UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON, D.C.
20549




FORM
10-Q/A




(Mark
One)




xQUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




FOR
THE QUARTERLY PERIOD ENDED JUNE 30, 2008.




OR




oTRANSITION REPORT UNDER
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




FOR
THE TRANSITION FROM _______ TO ________.




COMMISSION
FILE NUMBER 000-27159




SUNWAY GLOBAL
INC.


(Exact
Name of Registrant as Specified in its Charter)




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





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


(Address
of principal executive offices) (Zip Code)





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




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





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




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




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




APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS


DURING
THE PRECEDING FIVE YEARS




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




APPLICABLE
ONLY TO CORPORATE ISSUERS




State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date: As of March 2, 2009, there were 18,499,736
outstanding shares of the Registrant's Common Stock, $0.0000001 par
value.







TABLE
OF CONTENTS





PagePART
      IItem
      1.
                  Financial
      Statements
                  
                  3Item
      2.
                  Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operation
                  
                  40Item
      3.
                  Quantitative
      and Qualitative Disclosures About Market Risk
                  
                  46Item
      4T
                  Controls
      and Procedures
                  
                  46PART
      IIItem
      1.
                  Legal
      Proceedings
                  
                  47Item
      1A.
                  Risk
      FactorsItem
      2.
                  Unregistered
      Sales of Equity Securities and Use of Proceeds
                  
                  47Item
      3.
                  Defaults
      Upon Senior Securities
                  
                  47Item
      4.
                  Submission
      of Matters to a Vote of Security Holders
                  
                  47Item
      5.
                  Other
      Information
                  
                  47Item
      6.
                  Exhibits
                  
                  47SIGNATURES
                  
                  48





EXPLANATORY
NOTE:





The
Registrant is hereby filing this Form 10-Q/A for the period ended June 30, 2008
to (i) restate consolidated balance sheets, consolidated income statements,
consolidated statements of stockholders’ equity and consolidated statement of
cash flows and accompanying notes and text for the six months ended June 30,
2008 as a result of the (1) incorrect par value of the Series A and B
Convertible Preferred Stock and common stock recorded; and (2) the exclusion of
the financial figures of Beijing Sunway New-force Medical Treatment Tech Co.,
Ltd., a wholly-owned subsidiary; and (ii) clarify its principles of
consolidation, accounting policies of impairment of long-lived assets,
inventories, trade receivables, revenue recognition, cash and cash equivalents
and expected warranty liabilities and the notes of organization and principal
activities, amount due from a director, Series B Convertible Preferred stock and
associated warrants, earnings per share; and (iii) reclassify part of the other
payables to customer deposits.




2




PART
I


FINANCIAL
INFORMATION




ITEM
1. FINANCIAL STATEMENTS





SUNWAY
GLOBAL INC.





FINANCIAL
STATEMENTS


FOR
THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007


(Stated
in US dollars)(Unaudited)




3




SUNWAY GLOBAL
INC.





CONTENTS
                  
                  PAGESREPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                  
                  5CONSOLIDATED
      BALANCE SHEETS
                  
                  6 -
      7CONSOLIDATED
      STATEMENTS OF INCOME
                  
                  8 -
      9CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ EQUITY
                  
                  10CONSOLIDATED
      STATEMENTS OF CASH FLOWS
                  
                  11 -
      12NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
                  
                  13 -
      39




4




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.




Report of Independent
Registered Public Accounting Firm




We have
reviewed the accompanying interim consolidated balance sheets, related
consolidated statements of income, stockholders’ equity and cash flows statement
of Sunway Global Inc. and consolidated subsidiaries as of June 30, 2008, and for
the three-month and six-month periods then ended. These interim financial
information statements are the responsibility of the company's
management.




We
conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with generally
accepted auditing standards, 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 interim financial statements for them to be in conformity
with accounting principles generally accepted in the United States of
America.




Since our
previous report dated August 14, 2008, it was determined that the consolidated
financial statements needed restatement to make corrections as described in note
19.





Hong
      Kong
            
            Albert
      Wong & Co.August
      14, 2008
            
            Certified
      Public Accountants


Except
for note 19 which is dated January 19, 2009




5




SUNWAY
      GLOBAL INC.CONSOLIDATED
      BALANCE SHEETSAS
      AT JUNE 30, 2008 AND DECEMBER 31, 2007(Stated
      in US Dollars)





Notes
                                                                                  
                                                                                  
                                                                                  June 30, 2008
                                                                                  
                                                                                  
                                                                                  December 31,
                                                                                    2007(Unaudited)
                                                                                  
                                                                                  
                                                                                  (Unaudited)ASSETSCurrent
      assetsCash
      and cash equivalents
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  $
                                                                                  15,460,208
                                                                                  
                                                                                  
                                                                                  $
                                                                                  5,820,100Trade
      receivables, net
                                                                                  
                                                                                  6
                                                                                  
                                                                                  
                                                                                  
                                                                                  2,499,943
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,525,201Inventories
                                                                                  
                                                                                  9
                                                                                  
                                                                                  
                                                                                  851,851
                                                                                  
                                                                                  
                                                                                  
                                                                                  766,933Advances
      to suppliers
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  2,058,826
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,331,159Prepayments
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  16,007
                                                                                  
                                                                                  
                                                                                  
                                                                                  125,333Tender
      deposits
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  138,176
                                                                                  
                                                                                  
                                                                                  
                                                                                  131,013Travel
      advances to shareholders
                                                                                  
                                                                                  7
                                                                                  
                                                                                  
                                                                                  
                                                                                  58,665
                                                                                  
                                                                                  
                                                                                  
                                                                                  30,824Advances
      to employees
                                                                                  
                                                                                  8
                                                                                  
                                                                                  
                                                                                  
                                                                                  473,258
                                                                                  
                                                                                  
                                                                                  
                                                                                  548,364Total
      current assets
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  $
                                                                                  21,556,934
                                                                                  
                                                                                  
                                                                                  $
                                                                                  10,278,927Amount
      due from a related company
                                                                                  
                                                                                  4
                                                                                  
                                                                                  
                                                                                  
                                                                                  830
                                                                                  
                                                                                  
                                                                                  
                                                                                  585,678Restricted
      cash
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  429,834
                                                                                  
                                                                                  
                                                                                  
                                                                                  491,049Amount
      due from a director
                                                                                  
                                                                                  5
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,088,811
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,028,474Property,
      plant and equipment, net
                                                                                  
                                                                                  10
                                                                                  
                                                                                  
                                                                                  
                                                                                  5,291,082
                                                                                  
                                                                                  
                                                                                  
                                                                                  4,449,619Intangible
      assets, net
                                                                                  
                                                                                  11
                                                                                  
                                                                                  
                                                                                  
                                                                                  6,969,843
                                                                                  
                                                                                  
                                                                                  
                                                                                  6,933,491TOTAL
      ASSETS
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  $
                                                                                  35,337,334
                                                                                  
                                                                                  
                                                                                  $
                                                                                  23,767,238LIABILITIES
      ANDSTOCKHOLDERS’
      EQUITYCurrent
      liabilitiesAccounts
      payable
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  $
                                                                                  -
                                                                                  
                                                                                  
                                                                                  $
                                                                                  245,917Income
      tax payable
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  409,847
                                                                                  
                                                                                  
                                                                                  
                                                                                  157,877Turnover
      and other taxes
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  260,027
                                                                                  
                                                                                  
                                                                                  
                                                                                  143,857Expected
      warranty liabilities
                                                                                  
                                                                                  12
                                                                                  
                                                                                  
                                                                                  
                                                                                  58,913
                                                                                  
                                                                                  
                                                                                  
                                                                                  55,351Customers
      deposits
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  4,214
                                                                                  
                                                                                  
                                                                                  
                                                                                  208,274Accrued
      liabilities
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  372,459
                                                                                  
                                                                                  
                                                                                  
                                                                                  323,464Other
      payables
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  7,904
                                                                                  
                                                                                  
                                                                                  
                                                                                  35,984Total
      current liabilities
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  $
                                                                                  1,113,364
                                                                                  
                                                                                  
                                                                                  $
                                                                                  1,170,724TOTAL
      LIABILITIES
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  $
                                                                                  1,113,364
                                                                                  
                                                                                  
                                                                                  $
                                                                                  1,170,724





See
accompanying notes to consolidated financial statements




6




SUNWAY
      GLOBAL INC.CONSOLIDATED
      BALANCE SHEETS (Continued)AS
      AT JUNE 30, 2008 AND DECEMBER 31, 2007(Stated
      in US Dollars)





Notes
                                                    
                                                    
                                                    June 30, 2008
                                                    
                                                    
                                                    December 31,
                                                      2007(Unaudited)
                                                    
                                                    
                                                    (Audited)STOCKHOLDERS’
      EQUITYSeries
      A Convertible PreferredStock
      $0.0000001 par value; 400,000 sharesauthorized;
      Nil and 228,531 sharesissued
      and outstanding at June 30, 2008and
      December 31, 2007 respectively
                                                    
                                                    
                                                    
                                                    
                                                    $
                                                    -
                                                    
                                                    
                                                    $
                                                    1Series
      B Convertible PreferredStock
      $0.0000001 par value; 400,000shares
      authorized; 160,494 and 165,432shares
      issued and outstandingat
      June 30, 2008 and December 31, 2007
                                                    
                                                    13
                                                    
                                                    
                                                    
                                                    1
                                                    
                                                    
                                                    
                                                    1Common
      stock at $0.0000001 par value;100,000,000
      shares authorized;18,446,045
      and 223,658 shares issued andoutstanding
      at June 30, 2008and
      December 31, 2007 respectively
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    2
                                                    
                                                    
                                                    
                                                    1Additional
      paid-in capital
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    22,629,965
                                                    
                                                    
                                                    
                                                    16,099,965Statutory
      reserves
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    2,127,978
                                                    
                                                    
                                                    
                                                    2,127,978Retained
      earnings
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    6,739,401
                                                    
                                                    
                                                    
                                                    3,188,280Accumulated
      other comprehensive income
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    2,726,623
                                                    
                                                    
                                                    
                                                    1,180,288$
                                                    34,223,970
                                                    
                                                    
                                                    $
                                                    22,596,514TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    $
                                                    35,337,334
                                                    
                                                    
                                                    $
                                                    23,767,238




See
accompanying notes to consolidated financial statements




7




SUNWAY
      GLOBAL INC.CONSOLIDATED
      STATEMENTS OF INCOMEFOR
      THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007(Stated
      in US Dollars)(Unaudited)





Six
      months ended June 30,2008
                                                                              
                                                                              
                                                                              2007NotesNet
      revenues
                                                                              
                                                                              18
                                                                              
                                                                              
                                                                              $
                                                                              8,090,863
                                                                              
                                                                              
                                                                              $
                                                                              5,659,211Cost
      of net revenues
                                                                              
                                                                              18
                                                                              
                                                                              
                                                                              
                                                                              (2,376,675
                                                                              )
                                                                              
                                                                              
                                                                              (1,699,615
                                                                              )Gross
      profit
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              $
                                                                              5,714,188
                                                                              
                                                                              
                                                                              $
                                                                              3,959,596Selling
      expenses
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              (98,075
                                                                              )
                                                                              
                                                                              
                                                                              (48,589
                                                                              )General
      and administrative expenses
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              (1,429,399
                                                                              )
                                                                              
                                                                              
                                                                              (665,218
                                                                              )Income
      from operation
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              $
                                                                              4,186,714
                                                                              
                                                                              
                                                                              $
                                                                              3,245,789Interest
      expenses
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              (3,292
                                                                              )Interest
      income
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              36,869
                                                                              
                                                                              
                                                                              
                                                                              1,600Income
      before income taxes
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              $
                                                                              4,223,583
                                                                              
                                                                              
                                                                              $
                                                                              3,244,097Income
      taxes
                                                                              
                                                                              15
                                                                              
                                                                              
                                                                              
                                                                              (672,462
                                                                              )
                                                                              
                                                                              
                                                                              (497,491
                                                                              )Net
      income
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              $
                                                                              3,551,121
                                                                              
                                                                              
                                                                              $
                                                                              2,746,606Net
      income per share:-Basic
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              $
                                                                              0.30
                                                                              
                                                                              
                                                                              $
                                                                              0.14-Diluted
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              $
                                                                              0.12
                                                                              
                                                                              
                                                                              $
                                                                              0.14Weighted
      average number of common stock-Basic
                                                                              
                                                                              14
                                                                              
                                                                              
                                                                              
                                                                              11,757,733
                                                                              
                                                                              
                                                                              
                                                                              19,207,455-Diluted
                                                                              
                                                                              14
                                                                              
                                                                              
                                                                              
