liang
                          
                          
                          -
                          
                          
                          
                          6,568Weishan
      Sun
                          
                          
                          24,748
                          
                          
                          
                          19,312$
                          39,137
                          
                          
                          $
                          30,824




8.
              ADVANCES
      TO EMPLOYEES
  Advances
to employees are advances for purchases and traveling. They are unsecured,
interest free and repayable on demand.




9.
              INVENTORIES




Inventories
comprise the following:




March
      31, 2008
                        
                        
                        December 31,
                          2007Finished
      goods
                        
                        $
                        538,386
                        
                        
                        $
                        161,005Raw
      materials
                        
                        
                        337,821
                        
                        
                        
                        605,928$
                        876,207
                        
                        
                        $
                        766,933




10.
              PROPERTY,
      PLANT AND EQUIPMENT, NET
  Property,
plant and equipment, net comprise the following:




March
      31, 2008
                                
                                
                                December 31,
                                  2007At
      costBuilding
                                
                                $
                                1,412,774
                                
                                
                                $
                                1,356,392Machinery
      and equipment
                                
                                
                                1,073,065
                                
                                
                                
                                1,022,960Moldings
                                
                                
                                4,052,476
                                
                                
                                
                                2,992,166Computer
      software
                                
                                
                                2,023,582
                                
                                
                                
                                1,942,823Office
      equipment and motorvehicles
                                
                                
                                83,784
                                
                                
                                
                                80,439$
                                8,645,681
                                
                                
                                $
                                7,394,780Less:
      accumulated depreciation
                                
                                
                                (3,249,156
                                )
                                
                                
                                (2,945,161
                                )$
                                5,396,525
                                
                                
                                $
                                4,449,619




18





SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007


(Stated
in US Dollars)(Unaudited)




10.
                  PROPERTY,
      PLANT AND EQUIPMENT,
NET(Continued)




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





For
      the three-months ended March 31,2008
                        
                        
                        2007Cost
      of sales
                        
                        $
                        163,266
                        
                        
                        $
                        145,200General
      and administrative expenses
                        
                        
                        14,421
                        
                        
                        
                        82,362$
                        177,687
                        
                        
                        $
                        227,562




11.
              INTANGIBLE
      ASSETS, NET
  Intangible
assets, net are as follows:




March
      31, 2008
                            
                            
                            December 31,
                              2007Land
      use rights, at cost
                            
                            $
                            1,321,908
                            
                            
                            $
                            1,269,151Less:
      accumulated amortization
                            
                            
                            (67,972
                            )
                            
                            
                            (58,508
                            )$
                            1,253,936
                            
                            
                            $
                            1,210,643Technology-based
      design , at cost
                            
                            $
                            6,169,363
                            
                            
                            $
                            5,923,149Less:
      accumulated amortization
                            
                            
                            (402,165
                            )
                            
                            
                            (200,301
                            )$
                            5,767,198
                            
                            
                            $
                            5,722,848$
                            7,021,134
                            
                            
                            $
                            6,933,491





Patent of
the Pneumatic Tube System has been registered with the PRC government under
Serial No. 264-2004 2005 with a registration fee of $347 (RMB 2,800) which was
expensed in 2003. This amount was immaterial for capitalization.





The Group
acquired the rights to use a parcel of land totaling 26,522 square meters, for a
consideration of $1,149,788 (RMB 9,282,700), located at Daqing Hi-Tech Industry
Development Zone, Daqing, Heilongjiang in the People’s Republic of China 163316
for a term of 46 years from September 16, 2005 to June 13, 2052. The land has
been used to build the Group’s facility.





Amortization
expense included in the general and administrative expenses for the three months
ended 2008 and 2007 were $196,280 and $41,869 respectively.




19





SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007


(Stated
in US Dollars)(Unaudited)




12.
              EXPECTED
      WARRANTY LIABILITIES




An
analysis of the expected warranty liabilities as at March 31, 2008 and December
2007 is as follows:





2008
                        
                        
                        2007Balance
      at beginning of period/year
                        
                        $
                        55,351
                        
                        
                        $
                        22,811Addition
      of warranty liabilities
                        
                        
                        -
                        
                        
                        
                        55,918Warranty
      expense for the year
                        
                        
                        -
                        
                        
                        
                        (23,378
                        )Foreign
      currency difference
                        
                        
                        2,300
                        
                        
                        
                        -Balance
      at end of period/year
                        
                        $
                        57,651
                        
                        
                        $
                        55,351




13.
              SERIES
      B CONVERTIBLE PREFERRED STOCK AND ASSOCIATED
  WARRANTS




On June
5, 2007, the Company entered into a purchase agreement, whereby the company
agreed to sell 165,432 shares of the Company’s Series B Preferred shares and
various stock purchase warrants to purchase up to 18,686,054 shares of the
Company’s common shares. The exercise price, expiration date and number of share
eligible to be purchased with the warrants is summary in the following
table:




Investment
                        Amount
                      
                      Preferred
      B
                      
                      A
      Warrant
                      
                      B
      Warrant
                      
                      J
      Warrant
                      
                      C
      Warrant
                      
                      D
      WarrantVision
      Opportunity Master Fund, Ltd.
                      
                      
                      6,500,000
                      
                      
                      160,494
                      
                      
                      4,814,815
                      
                      
                      2,407,407
                      
                      
                      4,362,416
                      
                      
                      4,362,416
                      
                      
                      2,181,208Columbia
      China Capital Group, Inc.
                      
                      
                      200,000
                      
                      
                      4,938
                      
                      
                      148,148
                      
                      
                      74,074
                      
                      
                      134,228
                      
                      
                      134,228
                      
                      
                      67,114





Series
      of Warrant
                  
                  Number
      of shares
                  
                  
                  Exercise
      Price
                  
                  Expiry
      DateSeries
      A
                  
                  
                  4,962,963
                  
                  
                  $
                  1.76
                  
                  6
      /5 /2012Series
      B
                  
                  
                  2,481,481
                  
                  
                  
                  2.30
                  
                  6
      /5 /2012Series
      J
                  
                  
                  4,496,644
                  
                  
                  
                  1.49
                  
                  6
      /5 /2008Series
      C
                  
                  
                  4,496,644
                  
                  
                  
                  1.94
                  
                  6
      /5 /2012Series
      D
                  
                  
                  2,248,322
                  
                  
                  
                  2.53
                  
                  6
      /5 /2012




The
Series B preferred stock has liquidation rights senior to common stock and
Series A preferred stock. In the event of a liquidation of the Company, holders
of Series B preferred stock are entitled to receive a distribution equal to
$40.50 per share of Series B preferred stock prior to any distribution to the
holders of common stock and Series A preferred stock. The Series B preferred
stock is entitled to non-cumulative dividends only upon declaration of dividends
by the Company. To date, no dividends have been declared or accrued. The Series
B preferred stock will participate based on their respective as-if conversion
rates if the Company declares any dividends. After the Amendment were filed
effect the Reverse Split, each share of Series B preferred stock would be
convertible into 30 shares of Common Stock for $1.35 each, which both may be
adjusted from time to time pursuant to the conversion rate. The holders of
Series B preferred stock shall be entitled to voting rights by applicable law
and the right to vote together with the holders of Common and Series A Preferred
Stock.




20





SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007


(Stated
in US Dollars)(Unaudited)




13.
                SERIES
      B CONVERTIBLE PREFERRED STOCK AND ASSOCIATED WARRANTS
      (Continued)




The gross
proceeds of the transaction were $6.7 million. The proceeds from the transaction
were allocated to the Series B preferred stock, warrants and beneficial
conversion feature based on the relative fair value of the securities. The value
of the Preferred Series B was determined by reference to the market price of the
common shares into which it converts, and the gross value of the warrants was
calculated using the Black -Scholes model with the following assumptions:
expected life of 1 year, volatility of 117% and an interest rate of
4.99%.




