UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON, D.C.
20549




FORM
10-Q




(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, 2009




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 xNo  o





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).   Yes xNo 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 x




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


Yes 
oNo 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 oNo 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 May 13, 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
            
            3Item
      2.
            
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operation
            
            4Item
      3.
            
            Quantitative
      and Qualitative Disclosures About Market Risk
            
            9Item
      4T
            
            Controls
      and Procedures
            
            9PART
      IIItem
      1.
            
            Legal
      Proceedings
            
            9Item
      1A.
            
            Risk
      Factors
            
            9Item
      2.
            
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            
            9Item
      3.
            
            Defaults
      Upon Senior Securities
            
            9Item
      4.
            
            Submission
      of Matters to a Vote of Security Holders
            
            9Item
      5.
            
            Other
      Information
            
            10Item
      6.
            
            Exhibits
            
            10SIGNATURES
            
            11





2




PART I


FINANCIAL
INFORMATION




ITEM
1. FINANCIAL STATEMENTS




SUNWAY GLOBAL
INC.





CONTENTS
            PAGESREPORT
      OF INDEPENDENT REGISTERED PUBLICACCOUNTING
      FIRM
            1CONSOLIDATED
      BALANCE SHEETS
            2 -
      3CONSOLIDATED
      STATEMENTS OF INCOME
            4CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ EQUITY
            5CONSOLIDATED
      STATEMENTS OF CASH FLOWS
            6 -
      7NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
            8 -
      31




3




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




To:  The
board of directors and stockholders of


Sunway
Global Inc. (“the Company”)




Report of Independent
Registered Public Accounting Firm





We have
reviewed the accompanying interim consolidated balance sheets of Sunway Global
Inc. as of March 31, 2009 and 2008, 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.




Hong Kong
            Albert Wong &
      Co.May 13,
    2009
            Certified Public
      Accountants





1




SUNWAY
      GLOBAL INC.CONSOLIDATED
      BALANCE SHEETSAS
      AT MARCH 31, 2009 AND DECEMBER 31, 2008(Stated
      in US Dollars)




Notes
            
            
            March
      31, 2009
            
            
            December
      31, 2008(Unaudited)
            
            
            (Audited)ASSETSCurrent assetsCash
      and cash equivalents
            
            
            
            
            $
            12,212,431
            
            
            $
            15,189,941Trade
      receivables, net
            
            
            5
            
            
            
            2,702,440
            
            
            
            2,953,919Inventories
            
            
            8
            
            
            
            1,022,032
            
            
            
            590,738Advances
      to suppliers
            
            
            
            
            
            
            1,502,484
            
            
            
            547,952Prepayments
            
            
            
            
            
            
            750,564
            
            
            
            -Tender
      deposits
            
            
            
            
            
            
            18,406
            
            
            
            112,735Travel
      advances to shareholders
            
            
            6
            
            
            
            57,483
            
            
            
            38,733Advances
      to employees
            
            
            7
            
            
            
            331,588
            
            
            
            429,804Total
      current assets
            
            
            
            
            
            $
            18,597,428
            
            
            $
            19,863,822Restricted
      cash
            
            
            
            
            
            
            356,046
            
            
            
            378,366Amount
      due from a related company
            
            
            4
            
            
            
            830
            
            
            
            830Property,
      plant and equipment, net
            
            
            9
            
            
            
            5,801,161
            
            
            
            5,069,871Intangibles,
      net
            
            
            10
            
            
            
            9,702,976
            
            
            
            6,576,769Deposit
      for acquisition of computersoftware
            
            
            
            
            
            
            -
            
            
            
            1,750,751Deposit
      for technology-based designs
            
            
            
            
            
            
            3,505,902
            
            
            
            -Deposit
      for acquisition of subsidiary
            
            
            
            
            
            
            -
            
            
            
            7,725,445Goodwill
            
            
            11
            
            
            
            4,831,386
            
            
            
            -TOTAL
      ASSETS
            
            
            
            
            
            $
            42,795,729
            
            
            $
            41,365,854LIABILITIES
      ANDSTOCKHOLDERS’
      EQUITYCurrent
      liabilitiesAccounts
      payable
            
            
            
            
            
            $
            712,325
            
            
            $
            59,912Income
      tax payable
            
            
            
            
            
            
            211,410
            
            
            
            632,893Turnover
      and other taxes
            
            
            
            
            
            
            89,834
            
            
            
            406,839Expected
      warranty liabilities
            
            
            12
            
            
            
            50,460
            
            
            
            50,396Customers
      deposits
            
            
            
            
            
            
            202,102
            
            
            
            -Accrued
      liabilities
            
            
            
            
            
            
            293,480
            
            
            
            301,461Other
      payables
            
            
            
            
            
            
            266,945
            
            
            
            15,168Total
      current liabilities
            
            
            
            
            
            $
            1,826,556
            
            
            $
            1,466,669TOTAL
      LIABILITIES
            
            
            
            
            
            $
            1,826,556
            
            
            $
            1,466,669





See
accompanying notes to consolidated financial statements





2




SUNWAY
      GLOBAL INC.CONSOLIDATED
      BALANCE SHEETS (Continued)AS
      AT MARCH 31, 2009 AND DECEMBER 31, 2008(Stated
      in US Dollars)





Notes
            
            
            March
      31, 2009
            
            
            December
      31, 2008(Unaudited)
            
            
            (Audited)Commitments
      and contingencies
            
            
            17
            
            
            $
            -
            
            
            $
            -STOCKHOLDERS’
      EQUITYSeries
      B Convertible PreferredStock
      $0.0000001 par value; 400,000shares
      authorized; 160,494 shares issuedand
      outstanding at March 31, 2009and
      December 31, 2008  respectively
            
            
            13
            
            
            $
            1
            
            
            $
            1Common
      stock at $0.0000001 parvalue;
      100,000,000 shares authorized;18,499,736
      shares issued andoutstanding
      at March 31, 2009and
      December 31, 2008 respectively
            
            
            
            
            
            
            2
            
            
            
            2Additional
      paid-in capital
            
            
            
            
            
            
            22,679,965
            
            
            
            22,679,965Statutory
      reserves
            
            
            
            
            
            
            3,033,855
            
            
            
            2,127,978Retained
      earnings
            
            
            
            
            
            
            12,384,103
            
            
            
            12,247,049Accumulated
      other comprehensive income
            
            
            
            
            
            
            2,871,247
            
            
            
            2,844,190$
            40,969,173
            
            
            $
            39,899,185TOTAL
      LIABILITIES ANDSTOCKHOLDERS’
      EQUITY
            
            
            
            
            
            $
            42,795,729
            
            
            $
            41,365,854





See
accompanying notes to consolidated financial statements





3




SUNWAY
      GLOBAL INC.CONSOLIDATED
      STATEMENTS OF INCOMEFOR
      THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008(Stated
      in US Dollars)(Unaudited)





Three
      months ended March 31,Notes
            
            
            2009
            
            
            2008Net
      revenues
            
            
            18
            
            
            $
            2,933,573
            
            
            $
            3,604,034Cost
      of net revenues
            
            
            18
            
            
            
            (893,980
            )
            
            
            (1,141,745
            )Gross
      profit
            
            
            
            
            
            $
            2,039,593
            
            
            $
            2,462,289Selling
      expenses
            
            
            
            
            
            
            (180,349
            )
            
            
            (25,237
            )General
      and administrative expenses
            
            
            
            
            
            
            (631,894
            )
            
            
            (786,242
            )Income
      from operation
            
            
            