                                                                              29,064,297
                                                                              
                                                                              
                                                                              
                                                                              19,207,455





See
accompanying notes to consolidated financial statements




8




SUNWAY
      GLOBAL INC.CONSOLIDATED
      STATEMENTS OF INCOMEFOR
      THE THREE MONTHS ENDED JUNE 30, 2008 AND 2007(Stated
      in US Dollars)(Unaudited)





Three months ended June 30,2008
                                                                  
                                                                  
                                                                  2007NotesNet
      revenues
                                                                  
                                                                  18
                                                                  
                                                                  
                                                                  $
                                                                  4,499,670
                                                                  
                                                                  
                                                                  $
                                                                  3,195,695Cost
      of net revenues
                                                                  
                                                                  18
                                                                  
                                                                  
                                                                  
                                                                  (1,236,310
                                                                  )
                                                                  
                                                                  
                                                                  (1,055,774
                                                                  )Gross
      profit
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  $
                                                                  3,263,360
                                                                  
                                                                  
                                                                  $
                                                                  2,139,921Selling
      expenses
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  (73,542
                                                                  )
                                                                  
                                                                  
                                                                  (35,122
                                                                  )General
      and administrative expenses
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  (640,909
                                                                  )
                                                                  
                                                                  
                                                                  (344,537
                                                                  )Income
      from operation
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  $
                                                                  2,548,909
                                                                  
                                                                  
                                                                  $
                                                                  1,760,262Interest
      expenses
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  (115
                                                                  )Interest
      income
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  37,152
                                                                  
                                                                  
                                                                  
                                                                  137Income
      before income taxes
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  $
                                                                  2,586,061
                                                                  
                                                                  
                                                                  $
                                                                  1,760,284Income
      taxes
                                                                  
                                                                  15
                                                                  
                                                                  
                                                                  
                                                                  (400,774
                                                                  )
                                                                  
                                                                  
                                                                  (264,367
                                                                  )Net
      income
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  $
                                                                  2,185,287
                                                                  
                                                                  
                                                                  $
                                                                  1,495,917Net
      income per share:-Basic
      and diluted
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  $
                                                                  0.14
                                                                  
                                                                  
                                                                  $
                                                                  0.08-Diluted
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  $
                                                                  0.08
                                                                  
                                                                  
                                                                  $
                                                                  0.08Weighted
      average number of common stock-Basic
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  15,155,118
                                                                  
                                                                  
                                                                  
                                                                  19,207,455-Diluted
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  28,619,524
                                                                  
                                                                  
                                                                  
                                                                  19,207,455





See
accompanying notes to consolidated financial statements




9




SUNWAY
      GLOBAL INC.CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ EQUITYFOR
      THE YEAR ENDED DECEMBER 31, 2007 AND SIX MONTHS ENDED JUNE 30,
      2008(Stated
      in US Dollars)(Unaudited)





Additional
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  AccumulatedPreferred
                                                                  
                                                                  
                                                                  Preferred
                                                                  
                                                                  
                                                                  No.
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  paid
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  otherSeries
                                                                  
                                                                  
                                                                  Series
                                                                  
                                                                  
                                                                  shares
                                                                  
                                                                  
                                                                  Common
                                                                  
                                                                  
                                                                  in
                                                                  
                                                                  
                                                                  Statutory
                                                                  
                                                                  
                                                                  Retained
                                                                  
                                                                  
                                                                  comprehensiveA
                                                                  
                                                                  
                                                                  B
                                                                  
                                                                  
                                                                  outstanding
                                                                  
                                                                  
                                                                  stock
                                                                  
                                                                  
                                                                  capital
                                                                  
                                                                  
                                                                  reserves
                                                                  
                                                                  
                                                                  earnings
                                                                  
                                                                  
                                                                  income
                                                                  
                                                                  
                                                                  TotalBalance,
      January 1, 2007
                                                                  
                                                                  $
                                                                  1
                                                                  
                                                                  
                                                                  $
                                                                  1
                                                                  
                                                                  
                                                                  
                                                                  223,658
                                                                  
                                                                  
                                                                  $
                                                                  1
                                                                  
                                                                  
                                                                  $
                                                                  4,223,632
                                                                  
                                                                  
                                                                  $
                                                                  1,124,073
                                                                  
                                                                  
                                                                  $
                                                                  4,844,680
                                                                  
                                                                  
                                                                  $
                                                                  843,205
                                                                  
                                                                  
                                                                  $
                                                                  11,035,593Reversal
      of realized gain on investment
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  (423,537
                                                                  )
                                                                  
                                                                  
                                                                  (423,537
                                                                  )Net
      income
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  6,047,505
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  6,047,505Appropriation
      to statutory reserves
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  1,003,905
                                                                  
                                                                  
                                                                  
                                                                  (1,003,905
                                                                  )
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -Issuance
      to Vision re: Debentures
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  199,200
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  199,200Issuance
      of Series B ConvertiblePreferred
      Stock
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  11,677,133
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  (6,700,000
                                                                  )
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  4,977,133Foreign
      currency translation adjustment
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  760,620
                                                                  
                                                                  
                                                                  
                                                                  760,620Balance,
      December 31,2007
                                                                  
                                                                  $
                                                                  1
                                                                  
                                                                  
                                                                  $
                                                                  1
                                                                  
                                                                  
                                                                  
                                                                  223,658
                                                                  
                                                                  
                                                                  $
                                                                  1
                                                                  
                                                                  
                                                                  $
                                                                  16,099,965
                                                                  
                                                                  
                                                                  $
                                                                  2,127,978
                                                                  
                                                                  
                                                                  $
                                                                  3,188,280
                                                                  
                                                                  
                                                                  $
                                                                  1,180,288
                                                                  
                                                                  
                                                                  $
                                                                  22,596,514Balance,
      January 1, 2008
                                                                  
                                                                  $
                                                                  1
                                                                  
                                                                  
                                                                  $
                                                                  1
                                                                  
                                                                  
                                                                  
                                                                  223,658
                                                                  
                                                                  
                                                                  $
                                                                  1
                                                                  
                                                                  
                                                                  $
                                                                  16,099,965
                                                                  
                                                                  
                                                                  $
                                                                  2,127,978
                                                                  
                                                                  
                                                                  $
                                                                  3,188,280
                                                                  
                                                                  
                                                                  $
                                                                  1,180,288
                                                                  
                                                                  
                                                                  $
                                                                  22,596,514Conversion
      of Preferred Series Ainto Common Stock
                                                                  
                                                                  
                                                                  (1
                                                                  )
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  13,711,831
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  1
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -Conversion
      of Preferred Series Binto
      Common Stock
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  148,140
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -Conversion
      of Warrant Series Jinto
      Common Stock
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  4,362,416
                                                                  
                                                                  
                                                                  
                                                                  1
                                                                  
                                                                  
                                                                  
                                                                  6,529,999
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  6,530,000Net
      income
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  3,551,121
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  3,551,121Foreign
      currency translation adjustment
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  1,546,335
                                                                  
                                                                  
                                                                  
                                                                  1,546,335Balance,
      June 30,2008
                                                                  
                                                                  $
                                                                  -
                                                                  
                                                                  
                                                                  $
                                                                  1
                                                                  
                                                                  
                                                                  
                                                                  18,446,045
                                                                  
                                                                  
                                                                  $
                                                                  2
                                                                  
                                                                  
                                                                  $
                                                                  22,629,965
                                                                  
                                                                  
                                                                  $
                                                                  2,127,978
                                                                  
                                                                  
                                                                  $
                                                                  6,739,401
                                                                  
                                                                  
                                                                  $
                                                                  2,726,623
                                                                  
                                                                  
                                                                  $
                                                                  34,223,970




See
accompanying notes to consolidated financial statements




10




SUNWAY
      GLOBAL INC.CONSOLIDATED
      STATEMENTS OF CASH FLOWSFOR
      THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007(Stated
      in US Dollars)(Unaudited)





Six
      months ended June 30,2008
                                      
                                      
                                      2007Cash
      flows from operating activitiesNet
      income
                                      
                                      $
                                      3,551,121
                                      
                                      
                                      $
                                      2,746,606Depreciation
                                      
                                      
                                      375,389
                                      
                                      
                                      
                                      458,686Amortization
                                      
                                      
                                      420,972
                                      
                                      
                                      
                                      13,697Adjustments
      to reconcile net income to net cash provided by operating
      activities:Trade
      receivables, net
                                      
                                      
                                      (851,682
                                      )
                                      
                                      
                                      (733,121
                                      )Inventories
                                      
                                      
                                      (34,545
                                      )
                                      
                                      
                                      (181,655
                                      )Advances
      to suppliers
                                      
                                      
                                      (623,758
                                      )
                                      
                                      
                                      (629,394
                                      )Prepayments
                                      
                                      
                                      114,059
                                      
                                      
                                      
                                      46,126Tender
      deposits
                                      
                                      
                                      1,233
                                      
                                      
                                      
                                      9,735Travel
      advances to shareholders
                                      
                                      
                                      (25,122
                                      )
                                      
                                      
                                      (29,819
                                      )Advances
      to employees
                                      
                                      
                                      107,267
                                      
                                      
                                      
                                      (372,507
                                      )Accounts
      payable
                                      
                                      
                                      (252,954
                                      )
                                      
                                      
                                      (16,367
                                      )Income
      tax payable
                                      
                                      
                                      234,942
                                      
                                      
                                      
                                      117,735Turnover
      and other taxes
                                      
                                      
                                      103,875
                                      
                                      
                                      
                                      -Expected
      warranty liabilities
                                      
                                      
                                      -
                                      
                                      
                                      
                                      19,634Customers
      deposits
                                      
                                      
                                      (215,385
                                      )
                                      
                                      
                                      78,924Accrued
      liabilities and other payables
                                      
                                      
                                      1,937
                                      
                                      
                                      
                                      47,447Net
      cash provided by operating activities
                                      
                                      $
                                      2,907,349
                                      
                                      
                                      $
                                      1,575,727Cash
      flows from investing activitiesPurchase
      of plant and equipment
                                      
                                      $
                                      (914,693
                                      )
                                      
                                      $
                                      (162,943
                                      )Sales
      of short term investment
                                      
                                      
                                      (434,674
                                      )
                                      
                                      
                                      -Restricted
      cash
                                      
                                      
                                      61,215
                                      
                                      
                                      
                                      (1,280,000
                                      )Advances
      to a related company
                                      
                                      
                                      584,415
                                      
                                      
                                      
                                      -Advances
      to a director
                                      
                                      
                                      (624,299
                                      )
                                      
                                      
                                      -Net
      cash used in investing activities
                                      
                                      $
                                      (1,328,036
                                      )
                                      
                                      $
                                      (1,442,943
                                      )Cash
      flows from financing activities
                                      
                                      $
                                      
                                      
                                      
                                      $Proceeds
      from Vision re: Debentures
                                      
                                      
                                      -
                                      
                                      
                                      
                                      199,202Proceeds
      from issuance of Series B ConvertiblePreferred
      Stock
                                      
                                      
                                      -
                                      
                                      
                                      
                                      5,557,133Proceeds
      from exercise of Series J ConvertiblePreferred
      Stock
                                      
                                      
                                      6,530,000
                                      
                                      
                                      
                                      -Net
      cash provided by financing activities
                                      
                                      $
                                      6,530,000
                                      
                                      
                                      $
                                      5,756,335




11


SUNWAY
      GLOBAL INC.CONSOLIDATED
      STATEMENTS OF CASH FLOWS (Continued)FOR
      THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007(Stated
      in US Dollars)(Unaudited)





Six
      months ended June 30,2008
                                
                                
                                2007Net
      in cash and cash equivalents sourced
                                
                                $
                                8,109,313
                                
                                
                                $
                                5,889,119Effect
      of foreign currency translation oncash
      and cash equivalents
                                
                                
                                1,530,795
                                
                                
                                
                                229,813Cash
      and cash equivalents-beginning of year
                                
                                
                                5,820,100
                                
                                
                                
                                1,749,048Cash
      and cash equivalents-end of year
                                
                                $
                                15,460,208
                                
                                
                                $
                                7,867,980Supplementary
      cash flow information:Interest
      received
                                
                                $
                                36,869
                                
                                
                                $
                                1,600Interest
      paid
                                
                                
                                -
                                
                                
                                
                                3,292Tax
      paid
                                
                                
                                672,462
                                
                                
                                
                                487,195




See
accompanying notes to consolidated financial statements




12




SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
 (Stated in US Dollars )(Unaudited)
 
 1.
              ORGANIZATION AND PRINCIPAL
      ACTIVITIES
 
 Sunway
Global Inc. (the “Company”) was incorporated in the state of Nevada on October
18, 1971. Prior to June 6, 2007 the company has only nominal operations and
assets.
 