The
Company recognized a beneficial conversion feature discount on the Series B
preferred stock at its intrinsic value, which was the fair value of the common
stock at the commitment date for the Series B preferred stock investment, less
the effective conversion price but limited to the $6.7 million of proceeds
received from the sale. The Company recognized the $6.7 million beneficial
conversion feature as an increase in paid in capital in the accompanying
consolidated balance sheets on the date of issuance of the Series B preferred
shares since the Series B preferred shares were convertible at the issuance
date.




The
agreement, also provided that if a Registration Statement is not effective
within a certain period of time or the common shares are not listed on the
NASDAQ or American exchange by December 31, 2008, the Company will pay the
holders of the shares a penalty that can range from $67,000 to $670,000 and
certain principal shareholders would issue up to 1,000,000 additional shares to
the purchasers of the Preferred Series B shares. The company is accounting for
these penalties in accordance with FAS 5 - Accounting for Contingencies, whereby
the penalty will not be recorded as a liability until and if it is probable the
penalty will be incurred. No penalty has been recorded in the accompanying
financial statements for this contingency.




On
February 7, 2008, 12 shareholders of Preferred Series A converted 228,531 shares
into 13,711,831 shares of common stock, in which Rise Elite International
Limited, Vision Opportunity Master Fund, Ltd and Kuhns Brothers, Inc converted
210,886, 7,990 and 2,647 shares of Preferred Series A into 12,653,160, 479,400
and 158,820 shares of common stock respectively.




14.
              EARNINGS
      PER SHARE




The
calculation of the basic and diluted earnings per share attributable to the
common stock holders is based on the following data:




For
      the three months ended March 31,2008
                                                                            
                                                                            
                                                                            2007Earnings:Earnings
      for the purpose of basicearnings
      per share
                                                                            
                                                                            $
                                                                            1,377,411
                                                                            
                                                                            
                                                                            $
                                                                            1,187,031Effect
      of dilutive potential commonstock
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -Earnings
      for the purpose of basicearnings
      per share
                                                                            
                                                                            $
                                                                            1,377,411
                                                                            
                                                                            
                                                                            $
                                                                            1,187,031Number
      of shares:Weighted
      average number ofcommon
      stock for the purpose of basicearnings
      per share
                                                                            
                                                                            
                                                                            8,360,349
                                                                            
                                                                            
                                                                            
                                                                            223,658conversion
      of Series Aconvertible
      preferred stock
                                                                            
                                                                            
                                                                            5,575,140
                                                                            
                                                                            
                                                                            
                                                                            -conversion
      of Series B
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            -convertible
      preferred stock
                                                                            
                                                                            
                                                                            4,962,960
                                                                            
                                                                            
                                                                            
                                                                            -conversion
      of Warrant Series A
                                                                            
                                                                            
                                                                            2,520,496
                                                                            
                                                                            
                                                                            
                                                                            -conversion
      of Warrant Series B
                                                                            
                                                                            
                                                                            885,551
                                                                            
                                                                            
                                                                            
                                                                            -conversion
      of Warrant Series J
                                                                            
                                                                            
                                                                            2,623,161
                                                                            
                                                                            
                                                                            
                                                                            -conversion
      of Warrant Series C
                                                                            
                                                                            
                                                                            2,057,343
                                                                            
                                                                            
                                                                            
                                                                            -conversion
      of Warrant Series D
                                                                            
                                                                            
                                                                            657,747
                                                                            
                                                                            
                                                                            
                                                                            -Weighted
      average number of commonstock
      for the purpose of dilutiveearnings
      per share
                                                                            
                                                                            
                                                                            27,642,747
                                                                            
                                                                            
                                                                            
                                                                            223,658




21





SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007


(Stated
in US Dollars)(Unaudited)




15.
              INCOME
      TAXES




The
Company is registered in the State of Nevada whereas its subsidiary, WTL being
incorporated in the British Virgin Islands is not subject to any income tax and
conducts all of its business through its PRC subsidiary, SWT and Sunway (see
note 1).





SWT and
Sunway, being registered in the PRC, are subject to PRC’s Enterprise Income Tax.
Pursuant to the PRC Income Tax Laws, Enterprise Income Taxes (“EIT”) is
generally imposed at a statutory rate of 25%.





However,
Sunway is a high technology company, and in accordance with the relevant
regulations regarding the favorable tax treatment for high technology companies,
Sunway is entitled to a reduced tax rate of 15% as long as Sunway located and
registered in the high and advance technology development zone.





A
reconciliation between the income tax computed at the U.S. statutory rate and
the Group’s provision for income tax is as follows:





Three
      months ended March 31,2008
                  
                  2007U.S.
      statutory rate
                  
                  
                  34
                  %
                  
                  34
                  %Foreign
      income not recognized in the U.S.
                  
                  
                  (34
                  )%
                  
                  (34
                  )%PRC
      Enterprise Income Tax
                  
                  
                  25
                  %
                  
                  33
                  %Tax
      holiday
                  
                  
                  (10
                  )%
                  
                  (18
                  )%Provision
      for income tax
                  
                  
                  15
                  %
                  
                  15
                  %




16.
              FAIR
      VALUE OF FINANCIAL
INSTRUMENTS




The fair
value of a financial instrument is the amount at which the instrument could be
exchanged in a current transaction between willing parties. The carrying amounts
of financial assets and liabilities, such as cash and cash equivalents, trade
accounts receivable, other receivables, accounts payable, and other payables,
approximate their fair values because of the short maturity of these instruments
and the availability of the market rates of interest.




17.
              COMMITMENTS
      AND CONTINGENCIES




The Group
has entered into a tenancy agreement for factory expiring through 2008. Total
rental expenses for the months ended March 31, 2008 and for the year ended
December 31, 2007 amounted to $4,853 and $14,016 respectively.





As at
March 31, 2008, the Group’s commitments for minimum lease payments under these
leases for the next one year and thereafter are as follows:




March
      31, 2008
                      
                      $
                      3,613$
                      3,613




22





SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007


(Stated
in US Dollars)(Unaudited)




18.
              SEGMENT
      INFORMATION




The Group
currently is engaged in the manufacturing and selling of logistic transport
systems. The Group has contracted with customers with four types of product
altogether, workstation type A, workstation type B, workstation type C and
Sunway Automatic Dispensing and Packing (“SADP”). These three types of
workstation are of the same function but with different product
design.





Net
revenues and cost of revenues by product:





For
      the three
                                                                          months
      ended
                                                                          March
      31, 2008
                                                                        
                                                                        Workstation
                                                                        
                                                                        
                                                                        Workstation
                                                                        
                                                                        
                                                                        WorkstationType
      A
                                                                        
                                                                        
                                                                        Type
      B
                                                                        
                                                                        
                                                                        Type
      C
                                                                        
                                                                        
                                                                        SADP
                                                                        
                                                                        
                                                                        ConsolidatedNet
      revenues
                                                                        
                                                                        $
                                                                        653,597
                                                                        
                                                                        
                                                                        $
                                                                        2,024,198
                                                                        
                                                                        
                                                                        $
                                                                        356,064
                                                                        
                                                                        
                                                                        $
                                                                        570,175
                                                                        
                                                                        
                                                                        $
                                                                        3,604,034Cost
      of netrevenues
                                                                        
                                                                        
                                                                        (177,442
                                                                        )
                                                                        
                                                                        
                                                                        (628,720
                                                                        )
                                                                        
                                                                        
                                                                        (134,920
                                                                        )
                                                                        
                                                                        
                                                                        (200,663
                                                                        )
                                                                        
                                                                        
                                                                        (1,141,745
                                                                        )$
                                                                        476,155
                                                                        
                                                                        
                                                                        $
                                                                        1,395,478
                                                                        
                                                                        
                                                                        $
                                                                        221,144
                                                                        
                                                                        
                                                                        $
                                                                        369,512
                                                                        
                                                                        
                                                                        $
                                                                        2,462,289





For
      the three
                                          months
      ended
                                          March
      31, 2007
                                        
                                        Workstation
                                        
                                        
                                        Workstation
                                        
                                        
                                        WorkstationType
      A
                                        
                                        
                                        Type
      B
                                        
                                        
                                        Type
      C
                                        
                                        
                                        SADP
                                        
                                        
                                        ConsolidatedNet
      revenues
                                        
                                        $
                                        1,067,194
                                        
                                        
                                        $
                                        1,400,034
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        2,467,228Cost
      of netrevenues
                                        
                                        
                                        (283,369
                                        )
                                        
                                        
                                        (360,878
                                        )
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (644,247
                                        )$
                                        783,825
                                        
                                        
                                        $
                                        1,039,156
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        1,822,981





The
Group’s operations are located in the PRC. All revenue is from customers in the
PRC. All of the Group’s assets are located in the PRC. Sales of workstations are
carried out in the PRC. Accordingly, no analysis of the Group's sales and assets
by geographical market is presented.