            
            
            $
            1,227,350
            
            
            $
            1,650,810Interest
      income
            
            
            
            
            
            
            23,577
            
            
            
            143-Income
      before income taxes
            
            
            
            
            
            $
            1,250,927
            
            
            $
            1,650,953Income
      taxes
            
            
            15
            
            
            
            (207,996
            )
            
            
            (273,542
            )Net
      income
            
            
            
            
            
            $
            1,042,931
            
            
            $
            1,377,411Net
      income per share:-Basic
            
            
            14
            
            
            $
            0.06
            
            
            $
            0.16-Diluted
            
            
            14
            
            
            $
            0.03
            
            
            $
            0.05Weighted
      average number of common stock-Basic
            
            
            14
            
            
            
            18,499,736
            
            
            
            8,360,349-Diluted
            
            
            14
            
            
            
            31,578,154
            
            
            
            27,642,747





See notes
to consolidated financial statements





4




SUNWAY
      GLOBAL INC.CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ EQUITYFOR
      THE YEAR ENDED DECEMBER 31, 2008 AND THREE MONTHS ENDEDMARCH
      31, 2009(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, 2008
            
            $
            1
            
            
            $
            1
            
            
            
            223,658
            
            
            $
            1
            
            
            $
            16,099,965
            
            
            $
            2,127,978
            
            
            $
            3,188,280
            
            
            $
            1,180,288
            
            
            $
            22,596,514Conversion
      of Preferred Series Ainto
      Common Stock
            
            
            (1
            )
            
            
            -
            
            
            
            13,711,831
            
            
            
            -
            
            
            
            1
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Conversion
      of Preferred Series Binto
      Common Stock
            
            
            -
            
            
            
            -
            
            
            
            148,140
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Conversion
      of Warrant Series Jinto
      Common Stock
            
            
            -
            
            
            
            -
            
            
            
            4,416,107
            
            
            
            1
            
            
            
            6,579,999
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            6,580,000Net
      income
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            9,058,769
            
            
            
            -
            
            
            
            9,058,769Foreign
      currency translationAdjustment
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            1,663,902
            
            
            
            1,663,902Balance,
      December 31, 2008
            
            $
            -
            
            
            $
            1
            
            
            
            18,499,736
            
            
            $
            2
            
            
            $
            22,679,965
            
            
            $
            2,127,978
            
            
            $
            12,247,049
            
            
            $
            2,844,190
            
            
            $
            39,899,185Balance,
      January 1, 2009
            
            $
            -
            
            
            $
            1
            
            
            
            18,499,736
            
            
            $
            2
            
            
            $
            22,679,965
            
            
            $
            2,127,978
            
            
            $
            12,247,049
            
            
            $
            2,844,190
            
            
            $
            39,899,185Net
      income
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            1,042,931
            
            
            
            -
            
            
            
            1,042,931Appropriations
      to statutoryReserves
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            905,877
            
            
            
            (905,877
            )
            
            
            -
            
            
            
            -Foreign
      currency translationAdjustment
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            27,057
            
            
            
            27,057Balance,
      March 31, 2009
            
            $
            -
            
            
            $
            1
            
            
            
            18,499,736
            
            
            $
            2
            
            
            $
            22,679,965
            
            
            $
            3,033,855
            
            
            $
            12,384,103
            
            
            $
            2,871,247
            
            
            $
            40,969,173





See notes
to consolidated financial statements





5




SUNWAY
      GLOBAL INC.CONSOLIDATED
      STATEMENTS OF CASH FLOWSFOR
      THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008(Stated
      in US Dollars)(Unaudited)





Three
      months ended March 31,2009
            
            
            2008Cash
      flows from operating activitiesNet
      income
            
            $
            1,042,931
            
            
            $
            1,377,411Depreciation
            
            
            240,444
            
            
            
            177,687Amortization
            
            
            253,803
            
            
            
            196,280Adjustments
      to reconcile net incometo
      net cash provided by operating activities:Trade
      receivables, net
            
            
            255,153
            
            
            
            (620,159
            )Inventories
            
            
            (430,489
            )
            
            
            (77,394
            )Advances
      to suppliers
            
            
            (953,755
            )
            
            
            964,951Prepayments
            
            
            377,494
            
            
            
            383,008Tender
      deposits
            
            
            94,457
            
            
            
            -Travel
      advances to shareholders
            
            
            (18,699
            )
            
            
            (39,137
            )Advances
      to employees
            
            
            98,741
            
            
            
            (398,153
            )Accounts
      payable
            
            
            652,243
            
            
            
            (254,484
            )Income
      tax payable
            
            
            (393,739
            )
            
            
            118,380Turnover
      and other taxes
            
            
            (317,470
            )
            
            
            85,220Loans
      from unrelated parties
            
            
            -
            
            
            
            1,572,360Amount
      due from a director
            
            
            -
            
            
            
            (726,133
            )Customers
      deposits
            
            
            202,073
            
            
            
            (216,932
            )Accrued
      liabilities
            
            
            (8,336
            )
            
            
            36,341Other
      payables
            
            
            (172,370
            )
            
            
            (7,113
            )Net
      cash provided by operating activities
            
            $
            922,481
            
            
            $
            2,572,133Cash
      flows from investing activitiesAcquisition
      of subsidiary, net of cash acquired
            
            $
            (7,652,252
            )
            
            $
            -Reversal
      of deposit for acquisition of subsidiary
            
            
            7,725,445
            
            
            
            -Purchase
      of technology-based designs
            
            
            (3,505,390
            )
            
            
            -Purchase
      of intangibles assets
            
            
            (485,275
            )
            
            
            -Purchase
      of plant and equipment
            
            
            (10,051
            )
            
            
            (939,630
            )Used
      of restricted cash
            
            
            22,320
            
            
            
            23,095Deposit
      for acquisition of computer software
            
            
            -
            
            
            
            (1,281,650
            )Net
      cash used in investing activities
            
            $
            (3,905,203
            )
            
            $
            (2,198,185
            )Cash
      flows from financing activities
            
            $
            -
            
            
            $
            -Net
      cash provided by financing activities
            
            $
            -
            
            
            $
            -




See notes
to consolidated financial statements




6




SUNWAY
      GLOBAL INC.CONSOLIDATED
      STATEMENTS OF CASH FLOWS (Continued)FOR
      THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008(Stated
      in US Dollars)(Unaudited)





Three
      months ended March 31,2009
            
            
            2008Net
      in cash and cash equivalents sourced
            
            $
            (2,982,722
            )
            
            $
            373,948Effect
      of foreign currency translation oncash
      and cash equivalents
            
            
            5,212
            
            
            
            262,621Cash
      and cash equivalents–beginning of year
            
            
            15,189,941
            
            
            
            5,820,100Cash
      and cash equivalents–end of year
            
            $
            12,212,431
            
            
            $
            6,456,669





Supplementary
      cash flow information:Tax
      paid
            
            $
            630,304
            
            
            $
            157,694Interest
      received
            
            
            23,577
            
            
            
            143





Supplemental
non-cash disclosures:





On
January 16, 2009, the Company acquired 100% interests in Liheng Enterprise
Company Limited, for a consideration of $7,725,445. The deposit for the
acquisition was classified as “Deposit for the acquisition of subsidiary” as at
December 31, 2008. The following represents the fair value of assets purchased
assumed at the acquisition date:





Cash
      and cash equivalents
            
            $
            73,193Property,
      plant and equipment
            
            
            955,208Land
      use rights
            
            
            1,133,323Other
      receivables
            
            
            1,127,949Turnover
      and other taxes
            
            
            28,477Other
      payables
            
            
            (424,091
            )Net
      assets acquired
            
            $
            2,894,059





Share
      percentage
              
              
              100
              %Consideration
              
              $
              7,725,445Less:
      Net assets acquired
              
              
              (2,894,059
              )Goodwill
              
              $
              4,831,386Consideration
              
              $
              7,725,445Cash
      acquired
              
              
              (73,193
              )Net
      cash consideration paid
              
              $
              7,652,252





See notes
to consolidated financial statements





7





SUNWAY GLOBAL
INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008


(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.