 On June
6, 2007, the Company executed a reverse-merger with Rise Elite International
Limited (“Rise Elite (BVI)”) by an exchange of shares whereby the Company issued
210,886 shares of the Company’s Series A Convertible Preferred Stock, par value
$0.0000001 per share in exchange for all shares in World Through Limited, a
British Virgin Islands corporation (“World Through (BVI)”).
 
 World Through (BVI) holds Sunway World
Through Technology (Daqing) Co Ltd (“SWT” or “WFOE”), which entered into a
series of agreements with Daqing Sunway Technology Co., Ltd (“Sunway”) including
but not limited to management, loan, purchase option, consignment, trademark
licensing, non-competition, etc. As a result of entering the abovementioned
agreements, WFOE deems to control Sunway as a Variable Interest Entity as
required by FASB Interpretation No. 46 (revised December 2003) Consolidated of
Variable Interest Entities, an Interpretation of ARB No. 51 since SWT was the
primary beneficiary.On March 16, 2008, SWT acquired Beijing
Sunway New-force Medical Treatment Tech Co., Ltd (“Beijing Sunway”) as its
wholly-owned subsidiary.  Beijing Sunway was incorporated in Beijing,
PRC on May 24, 2007.
 
 The
Company, through its subsidiaries and Sunway, (hereinafter, collectively
referred to as “the Group”), is now in the business of designing, manufacturing
and selling logistic transport systems and medicine dispensing systems and
equipment.
 
 On
February 7, 2008, the Company changed its name from National Realty and
Mortgage, Inc. to Sunway Global Inc.
  2.
              SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES
 
 (a)
              Method of
      Accounting
 
 The
Company maintains its general ledger and journals with the accrual method
accounting for financial reporting purposes. The financial statements and notes
are representations of management. Accounting policies adopted by the Company
conform to generally accepted accounting principles in the United States of
America and have been consistently applied in the presentation of financial
statements.
 
 The
interim results of operations are not necessarily indicative of the results to
be expected for the fiscal period ending June 30, 2008. The Company’s
consolidated balance sheet as of December 31, 2007 has been taken from the
Company’s audited consolidated 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 Company’s accounting policies and certain
other disclosure are set forth in the notes to the consolidated financial
statements contained in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2007. These financial statements should be read in
conjunction with the Company’s audited consolidated financial statements and
notes thereto.
  13
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
 (Stated
in US Dollars)(Unaudited)
 
 2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
 (a)
              Method of
      Accounting(continued)
 
 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 and British Virgin Island, 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 the three subsidiaries since its reverse-merger on June 6, 2007.
The detailed identities of the consolidating subsidiaries would have been as
follows:
 
 Name
      of Company
                                
                                Place
      of
                                  incorporation
                                
                                Attributable interestWorld
      Through Ltd
                                
                                British Virgin Islands
                                
                                100%Sunway
      World Through Technology (Daqing) Co Ltd
                                
                                PRC
                                
                                100%*Daqing
      Sunway Technology Co Ltd
                                
                                PRC
                                
                                100%Beijing
      Sunway New-force Medical Treatment Tech Co., Ltd
                                
                                PRC
                                
                                100%*Note:
      Deemed variable interest entity
  14
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
 (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 amortization. Amortization is provided over
the respective useful lives, using the straight-line method. Estimated useful
lives of the intangibles are as follows:
  Land
      use rights
                47
      yearsTechnology-based
      design
                10
      years
  (f)
              Accounting for software
      systems
 
 The
Company adopts FASB No. 86 for accounting of software systems, in that all
expenditures incurred from start-up to completion of feasibility are expensed;
development costs, after the feasibility study through system completion, are
capitalized, and are depreciated over a useful life of three years. Expenditures
incurred after completion are expensed as repairs and maintenance.
  15
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
 (Stated
in US Dollars)(Unaudited)
 
 2.
              SUMMARY OF
      SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 (g)
              Property, plant and
      equipment
 
 Plant and
equipment are carried at cost less accumulated depreciation. Depreciation is
provided over their estimated useful lives, using the straight-line method.
Estimated useful lives of the plant and equipment are as follows:
 
 Buildings
                20
      yearsMachinery
      and equipment
                6
      yearsMolding
                10
      yearsComputer
      software
                3
      yearsOffice
      equipment and motor vehicles
                6 -
      10 years
  The cost
and related accumulated depreciation of assets sold or otherwise retired are
eliminated from the accounts and any gain or loss is included in the statement
of income.
 
 (h)
              Maintenance and
      repairs
 
 The cost
of maintenance and repairs is charged to income as incurred, whereas significant
renewals and betterments are capitalized.
 
 (i)
              Accounting for the impairment of
      long-lived assets
 
 The Group
periodically evaluates the carrying value of long-lived assets to be held and
used, including intangible assets subject to amortization, when events and
circumstances warrant such a review, pursuant to the guidelines established in
SFAS No. 144. The carrying value of a long-lived asset is considered impaired
when the anticipated undiscounted cash flow from such asset is separately
identifiable and is less than its carrying value. In that event, a loss is
recognised based on the amount by which the carrying value exceeds the fair
market value of the long-lived asset. Fair market value is determined primarily
using the anticipated cash flows discounted at a rate commensurate with the risk
involved. Losses on long-lived assets to be disposed of are determined in a
similar manner, except that fair market values are reduced for the cost to
dispose.
 
 During
the reporting periods, there was no impairment loss.
 
 (j)
              Inventories
 
 Inventories consist of finished goods
and raw materials, and stated at the lower of cost or market value.
Substantially all inventory costs are determined using the weighted average
basis. Finished goods are comprised of direct materials, direct labor and an
appropriate proportion of overhead.The management regularly evaluates the
composition of its inventory to identify slow-moving and obsolete inventories to
determine if additional write-downs are required.
  16
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
 (Stated
in US Dollars)(Unaudited)
 
 2.
              SUMMARY OF SIGNIFICANT
      ACCOUNTING POLICIES (Continued )
 
 (k)
              Trade
      receivables
 
 Trade
receivables are recognized and carried at the original invoice amount less
allowance for any uncollectible amounts. An allowance for doubtful accounts is
maintained for all customers based on a variety of factors, including the length
of time the receivables are past due, significant one-time events and historical
experience. Bad debts are written off as incurred. During the reporting years,
there were no bad debts.
 
 Outstanding
accounts balances are reviewed individually for collectability. The Company do
not charge any interest income on trade receivables.  Accounts
balances are charged off against the allowance after all means of collection
have been exhausted and the potential for recovery is considered remote. To
date, the Company has not charged off any balances as it has yet to exhaust all
means of collection.
 
 (l)
              Cash and cash
      equivalents
 
 The
Company considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents. The Company maintains
bank accounts only in the PRC. The Company does not maintain any bank accounts
in the United States of America.
 
 June 30, 2008
                                          
                                          
                                          December 31, 2007Bank
      of Communications, Branch of DaqingCity
      Economic Zone
                                          
                                          $
                                          8,033,893
                                          
                                          
                                          $
                                          5,398,866Daqing
      City Commercial Bank
                                          
                                          
                                          4,508,010
                                          
                                          
                                          
                                          72,690HSBC
                                          
                                          
                                          2,452,297
                                          
                                          
                                          
                                          348,362Agricultural
      Bank of China
                                          
                                          
                                          458,796
                                          
                                          
                                          
                                          -Cash
      on hand
                                          
                                          
                                          7,212
                                          
                                          
                                          
                                          182$
                                          15,460,208
                                          
                                          
                                          $
                                          5,820,100
 
 (m)
              Restricted
      cash
 
 Restricted
cash are pledged deposits in an escrow account for investor relations
purpose.
 
 (n)
              Revenue
      recognition
 
 Revenue
represents the invoiced value of goods sold recognized upon the delivery of
goods to customers. Revenue is recognized when all of the following criteria are
met:
 -
              Persuasive
      evidence of an arrangement exists;-
              Delivery
      has occurred or services have been rendered;-
                -
              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.
  17
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
 (Stated
in US Dollars)(Unaudited)
 
 2.
              SUMMARY OF
      SIGNIFICANT ACCOUNTING POLICIES (Continued)
  (o)
              Expected warranty
      liabilities
 
 The
Company warrants its products against defects in design, materials, and
workmanship generally for one year. A provision for estimated future costs
relating to warranty expense are recorded when products are shipped, and the
provision is based upon our own historical claim experience.
 
 (p)
              Cost of
    sales
 
 Cost of
sales consists primarily of material costs, employee compensation, depreciation
and related expenses, which are directly attributable to the production of
products. All inbound freight charges, purchasing and receiving costs,
inspection costs, warehousing costs, internal transfer costs, and the other
costs of distribution network are also included. Write-down of inventory to
lower of cost or market is also recorded in cost of revenues.
 
 (q)
              Leases
  The Group
did not have 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 $23,851 and
$14,016 for the six months ended June 30, 2008 and 2007
respectively.
 
 (r)
              Advertising
 
 The Group
expensed all advertising costs as incurred. Advertising expenses included in
selling expenses were $10,115 and $26,805 for the six months ended June 30, 2008
and 2007 respectively.
 
 (s)
              Shipping and
      handling
 
 All
shipping and handling are expensed as incurred. Shipping and handling expenses
included in selling expenses were $10,389 and $15,090 for the six months ended
June 30, 2008 and 2007 respectively.
 
 (t)
              Research and
      development
 
 All
research and development costs are expensed as incurred. The research and
development costs included in general and administrative expenses were nil and
$83,536 and for the six months ended June 30, 2008 and 2007
respectively.
 
 (u)
              Retirement
      benefits
 
 Retirement
benefits in the form of contributions under defined contribution retirement
plans to the relevant authorities are charged to the statements of income as
incurred. The retirement benefit expenses included in general and administrative
expenses were $17,964 and $27,297 for the six months ended June 30, 2008 and
2007 respectively.
 
 18
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
 (Stated
in US Dollars)(Unaudited)
 
 2.
              SUMMARY OF
      SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 (v)
              Income
    taxes
 
 The Group
accounts for income tax using an asset and liability approach and allows for
recognition of deferred tax benefits in future years. Under the asset and
liability approach, deferred taxes are provided for the net tax effects of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. A
valuation allowance is provided for deferred tax assets if it is more likely
than not these items will either expire before the Group is able to realize
their benefits, or that future realization is uncertain.
 
 (w)
              Foreign currency
      translation
 
 The
accompanying financial statements are presented in United States dollars. The
reporting currency of the Group is the U.S. dollar ($). SWT, Sunway and Beijing
Sunway use its local currency, Renminbi (RMB), as its functional currency.
Results of operations and cash flow are translated at average exchange rates
during the period, and assets and liabilities are translated at the end of
period exchange rates. Translation adjustments resulting from this process are
included in accumulated other comprehensive income in stockholders’ equity.
Transaction gains and losses that arise from exchange rate fluctuations from
transactions denominated in a currency other than the functional currency are
included in the results of operations as incurred.
 
 The PRC
government imposes significant exchange restrictions on fund transfers out of
the PRC that are not related to business operations. These restrictions have not
had a material impact on the Group because it has not engaged in any significant
transactions that are subject to the restrictions.
 
 The
exchange rates used to translate amounts in RMB into USD for the purposes of
preparing the consolidated financial statements were as follows:
 
 June 30, 2008
                          
                          December 31,
                            2007
                          
                          June 30, 2007Twelve
      months ended
                          
                          
                          -
                          
                          7.3141
                          
                          
                          -RMB
      : USD exchange rateSix
      months ended
                          
                          
                          6.8718
                          
                          -
                          
                          
                          7.6248RMB
      : USD exchange rateAverage
      six months ended
                          
                          
                          7.0726
                          
                          -
                          
                          
                          7.7300RMB
      : USD exchange rateAverage
      three months ended
                          
                          
                          6.9696
                          
                          -
                          
                          
                          7.6896RMB
      : USD exchange rate
  The RMB
is not freely convertible into foreign currency and all foreign exchange
transactions must take place through authorized institutions. No representation
is made that the RMB amounts could have been, or could be, converted into USD at
the rates used in translation.
  19
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
 (Stated
in US Dollars)(Unaudited)
 
 2.
              SUMMARY OF
      SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 (x)
              Statutory
      reserves
 
 As
stipulated by the PRC’s Company Law and as provided in the SWT, and Sunway’s
Articles of Association, SWT and Sunway’s net income after taxation can only be
distributed as dividends after appropriation has been made for the
following:
 
 (i)
              Making up cumulative prior years’
      losses, if any;
  (ii)
              Allocations to the “Statutory
      surplus reserve” of at least 10% of income after tax, as determined under
      PRC accounting rules and regulations, until the fund amounts to 50% of the
      Company's registered capital, which is restricted for set off against
      losses, expansion of production and operation or increase in registered
      capital;
  (iii)
              Allocations of 5-10% of income
      after tax, as determined under PRC accounting rules and regulations, to
      the Company's “Statutory common welfare fund”, which is restricted for
      capital expenditure for the collective benefits of the Company's
      employees; and
  (iv)
              Allocationsto the discretionary surplus reserve, if approved in the
      shareholders’ general
  meeting.
  (y)
              Comprehensive
      income
 
 Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, all
items that are required to be recognized under current accounting standards as
components of comprehensive income are required to be reported in a financial
statement that is presented with the same prominence as other financial
statements. The Group’s current component of other comprehensive income is the
foreign currency translation adjustment.
 