23





SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007


(Stated
in US Dollars)(Unaudited)




19.
              RESTATEMENTS




During
the course of internal evaluation, our accounting staff found misstatements in
our previously reported financial statements for the fiscal year ended December
31, 2007 that required correction relating to the improper use of exchange rate
of shareholders’ equity items and incorrect par value of the Series A and B
Convertible Preferred Stock and common stock recorded. Specifically, the Series
A and B Convertible Preferred Stock were overstated by $245 and $164
respectively, common stock was overstated by $223, additional paid-in capital
was overstated by $252,868, statutory reserves were overstated by $37,309,
retained earnings were overstated by $128,861, and the accumulated other
comprehensive income and foreign currency translation understated by $419,670
and $47,296 respectively for the year ended December 31, 2007.





Moreover,
there was a reclassification of restricted cash $491,049 from current asset to
non current asset and there was a correction for the basic and diluted weighted
average number of common stock from 223,653 to 223,658 and from 14,814,953 to
14,814,958 respectively for the year ended December 31, 2007.





For the
quarterly period ended March 31, 2008, the impacts of the (1) improper use of
exchange rates of shareholders’ equity items and incorrect par value of the
Series A and B Convertible Preferred Stock and common stock recorded have
resulted in a decrease in the Series B Convertible Preferred Stock of $164, a
decrease in common stock of $13,934, a decrease in additional paid-in capital of
$239,402, a decrease in statutory reserves of $37,309, a decrease in retained
earnings of $88,252, and an increase of accumulated other comprehensive income
of $419,670;(2) misstatements because of the exclusion of the financial figures
of the holding company, Sunway Global Inc., have led to the changes in net
revenues and net income by an increase of $40,609;(3) exclusion of the effects
of the Series A and B Convertible Preferred Stock and Warrants A, B, C, D and J
led to an increase of $4,997,262 for the diluted weighted average number of
common stock; (4) other misstatements identified, which were individually not
material, including amounts related to account payables and accrued liabilities,
resulting in a decrease of $39,823 and $786 for account payables and accrued
liabilities respectively; (5) certain reclassifications during the course of
internal evaluation, resulting in reclassifications among selling expenses and
general and administrative expenses of $137,318 and a reclassification of
restricted cash $467,954 from current asset to non current asset as at March 31,
2008.





For the
three months ended March 31, 2007, there were misstatements identified which
were individually not material, including amounts related to selling expenses
and general and administrative expenses, which overall led to a decrease in net
income by $134,857. The decrease of net income led to a decrease of $0.6 for
both the basic and diluted net income per share.   Moreover, the
misstatements overstated the foreign currency translation and unrealized gain on
investments by $220,851 and $420,912 respectively. In addition, there was a
correction for the basic and diluted weighted average number of common stock
from 223,653 to 223,658.





24





SUNWAY
      GLOBAL INC.


BALANCE
SHEETS


Original
                                
                                
                                RestatedMarch
      31, 2008(Unaudited)
                                
                                
                                (Unaudited)ASSETSCurrent
      assetsCash
      and cash equivalents
                                
                                $
                                6,456,669
                                
                                
                                $
                                6,456,669Restricted
      cash
                                
                                
                                467,954
                                
                                
                                
                                -Trade
      receivables, net
                                
                                
                                2,208,760
                                
                                
                                
                                2,208,760Inventories
                                
                                
                                876,207
                                
                                
                                
                                876,207Advances
      to suppliers
                                
                                
                                421,542
                                
                                
                                
                                421,542Prepayments
                                
                                
                                595,282
                                
                                
                                
                                595,282Tender
      deposits
                                
                                
                                -
                                
                                
                                
                                -Travel
      advances to shareholders
                                
                                
                                39,137
                                
                                
                                
                                39,137Advances
      to employees
                                
                                
                                398,153
                                
                                
                                
                                398,153Total
      current assets
                                
                                $
                                11,463,704
                                
                                
                                $
                                10,995,750Amount
      due from a related company
                                
                                
                                830
                                
                                
                                
                                830Restricted
      cash
                                
                                
                                -
                                
                                
                                
                                467,954Amount
      due from a director
                                
                                
                                726,133
                                
                                
                                
                                726,133Deposit
      for acquisition of computer software
                                
                                
                                1,281,650
                                
                                
                                
                                1,281,650Property,
      plant and equipment, net
                                
                                
                                5,396,525
                                
                                
                                
                                5,396,525Intangible
      assets, net
                                
                                
                                7,021,134
                                
                                
                                
                                7,021,134TOTAL
      ASSETS
                                
                                $
                                25,889,976
                                
                                
                                $
                                25,889,976LIABILITIES
      ANDSTOCKHOLDERS’
      EQUITYCurrent
      liabilitiesAccounts
      payable
                                
                                $
                                39,823
                                
                                
                                $
                                -Income
      tax payable
                                
                                
                                282,820
                                
                                
                                
                                282,820Turnover
      and other taxes
                                
                                
                                235,056
                                
                                
                                
                                235,056Expected
      warranty liabilities
                                
                                
                                57,651
                                
                                
                                
                                57,651Customers
      deposits
                                
                                
                                -
                                
                                
                                
                                -Accrued
      liabilities
                                
                                
                                374,037
                                
                                
                                
                                373,251Other
      payables
                                
                                
                                30,367
                                
                                
                                
                                30,367Total
      current liabilities
                                
                                $
                                1,019,754
                                
                                
                                $
                                979,145TOTAL
      LIABILITIES
                                
                                $
                                1,019,754
                                
                                
                                $
                                979,145




25





SUNWAY
      GLOBAL INC.


BALANCE
SHEETS (Continued)


Original
                                            
                                            
                                            RestatedMarch
      31, 2008(Unaudited)
                                            
                                            
                                            (Unaudited)STOCKHOLDERS’
      EQUITYSeries
      A Convertible PreferredStock
      $0.0000001 par value; 400,000 sharesauthorized;
      Nil and 228,531 sharesissued
      and outstanding at March 31, 2008and
      December 31, 2007 respectively
                                            
                                            $
                                            -
                                            
                                            
                                            $
                                            -Series
      B Convertible PreferredStock
      $0.0000001 par value; 400,000shares
      authorized; 165,432shares
      issued and outstandingat
      March 31, 2008 and December 31, 2007
                                            
                                            
                                            165
                                            
                                            
                                            
                                            1Common
      stock at $0.0000001 par value;100,000,000
      shares authorized;13,935,489
      and 223,658 shares issued andoutstanding
      at March 31, 2008and
      December 31, 2007 respectively
                                            
                                            
                                            13,935
                                            
                                            
                                            
                                            1Additional
      paid-in capital
                                            
                                            
                                            16,339,368
                                            
                                            
                                            
                                            16,099,966Statutory
      reserves
                                            
                                            
                                            2,165,287
                                            
                                            
                                            
                                            2,127,978Retained
      earnings
                                            
                                            
                                            4,653,943
                                            
                                            
                                            
                                            4,565,691Accumulated
      other comprehensive income
                                            
                                            
                                            1,697,524
                                            
                                            
                                            