On
January 16, 2009, World Through (BVI) acquired Liheng Enterprise Company Limited
(“Liheng”) as its wholly-owned subsidiary. Liheng was incorporated in PRC on
June 6, 2003.





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.





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 (“US GAAP”) 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, 2009 AND 2008


(Stated
in US Dollars)(Unaudited)





2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)





(a)
            Method
      of Accounting (Continued)





The
interim results of operations are not necessarily indicative of the results to
be expected for the fiscal period ending March 31, 2009. The Company’s
consolidation balance sheet as of December 31, 2008 has been taken from the
Company’s consolidation balance sheet as of the date. All other financial
statements contained herein are unaudited and, in the opinion of management,
contain all adjustments (consisting only of normal recurring accruals) necessary
for a fair presentation of financial position, results of operations and cash
flows for the period presented.





The
preparation of financial statements in conformity with US GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. This basis of accounting differs in certain material respects from
that used for the preparation of the books of account of the Company’s principal
subsidiaries, which are prepared in accordance with the accounting principles
and the relevant financial regulations applicable to enterprises with limited
liabilities established in the PRC, the accounting standards used in the places
of their domicile. The accompanying condensed interim consolidated financial
statements reflect necessary adjustments not recorded in the books of account of
the Company's subsidiaries to present them in conformity with US
GAAP.





(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 five subsidiaries since its reverse-merger on June 6, 2007. The
detailed identities of the consolidating subsidiaries would have been as
follows:





Name of subsidiaries
            
            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%Liheng
      Enterprise Company Limited
            
            PRC
            
            100%




*Note:
Deemed variable interest entity
  9




SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008


(Stated
in US Dollars)(Unaudited)





2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)





(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.





(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)
            Goodwill





Goodwill
represents the excess of the cost of an acquisition over the fair value of the
net acquired identifiable assets at the date of acquisition. No amortization is
provided.





Goodwill
is tested annually for impairment. During the periods, no impairment is
made.





(g)
            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.





10





SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008


(Stated
in US Dollars)(Unaudited)





2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)





(h)
            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
      yearsMoldings
              10
      yearsComputer
      software
              3 -
      10 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.





(i)
            Maintenance
      and repairs





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





(j)
            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.





(k)
            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.





11





SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008


(Stated
in US Dollars)(Unaudited)





2.    SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





(l)
            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.





(m)
            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, 2009
                
                
                December
      31, 2008Bank
      of Communications, Branch of DaqingCity
      Economic Zone
                
                $
                11,858,175
                
                
                $
                9,606,188Daqing
      City Commercial Bank
                
                
                -
                
                
                
                4,536,667Agricultural
      Bank of China
                
                
                82,434
                
                
                
                930,332China
      Construction Bank, Bejing Branch
                
                
                180,115
                
                
                
                -HSBC
                
                
                70,148
                
                
                
                109,151Cash
      on hand
                
                
                21,559
                
                
                
                7,603$
                12,212,431
                
                
                $
                15,189,941


(n)
            Restricted
      cash





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





(o)
            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 4 installments. Deposit of 30% is received from client when the
contract is signed. Second payment of 30% is received when the project
commenced. Third payment of 35% is received after the construction is completed
within 4 months. The final sum of the remaining portion is received after the
construction is completed until one year.




12




SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008


(Stated
in US Dollars)(Unaudited)





2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)





(p)
            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.





(q)
            Cost
      of net revenues





Cost of
net revenues 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.





(r)
            Leases





The Group
did not have lease which met the criteria of capital lease. Leases which do not
qualify as capital lease are classified as operating lease. Operating lease
rental payment included in general and administrative expenses were $26,333 and
$4,853 and cost of sales were $6,297 and nil for the three months ended March
31, 2009 and 2008 respectively.





(s)
            Advertising





The Group
expensed all advertising costs as incurred.  Advertising expenses
included in selling expenses were nil and $20,979 for the three months ended
March 31, 2009 and 2008 respectively.





(t)
            Shipping
      and handling





All
shipping and handling are expensed as incurred.  Shipping and handling
expenses included in selling expenses, general and administrative expenses, cost
of net revenues and were $5,728 and $3,881 for the three months ended March 31,
2009 and 2008 respectively.





(u)
            Research
      and development





All
research and development costs are expensed as incurred. The research and
development costs included in general and administrative expenses were $20,534
and $377 for the three months ended March 31, 2009 and 2008
respectively.





(v)
            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 and selling expenses were $26,719 and $10,118 for the three months
ended March 31, 2009 and 2008 respectively.




13





SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008


(Stated
in US Dollars)(Unaudited)





2.    SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





(w)
            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.





(x)
            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, Beijing
Sunway and Liheng 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, 2009
            
            
            December
      31, 2008
            
            
            March
      31, 2008Twelve
      months endedRMB
      : USD exchange rate
            
            
            -
            
            
            
            6.8542
            
            
            
            -Three
      months endedRMB
      : USD exchange rate
            
            
            6.8456
            
            
            
            -
            
            
            
            7.0222Average
      three months endedRMB
      : USD exchange rate
            
            
            6.8466
            
            
            
            -
            
            
            
            7.1757




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.
  14




SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008


(Stated
in US Dollars)(Unaudited)





2.    SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





(y)
            Statutory
      reserves





As
stipulated by the PRC’s Company Law and as provided in the SWT, Sunway and
Liheng’s Articles of Association, SWT, Sunway and Liheng’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; and


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





(z)
            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.





(aa)
            Recent
      accounting pronouncements





In March
2008, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standard (“SFAS”) No. 161 “Disclosures about Derivative Instruments
and Hedging Activities”. SFAS 161 is intended to improve financial reporting
about derivative instruments and hedging activities by requiring enhanced
disclosures to enable investors to better understand their effects on an
entity’s financial position, financial performance, and cash flows. It is
effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008, with early application encouraged. The
Company is currently evaluating the impact of SFAS 161 on its consolidated
financial statements but does not expect it to have a material
effect.





In April
2008, the FASB issued FASB Staff Position (FSP) FAS 142-3, Determination of the
Useful Life of Intangible Assets, which amends the factors that should be
considered in developing renewal or extension assumptions used to determine the
useful life of a recognized intangible asset under FASB Statement No. 142,
Goodwill and Other Intangible Assets. This Staff Position is effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and interim periods within those fiscal years. Early adoption is prohibited.
Application of this FSP is not currently applicable to the Company as the
Company’s intangible assets consist of land used rights which has a fixed useful
life of 47 years.





15





SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008


(Stated
in US Dollars)(Unaudited)





2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)





(aa)   
Recent accounting pronouncements





In May
2008, the FASB issued SFAS No. 163, Accounting for Financial Guarantee Insurance
Contracts, an interpretation of FASB Statement No. 60 (SFAS
163).  This statement clarifies accounting for financial guarantee
insurance contracts by insurance enterprises under FASB Statement No. 60,
Accounting and Reporting by Insurance Enterprises.  SFAS 163 is
effective for fiscal years and interim periods within those years, beginning
after December 15, 2008.  Because the Company does not issue financial
guarantee insurance contracts, it does not expect the adoption of this standard
to have an effect on its financial position or results of
operations.