 (z)
              Recent accounting
      pronouncements
 
 In
February 2007, FASB issued Statement of Financial Accounting Standards No.
(“SFAS”) 159, “The Fair Value Option for Financial Assets and Financial
Liabilities - Including an Amendment of FASB Statement No. 115” (“SFAS 159”).
SFAS 159 permits entities to choose to measure many financial instruments and
certain other items at fair value. Entities that elect the fair value option
will report unrealized gains and losses in earnings at each subsequent reporting
date. The fair value option may be elected on an instrument-by-instrument basis,
with a few exceptions. SFAS 159 also establishes presentation and disclosure
requirements to facilitate comparisons between entities that choose different
measurement attributes for similar assets and liabilities. The requirements of
SFAS 159 are effective for our fiscal year beginning on January 1,
2008.
  The
Company does not anticipate that the adoption of this standard will have a
material impact on these consolidated financial statements.
 
 In
December 2007, the SEC issued Staff Accounting Bulletin No. 110 (“SAB 110”). SAB
110 permits companies to continue to use the simplified method, under certain
circumstances, in estimating the expected term of “plain vanilla” options beyond
December 31, 2007. SAB 110 updates guidance provided in SAB 107 that previously
stated that the Staff would not expect a company to use the simplified method
for share option grants after December 31, 2007. Adoption of SAB 110 is not
expected to have a material impact on the Company’s consolidated financial
statements.
  20
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
 (Stated
in US Dollars)(Unaudited)
 
 2.
              SUMMARY OF
      SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 (z)
              Recent accounting pronouncements
      (continued)
 
 In
December 2007, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard (“SFAS”) No. 160, "Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51”. SFAS 160
establishes accounting and reporting standards for the noncontrolling interest
in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is
effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008. As such, the Company is required to
adopt these provisions at the beginning of the fiscal year ended December 31,
2009. The Company is currently evaluating the impact of SFAS 160 on its
consolidated financial statements but does not expect it to have a material
effect
 
 In
December 2007, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard (“SFAS”) No. 141(R), "Business Combinations”. SFAS
141(R) establishes principles and requirements for how the acquirer recognizes
and measures in its financial statements the identifiable assets acquired, the
liabilities assumed, an any noncontrolling interest in the acquiree, recognizes
and measures the goodwill acquired in the business combination or a gain from a
bargain purchase, and determines what information to disclose to enable users of
the financial statements to evaluate the nature and financial effects of the
business combination. SFAS 141(R) is effective for fiscal years, and interim
periods within those fiscal years, beginning on or after December 15, 2008. As
such, the Company is required to adopt these provisions at the beginning of the
fiscal year ended December 31, 2009. The Company is currently evaluating the
impact of SFAS 141(R) on its consolidated financial statements but does not
expect it to have a material effect.
  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.
  21
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
 (Stated
in US Dollars)(Unaudited)
 
 3.
              CONCENTRATIONS OF CREDIT RISK AND
      MAJOR CUSTOMERS
 
 Financial
instruments which potentially expose the Group to concentrations of credit risk,
consists of cash and trade receivables as of June 30, 2008 and December 31,
2007. The Group performs ongoing evaluations of its cash position and credit
evaluations to ensure collections and minimize losses.
 
 As of
June 30, 2008 and December 31, 2007, the Group’s bank deposits were all placed
with banks in the PRC where there is currently no rule or regulation in place
for obligatory insurance of bank accounts.
 
 For the
six months ended June 30, 2008 and 2007, all of the Group’s sales were generated
from the PRC. In addition, all trade receivables as of June 30, 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 six months ended
                        June
      30,2008
                      
                      
                      2007Customer
      A
                      
                      $
                      989,731
                      
                      
                      $
                      -Customer
      B
                      
                      
                      870,963
                      
                      
                      
                      538,811Customer
      C
                      
                      
                      821,477
                      
                      
                      
                      -Customer
      D
                      
                      
                      781,887
                      
                      
                      
                      -Customer
      E
                      
                      
                      -
                      
                      
                      
                      733,507Customer
      G
                      
                      
                      -
                      
                      
                      
                      466,365Customer
      J
                      
                      
                      -
                      
                      
                      
                      439,198Customer
      K
                      
                      
                      
                      
                      
                      
                      479,949
 
 Details
of customers accounting for 10% or more of the Group’s trade receivables are as
follows:
 
 June 30, 2008
                      
                      
                      December 31,
                        2007Customer
      B
                      
                      $
                      419,523
                      
                      
                      $
                      221,510Customer
      D
                      
                      
                      274,120
                      
                      
                      
                      159,005Customer
      E
                      
                      
                      288,422
                      
                      
                      
                      235,149Customer
      G
                      
                      
                      -
                      
                      
                      
                      269,861Customer
      I
                      
                      
                      257,435
                      
                      
                      
                      275,851Customer
      J
                      
                      
                      240,749
                      
                      
                      
                      -Customer
      K
                      
                      
                      -
                      
                      
                      
                      146,688
  22
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
 (Stated
in US Dollars)(Unaudited)
 
 4.
              AMOUNT DUE FROM A RELATED
      COMPANY
 
 Amount
due from Rise Elite International Ltd (Rise Elite), a related company where Mr.
Liu Bo, the director of the Group is a shareholder. The amount is unsecured,
interest free and repayable on demand. The amount is held by Rise Elite for the
initial setup expenses.
 
 5.
              AMOUNT DUE FROM A
      DIRECTOR
 
 Amount
due from Mr. Liu Bo, the director of the company is unsecured, interest free and
repayable on demand.  The amount is held for the proposed development
of representative offices in Hang Zhou, Xi’an & Shanghai. This leads to a
better working capital arrangement.
 
 6.
              TRADE RECEIVABLES,
      NET
  June 30, 2008
                        
                        
                        December 31,
                          2007Trade
      receivables, gross
                        
                        $
                        2,508,335
                        
                        
                        $
                        1,533,085Provision
      for doubtful debts
                        
                        
                        (8,392
                        )
                        
                        
                        (7,884
                        )$
                        2,499,943
                        
                        
                        $
                        1,525,201
 
 All of
the above trade receivables are due within one year of aging.
 
 An
analysis of the allowance for doubtful accounts for the six months ended June
30, 2008 and December 31, 2007 is as follows:
  June 30, 2008
                        
                        
                        December 31,
                          2007Balance
      at beginning of period/year
                        
                        $
                        7,884
                        
                        
                        $
                        7,377Foreign
      exchange adjustment
                        
                        
                        508
                        
                        
                        
                        507Balance
      at end of period/year
                        
                        $
                        8,392
                        
                        
                        $
                        7,884
 
 Allowance
was made when collection of the full amount is no longer probable. Management
reviews and adjusts this allowance periodically based on historical experience,
current economic climate as well as its evaluation of the collectability of
outstanding accounts. The Group evaluates the credit risks of its customers
utilizing historical data and estimates of future performance.
  23
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
 (Stated
in US Dollars)(Unaudited)
 
 7.
              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.
  June 30, 2008
                        
                        
                        December 31,
                          2007Bo
      Liu
                        
                        $
                        17,614
                        
                        
                        $
                        4,244Qichai
      Zhao
                        
                        
                        9,939
                        
                        
                        
                        700Deli
      Liang
                        
                        
                        -
                        
                        
                        
                        6,568Weishan
      Sun
                        
                        
                        31,112
                        
                        
                        
                        19,312$
                        58,665
                        
                        
                        $
                        30,824
 
 8.
              ADVANCES TO
      EMPLOYEES
 
 Advances
to employees are advances for purchases and traveling. They are unsecured,
interest free and repayable on demand.
 
 9.
              INVENTORIES
 
 Inventories
comprise the followings:
  June 30, 2008
                        
                        
                        December 31,
                          2007Finished
      goods
                        
                        $
                        621,445
                        
                        
                        $
                        161,005Raw
      materials
                        
                        
                        230,406
                        
                        
                        
                        605,928$
                        851,851
                        
                        
                        $
                        766,933
 
 10.
              PROPERTY, PLANT AND EQUIPMENT,
      NET
 
 Property,
plant and equipment, net comprise the followings:
  June 30, 2008
                          
                          
                          December 31,
                            2007At
      costBuilding
                          
                          $
                          1,443,695
                          
                          
                          $
                          1,356,392Machinery
      and equipment
                          
                          
                          1,097,167
                          
                          
                          
                          1,022,960Moldings
                          
                          
                          4,141,171
                          
                          
                          
                          2,992,166Computer
      software
                          
                          
                          2,040,623
                          
                          
                          
                          1,942,823Office
      equipment and motor vehicles
                          
                          
                          85,617
                          
                          
                          
                          80,439$
                          8,808,273
                          
                          
                          $
                          7,394,780Less:
      accumulated depreciation
                          
                          
                          (3,517,191
                          )
                          
                          
                          (2,945,161
                          )$
                          5,291,082
                          
                          
                          $
                          4,449,619
  24
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
 (Stated
in US Dollars)(Unaudited)
 
 10.
              PROPERTY, PLANT AND EQUIPMENT,
      NET (Continued)
 
 Depreciation
expense is included in the statement of income as follows:
 
 For
      the six months ended
                            June
      30,2008
                          
                          
                          2007Cost
      of sales
                          
                          $
                          368,794
                          
                          
                          $
                          376,324General
      and administrative expenses
                          
                          
                          6,595
                          
                          
                          
                          82,362$
                          375,389
                          
                          
                          $
                          458,686
  11.
              INTANGIBLE ASSETS,
      NET
 
 Intangible
assets, net are as follows:
  June 30, 2008
                                
                                
                                December 31,
                                  2007Land
      use rights, at cost
                                
                                $
                                1,350,840
                                
                                
                                $
                                1,269,151Less:
      accumulated amortization
                                
                                
                                (76,645
                                )
                                
                                
                                (58,508
                                )$
                                1,274,195
                                
                                
                                $
                                1,210,643Technology-based
      design , at cost
                                
                                $
                                6,304,389
                                
                                
                                $
                                5,923,149Less:
      accumulated amortization
                                
                                
                                (608,741
                                )
                                
                                
                                (200,301
                                )$
                                5,695,648
                                
                                
                                $
                                5,722,848$
                                6,969,843
                                
                                
                                $
                                6,933,491
 
 Patent of
the Pneumatic Tube System has been registered with the PRC government under
Serial No. 264-2004 2005 with a registration fee of $347 (RMB 2,800) which was
expensed in 2003. This amount was immaterial for capitalization.
 
 The Group
acquired the rights to use a parcel of land totaling 26,522 square meters, for a
consideration of $1,149,788 (RMB 9,282,700), located at Daqing Hi-Tech Industry
Development Zone, Daqing, Heilongjiang in the People’s Republic of China 163316
for a term of 46 years from September 16, 2005 to June 13, 2052. The land has
been used to build the Group’s facility.
 
 Amortization
expense included in the general and administrative expenses for the six-months
ended 2008 and 2007 were $420,972 and $13,697 respectively.
  25
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
 (Stated
in US Dollars)(Unaudited)
 
 12.
              EXPECTED WARRANTY
      LIABILITIES
 
 An
analysis of the warranty liabilities as at June 30, 2008 and December 2007 is as
follows:
 
 2008
                          
                          
                          2007Balance
      at beginning of period/year
                          
                          $
                          55,351
                          
                          
                          $
                          22,811Addition
      of warranty liabilities
                          
                          
                          -
                          
                          
                          
                          55,918Warranty
      expense for the year
                          
                          
                          -
                          
                          
                          
                          (23,378
                          )Foreign
      currency difference
                          
                          
                          3,562
                          
                          
                          
                          -Balance
      at end of period/year
                          
                          $
                          58,913
                          
                          
                          $
                          55,351
 
 13.
              SERIES B CONVERTIBLE PREFERRED
      STOCK AND ASSOCIATED
WARRANTS
  On June
5, 2007, the Company entered into a purchase agreement, whereby the company
agreed to sell 165,432 shares of the Company’s Series B Preferred shares and
various stock purchase warrants to purchase up to 18,686,054 shares of the
Company’s common shares. The exercise price, expiration date and number of share
eligible to be purchased with the warrants is summary in the following
table:
  Investment
                              Amount
                            
                            Preferred B
                            
                            A
      Warrant
                            
                            B
      Warrant
                            
                            J
      Warrant
                            
                            C
      Warrant
                            
                            D
      WarrantVision
      Opportunity Master Fund, Ltd.
                            