                                            2,117,194$
                                            24,870,222
                                            
                                            
                                            $
                                            24,910,831TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                                            
                                            $
                                            25,889,976
                                            
                                            
                                            $
                                            25,889,976




26





SUNWAY
      GLOBAL INC.BALANCE
      SHEETS




Original
                              
                              
                              RestatedDecember
      31,2007
                              
                              
                              2007ASSETSCurrent
      assetsCash
      and cash equivalents
                              
                              $
                              5,820,100
                              
                              
                              $
                              5,820,100Restricted
      cash
                              
                              
                              491,049
                              
                              
                              
                              -Short
      term investments
                              
                              
                              -
                              
                              
                              
                              -Trade
      receivables, net
                              
                              
                              1,525,201
                              
                              
                              
                              1,525,201Inventories
                              
                              
                              766,933
                              
                              
                              
                              766,933Advances
      to suppliers
                              
                              
                              1,331,159
                              
                              
                              
                              1,331,159Prepayments
                              
                              
                              125,333
                              
                              
                              
                              125,333Tender
      deposits
                              
                              
                              131,013
                              
                              
                              
                              131,013Travel
      advances to shareholders
                              
                              
                              30,824
                              
                              
                              
                              30,824Advances
      to employees
                              
                              
                              548,364
                              
                              
                              
                              548,364Total
      current assets
                              
                              $
                              10,769,976
                              
                              
                              $
                              10,278,927Amount
      due from a related company
                              
                              
                              585,678
                              
                              
                              
                              585,678Restricted
      cash
                              
                              
                              -
                              
                              
                              
                              491,049Amount
      due from a director
                              
                              
                              1,028,474
                              
                              
                              
                              1,028,474Property,
      plant and equipment, net
                              
                              
                              4,449,619
                              
                              
                              
                              4,449,619Intangibles,
      net
                              
                              
                              6,933,491
                              
                              
                              
                              6,933,491TOTAL
      ASSETS
                              
                              $
                              23,767,238
                              
                              
                              $
                              23,767,238LIABILITIES
      ANDSTOCKHOLDERS’
      EQUITYCurrent
      liabilitiesShort
      term bank loans
                              
                              $
                              -
                              
                              
                              $
                              -Accounts
      payable
                              
                              
                              245,917
                              
                              
                              
                              245,917Income
      tax payable
                              
                              
                              157,877
                              
                              
                              
                              157,877Turnover
      and other taxes
                              
                              
                              143,857
                              
                              
                              
                              143,857Expected
      warranty liabilities
                              
                              
                              55,351
                              
                              
                              
                              55,351Customers
      deposits
                              
                              
                              208,274
                              
                              
                              
                              208,274Accrued
      liabilities
                              
                              
                              323,464
                              
                              
                              
                              323,464Other
      payables
                              
                              
                              35,984
                              
                              
                              
                              35,984Total
      current liabilities
                              
                              $
                              1,170,724
                              
                              
                              $
                              1,170,724TOTAL
      LIABILITIES
                              
                              $
                              1,170,724
                              
                              
                              $
                              1,170,724




27





SUNWAY
      GLOBAL INC.





BALANCE
      SHEETS (Continued)




Original
                                                    
                                                    
                                                    RestatedDecember
      31,2007
                                                    
                                                    
                                                    2007STOCKHOLDERS’
      EQUITYSeries
      A Convertible PreferredStock
      $0.0000001 par value;400,000shares
      authorized; 228,531shares
      issued and outstandingat
      Dec 31, 2007 and 2006
                                                    
                                                    $
                                                    246
                                                    
                                                    
                                                    $
                                                    1Series
      B Convertible PreferredStock
      $0.0000001 par value; 400,000shares
      authorized; 165,432shares
      issued and outstandingat
      Dec 31, 2007 and 2006
                                                    
                                                    
                                                    165
                                                    
                                                    
                                                    
                                                    1Common
      stock at $0.0000001 parValue;
      100,000,000 shares;authorized
      223,658 sharesissued
      and outstanding atDec
      31, 2007 and 2006
                                                    
                                                    
                                                    224
                                                    
                                                    
                                                    
                                                    1Additional
      paid-in capital
                                                    
                                                    
                                                    16,352,833
                                                    
                                                    
                                                    
                                                    16,099,965Statutory
      reserves
                                                    
                                                    
                                                    2,165,287
                                                    
                                                    
                                                    
                                                    2,127,978Retained
      earnings
                                                    
                                                    
                                                    3,317,141
                                                    
                                                    
                                                    
                                                    3,188,280Accumulated
      othercomprehensive
      incomeUnrealised
      gain on investment
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -Foreign
      currency translation
                                                    
                                                    
                                                    760,618
                                                    
                                                    
                                                    
                                                    1,180,288$
                                                    22,596,514
                                                    
                                                    
                                                    $
                                                    22,596,514TOTAL
      LIABILITIES ANDSTOCKHOLDERS’
      EQUITY
                                                    
                                                    $
                                                    23,767,238
                                                    
                                                    
                                                    $
                                                    23,767,238




28





SUNWAY
      GLOBAL INC.STATEMENTS
      OF INCOME




Original
                                      
                                      
                                      RestatedThree
      months ended March 31,2008
                                      
                                      
                                      2008Net
      revenues
                                      
                                      $
                                      3,563,425
                                      
                                      
                                      $
                                      3,604,034Cost
      of net revenues
                                      
                                      
                                      (1,141,745
                                      )
                                      
                                      
                                      (1,141,745
                                      )Gross
      profit
                                      
                                      $
                                      2,421,680
                                      
                                      
                                      $
                                      2,462,289Selling
      expenses
                                      
                                      
                                      (162,555
                                      )
                                      
                                      
                                      (25,237
                                      )General
      and administrative expenses
                                      
                                      
                                      (648,924
                                      )
                                      
                                      
                                      (786,242
                                      )Income
      from operation
                                      
                                      $
                                      1,610,201
                                      
                                      
                                      $
                                      1,650,810Interest
      expenses
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Interest
      income
                                      
                                      
                                      143
                                      
                                      
                                      
                                      143Income
      before income taxes
                                      
                                      $
                                      1,610,344
                                      
                                      
                                      $
                                      1,650,953Income
      taxes
                                      
                                      
                                      (273,542
                                      )
                                      
                                      
                                      (273,542
                                      )Net
      income
                                      
                                      $
                                      1,336,802
                                      
                                      
                                      $
                                      1,377,411Foreign
      currency translation
                                      
                                      
                                      936,906
                                      
                                      
                                      
                                      936,906Unrealized
      gain on investments
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Comprehensive
      income
                                      
                                      $
                                      2,273,708
                                      
                                      
                                      $
                                      2,314,317Net
      income per share:-Basic
                                      
                                      $
                                      0.16
                                      
                                      
                                      $
                                      0.16-Diluted
                                      
                                      $
                                      0.06
                                      
                                      
                                      $
                                      0.05Weighted
      average number of common stock-Basic
                                      
                                      $
                                      8,360,349
                                      
                                      
                                      $
                                      8,360,349-Diluted
                                      
                                      $
                                      22,645,485
                                      
                                      
                                      $
                                      27,642,747




29




SUNWAY
      GLOBAL INC.STATEMENTS
      OF INCOME




Original
                                    
                                    
                                    RestatedThree
      months ended March 31,2007
                                    
                                    
                                    2007Net
      revenues
                                    
                                    $
                                    2,467,228
                                    
                                    
                                    $
                                    2,467,228Cost
      of net revenues
                                    
                                    
                                    (644,247
                                    )
                                    
                                    
                                    (644,247
                                    )Gross
      profit
                                    
                                    $
                                    1,822,981
                                    
                                    
                                    $
                                    1,822,981Selling
      expenses
                                    
                                    
                                    (10,592
                                    )
                                    
                                    
                                    (13,580
                                    )General
      and administrative expenses
                                    
                                    
                                    (255,644
                                    )
                                    