In May
2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted
Accounting Principles. SFAS 162 identifies the sources of accounting principles
and the framework for selecting the principles to be used in the preparation of
financial statements of nongovernmental entities that are presented in
conformity with GAAP. SFAS 162 directs the GAAP hierarchy to the entity, not the
independent auditors, as the entity is responsible for selecting accounting
principles for financial statements that are presented in conformity with GAAP.
SFAS 162 is effective 60 days following the SEC's approval of the Public Company
Accounting Oversight Board amendments to remove the GAAP hierarchy from the
auditing standards. SFAS 162 is not expected to have a material impact on the
Company’s financial statements.





16





SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008


(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, 2009 and December 31,
2008. The Group performs ongoing evaluations of its cash position and credit
evaluations to ensure collections and minimize losses.





As of
March 31, 2009 and December 31, 2008, 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, 2009 and 2008, 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 31,2009
            
            
            2008Customer
      B
            
            $
            398,738
            
            
            $
            378,799Customer
      E
            
            
            -
            
            
            
            448,577Customer
      I
            
            
            -
            
            
            
            541,141Customer
      J
            
            
            -
            
            
            
            463,530Customer
      K
            
            
            552,099
            
            
            
            -Customer
      L
            
            
            350,539
            
            
            
            -





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





March
      31, 2009
            
            
            December
      31, 2008Customer
      A
            
            $
            -
            
            
            $
            499,583Customer
      B
            
            
            277,549
            
            
            
            -Customer
      C
            
            
            -
            
            
            
            387,263Customer
      D
            
            
            358,917
            
            
            
            -Customer
      E
            
            
            498,043
            
            
            
            396,822Customer
      F
            
            
            300,459
            
            
            
            371,218Customer
      G
            
            
            -
            
            
            
            325,129Customer
      H
            
            
            410,190
            
            
            
            -


17


SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
 (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.
              TRADE
      RECEIVABLES, NET
  March
      31, 2009
              
              
              December
      31, 2008Trade
      receivables, gross
              
              $
              2,710,864
              
              
              $
              2,962,333Provision
      for doubtful debts
              
              
              (8,424
              )
              
              
              (8,414
              )$
              2,702,440
              
              
              $
              2,953,919
  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, 2009 and December 31, 2008 is as follows:
  March
      31, 2009
              
              
              December
      31, 2008Balance
      at beginning of period/year
              
              $
              8,414
              
              
              $
              7,884Foreign
      exchange adjustment
              
              
              10
              
              
              
              530Balance
      at end of period/year
              
              $
              8,424
              
              
              $
              8,414
 
 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.
 
 6.
              TRAVEL
      ADVANCES TO SHAREHOLDERS
 
 Travel
advances were made to 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, 2009
              
              
              December
      31, 2008Bo
      Liu
              
              $
              33,020
              
              
              $
              23,495Deli
      Liang
              
              
              24,463
              
              
              
              15,238$
              57,483
              
              
              $
              38,733
  7.
              ADVANCES
      TO EMPLOYEES
 
 Advances
to employees are advances for purchases and traveling. They are unsecured,
interest free and repayable on demand.
  18
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
 (Stated
in US Dollars)(Unaudited)
 
 8.
              INVENTORIES
 
 Inventories
comprise the followings:
  March
      31, 2009
              
              
              December
      31, 2008Finished
      goods
              
              $
              459,889
              
              
              $
              218,448Work
      in progress
              
              
              41,187
              
              
              
              188,855Raw
      materials
              
              
              520,956
              
              
              
              183,435$
              1,022,032
              
              
              $
              590,738
 
 9.
              PROPERTY,
      PLANT AND EQUIPMENT, NET
 
 Property,
plant and equipment, net comprise the followings:
  March
      31, 2009
              
              
              December
      31, 2008At
      costBuildings
              
              $
              1,449,221
              
              
              $
              1,447,402Machinery
      and equipment
              
              
              1,119,996
              
              
              
              1,116,941Moldings
              
              
              4,160,819
              
              
              
              4,155,598Computer
      software
              
              
              2,098,260
              
              
              
              2,073,181Office
      equipment and motor vehicles
              
              
              369,799
              
              
              
              288,736$
              9,198,095
              
              
              $
              9,081,858Less:
      accumulated depreciation
              
              
              (4,264,904
              )
              
              
              (4,011,987
              )$
              4,933,191
              
              
              $
              5,069,871Construction
      in progress
              
              
              867,970
              
              
              
              -$
              5,801,161
              
              
              $
              5,069,871
 
 Construction
in progress represented the office and warehouse that were substantially
completed as at March 31, 2009. As at March 31, 2009, the capital commitment
outstanding was immaterial.
 
 Depreciation
is included in the statement of income and as follows:
 
 For
      the three months ended March 31,2009
              
              
              2008Cost
      of net revenues
              
              $
              219,089
              
              
              $
              163,266General
      and administrative expenses
              
              
              11,702
              
              
              
              14,421Selling
      expenses
              
              
              9,653
              
              
              
              -$
              240,444
              
              
              $
              177,687
  19
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
 (Stated
in US Dollars)(Unaudited)
 
 10.
              INTANGIBLE
      ASSETS, NET
 
 Intangible
assets, net are as follows:
  March
      31, 2009
              
              
              December
      31, 2008Land
      use rights, at cost
              
              $
              2,484,712
              
              
              $
              1,354,308Technology-based
      design, at cost
              
              
              8,519,706
              
              
              
              6,320,577$
              11,004,418
              
              
              $
              7,674,885Less:
      accumulated amortization
              
              
              (1,301,442
              )
              
              
              (1,098,116
              )$
              9,702,976
              
              
              $
              6,576,769
 
 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.
 
 The Group
acquired the rights to use a parcel of land totaling 9,082 square meters, for a
consideration of $89,552 (RMB613,035), located at Qingdao Hi-Tech Industry
Development Zone, Qingdao, Shandong in the People’s Republic of China for a term
of 48 years from November 3, 2006 to July 24, 2053. The land has been used to
build the Liheng’s facility.
 
 The Group
acquired the rights to use a parcel of land totaling 10,841 square meters, for a
consideration of $ 106,709 (RMB730,485), located at Qingdao Hi-Tech Industry
Development Zone, Qingdao, Shandong in the People’s Republic of China. The land
has been used to build the Liheng’s facility. We already paid fully in cash but
the issuance of land certificate is in progress. It is believed that the land
certificate will be issued within the current year.
  Amortization
expense included in the general and administrative expenses for the three
months ended
2009 and 2008 were $253,803 and $196,280 respectively.
 