                            
                            6,500,000
                            
                            160,494
                            
                            
                            4,814,815
                            
                            2,407,407
                            
                            
                            4,362,416
                            
                            4,362,416
                            
                            
                            2,181,208Columbia
      China Capital Group, Inc.
                            
                            
                            200,000
                            
                            4,938
                            
                            
                            148,148
                            
                            74,074
                            
                            
                            134,228
                            
                            134,228
                            
                            
                            67,114
 
 Series
      of Warrant
                        
                        Number of shares
                        
                        
                        Exercise Price
                        
                        Expiry
      DateSeries
      A
                        
                        
                        4,962,963
                        
                        
                        $
                        1.76
                        
                        6
      /5 /2012Series
      B
                        
                        
                        2,481,481
                        
                        
                        
                        2.30
                        
                        6
      /5 /2012Series
      J
                        
                        
                        4,496,644
                        
                        
                        
                        1.49
                        
                        6
      /5 /2008Series
      C
                        
                        
                        4,496,644
                        
                        
                        
                        1.94
                        
                        6
      /5 /2012Series
      D
                        
                        
                        2,248,322
                        
                        
                        
                        2.53
                        
                        6
      /5
/2012
  The
Series B preferred stock has liquidation rights senior to common stock and
Series A preferred stock. In the event of a liquidation of the Company, holders
of Series B preferred stock are entitled to receive a distribution equal to
$40.50 per share of Series B preferred stock prior to any distribution to the
holders of common stock and Series A preferred stock. The Series B preferred
stock is entitled to non-cumulative dividends only upon declaration of dividends
by the Company. To date, no dividends have been declared or accrued. The Series
B preferred stock will participate based on their respective as-if conversion
rates if the Company declares any dividends. After the Amendment were filed
effect the Reverse Split, each share of Series B preferred stock would be
convertible into 30 shares of Common Stock for $1.35 each, which both may be
adjusted from time to time pursuant to the conversion rate. The holders of
Series B preferred stock shall be entitled to voting rights by applicable law
and the right to vote together with the holders of Common and Series A Preferred
Stock.
  26
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
 (Stated
in US Dollars)(Unaudited)
 
 13.
              SERIES B CONVERTIBLE PREFERRED
      STOCK AND ASSOCIATED
WARRANTS(CONTINUED)
  The gross
proceeds of the transaction were $6.7 million. The proceeds from the transaction
were allocated to the Series B preferred stock, warrants and beneficial
conversion feature based on the relative fair value of the securities. The value
of the Preferred Series B was determined by reference to the market price of the
common shares into which it converts, and the gross value of the warrants was
calculated using the Black -Scholes model with the following assumptions:
expected life of 1 year, volatility of 117% and an interest rate of
4.99%.
  The
Company recognized a beneficial conversion feature discount on the Series B
preferred stock at its intrinsic value, which was the fair value of the common
stock at the commitment date for the Series B preferred stock investment, less
the effective conversion price but limited to the $6.7 million of proceeds
received from the sale. The Company recognized the $6.7 million beneficial
conversion feature as an increase in paid in capital in the accompanying
consolidated balance sheets on the date of issuance of the Series B preferred
shares since the Series B preferred shares were convertible at the issuance
date.
  The
agreement, also provided that if a Registration Statement is not effective
within a certain period of time or the common shares are not listed on the
NASDAQ or American exchange by December 31, 2008, the Company will pay the
holders of the shares a penalty that can range from $67,000 to $670,000 and
certain principal shareholders would issue up to 1,000,000 additional shares to
the purchasers of the Preferred Series B shares. The company is accounting for
these penalties in accordance with FAS 5 - Accounting for Contingencies, whereby
the penalty will not be recorded as a liability until and if it is probable the
penalty will be incurred. No penalty has been recorded in the accompanying
financial statements for this contingency.
  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 228,531 shares
into 13,711,831 shares of common stock, in which Rise Elite International
Limited, Vision Opportunity Master Fund, Ltd and Kuhns Brothers, Inc converted
210,886, 7,990 and 2,647 shares of Preferred Series A into 12,653,160, 479,400
and 158,820 shares of common stock respectively.
 On June
18, 2008, Columbia China Capital Group, Inc. converted 4,938 shares of Preferred
Series B into 148,140 shares of common stock.
  27
  SUNWAY
GLOBAL INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
 (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 six months ended June 30,2008
                                        
                                        
                                        2007Earnings:Earnings
      for the purpose of basic earnings per share
                                        
                                        $
                                        3,551,121
                                        
                                        
                                        $
                                        2,746,606Effect
      of dilutive potential common stock
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Earnings
      for the purpose of basic earnings per share
                                        
                                        $
                                        3,551,121
                                        
                                        
                                        $
                                        2,746,606Number
      of shares:Weighted
      average number ofcommon
      stock for the purpose of basicearnings
      per share
                                        
                                        
                                        11,757,733
                                        
                                        
                                        
                                        19,207,455Effect
      of dilutive potential common stock-
      conversion of Series Aconvertible
      preferred stock
                                        
                                        
                                        2,787,570
                                        
                                        
                                        
                                        --
      conversion of Series Bconvertible
      preferred stock
                                        
                                        
                                        4,952,379
                                        
                                        
                                        
                                        --
      conversion of Warrant Series A
                                        
                                        
                                        2,424,318
                                        
                                        
                                        
                                        --
      conversion of Warrant Series B
                                        
                                        
                                        822,708
                                        
                                        
                                        
                                        --
      conversion of Warrant Series J
                                        
                                        
                                        3,763,183
                                        
                                        
                                        
                                        --
      conversion of Warrant Series C
                                        
                                        
                                        1,961,291
                                        
                                        
                                        
                                        --
      conversion of Warrant Series D
                                        
                                        
                                        595,115
                                        
                                        
                                        
                                        -Weighted
      average number of commonstock
      for the purpose of dilutiveearnings
      per share
                                        
                                        
                                        29,064,297
                                        
                                        
                                        
                                        19,207,455
  28




SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007


(Stated
in US Dollars)(Unaudited)





15.
            INCOME
    TAXES





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





SWT and
Sunway, being registered in the PRC, are subject to PRC’s Enterprise Income Tax.
Under applicable income tax laws and regulations, an enterprise located in PRC,
including the district where our operations are located, is subject to a 25%
enterprise income tax (“EIT”).





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:





For
      the six month ended
                  June
      30,2008
                
                
                2007U.S.
      statutory rate
                
                
                34
                %
                
                
                34
                %Foreign
      income not recognized in the U.S.
                
                
                (34
                )%
                
                
                (34
                )%PRC
      Enterprise Income Tax
                
                
                25
                %
                
                
                33
                %Tax
      holiday
                
                
                (10
                )%
                
                
                (18
                )%Provision
      for income taxes
                
                
                15
                %
                
                
                15
                %





16.
            FAIR VALUE OF FINANCIAL
      INSTRUMENTS





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





17.
            COMMITMENTS AND
      CONTINGENCIES





The Group
has entered into a tenancy agreement for factory expiring through 2008. Total
rental expenses for the six months ended June 30, 2008 and 2007 amounted to
$23,851 and $14,016 respectively.





As at
June 30, 2008, the Group’s commitments for minimum lease payments under these
leases for the next one year and thereafter are as follows:




June
      30,2008
                
                $
                24,5482009
      - 2012 and thereafter
                
                
                -$
                24,548




29




SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007


(Stated
in US Dollars)(Unaudited)





18.
            SEGMENT
      INFORMATION





The Group
currently is engaged in the manufacturing and selling of logistic transport
systems and operating in one segment only. 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
revenue and cost of revenue by product:





For the six months ended June 30, 2008
                
                Workstation
                
                
                Workstation
                
                
                WorkstationType A
                
                
                Type B
                
                
                Type C
                
                
                SADP
                
                
                ConsolidatedNet
      revenue
                
                $
                1,654,785
                
                
                $
                3,503,647
                
                
                $
                2,395,149
                
                
                $
                537,282
                
                
                $
                8,090,863Cost
      of net revenue
                
                
                (428,782
                )
                
                
                (1,042,584
                )
                
                
                (700,954
                )
                
                
                (204,355
                )
                
                
                (2,376,675
                )$
                1,226,003
                
                
                $
                2,461,063
                
                
                $
                1,694,195
                
                
                $
                332,927
                
                
                $
                5,714,188





For the six months ended June 30, 2007
                
                Workstation
                
                
                Workstation
                
                
                WorkstationType A
                
                
                Type B
                
                
                Type C
                
                
                SADP
                
                
                ConsolidatedNet
      revenue
                
                $
                2,304,074
                
                
                $
                3,355,137
                
                
                $
                -
                
                
                $
                -
                
                
                $
                5,659,211Cost
      of net revenue
                
                
                (691,976
                )
                
                
                (1,007,639
                )
                
                
                -
                
                
                
                -
                
                
                
                (1,699,615
                )$
                1,612,098
                
                
                $
                2,347,498
                
                
                $
                -
                
                
                $
                -
                
                
                $
                3,959,596





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.


30





SUNWAY
GLOBAL INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007


(Stated
in US Dollars)(Unaudited)





19.RESTATEMENTS





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





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





For the
quarterly period June 30, 2008, the impacts of the (1) incorrectly recorded par
value of the Series A and B Convertible Preferred Stock and common stock, have
resulted in a decrease in the Series B Convertible Preferred Stock of $159, a
decrease in common stock of $18,444 and an increase in additional paid-in
capital of $18,603; (2) the exclusion of the financial figures of one of the
wholly-owned subsidiaries, Beijing Sunway New-force Medical Treatment Tech Co.,
Ltd., resulted in an increase of $458,796 in cash and cash equivalents, a
decrease of $20,998 in amount due from a related company, a decrease of 648,404
in amount due from a director, an increase of $57,475 in selling expenses, an
increase of $149,280 in general and administrative expenses, an increase of
$2,130 in interest income, a decrease of $204,625 in both the net income and
retained earnings and a decrease of $5,981 in the accumulated other
comprehensive income. Moreover, as the net income was revised, the basic and
diluted net income per share had a decrease of $0.02 and $0.01 respectively; and
(3) internal evaluation led to the reclassification of $4,214 from other
payables to customer deposits as at June 30, 2008.


31


SUNWAY
GLOBAL INC.





BALANCE
SHEETS


Original
                            
                            
                            RestatedJune 30, 2008(Unaudited)
                            
                            
                            (Unaudited)ASSETSCurrent
      assetsCash
      and cash equivalents
                            
                            $
                            15,001,412
                            
                            
                            $
                            15,460,208Trade
      receivables, net
                            
                            
                            2,499,943
                            
                            
                            
                            2,499,943Inventories
                            
                            
                            851,851
                            
                            
                            
                            851,851Advances
      to suppliers
                            
                            
                            2,058,826
                            
                            
                            
                            2,058,826Prepayments
                            
                            
                            16,007
                            
                            
                            
                            16,007Tender
      deposits
                            
                            
                            138,176
                            
                            
                            
                            138,176Travel
      advances to shareholders
                            
                            
                            58,665
                            
                            
                            
                            58,665Advances
      to employees
                            
                            
                            473,258
                            
                            
                            
                            473,258Total
      current assets
                            
                            $
                            21,098,138
                            
                            
                            $
                            21,556,934Amount
      due from a related company
                            
                            
                            21,828
                            
                            
                            
                            830Restricted
      cash
                            
                            
                            429,834
                            
                            
                            
                            429,834Amount
      due from a director
                            
                            
                            1,737,215
                            
                            
                            
                            1,088,811Property,
      plant and equipment, net
                            
                            
                            5,291,082
                            
                            
                            
                            5,291,082Intangible
      assets, net
                            
                            
                            6,969,843
                            
                            
                            
                            6,969,843TOTAL
      ASSETS
                            
                            $
                            35,547,940
                            
                            
                            $
                            35,337,334LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilitiesAccounts
      payable
                            
                            $
                            -
                            
                            
                            $
                            -Income
      tax payable
                            
                            
                            409,847
                            
                            
                            
                            409,847Turnover
      and other taxes
                            
                            
                            260,027
                            
                            
                            
                            260,027Expected
      warranty liabilities
                            
                            
                            58,913
                            
                            
                            
                            58,913Customers
      deposits
                            
                            
                            -
                            
                            
                            
                            4,214Accrued
      liabilities
                            
                            
                            372,459
                            
                            
                            
                            372,459Other
      payables
                            
                            
                            12,118
                            
                            
                            
                            7,904Total
      current liabilities
                            
                            $
                            1,113,364
                            
                            
                            $
                            1,113,364TOTAL
      LIABILITIES
                            
                            $
                            1,113,364
                            
                            
                            $
                            1,113,364




32





SUNWAY
GLOBAL INC.