                                    
                                    (387,513
                                    )Income
      from operation
                                    
                                    
                                    1,556,745
                                    
                                    
                                    
                                    1,421,888Interest
      expenses
                                    
                                    
                                    (3,040
                                    )
                                    
                                    
                                    (3,040
                                    )Interest
      income
                                    
                                    
                                    1,457
                                    
                                    
                                    
                                    1,457Income
      before income taxes
                                    
                                    $
                                    1,555,162
                                    
                                    
                                    $
                                    1,420,305Income
      taxes
                                    
                                    
                                    (233,274
                                    )
                                    
                                    
                                    (233,274
                                    )Net
      income
                                    
                                    $
                                    1,321,888
                                    
                                    
                                    $
                                    1,187,031Foreign
      currency translation
                                    
                                    
                                    297,428
                                    
                                    
                                    
                                    76,577Unrealized
      gain on investments
                                    
                                    
                                    667,065
                                    
                                    
                                    
                                    246,153Comprehensive
      income
                                    
                                    $
                                    2,286,381
                                    
                                    
                                    $
                                    1,509,761Net
      income per share:-Basic
                                    
                                    $
                                    5.91
                                    
                                    
                                    $
                                    5.31-Diluted
                                    
                                    $
                                    5.91
                                    
                                    
                                    $
                                    5.31Weighted
      average number of common stock-Basic
                                    
                                    
                                    223,653
                                    
                                    
                                    
                                    223,658-Diluted
                                    
                                    
                                    223,653
                                    
                                    
                                    
                                    223,658




30


SUNWAY
GLOBAL INC.
 STATEMENT
OF CASH FLOWS
 Original
                      
                      
                      RestatedThree months ended March 31,2008
                      
                      
                      2008Cash
      flows from operating activitiesNet
      income
                      
                      $
                      1,336,802
                      
                      
                      $
                      1,377,411Depreciation
                      
                      
                      177,687
                      
                      
                      
                      177,687Amortization
                      
                      
                      196,280
                      
                      
                      
                      196,280Adjustments
      to reconcile net incometo
      net cash provided by operating activities:Restricted
      cash
                      
                      
                      23,095
                      
                      
                      
                      -Trade
      receivables, net
                      
                      
                      (620,159
                      )
                      
                      
                      (620,159
                      )Inventories
                      
                      
                      (77,394
                      )
                      
                      
                      (77,394
                      )Advances
      to suppliers
                      
                      
                      964,951
                      
                      
                      
                      964,951Prepayments
                      
                      
                      383,008
                      
                      
                      
                      383,008Travel
      advances to shareholders
                      
                      
                      (39,137
                      )
                      
                      
                      (39,137
                      )Advances
      to employees
                      
                      
                      (398,153
                      )
                      
                      
                      (398,153
                      )Accounts
      payable
                      
                      
                      (214,661
                      )
                      
                      
                      (254,484
                      )Income
      tax payable
                      
                      
                      118,380
                      
                      
                      
                      118,380Turnover
      and other taxes
                      
                      
                      85,220
                      
                      
                      
                      85,220Loans
      from unrelated parties
                      
                      
                      1,572,360
                      
                      
                      
                      1,572,360Amount
      due from a director
                      
                      
                      (726,133
                      )
                      
                      
                      (726,133
                      )Customers
      deposits
                      
                      
                      (216,932
                      )
                      
                      
                      (216,932
                      )Accrued
      liabilities
                      
                      
                      37,127
                      
                      
                      
                      36,341Other
      payables
                      
                      
                      (7,113
                      )
                      
                      
                      (7,113
                      )Net
      cash provided by operating activities
                      
                      $
                      2,595,228
                      
                      
                      $
                      2,572,133Cash
      flows from investing activitiesPurchase
      of plant and equipment
                      
                      $
                      (939,630
                      )
                      
                      $
                      (939,630
                      )Restricted
      cash
                      
                      
                      -
                      
                      
                      
                      23,095Deposit
      for acquisition of computer software
                      
                      
                      (1,281,650
                      )
                      
                      
                      (1,281,650
                      )Disposal
      of plant and equipment
                      
                      
                      -
                      
                      
                      
                      -Net
      cash used in investing activities
                      
                      $
                      (2,221,280
                      )
                      
                      $
                      (2,198,185
                      )Cash
      flows from financing activities
                      
                      $
                      -
                      
                      
                      $
                      -
  31
  SUNWAY
GLOBAL INC.
 
 STATEMENT
OF CASH FLOWS (Continued)
  Original
                        
                        
                        RestatedThree months ended March 31,2008
                        
                        
                        2008Net
      in cash and cash equivalents sourced
                        
                        $
                        373,948
                        
                        
                        $
                        373,948Effect
      of foreign currency translation oncash
      and cash equivalents
                        
                        
                        262,621
                        
                        
                        
                        262,621Cash
      and cash equivalents-beginning of year
                        
                        
                        5,820,100
                        
                        
                        
                        5,820,100Cash
      and cash equivalents-end of year
                        
                        $
                        6,456,669
                        
                        
                        $
                        6,456,669Supplementary
      cash flow information:Tax
      paid
                        
                        $
                        1,364,381
                        
                        
                        $
                        1,364,381Interest
      received
                        
                        
                        143
                        
                        
                        
                        143Interest
      paid
                        
                        
                        -
                        
                        
                        
                        -
 32
 
 SUNWAY
GLOBAL INC.
 STATEMENT
OF CASH FLOWS
 Original
                      
                      
                      RestatedThree months ended March 31,2007
                      
                      
                      2007Cash
      flows from operating activitiesNet
      income
                      
                      $
                      1,321,888
                      
                      
                      $
                      1,187,031Depreciation
                      
                      
                      146,495
                      
                      
                      
                      227,562Amortization
                      
                      
                      41,869
                      
                      
                      
                      41,869Adjustments
      to reconcile net incometo
      net cash provided by operating activities:Restricted
      cash
                      
                      
                      -
                      
                      
                      
                      -Trade
      receivables, net
                      
                      
                      (696,888
                      )
                      
                      
                      (694,156
                      )Inventories
                      
                      
                      (115,922
                      )
                      
                      
                      (115,467
                      )Advances
      to suppliers
                      
                      
                      (460,618
                      )
                      
                      
                      -Prepayments
                      
                      
                      (54,242
                      )
                      
                      
                      (493,761
                      )Travel
      advances to shareholders
                      
                      
                      -
                      
                      
                      
                      -Advances
      to employees
                      
                      
                      -
                      
                      
                      
                      -Accounts
      payable
                      
                      
                      1,325
                      
                      
                      
                      (31,364
                      )Income
      tax payable
                      
                      
                      (15,131
                      )
                      
                      
                      -Turnover
      and other taxes
                      
                      
                      196,530
                      
                      
                      
                      177,708Loans
      from unrelated parties
                      
                      
                      -
                      
                      
                      
                      -Amount
      due from a director
                      
                      
                      -
                      
                      
                      
                      -Customers
      deposits
                      
                      
                      (7,515
                      )
                      
                      
                      -Accrued
      liabilities
                      
                      
                      (24,481
                      )
                      
                      
                      -Other
      payables
                      
                      
                      (13,738
                      )
                      
                      
                      57,797Net
      cash provided by operating activities
                      
                      $
                      319,572
                      
                      
                      $
                      357,219Cash
      flows from investing activitiesPurchase
      of plant and equipment
                      
                      $
                      (1,877
                      )
                      
                      $
                      -Deposit
      for acquisition of computer software
                      
                      
                      -
                      
                      
                      
                      -Disposal
      of plant and equipment
                      
                      
                      -
                      
                      
                      
                      33,645Net
      cash used in investing activities
                      
                      $
                      (1,877
                      )
                      