 11.
              GOODWILL
 
 Goodwill
represents the excess of the cost of the purchases over the fair value of the
net acquired identifiable assets at the date of acquisition. Goodwill is related
to the acquisition of Liheng Enterprise Company Limited on January 16, 2009
(Please also see Note 19). Management annually reviews the carrying value of
goodwill using the same of the discounted cash flows to determine if an
impairment charge is necessary. To date, the Company determined no impairment is
needed.
  20


SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
 (Stated
in US Dollars)(Unaudited)
 
 12.
              EXPECTED
      WARRANTY LIABILITIES
  An
analysis of the expected warranty liabilities as at March 31, 2009 and December
2008 is as follows:
 
 March
      31, 2009
              
              
              December
      31, 2008Balance
      at beginning of period/year
              
              $
              50,396
              
              
              $
              55,351Addition
      of warranty liabilities
              
              
              -
              
              
              
              -Warranty
      expense for the year
              
              
              -
              
              
              
              (8,533
              )Foreign
      currency difference
              
              
              64
              
              
              
              3,578Balance
      at end of period/year
              
              $
              50,460
              
              
              $
              50,396
 
 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 purchases 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 are 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.
  21


SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008


(Stated
in US Dollars)(Unaudited)





13.
            SERIES
      B CONVERTIBLE PREFERRED STOCK AND ASSOCIATED
  WARRANTS




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.




Under the
agreement, Warrant J was expired on June 5, 2008. On that day, Vision
Opportunity Master Fund Ltd. converted all the Warrant J, totally 4,362,416
shares into 4,362,416 of common stock.




On
February 7, 2008, 12 shareholders of Preferred Series A converted 228,530 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.




On June
18, 2008, Columbia China Capital Group, Inc. converted 4,938 shares of Preferred
Series B into 148,140 shares of common stock.




On
November 10, 2008, Columbia China Capital Group, Inc. converted the Warrant J,
totally 53,691 shares into 53,691 of common stock.




22




SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
 (Stated
in US Dollars)(Unaudited)
 
 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 31,2009
                
                
                2008Earnings:Earnings
      for the purpose of basic earnings per share
                
                $
                1,042,931
                
                
                $
                1,377,411Effect
      of dilutive potential common stock
                
                
                -
                
                
                
                -Earnings
      for the purpose of dilutive earnings per share
                
                $
                1,042,931
                
                
                $
                1,377,411Number
      of shares:Weighted
      average number of common stock for the purpose of basic earnings per
      share
                
                
                18,499,736
                
                
                
                8,360,349Effect
      of dilutive potential common stock-conversion
      of Series Aconvertible
      preferred stock
                
                
                -
                
                
                
                5,575,140-conversion
      of Series Bconvertible
      preferred stock
                
                
                4,814,820
                
                
                
                4,962,960-conversion
      of Warrant Series A
                
                
                3,189,780
                
                
                
                2,520,496-conversion
      of Warrant Series B
                
                
                1,322,867
                
                
                
                885,551-conversion
      of Warrant Series J
                
                
                -
                
                
                
                2,623,161-conversion
      of Warrant Series C
                
                
                2,676,941
                
                
                
                2,057,343-conversion
      of Warrant Series D
                
                
                1,074,010
                
                
                
                657,747Weighted
      average number of common stock for the purpose of dilutive earnings per
      share
                
                
                31,578,154
                
                
                
                27,642,747
  23
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
 (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, Sunway and Liheng.
(see note 1).
 
 SWT,
Sunway and Liheng, 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 31,2009
              
              
              2008U.S.
      statutory rate
              
              
              34
              %
              
              
              34
              %Foreign
      income not recognized in the U.S.
              
              
              (34
              %)
              
              
              (34
              %)PRC
      Enterprise Income Tax
              
              
              25
              %
              
              
              25
              %Tax
      holiday
              
              
              (10
              %)
              
              
              (10
              %)Provision
      for income tax
              
              
              15
              %
              
              
              15
              %
 
 The
provision for income taxes consists of the following:
 
 Three
      months ended March 31,2009
              
              
              2008Current
      tax – PRC EIT
              
              $
              207,996
              
              
              $
              273,542Deferred
      tax provision
              
              
              -
              
              
              
              -Income
      tax expenses
              
              $
              207,996
              
              
              $
              273,542
  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 receivables, 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.
  24
 SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
 (Stated
in US Dollars)(Unaudited)
 
 17.
              COMMITMENTS
      AND CONTINGENCIES
 
 The Group
has entered into a tenancy agreement for factory expiring through 2010. Total
rental expenses for the months ended March 31, 2009 and for the year ended
December 31, 2008 amounted to $32,630 and $70,922 respectively.
 
 As at
March 31, 2009, the Group’s commitments for minimum lease payments under these
leases for the next one year and thereafter are as follows:
  March
      31,2010
              
              $
              70,0012011
      and thereafter
              
              
              -$
              70,001
  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 are as follows:
  For
      the three months ended March 31, 2009
              
              Workstation
              
              
              Workstation
              
              
              WorkstationType
      A
              
              
              Type
      B
              
              
              Type
      C
              
              
              SADP
              
              
              ConsolidatedNet
      revenues
              
              $
              1,088,862
              
              
              $
              368,066
              
              
              $
              1,476,645
              
              
              $
              -
              
              
              $
              2,933,573Cost
      of netrevenues
              
              
              (307,439
              )
              
              
              (101,667
              )
              
              
              (484,874
              )
              
              
              -
              
              
              
              (893,980
              )$
              781,423
              
              
              $
              266,399
              
              
              $
              991,771
              
              
              $
              -
              
              
              $
              2,039,593
 
 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
 
 25
 
 SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
 (Stated
in US Dollars)(Unaudited)
 
 18.
              SEGMENT
      INFORMATION (Continued)
 
 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.
 
 19.
              ACQUISITION
 
 In order
to expand, on August 31, 2008, the Group entered an agreement with a third
party, Liheng Enterprise Company Limited, to acquire its 100% interest of it,
for a cash consideration of approximately $7.29 million (RMB$50,000,000). The
whole amount of $7,725,445 was paid and classified as “Deposit for the
acquisition of subsidiary” as at December 31, 2008. The transaction was planned
to be finished at December 1, 2008, but due to the PRC authority processing
delay, was completed on January 16, 2009.
 
 Details
of net assets acquired and goodwill are as follows:
  Purchase
      consideration
              
              $
              7,725,445Less:
      Fair value of net assets acquired (see below)
              
              
              (2,894,059
              )Goodwill
              
              $
              4,831,386
 
 The
assets and liabilities arising from the acquisition, provisionally determined,
are as follows:
 
 Fair
      valueCash
      and cash equivalents
              
              $
              73,193Property,
      plant and equipment
              
              
              955,208Land
      use rights
              
              
              1,133,323Other
      receivables
              
              
              1,127,949Turnover
      and other taxes
              
              
              28,477Other
      payables
              
              
              (424,091
              )Net
      assets acquired
              
              $
              2,894,059
 
 26
  SUNWAY
      GLOBAL INC.NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSFOR
      THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008(Stated
      in US Dollars)(Unaudited)
 
 19.
              ACQUISITION
      (Continued)
 
 The
following tabulations were retroactive restatements of pro forma consolidated
income statements for the years ended December 31, 2008.  The
retroactive restatements were based on the assumption that the acquisition of
Liheng Enterprise Company Limited was made at the beginning of 2009 for the
purpose of comparative analysis.
 