BALANCE
SHEETS (Continued)




Original
                                  
                                  
                                  RestatedJune 30, 2008(Unaudited)
                                  
                                  
                                  (Unaudited)STOCKHOLDERS’
      EQUITYSeries
      A Convertible Preferred Stock $0.0000001 par value; 400,000
      shares authorized; Nil and 228,531 shares  issued and
      outstanding at June 30, 2008 and December 31, 2007
      respectively
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -Series
      B Convertible Preferred Stock $0.0000001 par value;
      400,000  shares authorized; 160,494 and
      165,432  shares issued and outstanding  at June 30,
      2008 and December 31, 2007
                                  
                                  
                                  160
                                  
                                  
                                  
                                  1Common
      stock at $0.0000001 par value; 100,000,000 shares authorized; 18,446,045
      and 223,658 shares issued and  outstanding at June 30, 2008 and
      December 31, 2007 respectively
                                  
                                  
                                  18,446
                                  
                                  
                                  
                                  2Additional
      paid-in capital
                                  
                                  
                                  22,611,362
                                  
                                  
                                  
                                  22,629,965Statutory
      reserves
                                  
                                  
                                  2,127,978
                                  
                                  
                                  
                                  2,127,978Retained
      earnings
                                  
                                  
                                  6,944,026
                                  
                                  
                                  
                                  6,739,401Accumulated
      other comprehensive income
                                  
                                  
                                  2,732,604
                                  
                                  
                                  
                                  2,726,623$
                                  34,434,576
                                  
                                  
                                  $
                                  34,223,970TOTAL
      LIABILITIES AND  STOCKHOLDERS’ EQUITY
                                  
                                  $
                                  35,547,940
                                  
                                  
                                  $
                                  35,337,334




33





SUNWAY
GLOBAL INC.





BALANCE
SHEETS


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




34





SUNWAY
GLOBAL INC.





BALANCE
SHEETS (Continued)


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




35





SUNWAY
GLOBAL INC.





STATEMENTS
OF INCOME


Original
                            
                            
                            RestatedSix months ended June 30,2008
                            
                            
                            2008Net
      revenues
                            
                            $
                            8,090,863
                            
                            
                            $
                            8,090,863Cost
      of net revenues
                            
                            
                            (2,376,675
                            )
                            
                            
                            (2,376,675
                            )Gross
      profit
                            
                            $
                            5,714,188
                            
                            
                            $
                            5,714,188Selling
      expenses
                            
                            
                            (40,600
                            )
                            
                            
                            (98,075
                            )General
      and administrative expenses
                            
                            
                            (1,280,119
                            )
                            
                            
                            (1,429,399
                            )Income
      from operation
                            
                            $
                            4,393,469
                            
                            
                            $
                            4,186,714Interest
      expenses
                            
                            
                            -
                            
                            
                            
                            -Interest
      income
                            
                            
                            34,739
                            
                            
                            
                            36,869Income
      before income taxes
                            
                            $
                            4,428,208
                            
                            
                            $
                            4,223,583Income
      taxes
                            
                            
                            (672,462
                            )
                            
                            
                            (672,462
                            )Net
      income
                            
                            $
                            3,755,746
                            
                            
                            $
                            3,551,121Net
      income per share:-Basic
                            
                            $
                            0.32
                            
                            
                            $
                            0.30-Diluted
                            
                            $
                            0.13
                            
                            
                            $
                            0.12Weighted
      average number of common stock-Basic
                            
                            
                            11,757,733
                            
                            
                            
                            11,757,733-Diluted
                            
                            
                            29,064,297
                            
                            
                            
                            29,064,297




36





SUNWAY
GLOBAL INC.





STATEMENTS
OF INCOME


Original
                    
                    
                    RestatedThree months ended June 30,2008
                    
                    
                    2008Net
      revenues
                    
                    $
                    4,499,670
                    
                    
                    $
                    4,499,670Cost
      of net revenues
                    
                    
                    (1,236,310
                    )
                    
                    
                    (1,236,310
                    )Gross
      profit
                    
                    $
                    3,263,360
                    
                    
                    $
                    3,263,360Selling
      expenses
                    
                    
                    (35,489
                    )
                    
                    
                    (73,542
                    )General
      and administrative expenses
                    
                    
                    (610,527
                    )
                    
                    
                    (640,909
                    )Income
      from operation
                    
                    $
                    2,617,344
                    
                    
                    $
                    2,548,909Interest
      expenses
                    
                    
                    -
                    
                    
                    
                    -Interest
      income
                    
                    
                    34,991
                    
                    
                    
                    37,152Income
      before income taxes
                    
                    $
                    2,652,335
                    
                    
                    $
                    2,586,061Income
      taxes
                    
                    
                    (400,774
                    )
                    
                    
                    (400,774
                    )Net
      income
                    
                    $
                    2,251,561
                    
                    
                    $
                    2,185,287Net
      income per share:-Basic
                    
                    $
                    0.15
                    
                    
                    $
                    0.14-Diluted
                    
                    $
                    0.08
                    
                    
                    $
                    0.08Weighted
      average number of common stock-Basic
                    
                    
                    15,155,118
                    
                    
                    
                    15,155,118-Diluted
                    
                    
                    28,619,524
                    
                    
                    
                    28,619,524


37





SUNWAY
GLOBAL INC.





STATEMENT
OF CASH FLOWS





Original
                        
                        
                        RestatedSix months ended June 30,2008
                        
                        
                        2008Cash
      flows from operating activitiesNet
      income
                        
                        $
                        3,755,746
                        
                        
                        $
                        3,551,121Depreciation
                        
                        
                        375,389
                        
                        
                        
                        375,389Amortization
                        
                        
                        420,972
                        
                        
                        
                        420,972Adjustments
      to reconcile net income to net cash provided by operating
      activities:Trade
      receivables, net
                        
                        
                        (851,682
                        )
                        
                        
                        (851,682
                        )Inventories
                        
                        
                        (34,545
                        )
                        
                        
                        (34,545
                        )Advances
      to suppliers
                        
                        
                        (623,758
                        )
                        
                        
                        (623,758
                        )Prepayments
                        
                        
                        114,059
                        
                        
                        
                        114,059Tender
      deposits
                        
                        
                        1,233
                        
                        
                        
                        1,233Travel
      advances to directors
                        
                        
                        (25,122
                        )
                        
                        
                        (25,122
                        )Advances
      to employees
                        
                        
                        107,267
                        
                        
                        
                        107,267Accounts
      payable
                        
                        
                        (252,954
                        )
                        
                        
                        (252,954
                        )Income
      tax payable
                        
                        
                        234,942
                        
                        
                        
                        234,942Turnover
      and other taxes
                        
                        
                        103,875
                        
                        
                        
                        103,875Expected
      warranty liabilities
                        
                        
                        -
                        
                        
                        
                        -Customers
      deposits
                        
                        
                        (215,385
                        )
                        
                        
                        (215,385
                        )Accrued
      liabilities and other payables
                        
                        
                        1,937
                        
                        
                        
                        1,937Net
      cash provided by operating activities
                        
                        $
                        3,111,974
                        
                        
                        $
                        2,907,349Cash
      flows from investing activitiesPurchase
      of plant and equipment
                        
                        $
                        (914,693
                        )
                        
                        $
                        (914,693
                        )Sales
      of short term investment
                        
                        
                        (434,674
                        )
                        
                        
                        (434,674
                        )Restricted
      cash
                        
                        
                        61,215
                        
                        
                        
                        61,215Advances
      to a related company
                        
                        
                        584,415
                        
                        
                        
                        584,415Advances
      to a director
                        
                        
                        (624,299
                        )
                        
                        
                        (624,299
                        )Net
      cash used in investing activities
                        
                        $
                        (1,328,036
                        )
                        
                        $
                        (1,328,036
                        )Cash
      flows from financing activities
                        
                        $
                        
                        
                        
                        $Proceeds
      from Vision re: Debentures
                        
                        
                        -
                        
                        
                        
                        -Proceeds
      from issuance of Series B ConvertiblePreferred
      Stock
                        
                        
                        -
                        
                        
                        
                        -Proceeds
      from exercise of Series J ConvertiblePreferred
      Stock
                        
                        
                        6,530,000
                        
                        
                        
                        6,530,000Net
      cash provided by financing activities
                        
                        $
                        6,530,000
                        
                        
                        $
                        6,530,000




38





SUNWAY
GLOBAL INC.





STATEMENT
OF CASH FLOWS (Continued)





Original
                        
                        
                        RestatedSix months ended June 30,2008
                        
                        
                        2008Net
      in cash and cash equivalents sourced
                        
                        $
                        8,313,938
                        
                        
                        $
                        8,109,313Effect
      of foreign currency translation on  cash and cash
      equivalents
                        
                        
                        867,374
                        
                        
                        
                        1,530,795Cash
      and cash equivalents–beginning of year
                        
                        
                        5,820,100
                        
                        
                        
                        5,820,100Cash
      and cash equivalents–end of year
                        
                        $
                        15,001,412
                        
                        
                        $
                        15,460,208Supplementary
      cash flow information:Interest
      paid
                        
                        $
                        34,739
                        
                        
                        $
                        36,869Interest
      received
                        
                        
                        -
                        
                        
                        
                        -Tax
      paid
                        
                        
                        672,462
                        
                        
                        
                        672,462




39


ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
 
 Forward-Looking
Statements
 
 The
information in this report contains forward-looking statements. All statements
other than statements of historical fact made in this report are forward
looking. In particular, the statements herein regarding industry prospects and
future results of operations or financial position are forward-looking
statements. These forward-looking statements can be identified by the use of
words such as "believes," "estimates," "could," "possibly," "probably,"
anticipates," "projects," "expects," "may," "will," or "should" or other
variations or similar words. No assurances can be given that the future results
anticipated by the forward-looking statements will be achieved. Forward-looking
statements reflect management's current expectations and are inherently
uncertain. Our actual results may differ significantly from management's
expectations.
 
 The
following discussion and analysis should be read in conjunction with our
financial statements, included herewith. This discussion should not be construed
to imply that the results discussed herein will necessarily continue into the
future, or that any conclusion reached herein will necessarily be indicative of
actual operating results in the future. Such discussion represents only the best
present assessment of our management.
  Overview
  As a
result of the reverse merger, financing and related transactions described
in our current report on Form 8-K/A filed with the SEC on June 27, 2007, the
Company ceased to be a shell company and became a holding company for entities
that, through contractual relationships, control the business of Sunway, a
company organized under the laws of the PRC that designs, manufactures and sells
logistic transport systems and medicine dispensing systems and equipment that
are principally used by hospitals and other medical facilities in the PRC.
Because Sunway’s operations are the only significant operations of the Company
and its affiliates, this discussion and analysis focuses on the business results
of Sunway, comparing its results in the three and six months ended June 30, 2008
to the three and six months ended June 30, 2007. We began selling our new core
product—a medicine dispensation and packaging system also designed for use in
hospitals and pharmacies—in the first quarter of 2008.
  Three-month
periods ended June 30, 2008 and June 30, 2007
 
 Results
of Operations
 
 In the
three months ended June 30, 2008, the company’s net revenue and gross profit
rose substantially as compared with the same period in the same period of 2007,
operating expenses also increased during these periods, bring on company net
income rose substantially increased. These increases are due in large part to
increased sales of Sunway’s pneumatic tube transport systems. Cost of sales only
slightly increased during these periods. The slightly increase in cost of sales
is due to increased product volume brought drop to the fixed costs. The increase
in operating expense is primarily due to an increase in amortization of
intangible assets.
 