                      $
                      33,645Cash
      flows from financing activities
                      
                      $
                      -
                      
                      
                      $
                      -
  33
 
 SUNWAY
GLOBAL INC.
  STATEMENT
OF CASH FLOWS (Continued)
  Original
                        
                        
                        RestatedThree months ended March 31,2007
                        
                        
                        2007Net
      in cash and cash equivalents sourced
                        
                        $
                        317,695
                        
                        
                        $
                        390,864Effect
      of foreign currency translation oncash
      and cash equivalents
                        
                        
                        23,251
                        
                        
                        
                        (49,918
                        )Cash
      and cash equivalents-beginning of year
                        
                        
                        1,749,048
                        
                        
                        
                        1,749,048Cash
      and cash equivalents-end of year
                        
                        $
                        2,089,994
                        
                        
                        $
                        2,089,994Supplementary
      cash flow information:Tax
      paid
                        
                        $
                        937,036
                        
                        
                        $
                        937,036Interest
      received
                        
                        
                        1,457
                        
                        
                        
                        1,457Interest
      paid
                        
                        
                        3,040
                        
                        
                        
                        3,040
  34
  ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
 
 Forward-Looking
Statements
 
 The
information in this report contains forward-looking statements. All statements
other than statements of historical fact made in this report are forward
looking. In particular, the statements herein regarding industry prospects and
future results of operations or financial position are forward-looking
statements. These forward-looking statements can be identified by the use of
words such as "believes," "estimates," "could," "possibly," "probably,"
anticipates," "projects," "expects," "may," "will," or "should" or other
variations or similar words. No assurances can be given that the future results
anticipated by the forward-looking statements will be achieved. Forward-looking
statements reflect management's current expectations and are inherently
uncertain. Our actual results may differ significantly from management's
expectations.
 
 The
following discussion and analysis should be read in conjunction with our
financial statements, included herewith. This discussion should not be construed
to imply that the results discussed herein will necessarily continue into the
future, or that any conclusion reached herein will necessarily be indicative of
actual operating results in the future. Such discussion represents only the best
present assessment of our management.
  Overview
  As a
result of the reverse merger, financing and related transactions described
in our current report on Form 8-K/A filed with the SEC on June 27, 2007, the
Company ceased to be a shell company and became a holding company for entities
that, through contractual relationships, control the business of Daqing Sunway,
a company organized under the laws of the PRC that designs, manufactures and
sells logistic transport systems and medicine dispensing systems and equipment
that are principally used by hospitals and other medical facilities in the PRC.
Because Sunway’s operations are the only significant operations of the Company
and its affiliates, this discussion and analysis focuses on the business results
of Sunway, comparing its results in the three months ended March 31, 2008 to the
three month period ended March 31, 2007. We have already sell our new core
product—a medicine dispensation and packaging system also designed for use in
hospitals and pharmacies—in the first quarter of 2008.
  Three-month
periods ended March 31, 2008 and March 31, 2007
 
 Results
of Operations
 
 In the
three months ended March 31, 2008, the company’s net income slightly increased.
Although company’s net revenues and gross profit rose substantially as compared
with the same period in the same period of 2007, but operating expenses also
increased during these periods , bring on net income slight increased. These
increases are due in large part to increased sales of Daqing Sunway’s pneumatic
tube transport systems and new product - a medicine dispensation and packaging
system. Cost of sales also increased during these periods, somewhat outpacing
the increase in sales. The increase in cost of sales is due largely to increased
depreciation expenses related to Sunway’s investment in 2007 in new molds ,
production lines used and the increased prices of raw materials used in the
manufacture of its newly designed medicine packaging and dispensing equipment.
The increase in operating expense is due new products marketing
expense.
 
 The
following table summarizes the results of our operations during the three months
ended March 31, 2008 and 2007, respectively, and provides information regarding
the dollar and percentage increase or (decrease) from the three months ended
March 31, 2008 and 2007.
 
 Three Months Ended March 31,2008
                          
                          
                          2007
                          
                          
                          Change
                          
                          
                          Change rateNet
      Revenues
                          
                          $
                          3,604,034
                          
                          
                          $
                          2,467,228
                          
                          
                          $
                          1,136,806
                          
                          
                          
                          46.08
                          %Cost
      of net revenues
                          
                          $
                          1,141,745
                          
                          
                          $
                          644,247
                          
                          
                          $
                          497,498
                          
                          
                          
                          77.22
                          %Gross
      Profit
                          
                          $
                          2,462,289
                          
                          
                          $
                          1,822,981
                          
                          
                          $
                          639,308
                          
                          
                          
                          35.07
                          %Gross
      Margin
                          
                          
                          68.32
                          %
                          
                          $
                          73.89
                          %
                          
                          
                          
                          
                          
                          
                          -5.57
                          %Operating
      Income
                          
                          $
                          1,650,810
                          
                          
                          $
                          1,421,888
                          
                          
                          $
                          228,922
                          
                          
                          
                          16.10
                          %Net
      Income
                          
                          $
                          1,377,411
                          
                          
                          $
                          1,187,031
                          
                          
                          $
                          190,380
                          
                          
                          
                          16.04
                          %Net
      profit margin
                          
                          
                          38.22
                          %
                          
                          
                          48.11
                          %
                          
                          
                          
                          
                          
                          
                          -9.89
                          %
  35
 
 Net
revenues
 
 Net
revenues for the first quarter of 2008, which resulted entirely from sales of
pneumatic material transport system workstations (“PTS”) and Automatic Medicine
Dispensing and Packing System (“SADP’), were $3,604,034, an increase of 46.08%
as compared with the net revenue of $2,467,228 in the first quarter of 2007. In
the first quarter of 2008, we sold 622 workstations, an increase of 14.34% as
compared with 544 workstations sold in the first quarter of 2007; at the same
time, we also sold two SADP units .
 
 The
following table breaks down application categories as percentage of total
sales.
 
 Three Months Ended March 31,2008
                  
                  
                  2007sales
                  
                  
                  % of total sales
                  
                  
                  sales
                  
                  
                  % of total salesPTS
                  
                  $
                  3,033,859
                  
                  
                  
                  84.18
                  %
                  
                  $
                  2,467,228
                  
                  
                  
                  100.00
                  %SADP
                  
                  $
                  570,175
                  
                  
                  
                  15.82
                  %
                  
                  $
                  -
                  
                  
                  
                  -Total
      net revenues
                  
                  $
                  3,604,034
                  
                  
                  
                  100.00
                  %
                  
                  $
                  2,467,228
                  
                  
                  
                  100.00
                  %
 
 Gross
Profit
 
 Gross
profit increased 35.07% to $2,462,289 for the three months ended March 31, 2008,
as compared to $1,822,981 for the three months ended March 31, 2007. Our gross
profit margin fell 5.57% from 73.89% as of the three months ended March 3, 2007
to 68.32% as of the same period of 2008, mainly due to our efforts to develop
new molds and new production line, which raised depreciation costs and therefore
raised the cost of sales; at the same time, due to the use of newer but more
costly raw materials instead of old raw material in order to increase product
quality and perfect workstation surface, raw material costs increased
markedly.
 
 The table
below presents information about our gross profit for the periods
indicated:
 
 Three Months Ended March 31,2008
                    
                    
                    2007US$
                    
                    
                    Gross profit
                      margin
                    
                    
                    US$
                    
                    
                    Gross profit
                      marginGross
      Profit
                    
                    $
                    2,462,289
                    
                    
                    
                    68.32
                    %
                    
                    $
                    1,822,981
                    
                    
                    
                    73.89
                    %
 
 Income
from Operations
 
 Income
from operating increased 16.10% to $1,650,810 for the three months ended
March 31, 2008, as compared with $1,421,888 for the three months ended March 31,
2007. The increase was primarily a result of the higher revenue by the higher
cost reduces during the three months ended March 31, 2008 as compared to the
same period of 2007.
 
 Cost
of net revenues
 
 Cost of
net revenues increased to $1,141,745 for the three months ended March 31, 2008,
representing 77.22% increase as compared with $644,247 for the same period of
2007. This increase is due primarily to increased revenues, raw materials prices
and depreciation cost from the three months ended March 31, 2008 to the same
period of 2007. The Raw materials prices increased 8.02% for the three months
ended March 31, 2008, as compared to the same period of 2007.
 