 SUNWAY
GLOBAL INC
 UNAUDITED
PRO FORMA CONSOLIDATED BALANCE SHEET
 AS
OF DECEMBER 31, 2008
 
 Registrant
                (Historical)
              
              
              Target
                (Historical)
              
              
              Pro forma
                adjustments
              
              
              Pro forma
                CombinedASSETSCurrent
      assetsCash
      and cash equivalents
              
              $
              15,189,941
              
              
              $
              869
              
              
              $
              
              
              
              $
              15,190,810Trade
      receivables, net
              
              
              2,953,919
              
              
              
              -
              
              
              
              
              
              
              
              2,953,919Inventories
              
              
              590,738
              
              
              
              -
              
              
              
              
              
              
              
              590,738Advances
      to suppliers
              
              
              547,952
              
              
              
              -
              
              
              
              
              
              
              
              547,952Tender
      deposits
              
              
              112,735
              
              
              
              -
              
              
              
              
              
              
              
              112,735Travel
      advances toshareholders
              
              
              38,733
              
              
              
              -
              
              
              
              
              
              
              
              38,733Advances
      to employees
              
              
              429,804
              
              
              
              -
              
              
              
              
              
              
              
              429,804Advances
      to a shareholder
              
              
              -
              
              
              
              1,074,640
              
              
              
              (432,298
              )
              
              
              642,342Other
      receivables
              
              
              -
              
              
              
              6,954
              
              
              
              
              
              
              
              6,954Total
      current assets
              
              $
              19,863,822
              
              
              $
              1,082,463
              
              
              $
              
              
              
              $
              20,513,987Restricted
      cash
              
              $
              378,366
              
              
              $
              -
              
              
              $
              
              
              
              $
              378,366Amount
      due from arelated company
              
              
              830
              
              
              
              -
              
              
              
              
              
              
              
              830Property,
      plant andequipment, net
              
              
              5,069,871
              
              
              
              555,005
              
              
              
              
              
              
              
              5,624,876Intangible
      assets, net
              
              
              6,576,769
              
              
              
              196,014
              
              
              
              
              
              
              
              6,772,783Deposit
      for acquisitionof computer software
              
              
              1,750,751
              
              
              
              -
              
              
              
              
              
              
              
              1,750,751Deposit
      for acquisitionof subsidiary
              
              
              7,725,445
              
              
              
              -
              
              
              
              (7,725,445
              )
              
              
              -Goodwill
              
              
              -
              
              
              
              -
              
              
              
              6,598,351
              
              
              
              6,598,351TOTAL
      ASSETS
              
              $
              41,365,854
              
              
              $
              1,833,482
              
              
              $
              
              
              
              $
              41,639,944
  27
  SUNWAY
      GLOBAL INC.NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSFOR
      THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008(Stated
      in US Dollars)(Unaudited)
 
 19.
              ACQUISITION
      (Continued)
  SUNWAY
GLOBAL INC
 UNAUDITED
PRO FORMA CONSOLIDATED BALANCE SHEET
 AS
OF DECEMBER 31, 2008
 
 Registrant
                (Historical)
              
              
              Target
                (Historical)
              
              
              Pro forma
                adjustments
              
              
              Pro forma
                CombinedLIABILITIES
      ANDSTOCKHOLDERS’ EQUITYCurrent
      liabilitiesShort-term
      bank loans
              
              $
              -
              
              
              $
              277,202
              
              
              $
              
              
              
              $
              277,202Accounts
      payable
              
              
              59,912
              
              
              
              25,298
              
              
              
              
              
              
              
              85,210Income
      tax payable
              
              
              632,893
              
              
              
              (28,410
              )
              
              
              
              
              
              
              604,483Turnover
      and other taxes
              
              
              406,839
              
              
              
              -
              
              
              
              
              
              
              
              406,839Expected
      warrantyliabilities
              
              
              50,396
              
              
              
              -
              
              
              
              
              
              
              
              50,396Accrued
      liabilities
              
              
              301,461
              
              
              
              -
              
              
              
              
              
              
              
              301,461Other
      payables
              
              
              15,168
              
              
              
              432,298
              
              
              
              (432,298
              )
              
              
              15,168Total
      current liabilities
              
              $
              1,466,669
              
              
              $
              706,388
              
              
              $
              
              
              
              $
              1,740,759TOTAL
      LIABILITIES
              
              $
              1,466,669
              
              
              $
              706,388
              
              
              $
              
              
              
              $
              1,740,759Commitments
      andcontingencies
              
              $
              -
              
              
              $
              -
              
              
              $
              
              
              
              $
              -
 
 28
  SUNWAY
      GLOBAL INC.NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSFOR
      THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008(Stated
      in US Dollars)(Unaudited)
 
 19.
              ACQUISITION
      (Continued)
 
 SUNWAY
GLOBAL INC
 UNAUDITED
PRO FORMA CONSOLIDATED BALANCE SHEET
 AS
OF DECEMBER 31, 2008
  Registrant
                  (Historical)
                
                
                Target
                  (Historical)
                
                
                Pro forma
                  adjustments
                
                
                Pro forma
                  CombinedSHAREHOLDERS’
      EQUITYSeries
      B convertible preferred stock at $0.000001 par value;400,000 shares
      authorized; 160,494 shares issued
    and  outstanding
                
                $
                1
                
                
                $
                -
                
                
                $
                
                
                
                $
                1Common
      Stock at $0.000001 par value;100,000,000 shares authorized,
      18,499,736shares issued and outstanding
                
                
                2
                
                
                
                1,237,076
                
                
                
                (1,237,076
                )
                
                
                2Additional
      paid-in capital
                
                
                22,679,965
                
                
                
                -
                
                
                
                
                
                
                
                22,679,965Statutory
      reserves
                
                
                2,127,978
                
                
                
                -
                
                
                
                
                
                
                
                2,127,978Retained
      earnings/ (accumulated losses)
                
                
                12,247,049
                
                
                
                (109,982
                )
                
                
                109,982
                
                
                
                12,247,049Accumulated
      other comprehensive income
                
                
                2,844,190
                
                
                
                -
                
                
                
                
                
                
                
                2,844,190$
                39,899,185
                
                
                $
                1,127,094
                
                
                $
                
                
                
                $
                39,899,185TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                
                $
                41,365,854
                
                
                $
                1,833,482
                
                
                $
                
                
                
                $
                41,639,944
  29
 
 SUNWAY
      GLOBAL INC.NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSFOR
      THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008(Stated
      in US Dollars)(Unaudited)
 
 19.
              ACQUISITION
      (Continued)
 
 SUNWAY
GLOBAL INC
 UNAUDITED
PRO FORMA CONSOLIDATED INCOME STATEMENTS
 FOR
THE YEAR ENDED DECEMBER 31, 2008
 
 Registrant
                (Historical)
              
              
              Target
                (Historical)
              
              
              Pro forma
                adjustments
              
              
              Pro forma
                CombinedNet
      revenues
              
              $
              19,845,882
              
              
              $
              -
              
              
              $
              
              
              
              $
              19,845,882Cost
      of net revenues
              
              
              (5,634,143
              )
              
              
              -
              
              
              
              
              
              
              
              (5,634,143
              )Gross
      profit
              
              $
              14,211,739
              
              
              $
              -
              
              
              $
              
              
              
              $
              14,211,739Selling
      expenses
              
              
              (425,050
              )
              
              
              -
              
              
              
              
              
              
              
              (425,050
              )General
      andadministrative expenses
              
              
              (3,068,027
              )
              
              
              (5,167
              )
              
              
              
              
              
              
              (3,073,194
              )Income(loss)
      fromoperation
              
              $
              10,718,662
              
              
              $
              (5,167
              )
              
              $
              
              
              
              $
              10,713,495Interest
      income
              
              
              66,935
              
              
              
              244
              
              
              
              
              
              
              
              67,179Interest
      expenses
              
              
              -
              
              
              
              (27,229
              )
              
              
              
              
              
              
              (27,229
              )Income(loss) beforeincome taxes
              
              $
              10,785,597
              
              
              $
              (32,152
              )
              
              $
              
              
              