 The
following table summarizes the results of our operations during the three months
ended June 30, 2008 and 2007, respectively, and provides information regarding
the dollar and percentage increase or (decrease) from the three months ended
June 30, 2008 and 2007.
  Three Months Ended June 30,2008
                                          
                                          
                                          2007
                                          
                                          
                                          Change
                                          
                                          
                                          Change rateNet
      Revenues
                                          
                                          $
                                          4,499,670
                                          
                                          
                                          $
                                          3,195,695
                                          
                                          
                                          $
                                          1,303,975
                                          
                                          
                                          
                                          40.80
                                          %Cost
      of net revenues
                                          
                                          $
                                          1,236,310
                                          
                                          
                                          $
                                          1,055,774
                                          
                                          
                                          $
                                          180,536
                                          
                                          
                                          
                                          17.10
                                          %Gross
      Profit
                                          
                                          $
                                          3,263,360
                                          
                                          
                                          $
                                          2,139,921
                                          
                                          
                                          $
                                          1,123,439
                                          
                                          
                                          
                                          52.50
                                          %Gross
      Margin
                                          
                                          
                                          72.52
                                          %
                                          
                                          $
                                          66.96
                                          %
                                          
                                          
                                          
                                          
                                          
                                          
                                          5.56
                                          %Operating
      Income
                                          
                                          $
                                          2,548,909
                                          
                                          
                                          $
                                          1,760,262
                                          
                                          
                                          $
                                          788,647
                                          
                                          
                                          
                                          44.80
                                          %Net
      Income
                                          
                                          $
                                          2,185,287
                                          
                                          
                                          $
                                          1,495,917
                                          
                                          
                                          $
                                          689,370
                                          
                                          
                                          
                                          46.08
                                          %Net
      profit margin
                                          
                                          
                                          48.57
                                          %
                                          
                                          
                                          46.81
                                          %
                                          
                                          
                                          
                                          
                                          
                                          
                                          1.76
                                          %
 
 Net
revenue
 
 Net
revenue for the three months ended June 30, 2008, which resulted entirely from
sales of pneumatic material transport system workstations (“PTS”) were
$4,499,670, an increase of 40.80% as compared with the net revenue of $3,195,695
for the three months ended June 30, 2007. In the three months ended June 30,
2008, we sold 885 workstations, an increase of 27.89% as compared with 692
workstations sold in the three months ended June 30, 2007. The increase was
primarily a result of more effective sales and marketing
efforts.
  40
  The
following table breaks down application categories as percentage of total net
revenues.
  Three Months Ended June 30,2008
                                                          
                                                          
                                                          2007Sales
                                                          
                                                          
                                                          % of total sales
                                                          
                                                          
                                                          Sales
                                                          
                                                          
                                                          % of total salesPTS
                                                          
                                                          $
                                                          4,499,670
                                                          
                                                          
                                                          
                                                          100.00
                                                          %
                                                          
                                                          $
                                                          3,195,695
                                                          
                                                          
                                                          
                                                          100.00
                                                          %Total
      net revenues
                                                          
                                                          $
                                                          4,499,670
                                                          
                                                          
                                                          
                                                          100.00
                                                          %
                                                          
                                                          $
                                                          3,195,695
                                                          
                                                          
                                                          
                                                          100.00
                                                          %
 
 Gross
Profit
 
 Gross
profit increased 52.50% to $3,263,360 for the three months ended June 30, 2008,
as compared to $2,139,921 for the three months ended June 30, 2007. Our gross
profit margin rose 5.56% from 66.96% as of the three months ended June 30, 2007
to 72.52% as of the same period of 2008, mainly due to increased product volume
brought drop to the fixed costs.
 
 The table
below presents information about our gross profit for the periods
indicated:
 
 Three Months Ended June 30,2008
                          
                          
                          2007US$
                          
                          
                          Gross profit
                            margin
                          
                          
                          US$
                          
                          
                          Gross profit
                            marginGross
      Profit
                          
                          $
                          3,263,360
                          
                          
                          
                          72.52
                          %
                          
                          $
                          2,139,921
                          
                          
                          
                          66.96
                          %
 
 Income
from Operations
 
 Income
from operations increased 44.80% to $2,548,909 for the three months ended
June 30, 2008, as compared with $1,760,262 for the three months ended June 30,
2007. The increase was primarily a result of the higher revenue by cost
reductions during the three months ended June 30, 2008 as compared to the same
period of 2007.
 
 Cost
of Net revenues
 
 Cost of
net revenues increased to $1,236,310 for the three months ended June 30, 2008,
representing 17.10% increase as compared with $1,055,774 for the same period of
2007. The increase is primarily due to increased net revenue and decreased
manufacturing overhead from the three months ended June 30, 2008 to the same
period of 2007. The manufacturing expenses decreased 9.88% for the three months
ended June 30, 2008, as compared to the same period of 2007.
 
 The table
below presents information about our cost of sales for the periods
indicated:
 
 Three Months Ended June 30,2008
                              
                              
                              2007
                              
                              
                              ChangeCost
      of net revenues
                              
                              $
                              1,236,310
                              
                              
                              $
                              1,055,774
                              
                              
                              
                              17.10
                              %
 
 Operating
Expenses
 
 Operating
expenses were $714,451 for the three months ended June 30, 2008, an increase of
88.18% as compared to $379,659 for the same period of 2007. The increase was
composed by two reasons: (1) selling expenses increased $38,420 or 109.39% to
$73,542 in the three months ended June 30, 2008 from $35,122 for the same period
of 2007; and (2) general & administration expenses increased $296,372, or
86.02% to $640,909 in the three months ended June 30, 2008 from $344,537 for the
same period of 2007. In the three months ended June 30, 2008, we increased
salary and benefits of management and increased amortization of intangible
assets. Reflecting this change, costs related to salary and benefits increased
65.63% in the three months ended June 30, 2008, compared with the same period of
2007; and amortization of intangible assets increased $357.73% in the three
months ended June 30, 2008 compared with the same period of
2007.
  41
 
 The table
below presents information about our operating expenses for the periods
indicated:
 
 Three Months Ended June 30,2008
                                    
                                    
                                    2007
                                    
                                    
                                    changeSelling
      expenses
                                    
                                    $
                                    73,542
                                    
                                    
                                    $
                                    35,122
                                    
                                    
                                    
                                    109.39
                                    %General
      and administrative expenses
                                    
                                    $
                                    640,909
                                    
                                    
                                    $
                                    344,537
                                    
                                    
                                    
                                    86.02
                                    %Total
      operating expenses
                                    
                                    $
                                    714,451
                                    
                                    
                                    $
                                    379,659
                                    
                                    
                                    
                                    88.18
                                    %
 
 Net
Income
 
 Net
income was $2,185,287 for the three months ended June 30, 2008, an increase of
46.08% from $1,495,917 for the same period of 2007. This increase is primarily
due to a substantial net revenue increase partially offset by the higher
general and administrative expense .
 
 Six-month
periods ended June 30, 2008 and June 30, 2007
 
 Results
of Operations
 
 In the
six months ended June 30, 2008, the company’s net revenue, gross profit,
operating income and net income all rose substantially as compared with the same
period in the same period of 2007. These increases are due in large part to
increased sales of Sunway’s pneumatic tube transport systems and new product ó a
medicine dispensation and packaging system. Cost of sales and operating expense
also increased during these periods, somewhat outpacing the increase in sales.
The increase in cost of sales is due largely to increased sales; the increase in
operating expenses is due largely to increased amortization of intangible assets
and salary.
 
 The
following table summarizes the results of our operations during the six months
ended June 30, 2008 and 2007, respectively, and provides information regarding
the dollar and percentage increase or (decrease) from the six months ended June
30, 2008 and 2007.
  Six Months Ended June 30,2008
                                                  
                                                  
                                                  2007
                                                  
                                                  
                                                  Change
                                                  
                                                  
                                                  Change rateNet
      Revenue
                                                  
                                                  $
                                                  8,090,863
                                                  
                                                  
                                                  $
                                                  5,659,211
                                                  
                                                  
                                                  $
                                                  2,431,652
                                                  
                                                  
                                                  
                                                  42.97
                                                  %Cost
      of net revenue
                                                  
                                                  $
                                                  2,376,675
                                                  
                                                  
                                                  $
                                                  1,699,615
                                                  
                                                  
                                                  $
                                                  677,060
                                                  
                                                  
                                                  
                                                  39.84
                                                  %Gross
      Profit
                                                  
                                                  $
                                                  5,714,188
                                                  
                                                  
                                                  $
                                                  3,959,596
                                                  
                                                  
                                                  $
                                                  1,754,592
                                                  
                                                  
                                                  
                                                  44.31
                                                  %Gross
      Margin
                                                  
                                                  
                                                  70.63
                                                  %
                                                  
                                                  $
                                                  69.97
                                                  %
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  0.66
                                                  %Operating
      Income
                                                  
                                                  $
                                                  4,186,714
                                                  
                                                  
                                                  $
                                                  3,245,789
                                                  
                                                  
                                                  $
                                                  940,925
                                                  
                                                  
                                                  
                                                  28.99
                                                  %Net
      Income
                                                  
                                                  $
                                                  3,551,121
                                                  
                                                  
                                                  $
                                                  2,746,606
                                                  
                                                  
                                                  $
                                                  804,515
                                                  
                                                  
                                                  
                                                  29.29
                                                  %Net
      profit margin
                                                  
                                                  
                                                  43.89
                                                  %
                                                  
                                                  
                                                  48.53
                                                  %
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  -4.64
                                                  %
 
 Net
revenue
 
 Net
revenue for the six months ended June 30, 2008, which resulted entirely from
sales of pneumatic material transport system workstations (“PTS”) and Automatic
Medicine Dispensing & Packing System (“SADP’), were $8,090,863, an increase
of 42.97% as compared with the net revenue of $5,659,211 for the six months
ended June 30, 2007. In the six months ended June 30, 2008, we sold 1,507
workstations, an increase of 21.93% as compared with 1,236 workstations sold in
the six months ended June 30, 2007. The increase was primarily a result of more
effective sales and marketing efforts.
 
 The
following table breaks down application categories as percentage of total
sales.
  Six Months Ended June 30,2008
                                    
                                    
                                    2007Sales
                                    
                                    
                                    % of total sales
                                    
                                    
                                    Sales
                                    
                                    
                                    % of total salesPTS
                                    
                                    $
                                    7,553,581
                                    
                                    
                                    
                                    93.36
                                    %
                                    
                                    $
                                    5,659,211
                                    
                                    
                                    
                                    100.00
                                    %SADP
                                    
                                    $
                                    537,282
                                    
                                    
                                    
                                    6.64
                                    %
                                    
                                    $
                                    -
                                    
                                    
                                    
                                    -Total
      net revenue
                                    
                                    $
                                    8,090,863
                                    
                                    
                                    
                                    100.00
                                    %
                                    
                                    $
                                    5,659,211
                                    
                                    
                                    
                                    100.00
                                    %
  42
  Gross
Profit
 
 Gross
profit increased 44.31% to $5,714,188 for the six months ended June 30, 2008, as
compared to $3,959,596 for the six months ended June 30, 2007. Our gross profit
margin rose 0.66% from 69.97% for the six months ended June 30, 2007 to 70.63%
as of the same period of 2008, mainly due to increased product volume brought
drop to the fixed costs.
 
 The table
below presents information about our gross profit for the periods
indicated:
 
 Six Months Ended June 30,2008
                                
                                
                                2007US$
                                
                                
                                Gross profit
                                  margin
                                
                                
                                US$
                                
                                
                                Gross profit
                                  marginGross
      Profit
                                
                                $
                                5,714,188
                                
                                
                                
                                70.63
                                %
                                
                                $
                                3,959,596
                                
                                
                                
                                69.97
                                %
 
 Income
from Operations
 
 Operating
income increased 28.99% to $4,186,714 for the six months ended June 30,
2008, as compared with $3,245,789 for the six months ended June 30, 2007. The
increase was primarily a result of the higher revenue partially offset by the
higher general and administrative reduces during the six months ended June 30,
2008 as compared to the same period of 2007.
 
 Cost
of Net revenues
 
 Cost of
net revenues increased to $2,376,675 for the six months ended June 30, 2008,
representing 39.84% increase as compared with $1,699,615 for the same period of
2007. The increase is due primarily to increased revenues and decreased by
manufacturing expenses from the six months ended June 30, 2008 to the same
period of 2007. The manufacturing expenses decreased 13.53% for the six months
ended June 30, 2008, as compared to the same period of 2007.
 