 The table
below presents information about our cost of sales for the periods
indicated:
 
 Three Months Ended March 31,2008
                  
                  
                  2007
                  
                  
                  ChangeCost
      of net revenues
                  
                  $
                  1,141,745
                  
                  
                  $
                  644,247
                  
                  
                  
                  77.22
                  %
  36
  Operating
Expenses
 
 Operating
expenses were $811,479 for the three months ended March 31, 2008, an increase of
102.32% as compared to $401,093 for the same period of 2007. This increase was
composed by two reasons: (1) selling expenses increased $11,657, or 85.84% to
$25,237 in the three months ended March 31, 2008 from $13,580 for the same
period of 2007; and (2) general & administration expenses increased
$398,729, or 102.89% to $786,242 in the three months ended March 31, 2008 from
$387,513 for the same period of 2007. In the three months ended March 31, 2008,
we increased exhibition fees for promoting our new products, which totaled
$60,147, compared with $10,191 for the same period of 2007. Also, in the three
months ended March 31, 2008, we increased salary and benefits of management.
Reflecting this change, costs related to salary and benefits increased 65.74% in
the three months ended March 31, 2008, compared with the same period of 2007;
and amortization of intangible assets increased $154,411, or 368.80% to $196,280
in the three months ended March 31, 2008 from $41,869 as of the same period of
2007; and cost of direct sales offices were increased from null as of the three
months ended March 31, 2007 to $84,787 as of the same period of
2008.
  The table
below presents information about our operating expenses for the periods
indicated:
 
 Three Months Ended March 31,2008
                  
                  
                  2007
                  
                  
                  changeSelling
      expenses
                  
                  $
                  25,237
                  
                  
                  $
                  13,580
                  
                  
                  
                  85.84
                  %General
      & Administrative expenses
                  
                  $
                  786,242
                  
                  
                  $
                  387,513
                  
                  
                  
                  102.89
                  %Total
      operating expenses
                  
                  $
                  811,479
                  
                  
                  $
                  401,093
                  
                  
                  
                  102.32
                  %
 
 Net
Income
 
 Net
income was $1,377,411 for the three months ended March 31, 2008, an increase of
16.04% from $1,187,031 for the same period of 2007, The increase is primarily
due to i) substantial net revenues increase, ii) sustained gross margin in
spite of extremely volatile raw material prices; and iii) partially offset by
higher operating expenses and depreciation cost.
 
 Cash
and Cash Equivalents
 
 Cash and
Cash Equivalents increased to $6,456,669 as of the three months ended March 31,
2008, as compared to $5,820,100 as of the fiscal year ended December 31, 2007.
This increase was mainly due to slight increase of net income in the first
quarter of 2008.
 
 Trade
Receivables
 
 Trade
Receivables increased 44.82% to $2,208,760 as of the three months ended March
31, 2008, compared with $1,525,201 as of the fiscal year ended December 31,
2007. This increase in accounts receivable was primarily attributable to a
substantial increase in workstation and new product-Automatic Medicine
Dispensing and Packing System sales in the first quarter of 2008.
 
 Inventory
 
 Inventory
consists of raw materials and finished goods. As of the three months ended March
31, 2008, the recorded value of our inventory has increased 14.25% to $876,207
from $766,933 as of the fiscal year ended December 31, 2007. This increase is
mainly due to a increase in finished goods from $161,005 as of December 31, 2007
to $538,386 as of March 31, 2008, an increase of 234.39%. In addition raw
materials decreased from $605,928 as of December 31, 2007 to $337,821 as of
March 31, 2008, a decrease of 44.25%, which was due to increased sales and
designed capacity.
 
 The table
below presents information about our inventory for the periods
indicated:
 
 Item
                  
                  March 31, 2008
                  
                  
                  December 31, 2007
                  
                  
                  changeRaw material
                  
                  $
                  337,821
                  
                  
                  $
                  605,928
                  
                  
                  
                  -44.25
                  %Finished goods
                  
                  $
                  538,386
                  
                  
                  $
                  161,005
                  
                  
                  
                  234.39
                  %Total
                  
                  $
                  876,207
                  
                  
                  $
                  766,933
                  
                  
                  
                  14.25
                  %
 
 Accounts
payable
 
 Accounts
payable amounted to nil as of the three months ended March 31, 2008, from
$245,917 as of the fiscal year ended December 31, 2007. This decrease is mainly
due to cash purchase raw material.
  37
 
 Liquidity
and Capital Resources
 
 We have
historically financed our operations and capital expenditures principally
through private placements of debt and equity offerings, and cash provided by
operations.
 
 On June
6, 2007 in closing, we raised $6.7 million in gross proceeds through private
placement offering of our series B convertible preferred stock. We received
$4,976,335 in net proceeds after deducting placement agent discounts and
commissions and payment of professional and other related expenses.
 
 As is customary in our
industry, we provide payment terms to most of our customers that exceed terms
that we receive from our suppliers. Therefore, the Company’s liquidity needs
have generally consisted of working capital necessary to finance receivables and
raw material inventory. Capital expenditures have historically been necessary to
expand the production capacity of the Company’s manufacturing
operations.
 
 The table
below presents information about our cash flow for the periods
indicated:
  Three Months Ended March 31,2008
                    
                    
                    2007
                    
                    
                    ChangeNet
      cash provided by (used in) operating activities
                    
                    $
                    2,572,133
                    
                    
                    $
                    357,219
                    
                    
                    $
                    2,214,914Net
      cash provided by (used in) investing activities
                    
                    $
                    -2,198,185
                    
                    
                    $
                    33,645
                    
                    
                    $
                    -2,231,830Net
      cash provided by (used in) financing activities
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -Effect
      of foreign currency translation on cash and cash
    equivalents
                    
                    $
                    262,621
                    
                    
                    $
                    -49,918
                    
                    
                    $
                    312,539cash
      and cash equivalents at beginning of year
                    
                    $
                    5,820,100
                    
                    
                    $
                    1,749,048
                    
                    
                    $
                    4,071,052Cash
      and cash equivalents-end of year
                    
                    $
                    6,456,669
                    
                    
                    $
                    2,089,994
                    
                    
                    $
                    4,366,675
 
 Operating
Activities
 
 For the
three months ended March 31, 2008, net cash provided by operating activities was
$2,572,133. This was primarily attributable to our net income of $1,377,411,
adjusted by an add-back of non-cash expenses mainly consisting of depreciation
and amortization of $373,967 offset by a $820,755 increase in working capital.
Specifically, the working capital increase was primarily due to i) a $620,159
trade receivables increase driven by revenue growth; ii) a $77,394 inventories
increase, principally finished goods, to support planned expansion and sales
growth; iii) a $964,951 decrease in advance to suppliers to buy raw materials;
iv) a $54,282 increase in prepayments , travel advances to shareholders and
advances to employees, consisting primarily of prepayments for raw materials
supplies in advance of shipment and working capital of direct sales office;
partially offset by a $607,639 decrease in accounts payable, tax payable, loans
from unrelated parties, amount due from a director, customers deposits, accrued
liabilities and other payables.
 
 Investing
Activities
 
 For the
three months ended March 31, 2008, net cash used in investing activities was
$2,198,185 and was primarily attributable to i) a $939,630 capital expenditure
for purchase of new plant and equipment; ii) a $1,281,650 capital expenditure
for Deposit for acquisition of computer software and iii) $23,095 in restricted
cash.
 
 In future
periods, we believe that our existing cash, cash equivalents and cash flows from
operations, combined with availability under our revolving credit facility, will
be sufficient to meet our presently anticipated future cash needs for at least
the next 9 months. We may, however, require additional cash resources due to
changed business conditions or other future developments, including any
investments or acquisitions we may decide to pursue.
 