              $
              10,753,445Income
      taxes
              
              
              (1,726,828
              )
              
              
              -
              
              
              
              
              
              
              
              (1,726,828
              )Net
      income(loss)
              
              $
              9,058,769
              
              
              $
              (32,152
              )
              
              $
              
              
              
              $
              9,026,617Other
      comprehensive income income:Foreign
      currencytranslation adjustment
              
              
              1,663,902
              
              
              
              -
              
              
              
              
              
              
              
              1,663,902Comprehensiveincome(loss)
              
              $
              10,722,671
              
              
              $
              (32,152
              )
              
              $
              
              
              
              $
              10,690,519
 
 30
  SUNWAY
      GLOBAL INC.NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSFOR
      THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008(Stated
      in US Dollars)(Unaudited)
 
 19.
              ACQUISITION
      (Continued)
 
 SUNWAY
GLOBAL INC
 UNAUDITED
PRO FORMA CONSOLIDATED INCOME STATEMENTS
 FOR
THE YEAR ENDED DECEMBER 31, 2008
 
 Earnings
      per common share-
      Basic
              
              $
              0.60-
      Fully diluted
              
              $
              0.31Common
      shares outstanding-
      Basic
              
              
              15,127,645-
      Fully diluted
              
              
              28,870,595
 
 31
 
 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
  Since
June 27, 2007, the Company has operated as 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. Now
our Company is the only producer of two products in the PRC. We have served
approximately 300 customers in the PRC from our facilities in Daqing. We generate our revenue from sales in two product
categories: pneumatic transport systems (“PTS”) and medicine dispensing systems
(“SADP”).
  Affected
by the financial crisis and affected by equivocal reform of the medical
institutions in the PRC, bring about hospital’s investment declines, the company
sales declined quickly in the first quarter of 2009, but we believe the global
liquidity crisis will affect all businesses. However, our strong balance sheet
and liquidity position should allow us to not only weather the current economic
environment but potentially benefit and continue to execute growth strategies
and pursue the numerous opportunities.
 
 This
discussion and analysis focuses on the business results of Daqing Sunway,
comparing its results in the three months period ended March 31, 2009 to the
three months period ended March 31, 2008.
 
 Three-month
periods ended March 31, 2009 and March 31, 2008
 
 Results
of Operations
 
 In the
three months ended March 31, 2009, the company’s net revenues, gross profit and
net income decreased significantly as compared with the same period in the same
period of 2008, but operating expenses increased slightly during these periods.
These decreases are primarily attributable to (i) adverse effects of the global
financial crisis; (ii) a decline in hospital-related investment due to expected
governmental reforms requiring pharmacies to be operated outside of and separate
from hospitals in the PRC; and (iii) the departure of one of our sales managers,
who left to set up his own company.
 
 The
following table summarizes the results of our operations during the three months
ended March 31, 2009 and 2008, respectively, and provides information regarding
the dollar and percentage increase or (decrease) from the three months ended
March 31, 2009 and 2008.
  Three
      Months Ended March 31,2009
                
                
                2008
                
                
                Change
                
                Change
      rateNet
      Revenue
                
                $
                2,933,573
                
                
                $
                3,604,034
                
                
                $
                (670,461
                )
                (18.60)
                %Cost
      of net revenue
                
                $
                893,980
                
                
                $
                1,141,745
                
                
                $
                (247,765
                )
                (21.70)
                %Gross
      Profit
                
                $
                2,039,593
                
                
                $
                2,462,289
                
                
                $
                (422,696
                )
                (17.17)
                %Gross
      Margin
                
                
                69.53
                %
                
                $
                68.32
                %
                
                
                
                
                1.21
                %Operating
      Income
                
                $
                1,227,350
                
                
                $
                1,650,810
                
                
                $
                (423,460
                )
                (25.65)
                %Net
      Income
                
                $
                1,042,931
                
                
                $
                1,377,411
                
                
                $
                (334,480
                )
                (24.28)
                %Net
      profit margin
                
                
                35.55
                %
                
                
                38.22
                %
                
                
                
                
                (2.67)
                %
  4
  Net
Revenue
  Net
revenue for the three months ended March 31, 2009, which resulted entirely from
sales were $2,933,573, a decrease of 18.60% as compared with net revenue of
$3,604,034 for the three months ended March 31, 2008. In the three months ended
March 31, 2009, we sold 566 workstations, a decrease of 9.0% as compared with
622 workstations sold in the three months ended March 31, 2008. The decrease was
due primarily to three factors, (i) adverse effects of the global financial
crisis; (ii) a decline in hospital-related investment due to expected
governmental reforms requiring pharmacies to be operated outside of and separate
from hospitals in the PRC; and (iii) the departure of one of our sales managers,
who left to set up his own company.
  The following table breaks down application categories as
percentage of total net revenue.
  Three
      Months Ended March 31,2009
              
              2008sales
              
              % of total sales
              
              sales
              
              % of total salesPTS
              
              $
              2,933,573
              
              100.00
              %
              $
              3,033,859
              
              84.18
              %SADP
              
              $
              -
              
              -
              %
              $
              570,175
              
              15.82
              %Total
      net revenue
              
              $
              2,933,573
              
              100.00
              %
              $
              3,604,034
              
              100.00
              %
 
 Gross
Profit
 
 Gross
profit decreased 17.17% to $2,039,593 for the three months ended March 31, 2009,
as compared to $2,462,289 for the three months ended March 31, 2008. Our gross
profit margin rose 1.21% from 68.32% as of the three months ended March 31, 2008
to 69.53% as of the same period of 2009, mainly due to a drop in raw material
prices and lower costs of initial inventory.
 
 The table
below presents information about our gross profit for the periods
indicated:
  Three
      Months Ended March 31,2009
              
              
              2008US$
              
              
              Gross
      profitmargin
              
              
              US$
              
              
              Gross
      profitmarginGross
      Profit
              
              $
              2,039,593
              
              
              
              69.53
              %
              
              $
              2,462,289
              
              
              
              68.32
              %
 
 Income
from Operations
 
 Operating
income decreased 25.65% to $1,227,350 for the three months ended March 31,
2009, as compared with $1,650,810 for the three months ended March 31, 2008. The
decrease was primarily attributable to a drop in sales and slight increase in
operating expenses.
 
 Cost
of Net Revenue
 
 Cost of
net revenue decreased to $893,980 for the three months ended March 31, 2009,
representing a 21.70% decrease as compared with $1,141,745 for the same period
of 2008. The decrease is primarily due to a decrease in sales during this
period.
 
 The table
below presents information about our cost of net revenue for the periods
indicated:
 
 Three
      Months Ended March 31,2009
              
              
              2008
              
              ChangeCost
      of net revenue
              
              $
              893,980
              
              
              $
              1,141,745
              
              
              
              21.70
              %
 
 5
  Operating
Expenses
 
 Operating
expenses were $812,243 for the three months ended March 31, 2009, an increase of
0.09% as compared to $811,479 for the same period of 2008. The increase was
primarily attributable to two factors: (1) selling expenses increased $155,112,
or 614.62% to $180,349 in the three months ended March 31, 2009 from $25,237 for
the same period of 2008; and (2) general and administration expenses decreased
$154,348, or 19.63% to $631,894 in the three months ended March 31, 2009 from
$786,242 for the same period of 2008. In the three months ended March 31, 2009,
we decreased the salary and benefits of our management. Reflecting this change,
costs related to salary and benefits decreased 6.95%, as compared with the same
period of 2008.
 