 The table
below presents information about our cost of sales for the periods
indicated:
 
 Six Months Ended June 30,2008
                                
                                
                                2007
                                
                                
                                ChangeCost
      of net revenues
                                
                                $
                                2,376,675
                                
                                
                                $
                                1,699,615
                                
                                
                                
                                39.84
                                %
 
 Operating
Expenses
 
 Operating
expenses were $1,527,474 for the six months ended June 30, 2008, an increase of
113.99% as compared to $713,807 for the same period of 2007. The increase was
primarily caused by two factors: (1) selling expenses increased $49,486, or
101.85% to $98,075 in the six months ended June 30, 2008 from $48,589 for the
same period of 2007; and (2) general & administration expenses increased
$764,181, or 114.88% to $1,429,399 in the six months ended June 30, 2008 from
$665,218 for the same period of 2007. In the six months ended June 30, 2008, we
increased salary and benefits of management. Reflecting this change, costs
related to salary and benefits increased 72.19% in the six months ended June 30,
2008, compared with the same period of 2007; and amortization of intangible
assets increased $336,788, or 400.06% to $420,974 in the six months ended June
30, 2008 from $84,186 as of the same period of 2007; and cost of direct sales
offices were increased from nil as of the six months ended June 30, 2007 to
$140,458 as of the same period of 2008.
 
 The table
below presents information about our operating expenses for the periods
indicated:
 
 Six Months Ended June 30,2008
                                        
                                        
                                        2007
                                        
                                        
                                        changeSelling
      expenses
                                        
                                        $
                                        98,075
                                        
                                        
                                        $
                                        48,589
                                        
                                        
                                        
                                        101.85
                                        %General
      & Administrative expenses
                                        
                                        $
                                        1,429,399
                                        
                                        
                                        $
                                        665,218
                                        
                                        
                                        
                                        114.88
                                        %Total
      operating expenses
                                        
                                        $
                                        1,527,474
                                        
                                        
                                        $
                                        713,807
                                        
                                        
                                        
                                        113.99
                                        %
 
 Net
Income
 
 Net
income was $3,551,121 for the six months ended June 30, 2008, an increase of
29.29% from $2,746,606 for the same period of 2007. The increase is primarily
due to i) substantial net revenue increase; and ii) partially offset by
higher operating expenses. Earnings per share was $0.30
and $0.12 on a diluted basis.
  43
 
 Cash
and Cash Equivalents
 
 Cash and
Cash Equivalents increased to $15,460,208 as of the six months ended June 30,
2008, as compared to $5,820,100 as of the fiscal year ended December 31, 2007.
The increase was mainly due to i) net income increase; and ii) the warrants J
exercised for approximately $6.53 million on June 5, 2008.
 
 Trade
Receivables
 
 Trade
Receivables increased 63.91% to $2,499,943 as of the six months ended June 30,
2008, compared with $1,525,201 as of in the fiscal year ended December 31, 2007.
This increase in accounts receivable was primarily attributable to a substantial
increase in workstation and new product-Automatic Medicine Dispensing and
Packing System sales during the six months ended June 30, 2008.
 
 Inventory
 
 Inventory
consists of raw materials and finished goods. As of the six months ended June
30, 2008, the recorded value of our inventory has increased 11.07% to $851,851
from $766,933 as of the fiscal year ended December 31, 2007. The increase is
mainly due to increase in finished goods from $161,005 as of December 31, 2007
to $621,445 as of June 30, 2008, an increase of 285.99%. In raw materials
decreased from $605,928 as of December 31, 2007 to $230,406 as of June 30, 2008,
a decrease of 61.97%, which was due to increased sales and designed
capacity.
 
 The table
below presents information about our inventory for the periods
indicated:
 
 Item
                                
                                June 30, 2008
                                
                                
                                December 31,
                                  2007
                                
                                
                                ChangeRaw
      material
                                
                                $
                                230,406
                                
                                
                                $
                                605,928
                                
                                
                                
                                -61.97
                                %Finished
      goods
                                
                                $
                                621,445
                                
                                
                                $
                                161,005
                                
                                
                                
                                285.99
                                %Total
                                
                                $
                                851,851
                                
                                
                                $
                                766,933
                                
                                
                                
                                11.07
                                %
 
 Accounts
payable
 
 Accounts
payable amounted to nil as of the six months ended June 30, 2008, a decrease
from $245,917 as of the fiscal year ended December 31, 2007. This decrease is
mainly due to cash purchases of raw materials.
  Liquidity
and Capital Resources
 
 We have
historically financed our operations and capital expenditures principally
through private placements of debt and equity offerings and cash provided by
operations.
 
 On June
6, 2007, we raised $6.7 million in gross proceeds through private placement
offering of our series B convertible preferred stock. We received $4,976,335 in
net proceeds after deducting placement agent discounts and commissions and
payment of professional and other related expenses.
 
 On June
5, 2008, we had received $6.53 million for the warrant J exercised.
 
 As is customary in our
industry, we provide payment terms to most of our customers that exceed terms
that we receive from our suppliers. Therefore, the Company’s liquidity needs
have generally consisted of working capital necessary to finance receivables and
raw material inventory. Capital expenditures have historically been necessary to
expand the production capacity of the Company’s manufacturing
operations.
 
 The table
below presents information about our cash flow for the periods
indicated:
  Six Months Ended June 30,2008
                                
                                
                                2007
                                
                                
                                ChangeNet
      cash provided by (used in) operating activities
                                
                                $
                                2,907,349
                                
                                
                                $
                                1,575,727
                                
                                
                                $
                                1,331,622Net
      cash provided by (used in) investing activities
                                
                                $
                                -1,328,036
                                
                                
                                $
                                -1,442,943
                                
                                
                                $
                                114,907Net
      cash provided by (used in) financing activities
                                
                                $
                                6,530,000
                                
                                
                                $
                                5,756,335
                                
                                
                                $
                                773,665Effect
      of foreign currency translation on cash and cash
    equivalents
                                
                                $
                                1,530,795
                                
                                
                                $
                                229,813
                                
                                
                                $
                                1,300,982Cash
      and cash equivalents at beginning of year
                                
                                $
                                5,820,100
                                
                                
                                $
                                1,749,048
                                
                                
                                $
                                4,071,052Cash
      and cash equivalents-end of year
                                
                                $
                                15,460,208
                                
                                
                                $
                                7,867,980
                                
                                
                                $
                                7,592,228
  44
  Operating
Activities
 
 For the
six months ended June 30, 2008, net cash provided by operating activities was
$2,907,349. This was primarily attributable to our net income of $3,551,121,
adjusted by an add-back of non-cash expenses mainly consisting of depreciation
and amortization of $796,361 offset by a $1,440,133 decrease in working capital.
Specifically, the working capital decrease was primarily due to i) a $851,682
trade receivables increase driven by revenue growth; ii) a $34,545 inventories
increase in principally finished goods to support planned expansion and sales
growth; iii) a $623,758 increase in advance to suppliers to buy raw materials;
and iv) a $197,437 decrease in prepayments, tender deposits, travel advances to
shareholders, and advances to employees, consisting primarily of prepayments for
raw materials supplies in advance of shipment and working capital of direct
sales office; partially offset by a $127,585 increase in accounts payable, tax
payable, expected warranty expenses, customers deposits, accrued
liabilities and other payables.
 
 Investing
Activities
 
 For the
six months ended June 30, 2008, net cash used in investing activities was
$1,328,036. This was primarily attributable to i) a $914,693 capital expenditure
for purchase of new plant and equipment; (ii) a $61,215 decrease in restricted
cash; (iii) a $434,674 increase in sales of short term investment; and (iv) a
$39,884 increase in advances to a related company and a director.
 
 Financing
activities
 
 For the
six months ended June 30, 2008, net cash used in financing activities was
$6,530,000. This was primarily attributable to the exercise of warrants
J.
 
 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 6 months. We may, however, require additional cash resources due to
changed business conditions or other future developments, including any
investments or acquisitions we may decide to pursue.
 
 Critical
Accounting Policies
 
 Management's
discussion and analysis of its financial condition and results of operations is
based upon Sunway’s consolidated financial statements, which have been prepared
in accordance with United States generally accepted accounting principles.
Sunway’s financial statements reflect the selection and application of
accounting policies which require management to make significant estimates and
judgments. Management bases its estimates on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances. Actual results may differ from these estimates under different
assumptions or conditions. Sunway believes that the following reflect the more
critical accounting policies that currently affect Sunway’s financial condition
and results of operations.
 
 Impairment of long-lived
assets. We account for impairment of property, plant and equipment and
amortizable intangible assets in accordance with SFAS No. SFAS No. 144. The
carrying value of a long-lived asset is considered impaired when the anticipated
undiscounted cash flow from such asset is separately identifiable and is less
than its carrying value. In that event, a loss is recognized based on the amount
by which the carrying value exceeds the fair market value of the long-lived
asset. Fair market value is determined primarily using the anticipated cash
flows discounted at a rate commensurate with the risk involved. Losses on
long-lived assets to be disposed of are determined in a similar manner, except
that fair market values are reduced for the cost to dispose. During the
reporting years, there was no impairment loss incurred. Competitive pricing
pressure and changes in interest rates, could materially and adversely affect
our estimates of future net cash flows to be generated by our long-lived
assets.
 
 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. Changes in
sales volumes due to unexpected economic or competitive conditions are among the
factors that could materially affect the adequacy of such write
down.
  45
 
 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.
 
 Revenue recognition. Revenue
represents the invoiced value of goods sold recognized upon the delivery of
goods to customers. Revenue is recognized when all of the following criteria are
met:
 
 -
Persuasive evidence of an arrangement exists;
 -
Delivery has occurred or services have been rendered;
 - The
seller’s price to the buyer is fixed or determinable, and
 -
Collection is reasonably assured.
 
 Contract
revenues are recognized when the manufacturing and installation of the medical
equipments is completed.  Generally, the company receives total
contract sum from clients in 3 installments. Deposit of 30% is received from
client when the contract is signed.  Second payment of 30% is received
when the project commenced.  The final sum of the remaining portion is
received after the construction is completed within 4 months.
 
 Expected warranty liabilities.The Company warrants its products against defects in design, materials,
and workmanship generally for one year. A provision for estimated future costs
relating to warranty expense are recorded when products are shipped, and the
provision is based upon our own historical claim experience.
 
 We have
no off-balance sheet arrangements and have not entered into any transactions
involving unconsolidated, limited purpose entities.
  ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
  N/A.
  ITEM
4T. CONTROLS AND PROCEDURES.
 
 Evaluation
of Disclosure Controls and Procedures
  Our
management is responsible for establishing and maintaining a system of
disclosure controls and procedures (as defined in Rule 13a-15(e)) under the
Exchange Act) that is designed to ensure that information required to be
disclosed by the Company in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported, within the time
specified in the Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by an issuer in the reports
that it files or submits under the Exchange Act is accumulated and communicated
to the issuer's management, including its principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, as appropriate to allow timely decisions regarding required
disclosure.
  Pursuant
to Rule 13a-15(b) under the Exchange Act the Company carried out an evaluation
with the participation of the Company’s management, including Liu Bo, the
Company’s Chief Executive Officer (“CEO”) and Samuel Sheng, the Company’s Chief
Financial Officer (“CFO”), of the effectiveness of the Company’s disclosure
controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act)
as of the six months ended June 30, 2008. Based upon that evaluation, the
Company’s CEO and CFO concluded that the Company’s disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in the reports that the Company files or submits under the Exchange
Act, is recorded, processed, summarized and reported, within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to the Company’s management, including the Company’s CEO and
CFO, as appropriate, to allow timely decisions regarding required
disclosure.
  Changes
in internal controls
  Our
management, with the participation our Chief Executive Officer and Chief
Financial Officer, performed an evaluation as to whether any change in our
internal controls over financial reporting  occurred during the 2008
Quarter ended June 30, 2008.  Based on that evaluation, our Chief Executive
Officer and our Chief Financial Officer concluded that no change occurred in the
Company's internal controls over financial reporting during the 2008 Quarter
ended June 30, 2008 that has materially affected, or is reasonably likely to
materially affect, the Company's internal controls over financial
reporting.
  46
 
 PART
II
  OTHER INFORMATION
  ITEM
1 - LEGAL PROCEEDINGS
  To our
knowledge, there is no material litigation pending or threatened against
us.
  ITEM
1A. RISK FACTORS
  N/A
  ITEM
2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  None.
  ITEM
3 - DEFAULTS UPON SENIOR SECURITIES
  To our
knowledge, there are no material defaults upon senior securities.
  ITEM
4 - SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
  ITEM
5 - OTHER INFORMATION
  There
were no matters required to be disclosed on Form 8-K during the six months ended
June 30, 2008 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.
  47
  SIGNATURES
  Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
  SUNWAY
      GLOBAL INC.Dated:
        March 6, 2009
                  By:
                  /s/
      Liu BoLiu
      BoChief
      Executive Officer
 Dated:
        March 6, 2009
                  By:
                  /s/
      Samuel ShengSamuel
      ShengChief
      Financial Officer
  48