 Critical
Accounting Policies
 
 Management's
discussion and analysis of its financial condition and results of operations is
based upon Sunway’s consolidated financial statements, which have been prepared
in accordance with United States generally accepted accounting principles.
Sunway’s financial statements reflect the selection and application of
accounting policies which require management to make significant estimates and
judgments. Management bases its estimates on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances. Actual results may differ from these estimates under different
assumptions or conditions. Sunway believes that the following reflect the more
critical accounting policies that currently affect Sunway’s financial condition
and results of operations.
 
 Impairment of long-lived
assets . We account for impairment of property, plant and equipment and
amortizable intangible assets in accordance with SFAS No. SFAS No. 144. The
carrying value of a long-lived asset is considered impaired when the anticipated
undiscounted cash flow from such asset is separately identifiable and is less
than its carrying value. In that event, a loss is recognized based on the amount
by which the carrying value exceeds the fair market value of the long-lived
asset. Fair market value is determined primarily using the anticipated cash
flows discounted at a rate commensurate with the risk involved. Losses on
long-lived assets to be disposed of are determined in a similar manner, except
that fair market values are reduced for the cost to dispose. During the
reporting years, there was no impairment loss incurred. Competitive pricing
pressure and changes in interest rates, could materially and adversely affect
our estimates of future net cash flows to be generated by our long-lived
assets.
  38
  Inventories. Inventories
consist of finished goods and raw materials, and stated at the lower of cost or
market value. Substantially all inventory costs are determined using the
weighted average basis. Finished goods are comprised of direct materials, direct
labor and an appropriate proportion of overhead. The management regularly
evaluates the composition of its inventory to identify slow-moving and obsolete
inventories to determine if additional write-downs are required.
 
 Trade receivable. Trade
receivables are recognized and carried at the original invoice amount less
allowance for any uncollectible amounts. An allowance for doubtful accounts is
maintained for all customers based on a variety of factors, including the length
of time the receivables are past due, significant one-time events and historical
experience.  Bad debts are written off as incurred.  During
the reporting years, there were no bad debts.
 
 Outstanding
accounts balances are reviewed individually for collectability. The Company do
not charge any interest income on trade receivables.  Accounts
balances are charged off against the allowance after all means of collection
have been exhausted and the potential for recovery is considered remote. To
date, the Company has not charged off any balances as it has yet to exhaust all
means of collection.
 
 Revenue recognition. Revenue
represents the invoiced value of goods sold recognized upon the delivery of
goods to customers. Revenue is recognized when all of the following criteria are
met:
 
 -
Persuasive evidence of an arrangement exists;
 -
Delivery has occurred or services have been rendered;
 - The
seller’s price to the buyer is fixed or determinable, and
 -
Collection is reasonably assured.
 
 Contract
revenues are recognized when the manufacturing and installation of the medical
equipments is completed. Generally, the company receives total contract sum from
clients in 3 installments. Deposit of 30% is received from client when the
contract is signed.  Second payment of 30% is received when the
project commenced.  The final sum of the remaining portion is received
after the construction is completed within 4 months.
 
 Expected warranty
liabilities. The Company warrants its products against defects in design,
materials, and workmanship generally for one year. A provision for estimated
future costs relating to warranty expense are recorded when products are
shipped, and the provision is based upon our own historical claim
experience.
 
 We have
no off-balance sheet arrangements and have not entered into any transactions
involving unconsolidated, limited purpose entities.
  ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
  N/A.
  ITEM
4T. CONTROLS AND PROCEDURES.
 
 Evaluation
of Disclosure Controls and Procedures
  Our
management is responsible for establishing and maintaining a system of
disclosure controls and procedures (as defined in Rule 13a-15(e)) under the
Exchange Act) that is designed to ensure that information required to be
disclosed by the Company in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported, within the time
specified in the Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by an issuer in the reports
that it files or submits under the Exchange Act is accumulated and communicated
to the issuer's management, including its principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, as appropriate to allow timely decisions regarding required
disclosure.
  Pursuant
to Rule 13a-15(b) under the Exchange Act the Company carried out an evaluation
with the participation of the Company’s management, including Liu Bo, the
Company’s Chief Executive Officer (“CEO”) and Samuel Sheng, the Company’s Chief
Financial Officer (“CFO”), of the effectiveness of the Company’s disclosure
controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act)
as of the three months ended March 31, 2008. Based upon that evaluation, the
Company’s CEO and CFO concluded that the Company’s disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in the reports that the Company files or submits under the Exchange
Act, is recorded, processed, summarized and reported, within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to the Company’s management, including the Company’s CEO and
CFO, as appropriate, to allow timely decisions regarding required
disclosure.
  39
  Changes
in internal controls
  Our
management, with the participation our Chief Executive Officer and Chief
Financial Officer, performed an evaluation as to whether any change in our
internal controls over financial reporting  occurred during the 2008
Quarter ended March 31, 2008.  Based on that evaluation, our Chief
Executive Officer and our Chief Financial Officer concluded that no change
occurred in the Company's internal controls over financial reporting during the
2008 Quarter ended March 31, 2008 that has materially affected, or is reasonably
likely to materially affect, the Company's internal controls over financial
reporting.
  40
  PART
II
  OTHER INFORMATION
  ITEM
1 - LEGAL PROCEEDINGS
  To our
knowledge, there is no material litigation pending or threatened against
us.
  ITEM
1A. RISK FACTORS
  N/A
  ITEM
2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  None
  ITEM
3 - DEFAULTS UPON SENIOR SECURITIES
  To our
knowledge, there are no material defaults upon senior securities.
  ITEM
4 - SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
  ITEM
5 - OTHER INFORMATION
  On March
16, 2008, SWT acquired Beijing Sunway as its wholly-owned
subsidiary.  SWT acquired all of the outstanding shares of Beijing
Sunway from the three owners of Beijing Sunway, Liang Deli, Sun Xitao, and Tao
Liyan, for the purchase price of RMB1,000,000 (approximately
US$145,000).  Mr. Liang also serves as a director of the
Company.
 
 Beijing
Sunway was incorporated in Beijing, PRC on May 24, 2007, and is primarily
engaged in the sale of medical equipment manufactured by Sunway. It was
incorporated with the proceeds of a loan from the Company in the amount of RMB3,
992,229 borrowed by Mr. Liang, Mr. Sun, and Ms. Yao, on the first quarter of
2008. The loan was unsecured, interest free and repayable on demand, and was
held by Mr. Liang, Mr. Sun and Ms. Yao on Beijing Sunway’s behalf for the
purpose of proposed developments of representative offices for the Company in
various locations in China so as to provide for a better working capital
arrangement for the Company. As of March 26, 2008, the loan has been
repaid.
 
 Except as
disclosed above, there were no matters required to be disclosed on Form 8-K
during the first quarter ended March 31, 2008 which were not disclosed on such
form.
  ITEM
6 - EXHIBITS.
 
 Exhibit
                      No.
                    
                    Description of Exhibit10.1
                    
                    Capital
      Transfer Agreement, dated March 16, 2008, by and among SWT, Liang Deli,
      Sun Titao, and Tao Liyan.31.1
                    
                    Certification
      by Chief Executive Officer pursuant to Sarbanes Oxley Act of 2002 Section
      302.31.2
                    
                    Certification
      by Chief Financial Officer pursuant to Sarbanes Oxley Act of 2002 Section
      302.32.1
                    
                    Certification
      by Chief Executive Officer pursuant to Sarbanes-Oxley Act of 2002 Section
      906.32.2
                    
                    Certification
      by Chief Financial Officer pursuant to Sarbanes-Oxley Act of 2002 Section
      906.
  41
 
 SIGNATURES
  Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
 
 SUNWAY
      GLOBAL INC.Dated:  
      March 6, 2009
                By:
                /s/Liu
  BoLiu
      BoChief
      Executive OfficerDated:  
      March 6, 2009
                By:
                /s/Samuel
      ShengSamuel
      ShengChief
      Financial Officer
  42