 The table
below presents information about our operating expenses for the periods
indicated:
 
 Three Months Ended March 31,2009
              
              
              2008
              
              ChangeSelling
      expenses
              
              $
              180,349
              
              
              $
              25,237
              
              
              
              614.62
              %General
      & Administrative expenses
              
              $
              631,894
              
              
              $
              786,242
              
              
              
              (19.63
              )
      %Total
      operating expenses
              
              $
              812,243
              
              
              $
              811,479
              
              
              
              0.09
              %
 
 Net
Income
 
 Net
income was $1,042,931 for the three months ended March 31, 2009, a decrease of
24.28% from $1,377,411 for the same period of 2008. The decrease is primarily
due to the drop in sales and slight increase in operating
expenses.
 
 Earnings
Per Share
 
 Basic and
diluted earnings per share for the three months ended March 31, 2009 were $0.06
and $0.03 compared to $0.16 and $0.05 for the same period of 2008. The weighted
average number of shares outstanding to calculate basic EPS was 18,499,736 and
8,360,349 for the three months ended March 31, 2009 and March 31, 2008,
respectively. The weighted average number of shares outstanding to calculate
diluted EPS was 31,578,154 and 27,642,747 for the three months ended March 31,
2009 and March 31, 2008.
 
 
 Trade Receivables, net
 
 Trade
receivables, net decreased 8.51% to $2,702,440 as of March 31, 2009, compared
with $2,953,919 as of December 31, 2008. The decrease in trade receivables was
primarily attributable to the decrease in sales.
 
 Inventory
 
 Inventory
consists of raw materials, finished goods and work in progress. As of March 31,
2009, the recorded value of our inventory has increased 73.01% to $1,022,032
from $590,738 as of December 31, 2008. The increase is mainly due to an increase
in finished goods from $218,448 as of December 31, 2008 to $459,889 as of March
31, 2009, an increase of 110.53%. Raw material inventory increased from $183,435
as of December 31, 2008 to $520,956 as of March 31, 2009, an increase of 184.0%.
Work in progress inventory decreased from $188,855 as of December 31, 2008 to
$41,187 as of March 31, 2009, a decrease of 78.19%. The increase was primarily
attributable to management’s overestimated demands of the market.
 
 The table
below presents information about our inventory for the periods
indicated:
 
 Item
              
              March
      31, 2009
              
              
              December
      31, 2008
              
              
              ChangeFinished
      goods
              
              $
              459,889
              
              
              $
              218,448
              
              
              
              110.53
              %Work
      in progress
              
              $
              41,187
              
              
              $
              188,855
              
              
              
              (78.19
              )%Raw
    material
              
              $
              520,956
              
              
              $
              183,435
              
              
              
              184.00
              %Total
              
              $
              1,022,032
              
              
              $
              590,738
              
              
              
              73.01
              %
 
 Accounts
Payable
 
 Accounts payable amounted to $712,325
as of March 31, 2009, an increase of 1,088.95% from $59,912 as of December 31,
2008. The increase is mainly due to our management’soverestimation demant of themarket, which resulted of
an increase in purchases of raw material.
 
 6
 Liquidity
and Capital Resources
 
 We have
historically financed our operations and capital expenditures principally
through private placements of debt and equity offerings and cash provided by
operations.
 
 The table
below presents information about our cash flow for the periods
indicated:
  Three
      months ended March 31,2009
              
              
              2008
              
              
              ChangeNet
      cash provided by (used in) operating activities
              
              $
              922,481
              
              
              $
              2,572,133
              
              
              $
              (1,649,652
              )Net
      cash provided by (used in) investing activities
              
              $
              (3,905,203
              )
              
              $
              (2,198,185
              )
              
              $
              (1,707,018
              )Net
      cash provided by (used in) financing activities
              
              $
              -
              
              
              $
              -
              
              
              $
              -Effect
      of foreign currency translation on cash and cash
    equivalents
              
              $
              5,212
              
              
              $
              262,621
              
              
              $
              (257,409
              )Beginning
      cash and cash equivalent
              
              $
              15,189,941
              
              
              $
              5,820,100
              
              
              $
              9,369,841Ending
      cash and cash equivalent
              
              $
              12,212,431
              
              
              $
              6,456,669
              
              
              $
              5,755,762
  Operating Activities
 
 For the
three months ended March 31, 2009, net cash provided by operating activities was
$922,481. This was primarily attributable to our net income of $1,042,931,
adjusted by an add-back of non-cash expenses mainly consisting of depreciation
and amortization of $494,247 offset by a $614,696 decrease in working capital.
Specifically, increase in working capital was primarily due to: i) a $255,153
trade receivables decrease driven by a drop in revenue; ii) a $430,489 increase
in inventories, principally of raw material and work in progress inventory, due
to our overestimation of market demand; iii) a $953,755 increase in advances to
suppliers to buy raw materials; iv) a $551,993 decrease in prepayments, travel
advances to shareholders, other receivables, tender deposits and advances
to employees, consisting primarily of prepayments for raw materials and other
supplies in advance of shipment, working capital for sales staff and payment of
client deposits; partially offset by a $37,599 decrease in accounts payable, tax
payable, loans from unrelated parties, amount due from a director, customer
deposits, accrued liabilities and other payables.
 
 Investing
Activities
 
 For the
three months ended March 31, 2009, net cash used in investing activities was
$3,905,203 and was primarily attributable to: i) a $10,051 capital expenditure
for purchase of new plant and equipment; ii) a $485,275 capital expenditure for
purchase of new intangible assets; iii) a $3,505,390 capital expenditure for the
purchase of technology-based designs, iv) $22,320 in restricted cash; and v)
$73,193 in reversal of deposit for acquisition of subsidiary.
 
 Cash
and Cash Equivalents
 
 Our cash
and cash equivalents as at the beginning of March 31, 2009, were $15,189,941 and
decreased to $12,212,431 by the end of the period.
 
 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 8 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.
 
 Trends
 We are
not aware of any trends, events or uncertainties that have or are reasonably
likely to have a material impact on our short-term or long-term
liquidity.
 Inflation
 We
believe that inflation has not had a material or significant impact on our
revenue or our results of operations.
 
 7
 Obligations
under Material Contracts
 
 We do not
have any material contractual obligations as of March 31, 2009.
 
 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.
  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.
 
 Off-Balance
Sheet Arrangements
  We have
no off-balance sheet arrangements as of March 31, 2009.
 
 8
 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, 2009. 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.
 
 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 three
months ended March 31, 2009.  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 three months
ended March 31, 2009 that has materially affected, or is reasonably likely to
materially affect, the Company's internal controls over financial
reporting.
 
 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
  Not
Applicable.
  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
 
 None.
  9
 ITEM
5 - OTHER INFORMATION
  Except
for the pro-forma consolidated balance sheets of the Company reflecting the
January 2009 acquisition of Liheng Enterprise Company Limited and the audited
financial statements of Liheng Enterprise Company Limited thereto, which the
Company intends to file with the Commission as soon as practicable, there were
no matters required to be disclosed on Form 8-K during the three months ended
March 31, 2009 which were not disclosed on such form.
  ITEM
6 - EXHIBITS.
 
 Exhibit
      No.
              
              Description
      of Exhibit31.1
              
              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.
 
 10
  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:
        May 14, 2009
                By:
                /s/ Liu BoName:
      Liu BoTitle:
      Chief Executive Officer
  Dated:
        May 14, 2009
                By:
                /s/ Samuel ShengName:
      Samuel ShengTitle:
      Chief Financial Officer
 
 11